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Innovation is Key to Controlling Health Care Costs

In the battle over health care that lies ahead, how strongly will the public rally around the need for innovation in confronting health care costs?  Does the public view innovation as relevant to the challenge in the first place?

These aren’t idle questions. The news that growth in overall national health care spending has been moderating has raised speculation that innovations in payment and health care delivery are already paying off, notwithstanding the unquestioned impact of the Great Recession.

Looking ahead, uncertainty over the fate of the Affordable Care Act and the likelihood of federal budget cuts yet to come has many fearing that innovations will be vulnerable. And it is not just federal spending that will be at risk. Hospitals and health plans will all be watching their margins carefully to assess how far and how fast they can keep making investments that support innovation (such as investments in healthcare IT, analytics and care coordination) but that may take months or years to generate a return.

All of which places the role of innovation in controlling costs center stage. After all, this is what undergirds the Triple Aim that so many health care leaders have embraced as the only realistic alternative to arbitrary cutbacks in health care services and spending. Health care leaders can defend innovation if they have public support. But do they?

NEHI set out to find out. In partnership with Ernst & Young and with the help of the APCO Insight survey research firm, we surveyed 500 Americans, all of them opinion leaders chosen for their high levels of civic engagement — but not for their expertise in health care.  Our respondents are the kind of people that survey experts believe are the folks who set the terms of debate on issues at the local level.

What did we find?

Not surprisingly, opinion leaders very much associate innovation with biomedical research and cutting-edge treatments. Given a list of seven broadly-accepted goals for U.S. health care, research and development for new treatments ranked at the top, including 75 percent who ranked it as “very important.”

Yet our respondents ranked innovation for efficiency nearly as high, including 66 percent who ranked it as “very important.”  By a four –to-one margin they expressed faith that innovation will lead to efficiencies that will control costs (78 percent) as opposed to “spending cuts and strict budgets” (16 percent).

Efficiency also ranked high among the goals the opinion leaders want the government to pursue. Asked to comment on six broad government health care policy goals, 87 percent said that government action to control health care costs through efficiencies should be the top priority, including 65 percent who rated this goal as a “very high priority.”

Support for the government taking action to improve efficiency spans partisan lines in the survey: 57 percent of Republicans support it, along with 62 percent of independents and 76 percent of Democrats. This suggests that there just may be room to build a broad-based defense of innovation.

But it should come as no surprise that this will take a lot of work. Stark partisan divisions are evident, suggesting that while Republicans, Democrats and independents support government action to improve health care efficiency in the abstract, they have wildly different views on how such efficiency should be achieved in reality, and even on whether the task is all that urgent.

None of the questions we asked used the terms “Affordable Care Act” or “Obamacare;” nonetheless, respondents displayed starkly different views on the role of health care costs in driving the federal deficit. When asked to rank order the most important goals for balancing the federal budget, Democrats put ‘controlling health care costs’ first, while Republicans identified ‘reducing waste and inefficiency in the federal budget” as the top federal budget problem.

Nor do our respondents share the same sense of urgency around the future of the health care system. A solid majority of Democrats (69 percent) believe that the health care system is at risk because of high costs; only a minority of Republicans (45 percent) agree, with Independents in the middle (62 percent). A solid majority of Democrats believe that the U.S. health care system is “fair” or “poor”, while a solid majority of Republicans (64 percent) believe the system is “good” or “excellent.”  Whatever sense of urgency that some citizens feel around the federal deficit and federal debt does not overlap with the sense of urgency that others feel about the fate of the health care system.

So what do these findings mean?

First, the poll suggests that opinion makers, at least, understand that innovation is a concept that applies to more than biomedical research and technology development: in short, innovation is relevant to our biggest health care problems. That’s a start.

Second, the poll suggests that opinion leaders have embraced the link between innovation and efficiency. This is a link that should be tested more, as “efficiency” can be easily construed as code for “cutback.”  Even the benign concept of “health care quality” has come in for that kind of scrutiny in recent years.

Third, the poll underscores the need to emphasize that innovation plays its role in the context of a system that is still based on competition and health care markets. Even Democrats in our poll expressed little support for direct government regulation of health care costs and little support for government regulation of competition. Republicans, predictably, gave their strongest support (63 percent) to “market based competition” as the best approach to health care costs, while Democrats (56 percent) supported “cooperation among government, health insurers and providers,” – cooperation that still assumes competition. The pro-innovation message needs to stress that innovation is all about making health care stakeholders better competitors.

Finally, innovators need to continue pointing towards any promising results and early successes that show innovation driving efficiencies that result in better care, better outcomes and lowered costs – whether those innovations are in healthcare IT, payment reform, system transformation, or new technologies. Innovators also need to stress that we need to sustain a climate in which these promising innovations can continue to thrive.

Ultimately, the strongest boost for a pro-innovation message would come if partisans on all sides could agree that the goal of a better health care system overlaps the goal of a sustainable federal budget. That may be a heavy political lift for some time to come.  But it should not deter us from rallying around a common goal to solve our health care problems through innovation and ingenuity.

Wendy Everett is the president of NEHI, a national health policy institute dedicated to finding innovative solutions to pressing health care problems. www.nehi.net

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Mark Waugh
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Mark Waugh

Thanks for sharing that. It is true that innovation is key to controlling health care cost. Thanks
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John
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John

Absolutely great post here. In reference to how innovation is achieved differently by Republicans and Democracts, this is an issue articulated in the discussion surrounding the medical device excise tax. Clearly, the implications of the SCOTUS ruling will alter the structure of this debate. For a couple brief articles on both the device tax and SCOTUS ruling, be sure to check out the following links: http://bit.ly/MvA88M http://bit.ly/KfVAKq

Peter1
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Peter1

The words “innovation” and ” efficiency” are code for shifting risk and payment to patients, not using technology/efficiency to reduce margins or prices or billings or provider incomes.

Bruce Hickman
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Moe
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Moe

My daughter really wants to go to a health care school and go into the medical/health industry. I went into finances, but that is her worst nightmare. She really wants to help people. Are there any good schools that you would recommend? I don’t know what schools are available, or which ones are good. Thanks!

Rajib Saha
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I agree with you. Thanks for your Participation.