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Obstacles to Value-Based Care Can Be Overcome

By KEN TERRY

(This is the seventh in a series of excerpts from Terry’s new book, Physician-Led Healthcare Reform: a New Approach to Medicare for All, published by the American Association for Physician Leadership.)

Even in a healthcare system dedicated to value-based care, there would be a few major barriers to the kinds of waste reduction described in this book. First, there’s the ethical challenge: Physicians might be tempted to skimp on care when they have financial incentives to cut costs. Second, there’s a practical obstacle: Clinical guidelines are not infallible, and large parts of medicine have never been subjected to rigorous trials. Third, because of the many gaps in clinical knowledge, it can be difficult for physicians to distinguish between beneficial and non-beneficial care before they provide it.

Regarding the ethical dimension, insurance companies often are criticized when they deny coverage for what doctors and patients view as financial reasons. Physicians encounter this every day when they request prior authorization for a test, a drug, or a procedure that they believe could benefit their patient. But in groups that take financial risk, physicians themselves have incentives to limit the amount and types of care to what they think is necessary. In other words, they must balance their duty to the patient against their role as stewards of scarce healthcare resources.

On the other hand, fee-for-service payment motivates physicians to do more for patients, regardless of whether it’s necessary or not. In some cases, doctors may order tests or do procedures of questionable value to protect themselves against malpractice suits; but studies of defensive medicine have shown that it actually raises health costs by a fairly small percentage. More often, physicians overtreat patients because of individual practice patterns or because they practice in areas where that’s the standard of care. As long as doctors believe there’s a chance that the patient will benefit from low-value care, they can justify their decision to provide that care.

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Hospitals Must Give Up Power to Save Healthcare

By KEN TERRY

(This is the sixth in a series of excerpts from Terry’s new book, Physician-Led Healthcare Reform: a New Approach to Medicare for All, published by the American Association for Physician Leadership.)

As hospital systems become larger and employ more physicians, healthcare prices will continue to rise and independent doctors will find it harder to remain independent. Hospitals will never fully embrace value-based care as long as it threatens their primary business model, which is to fill beds and generate outpatient revenues. To create a viable, sustainable healthcare system, the market power of hospitals must be eliminated.

Federal antitrust policy is not adequate to handle this task. Even if the Federal Trade Commission had more latitude to deal with mergers among not-for-profit entities, the industry is already so consolidated that the FTC would have to break up health systems involving thousands of hospitals. Such a gargantuan effort would be practically and legally unfeasible.

All-payer Systems

 The government could curtail health systems’ market power without breaking them up. For example, either states or the federal government could adopt “all-payer” models similar to those in Maryland and West Virginia. Under the Maryland model introduced 40 years ago, every insurer, including Medicare, Medicaid, and private health plans, pays uniform hospital rates negotiated between the state and the hospitals.

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To Avoid Pay Cuts, Doctors Must Reduce Waste

By KEN TERRY

(This is the fifth in a series of excerpts from Terry’s new book, Physician-Led Healthcare Reform: a New Approach to Medicare for All, published by the American Association for Physician Leadership.)

Real healthcare reform depends on an effective plan to reduce cost growth. To achieve this goal, it makes a whole lot more sense to cut waste than to limit access to necessary services or slash provider payments to the bone, noted Donald Berwick, MD, a former acting CMS administrator, and Andrew D. Hackbarth, a RAND Corp. researcher, in a 2012 JAMA article. In their telling, a significant reduction in waste would allow us to bend the cost curve without hurting healthcare quality or access.

Berwick shared with me that he doesn’t know how much unnecessary care physicians or hospitals could safely eliminate. “Some of it is marbled into the daily activities of healthcare organizations,” he said. “There would have to be systemic changes to get it done. But it’s a matter of will. With enough will, a lot of it could be eliminated. And when you’re talking about $1 trillion [worth of waste], even if you get 10% of it, that’s a tremendous amount that could be applied to other activities.”

Risk-based contracts, whether shared savings or capitation, can incentivize physicians to reduce waste. From the viewpoint of long-suffering primary care physicians, value-based-care agreements that let them share in the savings they generate are a godsend. Of course, not all primary care doctors are willing to take financial risk or change their practice patterns. But if maintaining their current income depends on it, most physicians will embrace change.

Specialists, too, can benefit by embracing the new paradigm. If they’re mainly being paid fee for service, they’ll have to forgo a lot of lucrative tests and procedures. But they can still keep their incomes up by delivering more-appropriate procedures and tests to a larger patient population.

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Why Primary Care Should Run the Healthcare System

By KEN TERRY

(This is the fourth in a series of excerpts from Terry’s new book, Physician-Led Healthcare Reform: a New Approach to Medicare for All, published by the American Association for Physician Leadership.)

Many other countries’ healthcare systems outperform ours for one simple reason: They place a much greater emphasis on primary care, which occupies the central place in their systems. “The evidence is that where you have more primary care physicians, where you coordinate care, and where you pay to keep people healthy, you get better outcomes at lower cost,” says David Nash, MD, founding dean of the College of Population Health, part of Thomas Jefferson University in Philadelphia.

The evidence that Nash mentions includes studies by Barbara Starfield and her colleagues at Johns Hopkins University. In a 2005 Health Affairs paper, they showed that a higher ratio of primary care physicians to the population is associated with a lower mortality rate from all causes and from heart disease and cancer; in contrast, having more specialists in a particular area does not decrease the overall mortality rate or deaths from cancer and heart disease.

Another study of Medicare data found that states where a higher percentage of physicians were PCPs had higher quality care and lower cost per beneficiary. This factor alone accounted for nearly half of the variation in Medicare spending from one state to another. A separate study found that in the areas of the country that had the most primary care providers, the average Medicare cost per beneficiary was a third lower than in areas with the least PCPs.

One reason for this is that primary care doctors provide comprehensive, continuous care, including preventive and routine chronic care. Chronic illnesses drive 90% of health costs, and some studies show that intensive primary care can reduce ER visits and hospital admissions and improve the health of chronically ill people.

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Physicians Should Lead on Healthcare Reform

By KEN TERRY

(This is the first in a series of excerpts from Terry’s new book, Physician-Led Healthcare Reform: a New Approach to Medicare for All, published by the American Association for Physician Leadership.)

Even before COVID-19, healthcare reform seemed to be stuck between a rock and a hard place, but there is a rational way forward. This approach, which I call “physician-led healthcare reform,” would engage doctors in building a healthcare system that was safe, effective, patient-centered, timely, efficient, and equitable, to use the Institute of Medicine’s set of foundational goals in its landmark book, Crossing the Quality Chasm: a New Health System for the 21st Century.Primary care physicians, rather than hospitals, would be in charge of the system, and they’d work closely with specialists and other healthcare professionals to produce the best patient outcomes at the lowest cost.

It would take a decade or more to restructure the healthcare system so that this goal could be achieved. Similarly, the transition to a single-payer insurance system needs to be accomplished gradually—although the pandemic might accelerate that timetable. Most people are not yet ready to abandon employer-sponsored insurance, and there’s still a lot of distrust of the government. Providers are more likely to accept changes in how they’re paid over time than all of a sudden. Additional benefits can also be brought online slowly. Ideally, we could transform healthcare financing over a 10-year period while rebuilding the care delivery system at the same time.

That is why implementing Medicare for America—a reform plan devised by the Center for American Progress and embodied in a current House bill–makes more sense than going directly to Medicare for All: it changes the system incrementally while achieving universal coverage fairly quickly. Medicare for America would do this by enrolling the uninsured, people who purchase individual insurance, and those now in Medicare, Medicaid, and the Children’s Health Insurance Program (CHIP). People would also be enrolled automatically at birth. Companies could enroll their employees in Medicare for America, and employees could opt out of employer-sponsored plans and enroll in the public plan.

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A Change in Tactics

By ROBERT PRETZLAFF MD, MBA

Those that advocate for change in healthcare most often make their case based on the unsustainable cost or poor quality care that is sadly the norm. A 2018 article in Bloomberg highlights this fact by reporting on global healthcare efficiency, a composite marker of cost and life expectancy. Not remarkably, the United States ranks 54th globally, down four spots from 2017 and sandwiched neatly between Azerbaijan and Bulgaria. Unarguably, the US is a leader in medical education, technology, and research. Sadly, our leadership in these areas only makes our failure to provide cost-effective, quality care that much more shameful. For the well-off, the prospect of excellent accessible care is bright, but, as the Bloomberg article points out, as a nation our rank is rank. Anecdotally, I can report that as a physician I am called upon with some regularity to intervene on the behalf of family and friends to get a timely appointment or explain a test or study that their doctor was too busy to explain, and so even for the relatively well-off, care can be difficult and deficient.

The cost of care frequently takes center stage in arguments advocating change. The recognition that health care costs are driving unsupportable deficits and limiting expenditures in other vital areas is very compelling. Therefore, lowering the cost of care would seem to be an area in which there would be swift consensus. However, solutions to rein in costs fail to address the essential truth that most of us define cost subjectively. Arguments about the cost of care divide rather than unify as the discussion becomes more about cost shifting than controlling overall cost. Further, dollars spent on healthcare are spent somewhere, and there are many who profit handsomely from the system as it is and work aggressively sowing division to maintain the status quo.

Poor quality and access are additional lines of argument employed to win support for change. These arguments fail due to a lack of a commonly accepted definitions of quality and access to care. Remedies addressing quality and access issues are frequently presented as population level solutions. Unfortunately, these proposals do not engage a populace that cares first and foremost about their access to their doctor. The forces opposed to change readily employ counterarguments to population-based solutions by applying often false, but effective, narratives that population-based solutions are an infringement on a person’s fundamental freedoms. In that counterargument is the key to improving healthcare.

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