Most of us know a lot about what's wrong with our health care system but, if you are anything like me, you are less certain about what if anything can be done to fix it. George Halvorson was the Chief Executive Officer of the Kaiser Permanente Health System for 11 years and ran the largest health care system in the country, widely acknowledged to be one of the best. It includes three dozen hospitals, 550 medical care sites, 180,000 care givers, and nine million covered patients, with $50 billion in annual revenue. Halvorson's views on the subject seemed a good place to start. Don't Let Health Care Bankrupt America is a straightforward, analytical, no-nonsense, business-oriented presentation with little partisan mumbo-jumbo, even though this reader suspects that Halvorson was actively involved with discussions leading up to the Affordable Care Act.
The book is a careful assessment of the flaws of the current system with proposals for models that would both lower health care costs and improve quality.
Halvorson starts with some well-known facts: “Health Care in America is inconsistent, badly organized, inefficient, operationally dysfunctional, deeply data deficient, and far too expensive,” he writes, laying out detailed evidence documenting all of these shortcomings.
He laments that this would be “bad enough if we were paying for those growing health care costs with current tax dollars,” but we are actually borrowing money to pay current health care costs—“leaving our children and grandchildren to pay taxes in the future to buy our health care today.”
The fundamental systemic problem in Halvorson's view is that we now purchase health care by the piece. Each episode of care or diagnostic evaluation is reimbursed by a payment for a defined service and not linked to any desired outcome. This sets up a perverse set of incentives where we pay for volume and not necessarily for results.
Paradoxically, health care delivery sites with more complications in diabetics, asthma, and more hospital- acquired infections and sepsis often are better reimbursed than those preventing those complications. No health system wants to have more complications, but we often lack the data to know whether outcomes are good or bad in any particular health care system.
Package, Not Piece
The solution, in Halvorson's view, is to pay for health care as a package, not by the piece. In this model, the total patient care per patient per month is covered in the package. This pivotal change would suddenly make prevention strategies, team care, careful management of chronic diseases which consume over 75 percent of the costs of care, connectivity, computerized and accessible medical libraries, e-mail consults with doctors and nurses, and home monitoring tools all important additions to overall care.
In the current pay-by-piece system few if any of these are reimbursed. It would have the additional benefits of eliminating the current problems of fraud and abuse and would curtail repetitive testing.
Halvorson illustrates the impact of payment by package with examples from Kaiser. They have reduced HIV death rates by 50 percent and cut the number of broken bones in their elderly population by over 30 percent by initiating nine separate innovations, only three of which are reimbursable by current Medicare fee schedules.
The book reviews the various alternative health care systems in place in other countries, pointing out the strengths and some of the flaws in each. Although pieces of each might be incorporated into our evolving health care system, Halvorson believes that a switch to a single payer system such as in Canada or to a hybrid system such as those in Europe seems unlikely—and furthermore is not necessary. A better solution would be to alter the goals and the way we reimburse in our existing system.
In the latter portions of the book, Halvorson outlines his view of how some of the entities in the Affordable Care Act should actually function:
- Medical homes should be very local, primary care-oriented, team care centers set up to provide coordinated care with interconnected links to subspecialty care and hospitals.
- Accountable Care Organizations should function as integrated health delivery systems creating team care with data-driven, interconnected patient care based on outcomes. Based on Halvorson's experience with Kaiser as a prototype, one can look at this model optimistically. However, health care in this country is not likely to evolve into a system of large Kaisers, so the challenge will be in the integration of the various systems of care into linked and interactive models. Despite the optimism, we are a long way from linked and integrated systems.
Halvorson spends some time discussing who should drive these major changes. Four entities currently pay for health care: consumers, employers, insurers, and the government. He believes that consumers have little leverage and little clout and are least equipped to initiate change.
Furthermore, our system of deductibles makes consumers immune to costs once the deductible level is passed. Employers have a larger say in change because they can direct health care plans to cover and reimburse differently and because increasingly large employers are self-insured.
But insurers and health plans should play the major role in leading these innovative changes because they have great leverage and a vested interest. The continued inexorable rise in insurance costs threatens what he calls the “risk pool death spiral” where increasing costs drive the healthiest subscribers out of the insurance market.
The government through Medicare and Medicaid can influence markets by setting prices or global budgets—and while useful in some instances, will delay reengineering of delivery systems and can impede innovation.
Halvorson is most hopeful about the Medicare advantage system which is already in place and seems to work well. Thirty percent of Medicare patients are already enrolled, and it pays a flat rate for each covered life and is a prototype of a packaged payment system.
The book is loaded with relevant facts and figures about both the current and proposed health care systems. It is well but not extensively referenced and some of the figures are difficult to read and are not referenced sufficiently for the reader to explore original source material.
That said, though, Don't Let Healthcare Bankrupt America is a soundly crafted text by one of the country's premier health care executives. It is optimistic about our capacity to improve health care and reduce costs—not through political rhetoric, but rather, by systematic reengineering of our health care reimbursement system.
This reader finished the book believing that such a fix might actually be possible.
DEC. 2013, CREATESPACE, ISBN: 1493570277, AVAILABLE IN PAPERBACK AND KINDLE EDITIONS
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