Attacking the Crux of the Health Care Cost Crisis

Mr. Montgomery is a retired primary care practice administrator and can be reached at jamontgomery44@gmail.com or (937) 547-0588.

It is now 14 years since the publication of the Institute of Medicine’s Crossing the Quality Chasm¹, with precious little evidence that the barriers to quality are in retreat. Costs continue to rise and our national health outcomes continue to diminish. In the midst of this period, Drs. Berwick and Hackbarth have attempted to categorize and estimate the waste (midpoint $910 billion annually²) in our healthcare system. The key factor driving waste within the delivery system is the slow adoption of new medical knowledge that could improve outcomes, and reduce risks and (importantly) costs. This is the front line in the battle defining our healthcare future, for it is here that medical innovation confronts the stiff resistance to change that is the human condition. Sharing the savings that comes from evidence-based care that promises better outcomes and less waste is an approach that aligns the interest of providers, payers and patients. In addition to sharing cost savings generally, specific cost saving sharing arrangements for the adoption of new medical knowledge best assures that those who will drive our healthcare future will be those with the strongest innovative organizations.

When necessity for change comes face to face with human nature, change can be frustratingly slow and very costly. There can be little doubt that our healthcare system must find ways to reduce costs or invite financial ruin. At just under 20 percent of GDP, healthcare threatens to unhinge our entire economy. And while we have enjoyed some years of quite moderate cost increases, the reality is that very little has been done to alter the structures that drive health costs.

Drs. Berwick and Hackbarth suggested that at the midpoint of the year 2011, the cost of waste in our health care system was in the range of $910 billion.² Centers for Medicare & Medicaid Services (CMS) has tagged total 2013 health care spending at $2.9 trillion.² By these estimates, waste represents fully one-third of healthcare expenditures. You would think that when one of every three dollars spent is simply thrown away in an enterprise that represents nearly 20% of our GDP that someone would have called for a war on waste. 

Berwick and Hackbarth recognize that the sources of waste are too disparate to address comprehensively (and that doing so could have significant adverse effects on our economy), suggesting instead an outline of what and where waste is found in our healthcare system so it can be attacked from many fronts. For our purposes, we are going to focus attention on the $355 billion (midpoint estimate) of the annual waste they identify in the categories “Failure of Care Delivery”, “Failures of Care Coordination”, and “Overtreatment”.² We can lump these together into something we might call the “Cost of Non-Evidence-Based Care” — the costs of not doing what the evidence dictates. Limiting our focus to the seemingly simple issue of actualizing current established medical knowledge and practice should reveal any structural impediments in our healthcare system.

Why, after all, would healthcare professionals not consistently offer state-of-the-art care?  A core ethical commitment of all physicians is contained in the principle of beneficence, i.e., always taking actions most beneficial to the patient. We might also recognize it as a commitment to the practice of evidence-based care. Dr. Berwick was one of the spokespersons for the Committee on the Quality of Health Care in America, which issued Crossing the Quality Chasm in 2001.¹ This publication outlined a host of provider behaviors adversely impacting patient well being. Indeed, the Committee found that on average, it took 17 years for new advances in medical care to gain widespread adoption, certainly a very weak commitment to that medical ethics centerpiece, beneficence.

It is not acceptable that new medical knowledge, together with its benefits of improved outcomes with fewer risks and less cost, is not fast-tracked across the healthcare delivery system. Who does not want better outcomes, fewer patient risks, and reduced costs? Well, according to the experts in behavioral change, the answer is almost all of us, save a very small minority identified as innovators.

Everett Rodgers explained how change is experienced in his 1962 book, Diffusion of Innovations.³ The fruits of the innovators are picked up by a small cadre of early adopters, then by the great bulwark (68%) of early and late majorities, and then finally, by the (16%) laggards, to complete the bell curve of adoption. If we as a nation want and need the benefits of new medical knowledge and practice far before the current 17-year standard, we obviously will need to introduce some very disruptive elements. 

In addition to our natural resistance to change, healthcare in the United States faces a major structural contradiction that impacts change. A system that is based in fee-for-service reimbursement has strong financial reasons to resist the adoption of most new medical knowledge. To expect physicians to warmly embrace new knowledge that will require the loss of considerable income while new knowledge is incorporated into practice and proficiency achieved, staff trained in new procedures, and new supplies and equipment purchased (along with the early obsolescence of undepreciated equipment) is to fly in the face of self interest. This contradiction screams for an investment solution more powerful than self-interest and our natural resistance to change.

The whistleblower experience offers valuable conceptual and experiential guidance. The Department of Health and Human Services’ whistleblower program dramatically increased the financial reward in 2013 to those uncovering waste and fraud to 15% of the recovered money, capped at $9.9 million.⁴ We are conditioned to think of financial rewards in terms of generating new revenue, but money is money, and reducing the huge waste in our healthcare system saves us money we would otherwise simply throw away. This concept is already embodied in a number of new reimbursement programs, (many) spurred on by the Affordable Care Act. If you save money that would otherwise be spent, following the whistleblower reward logic, you should be entitled to some of that savings. The question then becomes, how much of a reward do we need to offer to effect change? Even the most generous of existing pay-for-performance programs fail to offer more than a 50% share of the savings. If the goal is to effect widespread change so that patients can receive better care so that you can save money down the road, a larger incentive for those doing the work of change is clearly going to more advantageous in the long run.

UnitedHealthcare’s experience and goals are instructive of where things stand and where they are going. The following is from www.uhc.com:

What is UnitedHealthcare’s commitment to payment reform? 

Currently, more than $27 billion, or over 25 percent, of our total network health care spend is tied to performance-based payments, where provider incentives and annual inflators must be earned, not automatically given. We expect this to grow to more than $65 billion by 2018. 

Today, all fully insured and most self-funded customers already participate in value-based payments. To maximize the customer benefits, all customers will participate in value-based contracting arrangements as of January 2015.  

[From Value-Based Incentive Programs, 2013⁵]

While there are many different performance-based incentives in play at present, it seems reasonable to postulate that programs that require shifting risk to providers while offering sharing arrangements of half or less of the achieved savings will not capture the imaginations and energies of physicians (and their staff) on the front lines of delivering care.  If we are to change the providers of care into insatiable cost-finding crusaders (and we must), we need offer a real incentive.

Transradial percutaneous coronary intervention (PCI) in North America offers a real-world experience with failed adoption that highlights the power of the obstacles to change. If not for the renewed efforts over the past 7 years to bring greater visibility to the procedural advantages of radial access, it might well have receded into the medical annals of “what could have been”. According to the current medical literature, radial percutaneous coronary intervention (PCI) provides an average cost savings of approximately $800 versus conventional femoral PCI, and comes with better outcomes, fewer complications, and less risk of future complications, and it receives high scores in terms of patient satisfaction.^6,7  The majority of the costs savings comes with the reduction of the length of stay (LOS). With approximately 600,000 PCI procedures performed in the U.S. annually, the adoption of the radial PCI represents a potential savings of $480 million annually.  Despite all of these advantages and 20+ years of experience, only 22-24% of PCI procedures (as reported by the American College of Cardiology’s National Cardiovascular Data Registry) in the U.S. currently utilize the transradial approach. Here we are, 6 years beyond the 17-year average adoption cycle determined by the Institute of Medicine, and only now are we beginning to attract the attention of what Dr. Rogers described as the “early majority” adopters. In contrast, over 80% of PCI procedures in France⁸ utilized the radial approach in 2012, and over 50% in Canada and the United Kingdom.^9,10 Attempting to explain this large gap in adoption between the U.S. and three of the most developed nationalized healthcare systems brings us to the second serious structural obstacle to adopting new health care knowledge in the United States.  

The adoption of the chronic care model developed by Dr. Edward Wagner¹¹ has enabled patients to manage their chronic illness to huge personal advantage and reduced cost.  While the advantages of teaching patients to manage their illness are dramatic, the advantages to the physicians are not so obvious. Unmanaged diabetes leads to many physician visits, and many medical complications and their attendant costs. With the demonstration of the effectiveness of the chronic care model, we are now expecting physicians to embrace this new approach to treating the broad swath of chronic illnesses.  Staff needs to be trained and new processes must be implemented to monitor patient progress. And the benefit of all this training is a patient population that requires less physician care. To physicians who are paid only for services they provide to patients, spending money to reduce your future income is hardly a strong incentive to change. It would, however, be of obvious benefit if physicians were paid for costs avoided.  

Indeed the adoption of new knowledge providing better outcomes, fewer risks, and less cost must be powerfully influenced by the promise of sharing substantially in the costs avoided. A great deal of energy (and cost) has gone into the design and new programs (e.g., accountable care organizations, patient-centered medical homes) providing financial incentives to providers. A simpler, quicker, and less costly way to achieve the goals of these (and like) programs would simply be to introduce shared savings arrangements into all provider agreements. It is possible to unleash the imagination and energy of the providers of care through a shared savings program. Such a program would maintain the focus on finding new and better ways to achieve clinical goals while reducing costs. As a part of shared savings, payers might commit to sharing 75% of the savings from new medical knowledge until there is a 25% adoption (with step-down sharing to follow). The $355 billion in waste Drs. Berwick and Hackbarth directly attributed to the delivery of care provides a powerful target for immediate attention and action.  

Yes, implementation of a widespread, shared savings incentive would not be immune to human nature. We would still see the innovators leading the way, with the early adopters close behind. The big difference, this time, is that those who reorient their delivery system to focus on ways to reduce costs while increasing outcomes and patient satisfaction will have a whole lot more money to build out their vision. And the laggards… will earn what they deserve.

Acknowledgement: The author wishes to recognize the assistance of Gary Clifton, Director of Marketing for Terumo Medical Corporation, in understanding the forces that have influenced adoption of the transradial PCI in recent years.

References

1. Committee on Quality of Health Care In America. Institute of Medicine. Crossing the Quality Chasm: A New Health System for the 21st Century. March 2001. Available online at https://iom.nationalacademies.org/~/media/Files/Report%20Files/2001/Crossing-the-Quality-Chasm/Quality%20Chasm%202001%20%20report%20brief.pdf. Accessed August 21, 2015.
2. Berwick DM, Hackbarth AD. Eliminating waste in US health care. JAMA. 2012 Apr 11;307(14):1513-6. doi: 10.1001/jama.2012.362.
3. Rogers E. Diffusion of Innovations. 1st, 3rd, and 4th eds. New York City, New York: The Free Press; 1962, 1983, and 1995.
4. Medicare Program; Requirements for the Medicare Incentive Reward Program and Provider Enrollment, 78 Fed. Reg. 25,013 (proposed Apr. 29, 2013) (to be codified at 42 C.F.R. pts. 405, 420, 424, 498). Available online at:  https://www.gpo.gov/fdsys/pkg/FR-2013-04-29/pdf/2013-09991.pdf. Accessed August 21, 2015.
5. UnitedHealthcare. Value-Based Incentive Programs. December 2013. Available online at: https://www.uhc.com/content/dam/uhcdotcom/en/Employers/PDF/reform-aco-external-faq-ASO-value-based-incentive-programs.pdf. Accessed August 21, 2015.
6. Amin AP, House JA, Safley DM, Chhatriwalla AK, Giersiefen H, Bremer A, et al. Costs of transradial percutaneous coronary intervention. JACC Cardiovasc Interv. 2013 Aug;6(8):827-34. doi: 10.1016/j.jcin.2013.04.014.
7. Mamas MA, Ratib K, Routledge H, Neyses L, Fraser DG, de Belder M, et al; British Cardiovascular Intervention Society and the National Institute for Cardiovascular Outcomes Research. Influence of arterial access site selection on outcomes in primary percutaneous coronary intervention: are the results of randomized trials achievable in clinical practice? JACC Cardiovasc Interv. 2013 Jul;6(7):698-706. doi: 10.1016/j.jcin.2013.03.011.
8. Louvard Y, Lefevre T, Benamer H, Monsegu J, Faurie B. Coronary Interventional Cardiology and Transradial Approach in France. Abstracts from AIM RADIAL 2012: 1st Advanced International Masterclass. J Invasive Cardiol. 2012 Sept; 24(9). Available online at https://www.invasivecardiology.com/articles/abstracts-aim-radial-2012-1st-advanced-international-masterclass. Accessed August 21, 2015.
9. Caputo RP, Tremmel JA, Rao S, Gilchrist IC, Pyne C, Pancholy S, Frasier D, Gulati R, Skelding K, Bertrand O, Patel T.  Transradial arterial access for coronary and peripheral procedures: executive summary by the Transradial Committee of the SCAI. Catheter Cardiovasc Interv. 2011 Nov 15;78(6):823-39. doi: 10.1002/ccd.23052.
10. Ratib K, Mamas MA, Routledge HC, Ludman PF, Fraser D, Nolan J. Influence of access site choice on incidence of neurologic complications after percutaneous coronary intervention. Am Heart J. 2013 Mar;165(3):317-24. doi: 10.1016/j.ahj.2012.10.015.
11. Wagner EH, Austin BT, Davis C, et al. Improving chronic illness care: translating evidence into action. Health Aff (Millwood). 2001 Nov-Dec; 20(6): 64-78.