Recently I was asked: “Why do we spend the most for healthcare and get less than similar nations?”
Lots of reasons, but the main culprit is uncontrolled Fee-for-Service (FFS) payment. Except for some kinds of managed care, American healthcare gets paid for by the piece. Every visit, procedure, test and medication is assigned a unique code. Government and private payers can control or negotiate the price per code, especially for the more expensive pieces such as hospital visits. But there aren’t effective controls on how many pieces a provider can do. So the more pieces you do, the more you get paid. It shouldn’t be surprising, then, that study after study suggests that about one-third of the tests, procedures, physician visits, hospital stays etc. that make up American medicine are unnecessary.
A look around the world shows that the other developed countries are doing one or more of three things to control costs. (1) The government owns and runs the hospitals and employs the caregivers. (2) The government doesn’t own or run everything, but it is the single payer. It uses its clout to negotiate fee schedules and volume. (3) There are multiple payers and independent providers, and there may be FFS for some services, but the government fiercely regulates prices and volume.
Of course the US doesn’t do any of those; that’s why costs are so high. But why is quality so low? We’re at or near the bottom in every international study that looks at comparative performance on quality measures such as life expectancy, safety, effectiveness, accessibility, and happiness with the care experience. Here too, the major culprit is FFS. It’s very lucrative to fix people up after they are sick, and in the US — but not elsewhere — preventive treatment gets paid at much lower rates, if at all. For example, under FFS, nobody gets paid for making sure that patients get the right medications after they leave the hospital. So lots of them don’t. That often leads directly to hospital readmissions. You get what you pay for.
So why not try paying healthcare providers a different way? Why not pay them so that it’s in their interest to keep people healthy? That’s the premise of the “Value Based Purchasing” (VBP) programs that both government and private payers have launched during this decade. These programs reward doctors and hospitals for finding ways to save money, while at the same time improving care delivery and patients’ satisfaction. For years, healthcare systems like Kaiser Permanente in California, the Geisinger Clinic in Pennsylvania, Intermountain Healthcare in Utah and many others have shown that this works. Caregivers do in fact save money, deliver better care and make patients happier when they are paid to do so.
How much impact have these VBP programs had so far? Most reimbursement outside of managed care is still FFS. But almost all doctors and hospitals now have at least some of their compensation tied up in VBP programs that reward or punish them for their performance against payer-set goals for reducing costs, getting better results (fewer deaths and complications), and pleasing more patients. And meeting those goals has meant that doctors and hospitals must learn to do something they were never trained to do: “Population Health Management.” This means finding out which of their patients have or are most at risk for serious illness and reaching out to them before they need to go to the hospital or have expensive surgery. The object is to head off intensive treatment through preventive testing and care, and by helping patients change their lifestyles, take their medicine, and get needed physical or behavioral therapy.
But population health management requires special expertise. Many doctors and hospitals need help in getting data about their population together and in understanding what it means and what to do about it. So GeoDimensional Decision Group has developed and just launched VBPMaster™, an instant, affordable Value Based Purchasing subscription service that provides Population Health Management expertise for a low monthly fee.
We’re proud and excited and ready to help change American healthcare. Find out more here!