HHS Secretary Says U.S. Is Laying Footing for Healthcare Efficiencies
The Milwaukee Journal Sentinel (Wisconsin)
March 5, 2007
Throughout the economy, the practices are commonplace: Providing information on prices and quality. Using information technology to become more efficient. Rewarding good performance.
In healthcare, they come close to being radical proposals.
Those seemingly simple ideas are the cornerstones of a nascent initiative by the federal government to remake the $2 trillion healthcare system. The goal is to make the healthcare system more efficient by changing the way Medicare and private health plans pay for healthcare and by changing the way people shop for it.
Michael Leavitt, secretary of the U.S. Department of Health and Human Services, is scheduled to visit Milwaukee on Wednesday to promote that change and what is being called the "Value-Driven Health Care Initiative."
The initiative was launched last year. But, in some ways, it merely gives a name to a series of demonstration projects in recent years backed by the federal government.
"We have embarked on a revolutionary change," said Barry Straube, the chief medical officer of the federal Centers for Medicare and Medicaid Services.
The demonstration projects, including several in Wisconsin, are designed to lay the groundwork for Medicare to reward hospitals and doctors for providing better quality care at a lower cost. That pay-for-performance concept is not how the system works now.
"Medicare has tended to pay for quantity, not quality," Straube said. "And we are trying to change that."
Price, Quality Not Same
Under the current system, hospitals and doctors basically are paid more when they do more—even if care is not needed or is of low quality.
The result is the United States spends more than any country in the world on healthcare yet doesn't rank in the top 10 based on the overall quality of care provided, said Straube, who also is director of the Office of Clinical Standards and Quality at the Centers for Medicare and Medicaid Services.
By one estimate, as much as 30% of healthcare spending doesn't result in better outcomes for patients. Further, the cost and quality of healthcare can vary wildly throughout the healthcare system.
Average spending for Medicare beneficiaries, for instance, ranges from about $3,000 to $8,000 a year, depending on the state in which they live. Yet the states with the highest costs generally have the worst outcomes. Wisconsin ranks among the most efficient states based on Medicare's data on quality and spending.
Medicare is the country's largest health plan, covering more than 42 million people. That gives it considerable leverage—and the federal government wants to use that leverage to help make the healthcare system work better.
The effort is in the earliest stages. But several organizations in Wisconsin—including Aurora Health Care, the Marshfield Clinic and the Wisconsin Collaborative on Healthcare Quality—are participating in the first demonstration projects designed to learn how to measure and reward quality and efficiency.
Those efforts are part of the Value-Driven Health Care Initiative that Leavitt is scheduled to promote this week during an event at Bucyrus International's headquarters in South Milwaukee.
The event is being sponsored by the Business Health Care Group, a coalition founded to help slow the rise in healthcare costs in southeastern Wisconsin, and the Wisconsin Collaborative on Healthcare Quality, a group of healthcare systems and large multi-specialty practices founded to provide better information on quality and prices. The initiatives support similar efforts by private health plans and employers.
Bucyrus is one of seven companies and two healthcare systems in Wisconsin that have endorsed the initiative. The other companies are Badger Meter Inc., Northwestern Mutual Life Insurance Co., Robert W. Baird & Co., Marshall & Ilsley Corp., Unlimited Services of Wisconsin Inc. and Rockwell Automation Inc. Aurora and ProHealth Care also have backed the initiative.
They are among more than 100 corporations—among them Exxon Mobil Corp., IBM Corp. and General Electric Co.—that support the initiative's goals.
Workers Need Information
Barbara Stephens, vice president of human resources of Bucyrus International, for example, wants the company's workers to have information on costs and quality and to be more involved in making decisions about their healthcare.
"We know that it's critical to our survival as a company to control our healthcare costs," Stephens said.
The catch is all this sounds a lot easier than it is. Medicare and health plans first must figure out how to measure quality before they can reward hospitals and doctors for providing better care. They have to figure out how to structure the incentives. And they have to figure out how to get people to use information on quality and such when picking a doctor or hospital.
"We are focusing on progress, not perfection," said Dianne Kiehl, executive director of the Business Health Care Group. "We know it is a long and arduous process. This is not something that can get established in a year."
But the federal government and private health plans have begun laying the groundwork. And Straube said the changes could begin to be seen as early as 2010 or 2011.
The federal government, for instance, is posting information on some quality measures for hospitals on Medicare's Web site. It plans to add more information each year. And hospitals that don't provide the information will be docked 2% on what they bill Medicare. Publicly disclosing quality information alone has led to quality improvements.
Doctors to Get Bonuses
Medicare also will begin paying doctors 1.5% more if they provide quality information.
"The pace is going to pick up," said Chris Queram, chief executive of the Wisconsin Collaborative for Healthcare Quality.
Several organizations in Wisconsin will have a role in that.
"Wisconsin is ground zero for a lot of the initiatives he (Leavitt) will be talking about," Queram said.
