I've been in it so long I forget how difficult it is for people outside the industry to understand the financial drivers in health care.
Let's take the case of Brave Employer. Tired of costs that keep going up in spite of Health Plan promises regarding medical management, Brave Employer's trust of Health Plan pitches has waned.
Brave Employer has learned from his buddy Paul Grundy MD at IBM that primary care if done well will reduce hospitalization rates, reduce emergency room use, and all while improving outcomes and making patients happier.
Brave Employer thinks "Where can I get me some of that good primary care? Oh, I bet Vertically Integrated Hospital System has some! I get the idea of vertical integration and in business it's a good thing (so it must be good in health care too!)."
Brave Employer reaches out to Vertically Integrated Hospital System (VIHS) with its primary care practices, specialists, outpatient departments and hospital beds, XRay machines, MRI machines, etc.
VIHS is totally jazzed and takes the deal. Their margin goes up a bit but after a few years there's no real bend in the cost or quality curves and everything is still pretty much the same.
You need to understand that and health savings have to come out of the health delivery system. The good news is that we in the U.S. are incredibly bloated with unnecessary testing, preventable hospitalization, avoidable emergency room utilization. When we do a good job at primary care we end up with fewer people in the hospitals, fewer emergency room visits etc. People are healthier, people are happier with their experience in health care, and costs are much lower.
But wait! VIHS has empty hospital beds! Each unnecessary hospitalization lost the hospital tens of thousands of dollars!
Oh no! VIHS CFO is pulling his hair out! Every person who had easy access to their PCP instead of going to emergency cost the hospital a $4000-$9000 claim!
Fewer unnecessary MRIs? Avoiding unnecessary CT scans? No way!!! VIHS makes great margin on those things, to say nothing of their Centers of (revenue) Excellence.
VIHS wins if the status quo is maintained. VIHS loses if primary care does a really good job.
In the 1990s VIHS saw the other hospital systems buying up primary care practices and got into the game too: "We need them as a funnel - gotta keep our beds and operating rooms full. So what if we lose money on primary care - we make it up 8:1 in the hospital and on ancillaries!"
Just about the only beef I have with Elliot Fisher from Dartmouth (brilliant guy and love his work - he, Jack Wennberg and team have published scads documenting what I'm describing here) is that he says 'accountable care organizations' should be formed around HOSPITALS! AAAAH! They're the ones who are most likely to try & shut down any attempt to beef up primary care!
So what is Brave Employer to do?
1: Stop expecting hospital systems to gore their own ox.
2: Work with independent primary care practices & practice networks that are not tied to a system that has no interest in changing the game.
The game is afoot. There have been nice pilot projects demonstrating how practices can delivery great primary care. Now we see early forays into developing clinically integrated primary care networks that can be real game-changes: high quality, better outcomes, costs go down. No mixed incentives.
Colleagues: you can come together legally if you are 'clinically integrated.' This is not so hard. We did that as part of our IMP project - using Wasson's HowsYourHealth.org tool we had a common data set, we learned on conference calls how to improve outcomes and even though it was a grant funded study we were clinically integrated. It's not as hard as some make it sound. You can do this.