One reason business runs into a brick wall when trying to change the health care game

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.

What gives?

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.

Comments

[Kathleen Patton]

Jay,
I'm game. Let's envision.
During the dark and stormy nights of residency, I would ask myself, "Who's going to die first and what am I going to do about it." Plan for the worst case scenario, take steps to make it better. Maybe the future of medical care will not be as dystopian as we fear. Maybe because we are primary care, we don't want to think of the future without primary care.
Most would agree that the current non-system resembles a badly sutured Frankenstein's monster on the set of the film, Brazil.
So let's engage in speculation. Seriously. We need to start with some assumptions. I'll go first, beginning with bare bones.

Given:
—People will need medical/health care.
—Healthcare will need to be paid for.
—Health coverage is not healthcare, rather, one method of paying for healthcare

Your move.
Gordon, you in?

[Jay Parkinson]

That's absolutely correct Gordon and Kathleen. It's all about small pockets.

However, I'd like to envision what primary care looks like without primary care doctors running the show. I think that's the inevitable future for the next few decades/generations. So what would it look like? We're going to have to deal with this soon at the systemic level. Hmmmm.....

[Kathleen Patton]

I believe most of the movements in the course of human history began with 'small pockets' of change.

[L Gordon Moore]

Im totally with you on that Jay.

The renaissance of primary care can be found in the little pockets we see now. What you developed in Brooklyn with Hello Health, folks like Aaron Blackledge with CarePractice in SF, what Scott Shreeve is cooking up with Crossover Health in Orange County CA, Natalie Hodge with Personal Medicine and hundreds of colleagues who have opened their own ideal medical practices (see www.IMPMap.com remember to zoom in).

Were out here, were doing it, we have brave residents like Thuc Huynh planning to move fast into the next generation of primary care rather than try and shore up a broken system.

Well small but growing. Well show the way and encourage others to join our ranks in reinventing and reinvigorating primary care.
Gordon

[Jay Parkinson]

Nice one Gordon. My only beef is this...when boomers retire, primary care dies. We need a 75% primary care/25% specialist workforce to make this happen in scale. With less than 5% of docs going into primary care for the past decade, with no signs of reversal in the millennials, we're 2 decades behind having a highly functioning primary care heavy system. And when Boomers retire or die, well, so does primary care.

That's not to say this isn't a good idea. It most certainly is...it'll just always be in little random pockets of America.

[L Gordon Moore]

True, true.
Ive got lots of energy but for now Ill stick to trying to fix health care. Maybe we can team up and you work on the public health federal subsidies for bad foods, etc.
Gordon

[Richard]

I really enjoyed your amusing post!

In the end, however, the US needs to tackle the root causes of sickness: bad food, lack of exercise and stress. Reduce demand, reduce costs...