1. Rethinking Health Care: Costs of Care Models: Is there a solution? Massachusetts Medical Society State of the State October 23, 2008 Elliott Fisher, MD, MPH The Dartmouth Institute for Health Policy and Clinical Practice

2. Houston, we’ve got a problem… The usual suspects: Uneven quality Rising costs Declining access to care Some looming challenges: Collapse of primary care Credibility of academic medicine Loss of professional authority of physicians A window of opportunity Health care reform debate set to begin What role will physicians play? Can Massachusetts lead the way?

3. Candidate proposals Coverage reform – radically different proposals McCain Obama Coverage Reform Aim for Universal coverage No Yes Requirements to have coverage No Children only Employer contribution No Yes Changes to employer benefit tax exemption Yes No Regulation of insurance markets No Yes Delivery System Reform Health IT Yes Yes Transparency Yes Yes Malpractice reform Yes Yes Prevention Yes Yes Pay-for-performance Yes Yes Comparative effectiveness/ quality measurement Yes Yes

4. Candidate proposals Delivery system reform – similar, traditional approaches McCain Obama Coverage Reform Aim for Universal coverage No Yes Requirements to have coverage No Children only Employer contribution No Yes Changes to employer benefit tax exemption Yes No Regulation of insurance markets No Yes Delivery System Reform Health IT Yes Yes Transparency Yes Yes Malpractice reform Yes Yes Prevention Yes Yes Pay-for-performance Yes Yes Comparative effectiveness/ quality measurement Yes Yes

6. Rethinking health care Every system is perfectly designed to get the results that it achieves. Paul Batalden Insanity: doing the same thing day after day and expecting different results. Albert Einstein

7. Per-capita Medicare spending 1990 Boston, San Francisco and East-Long Island -- $4000 $8,363 1990 1995 2000 2005 East Long Island San Francisco Boston $10,827 $9,544

8. Per-capita Medicare spending 2006 Boston, San Francisco and East-Long Island -- $2500 spread $8,363 1990 1995 2000 2005 East Long Island San Francisco Boston $10,827 $9,544

9. What do high spending regions get? Use Rates in High vs Low 1.00 1.5 2.0 0.5 2.5 Reperfusion in 12 hours (Heart attack) Effective Care: technical quality Ratio of rate in high spending to low spending regions Aspirin at admission (Heart attack) Mammogram, Women 65-69 Pap Smear, Women 65+ Pneumococcal Immunization (ever) Total Hip Replacement Total Knee Replacement Back Surgery Preference Sensitive Care: elective surgery CABG following heart attack Evaluation and Management (visits) Imaging Diagnostic Tests Supply sensitive services: often avoidable care Inpatient Days in ICU or CCU Total Inpatient Days

10. What do high spending regions get? The paradox of plenty (1) Fisher et al. Ann Intern Med: 2003; 138: 273-298 (2) Baicker et al. Health Affairs web exclusives, October 7, 2004 (3) Fisher et al. Health Affairs, web exclusives, Nov 16, 2005 (4) Skinner et al. Health Affairs web exclusives, Feb 7, 2006 (5) Sirovich et al Ann Intern Med: 2006; 144: 641-649 (6) Fowler et al. JAMA: 299: 2406-2412 If all U.S. regions could adopt practice patterns of most conservative fifth of US, Medicare spending would decline by 30%

11. What’s going on? Research on causes of regional variations (1) Pritchard et al. J Am Geriatric Society; 46:1242-1250, 199 (2) Anthony et al, under review (3) Kessler et al. Quarterly Journal of Medicine 1996;111(2):353-90 (4) Baicker, Chandra, NBER Working Paper W10709 (5) Fisher et al. Ann Intern Med: 2003; 138: 273-298 (6) Sirovich et al. Archives of Internal Medicine. 165(19):2252-6. (7) Sirovich et al, J Gen Intern Med. 2006;21(Suppl4):164.

12. What’s going on? The key role of local context – and capacity – in the “gray areas” Consequence: reasonable individual clinical and local decisions lead, in aggregate, to higher utilization rates, greater costs -- and inadvertently -- worse outcomes The more complicated care becomes, the more likely mistakes are to occur. Hospitals are dangerous places if you don’t need to be there. Physician - Patient Encounter Clinical Evidence Professionalism Clinical evidence is an important -- but limited -- influence on clinical decision-making. Physicians practice within a local organizational context that profoundly influences their decision-making. Payment system ensures that existing capacity is fully utilized. Physicians adapt to available resources: more referrals, more admissions, more ICU stays Policy Environment (e.g. payment system) Local Organizational Context (e.g. capacity - culture)

13. Just the gray areas?

16. Thoughts on moving forward Address the underlying causes of rising costs, poor quality Failure to recognize key role of local system (capacity, local social norms) as a driver of cost and quality Assumption that more is better Equating less care with rationing Payment system that rewards more care, increased capacity, high margin treatments, entrepreneurial behavior Foster development of local organizations (delivery systems) accountable for overall cost and quality of care Comparative effectiveness research Balanced information on risks / benefits Comprehensive performance measures Reform of payment system (long term) Shared savings as interim approach Underlying cause General Approach

23. Shared savings How much money is on the table? Lots $8,363 $10,827 $9,544 1990 1995 2000 2005 East Long Island San Francisco Boston

26. Moving forward Creating virtual integrated systems Implementation Year Support coordination & integration among physician groups Performance measurement pathway to support quality improvement, shared savings and HIT Shared savings payments for qualifying ACOs Shared savings payments to ACOs that meet quality benchmarks (progressively increasing performance standards, based on above) 1 2 4 3 5 Provide list of MDs within network Report on network quality using admin data (eg AQA), replacing PQRI Report on care coordination, access using survey data (eg CAHPS) Registries for expanding list of conditions Health outcome measures for conditions included in the registry (e.g. functional status) Cost-measures for specific conditions included in the registry

27. A riddle for would-be health care reformers: Q: How is a kilowatt-hour of electricity like a day in the hospital? A: Nobody wants either