On a typical night in the emergency room, a patient shows up short of breath, suffering from emphysema or heart failure or maybe both, as well as diabetes and high blood pressure. Doctors and nurses administer inhalers to ease his breathing and diuretics to take off excess fluid, and admit him to the hospital. Over the next few days, interns and residents furiously adjust his medications and fix his diet. He is discharged with a stack of prescriptions. A week or two later, chances are good he’ll be right back in the emergency room.
A 2009 study in The New England Journal of Medicine showed that among Medicare patients, 20 percent were re-admitted to the hospital within 30 days of being discharged. We call these chronically ill patients frequent fliers.
What goes wrong? Just about everything. It is estimated that up to 40 percent of prescriptions go unfilled, and even when they are filled, patients often fail to take the medications as prescribed. Before blaming the patients, remember that many have multiple conditions and juggle 5 or 15 pills a day. Regulating a diet is difficult even for well-educated and motivated individuals. The typical Medicare patient sees 7 doctors a year; those with five or six chronic conditions see up to 10. They might forget to make an appointment, or be unable to keep it. If they do see a doctor, they probably have only 15 minutes to cram in all the issues they need to discuss.
With one-third of total health care expenditures spent on hospital care and about 20 percent spent on physician services and specialists each year, this is where the big money is — and where it can be saved. Although the United States spends more than $8,000 per person per year for health care, that money is not evenly distributed. Half the population — mostly young people and healthy adults — consumes just 3 percent of costs, while the sickest 10 percent consumes 64 percent. Real cost control requires changing the way we care for these high-cost patients with multiple chronic conditions. In particular, it requires preventing the avoidable complications that land them in emergency rooms and hospitals again and again.
Controlling costs can do more than simply save money, it can also improve the quality of medical care and these patients’ lives. Fortunately, or unfortunately, there is plenty of room for improvement.
If you’ve followed the debate over health care reform, then you’ve probably heard President Obama or some other reformer extol the importance of “integrating” care. This involves teams of doctors, nurses and pharmacists working with care coordinators to help manage patients. The team forges a personal, face-to-face relationship with the patient and the caregiver, and develops an individual plan for each patient. They don’t wait for patients to call with problems or come in to emergency rooms. Instead they reach out to patients, sometimes daily, to monitor early indicators of trouble like weight gain, blood pressure or blood glucose levels. Some of the groups offer home visits and pre-package their patients’ medications. Some create clinics staffed by expert nurses who specialize in recurrent problems, like wound care for diabetics. In other words, they offer many more services than doctors and hospitals typically do, and more than are typically covered by standard fee-for-service insurance plans and Medicare.
This is “high touch medicine” or “concierge medicine,” not for rich people who can afford it, but for chronically ill patients who need it.
If high touch medicine offers additional monitoring and services, how can it save money? Arnold Milstein, now a Stanford professor, identified physician groups that were above average in quality but treated patients for 15 to 20 percent less money than average.
How did they do it? By preventing emergency room visits and subsequent hospitalizations. Avoiding just one hospitalization for shortness of breath or a gangrenous foot can pay for a lot of home monitoring and specialized clinic visits. Additional savings come from referring patients to carefully selected specialists, ones who don’t order a battery of tests and procedures for every patient. Concentrating patients with a few specialists also saves money by reducing miscommunication and errors when patients are sent from practice to practice.
High touch groups like this already exist in some parts of the country. CareMore in Cerritos, Calif., Leon Medical Centers in Miami, the Group Health Cooperative in Seattle and a program in Maryland working with around 50 primary care practices are just some of the early adopters. Their numbers have increased thanks to the Affordable Care Act. To really save money though, this model must become the norm.
There is no reliable estimate of the systemwide savings if these practices were to become standard. But if we use just one third of Dr. Milstein’s low estimate, saving 5 percent of expenditures on the top 10 percent of health care spenders, the savings would exceed $80 billion a year. That’s more than seven times the Congressional Budget Office’s estimate for the savings from medical malpractice reform, and more than 16 times the potential savings generated by importing brand name drugs from abroad.
Although these groups have managed to make high touch medicine work, the majority of doctors and hospitals haven’t. Extending high touch medicine from these committed pioneers to average practices requires helping doctors and hospitals redesign the way they deliver care, and this can happen only by changing how they are paid. It is impossible to deliver high touch medicine in a fee-for-service system that emphasizes quantity over quality. In fact, most specialists and hospitals lose money if they keep the chronically ill healthy.
To change these incentives, we must introduce “bundling” — which, as the name implies, means paying for a patient’s entire care episode rather than every single test and treatment he gets. Imagine, for example, a patient who comes to the hospital for a hip replacement. That patient and his insurer (whether it’s Aetna or Medicare) will be billed separately for the X-rays, laboratory tests, the surgeon’s fee, the anesthesiologist’s fee, the rehabilitation services, the hospital bill and the visits to the doctor after he’s discharged.
In a bundled payment system, all the bills are rolled into one standard hip-replacement charge. The idea is to force all of a patient’s care providers to work together. They have a strong incentive to eliminate unnecessary tests and treatments and use less expensive implants, drugs and devices that don’t compromise quality, and to prevent infections and other complications that could land the patient back in the hospital.
The Affordable Care Act requires Medicare to run pilot programs with bundled payments, and recommends expanding the program to the whole country after Jan. 1, 2016, if doing so would reduce costs or improve quality. But why wait? For two decades Medicare has been experimenting with bundled payments. Since 2009, Medicare has been using the Acute Care Episode bundled payment program to cover 37 cardiovascular and orthopedic procedures. While there has not been a definitive evaluation, preliminary data suggest savings of up to 10 percent and improved quality of care. Unfortunately, the program does not cover rehabilitation and other post-discharge services. Worse, it is voluntary and only a few hospitals are participating. To herald the shift away from fee-for-service, Medicare should make the program mandatory for all hospitals beginning Jan. 1, 2013, eliminating fee-for-service for these procedures forever.
Even more important than bundling payments for surgical and other procedures is bundling payments for patients with chronic illnesses. Medicare has been somewhat reluctant. A good place for Medicare to start is bundling payments for patients with congestive heart failure and diabetes, as well as for newly diagnosed cancers, like breast and colon. These conditions have clear, widely accepted clinical guidelines — that is, they have reasonably unambiguous standards for treatment — that could form the basis for the bundled payment.
The last big barrier to switching from fee-for-service is to get Medicare as well as the other insurers to change how they pay in unison. It is extraordinarily difficult for doctors and hospitals to change how they practice if they are partially paid via fee-for-service and partially through bundling — especially if the bundles differ between insurers. The incentives pull in opposite directions — fee-for-service to deliver more services for sick patients, bundled payments to be efficient and keep patients healthy. But if Medicare and private insurance agreed to coordinate a switch to bundled payments, doctors and hospitals could follow suit. This will not be easy, but it is absolutely necessary if we want to save real money and improve care.
Politicians frequently declaim that we need a health care system rather than a sick care system. They are right, and high touch medicine and bundled payments are the best ways to catalyze that change.
This is the last in a series of articles about the cost of health care. A version of this column will appear in print on Sunday, Nov. 20, 2011.