Richard L. Reece, MD, and Brian Klepper, PhD
First published in HealthLeaders Media.
For some time, we have speculated that America’s health system is sliding towards a financial crisis that could spill over into the general economy and bring it down.
The logic goes like this: explosive growth in the cost of healthcare is pricing rank-and-file Americans out of the coverage market and reducing the system’s (inflation-adjusted) available revenues. All the while, service demands have continued to increase, creating a mounting resource-demand mismatch.
We can see this already on the system’s edges, in the crises or shutdowns at the nation?s safety net health systems—Martin Luther King in Los Angeles, Women’s Hospital in Philadelphia, Grady Hospital in Atlanta—where demands for care simply outstripped the resources required to provide it. Because healthcare is one-seventh of the economy and one-eleventh of its jobs, a meltdown that starts at healthcare’s edges and then spreads throughout the industry might cascade to all other sectors as well, wreaking havoc throughout the economy.
Now we believe it could happen the other way around, with the collapse of financial institutions sinking healthcare markets. Consider what might happen, for example, if the many health systems whose margins have been kept afloat through investment income, suddenly lost that revenue stream. The ability to provide care, or to purchase goods and services from others in the health industry, would be dramatically compromised.
Market-based, not policy-based reforms
As the largest part of the economy, America’s health system will be sorely tested by the financial markets’ turmoil. The challenges posed by diminished resources and the tightening of credit will intensify the pressure on healthcare professionals and organizations that have long resisted major structural changes—like the re-empowerment of primary care, pricing and performance transparency, and payments linked to results—that can finally check rampant cost growth and re-establish stability and sustainability to the industry. If they suddenly share in our pain, they’re more likely to be receptive.
Despite the current wisdom, the major levers for reform aren’t likely to come from the federal government. In 2007, members of Congress accepted $445 million from the healthcare industry, about 16% of all the lobbying contributions accepted from special interests in exchange for influence over policy. They’re hardly likely to disappoint their benefactors by passing laws that would drive out the significant healthcare waste that is an important portion of revenues and margin.
And even if they were interested in addressing the problem, and even if healthcare hadn’t fallen off the political radar screen compared to the economy, gas prices, food prices, the current economic turmoil and mounting budget deficits would trump Congress’ ability to focus dollars on fixing healthcare.
No, it won’t be big government, but big business that drives change. Business is finally apoplectic about healthcare’s excesses—the cost, the questionable quality, the lack of demonstrable value, and the employee dissatisfaction—and fed up with its excuses. They want results right now. They don’t know why health plans—supposedly their surrogates to insure good care at reasonable cost—and the health industry as a whole aren’t cooperating.
Businesses’ own growth and economic health depends on its ability to compete globally. Now, in a new push, business leaders appear to be coming together and mobilizing decisively to change the ways the system. They are mad as hell, and they’re tired of haggling. They’re not going to take it any more, and they’re giving notice of their intentions. They are in a mood to demand cooperation, and if it is not there, to seek their own solutions.
Two facets of a primary care initiative by business
Given this backdrop of economic turmoil, increasing pressure on the industry, and business’ dissatisfaction with healthcare, let’s examine two major events—worksite clinics and primary care re-empowerment—that underscore business’ determination to transform the system, and in the process, cut costs, insure quality, and satisfy their employees. Both are focused on “the medical home,” though the worksite clinic model is, at this point, the most fully realized by far.
The uptake of worksite clinics by mid-sized and large corporations is so rapid that it is hard to understand it in any terms but transformative. Walgreens estimates that America has about 7,600 corporate campuses with 1,000 or more employees (that would generally mean about 2,200 or more lives). About half of all Fortune firms are expected to have clinics by 2010. Because a properly configured clinic is scalable and provides a platform for very proactive management of care both inside the clinic and downstream, on the network, the trend is spreading like wildfire to smaller firms with as few as 250 employees. They’re also being bundled with high deductible plans and becoming available to coalitions of smaller employers as well.
Large clinic firms, like Walgreens’ subsidiary Take Care, and smaller ones like Orlando-based WeCare TLC and Atlanta-based Worksite Rx, are actively catering to the rush of employers who see this model as a way to dramatically improve care while reducing cost.
“Think of an employer sitting at the table with his healthcare relationships: brokers, health plans, doctors, hospitals, drug and device companies. Everyone but him wants it to cost more, and they are all in direct control of cost creation. So our model is different. We have two goals: Providing better care for the patient, and being a fiduciary for the purchaser. Everything else is secondary.” That’s a comment by Lynn Jennings, board chair of WeCare TLC, and it typifies an orientation that caters to this new corporate activism on healthcare.
Worksite clinics offer fully integrated health management platforms, separate from and in front of the health plans. Participation is voluntary, but patients who use the clinic don’t need to access the health plan until they leave the clinic. In other words, the model goes around the health plan to achieve savings, quality improvement, and employee satisfaction.
The clinics build in significant incentives for both patients and doctors. Employees using the clinics may get free visits, free drugs and labs. Access to the clinics is convenient, fast, private, and secure. Time spent in the clinic often doesn’t count as paid time off.
Staff physicians win as well, often making one-third or more than doctors in private practice, with the luxury of spending more time with patients and, because no money changes hand, focusing on care and not worrying about the practice’s business aspects.
The clinicians use a complete complement of informational tools: claims analytics and health risk appraisals to identify patients at risk, electronic medical records with embedded best practice and care gap guidelines, and provider profiles to steer patients needing referrals to high performance specialists and inpatient facilities.
Worksite clinics can have had tremendous impact. The City of Port St. Lucie, FL, reported a 3.1:1 return on investment and an 18% total health plan cost drop in its first year of operations. Returns on occupational health, retention and recruitment and lost productivity, are harder to quantify but probably even higher.
Transforming community primary care practices
Worksite clinics are fine for patients in corporations, but how do we change the thousands of small and mid-sized primary care practices in the field? More importantly, how do we allow them to perform the full range of cognitive medicine services they’re capable of? Finally, how do we make it worth their while, get primary care off the gerbil’s wheel, and encourage young doctors to become generalists?
Two years ago, Paul Grundy, MD, MPH, IBM’s Director of Health Transformation, became concerned that his company could not buy comprehensive coordinated care for its U.S. employees.
He could buy an amputation of a diabetic’s leg, but he could not buy prevention services to avoid that amputation. Often, he did not see “value” in the outcomes or patient satisfaction associated with the episodic care that IBM was purchasing. He also worried that many of his employees could not name their personal physicians. He saw American primary care’s very existence threatened. He knew from a literature review and from IBM’s Denmark experience that primary care-based systems saved about 20% in costs and produced 30% better results with immensely greater satisfaction among patients and physicians.
Grundy and his colleagues act
Working through a multi-constituency, action-oriented organization, the Patient Centered Primary Care Collaborative, Dr. Grundy and his colleagues began to drive a powerful market-based reform initiative.
They assembled leaders of nearly 50 Fortune organizations and seven major health plans to describe their findings. His advice to the plans was to move quickly to a primary care model or risk public confrontation and isolation by the Fortunes.
He gathered medical society representatives-family physicians, internists, pediatricians, and osteopaths-for recommendations to re-empower primary care. The result was a declaration of Joint Principles of a Medical Home. Effectively, they argue that American healthcare can be dramatically improved and its cost crisis largely ameliorated if:
- Primary care physicians are paid more to collaborate with specialists on the full continuum management of their patients. This would also reduce the profound income gap between primary care and specialist physicians, and provide reason for medical students to again enter primary care as a career.
- Mechanisms can be developed to ensure that primary care physicians have access to the full range of modern patient evaluation and management information technology tools.
- The rules of engagement are changed between primary care physicians and specialists, so that they can more easily collaborate on patients’ care.
This is not a lone view. MEDPAC, the Medicare Payment Commission has also urged Medicare to use medical homes to get Medicare costs under control. In 26 state legislatures, 108 bills introduce “medical homes,” and 20 bills in 10 states define the concept and provide for demonstration projects. A few innovative health systems around the country—the Geisinger Health System in Pennsylvania; the Holston Medical Group in Kingsport, TN; Alabama Medicaid; HealthPartners in Minnesota—are actively proving its value.
So far, the major health plans have mounted a few pilots, but nothing substantive or systemic has changed in the way that primary care physicians around the country treated by health plans or specialists. The jury’s still out on whether they’ll be willing to drive down total claims costs—remember they make a percentage of the whole—by taking advantage of primary care, the most powerful tool at their command.
What does this all mean? Business is defending and advancing its own best interests by taking an active, influential role in transforming healthcare. Whether it can bring enough pressure to bear to bring the entrenched healthcare industry along remains to be seen. But its cause may have just received a boost from the nation’s economic woes.
Dr. Richard Reece is author of Innovation-Driven Healthcare: 34 Key Concepts for Transformation and is currently at work on a new book with Paul Grundy MD MPH called Primary Solution. He maintains a column at MedInnovation Blog.