Health, Healthcare, and Government Spending (and a Culture of Health)

Why governments care about health and healthcare, how they are connected to government spending and priorities, and why addressing social determinants of health is so important for making lasting improvements, were the subjects I covered in a presentation at George Mason’s graduate policy school in September. My goal was to provide the soon-to-be policy analysts and advisers with a framework for understanding those issues so they will be able to provide useful recommendations to their future decision making bosses. (See the slide below for the topics covered in the presentation.) Links to videos of the talk are below, along with short descriptions – I think that Part 6 is particularly good. (Embedded views of the videos are at the end.)

I’ve had discussions with policy makers and corporate executives about these issues since their organization’s value propositions increasingly require demonstrating individual and population outcomes with specific metrics. Those requirements are part of the broader rapid movement of the U.S. healthcare system towards more accountability. Consequently, the connections among health, healthcare delivery, spending, community organizations, and social determinants of health are becoming a top priority for healthcare and life science leaders in companies and government agencies as they seek to increase value for their organizations and the people they serve.

Any thoughts you have about this talk, the connections among health, healthcare, spending, and community health factors (a.k.a. social determinants of health), would be greatly appreciated. And if there are any aspects of these issues where I can be of help to you or your colleagues – or you know of organizations or audiences that would also benefit from a similar presentation – please just let me know as I’d be happy to discuss that with you.

GMU - 9-29-16 Overview Slide

Part 1: Introduction. Why Governments care about health and healthcare. What is health. What is healthcare.

Part 2: Insights into healthcare spending with a particular focus on the Medicare and Medicaid programs.

Part 3: Why spending on (and budgeting for) health and healthcare programs are unlike almost all other Federal programs, and why projecting spending is so challenging.

Part 4: How government and private payers are seeking greater value and better clinical outcomes from their healthcare spending, and how data and analytics are increasingly important components of developing and evaluating those initiatives.

Part 5: Examples of value based pricing initiatives and the importance of data and analytics for managing such programs, determining “success”, and sharing savings with physicians, other providers, or patients.

Part 6: How health, healthcare, and spending on government health programs (and private insurance reimbursements) connect to each other, and how social determinants of health can drive clinical and economic outcomes, i.e., how a culture of health can be so important for transforming health in a community. This Part concludes with a brief discussion of the Affordable Care Act and the future of that program and the U.S. healthcare system.

Enjoy. Pass along to your colleagues and friends. And as always, constructive comments are welcome!

Medicaid and State Level Health Transformations

I recently guest lectured on Medicaid and state level health transformation at a George Mason University public policy class.

To start, I led the class through a discussion of how states differ from each other around 14-plus factors related to healthcare delivery, financing, policy, and politics. In this discussion we talked about the importance of policy makers appreciating those factors as they consider how to improve health, and the different routes states have taken for Medicaid improvements and expansion. (See picture of white board below.)

We had a great discussion, and I emphasized the importance of both multi-stakeholder alignment, and health information systems that can provide data for transparency and accountability – which together are fundamental to health improvement and reform efforts. Later in the class we talked about how all the state and federal health reform and improvement efforts have transparency and accountability at their core, and how decision making comes down to people and relationships. Continuing that theme, we discussed how healthcare is local, and for most states the relevant geographic “unit” for transformation of healthcare delivery, public health, and the social determinants of health is the city, community, or region – depending upon how each of those terms is defined.

One of my favorite parts of this class was talking with the students about the intersection of policy and politics. We talked about how the baseline for improvement/reform efforts are the 14-plus factors discussed at the beginning of the class, and the need for policy makers and implementers – such as the students in their current and future work lives – to keep focused on what measurable objectives they are trying to accomplish, i.e., not just on processes disconnected from outcomes. (See slide below.)

Thoughts or comments?

CER, HIT, and Women’s Health Research

Below is a video of my discussion with Phyllis Greenberger, President and CEO of the Society for Women’s Health Research, about the implications of comparative effectiveness research (CER) and information technology for women’s health and quality improvement.

What are your thoughts about CER and HIT?  Will they lead to higher quality, lower cost, or more efficient/better healthcare?  And if so, how soon?

FYI – The SWHR’s July 18-19 meeting mentioned in the video is “What a Difference an X Makes: The State of Women’s Health Research.”

Health Propoganda

Zocalo Public Square asked me to write a short answer to the question “What has been your favorite health propaganda campaign in world history–whether for its success or for its other qualities–and why?”

I wrote about the positive contribution of the Robert Wood Johnson Foundation funded Aligning Forces for Quality (AF4Q) initiative, and the negative effects of fake medicines.  You can see my full piece along with the other 6 contributions here:


Accomplishments v. Activity in Healthcare

The phrase “Paying for Value not Volume” has been health reform’s mantra for several/many years.  But the concepts embodied in “Paying for Value not Volume” are problematic on two levels.  First, the term “Value not Volume” doesn’t convey a clear picture of the specific changes health reform is trying to achieve. This creates problems communicating the benefits of health reform and healthcare transformation to people who are not steeped in health policy, including most clinicians and patients.

And second, the “Paying for” part of the phrase indicates that the focus is on financial reforms. This creates a barrier to people (i.e., patients) embracing the underlying principles of “Value not Volume” because, from their perspective, changing how doctors and hospitals are paid seems unlikely to benefit them – and could potentially harm them by decreasing access or increasing their costs.  In addition, “Paying for Value not Volume” seems disconnected from the important access and clinical improvements that people care about as much as they care about cost control – if not more so.

Accomplishments Trumps Value
Therefore, rather than “Value not Volume” a better phrase would be “Accomplishments not Activity.” This phrase more directly represents what people and society really want from health reform, i.e. accomplishments in the form of better clinical and economic outcomes.

While it could be argued that “Value” captures the same intent as “Accomplishments,” “Value” is more ambiguous and less specific. For example, employees are often paid partially on the value they deliver for their company, but the specific factors used to determine that “value” are quantifiable measures such as sales or actions that produce revenue generating goods or services.

Thus, paying for healthcare accomplishments is a simpler and more direct concept. It avoids the rhetorical and cognitive extra step of translating “value” into specific accomplishments. In addition, the concept of paying for accomplishments could also include incentivizing patients for specific achievements related to improving their health or reducing their risk of illness.  In this way, “Paying for Accomplishments” is a broader term than “Paying for Value” because it connects innovations in provider and clinician payments to the expanding array of new provisions health insurance plans are adopting to motivate and help individuals achieve certain wellness goals, e.g., smoking cessation classes, weight loss incentives, etc.

Goals of Health Reform
Similarly, “Achieving Accomplishments” could be a good phrase for describing the goals of health reform, e.g., “The goal of health reform is to achieve accomplishments in three areas: improving health for populations, improving health care quality, and lowering health costs. And the accomplishments we expect to achieve this year for our [community, region, state, country] are……”

“Accomplishments not Activity” is a term that people can more easily understand, and this greater understanding could help the public embrace innovative payment models and insurance plan designs that – by rewarding accomplishments – are creating linked incentives for providers, clinicians, patients, and communities to collaboratively build higher performing healthcare delivery systems.

Cutting Employer Healthcare Costs

Over the past 20+ years larger companies have tried many tactics to control the growth of their healthcare spending, including HMOs, consumer-directed healthcare, wellness programs, value-based insurance design, selective contracting for high-cost procedures, personal health assessments, etc.  While some of those efforts temporarily reduced employers’ healthcare spending, they did not change the long-term trends, in part because they only targeted employees and did not focus on high or very high cost individuals – many of whom are not active workers. [A recent Health Affairs article analyzing conditions associated with employee healthcare spending reflects this “searching under the streetlamp” phenomenon.]

Company Health Benefit Costs Do Not Equal Employees’ Healthcare Spending

The cost of providing health benefits for most larger companies includes not only the health benefits for employees, but also costs for retirees, and spouses and dependents of active workers. In addition, these “other” groups represent a disproportionate amount of health benefits costs because they are generally older and/or in poorer health. The importance of this factor is depicted in the chart below that illustrates how healthcare spending is not uniform across a group of people, e.g., all the individuals covered by a company’s health plan, or Medicare beneficiaries. While the actual spending per person changes significantly depending on the specific group, the general shape of the curve remains the same with about 5-10% of the people accounting for 20-40% of all the spending. For companies’ health benefit programs – as mentioned above – retirees, spouses and dependents make up a disproportionate share of individuals in the yellow and red zones.

[Y-Axis = Percentage of spending;  X-Axis = Percentage of people in the group]

In addition, these high cost individuals are also the people who have the most complicated (and usually chronic) healthcare problems, and thus whose healthcare quality and health status can be improved the most.

Challenges in Targeting High Cost Individuals

Companies have typically focused health improvement and wellness initiatives on active workers because they were the individuals the company had the greatest direct interaction with, i.e., they were the people seen in the workplace. This situation reflects the analogy about potential analytical biases where a person will search for dropped keys under the streetlight because that is the only visible area, i.e. information about what is outside the arc of the streetlight is unavailable.*

[Source: “Fixing the US Healthcare System,” 2008 – Unpublished]

While some employers are starting to focus initiatives on high and very high cost individuals, they face several challenges in creating and implementing these programs.  For example, since these individuals are more likely to be spouses, dependents or retirees under the age of 65, it can be more difficult for companies to reach them.  Other challenges that companies’ health benefits programs face in interacting more closely with these people are:

  • HIPAA privacy concerns.
  • For retirees under the age of 65, expecting that they will soon by on Medicare, and thus the company may not see any economic benefits.
  • Lack of potential benefits to the company by improving health and productivity for people who are not active workers. (However, improving the health of high cost dependents and spouses of active workers can reduce the employees’ absenteeism by decreasing the time they spend providing caregiving and care-assisting help to their family members.)

How to Improve Health Delivery and Control Spending for High Cost Individuals

Controlling healthcare spending for high cost people is not easy, nor is it inexpensive. Actions to control spending for these individuals generally involves making care more efficient and reducing errors and complications – which also improves the individual’s health status, i.e. it is a Win-Win situation with improved clinical and economic outcomes.

Specific actions to control spending for high cost individuals includes initiatives such as:

  • Case management e.g., nurse case management and/or tele-medicine
  • Team based care e.g., patient-centered medical homes
  • Integrated care e.g., quality monitoring and fiscal incentives for quality and economic performance

The common theme among these actions is that they are all designed to ensure that nothing falls through the cracks leading to very expensive cascades of poor clinical outcomes and complications. An additional benefit is that these initiatives can also help direct care for people with costly chronic conditions towards the places/locations/providers that are more efficient and higher quality – and often less costly. (Some companies are doing this for elective surgeries, and incentivizing individuals to use specified providers by offering reduced or zero cost sharing, as well as paying their travel costs.)

Does Better Care for High Cost Individuals Pay Dividends?

Financial calculations can quantify the direct value of these efforts. For example if high and very high cost individuals are costing the company more than $10,000 or $25,000 per year, an investment of $1,000, (such as for intensive case management), that reduces spending by 10% provides at least a break-even ROI.  Spending reductions of this magnitude are very achievable for people with complicated diabetes or congestive heart failure. And some healthcare innovations have been shown to reduce spending by 20-30% for people with those conditions. However, not all “case management” or “disease management” programs are the same. As a general rule, “you get what you pay for,” i.e., programs that are less expensive and/or not integrated into the patient’s healthcare team-flow, tend to not benefit individuals with serious chronic illnesses – or deliver a positive ROI. (This was evident in the Medicare Case Management Demo I referenced in a 2009 article on this blog.)

Of course, not all people who fall into the high cost category can have their spending easily controlled through better case management or integrated team-based care. Thus, companies will not see a positive ROI through better healthcare management for all high cost individuals. Some diseases and conditions are just unexpected, inherently expensive, or have long lag times before positive benefits are seen. For example, cancer rates (and spending) can be reduced through exercise, nutrient and smoking cessation – as well as early detection – but the timeframe for those improvements can be long.

Accidents outside the workplace are also frequently cited as high cost medical cases that cannot be prevented. However, alcohol (or abuse of other substances) and/or mental health conditions are often contributing factors for accidents – factors which can be addressed through the healthcare system.  Unfortunately, because of the fuzziness of the ROI calculations, privacy issues, or other concerns, these areas have not generally been a focus for employers.  In addition, in some professions, these medical problems can lead to loss of employment or advancement opportunities, making them especially difficult to address as part of a person’s comprehensive medical care.

Identifying High Cost Cases

Before value-producing interventions can help high cost individuals, these people need to be identified so that they can be engaged to participate in these programs. Fortunately, there are increasingly sophisticated and efficient ways to identify high cost people:

  • Claims analysis conducted by the employer’s insurance company.  (Having the insurance company analyze the claims data creates an important information firewall to address HIPAA privacy concerns. Because of privacy issues, an insurance company – or managed care company – is also in a better position to directly contact and engage individuals for participation in any programs.)
  • EMR database analysis by individual health systems or large provider groups.
  • Asking physicians to identify their medically fragile and high utilizing patients, and then engaging/enrolling them in the appropriate care management programs.  (However, this approach works best for community-wide initiatives rather than individual employer populations since it could be inefficient and unusual for physicians to separately analyze or engage their patients by employer.)

Preventing High Cost Situations

A related set of challenges is identifying people who are not yet high cost individuals, but are sliding toward that end of the scale, (e.g., pre-diabetes, unrecognized diabetes, high blood pressure, smokers, etc.), and preventing them from becoming high cost cases. Some individuals may be easy to identify, (particularly with a high quality EMR system that can do practice-wide analyses), but changing an individual’s potential healthcare trajectory is hard. Changing community norms and expectations for smoking, exercise, and nutrition can be effective foundational actions – and are good initiatives for reaching non-workers such as retirees and spouses.  However, changing personal behaviors on a shorter time frame generally requires one-on-one engagement and encouragement.  This can start with the person’s medical care team, with a non-physician clinician, (such as a diabetic educator, nurse specialist, or health coach), who can provide on-going support as well as referrals to services and resources in the community through organizations such as the YMCA.


Controlling the long term growth of the cost of employers’ health benefits programs, (i.e., bending the “cost curve”), requires focusing on individuals who are costing the most, as well as preventing individuals who are smoldering with early-stage or unrecognized conditions from exploding into expensive complex chronic disease situations.  For self-insured companies, investing in disease and case management programs, tools, and services requires resources, spine, and compassion, but the financial and human-value returns (including company loyalty and appreciation) can be significant. Few smaller companies can marshal the time and resources for these programs, but as technology improves and health insurance markets become more efficient, these services should become more readily available through purchased insurance products – including those offered through the ACA created state-based insurance exchanges.  This should happen with the next 2-5 years since, “it’s where the money is.”


* The parable about looking for lost keys on a street at night illustrates the pitfalls of operating with limited information while trying to solve a problem.  The tendency is to look under the streetlights because that is the only place where you can easily see, i.e., this is where there is easy access to the “data” about what is on the ground to see if the keys are there or not. However, it is also possible that the keys are outside of the corona of the streetlights.  But looking outside those circles takes both imagination to realize that the street exists outside the circles of light, having access to data about what lies outside the circle of light, (possibly with “technology” such as a flashlight), and making the effort to seek and understand this “new” data. [Source: “Fixing the US Healthcare System,” 2008 – Unpublished]

Doctors are Not Terrorists, But…….

Changing behavior is very complex.  Many management books, philosophical tomes, and academic psychology articles have been written on this subject, so I’m going to simply and quickly get to the connections among doctors, terrorists, and health reform.

1. Changing people’s behavior requires appealing to basic motivating factors. Different individuals have different motivators, but everyone has them.

2. Physicians are a key part of the healthcare system.  Improving quality and controlling healthcare spending will require physicians to do some things differently – particularly how they work with other clinicians (i.e., in teams), prescribe treatments, order tests, make referrals, and interact with patients and their families.  (Physicians receive about 20 cents of every healthcare dollar, but control about 80 cents. And an old axiom is that the most expensive piece of medical equipment is a pen in a physician’s hand – although soon it may be their hands on a keyboard.)

3. Money is a key motivator for many people…. But it’s not the only one. For many clinical thought-leaders and decision-makers, money may be of secondary concern.

Physicians, and Terrorists, and Everyone are Motivated By Specific Factors
I’ve long believed that aligning non-financial motivators is crucial for successful health reform because success will require changing individual attitudes and actions. But I didn’t realize how broadly powerful non-financial influencing factors could be until I read “Counterstrike,” the recent book by Pulitzer Prize winning journalist Eric Schmitt and his co-author Thom Shanker. This book describes how, in the mid-2000s, US anti-terrorism organizations saw markedly greater success by shifting their strategy from prioritizing “find-capture-kill” operations to taking actions that pivot potential terrorists’ motivational forces – in part by similarly pivoting the support potential terrorists receive from their families, communities, and religious leaders.  Some of these non-financial factors are:

  • Personal reputation
  • Personal glory
  • Network cohesion and dependability
  • Well-being of their family

As can be seen from this list, some of the factors that influence terrorists are similar to what could also motivate physicians, i.e. professional recognition, influence within their organizations, community status, etc.

Desired Outcomes
The face of successful health reform will be physicians enthusiastically doing things differently because they recognize that their actions are making their patients and communities healthier, making their own lives better, and also easing the “economic dragooning” that the healthcare system was imposing on society.

Successful Health Reform = Changing Physician Behaviors
Achieving these outcomes will depend upon changing physician behaviors, as described in #2 above. And while financial incentives* supporting those behavior changes are being incorporated into new delivery models – such as Medical Homes and Accountable Care Organizations – the organizations that successfully build these new models will utilize other motivating factors in their quest for higher quality, lower costs, and better care experiences for both physicians and patients.  As I noted in the opening paragraph, many pages have been written on changing behaviors, but the fundamental elements were described in general terms by Everett Rogers in his book, “Adoption of Innovation”:

  1. Relative Advantage
  2. Compatibility (with existing or connected practices and actions)
  3. Simplicity
  4. Observability
  5. Trialability

These principles are important because changing behaviors is synonymous with adopting innovations, e.g., using an ATM rather than a bank teller, writing on a computer rather than a typewriter, inhaling insulin** rather than injecting it. And thus, achieving successful behavior changes and producing our desired three aims will require change leaders to incorporate these elements – and both financial and non-financial factors – into their strategies for motivating physicians, patients, and all groups who make up the healthcare system.


*These incentives are generally described as rewarding value and quality rather than volume of services, and include pay-for-performance, shared savings/risk, bundled payments, and capitation.

** Not all innovations are successful – at least in their first iteration.

Health Reform’s 7 Lively Concerns (Not the 7 Deadly Sins)

At a recent meeting about implementing the Accountable Affordable Care Act, Don Berwick, (the recent CMS Administrator, and the Founder and former CEO of the IHI), listed 7 areas that worry him about continuing with successful health reform and the implementation of the ACA. (Note – I’ve rephrased some of these into question form and added some summary comments.)

  1. Will Care Change? (After payments change to incentive value rather than volume.)
  2. Will Costs Actually Be Reduced? (It is too early for much data, but can we get to a sustainable level of GDP spending on healthcare, e.g. 15%?)
  3. Will the Mechanics of Coverage Be Successful? (e.g. Insurance Exchanges)
  4. Will the Safety Net Be Maintained/Sustained? (i.e. Beyond Medicaid)
  5. Will there be a Continued Commitment to Science? (People want healthcare that works, e.g. evidence based medicine.)
  6. Will Prevention Efforts Continue? (It is easy to say, hard to do, but also an easy target for funding cuts.)
  7. Will Communications to the Public About the Value of Healthcare Changes Improve? (Debra Ness, the President of the National Partnership for Women and Families, noted in a later panel that “normal” people – i.e. non-healthcare wonks – don’t understand the terminology that “experts” use, but when they describe what they want from the healthcare system, it sounds very much like the basic elements of a patient-centered medical homes. This indicates that the public should like the system we are moving towards, but they don’t understand the vision because the communications hasn’t been appropriate…. Something I wrote about last year. )

Two other important facets of healthcare improvement that he noted later in his remarks are:

  1. States are moving forward as experimental fountains – and this is a good thing.
  2. There is a great need for engaging the business community as major payers – their voices have not been involved enough in local and regional discussions.

These are all important aspects of implementing healthcare reform where the decisions made by local, regional, and national entities could either accelerate or stall progress towards higher quality, lower costs, and better care experiences.  As such, they are now part of my list for determining if initiatives will likely be successful, or may be moving in a direction that won’t produce the desired results, e.g. by reinforcing or expanding local monopoly-like entities.

Later in the conference Dr. Berwick noted that in his discussions with the leaders of healthcare organizations around the country they are consistently facing the “How” challenge.  That is, they all recognize that the healthcare world is rapidly evolving and although the payment system hasn’t yet changed significantly, they know it will, and therefore they are seeking to understand how to transform/restructure their delivery operations and supporting infrastructure, (e.g. IT systems), to be ready for this future that is rushing towards them.

Why Healthcare Spending is Slowing – A New Normal?

The growth in healthcare spending has slowed in recent years.  Many experts and pundits have sought to explain why – while also worrying, (or predicting), that this slowing is only temporary, i.e. past performance will predict the future.

Healthcare Delivery and Financing are Dynamically Evolving

The future will be significantly different than the past because our healthcare system, society, and economy are evolving into what might be called a “New Normal” state.  Assuming current priorities and pressures continue, public and private sector organizations at all levels will increasingly emphasize value¹ in their decisions about spending and preferences for healthcare services – including choices about substituting one treatment option for another.  For public entities, these choices involve coverage and budgeting for programs ranging from Medicare, Medicaid, and Veterans’ healthcare, to benefits for government employees – as well as rules for insurance exchanges. For private organizations, these choices range from health insurance benefits provided by large employers to the decisions individuals make for their insurance coverage – as well as the clinical and lifestyle choices individuals make inside and outside doctors’ offices.

While those choices will collectively mold our future healthcare system, many changes have occurred in the last five years that are creating a new environment for making these choices and pushing us into a “New Normal” state, i.e., these evolutionary forces have already started bending the cost/spending curve.  This progress towards more value oriented healthcare will continue unless the driving forces are hampered, hindered, or blocked by future actions.

The Times They Are a-Changin”
                             Robert Zimmerman

Listed below – in my estimated rough order of importance – are reasons why healthcare spending has slowed and will continue to be less than had been projected.

  1. Dipping Economy: The economic slowdown has decreased the amount of healthcare people are seeking – as well as creating a temporary disruptive environment for making other changes in stakeholders’ attitude and latitudes of practice. Whether the decrease in healthcare utilization is because people have mostly declined or delayed unnecessary or truly discretionary healthcare services and treatments, or are foregoing many important preventive actions and therapies – which will lead to higher costs and morbidity in the future – remains to be determined.
  2. Private Insurance Benefit Design Changes: People with private insurance have shifted to higher deductible plans², (a.k.a. consumer directed plans), which have lower monthly premiums and higher deductibles, and sometimes increased co-payments/co-insurance.  This change has been in both employer sponsored plans – where individuals may not have a choice – as well as for people (and families) buying insurance as individuals or through small business plans.  Like #1 above, economic incentives have led people to be more selective in what healthcare services and products they are using, but the wisdom of these choices and their long-term effects on costs and quality of care (and life) are not yet fully understood.
  3. Medicare Outpatient Prescription Drug Benefit: The Medicare outpatient prescription drug benefit, (a.k.a. Part D), started in 2006.  If the general premise that prescription medicines are the most clinically and cost-effective form of healthcare is correct, then the greater use of prescription medicines by Medicare enrollees should be reducing spending growth in other Parts of Medicare, e.g. hospitalizations and doctor visits.
  4. Mindset Changes for Patients and Clinicians: The economic downturn, various provisions of the Accountable Care Act, and changes in healthcare benefit design – particularly more high deductible health insurance plans – are making patients and clinicians more attuned to the economic implications of healthcare choices and the value of integrated, multidisciplinary, (a.k.a. team-based), care delivery. Resistance to shifting to such integrated care from the old one-patient/one-doctor Marcus Welby, MD-esque mindset will impede progress in some areas – particularly the adoption of EMRs and regional health information systems, which require up-front spending, and where the long-term benefits are derived from providers participating in such team-based care paradigms.
  5. Change to Healthcare Delivery System:
    1. Integrated care delivery systems and the purchase or affiliation of physicians’ practices;
    2. Geographically uneven changes;
    3. Accountable Care Organizations (ACOs);
    4. Patient Centered Medical Homes (PCMH);
    5. Concierge medical practices;
    6. Greater use of tele-medicine for remote monitoring, management, and consultations;
    7. Greater use of non-physician clinicians, community based healthcare coordinators, and home care services – including more old-fashioned house calls.
  6. Change to Financial Incentives: (Besides high-deductible insurance plans)
    1. Pay for Reporting (P4R) – usually tied to quality metrics, but also used for EMR capabilities;
    2. Pay for Performance (P4P) – similar to P4R, but for actually performance, not just reporting;
    3. Global or bundled payments, e.g. ACOs shared savings and risk sharing arrangements with Medicare and private payers;
    4. Non-payment for “never events”.
  7. Trans-Fat Labeling: FDA regulations have required food labels to list trans-fats since 2006, which has had a two-fold effect which should be driving down long-term health spending: Making people more aware of trans-fats as an unhealthy choice, and inducing food companies to both remove trans-fats from their products and advertise that fact. The results have been significant. Earlier this year the CDC reported that blood levels of trans-fats have declined from 2000 to 2009: “The 58 percent decline shows substantial progress that should help lower the risk of cardiovascular disease in adults”. I suspect that CBO or others didn’t project savings to Medicare or Medicaid from the food labeling requirement.  However, shifts to healthier lifestyles will need more environmental changes like these, e.g. bike sharing programs; walking paths; programs connecting individuals with shared goals; healthier food options at cafeterias, restaurants, and grocery stores, etc.
  8. Price Transparency and Accountability for Outcomes: More transparency about prices and quality of care delivered by individual clinicians and providers is placing greater pressure on healthcare prices. In addition, since healthcare prices in the US are higher than in other countries, globalization will increasingly create downward pricing pressure – especially for products and services where people, (or their specimens), can easily travel to other countries, such as for elective surgery, or DNA testing. [Note – accountability for quality, accuracy, and fraud prevention will be necessary to ensure that foreign services with lower prices represent higher value rather than just greater waste and harm to patients.]
  9. Innovations – Better Therapies, Diagnostics, and Prevention:
    Healthcare innovations range from biopharmaceuticals, genetic tests, HIT/tele-medicine, to validated best practices including checklists and clinical decision support.  Some innovations increase costs. Some improve clinical outcomes. Some do one but not the other. Some do both.  As metrics demonstrating the value of innovations become more granular and can be determined more rapidly, clinicians and providers will be under greater pressure to demonstrate – and be accountable for – the outcomes they are delivering. However, this will only occur in a balanced way as long at patient-centric quality outcomes are measured alongside economic outcomes.  The danger is that clinical outcomes will only be determined on a population basis, but then applied to patient care decisions without considering individual patient characteristics or priorities.
  10. Smoking Restrictions.  Restrictions on smoking in public places is reducing exposure to second-hand smoke.  Some studies have shown rapid declines in heart attacks for people working in restaurants and bars after smoking in those workplaces was prohibited.  (FYI – LEED certified residential buildings treat second-hand cigarette smoke as a pollutant and often prohibit smoking inside the entire building – including people’s apartments, as well as outside doors and windows. And the DC Department of Health has been publicizing the toxic nature of second-hand cigarette smoke from adjacent apartments.)
  11. Tougher Enforcement Against Fraud and Abuse. Cracking down on fraud and abuse may be reducing healthcare spending by deterring such criminal activity.  These efforts have been aided by improvements to healthcare IT – and this will only improve in the future.
  12. There certainly should be a 12th reason – since all good lists have 12 items – but I can’t think of one right now…. Any suggestions?

Not a Simple Picture

The dynamic interactions among many of the factors listed above makes it very difficult to determine the contribution each one makes to reducing healthcare spending for a particular condition, population, or US healthcare spending overall. For example, improvements to healthcare IT are enabling improvements to delivery system operations and financial incentives – which are also linked to each other.  Each of these also affect the mindsets of  patients and clinicians, i.e., HIT systems are elevating patients’ and clinicians’ expectations for better information about treatment options and less waste. And financial incentives are evolving to support the use of such information to achieve better outcomes. Together these and other changes are altering patients and clinicians attitudes and actions towards the entire healthcare system to be accountable for delivering greater value. This hyper-cross-connected situation is analogous to the biomedical research field of systems biology, which is seeking to understand how multiple physiological systems cause specific diseases – and how combination therapies may be needed to treat such complex illnesses.


1. Value in healthcare can be a tricky concept, but it generally encompasses the clinical and economic outcomes produced by the intervention compared to the total costs, risks, and potential adverse effects of the treatment option.
2. Haviland A., et. al., “Growth Of Consumer-Directed Health Plans To One-Half Of All Employer-Sponsored Insurance Could Save $57 Billion Annually,” Health Affairs, May 2012 31:5,1009-1015

Accountability in Healthcare – What People Think of the Coming Changes

Following up on my pre-Thanksgiving post, I’m reporting back on what friends and relatives think about some of the terms for new healthcare delivery entities, e.g., Accountable Care Organizations (ACOs) and Patient-Centered Medical Homes (PCMH).

What I heard is consistent with my previous conversations: People think that ACOs are like HMOs, and Medical Homes might be nursing homes, home health, or hospice, etc.  One great insight came from my cousin who is a teacher.  She told me that teachers react negatively to the word “accountability” because of the No Child Left Behind (except those who don’t measure up) law – which according to a RAND analysis from the summer of 2010 is “encouraging teachers to focus on some students at the expense of others, and discouraging the development of higher-thinking and problem-solving skills.” (Yikes! That doesn’t sound good for long-term innovation, economic growth, and international competitiveness.)

Solutions for Engaging the Public with Healthcare Transformation

I’ve been talking to a variety of people involved with health transformation at the national and local level about this information/perception gap, and am looking for ideas for raising the public’s understanding about why more team-based and coordinated care will improve quality and efficiency for them as individual patients.  If you have any thoughts on this, please feel free to comment.  In addition, I’ll be talking to more friends and families during the remainder of the holiday season about their impressions of the new terms, (such as ACOs and PCMHs), as well as the benefits of the healthcare delivery changes that are on the horizon, e.g., why the iconic one-on-one relationship with a solo Dr. Welby-like primary care physician may not be the way to get the highest quality care.