Archive for June, 2006

Simple Care

Tuesday, June 6th, 2006

American health care is large and complex–larger, indeed, than the entire Italian economy and about as well organized. Recent advances have made it more complex, medically, organizationally and administratively. For example, genomic medicine will increasingly require that care be customized to a patient’s individual genetic profile. While this is not yet in the mainstream, the trend is clear. Similarly, benefit carve-outs, specialty disease management organizations, and focused factories including specialty hospitals and clinics all fuel the organizational complexity of the system. In addition, recent changes in reimbursement and benefit design–from the Byzantine complexity of Medicare Part D arrangements to pay-for-performance, tiered networks and consumer cost-sharing arrangements–make the health care system more impenetrable for patient and provider alike.

While this complexity is a natural outgrowth of the heterogeneity of a big country, a manifestation of American pluralism and a legacy of incrementalism in policy, we sometimes hide behind the complexity and use it as an excuse for not doing the right thing.

The Canadian Viewpoint

My wife, Nora, is a Canadian. Like most Canadians, she is pretty mystified by the complexity of the American health care system. She is a seasoned emergency room nurse; she is also a no-nonsense prairie girl from Manitoba (it’s like Minnesota, only colder). But while she has the Midwestern nice, she also takes no prisoners.

She grew up in a medical family and worked in critical care in Canada and the United States. She was a nursing systems analyst and manager, doing clinical re-engineering before it became fashionable. I respect and draw on her experience and perspective on all things, especially health care. To listen to Nora, it’s easy to fix the American health care system.

Nora’s major beef is complexity. Why does it all have to be so complex? In her view, health care is simple:

Develop a standard of care. There should be a standard of care for every procedure–from prevention, through primary care, to complex operations. The standard of care should be developed by professionals based on the best available scientific evidence. Providers should follow the standard of care and should be sanctioned through professional peer review if they don’t.

Use a set fee schedule. There should be a standard fee schedule for all patients and all providers, and there should be a standard claim form that everyone uses. (Estimates are that 25 percent of American health care is administrative waste motion in which armies of clerks battle over payment.) When pushed on the issue of whether all providers should get the same payment, Nora concedes that there should be a basic standard for all providers, but if providers deliver superior performance, then they should be rewarded not just through volume but also through price. Still, her basic question is, “Why aren’t all providers achieving the high level of performance of the best cohort, if they are following the standard of care, eh?”

Provide transparency. Nora knows that it is politically impossible to have a single payer system in the United States. Americans are not Canadian. She even concedes that there is some benefit to having the consumer pay something toward their care at the point of service. This is a view shared by most Canadian providers, by the way, who live daily with the consequences of unrestrained access to primary care. But what Nora has a great deal of difficulty with is that there is no price list in American health care. We Morrisons are a well family, but Nora spends hours on the phone hassling with Stanford, Wellpoint, Aetna and United trying to get a clear explanation of what things cost, what was covered, what we owe and why. It is not an explanation of benefits (EOB); it is an obfuscation of benefits (OOB). While Nora is an empowered consumer, she cannot get anyone in health care to tell her what something is going to cost in advance of having the service. How else are we supposed to decide?

Simplifying

What are the benefits of simplicity? Lower administrative costs, much greater consumer engagement and less anguish among providers. But how should we proceed in such a complex system that is unlikely to move toward anything that resembles a simple single-payer structure? Here are some examples:

Standardize care. The anesthesiologists have done a brilliant job of standardizing and enforcing clinical processes. The result has been improved patient safety, better outcomes and lower malpractice costs.

Use flat co-insurance. A 20 percent co-insurance applied to all services up to an out-of-pocket maximum would make prices transparent to consumers and be a lot easier to understand than tiered formularies, tiered networks and the arcane combination of co-payments, deductibles and other cost-sharing arrangements. Even in the drug area we have resisted this because pharmacists and PBMs make more money on generics by having a co-payment rather than co-insurance (a $10 co-payment for a generic drug is better for them than 20 percent of $20). Hospitals and physicians won’t look so good in a flat co-insurance world, and drugs (particularly generics) start looking like an even better deal.

Standardize enrollment processes. The California Healthcare Foundation’s pioneering Health-eApp and One-eApp are standardized, electronic tools for enrolling eligible beneficiaries in public programs such as MediCal and Healthy Families. As a proud member of CHCF’s board, my colleagues and I point to this as one of the foundation’s key innovative contributions, even though the public programs may not always have the resources to accept the eligible enrollees.

Standardize benefit designs. Health insurers are creating myriad choices for the customer–too much choice. The ridicule that Medicare Part D arrangements have earned from cartoonists and Saturday Night Live is because of the mind-boggling complexity of the choices. When I signed on the Medicare.gov Web site, the first thing it told me was to download a Flash Media Player. I had visions of grannies across America having to take a course in installing Java applets.

It is quite likely that the basis of any modification to Medicare Part D that the Democrats come up with will involve simplifying and regulating the number of choices available to consumers. But it should not stop there. Simple, standardized care and administrative processes can lead to better consumer engagement, lower costs, elimination of variation and disparities and better quality. Isn’t that what we want? Let’s not hide our inefficiency behind a veil of complexity.

Ian Morrison is an author, consultant and futurist based in Menlo Park, California.