1. What GP Commissioning Consortia might learn from
the development of physician groups in the US: a
synthesis of 20 years experience to avoid failure
Lawrence Casalino MD, Ph.D.
,
Livingston Farrand Associate Professor of Public Health
Chief, Division of Outcomes and Effectiveness Research
We Co e
Weill Cornell Medical College
ed ca Co ege
New York City
The John Fry Lecture Nuffield Trust
October 18, 2010

2. Today’s talk
1. Two organizing frameworks for
thinking about GP commissioning
g g
consortia
2. U.S.
2 U S experience with “consortia” and
consortia
commissioning
3.
3 Seven theses on GP commissioning
4. Suggestions from an outsider

3. Two views of quality
• the individual physician view
• the organized process view
h i d i

4. Two types of things that must be
created
• incentives
• capabilities
• performance = f(i
f f(incentives +
i
capabilities)

5. Exhibit 12. Premiums Rising Faster Than Inflation and Wages
Cumulative Changes in Components of Projected Average Family Premium as
U.S. National Health Expenditures and a Percentage of Median Family Income,
Workers’ Earnings, 2000–2009 2008–2020
Percent Percent
125 25 24
23
Insurance premiums 22 22
108% 21 21
Workers' earnings 20 20
20 19 19 19
100 18 18 18 18 18
Consumer P i I d
C Price Index 17
16
15 14
75 13
12
11
10
50
32%
5
25
24%
0
2011
1
1999
9
2000
0
2001
1
2002
2
2003
3
2004
4
2005
5
2006
6
2007
7
2008
8
2009
9
2010
0
2012
2
2013
3
2014
4
2015
5
2016
6
2017
7
2018
8
2019
9
2020
0
0
2000 2001 2002 2003 2004 2005 2006 2007 2008* 2009*
Projected
* 2008 and 2009 NHE projections.
Data: Calculations based on M. Hartman et al., “National Health Spending in 2007,” Health Affairs, Jan./Feb. 2009;
and A. Sisko et al., “Health Spending Projections through 2018,” Health Affairs, March/April 2009. Insurance
premiums, workers’ earnings, and CPI from Henry J. Kaiser Family Foundation/Health Research and Educational
THE
Trust, Employer Health Benefits Annual Surveys, 2000–2009. COMMONWEALTH
FUND
Source: K. Davis, Why Health Reform Must Counter the Rising Costs of Health Insurance Premiums, (New York:
The Commonwealth Fund, Aug. 2009).

6. Exhibit 1. National Health Expenditures per Capita, 1980–2007
Average spending on health per capita ($US PPP)
$
8000
United States
7000 Canada
France
6000 Germany
Netherlands
5000 United Kingdom
4000
3000
2000
1000
0
1980 1984 1988 1992 1996 2000 2004
THE
COMMONWEALTH
FUND
Data: OECD Health Data 2009 (June 2009).

8. Quick summary: history of U.S.
US
“commissioning”
• Anticipated move to “full-risk” contracting did not
occur.
• Most physician organizations created to engage in
risk contracting failed
– ~ 2000 IPAs created
– ~ 200 IPAs successful (at the most)
• High profile failures of large fund-holding IPAs.
• There is now little or no risk contracting in most of
the U.S.
• In California and pockets elsewhere, risk
contracting persists in modified forms.

9. Why did risk contracting fail,
fail
overall, in the U.S.?
• policy failures
• organizational failures
i i l f il

10. Policy failures - failure to:
• risk-adjust
• balance incentives
– physicians and patients perceived risk contracting to be
h i i d i i d ik i b
about reducing costs
– not about improving quality or patient experience
• provide timely, accurate, transparent information to
id i l i f i
the “consortia”
• recognize how difficult it is to build competent
g p
physician organizations
• reduce incentives for specialists and hospitals to
churn high profit services

11. Organizational failures - failure to:
• invest in:
– physician leaders
– skilled managers
kill d
– IT
– adequate staff (e.g. nurse care managers)
(e g
• adequately analyze the level of risk
• track IBNR (incurred but not reported)
( p )
• motivate/coordinate their physicians
• g
gain specialist/hospital cooperation
p p p

12. Flow of funds?
NHS
GP Consortium
Hospital
GPs
Consultants

13. Thesis 1
It will be extremely difficult to create
high-performing GP
g p g
commissioning consortia. The
g
government should not expect that
p
large numbers of high performing
g ,
consortia will be formed overnight,
or even within 3-5 years.

14. Necessary capabilities for GP
consortia
• leadership
• organized processes to improve care (not
g p p (
just to commission it)
• sophisticated information collecting and
processing
– and people with the time and skills do do
something with the information
thi ith th i f ti
– sophisticated financial capabilities, including
both accounting and modeling
g g

15. Necessary capabilities for GP
consortia (more)
• ability to create and manage
relationships with many external
entities
• ability to pay claims??
• a culture of cooperation and quality
improvement
– not only within the GP consortium, but
with outside entities as well

16. Even with perfectly designed incentives,
incentives
the risk of failure is high
• inadequate supply of GP leaders
• GP consortia likely to underinvest in
management
• takes time to develop culture
• may b very diffi lt t gain cooperation
be difficult to i ti
from consultants and hospitals
• GP consortia will be more like IPAs than
multispecialty medical groups or integrated
systems

17. Thesis 2
It will be necessary to create
incentives for cooperation at
multiple levels within the health
care delivery system.
- GP consortium
i
- GP practice/individual GP
- consultant/specialist physicians
- hospitals
- and others

18. To gain support from rank and file
GPs:
• GPs must believe that changes will
significantly improve some or all of
g y p
the following:
– quality of care for their patients
– quality of their workday
– respect from their peers
– physician income

19. Ways to influence physicians within
an organization
• develop an organizational culture
• include only physicians compatible with the desired
culture
• educate/persuade/develop guidelines
• show physicians in the organization data on:
– the organization’s performance
– the performance of practices/individual MDs within the
organization
• choose payment methods to reward desired
behavior
• require prior approval for certain
referrals/procedures (for some physicians?)

20. Thesis 3
Incentives should not focus primarily
on generating savings/reducing the
g g g g
cost of care. They should be
balanced among quality, p
gq y, patient
experience, and cost-control.

21. Thesis 4
Incentives should be neither too strong
nor too weak.

22. Should have:
• risk-adjustment
• moderate upside and smaller downside risk,
p ,
gradually increasing over time
– threat to close a consortium not likely to be
enough when consortium membership i
h h i b hi is
required for GPs
• risk modifiers - e g stop-loss insurance for
e.g. stop loss
outlier patients

23. Thesis 5
It will be critically important to find
ways to foster collaboration among
y g
GPs, specialist physicians, and
p
hospitals.

24. What’s in a name?
• GP Commissioning is likely not an
ideal name
• Why not call it “GP Dominance?
GP Dominance?”

25. Other barriers
• basically impossible to form a
multispecialty group
p yg p
• incentives not aligned: Payment by
Results

26. We ll
We’ll know the system is working
when:
• GPs and consultants frequently discuss
p
patients on the telephone
p
• Phone conversations often replace
visits to consultants

27. Thesis 6
Don’t skimp on funds for consortium
g
management!

28. Management costs
• critical to have:
– skilled clinical and lay leaders
– infrastructure support (people and data)
– data in itself is useless
• th must be leaders whose only or main job is to
there tb l d h l i j bi t
help the GP group improve the care provided
• left to themselves, GPs will under-invest in
,
management
– (at least until they see a reliable ROI)

29. Thesis 7
• GP commissioning is likely to result in
the transfer of a large amount of NHS
g
funds to the private sector
– (for better or for worse)

30. UK advantages (1)
• “single payer” gives the opportunity to:
– collect comprehensive data
– risk adjust
– balance incentives (cost, quality, patient
experience)
i )
– invest in the development of physician leaders
– invest in management costs in GP consortia

31. UK advantages (2)
• public acceptance of GPs
• savings perceived as going to NHS,
not to corporate executives and
shareholders

32. UK advantages in developing
physician leaders
• NHS can pay GP leaders
• NHS can provide training for GP
leaders
• NHS can provide an attractive career
track for GP leaders

33. Suggestions (1)
1. anticipate failures; don’t overinflate
expectations for rapid, widespread change
2. b d f gradual performance
budget for d l f
improvement by GP consortia
- provide upside and downside incentives
- with incentives increasing over time
3. balance incentives: cost, q
, quality, p
y, patient
experience

34. Suggestions (2)
5. make it possible for GP consortia to have
financial leverage vis-à-vis member
physicians/practices
6. seek ways to create substantial financial
incentives for hospitals and consultants to
cooperate with GP consortia
7. seek ways to make it attractive for
consultants to join with GPs in creating
multispecialty medical groups

35. Suggestions (3)
8. provide substantial ring-fenced
management funds to GP consortia for 4
years,
years then blend into their budget (and ?
reduce the funds)
9. consider a name other than “GPGP
commissioning”
10. invest in developing GP and consultant
leadership