1. June 2005
Gregg S. Meyer, MD, MSc
Senior Vice President
Edward P. Lawrence Center for
Quality and Safety, MGH/MGPO
gmeyer@partners.org
The Evolution of Healthcare Quality
and the Marketplace
2. Why Should You Care?
• The federal health systems do not operate in a vacuum
• Trends in civilian healthcare will have increasing impact on the MHS
(including healthcare reform efforts)
• Civilian healthcare will be the lens through which MHS care is
viewed under the microscope of oversight
• Federal health programs are seen as test beds and demonstration sites
for innovations in care (IOM Report – Leadership by Example)
• The MHS is no longer stand alone and requires increasing interaction,
interoperability, and in some cases interdependence, with civilian
healthcare programs
• It is unlikely that you will be working in the MHS for your entire career
• Transitioning leadership in the MHS arena to the civilian sector is a
well worn path but it requires contextual awareness
• You have some important advantages in terms of experience but
you need to know them well
3. What type of evolutionary era are we in?
• Gradualism versus punctuated equilibrium
• Environmental assessment as the key to what we will look like
• Technical Revolution and Cultural Revolution
• Globalization of healthcare, ongoing global financial crisis and the elections of 2008 and 2010 are
punctuators
4. IOM 2: Crossing the Quality Chasm
“The Rest of the Iceberg”
There are serious problems in quality
Between the health care we have and the care we could
have lies not just a gap but a chasm.
The problems come from poor systems…not bad
people
In its current form, habits, and environment, American
health care is incapable of providing the public with the
quality health care it expects and deserves.
We can fix it… but it will
require changes
5. VARIATIONS ARE WIDESPREAD –
Intensity of Care
The Cost Conundrum
What a Texas town can teach us
about health care.
Atul Gawande June 1, 2009
6. The Cost Landscape
• Per capita health care costs
have grown steadily for 40
years
• Private insurance payers
subsidize underpayments by
Medicare, Medicaid and the
uninsured
• Chronic disease and technology
are the primary drivers of cost
• Proposals to extend health
insurance coverage magnify
cost pressures
0
500
1000
1500
2000
2500
3000
3500
1966
1968
1970
1972
1974
1976
1978
1980
1982
1984
1986
1988
1990
1992
1994
1996
1998
2000
2002
2004
2006
PerCapitaNHEin$
Per Capita Growth In Health Expenditures
Has Increased at 2.5% Above Inflation For
40 Years
(adjusted for inflation)
7. Two Competing View of Healthcare Costs…..
Both are correct*
Medicare cost
trends are unsustainably
high and threaten to
bankrupt the Federal
Government (along with
a few other things)
Inadequate payment rates
from government payers
threaten the viability of
hospitals, access of elderly
patients to needed care
and are driving unprecedented
cost shifting to the private
sector
•BTW the healthcare sector is
a driver of local economies
8. Two Views on Quality v. Cost
Source: Baicker, K and Chandra, M : Medicare spending, the
Physician Workforce and Beneficiary Quality of Care, Health
Affairs, April 7, 2004
9. The Purchaser’s dilemma
• The cost of health benefits for employees > the cost of steel in American cars for 2 decades
• Starbucks spends more on health insurance for employees than on coffee for 4 years
• We are not immune!
• Partners Healthcare pays nearly $700 million for healthcare for our employees
• Most large health care providers are trying payment/delivery innovations with
their own employees
• For other inputs purchasers are used to getting more when they pay more (value added)
• Not transparent in healthcare
• BUT, Levers for demanding “added value” have not existed
• Purchasers (including CMS) are asking and now demanding payers to develop such levers
• Citing healthcare as a driver of global non-competitiveness
Optimal
Quality
Effective
and
Efficient
Utilization
Value
Added
10. One Model of the Evolution of Healthcare
The Long View
Performance
comparisons
for hospitals,
MDs & Tx
Market
sensitivity to
hospital/MD
quality &
TCO
Clinical re-
engineering by
MDs, hospitals
& suppliers
Q 50 ppts
$ 40 ppts
Value of
Health
Benefits
Key Evolutionary Steps
High
Low
2002 2012
Performance
Disclosure
Consumerism
& P4P
Chasm Crossing
Q = compliance with guidelines
$ = annual health benefits cost
Reproduced with permission of Arnold Milstein, MD (Mercer)
11. The “5 Stages” of Getting Involved
in Quality Measurement
• Denial
• Anger
• Bargaining
• Depression
• Acceptance
• We need help getting through the stages
12. • 7 HealthGrades awards
• Ranked as the 9th best
hospital in Boston
• One of the lowest rated
hospitals in Boston
Massachusetts General Hospital
• Ranked #2 in the
nation overall
• Only other
Massachusetts
Hospital in the top 10
is our partners
institution, the
Brigham and
Women’s Hospital.
• “There are wide disparities
in hospital payments but no
real difference in cost.”
Clear Information for Decisionmaking?
13. Being Careful About What You Measure (and wish for)
Quality Measurement in Aortic Valvuloplasty
• To palliate congenital aortic stenosis, the valve is dilated
with a balloon
• Therapeutic success is achieved by maximizing the
amount of dilation/gradient relief -- use a bigger balloon
• Safety is achieved by avoiding rupture/damage to the
valve -- use a smaller balloon
• Do not measure quality of aortic valvuloplasty purely by
procedural morbidity/mortality, need a measure of efficacy
and long term benefit as well, otherwise the incentive is
purely to use a smaller balloon
Lee TH. Torchiana DF. Lock JE. Is zero the ideal death rate?. New England Journal of Medicine. 357(2):111-3, 2007 Jul 12.
14. Consumer effects of public reporting
• Is information available at the right time?
• Is information readily understandable?
• Is information presented in a manner which is statistically appropriate?
Kaiser Family Foundatin, 2008
Public reporting of quality alone may not do it and now cost reporting ($,
$$, $$$, $$$$) is getting greater attention…
18. The Long View
Performance
comparison
s for
hospitals,
MDs & Tx
Market
sensitivity to
hospital/MD
quality &
TCO
Clinical re-
engineering by
MDs, hospitals
& suppliers
Q 50 ppts
$ 40 ppts
Value of
Health
Benefits
Key Evolutionary Steps
High
Low
2002 2012
Performance
Disclosure
P4P &
Consumerism
Chasm Crossing
Q = compliance with guidelines
$ = annual health benefits cost
Reproduced with permission of Arnold Milstein, MD (Mercer)
19. Why Payment for Performance
Is So Important
• There is a “quality chasm” between what is and what ought to be
in healthcare
• We have programs that we know work to improve quality
• Patients have improved outcomes and quality of life (win)
• The savings accrue to the payers (win)
• The costs of the program are borne by the providers (lose)
• Payment for performance could make it a win – win – win
• This is a key additional motivator for improvement
• CMS sees this as its key tactic (becoming a “value based
purchaser”)
• Payment for reporting
• Payment for performance (or withholding payment
updates – e.g. SREs and readmission rates)
20. What is Payment for Performance?
Payment for Performance = Concrete financial incentives (either “bonuses” or
“return of withholds”) for meeting negotiated targets on quality and
efficiency
Goals include:
1. Efficiency (managing utilization and costs)
• Inpatient days or admissions or readmissions
• High cost imaging utilization
• Pharmacy costs
• Emergency Room utilization
• Management of High Risk Patients
2. Quality (improving patient safety and quality care)
• Pediatric asthmatic use of controller medications
• Adult diabetes population HbA1c testing and control
• Chlamydia testing in young adult women
• Cardiac Care
• Reporting of healthcare acquired infections
3. Infrastructure
• Electronic Medical Record (EMR) implementation by PCPs and
Specialists (accelerated by HITECH and ARRA)
• Computerized Physician Order Entry (CPOE) implementation
• Safety system implementation
21. No decision is a decision: Impact of pay for value programs:
once fully implemented (FY ’17) for one unnamed New
England Hospital
CMS Program
Start
Year
Payment mechanism
Annual risk*
$M
Cum risk thru FY
17 $M
Inpatient Quality
Reporting
2010 MB penalty for failure to report $9 M $63 M
Value Based Purchasing 2013
MB reduction with option to earn
back based on performance
$4 M $15 M
Hospital Acquired
Conditions
2015
MB penalty for bottom quartile
performance
$3 M $9 M
Reducing Readmissions 2013
MB penalty for performance
(stratified)
$9 M $34 M
Meaningful Use 2015
MB penalty if failure to meet MU
requirements
$6 M $24 M
Total Financial Risk $31 M $145 M
* Annual risk when fully implemented
CMS Is Getting Serious
24. Turning Up the Heat: Selective Contracting
Example: Aetna Aexcel
“If a doctor has opened
with a bronze lancet an
abscess of the eye of a
gentleman and has
cured the eye, he shall
take ten shekels of
silver”
“If a doctor has opened
with a bronze lancet an
abscess of the eye of a
gentleman and has
caused the loss of the
eye, the doctor’s hands
shall be cut off”
Projected savings vary from
1.6 % to 4.5% depending on
the region, specialties
involved and other factors.
This product has grown
rapidly
25. The Long View
Performance
comparison
s for
hospitals,
MDs & Tx
Market
sensitivity to
hospital/MD
quality &
TCO
Clinical re-
engineering by
MDs, hospitals
& suppliers
Q 50 ppts
$ 40 ppts
Value of
Health
Benefits
Key Evolutionary Steps
High
Low
2002 2012
Performance
Disclosure
P4P &
Consumerism
Chasm Crossing
Q = compliance with guidelines
$ = annual health benefits cost
Reproduced with permission of Arnold Milstein, MD (Mercer)
26. THE HEALTH CARE & EDUCATION AFFORDABILITY
RECONCILIATION ACT of 2010
•Coverage
• Payment
• Delivery (including I. T.)
• Financing
Health Reform 1.0
v.
v.
28. There is a lot about quality in
Health Reform 1.0*
IMPLEMENTATION TIMELINE
• 2010
• Improving Consumer Information through the Web.
• Strengthening the Quality Infrastructure.
• Establishing a Patient Centered Outcomes Research Institute.
• 2011
• Improving Health Care Quality and Efficiency.
• 2012
• Encouraging Integrated Health Systems.
• Linking Payment to Quality Outcomes.
• Reducing Avoidable Hospital Readmissions.
• 2013
• Fee for patient centered outcomes research.
• 2014
• Quality Reporting for Certain Providers.
• 2015
• Paying Physicians Based on Value Not Volume.
*that does not depend upon the individual mandate or the Supreme Court
29. Payment Reform In the States
(the rest of the story)
• Bundled payment pilots
• National pilots/demonstrations in key areas such
as CHF, arthroplasty, pneumonia
• Capitation/global payment
• Massachusetts Payment Reform Commission
• BCBS Alternative Quality Contract (AQC)
• ? All payer rate setting
• No payment for excess readmissions
• Medicare: starting with 30-day readmissions for
heart attack, heart failure and pneumonia
• Accountable care organizations/medical
home/CMS demonstrations with shared savings
• 31 Pioneer ACOs launched on 1 January 2012
30. The Myth of a “Right” Way to
Pay for Healthcare
Type of Care Example Goals of a payment method Possible optimal method
Simple self
limiting disease
Recurrent UTI
in sexually
active woman
> 18
1.Rationalization of utilization
2.Ease of access
Fee for service with self
pay
(Retail Health)
Minor trauma
Fractured
forearm
1.Rationalization of utilization
2.Ease of access
Fee for service with co- pay
Stable chronic
disease
Congestive
heart failure
1.Rationalization of utilization
2.Reduction of hospitalization
3.Investment in infrastructure
Capitation
Major single
illness
Breast cancer
1.Coordination of multiple
providers within a team
2.Investment in infrastructure
including staff
Episode of care
Emergency, major
trauma
Motor vehicle
accident
1.Universal access
2.Maintenance of surge
capacity
Public Utility
Key Capability: Provide high quality patient
centered care efficiently (i.e. High Value)
32. Provide high quality patient centered care efficiently
Goals
• Demonstrably higher quality
• Decreased unit cost
• Savings to purchasers
Approach
• Improve quality (patient
outcomes)
• Reduce unit costs
• Redesign care (fewer
units/patient)
• Improve access (more patients)
Episodes of Illness
Inpatient and
Outpatient
Encounters
Inpatient and
Outpatient
Encounters
Episodes of Illness
Population
Management
Population Management Imperative*
* This is what you do!
33. Key Capabilities Required to
Provide High Value
Longitudinal Care Episodic Care
Primary Care Specialty Care Hospital Care
Access to care
Patient portal/physician portal Hospital Access Center
Extended hours/same day appointments Reduced low acuity
admissionsExpand virtual visit options
Design of care
Defined process standards in priority conditions
(multidisciplinary teams)
High risk care
management
Shared decision making
Re-admissions
Hospital Acquired
Conditions
100% preventive services Appropriateness
Hand-off standards
Continuity visit
EHR with decision support and order entry
Incentive programs
Measurement
Variance reporting/performance dashboards
Quality metrics: clinical outcomes, satisfaction
Costs/population Costs/episode
34. Process for Defining Episode Process Standards
Themes in Care Redesign Recommendations
• Implement scheduling and navigation functions
• Reduce unwarranted variation in resource use
• Ensure reliable implementation of planned
processes
• Develop capacity to monitor patients prospectively,
longitudinally
Document
current state
process map
Identify
opportunities for
improvement
Activities
Hand-Offs/ transitions
Phases of care
Timing
Assess
implications
Quality
improvement
Cost savings
1 2 3
Population mix
Quality
Cost (internal and
market)
Define
recommended
care
innovations
System-level
recommendations
Implementation
options
Performance
metrics to monitor
implementation
35. 36
36
36
Distribution of Diabetes Costs
IP Stay ED Visits Ambulatory Care
(Hospital)
Prof services OP Other Pharmacy
Based on Actual Payments for One Insurer, N = 3,824 bundles
PACs
Top Potential Avoidable Complications (PACs)
• Diabetic emergency, hypo-hyper glycemia
• Preventative, rehab, and after care
• Skin and wound care
• CHF, carditis, cardiomyopathy
• Cardiac dysrhthmias
• Labs
• Diagnostic radiology
• Colonoscopy and biopsy
• Diagnostic cath
• Radioisotope scan
• Anesthesia
• Lens and cataract procs
• MRI
• Decompression peripheral nerve
• Debridement of wound
• Excision of skin lesions
Hospital-billed dollars
• DME//supplies
• Labs
• Transportation
• Home health
• Medications (injections, infs, etc.)
Diabetes Episode Timeframe
• 365 days from the date of service of visit
with a Diabetes diagnosis
• Coronary atherosclerosis
• Complications of medical care
Overall PACs rate
for Diabetes is 27%
with PACs
distributed across
these groupings of
care
• Consultation
• Labs
• Ophthalmologic and
Otologic diag and treatment
• Electrocardiogram
• Excision of skin lesions
• Destruction of lesion of
retina and choroid
• MRI
36. Key Capabilities Required to Provide High Value
Longitudinal Care Episodic Care
Primary Care Specialty Care Hospital Care
Access to care
Patient portal/physician portal Hospital Access Center
Extended hours/same day appointments Reduced low acuity
admissionsExpand virtual visit options
Design of care
Defined process standards in priority conditions
(multidisciplinary teams)
High risk care
management
Shared decision making
Re-admissions
Hospital Acquired
Conditions
100% preventive services Appropriateness
Hand-off standards
Continuity visit
EHR with decision support and order entry
Incentive programs
Measurement
Variance reporting/performance dashboards
Quality metrics: clinical outcomes, satisfaction
Costs/population Costs/episode
37. MGH Medicare Demo
Opportunity
• 10% of Medicare patients account
for nearly 70% of spending
• 20% of Medicare patients
have 5 or more chronic conditions
• Congestive heart failure
• Chronic pulmonary disease
• Coronary disease
• Diabetes
• Depression
MGH Demo
• Medicare selected MGH to
participate in a 3-year
demonstration focusing on high-
cost beneficiaries in 2006
• Success validated in 2010
• Contract renewed (3 more years)
• Expanded to new sites
• Brigham and Women’s
Hospital
• North Shore Medical Center
38. MGH Medicare Demo
Results from Independent Evaluator (RTI)
Successful Enrollment
• 87% of eligible beneficiaries enrolled
Successful Targeting of Interventions
• Interventions focused on the enrolled patients with the
greatest opportunity
Successful Communication
• Improved communication between patients and health
care team
• High patient and physician satisfaction
Successful Outcomes
• Hospitalization rate among enrolled patients was 20%
lower than comparison*
• ED visit rates were 25% lower for enrolled
patients*
• Annual mortality 16% among enrolled and 20%
among comparison
Successful Savings
• 7.1% annual net savings (12.1% gross) for enrolled
patients
• Approximately 4% annual savings for total population
• For every $1 spent, the program saved at least $2.65
*Based on difference in
differences analysis
39. Key Capabilities Required to
Provide High Value
Longitudinal Care Episodic Care
Primary Care Specialty Care Hospital Care
Access to care
Patient portal/physician portal Hospital Access Center
Extended hours/same day appointments Reduced low acuity
admissionsExpand virtual visit options
Design of care
Defined process standards in priority conditions
(multidisciplinary teams)
High risk care management Shared decision making
Re-admissions
Hospital Acquired
Conditions
100% preventive services Appropriateness
Hand-off standards
Continuity visit
EHR with decision support and order entry
Incentive programs
Measurement
Variance reporting/performance dashboards
Quality metrics: clinical outcomes, satisfaction
Costs/population Costs/episode
40. Consumerism - Shared Decision Making
• Concept developed by MGH and Dartmouth physicians in
1990s
•
• Research suggests that Shared Decision Making (SDM)
results in a 20% decrease in the use of elective
services
• Partners disseminates access to SDM videos to all
physicians and patients
• Physicians send SDM videos to patients with a single click
of an icon in EHR
• In 2008, more than 2,200 SDM videos were ordered for
Mass General adult primary care patients
41. Prostate cancer care pathway
Proton beam
Cross-
over
therapies
+ Biopsy
Interventional
Radiologist
Urologist
Hormone
Brachy
Surgery
PSA test
IMRT
Digital rectal
exam
Watch and wait
Symptoms
Current patient
experience:
PCP
Med. - Oncologist
Rad. - Oncologist
Urologist
PCP
Clinician:
3
5
Phase of care Diagnosis Treatment
Analysis of practice variation
6
Feedback to PCP’s
Input to Multi-disciplinary process or overall guidelines
Discussion of
therapies
4
2
1
PSA pre-
screening
education
Pre-biopsy
education
Informed
decision –
making with
better aids
Multi-
disciplinary
input
Standardized
informed
consent
* Possible Intervention Points
42. The New “Good Doctor”
• “ In the past, a stereotypical
good doctor was independent
and always available, had
encyclopedic knowledge, and
was a master of rescue care.
Today, a good doctor must have
a solid fund of knowledge and
sound decision-making skills but
also must be emotionally
intelligent, a team player, able to
obtain information from
colleagues and technological
sources, embrace quality
improvement as well as public
reporting, and reliably deliver
evidence-based care, using
scientifically informed guidelines
in a personal, compassionate,
patient-centered manner.”
43. Conclusions
• Quality reporting to date has had modest effects on selection, but clearly focuses
attention and fosters improvement
• Focus on reporting has shifted from quality to value
• Payment for performance had transformed into value-based purchasing but taking
on greater financial risk is likely to emerge as dominant mode of market reform
• Increased out of pocket costs with tiering
• Selective contracting
• Shared savings plans
• Re-emergence of forms of capitation
• Health reform (national, state, and local) will be seen as a value re-engineering
opportunity
• Providing high quality patient centered care efficiently (i.e. High Value) will be
the key differentiator of successful healthcare organizations in the civilian
marketplace
• Focusing on key capabilities (health IT implementation, care redesign, high
risk patient management, shared decision-making, etc) and shifting from an
individual to a population based focus are the imperatives in the civilian
marketplace
• Some of these have been a longstanding focus in the MHS
• We are likely to experience a continuing period of punctuated equilibrium in the
evolution of the healthcare marketplace in the next few years – can further
incremental healthcare reform (focused on payment, delivery and financing)
continue to wait?