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The evolving health care market: Professionalism and value at the envelope's edge
PUBLIC POLICY, NUTRITION PRACTICE AND THE EVOLVING HEALTH CARE MARKET
GUEST
Nutrition Vol. 12, No. 4, 1996
EDITORS:
ALISON B. KING, PHD GREGG S. MEYER, MD, MSC From Procter & Gamble Pharmaceuticals, Norwich, New York, and the Department of Medicine, Uniformed Services University of the Health Sciences, Bethesda, Maryland, USA
The Evolving Health Care Market: Professionalism and Value at the Envelope’s Edge GREGG From the Department
of Medicine,
The new economics of health care, where value and cost-effectiveness have become the mantra of health systems evolution, has brought a whole new series of challenges for which few of us were prepared. The shifts from managing individual patients to managing populations, physician-directed care to team-directed care and physician services as a revenue generator to cost centers have claimed their share of victims as measured by diatribes against these inevitabilities in the popular and medical press by health care providers. Although it remains necessary for clinicians to provide good care, this alone is no longer sufficient. That care must now not only be of good quality but must be accessible to patients (read “customers” under the new health care economics lexicon), leave those patients satisfied and maintain or enhance the financial performance of the health care organization by achiev-
MD, MSC
Uniformed Health Services University of the Health Sciences, Bethesda, Maryland, USA
ing an acceptable outcome at a reasonable cost. There is a legitimate argument that the new economics of health care will, at least initially, enhance the quality of patient care as economic forces drive down inappropriate use of potentially harmful health care interventions that had been incentivized by fee for service reimbursement (Fig. 1). Capitation pay-
ments reward low cost providers regardless of the quality of care they provide. The open question, however, is whether those same forces that squeeze out overutilization of services will continue to drive the cost-quality relationship, resulting in a situation where quality is being sacrificed on the altar of cost control. Pushed further, the capitation model could result in a situation where the drive to achieve short-term cost savings results in long-term inefficiencies. The current trends in admissions rates and length of stay provide an ongoing example of this phenomenon. As aggressive managed care organizations approach the 150 bed days per thousand patients per year benchmark, it is likely that further reductions in hospital utilization will be offset by readmissions for inadequate care and more intensive hospital therapy for delays in necessary admissions. Although it is possible that some pa-
rexcesscare underfee for service m optimal care m cost-quality trade off
0
au&fCln
10
quality increasing ->
FIG. 1. The effect of the new economics.
The opinions and assertions contained herein are the private Department of the Air Force or the Department of Defense.
Nutrition 12:285-286, 1996 OElsevier Science Inc. 1996 Printed in the USA. All rights reserved.
S. MEYER,
views of the author and are not to be considered
ELSEVIER
official or reflecting
the views of the
0899-9007/96/$15.00 PII: SO899-9007(96)00087-
1
286 tients will “vote with their feet” and switch health plans if they find the quality of their coverage to be unacceptable, many patients may find they have little option to exercise this prerogative because of their inability to afford more costly plans or because their employers leave them with no alternative choices. The potential dangers of market forces pushing the edge of the quality envelope to create a cost-quality tradeoff are quite real. Because providers have found it difficult to define, much less measure, quality, cost has become the prime driver of health care decision-making at the individual and corporate level. The development of adequate information systems, examinations of the important dimensions of quality in health care and the dissemination of comparative quality reports among purchasers of health care are the long-term solutions to this consequence of evolving health care economics. In the interim, however, there are two fundamentals of the provision of health care that remain robust regardless of the economic milieu. The first can be summed in the concept of professionalism, whereas the second is the recognition that health care value must be viewed in context instead of the reductionist view that equates value with price alone. Professionalism, which is defined by character and spirit in addition to education, is centered on the physician-patient relationship.’ Although “customer focus” and the “drive for maximizing efficiency” challenge that relationship, the new economics need not destroy the primacy of the
THE EVOLVING physician-patient interaction nor usurp the advocacy that is its hallmark. Many of the ideal characteristics of a provider under a system of managed care are remarkably similar to those under other economic models. A provider who strives to provide excellent care, meet the needs of patients, and provide those services to as many patients as possible will meet with success regardless of the system. The value of professionalism is a singular constant in changing times. Providers who can integrate traditional core values of professionalism such as excellence, leadership and innovation with new values such as patient focus and accountability will not only survive the tumultuous market transition but be well situated to thrive in the future.’ The second fundamental is that good value in health care will eventually be appreciated to be far more than just a good price. Although a 5% premium savings can mean millions of dollars to a large employer in health plan costs, such savings can be dwarfed by potential losses in other sectors of the organization if the cheaper health plan provided has real or perceived deficiencies in quality. A health plan that skimps on services (e.g., rehabilitation postacute myocardial infarction) can have a direct impact on an employer’s bottom line if employees miss more days of work because treatment that would have brought them back sooner was not available. Indirect costs secondary to a poor choice of health plan by an employer can take the form of attrition of valued employees who are attracted to other firms because those alter-
HEALTH CARE MARKET
natives offer better health benefits. The loss of a valued executive or decreased productivity secondary to inadequate coverage will very quickly erase any “savings” from a cheaper health plan that offers poor value. There is some evidence that the appreciation of a broader definition of value is already having an effect on corporate decision-making. Some firms are taking nascent ratings of quality such as how many of the plan’s providers are board certified or whether the plan meets evolving national quality standards into account when choosing among altematives.3 In some cases, higher cost plans are being selected because their quality is perceived to offer the corporation greater long-term value. In the past, large corporations have been catalysts in market evolution, and it is reasonable to expect that with time, their practices will trickle down to smaller firms. The steadfast values of professionalism and the growing appreciation of value as a multidimensional construct are more than just rays of hope for seemingly disenfranchised providers in their perceived darkness of the evolving health care market. These forces are in fact the dawning of the next revolution in health care economics. REFERENCES 1. Wennberg JE. Health care reform and pro-
fessionalism. inquiry 1994;3 1:296 2. Souba WW. Professionalism, responsibility, and service in academic medicine. Surgeryl996;119:1 3. Barron’s. March 4, 1996, p. 1.
GUEST
Nutrition Vol. 12, No. 4, 1996
EDITORS:
ALISON B. KING, PHD GREGG S. MEYER, MD, MSC From Procter & Gamble Pharmaceuticals, Norwich, New York, and the Department of Medicine, Uniformed Services University of the Health Sciences, Bethesda, Maryland, USA
The Evolving Health Care Market: Professionalism and Value at the Envelope’s Edge GREGG From the Department
of Medicine,
The new economics of health care, where value and cost-effectiveness have become the mantra of health systems evolution, has brought a whole new series of challenges for which few of us were prepared. The shifts from managing individual patients to managing populations, physician-directed care to team-directed care and physician services as a revenue generator to cost centers have claimed their share of victims as measured by diatribes against these inevitabilities in the popular and medical press by health care providers. Although it remains necessary for clinicians to provide good care, this alone is no longer sufficient. That care must now not only be of good quality but must be accessible to patients (read “customers” under the new health care economics lexicon), leave those patients satisfied and maintain or enhance the financial performance of the health care organization by achiev-
MD, MSC
Uniformed Health Services University of the Health Sciences, Bethesda, Maryland, USA
ing an acceptable outcome at a reasonable cost. There is a legitimate argument that the new economics of health care will, at least initially, enhance the quality of patient care as economic forces drive down inappropriate use of potentially harmful health care interventions that had been incentivized by fee for service reimbursement (Fig. 1). Capitation pay-
ments reward low cost providers regardless of the quality of care they provide. The open question, however, is whether those same forces that squeeze out overutilization of services will continue to drive the cost-quality relationship, resulting in a situation where quality is being sacrificed on the altar of cost control. Pushed further, the capitation model could result in a situation where the drive to achieve short-term cost savings results in long-term inefficiencies. The current trends in admissions rates and length of stay provide an ongoing example of this phenomenon. As aggressive managed care organizations approach the 150 bed days per thousand patients per year benchmark, it is likely that further reductions in hospital utilization will be offset by readmissions for inadequate care and more intensive hospital therapy for delays in necessary admissions. Although it is possible that some pa-
rexcesscare underfee for service m optimal care m cost-quality trade off
0
au&fCln
10
quality increasing ->
FIG. 1. The effect of the new economics.
The opinions and assertions contained herein are the private Department of the Air Force or the Department of Defense.
Nutrition 12:285-286, 1996 OElsevier Science Inc. 1996 Printed in the USA. All rights reserved.
S. MEYER,
views of the author and are not to be considered
ELSEVIER
official or reflecting
the views of the
0899-9007/96/$15.00 PII: SO899-9007(96)00087-
1
286 tients will “vote with their feet” and switch health plans if they find the quality of their coverage to be unacceptable, many patients may find they have little option to exercise this prerogative because of their inability to afford more costly plans or because their employers leave them with no alternative choices. The potential dangers of market forces pushing the edge of the quality envelope to create a cost-quality tradeoff are quite real. Because providers have found it difficult to define, much less measure, quality, cost has become the prime driver of health care decision-making at the individual and corporate level. The development of adequate information systems, examinations of the important dimensions of quality in health care and the dissemination of comparative quality reports among purchasers of health care are the long-term solutions to this consequence of evolving health care economics. In the interim, however, there are two fundamentals of the provision of health care that remain robust regardless of the economic milieu. The first can be summed in the concept of professionalism, whereas the second is the recognition that health care value must be viewed in context instead of the reductionist view that equates value with price alone. Professionalism, which is defined by character and spirit in addition to education, is centered on the physician-patient relationship.’ Although “customer focus” and the “drive for maximizing efficiency” challenge that relationship, the new economics need not destroy the primacy of the
THE EVOLVING physician-patient interaction nor usurp the advocacy that is its hallmark. Many of the ideal characteristics of a provider under a system of managed care are remarkably similar to those under other economic models. A provider who strives to provide excellent care, meet the needs of patients, and provide those services to as many patients as possible will meet with success regardless of the system. The value of professionalism is a singular constant in changing times. Providers who can integrate traditional core values of professionalism such as excellence, leadership and innovation with new values such as patient focus and accountability will not only survive the tumultuous market transition but be well situated to thrive in the future.’ The second fundamental is that good value in health care will eventually be appreciated to be far more than just a good price. Although a 5% premium savings can mean millions of dollars to a large employer in health plan costs, such savings can be dwarfed by potential losses in other sectors of the organization if the cheaper health plan provided has real or perceived deficiencies in quality. A health plan that skimps on services (e.g., rehabilitation postacute myocardial infarction) can have a direct impact on an employer’s bottom line if employees miss more days of work because treatment that would have brought them back sooner was not available. Indirect costs secondary to a poor choice of health plan by an employer can take the form of attrition of valued employees who are attracted to other firms because those alter-
HEALTH CARE MARKET
natives offer better health benefits. The loss of a valued executive or decreased productivity secondary to inadequate coverage will very quickly erase any “savings” from a cheaper health plan that offers poor value. There is some evidence that the appreciation of a broader definition of value is already having an effect on corporate decision-making. Some firms are taking nascent ratings of quality such as how many of the plan’s providers are board certified or whether the plan meets evolving national quality standards into account when choosing among altematives.3 In some cases, higher cost plans are being selected because their quality is perceived to offer the corporation greater long-term value. In the past, large corporations have been catalysts in market evolution, and it is reasonable to expect that with time, their practices will trickle down to smaller firms. The steadfast values of professionalism and the growing appreciation of value as a multidimensional construct are more than just rays of hope for seemingly disenfranchised providers in their perceived darkness of the evolving health care market. These forces are in fact the dawning of the next revolution in health care economics. REFERENCES 1. Wennberg JE. Health care reform and pro-
fessionalism. inquiry 1994;3 1:296 2. Souba WW. Professionalism, responsibility, and service in academic medicine. Surgeryl996;119:1 3. Barron’s. March 4, 1996, p. 1.