1. Pacing the shift to value-based models. Healthcare leaders continue to put infrastructure and governance practices in place to support value-based models even as providers still have significant fee-for-service revenue. However, many providers are concerned that they may be reaching a point at which the cost of building and maintaining their value-based organization is not supported by their fee-for-service reimbursement model.
2. Responding effectively to the economic dynamics of local markets. Health organizations that are migrating to value-based models must contend with the realities and limits of their local economies, the strategies of large employers for reducing their healthcare costs, concentration of the payer market and physician practice alignment.
3. Securing and growing market share. Gaining market share remains a big concern regardless of the pace of the payment model change. Providers must weigh market strategies, including consolidation and traditional and non-traditional partnership and strategic relationships, even as volume continues to drive a large share of revenue.
4. Developing alternative revenue streams. Health systems with cash reserves and strong margins are better positioned to make investments that are related to, but not necessarily directly in support of, their core patient care business. Investments that can supplement declining revenue from payers can include ambulatory care centers, telemedicine, business software development and pharmaceutical research.
5. Containing core operating costs. Health executives continue to seek approaches to rein in the costs of their core operations, reduce utilization through standardization, and manage care variations. Even high-performing organizations can obtain additional cost containment by taking a systems approach that is rigorous and transparent.
These pressures won't subside while the “gap between current cost and quality and where everyone needs to get to is still significant,” Ziskind said. The building block is operational efficiency, such as optimizing staffing and managing the supply chain efficiently. "But fundamentally changing the way care is delivered with the right providers at the right place at the right time, reducing unnecessary services and focusing on value – that's where the next wave of benefit is going to occur," he said.
Problem 1: Too Much Unnecessary Care
Overuse and unnecessary care accounts for anywhere from one-third to one-half of all health care costs, which equal hundreds of billions of dollars, in addition to the half-a-trillion per year experts attribute to lost productivity and disability.
Early elective deliveries are unnecessary, according to advice by the American College of Obstetricians and Gynecologists, that has been repeated for more than 30 years (that’s not a typo – 30 years), a point reinforced today at a press conference. This is a message carried by several other highly respected organizations like Childbirth Connection, the March of Dimes and the Association of Women’s Health, Obstetric & Neonatal Nurses (AWHONN). All national health plans concur. Nonetheless, we saw a dramatic escalation in the rates of these deliveries from the 1990s to the first decade of the new century.
Problem 2: Avoidable Harm to Patients
This is one of health care’s most common problems. The statistics are staggering. Here’s an example: one in four Medicare beneficiaries that are admitted to a hospital suffers some form of harm during their stay. Would you get in your car if you thought you had a one in four chance of harm during the drive?Early elective deliveries harm women and newborns. Babies born at 37-39 completed weeks gestation are at much higher risk of death. They are also at a far higher risk for harms like respiratory problems and admission to the (NICU).
Problem 3: Billions of Dollars are Being Wasted
A report by the Institute of Medicine Health suggests a third or more of health costs are wasted. The cost of these unnecessary, harmful early elective deliveries was estimated in a study in the American Journal of Obstetrics and Gynecology to be nearly $1 billion per year.
Problem 4: Perverse Incentives in How We Pay for Care
Traditionally, health plans, Medicare and Medicaid pay providers for whatever services they deliver, regardless of whether the service truly benefits the patient. As an excellent new book called “The Incentive Cure” points out (as does a plethora of other literature that could fill several libraries), how we end up with an epidemic of perverse incentives.
The harsh truth about early elective deliveries is that our payment system encourages them. They generate admissions to NICUs, and NICUs are profit centers. Studies suggest that reducing the rate of these deliveries to a reasonable number could eliminate as many as one-half million NICU days, which could lower health costs for the U.S. But this would force hospitals to take a big financial hit. To their credit, in my experience, once hospitals recognize they have a problem with early elective deliveries, they don’t think twice about taking that hit. States like South Carolina and Texas are trying to reverse the incentives, as are many employers. Unfortunately, they are the exception that proves the terrible rule of insane payment incentives.
Problem 5: Lack of Transparency
We have far more information available to us to compare and select a new car than we do to choose where to go for lifesaving health care.
Transparency galvanizes change like nothing else. Early elective deliveries exemplify that: Despite warnings over the years from medical societies and highly respected national organizations, the rates of these deliveries have been rising for decades. That stopped when a purchaser-driven organization, The Leapfrog Group (my organization), started reporting early elective delivery rates by hospitals in 2010. Suddenly, the rates started declining. Just today, Leapfrog released the 2012 data showing that the national rate for early elective deliveries is 11.2 percent, down from 17 percent in 2010. This is a voluntary survey, with nearly 800 hospitals providing the data willingly. Consumers deserve to know these rates for every hospital delivering babies in the country.
Now for a Dose of Optimism
We have a glimpse of success in ending early elective deliveries. Sparked by public reporting, we have seen a growing cadre of providers, policymakers and consumer advocates uniting to address this problem, and the Department of Health & Human Services declared early elective deliveries as a top priority issue. Regional coalitions are also vowing to end the practice in their community.
The next step is for purchasers and consumers to keep up the pressure because that will only help in encouraging real change. And we need to apply that model across the board – the business community should also work together to address the five big problems in health care that have a direct impact on their own employees’ health and their business’ bottom line. The key message here for all groups is this: don’t financially reward the wrong care and demand transparency.
http://www.forbes.com/sites/leahbinder/2013/02/21/the-five-biggest-problems-in-health-care-today/
Quick Reply
