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Fragmented Medical Care II: The Models

September 9, 2008 in Health Insurance, Hospitals, Physician Compensation, Supply of Medical Services | Permalink

Yesterday I wrote about the problems with fragmented medical care in America.  Is a single payer system the only solution?  A Commonwealth Fund report shows that the single payer system is not the only path towards improved, more integrated care.

What we want

The report outlines six general improvements that need to be made to improve the quality of care in the U.S.:

  1. Patients’ clinically relevant information is available to all providers at the point of care and to patients through electronic health record systems.
  2. Patient care is coordinated among multiple providers, and transitions across care settings are actively managed.
  3. Providers both within and across settings have accountability to each other, review each other’s work, and collaborate to reliably deliver high-quality, high-value care.
  4. Patients have easy access to appropriate care and information, including after hours.
  5. There is clear accountability for the total care of patients.
  6. The system is continuously innovating and learning in order to improve the quality, value, and patients’ experiences of health care delivery.

These are high ideals that need to be translated into specific action-items for providers.  However, a variety of different organizational structures have been able to accomplish each of these six goals.

Models

There are four general types of structures and all can be successful in delivering high quality care.

  • Integrated delivery systems such as Kaiser Permanente and Geisinger Health System.
  • Large multi-speciality groups such as the Mayo Clinic and Partners Healthcare.  Both groups are nonprofits.  While the Mayo Clinic directly employs doctors on a salaried basis, Partners contracts with over 1000 PCPs and 3500 specialists to provide high quality care to patients.
  • Private networks of independent providers, such as Hill Physicians Medical Group and Northland Health Alliance, generally receive a capiation payment from insurers for each practice but doctors are compensated on a FFS basis.  This is similar to RVU compenation.
  • Government-facilitated networks of independent providers.  Here, the government does not directly provide care, but instead coordinates care between providers.  This has worked will for Medicaid patients in North Carolina. Denmark’s universal health care system coordinates physicians, who are paid via fee-for-service plus a fee for serving as the patients medical home.  Ninety-eight percent of physicians have paperless offices, prescriptions and lab tests.

Shih et al. (2008) “Organizing the U.S. Health Care Delivery System for High Performance“, Commonwealth Fund Report  no. 1155.

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Fragmented Medical Care I: America’s Problem

September 8, 2008 in Current Events, Health Insurance, Hospitals, Physician Compensation, Supply of Medical Services | 2 comments

The U.S. healthcare system is one of the more fragmented systems in the world. Traditionally, economists believe that a splash of decentralized planning with a heap of free markets is a recipe for efficient outcomes. In the case of health care coordination, however, information sharing, and collaborative work are needed if quality is to improve and decentralization may not be the best option. Cebul et al. (2008) describe some of the problems with America’s fragmented system. For instance:

  • Health insurance is a high turnover product. About one-fifth of health insurance policyholders cancel their plans in any given year. Most of these changes are due to i) employees switching jobs and ii) employers cancelling their group plans in favor of other plans. When insurers have short term relationships with their customers, it likely does not pay for them to invest in preventive care or chronic disease management programs.
  • Having a fragmented insurance market can give insurers an incentive to lower quality. When adverse selection is present, offering high quality medical care will attract sicker individuals which will drive up insurance premiums. Thus, insurers often do not have an incentive to provide high quality care.
  • The fragmented insurance system means that hospitals must spend more money paying administrators to collect claims. Woolhander et al. (2003) finds that hospitals in the U.S. spend $315 per capita on administration compared with $103 in Canada.
  • The fact that physicians are rarely employed by the hospitals has lead to some perverse behavior by nurses. For instance at Stanford Hospital, “Nurses were harshly blamed by surgeons for instrumentation failures, but nurses who delivered clean instruments on time achieved ‘star status’ among surgeons. In this setting, some operating room staff shared instruments between surgical suites. Some nurses kept critical instruments in their personal lockers. Some surgeons also took instruments with them when they left the hospital.”
  • Further, physician heterogeneity hurts efficiency by making standard operating procedures nearly impossible to implement. Generally, hospitals allow doctor to gets what they want in order to attract physicians with large patient bases to their hospital. However, this creates an incredible amount of complexity and possibility for error in the health care system.
  • When providers do consolidate, it is often not done in the best interest of the patient. While vertical integration could improve quality, consolidation is often done with the purpose of locking-in profitable referrals or increasing bargaining power.
  • “[Medicare] patients with diabetes see a median of eight physicians in five distinct medical practices.”

In future posts, I will give some examples of organizations that have been able to overcome these problems, as well as policy prescriptions to improve the health of America’s medical system.

See also: Fragmented Medical Care II (The Models) and III (Policy Options).

Cebul RD, Reibitzer JB, Taylor LJ, Votruba M (2008) “Organizational Fragmentation and Care Quality in the U.S. Health Care System” NBER WP 14212.

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