President's Message
Aiming High: Targets for the U.S. Health System
1. Long, Healthy, and Productive Lives
2. The Right Care
3. Coordinated Care over Time
4. Safe Care
5. Patient-Centered Care
6. Efficient, High-Value Care
7. Universal Participation
8. Affordable Care
9. Equitable Care
10. Knowledge and Capacity to Improve Performance

Policy Options for Improving Health System Performance

Printable version of this article
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The United States spends far more of its economic resources on health care than other countries do. Yet, higher spending doesn't mean that we receive more or better care. On a per capita basis, fewer Americans are hospitalized than their counterparts in other countries, with about the same number of physicians. The real difference is that we pay more for health care. For example, other major industrialized countries pay less than half what we pay for prescription drugs.(19) They also invest more in primary care and less in specialist care, perhaps gaining more value-per-dollar spent than the United States.
Particularly troubling are new studies finding wide variations in the cost and quality of U.S. health care. A Commonwealth Fund-supported study found, for example, that the quality of hospital care varies widely from hospital to hospital and from city to city.(20) Others studies are documenting that there is no clear relationship between health outcomes and costs, for example between hospital mortality rates and the cost of hospital care.
Much of the variation seems to be a consequence of care that is not standardized. Some of the nation's finest hospitals deploy twice as many physicians as other hospitals, with no clear differences in patient outcomes. (21) How much care costs depends very much on where a patient goes for care—or, in some cases, where an ambulance takes a patient in a serious emergency.
In many ways, we get what we pay for. Our fee-for-service payment system rewards the provision of more specialized services, not good outcomes. It pays for defective services—willingly paying twice when a foreign object is left in a patient after surgery or a misplaced imaging test has to be repeated. It gives hospitals no financial incentive to reduce complications or prevent rehospitalizations by making sure patients understand how to take their medications and manage their conditions at home. It does not reward nursing homes that prevent pneumonia or flu by making sure all residents are immunized. It fails to encourage investment in primary care that avoids preventable hospitalizations. It does not pay for devices that help asthmatic children monitor their peak flow rate and report early symptoms of trouble to their pediatricians, and it does not reward screening young children for developmental delays or guiding parents in helping their children grow up healthy and ready to learn in school. If we want different results, we must reward the results we want to achieve.
 
 
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Variation in hospital mortality and cost per patient

Source: H. J. Jiang, Center for Delivery, Organization and Markets, Agency for Healthcare Research and Quality.
Note: Data from 10 Healthcare Cost and Utilization Project states. Mortality is a weighted composite of 10 risk-adjusted inpatient mortality rates. Cost has been adjusted for wage index, case mix, and severity of illness.
Average percentage of patients seeing 10+ different physicians in first year of care within academic medical center hospitals

Source: E. S. Fisher et al., "Variations in the Longitudinal Efficiency of Academic Medical Centers," Health Affairs Web Exclusive, October 7, 2004.
Note: Quintiles of practice intensity ("treatment groups") corresponded closely to regional differences in price and to illness-adjusted Medicare spending.