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Interview: Dr. Arnold Milstein Talks About Accelerating Health Care Delivery Innovation, What Doctors Can Learn From Systems Engineers, and When It's Okay to Declare Victory

Dr. Arnold Milstein has been at the forefront of health care performance improvement for decades. He cofounded the Leapfrog Group and the Consumer–Purchaser Disclosure Project, and served as a congressionally appointed Medicare Payment Advisory Commission Commissioner. Voted one of the 20 most influential physician executives in Modern Healthcare's annual poll, he also is the Pacific Business Group on Health's medical director. He is a professor at Stanford University and directs its Clinical Excellence Research Center (CERC), a year-old entity that brings together experts from the fields of medicine, business, and engineering to develop new care delivery models that lower per-capita health spending while improving health and patient satisfaction. Dr. Milstein talked to us about this new venture.

IMPORTED: __media_13A8167787134CBAB4765FF8B503749B.gif PHP: Why does the world need CERC?

AM: The United States certainly needs an "innovation accelerator" that increases the flow of new care delivery methods that yield better health with a lot less health spending. CERC accelerates such flow via three activities: inventing much more cost-effective care models for illnesses accounting for the bulk of suffering and spending in the U.S.; alpha and beta testing them in diverse sites with payer support; and finding external partners to spread them nationally.

PHP: Employers are going to like hearing about the possibility of reducing health care spending by "a lot." But can you quantify that? How much are we talking about?

AM: At least $640 billion annually. I wrote about the potential savings opportunity in The New England Journal of Medicine with my colleague Dr. Victor Fuchs and cochaired the planning committee of an Institute of Medicine workshop series that quantified savings estimates. Roughly $640 billion is the amount I estimate would be saved if all care in this country were delivered by providers that rank high on quality and low in per-capita spending. Those providers typically cost about 20 percent less than the norm.

PHP: But there will always be a strong performers and not-so-strong performers, right? How do we get to the point in health care where all providers are performing at a level that we might comfortably consider excellent?

AM: We need to shrink that gap between top performers and all the rest by a lot. Think about a race in the Olympics: the last sprinter in the 100-yard dash doesn't finish two or three seconds after the leader, he or she finishes two- to three-tenths of a second after the leader. All Olympic sprinters are excellent. That's what we need in medicine—everyone crossing the finish line on the heels of the winner.

PHP: And the key is the design and execution of more cost-effective care processes?

AM: Absolutely. At CERC, we focus on innovation design and testing, and then we rely on external organizations for national spread. We start our innovation design process by identifying the current top performers in high-cost clinical areas, understanding their processes, and formulating how knowledge and tools borrowed from systems engineering and social science might substantially improve them. We select four clinical targets on which to focus every year. If the models succeed in alpha site tests, we then refine them for beta testing in diverse care delivery sites to confirm their replicability. If they replicate well, we turn to diverse national and regional health care improvement organizations and information technology firms to spread them. Fortunately, I have long and trustworthy relationships with several of the external partners with whom we'll be collaborating.

PHP: What are the four areas you've chosen to focus on in CERC's first year of operation?

AM: This year we're focused on two aspects of chronic illness care and two procedures. We're working on late-stage cancer care—a gateway to much preventable suffering and waste. We're also targeting care for late-stage chronic kidney disease, which is laden with preventable complications including end-stage renal disease that consumes $80,000 to $120,000 of annual health spending per patient. The two procedures we're looking at are colonoscopy screening and low-risk bariatric surgery.

PHP: When can we expect to see the first of these new care models?

AM: The solution elements are crystallizing now. The second quarter of this year is our target date for releasing our first four new care models for alpha testing.

PHP: Can you quantify the kinds of improvements—either in terms of lowered cost or improved quality—that you expect CERC to be able to realize in these areas?

AM: The bar we've set is to create care models that improve health while lowering by 50 percent per-capita health spending for patients for targeted conditions. For example, current methods of bariatric surgery, which improve diabetes and other obesity-related health conditions, cost about $30,000 per surgery and appear to increase annual per-capita spending for postsurgical patients compared with nonsurgically treated obese patients. We aim to reduce by 50 percent combined spending for the surgery and annual total health care spending for many years following surgery. If we succeed, every such surgery would lower overall per-capita U.S. health care spending.

PHP: So that's the definition of success?

AM: No, success is when savings from the innovative care models developed and tested by CERC materializes nationally. Our work isn't over until clinicians routinely use them to improve health and lower per capita health spending.

PHP: Which is the hard part: making better, more efficient processes or getting the health care system to adopt them?

AM: Historically it's been the latter. Fifteen to 20 years is not an uncommon timeframe for doctors and hospitals to embrace a better but unfamiliar process. But if we aspire to a U.S. health system that won't ruin the credit ratings of Uncle Sam, state governors, and globally competing American employers, we need to generate high-value care models much faster, not just deploy existing cost-effective care models.

PHP: How is CERC going to speed the adoption of its new care models?

AM: Mobilizing self-insured employers and clinical leaders will be pivotal since mobilizing government is fraught with political uncertainties. Large self-insured employers have a lot more leverage than they realize and certainly more than they use. CERC has recruited activated health care purchasers, including Boeing, a labor–employer partnership in Las Vegas, and leading employer health care coalitions like the Pacific Business Group on Health and the National Business Coalition on Health. Each is poised to help drive the adoption and testing of CERC-redesigned processes. We've also recruited health systems that have distinguished themselves in the value they provide to patients and payers—like Intermountain Healthcare in Utah, CareMore in California, Virginia Mason in Washington, and ThedaCare in Wisconsin—to serve as pilot sites for the new care models.

PHP: You have a unique team involved in the CERC effort—physicians, business people, and engineers. What's with the engineers?

AM: Systems engineers offer valuable tools such as systems analysis, systems design, and systems controls. In addition, we rely on an innovation development method created by Stanford's Institute of Design to give our design teams the best possible chance at breakthrough, using techniques like mixing different disciplines and understanding poorly articulated needs of current service users and providers.

PHP: What can the readers of Purchasing High Performance do to help support your efforts at CERC?

AM: Become one of our alpha or beta test participants. Employers will need to buy more employee health with less money if they wish to escape the "Cadillac Tax" in 2018! To become a participant, contact Bob Rebitzer at [email protected].

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