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The Third Path: Systemic Change Will Focus on Returning Value

Gregory P. Poulsen

Commentary on The Commonwealth Fund/Modern Healthcare Health Care Opinion Leaders Survey on Views on Health Care Delivery System Reform by Gregory P. Poulsen, senior vice president of Intermountain Healthcare and a member of The Commonwealth Fund Commission on a High Performance Health System.

As the political debate over the nation's health care crisis becomes increasingly polarized, it is tempting to believe that there are only two mutually exclusive paths before us. One proposal argues broadly for greater government involvement in order to ensure "universal" coverage. The other depends on market forces or a "consumer-driven" approach. But neither addresses the core challenge facing our health care system: providing quality and value. And that challenge won't be met solely by enrolling us all in an insurance program or by sending us shopping in the medical marketplace.

True reform identifies core flaws and targets those flaws. In the U.S., the fundamental flaw in health care isn't access (which clearly must expand) or insurance (which must become more affordable). It's more complicated, more systemic. And only by addressing the core issues of cost, structure and the need to align incentives around value-enhancing quality can we ever hope to make the system functional, accessible, and affordable.

So I believe that the best solution is a third path: one that builds on the best attributes of the two that have been proposed, but adds mechanisms to significantly improve value.

The fragmentation of America's health care system too often relegates patients to navigate a sea of providers and care settings, staffed by clinicians who lack adequate or complete medical histories. Poor communication and accountability lead to worse care and increase the chance for errors. The lack of peer accountability, quality improvement infrastructure, and clinical information systems reduces overall quality and value of care. And all of this, stewing in an environment too often fueled by troubling, or even tainted incentives, sends us further off-course.

What might I mean by "troubling?" The incentives to increase utilization are powerful. Most obviously, the physician's professional fee is affected by treatment decisions; our internal analysis suggests that physicians can make six times as much income per hour by doing procedures as by doing consultations that don't result in procedures. In many cases, "defensive medicine" encourages increased utilization ("So tell me, doctor, why didn't you get an MRI to be absolutely sure?"). Patients often request more expensive treatments, testing, and medications that they have seen in advertisements or in popular literature (particularly patients with little out-of-pocket expense). Finally, physicians with ownership in delivery services (such as imaging or surgical facilities) have their incentives to utilize greatly magnified. So studies showing that global health cost increases are primarily because of utilization increases should come as no surprise.

Over and over again, we find that the incentives in today's environment are at war with the professional ethic to maximize value. We can be grateful that most clinicians take their professionalism seriously, or our problem would be much greater. However, putting physicians and other caregivers in a position where they must constantly choose between doing what is right and doing what is rewarded is unconscionable and foolhardy.

In an ideal system, patient information would be available to providers at the point of care, patient care would be coordinated and actively managed, and health care providers would work together and be accountable to the patient and to one another. In an organized system with the correct incentives, people would receive coordinated care based on established clinical best practices, avoiding over- or undertreatment. And, the system as a whole would be innovative, always looking for ways to improve the quality and value of care. Work at my organization and others has demonstrated the value of this kind of approach.

There are many potential avenues leading to a high-value system. But the current environment—professional, regulatory, financial, and cultural—frequently serves as a barrier. True reform will require policy modification, and therein opportunities and access points abound.

Here are some of the recommendations gaining increasing currency:

  • The payment system should move away from the common fee-for-service method, toward a more "bundled" system where providers are rewarded for providing quality care, and penalized for providing unnecessary care. Episode-based, all-inclusive payments or even universal payment for all care may be needed for a period of time.
  • Patients should be motivated (even given financial incentives) to choose high-value care. Furthermore, patients should participate to a reasonable degree in the cost of their care—otherwise, they tend to undervalue and over-demand care, often to their regret.
  • The regulatory environment should change to better facilitate coordination and cooperation among providers.
  • Health information technology, especially electronic medical records, should be utilized and communication protocols should be standardized nationally.

Not since the creation of Medicare has America been so positioned to consider meaningful health care reform. Proponents on every side of the debate agree on one thing, that this is a time for meaningful change.

Now is the time to act. It's time to rethink our reimbursement philosophy; it's time to refocus our efforts on coordinated, integrated, quality care. Because, while it is worthy to consider insurance reform, or ways to increase access to care, any proposal that ignores the health care system's core flaws ultimately will fail—or carry us along, limping, to the next crisis.

The views presented in this commentary are those of the author and should not be attributed to The Commonwealth Fund or its directors, officers, or staff.

Publication Details



G. P. Poulsen, The Third Path: Systemic Change Will Focus on Returning Value, Modern Healthcare and The Commonwealth Fund, April 2008.