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A Prescription for Our Nation's Ailing Health Care System

By Karen Davis

This column is based on the President's Message from the 2007 Annual Report.

The last time health care reform was on the national agenda, a fictional couple named Harry and Louise helped ensure its demise with the refrain, "There has to be a better way."

Today, Harry and Louise might very well be among the 47 million uninsured Americans who are struggling to pay for needed medical care. Or they might be one of millions of Americans unable to obtain the coordinated, quality care enjoyed by residents of so many other countries and instead experiencing lost medical records, redundant tests, and poor oversight of chronic health conditions.

One thing is certain: On the eve of a presidential election in which health care promises to play a prominent role, Harry and Louise, as well as others like them, still do not have access to a high performance health system.

But there is indeed a better way. Let us consider another fictional couple: Angela and Martin. Only this time, let's imagine the two of them not in today's health care system but in a high performance health system of the near future. This is what that system looks like.

Automatic, Affordable Coverage for All

Ever since the country implemented universal health coverage three years ago, Martin had been able to afford the medications and preventive care that kept his high blood pressure, cholesterol, and diabetes under control. He felt like a new person. He'd finally found the energy to begin exercising and the encouragement to lose weight. Last week, his doctor told him he was doing so well that he might even be able to cut the dosages of two of his medications.

While the costs of extending health insurance coverage are significant, so are the economic and human costs of leaving millions of people without coverage and comprehensive benefits, including prescription drugs. The Institute of Medicine estimates that 18,000 avoidable deaths occur each year in the United States as a direct result of individuals being uninsured. The aggregate, annualized cost of uninsured people's lost capital and earnings from poor health and shorter life spans falls between $65 billion and $130 billion for each year without coverage.

The Commonwealth Fund Commission on a High Performance Health System believes the most pragmatic approach for covering all Americans is a mix of private and public group insurance that builds on the best features of our current system, while minimizing dislocation for the millions of people who currently have good coverage. Importantly, the financing for this approach would be shared among individuals, employers, and government.

Aligned Incentives for High-Value Care

For Angela, paying medical bills that morning had been easy, since her insurer paid the oncology center a single global fee for her breast cancer treatment for a year, and she was responsible for 5 percent of that one bill. Thanks to the bundled global fee for her care paid by Angela's insurance plan, Angela had received the kind of coordinated care shown to result in the best outcomes. And since she had checked the excellent patient outcomes for her oncology team on the Internet, she felt confident that all her health care providers, from the hospital where she had her surgery to the outpatient center where she received her radiation therapy, had implemented systems designed to provide high-quality care.

The limitations of the predominant fee-for-service payment system—especially in promoting effective, coordinated, and efficient care—is becoming readily apparent. A major contributor to high costs in the United States is the way our system rewards hospitals and physicians for providing more care, not for more efficiently getting the results patients want.

Fundamental payment reform will be required to reward doctors for providing the highest quality care. This could include a blended payment system that features elements of fee-for-service along with explicit rewards for quality and efficiency; payment for entire "episodes" of care for certain acute conditions (such as heart attacks, hip replacements, and certain types of cancer), with explicit rewards for quality; monthly payments to primary care practices that are accountable for the care provided over time to patients with various chronic conditions (such as diabetes) or health risks (such as high blood pressure); or a combination of payment methods.

Accountable, Coordinated Care

Angela woke up one October morning feeling awful. She reached for the phone and speed-dialed her family practitioner's office. Could she see Dr. F today? "Sure," the receptionist said.

Shortly after 2 p.m., the nurse entered Angela's blood pressure, weight, and heart rate into the computer holding Angela's electronic medical record, congratulated her on losing a few pounds, updated her medications, and, seeing that Angela was being treated for breast cancer, asked how she was feeling. A couple of minutes later, Dr. F entered. She inquired about Angela's cancer treatment. She listened to Angela's heart and lungs; checked her throat, nose, and ears; and ordered a quick strep test, which turned out to be positive. A few clicks on her computer and she found an antibiotic with no interactions with Angela's medications. Two days later, Angela felt fine. That day, she received an automatically generated e-mail from Dr. F's office asking how she felt and urging her to check in. She replied, letting them know she was better.

One of the keys to better health system performance is ensuring that all patients are linked to a regular source of medical care—one that is accountable for coordinating all services and provides convenient access to appointments. This style of practice, sometimes called a "patient-centered medical home," allows patients to contact their provider by telephone, get same-day medical appointments as well as care or medical advice in the evening and on the weekend, and experience well-organized office visits—with their complete medical history readily available. The Commonwealth Fund has funded the National Committee for Quality Assurance to establish standards for a patient-centered medical home, a concept that has been endorsed by four primary care specialty societies.

However, according to a recent Commonwealth Fund report, just 27 percent of working-age adults currently have a medical home. One major barrier to the spread of medical homes is that public programs, such as Medicare and Medicaid, and private insurers pay disproportionately higher rates for specialized procedures than for preventive and primary care. Fund-supported research is helping to develop and evaluate new payment methods that encourage more physicians to practice primary care, employ a team approach to care, and meet the standards of the patient-centered medical home.

Aiming for Higher Quality and Greater Efficiency

It was April 19, a date Martin always dreaded. His father, at age 60, had died from colon cancer on this date 15 years ago. Martin was intent on avoiding the same fate. Thanks to his health insurance plan, which provided 100 percent coverage for all preventive services, he was able to act on his family physician's advice and schedule his first colonoscopy when he turned 50. He would have had one earlier, given his family history, but he couldn't afford the out-of-pocket cost under his old, high-deductible plan. But now, since part of his family doctor's compensation was based on the quality of care provided, including preventive care, he received regular reminders about screenings and other preventive services.

Today's patients often want to be active, engaged partners in their care. A robust system of transparency and public reporting can help patients find the information they want, including measures of quality, prices, total cost of care, and health outcomes for major conditions treated by each provider, as well as information on treatment options.

Moreover, the best health care systems use information technology to organize care for patients, track and measure the quality of care provided, and then compare that quality against agreed-upon benchmarks. The electronic medical record (EMR) plays a central role. An EMR system enables providers to access a patient's complete medical history, including outpatient, inpatient, and ancillary visits, as well as all test results and prescriptions, preventive services like mammograms and colorectal cancer screenings, and clinicians' notes. Such transparent, easily accessible information spurs innovation and improvement in hospitals and physician groups by appealing to their professionalism and helping them to identify areas for improvement.


Accountable Leadership

Achieving the goal of a high performance health system requires new leadership from the federal government in conjunction with public–private collaboration. What our country could use is a single entity that:

  • Sets national targets for health system performance and specific priorities for improvement.
  • Ensures a uniform health information technology system.
  • Generates information on the comparative effectiveness of drugs, medical devices, procedures, and health care services and disseminates that information to payers, clinicians, and patients.
  • Develops the databases and compiles the information needed for assessing effective practices and for identifying and rewarding high performance of those who deliver health care.
  • Reports regularly on health system performance and makes recommendations on how to meet desired targets.

At the same time, stronger partnerships between the federal government and the states—which together account for almost half of all U.S. health care spending—are needed to link payment to guidelines and performance standards. Federal and state governments should also lead by example through the establishment of financial incentives for Medicare and Medicaid providers that meet high levels of quality—something that has already begun.


Is there a better way to provide and pay for health care in the United States? Just ask Martin and Angela, who live in the world of a high performance health system.

As the discussion about health care reform heats up in 2008, The Commonwealth Fund, together with the Commission on a High Performance Health System, will continue to assess ways in which these strategies can be implemented. We hope to assist health care leaders and policy officials who are committed to making the U.S. health system truly the best it can be.

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January 2008