As President Barack Obama and his allies press their case for health care reform, the president exhorts that his vision will slow the growth of medical expenditures, expand coverage to millions, and improve the quality of care.  In the trenches, where millions of medical interventions occur daily, physicians and hospital managers who do the heavy lifting describe a far more grueling path “to bending the cost curve,” one that takes dedicated years to navigate and often loses money because the inflationary fee-for-service payment system rewards providers for rendering more, not less, health care.  At a conference last week, that was the clear message of doctors and managers who have tried to bend the cost curve while improving the quality of care in health care enterprises in communities across the United States. 

In many respects, their voices provided a rationale for why achieving reform is so critical and why — as legislators head for home and countless conversations with their constituents — the road to reform will prove so difficult.  Speaking of the interests of physicians alone, the community voices left unanswered a looming question: will national health reform be able to transform the practice of medicine by weaning physicians from inflationary fee-for-service payments and promoting a more conservative style of practice without causing a rebellion among practitioners who already feel put upon by the gathering forces of policymakers and payers?

Small teams of doctors, hospital managers, health insurers, and others were brought together in Washington, D.C., by four national health care improvement experts to describe their efforts to reduce medical costs in the 10 communities where they work.  The purpose of the meeting, held on July 21 at the Henry J. Kaiser Conference Center, was clear in its title:  “How Do They Do That?  Low-Cost, High-Quality Health Care in America.”  The communities represented were  Sacramento, CA; Cedar Rapids, IA; Portland, ME; Ashville, NC; Sayre, PA; Temple, TX; Richmond, VA; Everett, WA; La Crosse, WI; and Tallahassee, FL.  

In opening remarks, Dr. Donald Berwick, chief executive officer of the Institute for Healthcare Improvement (Cambridge, MA) and one of the four sponsors, said:  “Of course, from a global perspective we already know that it’s possible to have the same or better care as we do in America for half the price.”  But, he added, the sponsors had concluded that if they were “going to get public, political, and professional traction on cost and quality based on successful examples,” they had to draw on American examples if they could find them.  “We can.  We have.”

The communities were selected based on how health care delivered there ranked on an array of measures, a number of which were developed and are published annually in the Dartmouth Atlas of Health Care. The atlas, a treasure trove of data that has long tracked the wide variations in clinical practice patterns across the United States, sorts the country into what it calls 306 “Hospital Referral Regions.” The health improvement experts sought to identify those regions within the 306 that ranked well on measures of cost, quality, and patient satisfaction.  They winnowed the number down to 70 regions where health care expenditures had been substantially reduced and where quality of care and patient satisfaction were well above the norm.  From the list of 70 regions, the sponsors selected 10 communities that were reasonably representative of the political, geographic, and demographic landscape of the U.S.

Berwick explained:  “What we wanted to know, and still do,” is, “What are the conditions — environmental, cultural, organizational, financial, historical…and so on — that can possibly explain how regions in America can perform at a level of cost and quality that — it is almost possible to assert — would, if universal, almost solve America’s health care financing crisis?” In addition to Berwick, the other three sponsors, all of whom are physicians, were Elliott Fisher of Dartmouth Medical College (Hanover, NH), Atul Gawande of Brigham and Women’s Hospital (Boston), and Mark McClellan of the Brookings Institution (Washington, DC).

Describing How They Do It

In the conference’s opening phase, team members briefly described key characteristics that influenced how their local health care providers operated. Most of their medical groups and hospitals are structured as not-for-profit enterprises, reflecting a more community than solely commercial purpose in their management styles. A Sacramento team member said:  “We believe that the commonality of hospitals as not-for-profit institutions have provided a moral compass for our community.” Members of other teams stressed the importance of nurturing a culture of collaboration, rather than one of strict market competition, and making certain that physicians were well represented in the management of hospitals where they practiced.

Conference participants underscored the growing importance of data to measure performance and in moving their systems toward more patient-centered care. And they emphasized that having a strong cadre of primary care doctors is critical to operating an efficient health care system. As Gawande described it, many of these systems “put the needs of patients first rather than the needs of their business model.”  Through these characteristics and others, the 10 communities were able to deliver care to Medicare beneficiaries that, on the basis of per capita spending, placed them in the lowest quartile of the 306 “Hospital Referral Regions” in 2006.  The communities also were in the lowest quartile of a Health Care Intensity Index (a measure of the number of hospital days and physician visits in the last two years of life among Medicare beneficiaries) and ranked well above the norm in providing quality care while maintaining, if not improving, patient satisfaction.

In several instances, physicians, hospitals, and others were subject to the constraints of certificate-of-need (CON) laws. CON laws that apply in Iowa, Maine, and Virginia require a provider or an investor to seek state approval before purchasing an expensive piece of medical equipment or constructing a new hospital that would add capacity to a community’s existing health care supply.

Most of the communities are served by independent medical groups, local single or multihospital systems, and one or more health plans. They operate to various degrees in collaboration with one another, but also compete for patients. Scott & White Clinic of Temple, TX, is an exception to this rule, reflected in the fact that its entire team was composed of representatives of this medical group that employs 800 physicians and is the major provider in that part of the state. The clinic has expanded its operations from three to nine hospitals, making it a much larger player and one that has drawn the scrutiny of the Federal Trade Commission.

Can Successful Cultures Be Replicated Elsewhere?

Dr. Nancy Nielsen of Buffalo, who stepped down in June as president of the American Medical Association, characterized as “some Utopian land” the compact between managers and physicians at the Scott & White Clinic. She asked how it would be possible to take “this culture” that had developed and form similar organizations across the United States. “I have to tell you,” she said, speaking colloquially, “this ain’t where it is at in other places.”

Nielsen said that “competitiveness and every man for himself” dominates physician behavior in most communities, including her own, where, she continued, medical groups “hold the health plans hostage. …In other communities, you can’t teach culture. Physicians have to have some reason” for building cultures like those that thrive in some of the 10 communities.

While Scott & White is the dominant system in its region, the  Sacramento team described how three systems there decided to challenge the dominance of the Kaiser Permanente Medical Care Program. One consequence of their collaboration was to substantially lower their annual per capita spending among Medicare beneficiaries while maintaining a high level of care quality. One Sacramento team member said:  “The development of integrated networks outside of Kaiser Permanente required dramatic changes in our culture.”

Out With Fee-For-Service, And In With . . . Something Else

Among many of the teams there was general recognition that the fee-for-service model under which most physicians practice must be changed, but there was no agreement on what the new model should be.  A Sacramento team member said: “The mixture of fee-for-service and capitation payments creates schizophrenia among physicians.”  One Everett, WA, team member said: “We want to change the basic (physician) payment model. It won’t be capitation payments, but the amount of revenue will be determined by the clinical outcome of care and patient satisfaction.” 

An increasing number of physicians are becoming salaried employees of hospitals and medical groups. But, in some instances, because this payment model does not increase the compensation of a doctor if she sees more patients, practitioners were not as productive as they were expected to be. Some medical groups have created payment incentives designed to encourage doctors to increase their productivity. The teams from Scott & White; Sayre, PA; and Sacramento all reported having instituted payment incentives to drive improvements in physician productivity.

Some of the teams reported that the quality of care had improved in their communities but that they still had a long way to go to reach their quality goals.  A Tallahassee team member said:  “We are pleased with our quality results but not satisfied with them. …We have room for major improvements.”   An Everett team member said: “We are less worse that the rest of the U.S.” And a team member from La Crosse lamented: “I am troubled to learn that we are national leaders because we have a long way to go.”

The Threats To Successes Achieved By Communities 

In a question posed by Gawande, who asked the teams what they considered were “threats” to their local practices and hospitals, they identified the following prospects:  too much economic pressure that would force the unraveling of their collective efforts to lower spending and improve quality; no real idea of the future role consumers will play in a reconfigured system; the prospect that system reform might establish unrealistic timetables for changes in the delivery of care; and the possibility that reform might not recognize primary care physicians as an endangered species, thus threatening access to primary care services.

The View From Buffalo

In the closing session, the sponsors invited Dr. Michael Cropp, a family physician who is CEO of Independent Health in Buffalo, a not-for-profit HMO with some 365,000 enrolled members, to relate what he heard during the day-long discussion. Cropp said he thought that the “collective community sense” mentioned by many of the 10 teams was one of the important recurring themes, along with a recognition that current cost trends were unsustainable and that the pursuit of improved quality was a never-ending quest.

Cropp said that as hospitals and medical groups contemplate greater integration, the system will need some relief from antitrust laws. Cropp was struck at the emphasis many of the 10 teams placed on developing stronger physician leaders.  He said in Buffalo “physician leadership is sorely lacking” and that, in all communities, it was unlikely that doctors would emerge as leaders unless investments were made in training them to serve in that capacity.

The conference seemed to energize many of the participants, but as Berwick said in his opening remarks, the sponsors expected that more questions than answers could come from the day of dialogue, and that is definitely what they heard.  “We do hope we can harvest at least a few ideas for policy,” he added.  However, the key characteristics of the 10 community systems — not-for-profit status, cultures nurtured through years of effort and making physicians group leaders when they are trained to be autonomous professionals — are hardly features that can be woven quickly into health reform policies.

The Distance Between McAllen, Texas, and Temple, Texas

Nevertheless, the promising stories of the 10 communities stood in stark contrast to the picture that one of the health care improvement experts — Gawande — depicted in a widely read June 1 article in The New Yorker titled, “The Cost Conundrum.”  The article highlighted the “Hospital Referral Region” in McAllen, TX, and compared it with El Paso, a city 800 miles away. Gawande, based largely on Dartmouth Atlas data, reported that McAllen has among the highest per capita Medicare costs in the country — more than $15,000 per beneficiary per year in 2006 — while costs in El Paso were only half as much.

Gawande’s article burst into the policy limelight and even caught the attention of President Obama, who is reported to have made the essay required reading among his White House staff members.  But the McAllen story is probably closer to the costs of care in more American communities than those of the 10 teams that were brought to Washington to tell their stories. It only highlights the challenges facing the United States as it moves gradually toward a national reform plan designed to lower costs and improve quality throughout a country driven by the imperatives of capitalism, independence, and a limited government.

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