Notes from Eric
The cavalry is not coming: Finding solutions is up to us
With the election just days away, many speculate how the outcome will affect the economy, health reform, and our jobs. At the recent annual meeting of the Institute of Medicine (IOM)—the clinicians and researchers who advise Congress and others on health policy—I heard this resounding message: There will be no easy solutions.
I strongly believe we all must vote: That’s our privilege and obligation. But regardless of the outcome, our country’s health and health care enterprise faces formidable challenges. Most notably, the cost of U.S. health care is unsustainably high. Transformation is absolutely necessary. And changing it will require creativity, courage—and in many cases, sacrifice from those who work in health care.
As Dr. Michael Weitekamp shared in the SGIM Forum in August: “The cavalry is not coming.” The economic challenges of American health care “transcend any particular judicial, political, legislative, or regulatory flavor of the month. They will still be here after the November election and beyond that.”
Weitekamp calls on physicians in particular to face the “inconvenient truths” of U.S. health care: the realities that will soon disrupt their economic interests, if they haven’t already. Among them:
- The government pays for half of all health care spending in the United States, so cuts needed to lower the federal deficit mean big cuts to health care.
- Physicians’ decisions and public expectations drive 80 percent of health care spending, so we can’t reduce spending without changing how we practice medicine.
- The current system is “stunningly inefficient and duplicative… and too tolerant of unwarranted variation in price, volume, and intensity of services.” Eliminating such waste will certainly disrupt the status quo.
To this list, add the fact that health care spending now accounts for one sixth of the U.S. economy. Cuts to health spending will mean fewer health care jobs, dampening an already shaky recovery. Fixing health care will inevitably lower health care’s bottom line.
Of course, you don’t need to go to an IOM meeting or read a medical society blog to know this. The inconvenient truths of the health care cost crisis are becoming painfully evident in health organizations everywhere—including Group Health. Although heralded for effective and cost-effective innovations such as the patient-centered medical home and shared decision making, Group Health is now seeking $250 million in cuts to our annual operating expenses over the next 16 months. Group Health President and CEO Scott Armstrong is asking managers to focus on savings through reductions in unnecessary clinical expenses, and from tighter controls over hiring and labor budgets. He’s confident that an organization with $3.5 billion in annual revenue can find such savings. And he’s promising we can do so without losing sight of our commitment to high-quality care and service.
As difficult as this sounds, Group Health is on the right track. We're confronting what it really takes to achieve better value for our patients through stronger financial management. And we already have a structure and many of the capabilities that leading experts deem necessary.
“Achieving higher-quality care at less expense requires adapting the current system into one that continually improves, by capturing and broadly disseminating lessons learned from everyday health care experience and research discovery,“ Dr. Mark Smith, president of the California HealthCare Foundation, wrote last week in the Journal of the American Medical Association.
Dr. Smith’s commentary, titled “What’s Needed Is a Health Care System That Learns,” describes recommendations from a recent IOM report he led on lowering costs. Included are many Group Health innovations: a patient website, digital data, decision support tools, and Evidence‑based clinical practice guidelines. But the report advises other changes, including improving cost transparency and measuring clinician performance based on patient outcomes.
“The stakes are high,” writes Dr. Smith. “The actions required to reverse this trend will be notable, substantial, highly disruptive—and absolutely necessary.”
When Dr. Smith keynoted Group Health Research Institute’s 25th anniversary in 2008, he asked, “If Group Health is so integrated, and your incentives are so aligned, why are you still so expensive?” He challenged us as a research organization to find ways to deliver care at good or better quality for 40 percent less. How? After four years, the question lingers.
Despite such challenges, leaders at Group Health and like-minded learning organizations remain hopeful. In fact, Commonwealth Fund President Dr. Karen Davis told the IOM audience last month, collective evidence shows cost can be reduced by at least a third. Her blog, citing Group Health’s work with the medical home, offers clues to what’s working nationwide.
Through our ongoing commitment to research and dissemination, our efforts to reduce costs while improving quality can become further opportunities to lead as innovators.