OBSERVATIONS - january 5, 2009
What is Delivery System Reform?
Cost management is central to the sustainability of universal coverage—no matter how that coverage is financed—and how health care is actually delivered is central to most notions of cost management. Accordingly, the notion of “Delivery System Reform” appears, in one form or another, on the agenda of most health care reform conferences. But what does delivery system reform actually mean? Are there necessary constituent elements? How do the various ideas being brought forward connect with one another?
Delivery system reform has three essential elements: structural reform; payment reform; and a set of tools that support the first two elements. These elements are interrelated, with progress on each requiring progress on the other two, often synergistically. To understand these relationships better, it is useful to examine each element in turn.
Structural Reform
Most physicians practice alone or in small groups, a model of care seen by many observers—including physicians—as not well suited to the care of complex and chronic illness, which involves coordinating services among providers. So far, many such small practices have been unable or unwilling to employ electronic medical records, systematic evidence based care processes, and performance based quality improvement programs. Several studies of common quality measures have shown that larger multispecialty group practices generally perform better on these parameters. A number of group practices around the country have also found ways to integrate not only among specialties but also between the physician practice and one or more hospitals, thus creating the opportunity to coordinate across care settings. Creating more such integrated practices would improve provider accountability for both the quality and cost of health care, but financial incentives for them to form are lacking. Although some of these groups have expanded geographically in recent years, few new ones have been created.
Payment Reform
Most physicians and many group practices are paid on a fee-for-service basis, so that providing more services increases revenue. By contrast, prepayment to groups of physicians and payment by salary to individual physicians creates receptivity to evidence-based care processes and the avoidance of unnecessary and potentially harmful care. Prepayment, however, requires provider organizations of sufficient size and management capability to manage financial risk and succeed over the long term. What we have then, is a classic “chicken and egg” problem: while there are not enough multispecialty group practices for payers to change payment methods, there are also too few innovative prepayment arrangements for physicians to consider organizing into larger practices. The process of delivery system reform will require breaking this conundrum by progressive and synergistic movement in both directions simultaneously. The exact nature of structural design and payment changes may well vary across geographies and market conditions, but significant movement will be needed everywhere for the current situation to improve.
Support Tools
The success of new delivery systems and payment methods will be aided or impeded by the presence or absence of several necessary tools; clinical information technology; adequate primary care capacity; and, “evidence tools” such as care pathways and comparative clinical effectiveness research. Clinical information technology is the neural network of the modern health care delivery system. Its use impacts patient safety, prevention and early detection of disease, coordination among providers, avoidance of redundancy, and provider-patient communication, to name only a few advantages over paper based systems. Actions will be needed as part of health care reform to expand the use of this technology.
Care coordination will depend, in the long run, on having enough physicians or other individuals capable of providing primary care services, and acting as the centerpiece or “medical home” of patient care. Current projections suggest there will soon be an inadequate supply of such providers, in part because their reimbursement is perceived to be inadequate compared with other specialties. This problem will require solution.
Finally, the effectiveness of new and old care systems, appropriately reimbursed, will be improved by the availability of trusted, science based information upon which to base clinical decisions. Current interest in creating an independent federal body to sponsor “comparative effectiveness” research is a step in this direction.
-Francis Jay Crosson, MD, Fellow, KP IHP
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