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Healthcare Model Redesign: How Do We Measure Up against Other Developed Countries and What Options Do We Have for Improvement?

US healthcare ranks poorly against the systems in other developed countries in terms of cost efficiency and outcomes. How can we realign payment and utilization incentives to reward high-quality, patient-centered care?

In the previous post in this series, (“What's the Patient Protection and Affordable Care Act (PPACA) or ObamaCare Going to Do for Us?”), I looked at some of the limitations of our current approach to healthcare reform. This week, we’ll focus on the fact that when the US is measured against other developed countries, we're at the bottom when it comes to healthcare costs and outcomes.

The United States ranks last when compared to six other countries: Britain, Canada, Germany, Netherlands, Australia and New Zealand. Indeed, America spends twice as much on healthcare compared to residents of other developed countries, but gets less healthcare quality, efficiency, and equity, according to a “Mirror, Mirror on the Wall: How the Performance of the U.S. Health Care System Compares Internationally,” a report published June 23, 2010 by the Commonwealth Fund. You can read the executive summary of the report here. Download a PDF of the full-text version of the report here.

The report looks to the healthcare legislation passed acrimoniously in the US designed to substantively improve the cost and quality of our healthcare.

I e-mailed Karen Davis, PhD, coauthor of the report, who has helped me in the past to sort through the geopolitical issues about what is meant by "value," to ask her opinion about America’s performance in healthcare as a nation, particularly in terms of incentives as a means to quality and value improvement.

Noting that the Commonwealth Fund report "Health Reform's Impact: Health Spending to Shrink by $590 Billion, Family Premiums by $2,000, Over Next Decade,” stated that "significant payment and system reform provisions in the Patient Protection and Affordable Care Act will begin to realign incentives within the health care system and reduce cost growth,” I asked Davis how, exactly, in the ideal, organized healthcare system can or will incentives be realigned? I also asked her whether, knowing what we do from the balloon analogy, if there is evidence that such efforts will have a net positive benefit and whether such efforts could be durable.

Here is what she wrote in response:

Dr. Kaplan,Thanks for your nice note and ongoing interest in Commonwealth Fund work. The Cutler-Davis study you mentioned refers to several specific payment and system reform provisions in the Affordable Care Act that change financial incentives within the health system to reward quality and value rather than volume. These include higher reimbursement for preventive care services and patient-centered primary care; bundled payment for hospital, physician, and other services provided for a single episode of care; shared savings or capitation payments for accountable provider groups that assume responsibility for the continuum of a patient’s care; and pay-for-performance incentives for Medicare providers. These provisions, among others, were projected to lead to substantial health system modernization and savings of $590 billion over 10 years.Further Commonwealth Fund case studies and reports have shown that successfully realigning financial incentives offers the opportunity to stimulate greater organization as well as higher performance. I’m attaching an article I wrote with Dr. Paulus and Dr. Steele of the Geisinger Health System in Pennsylvania that details some of the successful payment and delivery system changes undertaken there. You may also be interested in the report on realigning incentives and organizing delivery written by several Fund colleagues. We recommend that payers move away from fee-for-service toward bundled payment systems that reward coordinated, high-value care. In addition, we recommend expanding pay-for-performance programs to reward high-quality, patient-centered care.