New Hampshire spent $5.9 billion on hospital care and physician services in 2010, and wasted an astonishing $1.5 billion of that. That's based on an estimate that nationally, 20 to 30 percent of such health care expenditures are wasted on unnecessary hospitalization, badly coordinated care between hospitals and physicians, and poor chronic disease management, according to Elliott Fisher, a Dartmouth College professor.
What's equally astounding is 5 percent of the population in the United States accounted for nearly 50 percent of health care expenditures in 2009, with annual mean expenditures of $40,682, according to a report issued this year by the federal Agency for Healthcare Research and Quality. By contrast, 50 percent of the population accounted for just 2.9 percent of expenditures, with mean annual bills of $236.
Even if we accept the burden of disease as it now exists, we can markedly reduce the need to be in the hospital. And, if we had quality, well coordinated treatment for chronic illness, we could reduce spending a lot, says Fisher, who is also a researcher at The Dartmouth Institute for Health Policy and Clinical Practice and the Geisel School of Medicine at Dartmouth College in Hanover. There are tremendous opportunities for improvement.
Treating chronic disease (increasingly, those related to obesity and other lifestyle choices) accounted for more than 75 percent of the entire country's $2.6 trillion costs in 2010, according to the Henry J. Kaiser Family Foundation. Chronic diseases include heart disease, asthma and diabetes, which means while health care costs are spiraling, they are controllable.
What is hard to control is behavior. It's a fiscal challenge to spend time motivating patients to be healthier with ever tighter budgets. But progress is being made as primary care providers, insurers and hospital systems are working together to redesign a system that focuses on moving from a sick care system to a health care system.
Health Care is Primary
Chris Cox was 52 in 2010 when his doctor told him he had high blood sugar and was pre-diabetic. His doctor recommended he join HMR Weight Sense, a medically managed weight loss program offered at Derry Medical Center in Derry, which he did. Cox dropped 110 pounds and lowered his blood sugar. My father was a diabetic for 20 years and spent his last two years in a nursing home, says Cox, adding his dad was on dialysis for 10 years. I didn't want to be like that. The HMR Weight Sense program is offered nationwide in two phases. During the first, patients attend weekly meetings, have weekly one-on-one counseling, and visit the doctor at least once a month. The second phase focuses on maintenance, does not involve doctors' visits, but includes meetings and counseling.
Cox says the program worked because it taught him a healthier lifestyle and held him accountable. He paid for it but says the cost was minimal compared to the future cost of diabetes-such as his dad's $7,500 monthly nursing home bill. By getting healthy, Cox also avoided medications and medical bills related to diabetes.
Derry Medical Center enrolled 477 patients in Weight Sense from November 2010 to December 2011, with 75 percent making it to the maintenance phase. For those people, Derry Medical Center CEO Tom Buchanan says the health care system is working. The real challenge is to work with people before they develop a chronic illness, says Buchanan. To reach those people, the medical center uses electronic medical records to call thousands of patients every month to remind them they are due for annual physicals or follow ups.
The NH Citizens Health Initiative, which managed a medical home pilot study Derry Medical Center took part in, reported that being proactive results in better health, lower costs and fewer emergency room visits.
A Multi-Level Solution
Elliot Hospital Senior Vice President and Chief Medical Officer Greg Baxter says the future of health care is smaller hospitals and fewer hospital stays. He says providers must shift more care to primary care doctors who should receive reimbursement for better patient outcomes, not individual procedures. And that is exactly what the Granite Healthcare Network is trying to do.
The network, which took effect in July, is a partnership of five independent nonprofit hospitals (Concord Hospital in Concord, Elliot Health System in Manchester, LRGHealthcare in Laconia, Southern NH Health System in Nashua, and Wentworth-Douglass Hospital in Dover). The group has formed an Accountable Care Organization (ACO) with Cigna-believed to be the largest in the state-through which the hospital systems will be rewarded for providing coordinated and seamless care through what is believed to be a less expensive system. Those hospitals care for 23,000 patients with Cigna insurance.
The schizophrenic part is the whole system is built on consumption, and I'm sitting here saying, By the way, I'm going to do everything I can to reduce [unnecessary] consumption', says Baxter, also chief medical officer of Granite Healthcare Network. Even if I was wildly successful in the first year [more coordinated care with better patient outcomes], I can't impact our overall revenue significantly.
Part of the ACO's challenge is that while Cigna is on board, the other three main insurers are not, though executives at Anthem and Harvard are in talks with the network.
Those with chronic illnesses will benefit most. Registered nurses in each hospital system act as clinical care coordinators, using data to identify patients discharged but at risk for readmission, overdue for follow ups, or not refilling prescriptions. They then help patients make appointments to manage conditions before they become a crisis.
Elliot alone will invest in six such full-time positions this year. Baxter says there is a 20 percent readmission rate across the five networks, similar to the national average of 20 to 25 percent. Under the ACO, the insurer picks up the tab for the coordinated care and shares the resulting savings with providers.
Fisher says that there will be consequences for those hospitals that don't focus on health rather than illness. Why on earth would you want to be in a hospital with all those nasty bugs when you can be cared for at home with nurses checking in on you? he says. Those who are willing to step forward and learn how to take care of people with the fewest resources possible while providing the best quality are likely to survive; others will not.
Baxter says the system has invested in a database to examine all patient claims data (not just Cigna patients) and identify patients due for physicals, at risk for chronic illnesses or overdue for follow up care.
Realigning the System
Cigna's partnership with Granite Healthcare Network is too new to have amassed data, but other programs have. Cigna currently has more than 300,000 patients enrolled in 32 ACOs in 16 states and will increase that number to 1 million by 2014 (or 8 percent of its 12.5 million
members nationally).
Results from its Phoenix-based multi-specialty practice group in Arizona are encouraging. There, Cigna found coordinated care saved $336 per patient per year, reduced ambulatory surgery costs by 11 percent and increased preventative care visits by 12 percent for adults.
Dr. Robert Hockmuth, senior medical officer for Cigna in New England, says Cigna's models have evolved. While Cigna initially called patients about preventative measures directly, the insurer found customers respond more to nurses from their local doctor's office.
Anthem developed a program, called Condition Care, which uses claims data to identify people with certain chronic diseases like asthma, chronic obstructive pulmonary disease (COPD), coronary artery disease, diabetes and heart disease. The insurer then has nurses call them and provide information about treatment and medicine. Another program uses the same model, but reaches out to those with multiple conditions. Anthem says it saves $2 for every dollar it invests in these programs.
Anthem is also working on a larger global project in partnership with IBM using the supercomputer Watson. The goal is to gather clinical information about the effectiveness of treatments for major illnesses (cancer to start) using outcomes data from oncologists worldwide. It will then be fed into the supercomputer and analyzed so doctors can measure the effectiveness of different treatments and discern the best patient care.
Harvard Pilgrim started offering its providers multiple payment models that share savings for high quality, lower-cost care. In addition to a patient-centered medical home pilot, Harvard Pilgrim has a specialist medical home model. If a specialist is acting like a preventative care provider, we give that specialist additional money to manage patient care along the whole spectrum, says Beth Roberts, senior vice president of regional markets for Harvard Pilgrim Health Care. She says Harvard Pilgrim developed these models as alternatives for those not in accountable
care organizations.
Harvard also offers bundled payments for surgeons with a unique twist: It will pay high quality surgical practices a single rate per patient (a rate lower than the current fee for service model), but then direct patients to those practices, creating more revenue through higher volume.
The Motivation Challenge
Reaching out to people is one thing, motivating them is another. It's fairly easy to deal with an asthmatic and get them engaged because they don't want to be wheezing, says Baxter. It's much more difficult to engage someone who has high blood pressure because there is no immediate change for managing it, no reward.
There is also the problem of aligning employee incentives with health improvement. Insurers offer numerous ways for businesses to reward workers for being healthy, including reduced rates for people with a healthy weight and low blood pressure. But employer incentives don't always reward improvement. Cox lost 110 pounds and walked throughout Europe for his 25th wedding anniversary, but his body mass index, which his employer uses to measure and reward health, is still not within the range to get him lower rates.
Doctors' salaries are also an issue. Sharon Beaty runs Mid-State Health Center, a primary care center in Plymouth that uses a patient-centered medical home model and which participated in the primary care pilot program with Derry Medical Center. Beaty, the CEO, says directing more people to primary care is wise, as is rewarding better primary care, but recruiting primary care doctors is tough and will be more difficult if demand increases.
Incentives alone can't fill the gap between pay for primary and specialty care. A recent Medscape survey of 24,216 physicians in 2011 found that pediatricians averaged $156,000 while radiologists made $315,000. Both pay the same medical school tuition bills. I don't begrudge [specialists] making good salaries, but if you want primary care to do this work, somehow you have to make a system to pay for it, Beaty says.
In the end, providers and experts at all levels say the solution rests heavily on integrating care, with a strong focus on primary care providers. But balancing collaboration and dividing limited money isn't easy. Primary care docs by themselves can't extract people from a hospital that doesn't want to coordinate care, says Fisher of Dartmouth. Adds Beaty, It's just a matter of getting payers, whoever they are, to recognize that this type of care costs a lot, but you can save a lot more than what it costs.
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