Sometimes the idea that keeping people healthy reduces costs can break down, but sometimes it actually works. A new article by Atul Gawande (subscription required) looks at one such instance. Here is an excerpt from the article, in which a young doctor named Jeffrey Brenner, in Camden, N.J., applies some of the statistical techniques he used as a volunteer police reform commissioner to identifying healthcare “hot spots” in his hometown:
[Brenner] made block-by-block maps of the city, color-coded by the hospital costs of its residents, and looked for the hot spots. The two most expensive city blocks were in north Camden, one that had a large nursing home called Abigail House and one that had a low-income housing tower called Northgate II. He found that between January of 2002 and June of 2008 some nine hundred people in the two buildings accounted for more than four thousand hospital visits and about two hundred million dollars in health-care bills. One patient had three hundred and twenty-four admissions in five years. The most expensive patient cost insurers $3.5 million.
We’ve blogged before about geographic cost disparity in healthcare, though never at so granular a level. Given the hope attached to reducing admissions and readmissions as a way of controlling healthcare costs, it seems reasonable that a formula that identified “super utilizers” as they are called and focused on improving their care (and minimizing unnecessary utilization) would help to reduce costs.
Last night’s News Hour included an interview with doctor and essayist Atul Gawande.
He notes the disparities in American healthcare from one area to the next and calls for improvement in both quality and cost.
The latest Atul Gawande article examines how pilot programs in the Senate healthcare reform bill may help to moderate healthcare cost increases:
The bill tests, for instance, a number of ways that federal insurers could pay for care. Medicare and Medicaid currently pay clinicians the same amount regardless of results. But there is a pilot program to increase payments for doctors who deliver high-quality care at lower cost, while reducing payments for those who deliver low-quality care at higher cost. There’s a program that would pay bonuses to hospitals that improve patient results after heart failure, pneumonia, and surgery. There’s a program that would impose financial penalties on institutions with high rates of infections transmitted by health-care workers. Still another would test a system of penalties and rewards scaled to the quality of home health and rehabilitation care.
Other experiments try moving medicine away from fee-for-service payment altogether. A bundled-payment provision would pay medical teams just one thirty-day fee for all the outpatient and inpatient services related to, say, an operation. This would give clinicians an incentive to work together to smooth care and reduce complications. One pilot would go even further, encouraging clinicians to band together into “Accountable Care Organizations” that take responsibility for all their patients’ needs, including prevention—so that fewer patients need operations in the first place. These groups would be permitted to keep part of the savings they generate, as long as they meet quality and service thresholds.
The bill has ideas for changes in other parts of the system, too. Some provisions attempt to improve efficiency through administrative reforms, by, for example, requiring insurance companies to create a single standardized form for insurance reimbursement, to alleviate the clerical burden on clinicians. There are tests of various kinds of community wellness programs. The legislation also continues a stimulus-package program that funds comparative-effectiveness research—testing existing treatments for a condition against one another—because fewer treatment failures should mean lower costs.
Looking for more reading on some of these concepts? Try these: