II. Universe A: The Health Care Polis

(This is part of a series: start here if you please.)

The Polis conception of the health system dominates health policy today. Visionaries like Don Berwick have dedicated untold hours to preaching its virtues and nudging the system in its direction. It’s a vision to which, in a previous life, I dedicated much of my time.

If It’s Broke, Fix It

In the Polis, the flaws in the health care are systemic, with inefficiencies and overspending stemming from fundamental misalignments between how care is paid for and delivered and how it ought to be under a rational, coherent system.

As a result the delivery of health care services is severely fragmented. Health care providers operate in narrow silos that focus on specific, specialized components of a patient’s problems without connecting their work in any meaningful way to a more holistic and complete understanding of a person’s health status.  Seizing on a wide range of literature convincingly demonstrating that this discord in health care delivery is driving up spending and resulting in costly and sometimes dangerous redundancies, errors, and missed opportunities (not to mention accounting for much of the purported physician shortage we face), reformers have pushed aggressively for more coordinated care across the entire spectrum of health services.

Accordingly, in the Polis, cohesive systems of care must be consciously designed, consistent standards of care must be agreed to, collaboration and buy-in for a team-based coordinated model of service delivery are essential. Ideally, health care ought to be a continuous process, with seamless handoffs between health care providers specializing in different domains of patient care. Each provider need not be a jack-of-all-trades but rather must be contributing to her component of a coordinated, holistic care plan. And a single point of human contact with medical knowledge, likely a primary care provider, must be conducting that orchestra of medical specialists to make sure that the total medical composition is played to perfection, for the sake of the patient.

Chasing Population Health Management

If the Polis was simply about applying a better, cheaper bandage that would be laudable enough. But it serves an even broader philosophy. It seeks not only to build a cohesive working system that rationalizes the delivery of health care, but also one that supports the maintenance of health in the first place. This approach, falling under the somewhat nebulous and oft-abused term “population health management,” aspires to both better coordinate medical services and integrate them with non-medical supports (be they social or behavioral, etc) essential to an individual's well-being.

We can get a sense of this philosophy from a quote shared by the recently departed CEO of a prominent integrated health system in the Northeast, Gary Gottlieb:

I’ll compete with anyone on cost and quality, if you give me the whole patient… People with hip replacements also have dementia…Someone with heart disease not taking his medication might also be depressed. We want to compete on how well we treat that whole patient.

Attending to only the immediate problem presenting isn't enough. Really tackling costs and improving health outcomes for a person requires a comprehensive strategy. Rather than a disjointed, piecemeal approach, health care providers must build relationships inside and outside of their walls to simultaneously address everything that makes a patient unwell. The ACA is a major driver of this philosophical shift, as the American Hospital Association attested in its report on Trends in Hospital-based Population Health Infrastructure:

Myriad factors are driving hospitals and care systems to address the nonmedical determinants of population health. Most notably, the Affordable Care Act implicitly and explicitly promotes a population health management approach to care delivery. Not only does this legislation expand health insurance to a majority of the United States population, it compels hospitals to address the socioeconomic, behavioral and environmental factors that affect people before hospital admission and after discharge. The ACA is accelerating the shift of reimbursement models from fee-for-service to value-based, a structure that promotes better health outcomes, improved quality of care, illness prevention and coordination across the continuum of care. Care systems are now being held accountable for the health of their patient population and are responsible for implementing health improvement strategies to address community health needs. Adopting a population-based approach to care that encompasses the spectrum of determinants of health is essential for care systems to thrive in the ACA era.  

To improve health outside their walls, hospitals and care systems must engage in multisectoral partnerships with community-based groups, health departments and public health organizations. By bringing together stakeholders from across the health care system and local community, hospitals can collaborate to identify population health priorities and develop strategies to address the health issues unique to their specific community. The federally mandated community health needs assessment process can provide a forum for enhanced collaboration between hospitals and their partners.

We're talking about nothing short of re-aligning the health care delivery system such that health, not sheer service volume, is its bread-and-butter. That's a big shift. And I'd be remiss if I failed to note that it's a shift that aligns almost perfectly with the insurance market reforms in the ACA, which move premium determination and benefit coverage decisions to the community, not individual, level.

Put Your Money Where Your Mouth Is: The Rise of Value-based Payment

But the plot thickens. If this is indeed the end goal, we find ourselves at present in a bizarre in-between stage. We can, if we squint, see the Promised Land but we need to lay down the infrastructure (policy, financial, and technical) to get us there. And that’s tricky. For instance, if we want to manage the health of populations and share information in real time between all participants in the extended care team tending to a patient, we need to shove health care into the 21^st century (or, arguably at least the late 20^th century) and get them on electronic health records that, through the miracle of structured data, can readily extract and give meaning to trends in the health of patients. But if the financial incentives underlying the system are still focused on churning out more services and billing more health widgets then, whatever its long-term potential for improving quality and managing health, converting to EHRs may just drive up spending by making it easier to quantify and bill for discrete services. And that indeed seems to be what has happened so far.

That volume-based approach to reimbursement bakes in an inherent bias toward delivering more and more services, as exemplified by Roemer's law that "in an insured population, a hospital bed built is a filled bed." Perversely, that means that the prevailing payment policy in the health care system effectively penalizes providers who do a better job and thus end up having to do less in the aggregate. This observation from the chief quality officer at Intermountain Healthcare, an integrated health care delivery system in Utah, sums up the challenge of improving in that environment:

Quality improvement is innately a preventive strategy. It achieves most of its cost savings by improving care “upstream,” thereby avoiding “downstream” failures and their associated recovery costs. Most clinical savings stem from reduced hospitalizations, reduced emergency department visits, and reduced resource consumption within care delivery episodes. David Clark and coauthors provide specific examples of the cost savings that resulted from clinical improvement efforts at Intermountain. Such savings extend well beyond savings from administrative improvements. 

Unfortunately, health care providers today are paid for precisely those care delivery episodes that quality improvement seeks to reduce. As Intermountain teams implemented clinical management, clinical outcomes improved and costs fell. However, our payments also fell—often even further than our operating costs. For example, although improvement in Intermountain’s appropriate elective induction rates saved the citizens of Utah more than $50 million per year through reduced payments, Intermountain’s costs fell by only about $41 million. Intermountain thus lost more than $9 million per year in operating margins. Implementing better care required us to invest in education, work-flow redesign, and new data systems. As we improved, the resources to drive further change disappeared.

If population health management is a new philosophy underpinning the delivery of health care, it needs a new model of reimbursement from health payers, like private health insurers or Medicare and Medicaid. How we pay for care heavily influences how doctors and hospitals provide it. Historically we've paid for each and every health care widget, with little mindfulness of the results they achieve or the cost efficiency with which they're selected. The result has been that service volume obsessed, uncoordinated, unfocused, and myopic non-system that the Polis is dedicated to upending.

The central conceit in the Polis is that we, as a society, aren’t getting enough value—read health, broadly defined—for  our health care dollar. And while the pricing of health services is necessarily a component of this, at a fundamental level this is a conception of the volume side of the cost equation being the problem. Not long before the ACA passed, Thomson Reuters famously estimated that $800 billion of our national health dollars are wasted annually on unneeded services, mistakes we should avoid, conditions we can better treat.

Proponents eagerly exploit that argument, pointing to vast waste in the American health system

resulting from poor coordination and dangerous volume incentives: duplicated tests, unnecessary procedures, a “do more” philosophy that neatly aligns with the “pay more” defeatism of many payers. With “better” (generally understood to be some variant of “streamlined”) care delivery, we can not only meet a patient’s needs with fewer resources, we can serve a fuller conception of the person. Health care becomes more than the sum of its parts. A well-functioning system of care thus generates savings beyond what it costs to put it all together.

This philosophy, that we must first pay for better care before we can expect to receive it, is taking off as reimbursements from public and private payers are increasingly linked to quality outcomes and cost efficiency. The Centers for Medicare & Medicaid Services has announced a goal of linking 90% of Medicare payments to quality or value by the end of 2018, and a coalition of prominent private sector payers and providers has pledged to get 75% of its payments in value-based arrangements by 2020.

Industry watchers from Catalyst for Payment Reform (the creator of the handy infographic above) to The Advisory Board to Fitch Ratings have tracked the explosion of value-based payment and risk-based contracting over the past five years, driven in no small part by incentives put forth in and the Polis-oriented philosophy pushed by the ACA.

Percentage of lives covered by ACOs, by hospital referral region

This shift in how care is paid for (giving health care providers some of their savings back if they do better—to avoid the Intermountain conundrum—and in some cases asking them to pay back some of the excess if their spending goes over a certain budget) has given rise to new modes of organization/delivery in the provider world. The accountable care organization (ACO), theoretically a tightly linked network of different kinds of doctors and hospitals working together collaboratively to manage the health of their patient populations, is proliferating rapidly.

And the health policy world is pinning much of its hopes on the Polis--both the tightly integrated organization of health care providers and the payment schemes put in place to nudge it. PricewaterhouseCoopers (PwC) looks at the expected drivers (and, working in the opposite direction, deflators) of medical inflation every year. Two of the three cost deflators they identify for 2015 are related to these kinds of ACA-supported delivery reforms: (1) "systemness," PwC's word for the holistic, coordinated vision of health care delivery embraced by the Polis, and (2) the financial champion of systemness, risk-based payments (the third deflator, price shopping, is one we'll meeting in Universe B).

I Come to White-Coat Caesar, Not to Bury Him, or: How I learned to Stop Worrying and Manage the Health of Populations

One of the most important organizational shifts all this entails is a rejiggering of the institutional logic that governs health care organizations, particularly those delivering care. To steal from Institutional Change and Healthcare Organizations:

Institutional logics refer to the belief systems and associated practices that predominate in an organizational field. . . Institutional logics provide the "organizing principles" that supply practice guidelines for field participants. Logics specify what goals or values are to be pursued within a field or domain and indicate what means for pursuing them are appropriate. Thus, logics tap into both the cultural-cognitive and normative dimensions of institutional environments. The logics are only salient to the extent that they affect action within the field--sometimes being carried by established participants, sometimes by outsiders who influence behavior within the field. 

If fundamental change in the health sector is indeed taking hold, this is where it comes from: the understanding of what health care ought to be and how it ought to be delivered held by critical actors in the health system is changing, and with it the way the entire field does business. The "goals or values" that the health sector is actively pursuing seem increasingly (thanks, in part at least, to the incentives and Polis-esque worldview being pushed under the ACA) to be embracing the Triple Aim--the notion that we ought to be simultaneously improving health, care, and holding down cost growth. Goals that are now being facilitated by agreements to be paid differently and to adopt new care models.

But few communities are truly democratic at their roots. The Polis—ruled, in the thought of antiquity, by the philosopher king—must give in to Michel’s Iron Law of Oligarchy, as all forms of organization ultimately must.  “Who says organizations say oligarchy.” For all the lip service—admirable and well-intentioned as it may be—to patient-centeredness, physicians retain control in the Polis. But more important than the role it provides the individual clinician, the Polis privileges the mighty Health System (ACO or otherwise), a conglomeration of disparate physician groups, hospitals, perhaps other components. If the name of the game is integration and coordination, then a (relatively) closed system of providers that collectively take on responsibility for the health of those patients who utilize them is what we're talking about.

Inherent in this concept of coordinated care is greater vertical integration in the health care system. Played out to its logical conclusion, the Polis ultimately promotes the formation of empires: vertically integrated systems capable of servicing the full continuum of health needs of their patients. The ultimate Health Care Oligarchs. This, for instance, is what the accountable care organizations forming under the Affordable Care Act are intended to achieve; while at present they preserve patient choice, allowing their patients to seek care outside them at their discretion, this is considered a serious weakness of the current model, not a strength.

For the alternative to the Health Care Oligarchs we must proceed to Universe B.