What if Medicare reimbursed based on improving the health status of a community?

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[Originally published by Hospital Impact – 2010]

Noted healthcare journalist Shannon Brownlee is not alone in her assessment that more medical tests and treatments do not necessarily lead to better overall outcomes. In her 2007 book “Overtreated: Why Too Much Medicine Is Making Us Sicker and Poorer“, Brownlee elaborates on that opinion, noting that one of the main motivators behind such behavior is that doctors, oftentimes “are paid for how much care they deliver, not how well they care for their patients.”

This is something that I know about all too well.

Some years back, I was analyzing medical expenses in the state of Maine, broken down by community. As the process went forward, notation was made that the medical expenses in one community–more specifically for cardiac services in one particular market–were markedly higher than in the other communities.

Long story short, I did not see a substantial improvement in outcomes for patients in the community with the medical expenses. And as I dug deeper into the data, I determined that the use of nuclear stress tests in that one particular community was significantly higher than in the other communities, and as such, was determined to be the key driver of the increased expense. Additionally, it was determined that only one high-volume physician practice in that community had the capability to perform said nuclear stress tests, meaning the practice was leveraging that ability to receive higher reimbursement for the treatment of patients with cardiac issues.

I, for one, think it’s high time that we change the reimbursement scene. Medicare should no longer be about reimbursing hospitals and providers based on productivity; instead, it should embrace reimbursement according to improvements in the health status of individuals and communities. Imagine the new conversations that such a shift would create.

In a recent article “Where are the adaptive leaders in healthcare?” originally published in the WPA Hospital News (Issue No. 5), I wrote of a local community hospital that recently invested a significant amount of capital in the building and expansion of their emergency department to address specific challenges they were facing: increased number of Emergency Department visits, the lack of efficient access to the floors, and the numbers of patients waiting excessive lengths of time for care in the ER.

Also noted in the article was the fact that at no time did anyone truly explore the reasons for the increase in Emergency Department visits. No one engaged people both inside and outside the hospital in the tougher discussions to better understand the root cause of this increase. No one used the challenge to move toward an adaptive solution that would focus on addressing the root cause of the increase in Emergency Department utilization while improving the health of both individuals and communities.

Under the new scenario that I outlined above, the hospital mentioned in my Hospital News post would assess the challenges that led to the increase in size of their Emergency Department. No longer would financial incentives unquestionably go hand-in-hand with an increase to Emergency Department visits. There finally would be an incentive to address other issues impacting ER utilization, as well as to bring communities and other stakeholders within the community together to set a course toward technical and/or adaptive solution plans that truly will improve the overall health status of both individuals and communities.

Add to that the evolvement of Medicare and we have a greater opportunity to impact the entire state of healthcare in America. Most payers reimburse according to Medicare principles and levels; by Medicare moving in this direction we would have a sentinel effect on communities throughout the country via the impacts on commercial, workers’ compensation, Medicaid and reimbursement protocols.

Financial misalignment has significantly and adversely impacted the health of individuals and communities. Now is the time to focus on paying for health outcomes; to bring smart people together to adapt and develop a program that truly reimburses based on improving the overall health status of individuals and our communities.

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