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A Successful and
Sustainable Health System — How to Get There from
Here
by Harvey V. Fineberg, The New
England Journal of Medicine
March 15, 2012
A new type of thinking is essential if mankind is to
survive and move toward higher levels.
— Albert Einstein
America's health system is neither as successful as it
should be nor as sustainable as it must be. The
Patient Protection and Affordable Care Act of 2010
(ACA) introduces the prospects for major reforms in
payment for and organization of care, in prevention
and population health, and in approaches to continuous
improvement. Yet it remains under legal assault and a
cloud of controversy. Even if it is fully implemented,
the ACA will not represent a complete solution to the
core dilemma of affordability and performance. The
country's political appetite for further reform may be
sated, but unless we attend to the major sources of
waste and impediments to performance, the United
States will remain vulnerable to an excessively costly
health system that delivers incommensurate health
benefit.
I purposely refer to a “health system” rather than a
“health care system” because the solutions need to
focus on the ultimate outcome of interest — that is,
the population's health and each individual's health —
and not only on the formal system of care designed
primarily to treat illness.
A successful health system has three attributes:
healthy people, meaning a population that attains the
highest level of health possible; superior care,
meaning care that is effective, safe, timely,
patient-centered, equitable, and efficient2; and
fairness, meaning that treatment is applied without
discrimination or disparities to all individuals and
families, regardless of age, group identity, or place,
and that the system is fair to the health
professionals, institutions, and businesses supporting
and delivering care.
A sustainable health system also has three key
attributes: affordability, for patients and families,
employers, and the government (recognizing that
employers and the government ultimately rely on
individuals as consumers, employees, and taxpayers for
their resources); acceptability to key constituents,
including patients and health professionals; and
adaptability, because health and health care needs are
not static (i.e., a health system must respond
adaptively to new diseases, changing demographics,
scientific discoveries, and dynamic technologies in
order to remain viable).
The Problem
In 1960, life expectancy at birth in the United States
was 69.8 years — putting us in the middle of the pack
of countries in the Organisation for Economic
Co-operation and Development (OECD), 12 of which had a
longer life expectancy and 13 of which had the same
life expectancy or a shorter one (Figure 1Figure 1Life
Expectancy at Birth in Selected OECD Countries,
1960–2009., and the Supplementary Appendix, available
with the full text of this article at NEJM.org).3 By
2009, U.S. life expectancy had increased by more than
8 years, to 78.2 — an increase of approximately 2
months per year over five decades. Yet this progress
left us in the lowest quartile of the OECD countries:
by 2009, 26 countries had longer life expectancies and
7 had shorter ones. Some European countries (including
Austria, France, Germany, Switzerland, and Finland)
had boosted life expectancy by 10 years or more. In
Australia, life expectancy was slightly more than 1
year longer than in the United States in 1960 but was
3.4 years longer by 2009. Mexico and Turkey, though
still trailing the United States, had managed to
achieve increases in life expectancy of 17.8 years and
25.5 years, respectively. In 9 of the 13 countries
that were tied with or behind the United States in
1960, life expectancy surpassed ours by 2009; among
these countries, Japan and Korea had lengthened their
respective life expectancies by 15.2 and 27.9 years.
Life expectancy is not the only measure of health
system performance according to which the United
States falls short. The Commonwealth Fund periodically
conducts a systematic comparison of health system
performance in Australia, Canada, Germany, the
Netherlands, New Zealand, Britain, and the United
States. When assessed on the basis of various aspects
of performance, including quality, access, efficiency,
and equity, the United States came in last overall in
2010; in no category did we excel.4 Our overall poor
showing masks substantial variation among the 50
states. For example, rates of hospital readmission
within 30 days after discharge among Medicare patients
in the period from 2006 through 2007 ranged from about
13% to more than 23%. The average costs per Medicare
beneficiary varied among states by more than 50%. Not
surprisingly, high readmission rates are correlated
with high costs per beneficiary.
One health system measure on which we far exceed all
other countries is health expenditures. Back in 1960,
when the United States spent 5.1% of its gross
domestic product (GDP) on health, Canada spent 5.4% of
its GDP (Figure 2Figure 2Health Expenditures as a
Percentage of Gross Domestic Product (GDP) in Selected
OECD Countries, 1960–2009.). By 2009, however,
Canada's spending as a fraction of GDP had more than
doubled, to 11.4%, while ours had more than tripled,
to 17.4%.3 In 1960, the per capita health expenditure,
as measured in dollars adjusted for purchasing-power
parity (PPP), was higher in Switzerland ($166) than in
the United States ($148).3 Today, however, no one
rivals the United States in per capita health
expenditures (see the Supplementary Appendix); Norway
came closest in 2009, at $5,352 (PPP-adjusted), which
was about two thirds the U.S. figure of $7,960.3 On a
more positive note, the pace of growth in U.S. per
capita health expenditures declined steadily over the
past decade, from a rise of 8.4% between 2001 and 2002
to a rise of 3.1% between 2008 and 2009.
The joint problem of relatively low performance and
high cost stands in the way of a successful,
sustainable health system. These concerns are
intensified by the federal debt crisis, which has
exacerbated worries about the capacity of individuals,
families, and the nation to afford health care yet
also meet other essential needs over time. The federal
debt, which surged past $15 trillion in 2011, now
exceeds our entire annual GDP.7
Political discourse on deficit reduction must consider
the two primary drivers of cost: defense expenditures
and entitlement programs. Social Security, Medicare,
and Medicaid are the three principal entitlements, and
federal expenditures for the two latter programs now
exceed those for Social Security.8 In 2009, the Office
of the Actuary at the Centers for Medicare and
Medicaid Services (CMS) projected that by 2030, given
current trends, national health expenditures will
exceed 30% of the GDP.9 There is no way to contend
with entitlements without dealing with Medicare. And
there is no way to deal with Medicare without
restraining the total cost of care: cost shifting
(from government to individuals or employers, or vice
versa) will not save money overall, and none of these
parties can afford to bear any more of the load. The
only morally and politically acceptable way to curtail
costs is to take steps to preserve or enhance the
performance of the health system, thus getting more
value for dollars spent.
The combination of high cost and relatively poor
performance reflects inefficiency in the health
system. High cost and low quality have many causes in
common (see Sources of Inefficiency in U.S. Health
Care). These failings are especially notable with
respect to chronically ill patients, who account for a
large fraction of health expenses: in 2001, 5% of
Medicare beneficiaries accounted for 43% of
expenditures, and 25% accounted for 85% of spending.10
Three fourths of these patients had one or more
chronic illnesses, such as heart disease, chronic lung
disease, and diabetes; a key driver of health system
inefficiency is a lack of coordinated care that could
keep such patients out of the hospital. The burden of
chronic disease and its resultant cost could be
mitigated through a more widespread effort to limit
risk factors, including measures to help patients
reduce excess body weight, increase physical activity,
quit smoking, control hypertension, and lower
cholesterol levels.
Potential savings from increased efficiencies in the
health care system are no small matter. An Institute
of Medicine (IOM) panel recently estimated annual
excess cost from systemic waste at $765 billion —
including $210 billion in unnecessary services, $130
billion in inefficiently delivered services, $190
billion in excess administrative costs, $105 billion
in excessively high prices, $55 billion in missed
opportunities for disease prevention, and $75 billion
in fraud.11 In all, these costs amount to
approximately 30% of total health expenditures. Fresh
from a stint as CMS administrator, Donald Berwick
estimated that problems such as poor quality of care,
overtreatment, and administrative waste could account
for as much as $1 trillion annually in costs that do
not contribute to improving the health of the
population.12 If these figures seem excessively high,
remember that even if annual health costs were reduced
by as much as $850 billion, the United States would
remain in the top tier of OECD countries in terms of
per capita health expenditures.
The Solution
In the half century since the debates that led to the
enactment of Medicare and Medicaid in the mid-1960s,
an ocean of ink has been spilled on the subject of
reforming the health system: on the availability of
health insurance, access to care, the supply and
education of doctors and nurses, the safety and
quality of health care, the evaluation of new medical
technology, the payment system for doctors and
hospitals, shortcomings in regulation of drugs and
devices, the fragmented organization of care, the
rising cost and diminishing affordability of care, and
other dimensions of our remarkably durable health
crisis. Sometimes analysts and reformers would stress
a particular idea as the key to reform; the numerous
examples include a single-payer system, an all-payer
system, increased competition, reduced fragmentation,
a change in physician payments, technology assessment,
information technology (IT), increased oversight,
decreased regulation, malpractice reform, consumer
choice, patient-centered care, systems to ensure
safety and increase quality, lean design principles of
production, systems engineering, managed care,
educational reform, and a new professionalism.
Several previous efforts have promoted integrative
strategies, emphasizing the need to accomplish many
things simultaneously in order to achieve a successful
and sustainable health system. In 2005, for example,
the Commonwealth Fund inaugurated an ongoing
Commission on a High Performance Health System; its
2007 report identified 15 changes in federal policy
related to information, prevention, pricing, and
payment that, when combined, were projected to save an
estimated $1.5 trillion over a period of 10 years.13
In 2009, with the support of the Robert Wood Johnson
Foundation, the Engelberg Center for Health Care
Reform of the Brookings Institution issued another
comprehensive prescription, describing a dozen key
reforms and many specific actions in four main
categories: foundational changes in information,
evaluation, and human resources; reforms in the
provider-payment system to encourage accountability in
order to achieve better outcomes and lower cost;
improvements in insurance markets so that insurers
would compete to add value rather than to enroll
lower-risk beneficiaries; and changes that would
enable individual patients to make better choices.14
The IOM Roundtable on Value and Science-Driven Health
Care, with support from the Peter G. Peterson
Foundation, conducted a series of workshops in 2009
aimed at identifying ways to reduce projected health
expenditures by 10% over the next decade without
compromising innovation, quality of care, or health
outcomes. A 600-page report summarizing these
discussions covered policy levers in such areas as
evidence development and use; administrative
simplification; streamlined insurance regulation;
payment that provides incentives for desired results;
and consistent, high-quality treatment for patients
with complex conditions.11 In addition, the report
identifies 10 approaches to reducing care-related
costs, administrative costs, and waste that could
potentially achieve the desired savings.11 The
roundtable has launched a series of Innovation
Collaboratives on best practices, evidence
communication, clinical effectiveness research,
digital learning, and value incentives — each designed
to engage key stakeholders and speed the design and
adoption of constructive reforms.
The central idea underlying all these efforts is this:
to accelerate the pace of change, we must take
different, reinforcing actions simultaneously in a
concerted effort to turn a behemoth health care
complex into a more streamlined health system that
delivers greater value for the money. In other words,
we must tackle the problem in its entirety and on all
fronts. No matter how comprehensive the proposed
solution, however, it will be of no consequence
without sufficient incentive to take action, nor will
it matter how well incentives are aligned with desired
outcomes if core processes of care do not consistently
ensure high quality. A process that works well today
but does not accommodate new discoveries and superior
technology is destined to become outmoded.
Improvements in each area are mutually reinforcing.
Over the longer term, IT can play a key role in
building a superior health system. The Health
Information Technology for Economic and Clinical
Health (HITECH) Act was enacted as part of the
American Recovery and Reinvestment Act of 2009.15 The
Office of the National Coordinator for Health
Information Technology in the Department of Health and
Human Services (DHHS) is responsible for overseeing
the development and promulgation of standards for a
nationwide health information infrastructure, as well
as the standards for meaningful use that will permit
payment incentives for physician practices that adopt
electronic health records. Unheralded in law, but a
potentially powerful promoter of the use of health IT,
is the first-ever appointment of a chief technology
officer at the DHHS. The Health Data Initiative
launched by that executive in association with the IOM
is making available to technology companies and
designers of smartphone applications a torrent of
government-held, health-related data.16 Initiatives by
private insurers, such as the recently announced
Health Care Cost Institute, promise to open
deidentified data for research purposes.17
More widespread adoption of IT in health care
settings, emerging standards for interoperability, and
the burgeoning availability of data provide a
foundation for new functionality in health IT, which
is already beginning to show promise as a way of
improving the efficiency and effectiveness of care.
When this functionality is combined with other
advances in such areas as high-speed network
connectivity, geospatial positioning capacity,
wireless communication, robotics and artificial
intelligence, biosensor technology, bioinformatics,
and ingenious applications, one can envision an array
of interrelated and interconnected uses of health IT
(see Potential Uses of Health IT). As with human
genomics and individualized medical care, we can
already see elements of such uses today, but it will
take years for them to be fully realized. In the
meantime, we will need to make many other changes
during the next decade to avoid an unsustainable
increase in the cost of health care.
Because the ACA expands insurance coverage, it has an
intrinsic tendency to increase overall health costs in
the near term, even as it helps to fulfill the
fundamental goal of universal access to care. Assuming
that the law — or at least the provisions other than
mandatory purchase of insurance — survives scrutiny by
the Supreme Court, it does lay a foundation for some
potential efficiencies and other needed improvements
through several salient provisions.
One such provision is that state-based insurance
exchanges will have the potential to introduce and
oversee clearer consumer information and more
appropriate competition among insurers. In accordance
with recently announced standards, states will have
some latitude in determining the essential health
benefits package for insurance policies.18
In addition, accountable care organizations (ACOs), as
defined in the law, will provide an impetus to
integrate professionals and institutions, with
incentives to coordinate the care of Medicare patients
more efficiently. ACOs may be particularly useful in
managing the care of patients with chronic disease who
tend to require high-cost care. The final regulations
open the way to wider participation and facilitate the
start-up phase.19
Another ACA provision establishes the Patient-Centered
Outcomes Research Institute (PCORI), which over time
will provide a much sounder evidence base for doctors
and patients to use in comparing the effectiveness of
clinical strategies. After a start-up period that runs
through 2012, the PCORI Trust Fund, supported by
assessments on public and private insurance payments,
should generate approximately $650 million annually
for such research.20
The Center for Medicare and Medicaid Innovation has a
mandate in the law to support innovation with the aims
of improving health and health care and saving money.
This ACA provision completes a reformulation of the
CMS — from its origins as part of the Social Security
Administration responsible mainly for issuing payments
on time to a prominent force for health intended to
obtain value from health care payments.
The DHHS announced the Partnership for Patients in
April 2011. Using $1 billion authorized in the ACA and
building on existing programs, this partnership
between the public sector and the private sector aims
to reduce rates of hospital-acquired infection and
avert complications when patients transition between
care settings. Accomplishing these goals would save
lives, shorten hospital stays, reduce readmissions,
and save billions of dollars.
Finally, newly mandated insurance coverage for
preventive services prohibits the charging of
copayments and thus may encourage wider delivery of
clinical measures for preventing disease. A new public
health fund will provide $15 billion over 10 years to
support state and community efforts to prevent illness
and promote health.
In each instance, one can readily imagine ways to
build on these provisions and extend these new
capacities. State-based exchanges in themselves will
not optimize national markets for insurance, simplify
and harmonize administrative requirements, or
eliminate price discrimination in provider payments.
ACOs will not achieve their full potential if they
only combine existing providers without adopting new
delivery capacities and payment strategies to meet
patient needs more effectively and efficiently. The
PCORI will be even more valuable if it is permitted to
support research that measures resource costs as well
as health outcomes. The CMS Innovation Center will be
a more potent agent for change if it can find ways to
rapidly move successful innovation into the
mainstream, as illustrated by the Partnership for
Patients. Even though coverage for preventive services
is helpful, it falls short of providing incentives for
patients to make dietary and behavioral changes that
will reduce the risks of disease and injury (although
such incentives can be worked into insurance premiums
and employer-based incentive programs). And needed
improvements in such areas as malpractice law, limits
on the tax deductibility of employer-based insurance,
and value-based purchasing of drugs and devices remain
beyond the purview of even this far-reaching
legislation.
Some desirable reforms that are beyond current law,
such as the full realization of the capabilities of
IT, will take years. Other actions can have more
immediate benefits. Any single step toward reform is
insufficient, yet a series of steps can bring us
closer to the desired destination. Although some
changes can be accomplished only through new national
or state legislation, others can be achieved by every
practicing health professional. Many of the changes
needed at the level of practice have already been
accomplished somewhere in the United States; they just
need to be replicated elsewhere.
When setting priorities, I would be guided by the
extent to which a reform counters the drivers of
inefficiency and fulfills the six attributes of a
successful and sustainable health system that I
articulated above. The following six steps are within
the purview of health professionals and
administrators.
First, redouble efforts to enhance the quality and
safety of medical care. Stress professional
responsibility and support both payers' use of
financial inducements for superior results and
penalties for avoidable complications. Motivated by
the simple desire to provide superior care, many
health institutions are showing that they can attain
higher quality. For example, between 2001 and 2009,
the number of blood infections associated with the
introduction of central lines decreased by 58% — from
43,000 to 18,000.21 Organizations such as the
Institute for Healthcare Improvement are leading the
charge, and business groups, government, and private
payers can all reinforce this core aim.
Second, meet the health needs of patients who require
high-cost care in a more humane way that will save
money over time. The goal is to enable patients to
function at as high a level as possible at home so
that they do not need to be admitted to the hospital.
Although innovative care models have improved health
status and reduced costs, Arnold Milstein argues that
scaling up these efforts will require greater
performance-based incentives for providers, incentives
for patients to rely on providers who deliver better
results, and technical assistance to spread best
practices.22
Third, elicit and honor patients' preferences,
including those regarding late-stage illness. With the
political furor over “death panels,” it is easy to
forget that physicians have the opportunity and
obligation to do what patients desire and is in their
best interests, including those who face imminent
death. Often, consultation with patients and families
will allay anxiety and guilt and enable patients to
spend precious time with loved ones in more familiar
and comfortable surroundings. It will also save money.
Fourth, rely on systems engineering and operations
research to smooth the flow of patients through the
health care system. Backups in emergency rooms,
periodic crowding in hospitals, and the lack of
specialty postoperative beds are often symptoms of
uneven scheduling of admissions, suboptimal scheduling
of operating rooms, and inadequate discharge planning.
Hospitals that apply systems engineering to scheduling
and resource use can save many millions of dollars
individually and billions in the aggregate, reduce
overcrowding, and improve staff satisfaction and
performance. Organizations such as the Institute for
Healthcare Optimization are showing the way.23
Fifth, learn from peers and from the evidence.
Participate willingly in data gathering and
performance comparisons regarding pertinent aspects of
patient care. The widespread adoption of simple,
demonstrably advantageous advances in care, such as
the use of beta-blockers after myocardial infarction,
can take too many years.24 Small improvements in
practice patterns multiplied by thousands of patients
can add up to substantial improvements in patients'
experience and economic savings.
Finally, champion a new ethos of medical
professionalism that values accountability above
autonomy; supports team-based care and
interprofessional education; and accepts
responsibility for a system to serve all patients, not
only one's own patients.
In his famous essay on Tolstoy entitled “The Hedgehog
and the Fox,” Isaiah Berlin compared a number of
historical figures to one or the other animal.25 Foxes
know many things, whereas the hedgehog knows one big
thing. Tolstoy, concluded Berlin, was a fox
masquerading as a hedgehog: although he believed that
history demanded a unifying theme, he could not resist
his tendency to see many threads rather than one big
cord.
To achieve a successful and sustainable health system,
we must be able and willing to try many different
things. But therein lies a unifying idea: do many
things. No single stroke will solve this problem. A
successful and sustainable health system will not be
achieved by supporting prevention, it will not be
achieved by championing competition, it will not be
achieved by comparing the effectiveness of different
practices, it will not be achieved by striking
commercial influence from professional decision
making, it will not be achieved by changing the way we
pay doctors, and it will not be achieved by just
reengineering the system. It requires all these
changes and more. We need the cleverness of the fox
and the persistence of the hedgehog. We must be
willing to adopt many strategies and use them to reach
one big goal.
Sources of
Inefficiency in U.S. Health Care
• Payment for wrong outputs (units of service rather
than episode of illness, health outcomes, or covered
lives)
• Financial incentives that reward inefficiency
(complications or readmissions)
• Lack of price information and incentives for
patients
• Indifference of providers to induced costs
• Dysfunctional competition rather than
performance-based competition
• Lack of personal or professional ethos to care about
societal costs of health care
• Failure to take full advantage of professional
skills of nurses
• Lack of uniform systems and processes to ensure safe
and high-quality care
• Uneven patient flows, resulting in overcrowding,
suboptimal care, and waste
• Insufficient involvement of patients in decision
making (as in end-of-life care)
• Insufficient attention to prevention, disparities,
primary care, health literacy, population health, and
long-term results
• Fragmented and uncoordinated delivery, without
continuity of care
• Lack of information on resource costs, performance,
comparative effectiveness, quality of care, and health
outcomes
• Scientific uncertainty about effectiveness and cost,
especially of newer tests and treatments
• Cultural predisposition to believe that more care is
better
• Administrative complexity of coping with multiple
forms, regimens, and requirements of different
insurers
• Rewarding of inventors and entrepreneurs for
possible performance advantage more than for
significant savings in overall system cost
• Regulatory regime that can only retard and not
accelerate innovation
• Insufficient reliance on competitive bidding for
drugs and devices
• Distortions resulting from fraud, conflict of
interest, and a dysfunctional malpractice system
Potential Uses of
Health IT
• Personal medical records
• Personalized health reminders and follow-up
• Personal health, diet, and activity monitoring and
motivation
• Pre-degree and continuing medical education
• Real-time clinical decision support
• Remote professional consultation and care
• Monitoring and advising of patients with chronic
disease
• Quality assurance
• Performance assessment of providers and institutions
• Comparative outcomes research
• Matching of potential participants to clinical
trials
• Monitoring for safety (or unanticipated benefits) of
drugs, devices, diagnostic tests, surgery, and other
treatments
• Enhanced peer-to-peer and professional–patient
support
• Comparative health assessments across populations,
communities, cities, and states
• Public health surveillance for disease outbreaks,
environmental risks, and potential bioterrorism
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