I stopped in to get my car fixed yesterday and found the recent Time issue featuring Steve Brill’s mega-story — Bitter Pill: Why Medical Bills Are Killing Us — still lingering on the waiting-room table, well-thumbed and dog-eared. For a story about a problem that just about everyone already knew existed, the piece has clearly been having a major impact and sparked widespread discussion.
Today, the Cambridge-based Institute for Healthcare Improvement posts a lively and provocative piece that concludes that the current payment system is broken and must be blown up to create one that “incents value improvement.” Written by Jeff Selberg, the institute’s chief operating officer, and Clifford M. Marks, a health care researcher st Harvard Business School, it begins:
Steve Brill’s recent piece on the irrationality of health care costs has inspired so many disparate reactions, it feels almost like a health policy Rorschach: Some see a clear case for a single-payer system. Others point to all-payer rate setting. And many health care executives, as reflected in a response from the Healthcare Financial Management Association (HFMA), saw an “unfortunate and misleading” narrative about rampant greed in health care.
The British writer G. K. Chesterton once observed that “[m]an can always be blind to a thing so long as it is big enough.” We wonder if that isn’t happening here, because there is a far more fundamental truth to be had in Brill’s descriptions of nonsensical charges, of patients forced to the brink of bankruptcy by prices that, frankly, seem extortionary. It’s a lesson so big we seem to have trouble even seeing it.
Payment in health care is not tied to what should be its goal of delivering better value, or better outcomes at lower costs. What’s more, everybody knows it. And it is this sobering reality that Brill’s article lays bare: Nobody has any faith in the current reimbursement system – and they shouldn’t. As Brill hammers home in vignette after vignette, health care charges are almost entirely unhinged from patient welfare. You can move to single payer. You can ratchet up taxes on hospital profits. You can enact tort reform. But none of it will work if we fail to blow up the current payment system, and replace it with one that incents value improvement.
When Jeff was CEO of Exempla Healthcare, he told his board – let’s have no rate increase for our chargemaster (the hospital listing of charges so appropriately maligned in Brill’s piece). We all know the chargemaster is crazy, it’s distorted, it’s meaningless. And his CFO responded, great, but if you want to freeze the rates, we’re going to take a $10 million hit.
That’s the problem hospitals face. No executive survives long by giving away money, and even not-for- profits need to perform well financially. The incentives are all wrong. We all know it. But we still must believe that the risk of overhauling the system is greater than that of protecting the status quo since there is no consensus to change it. Otherwise, why would we continue with payments that have no relationship to actual cost and the quality of the clinical outcome? Why would we allow the poor performers to profit from their defects and get reimbursed more than the high-performing providers? The Health Care Financial Management Association, while having done some very effective research on value-based payment, focused on where Brill (incorrectly, we think) implied nefarious motive in how executives operate within the current payment system. They ran right past the enormous truth that we all see every single day: the health care reimbursement system is broken for the very people we serve – the patients who ultimately pay for health care through their wages for health insurance or directly out of their own pockets.
So accepting that reality, where do we go from here?
Check out the full post on the IHI Website here to read the authors’ prescriptions, and please let us know what you think in the comments section below. We also posted some earlier reactions to Brill’s piece here.