1. A Clinical Home Run for the Sandovals Designing Payment for Purpose
Arnold Milstein, MD, MPH
March 10, 2009

2. Learning How to Pay From Lean Benchmark Providers
RWJF and CHCF supported search for “lean care idols”
Lowering total annual cost by >15% pivots on designed-for-purpose chronic care
Chronic care designed to lower total cost (and raise Q) requires shared savings with, or global cap, of PCPs

3. Team-based Production
Three Ingredients Were Applied to Two Reengineering Goals: A. ↓ Health Crises/Year (Primary) B. ↓ Cost/Service (Secondary)
Salient Caring, Tailored to ↓ ↓ Hospital Use
Team-based Production
Tight Supplier Mgmt
(↓ Both)
(↓ Crises/Year)
(↓ Cost/Service)
See “Medical Homes – And Medical Home Runs?” By A. Milstein, Sept. 10, Health Affairs Blog.
URL:
And R. Bohmer & D. Lawrence in Health Affairs Sept/Oct 2008

4. Night/weekend non-ER access difficult 60%
Lowering Hospital Use is Not Rocket Science: U.S. Chronic Illness Patients’ Experience of Care (10 yrs after IOM Blue Ribbon Quality Report)
Night/weekend non-ER access difficult
60%
No between-visit checks by MD (ever)
51%
Perceptible errors when > 4 MDs involved
43%
Reference: Schoen C, Osborn R, How S, Doty M, Peugh J. In chronic condition: Experiences of patients with complex health care needs, in eight countries, Health Affairs. 2008;8:w1-w16.

5. Final Evolutionary Step is Rocket Science: Fluid “Learning Organizations” Offer Lower Near-term & Greater Long-term Gains
Industrial engineering core
Lowering cost/service is primary
No detectable performance limits
Larger scale required
Shared plan savings not essential

6. Options for Funding the Sandovals’ Care
Today: 5-10% savings via “20/20”: (a) incentivize sicker patients to switch to better (Q + E) PCPs (b) incentivize better PCPs to ↑↑ throughput via team-based care
Tomorrow: ~35% (?) savings via “ACOs”: incentivize all providers to boost value
Reference pricing encourages all patients to select higher value providers
Chronic & preventive care providers share in plan’s total PMPM savings only when needed
Episodic care providers share in plan’s total episode savings only when needed
Transforming care savings into care affordability will require expanded professionalism and/or more provider competition