1. What’s Next for Health Care
What’s Next for Health Care? Understanding the current state to get to the future state
Julie Lewis
Director for Health Policy
The Dartmouth Institute for Health Policy & Clinical Practice
Presented to the Concord Coalition
May 28, 2009

2. What does health care in the US currently look like?

3. Healthcare is in Crisis
Unsustainable Growth in Spending
Pay for Volume, not Value
Little to No Accountability for Quality or Cost
Gaps & Variances in Care
Poor Chronic Disease Management
Lack of Care Coordination
Disparities by Race and Ethnicity
Increasing Uninsured & Underinsured
Lack of Information
Effectiveness of Treatments
Comparative Effectiveness
Public Information on Provider Cost and Quality

4. The Numbers US healthcare costs in excess of $2.5 trillion
Recent CBO report suggests waste = $700B/year
Patients, on average, receive recommended health care only 55 percent of the time (McGlynn et al. 2003)

5. Cost: Over half of cost growth in federal spending will be attributed to per capita cost growth
Percent of GDP
Allocation of Projected Growth in Federal Spending on Medicare and Medicaid by Source
Source: Economic and Budget Issue Brief: Accounting for Sources of Projected Growth in Federal Spending on Medicare and Medicaid. A series of issue summaries from the Congressional Budget Office. May 28, 2008

6. Cost: U.S. Health Expenditures and Workers’ Earnings, 2000–2008
106%
75%
Percent
47%
29%

7. Three fold variation in per capita spending
Peter Orszag, N Engl J Med, 2007

8. End-of-Life Spending Variation at Major US Medical Centers
Spending and resource use chronically ill, last 6 months of life
Total Medicare spending
50,522
40,181
26,330
Physician visits
52.1
42.2
23.9
Hospital days
19.2
17.7
12.9
UCLA
Medical
Center
Massachusetts
General
Hospital
Mayo Clinic
(St. Mary's
Hospital)

9. Where is the variation? More Care in High Spending Regions
Less Care in High Spending Regions
Evidence-Based
Quality
Examples:
Mammogram, Women Pap Smear, Women 65+
Pneumococcal Immunization Aspirin at admission (Heart attack)

10. Higher healthcare spending is not associated with better quality
Source: Baicker et al. Health Affairs web exclusives, October 7, 2004

11. Where is the variation? More Care in High Spending Regions
Less Care in High Spending Regions
Evidence-Based
Quality
Preference
Sensitive Care
Examples:
Total Hip Replacement Total Knee Replacement
Back Surgery CABG Following Heart Attack

12. 14 March, 2001
Variation in preference sensitive care exists within ALL regions rather than between regions
2.0
4.0
6.0
8.0
10.0
12.0
14.0 Q1 Q2 Q3 Q4 Q5
Rate of Coronary Artery Bypass Graft Surgery
Age-sex-race adjusted, 2001
Rate per 1000 Enrollees
HRRs by Spending Quintile
Each red dot represents a Hospital Referral Region (HRR)

13. Where is the variation? More Care in High Spending Regions
Less Care in High Spending Regions
Evidence-Based
Quality
Preference
Sensitive Care
Supply
Sensitive Care
Examples:
Total Inpatient Days/ICU Days Diagnostic Tests
Evaluation and Management (visits) Imaging

14. What do higher spending regions get?
14 March, 2001
What do higher spending regions get?
Health Outcomes
Slightly higher mortality
Patient-Perceived Quality
Worse access to primary care
Lower overall rating of medical care
Lower satisfaction with hospital care
Physician’s Perceptions
Worse communication among physicians
Greater difficulty ensuring continuity
Lower satisfaction with career
Trends Over Time
Greater growth in per capita resource use
Lower gains in survival following AMI
(1) Fisher et al. Ann Intern Med: 2003; 138:
(2) Baicker et al. Health Affairs web exclusives, October 7, 2004
(3) Fisher et al. Health Affairs, web exclusives, Nov 16, 2005
(4) Skinner et al. Health Affairs web exclusives, Feb 7, 2006
(5) Sirovich et al Ann Intern Med: 2006; 144:
(6) Fowler et al. JAMA: 299: 14

15. What’s going on? Research on causes of regional variations
Patient Preference
Slight preference for specialists in high specialist regions
No difference in wish for test MD says not needed
No difference in wish for aggressive EOL care
Malpractice Environment
Explains less than 10% state differences in spending
Capacity & Payment System
Payment system ensures that all stay busy
Capacity is strongly correlated, but explains less than 50%
Clinical Judgment
No difference in decisions with strong evidence
More likely to intervene in gray areas

16. What might be going on? Research on causes of regional variations
Source: Sirovich et al. Health Affairs. May/June 2008

17. What about Iowa?

18. Per Capita Medicare Reimbursements(Part A & B, 2006)
Dollars
Iowa
$6,572/beneficiary
States

19. Per Capita Medicare Reimbursements(Part A & B, 2006)
Dollars
Dubuque
$7,859/beneficiary
Iowa City
$6,045/beneficiary
Hospital Referral Region

20. Total Medicare reimbursements per enrollee (Part A and B)
Area
Population
Rates
Surplus/Deficit
*Marshalltown , IA
7,611
4169 -
Dubuque , IA
11,082
7586
37,863,403
Mason City , IA
15,814
7495
52,587,171
Clinton , IA
8,196
7086
23,900,376
Davenport , IA
18,135
7041
52,070,779
Waterloo , IA
13,903
7031
39,787,086
Fort Dodge , IA
7,394
6913
20,285,509
Sioux City , IA
15,666
6796
41,150,195
Burlington , IA
8,470
6771
22,037,085
Des Moines , IA
52,517
6412
117,787,060
Ames , IA
7,653
6200
15,539,730
Cedar Rapids , IA
28,327
5999
51,834,360
Ottumwa , IA
5,094
5874
8,680,673
Council Bluffs , IA
9,919
5769
15,866,515
Iowa City , IA
14,041
5605
20,154,443
What if….
If per capita Medicare spending in Iowa was at the Marshalltown level?
Saving for…
- Just Medicare
- Just for Part A & B
- Just 2006
Would have been:
$520 Million

21. Standardized Prices Total Medicare Expenditures (Part A & B)
National Average

22. Standardized Prices Inpatient Short Stays
National Average

23. Standardized Prices Hospice Services
National Average

24. Standardized Prices Outpatient Services
National Average

25. Annual Growth Rates of per Capita Medicare Spending
Dubuque……………..5.2%
Sioux City……………4.9%
Waterloo……………..4.2%
Des Moines………….4.0%
Davenport……………3.5%
Cedar Rapids………..3.5%
Iowa City……………..2.8%
Source: Slowing the Growth of Health Care Spending: Lessons from Regional Variation
Fisher, Skinner, Bynum, New England Journal of Medicine, February 26, 2009

26. Where are we trying to go?

27. Principles for Reform Better Evidence to Reduce Gray Areas
Meaningful Measures of System Performance
Meaningful Measures of System Performance
Better Evidence to Reduce Gray Areas
Focus of Measurably Improving Health
Focus of Measurably Improving Health
Principles for Reform
Rewarding Value, Not Volume
Rewarding Value, Not Volume
Organizational Accountability for Capacity, Cost, and Quality
Organizational Accountability for Capacity, Cost, and Quality
Engaged Patients, Informed Choice
Engaged Patients, Informed Choice
The Right Workforce to Lead the Change
The Right Workforce to Lead the Change