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Health Care Savings Start With Improved Care For Patients

The views expressed are those of the author and do not necessarily reflect the views of ASPA as an organization.

By Brandon Danz
November 14, 2014

The American health care industry accounts for almost a fifth of the U.S. economy. Increasing portions of our nation’s annual $2.8 trillion health care bill are falling on public coffers, making the business of performance management integral to controlling future costs and assuring continued access to quality health care services. This article explores one avenue by which we can increase the quality of our health care system while significantly reducing costs.

We Spend Too Much On Too Few Individuals & Have Nothing to Show for It

The vast majority of health care costs in the U.S. are consumed by a surprisingly small population of very sick individuals. For example in Pennsylvania’s Medicaid program, 5 percent of program beneficiaries account for 54 percent of the total Medicaid spend – that is roughly 90,000 individuals whose annual cost of care is somewhere in the neighborhood of $5 billion. And this is not an anomaly.

Danz novMany individuals in this category have complex medical conditions which are very expensive to treat. Others are individuals who are very ill but have fallen through the cracks of our health care system. They are the “super-utilizers” – people with multiple chronic conditions and comorbidities, many of whom have undiagnosed or under-treated behavioral health problems, weak familial and social safety nets. Their visits to the hospital can number into the dozens each year – and each of these encounters with our health care system is met with fragmented services, lack of coordination across the systems of care. Although providers can cure their ailment for that day, they know they will see that patient back again next week. As a group, these patients often lack understanding about their illnesses and how to navigate a complex health care system.

If we could find a way to provide stronger, person-centered, cross-systems care for these vulnerable individuals, it would first and foremost make them much healthier, but would also drastically reduce their utilization and their reliance on health care services, saving the U.S. health care system billions of dollars.

Pioneering a New Approach to Care

Fortunately, some forward-thinking health systems recognize the breakdown that has occurred and are doing something about it. Earlier this month, physician leaders from five Pennsylvania health systems presented a paper in Washington, D.C. showing initial results of their work to improve the care of super-utilizers. Working closely with Dr. Jeffrey Brenner of the Camden Coalition whose super-utilizer work has gained national recognition, the South Central Pennsylvania High Utilizer Collaborative (Collaborative) is a model for how health care organizations can break down traditional barriers, look past financial incentives, and make positive changes in the lives of their patients.

It starts with acknowledging that truly “patient-centered” care management must be just that – patient-centered – and not centered on the traditional silos of care. A patient with physical and behavioral health issues is not receiving effective care when she goes to an acute care hospital for her out-of-control hypertension while her chronic depression remains unchecked. These health systems and the allied health professionals who they partner with start by assigning cross-systems, patient-centered care management teams to each patient which go beyond the traditional footprint of the health care provider. These teams are unique to each patient’s needs. Regular home visits, medication monitoring, health education, and even thing like helping the patient find an exterminator for the insect infestation in her apartment – are all the responsibility of the care management team.

In 2013, these five health systems launched programs and saw 138 super-utilizer patients. Ninety percent of them had diagnosed behavioral and physical health problems. Through their revolutionary approach to care management, these health systems were able to help these individuals become more independent of the system, reducing their inpatient admissions by 34 percent within the first 12 months and producing an estimated cost savings of almost $1.2 million. That’s $1.2 million in cost savings for the care of just 138 patients. If these results could be duplicated for the rest of Pennsylvania’s super-utilizers, it could result in hundreds of millions of dollars in reduced spending.

But There Is a Catch

From the perspective of a hospital, the $1.2 million in “cost savings” is actually a revenue reduction – a net loss. Considering that 50 percent of all health care spending is spent on just 5 percent of patients, finding better ways to care for individuals who have been failed by the system is a risky initiative to undertake. Even in today’s world of managed care, capitation and bundled payments, we have still not escaped the incentives built into payment methodologies to provide more care.

When costs are reduced, it is not the hospital that reaps the reward and it is not the taxpayer either. It is the managed care company – the insurer who the state Medicaid program is paying. One way to align payments and incentivize health systems to engage in the kind of work being done by the Collaborative is to adopt shared savings programs. In these programs, providers are financially rewarded for achieving improved health for patients at a lower cost.

Fortunately, the federal and state governments are testing new delivery and payment systems designed to produce the same kind of results pioneered by the Collaborative. These include accountable care organizations, patient-centered medical homes, greater use of care management teams, and increased meaningful use of electronic health records (EHR) (although, as I point out in a recent blog, there’s more work to be done with EHRs in order for them to be effective across all systems of care). As states implement and test these new systems, it is important that they align payment methodology with quality measurement – and that quality measurement spans all of the health needs of individuals – not just those that are neatly assigned to traditional silos of care.

For more information about the South Central Pennsylvania High Utilizer Collaborative, click here.


Author: Brandon Danz, M.P.A., is special adviser to the Secretary of the Pennsylvania Department of Public Welfare and an ASPA member. He is a graduate of the master of public administration program at Shippensburg University of Pennsylvania. Danz is seeking a master of health administration degree from The Pennsylvania State University, Harrisburg, with a focus on health care policy development and cost containment. Danz can be reached at www.linkedin.com/in/brandondanz/.

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One Response to Health Care Savings Start With Improved Care For Patients

  1. Pingback: Pioneering A New Approach to Care for Superutilizers | BrandonDanz.com

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