• What does failure mean?

    I’ve seen a number of responses to yesterday’s news that the Medicare demonstration projects were not successful. Some have claimed that they were only demonstration projects, and the fact that some succeeded means we should look into those further. Others asserted that this once again proves that the government is incapable of making the health care system better.

    As to the first point, it’s hard to get excited about this. By chance alone, a couple of programs were likely to save money. Four out of 34 reducing hospitalizations (when the best of them might have had inadequate data)? Hardly something to get excited about. Remember that two out of the 34 actually saw increased hospitalizations, too. I think it’s totally reasonable to think hard before just assuming there was something special about those four programs, and throwing more money at them.

    But I think the latter point, made by Peter Suderman, is a bit of an over-reach as well. It’s important to remember that these were attempts by private hospitals and private physicians to change the way they care for patients. Granted, government was paying the insurance bills through Medicare, but this would have looked awfully similar if a private company had footed the bill. And, yes, private insurance companies have tried to use care coordination and disease management to reduce costs as well.

    At times like this, it’s important to look beyond the roots of our love/hate relationship with government to address the actual programs. I have very little trouble believing that better care coordination results in better quality. Yes, we should check, but there’s face validity to the idea that assigning trained personnel to spend more time making sure patients and doctors communicate is a good idea. It’s only in the crazy world of politics, though, where we assume that better quality also means reduced costs. Over here in the real world, I often assume that better things cost more. So I’m not surprised when programs which likely improve quality don’t save money.

    Note that this doesn’t mean we should stop trying. It means that we should be honest about what we’re trying to accomplish. I think lots of things are being sold as cost-saving when they are really quality-improving. Think prevention. And information technology.

    As to the second type of demonstration program, “paying for quality, not quantity”, well I’ve always been skeptical of that. I’ve long argued that it is very difficult to get doctors to change their behavior. Some lump-sum payments and a few years of pleading aren’t going to do it. If you want to truly affect physicians behavior through the payment system, you need to make some pretty big changes. Some think ACOs might do it. I’m even skeptical of that.

    My major gripe with both sides here is that there’s a general consensus in the public sphere that we can get a handle on costs with no one feeling it. A nibble here, a tuck there, and it will all be affordable, and no one will notice the difference. That’s somewhat delusional. Cutting a couple hundred billion out of health care spending means that people all over the country are going to make a couple hundred billion less. They’re going to notice, and they’re going to scream, and it’s going to hurt. It’s time to start recognizing that some simple slogans and promises of improved quality coupled with reduced spending aren’t going to save the day.

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    • Best TIE post I’ve seen.

      Pity I can’t make this mandatory reading for many of my colleagues who unfortunately are part of the no trade-offs school of thought.

      Disease management is worth doing even if there are no cost benefits and claiming that there are, only make us look clueless to anti-HC types like Suderman.

    • From reading Longman’s Best Care Anywhere, I got the very clear impression that gov’t can reduce costs and improve care. But I think that any system that’s built like the VA (large and stable patient population, managed from the top-down, coordinated care) can do the same. I support government being in charge b/c I think that while not perfect, we have a better chance at transparency – and so accountability – there than with private systems. Also, removing the profit motive (Wall St) is key.

      • I think there can be instances of reduced spending and better outcomes. But when you reduce spending, those in the system will make less money. Making them responsible for the spending less and better outcomes is not going to be easy. The larger point is that it’s somewhat bizarre to keep on pretending we can cut hundreds of billions of dollars out of the system in a way that also improves quality and doesn’t leave many people upset.

        • Of course, agreed. Oxen will be gored. Dean Baker has ideas on how to reduce costs that would work roughly along the “free market” lines that clobbered the American factory worker. I was responding to the Suderman point – that gov’t can’t reduce costs. In your post, you to Suderman by saying that the not-great results would show up if private interests were paying the bill. I mentioned Longman’s book as an example of gov’t-run case of coordinated care, top-down management and a stable patient population leading to lower costs – and better outcomes.

          As for people who make money in a sector of the economy which is, perhaps, over-sized being upset when that sector returns or is brought to a more manageable size – no doubt. What I worry most about there though is what will happen to all the medical infrastructure that’s being created like crazy now. And that’s why I think that if we are able to get to a single-ish payer model, it’ll be a private payer. That wouldn’t necessarily be bad, but it would raise accountability issues – and it would necessarily waste resources to profit. Same old story.

    • So are we trying to reduce costs? If so, how do we do that? Just pay less?

    • It’s essential to remember that, in health care, one party’s expense is another party’s income, as Aaron reminds us again here. But it’s also essential to remember that per capita health care spending is much higher in the US than in other industrial nations, with poorer results in terms of health outcomes. We pay more for hospital care, we pay more for specialist treatments, we pay more for drugs…and so on. To do anything about this, inevitably you bump into the power of vested/ special interests, who will resist reductions in their income mightily, and usually with success. [E.g., the “doc fix.”]

      All the unwarranted variations in supply-sensitive care spotlighted by the Dartmouth Atlas crew may be naturally occurring phenomena, for the most part. But they do add to spending (and to income) and as far as evidence is concerned, they are unwarranted. If a region has lots of heart surgeons, it will have high rates of heart surgery, and high incomes for those surgeons, who often earn more than the presidents of the universities whose hospitals build their ORs.

    • Amen, especially to your last paragraph!

    • You said ” I think it’s totally reasonable to think hard before just assuming there was something special about those four programs before throwing more money at them” . I agree that we shouldn’t just assume there was something special about those programs, but how are you disagreeing with people who want us to take a closer look at them? Does their idea of taking a closer require funding more of the same demonstration programs?

      I agree that the idea of improving care coordination has good face validity, but is there good empirical evidence that poor coordination is a significant reason for high healthcare costs?

    • “Cutting a couple hundred billion out of health care spending means that people all over the country are going to make a couple hundred billion less. They’re going to notice, and they’re going to scream, and it’s going to hurt. It’s time to start recognizing that some simple slogans and promises of improved quality coupled with reduced spending aren’t going to save the day.”

      This is equally true for patients. Since most of the intra and international population-level cost and quality comparisons seem to be statistical mirages that disappear when people actually account population level differences in how well people take care of themselves, cutting costs under the HMO/ACO model is going to mean cutting the care that individual patients get.

      TAANSTAFL, and once patients realize that in top-down, third-party payor dominated systems cutting costs means that doctors have been conscripted to act as rationing agents acting on behalf of whichever third party is paying the bills, I don’t expect them to take it like Socrates and down their dose of rationing-hemlock with dispassionate fortitude when it’s their own life on the line.

    • Failure is the first stepping stone to success…

    • A quick summation of W.E. Deming, h/t Wikipedia, that seems relevant:

      When people and organizations focus primarily on quality, quality tends to increase and costs fall over time. However, when people and organizations focus primarily on costs, costs tend to rise and quality declines over time.