Five Barriers to Post-Reform Efficiency

Janice Simmons, April 15, 2010

Many would agree with Edward G. Murphy, MD, president and CEO of Roanoke-based Carilion Health System, that there's a lot of interest in making the transition to accountable care. But is the healthcare industry actually ready to make that transition?

First, healthcare providers need to be accountable for outcomes. "Nothing new about that. Most doctors would agree that's the case," he said. Murphy, spoke earlier this week at a forum on challenges to the delivery system sponsored by the Washington-based New America Health Policy Program.

Next, is service. "We're allegedly a service industry," he said. "It's actually hard to tell sometimes if you actually 'go' to the doctor. But, at least people would understand the notion that there's supposed to be a responsible service."

But it's the third and final item—efficiency—that may take some greater understanding. "Outside the tradition of medicine is efficiency," he said. "It's important for us to understand that providing tests, rendering treatments, doing admissions to the hospital, or providing surgical care that are costly, potentially dangerous, and don't have any realistic chance of helping patients [are] every bit the mistake as a medication error, missing the diagnosis, or prescribing the wrong medication."

"It's going to require a significant transition—and transitions are messy places," Murphy said. "And this is a large transition by comparison to anything we've done in the past." Murphy cited five "impediments" that he thought stand in the way of better accountability and efficiency.

1) The payment system. "We talk about the sort of the tradition I grew up with—with doctors. Everybody thinks about [television doctor] Marcus Welby—and [that] you're there to care for patients. The reality is: that's not true," Murphy said. "We're driven by the payment system, and the payment system is organized around transactions."

In healthcare, it centers around billing codes. "We get paid for doing stuff to you—and not for taking care of you. There's a lot of things that we'd like to do . . . [but they] don't fit well into billing codes," he said. "And if you can't fit it into a billing code, it's very difficult to justify doing it. We're paid for doing more—whether it's valuable or not."

The "real perverse incentive" is that healthcare providers are penalized for savings. "If we avoid doing something which is unnecessary, that's lost revenue to the system when the expense is still remaining. It's very difficult to get from under that trap," he said.

In addition, the current payment system "is well suited for acute and episodic care, which is the first half of the 20th Century," he added. "The real public health imperative of the 21st Century is complex, chronic diseases, which is longitudinal care management. Episodic transactions do not lend themselves well to effective treatment of medical care of chronic conditions."

2) Organizational structure. "A good bit of advice I received some time ago from someone much more learned than I was that all systems are perfectly aligned to get the results that they get," he said. "Our healthcare delivery system today is perfectly aligned to get the results we get: It's fragmented, it's episodic, and it's designed to maximize the payment system, which is designed around transactions."

Today, healthcare economists argue that "all we have to do is change the financial incentives and then magically, it will be like pixie dust and magically everybody will start doing stuff the next day," he said. "There's no evidence for that."

"As a matter of fact, there's evidence to the contrary. I would argue that the problem of the experiment of the movement to managed care of the 1990s was all about changing the financial system and the financial incentives—without changing the delivery system to take advantage of the new incentives or deliver" what was desired, he said.

3) The culture of medicine. While it's "enveloped" in the previous two items, it still comes down to two things: autonomy and independence, Murphy said.

"Effective management of patients with chronic diseases is all about teamwork and consensus. Avoiding that which is unnecessary is all about teamwork and consensus," he said. "We hate that."

Janice Simmons Janice Simmons is a senior editor and Washington, DC, correspondent for HealthLeaders Media Online. She can be reached at
Facebook icon
LinkedIn icon
Twitter icon