Five Barriers to Post-Reform Efficiency

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."

"Engineers will tell you that in engineering, fragmentation and variation are the enemies of quality and efficiency. It's as every bit as true in medicine as it is in engineering but we reject it because we're all about our independence—and we guard it jealously."

It lends itself well to a sports metaphor, Murphy said. "We're all about tennis, and well-practice medicine is baseball. And not only are we all about tennis . . . too many doctors in the profession are John McEnroe."

4) No burning platform. "We're a profession that is highly resistant to change," Murphy said. "The problem is it's still credible for us today...to maintain the status quo. And as long as we think that—it doesn't matter whether we are right or wrong—as long as we believe it, we'll act on that belief."

An example is implementation of the sustainable growth rate formula in Medicare that would lead to in effect a reduction in physician payments for services this year. This is not likely to happen because they "keep fixing it and rolling it over," he said. "Right now, we're looking down the barrel of a 21% reduction for physician fee services. Nobody believes it's going to happen, including me. They're going to fix it."

If they didn't fix it, there'd be imperative for people to think about doing something different. "Fixing it enables the status quo, and they'll fix it as sure as I'm standing here," he said.

"It's difficult to get people to drive changes in how they deliver care day in and day out—because the history they've lived with," he said. "Every time they got up to the precipice of needing to make a change, the government always fixes it and made it OK to stay the way it was."

5) Healthcare insurance company resistance. Murphy, who works with many insurance companies, says "they are all over the map." Some are "highly compatible, sympathetic, and consistent in the direction we are trying to move in." Others are "highly resistant."

"But the reason I need health insurers to work with me—to figure out how to practice medicine differently—is that I need their data," he said. "Even if you've got a very effective, very high quality electronic medical record, which we do, we can only have data on stuff that occurs within our confines."

When patients go elsewhere for healthcare, the insurance companies will know about it because there is a bill attached to it—"but we don't know about it," he said. "And, you can't manage what you don't know. The data have to be real time."