[Vision2020] A Formula for Cutting Health Costs

[Art Deco]

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July 21, 2012
A Formula for Cutting Health Costs

No matter what happens to President Obama’s health care reforms after the
November elections, the disjointed, costly American health care system must
find ways to slow the rate of spending while delivering quality care. There
is widespread pessimism that anything much can be achieved quickly, but
innovative solutions are emerging in unexpected places. A health care
system owned and managed by Alaska’s native people has achieved astonishing
results in improving the health of its enrollees while cutting the costs of
treating them.

At a recent conference for health leaders from the United States and abroad
at the native-owned Southcentral Foundation in Anchorage, the Alaskans
described techniques that could be adopted by almost any health care
organization willing to transform its culture. Such a transformation would
require upfront financing for training, data processing and the like, but
the investment should rapidly pay off in reduced costs.

The foundation, established in 1982, provides primary outpatient care to
Alaska natives and American Indians who had previously been the
responsibility of the federal government’s Indian Health Service. It serves
45,000 enrollees in the Anchorage area and 10,000 more scattered in remote
villages, most reachable only by air, on an annual budget of $200 million.
It also jointly owns and manages (with a consortium of native tribes) a
small hospital, and has built a modern campus of outpatient clinics with
the help of loans, grants, bonds and retained earnings.

About 45 percent of its revenue comes in what amounts to an annual block
grant from the Indian Health Service, a source unavailable to most health
systems; another 45 percent comes from Medicaid, Medicare and private
insurers, and the rest from philanthropy and grants.

As the Commerce Department noted when it gave Southcentral a national
quality award in 2011, known as the Malcolm Baldrige award, the foundation
has achieved startling efficiencies: emergency room use has been reduced by
50 percent, hospital admissions by 53 percent, specialty care visits by 65
percent and visits to primary care doctors by 36 percent. These
efficiencies, in turn, have clearly saved money. Between 2004 and 2009,
Southcentral’s annual per-capita spending on hospital services grew by a
tiny 7 percent and its spending on primary care, which picked up the slack,
by 30 percent, still well below the 40 percent increase posted in a
national index issued by the Medical Group Management Association.

Patients have not been shortchanged; in fact, care and access to services
have improved greatly. Patients are virtually guaranteed a doctor’s
appointment on the day they request it, and their calls are answered
quickly, usually within 30 seconds. The percentage of children receiving
high-quality care for asthma has soared from 35 percent to 85 percent, the
percentage of infants receiving needed immunizations by age 2 has risen
above 90 percent, the percentage of diabetics with blood sugar under
control ranks in the top 10 percentile of a standard national benchmark,
and customer and employee satisfaction rates top 90 percent.

The staff is trained to treat patients courteously, not with the disdain
often reserved for the poor or ethnic minorities. The atmosphere is so
welcoming that natives routinely congregate in waiting areas to swap
stories and meet old friends even when they do not need medical care.

Although Southcentral has unique attributes (it even refers cases to
traditional tribal healers if doctors agree), here are some of its
techniques that almost any health care system can adopt:

¶Assigning small teams — consisting of a doctor, a nurse, and various
medical, behavioral and administrative assistants — to be responsible for
groups of 1,400 or so patients. The team members sit in the same small work
area and communicate easily. When a patient calls, the nurse decides
whether a face-to-face visit with a doctor or other health care provider is
required or whether counseling by phone is sufficient. The doctors are left
free to deal with only the most complicated cases. They have no private
offices and the nurses have no nursing stations to which they can retreat.

¶Integrating a wide range of data to measure medical and financial
performance. Southcentral’s “data mall” coughs up easily understood
graphics showing how well doctors and the teams they lead are doing to
improve health outcomes and cut costs compared with their colleagues, their
past performance and national benchmarks, and it provides them with action
lists of what they can do to improve and mentors to guide them. That almost
always spurs the laggards. One doctor whose team ranked well behind 10
others in scheduling annual eye exams for diabetics jumped to first place
within two months once she became aware of how poorly her team was
performing.

¶Focusing on the needs and convenience of the patients rather than of the
institution or the providers. The facilities feature rooms where providers
and families can chat as equals on comfortable chairs, in sharp contrast to
examination rooms where a doctor looms over a patient. Every patient visit
is carefully planned so the patient can get in and out quickly without
being delayed because, say, a needed lab test result is not available.

¶Building trust and long-term relationships between the patients and
providers.

¶Changing from a reactive system in which a sick patient seeks medical care
to a proactive system that reaches out to patients through special events,
written and broadcast communications, and telephone calls to keep them
healthy or at least out of the hospital and clinics.

Visionary health care systems elsewhere are already adopting Southcentral’s
techniques, usually after visits to Anchorage to observe them in action.

CareOregon, a small Medicaid managed-care plan in Portland, sent not only
its own people but also delegations from the clinics that serve its
patients. It then paid the clinics a subsidy to get started and found that,
within two years, Southcentral’s tactics greatly reduced the use of costly
emergency departments and hospital admissions while improving health
outcomes. Dr. David Labby, CareOregon’s medical director, said in an e-mail
that the example set by Southcentral was “hugely inspirational” and
“remains the model that guides us.”

Similarly, Maxine Jones, the service manager of a primary care practice in
the county of Fife, Scotland, is supervising a pilot study for the National
Health Service using techniques adapted from Southcentral that almost
immediately produced a sharp decline in visits to the practice because many
problems could be handled by an integrated team of doctors and nurses by
phone. “I can see that this model has the potential to transform the face
of primary care in Scotland,” she said in an interview at the conference.

Many other health care organizations in the United States and elsewhere
have consulted with Southcentral on how to make their delivery of care more
efficient and less costly while maintaining or improving quality. If enough
of them summon the energy to transform their operations, their combined
impact could help slow the rising curve of health care costs, or even bend
it downward.

•

*This is part of a continuing examination of ways to cut the costs of
medical care while improving quality.*




-- 
Art Deco (Wayne A. Fox)
art.deco.studios at gmail.com
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