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<div class="timestamp">July 21, 2012</div>
<h1>A Formula for Cutting Health Costs</h1>
<div id="articleBody">
<p>
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. </p>
<p>
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. </p>
<p>
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. </p>
<p>
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. </p>
<p>
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. </p>
<p>
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. </p>
<p>
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.
</p>
<p>
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: </p>
<p>
¶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. </p>
<p>
¶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. </p>
<p>
¶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. </p>
<p>
¶Building trust and long-term relationships between the patients and providers. </p>
<p>
¶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. </p>
<p>
Visionary health care systems elsewhere are already adopting
Southcentral’s techniques, usually after visits to Anchorage to observe
them in action. </p>
<p>
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.” </p>
<p>
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. </p>
<p>
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. </p>
<p>
</p><p style="text-align:center">• </p>
<p>
<em>This is part of a continuing examination of ways to cut the costs of medical care while improving quality.</em> </p>
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