A Fragmented System with Multiple Frames of Reference

I heard bits and pieces of Maggie Mahar on NPR’s Fresh Air the other night. On the show, she made a point that I think is worth repeating and fleshing out a bit more—along with a Healthcare Intelligence twist. In talking with Terry Gross, Mahar said that the healthcare system was positively Hobbesian. Hmm. How so? Well, remember back in college when you read The Leviathian? Perhaps not. But surely, you remember Hobbes description of life in the absence of society—the intense competition between individuals, the lack of specialization, and the lives that were “solitary, poor, nasty, brutish, and short.”

Welcome to the US healthcare system! As Gross paraphrased it, MDs compete against MDs, who compete against insurance companies, who compete against other insurance companies, who compete against pharmaceutical companies, who compete against other pharmaceutical companies, who compete against regulators, etc. You get the idea. Eew. Mahar’s points were that this competition has made the system less stable, more expensive, and more fraught with poorly coordinated care. And, of course, she’s right.

Our healthcare system—from financing, to service delivery, to data tracking—is inveterately fragmented. And as a result, different healthcare entities (patients, primary care physicians, hospitals, pharmaceuticals, insurance companies, etc) have slightly different frames of reference with regards to healthcare data, healthcare costs, and healthcare quality. They differ in terms of what data they have access to, the combination and constitution of elements related to cost and quality that they pay attention to, and in the leavers they can use to manage costs and improve quality.

Hospitals, for example, are looking not only at quality issues, but how those quality issues intersect with their supply chain, the use of materials for various procedures, etc. Many hospitals have moved towards the use of Diagnosis Related Groups (DRGs). These provide reimbursement to hospitals on the basis of a certain diagnosis, regardless of the services provided and, ultimately, encourage hospitals to become more efficient. At least in theory. You can think of it as managed are for hospitals. But this ultimately places a greater emphasis on the use of materials and supplies, so long as it doesn’t have too much of a detrimental effect of quality.

(When my daughter was born, the nurses looked like they’d gotten into a fight in a sticker factory. For each piece of equipment they pulled out—saline drips, latex gloves, vacuum extractor, etc—there was a convenient barcode sticker. As each nurse took a new something, they’d peel off the barcode, and stick it to her scrubs. At the end, it was like being in the checkout line of a grocery store. They zapped all the barcodes and catalogued all the supplies and equipment they used. All I kept thinking was, “Boy, I’m sure glad I’m not paying for this.”)

If a hospital can reduce the number of certain supplies for a particular procedure, they can reduce their costs. They can also start to look at the cost of storing their supplies, as well as the quantity to purchase at a single time. All of this can affect a hospital’s bottom line. But all of this is likely to have some effect on quality. How much? Well, that’s where healthcare intelligence would come in—to help evaluate the change in terms of quality outcomes, and it would need to control for a variety of factors including the relative sickness of various patients, any seasonality issues, demographics, etc.

I can devote another entry to some of the different kinds of quality certifications that different healthcare agencies must obtain, but suffice to say that Hospital certification—specificallyJCAHO--is a very complicated process that requires hospitals to monitor and report on their performance on a number of different measures. Although it will rarely be a single measure that would prevent a hospital from achieving certification, it is not difficult to imagine that a hospital might devote significant resources to improving marks in a certain area. Or perhaps they might decide that they are prepared to accept a declination in a certain quality area where they are already strong in order to improve their bottom line.

Mind you, this may be the right thing to do—cost and quality are inexorably linked, mostly in inverse proportions. And here again we get to our $1 Trillion question(s): how good is good enough? And how much are we prepared to pay to achieve it?