Transcript Housekeeping/Intro/Overview

Are We Heading For a Train Wreck?:
The US Health Care System in 2007
Richard Lichtenstein Ph.D, MPH
Department of Health Management and Policy
School of Public Health
University of Michigan
“The problem of providing satisfactory
medical care to all the people of the
United States at costs which they can
meet is a pressing one. At the present
time, many persons do not receive
service which is adequate either in
quantity or quality, and the costs of
service are inequitably distributed.
The result is a tremendous amount of
preventable physical pain and mental
waste. Furthermore, these conditions
are…largely unnecessary. The United
States has the economic resources, the
organizing ability and the technical
experience to solve this problem.”
Source: Committee on the Costs of
Medical Care. Medical Care for the
American People: The Final Report of
the Committee on the Costs of Medical
Care. Chicago: The University of
Chicago Press. October 31, 1932
The nation’s health care system is
a “tangled, highly fragmented
web that often wastes resources
by providing unnecessary
services and duplicating efforts,
leaving unaccountable gaps in
care and failing to build on the
strength of all health
professionals.”
The Institute of Medicine, Crossing the Quality Chasm. 2001
World Health Organization (WHO)
Definition of Health
“Health is a state of complete
physical, mental, and social
well-being and not merely the
absence of disease or
infirmity.”
The Traditional Health Care
System in the US Has Had
Several “Fatal” Flaws
• System of Financing Care
(Fee-for-service system; fragmented payments)
• Organization of Services
“A Paradox of Excess and Deprivation”*
• Insurance Coverage of the Population
Health coverage is not a right in America
*Enthoven and
Kronick, NEJM 320:29-37. 1989
PROBLEMS WE FACE AS A
RESULT:
• COSTS
• ACCESS TO COVERAGE AND CARE
• QUALITY AND ACCOUNTABILITY
• RACIAL AND ECONOMIC
DISPARITIES in HEALTH AND CARE
Health Care Costs: Magnitude of Growth
Both total and per capita spending on health have skyrocketed.
U.S. Total and Per Capita Expenditures on
Health Care, 1965-2005
$1.988 Trillion
$6,697
$8,000
$7,000
$6,000
$5,000
$4,000
$3,000
$2,000
$1,000
$-
$2,000
$1,500
$1,000
$500
$172
$0
$35 Billion
Per Capita
Expenditures (Billions)
$2,500
5 975 985 994 996 998 000 002 004
6
9
1
1
1
1
1
1
2
2
2
Total (billions)
Per Capita
9
Source: Health, United States, 2001, Table 114; Health Affairs, National Health Spending in 2005, Jan-Feb. 2007.
!/28/07
General Motors
Health Care Costs
• $5.4 billion in health spending in ’05
– $1.4 billion in 2002 for prescription drugs
(31% of healthcare costs)
– $1,500 per vehicle
• 3.1 retirees/active worker, compared to Toyota
with .02 retirees/active worker
Source: Detroit News February 10, 2005 and March 11, 2004 and NYTimes.com May 19, 2006
General Motors
Health Care Costs
• In October, 2005, GM and the UAW
negotiated to increase costs of care to
retirees. Active workers now contribute
$1/hour for retiree health care.
• Unfunded liability of $85 billion (in 2006
dollars) for future health care costs for
workers and retirees.
Source: Detroit News February 10, 2005 and March 11, 2004 and NYTimes.com May 19, 2006
Health Care Costs: Impact on the Public Sector
Health care is consuming an increasing percentage of public budgets.
Michigan
spent 25% of
its budget on
health in 2003
30%
25%
20%
15%
10%
5%
Federal Health Expenditures
2004
2002
2000
1998
1996
1994
1990
1980
1970
0%
1960
Percent of Total Gov't. Expenditures
Government Health Expenditures as a Percent of Total
Government Expenditures: Selected Years, 1960-2004
New York
State spent
over 45%
of its
budget on
Medicaid
in 20042005.
State and Local Health Expenditures
13
Source: Health, United States, 2006, Table 120
Medicare Expenditures and Non-Interest Income by Source
as a Percent of GDP -2007
Source: Status of the Social Security and Medicare Programs. A SUMMARY OF THE 2007 ANNUAL REPORTS
http://www.ssa.gov/OACT/TRSUM/trsummary.html), 2007
Spending on Medicare Drug Benefit
• Between 2006-2015 expenditures for the
Medicare Drug Benefit estimated $724 bill.
• One-time increased expenditures 2005-2006
of 27.8% due to addition of benefit
• Projected growth in Medicare expenditures
on drugs of 7.3% annually between 20062014
Source: Kaiser Family Foundation Fact Sheet, April 2005 using data from CMS/Office of the Actuary
ACCESS TO CARE: The Uninsured
Percent of Non-Elderly Population Without Health
Insurance Coverage, 1987-2005
Americans without
health insurance
increased by 1.4
million in 2003.
19.0%
18.0%
17.0%
16.0%
15.0%
14.0%
*2005: 44.8 million Americans were uninsured
13.0%
2005
2003
2002
2001
2000
1999
1998
1997
1996
1995
1994
1993
1992
1991
1990
1989
1988
1987
12.0%
Source: US Census Bureau, Historical Health Insurance Tables, http://www.census.gov/ (accessed May, 14, 2007)
In 2007, the US Census Bureau revised downwards the figures for 2004-05 (methodological issue) . 2003 data not revised.
The wording of CPS questions implies that these estimates represent the number uninsured for the entire calendar year. However,
comparisons with other data sources (such as MEPS and SIPP) suggest that the CPS figures are much closer to point-in-time than16
full-year
estimates. Some of the dip observed in 1999 and later years reflects the addition of a verification question that reduced the number
Quality is Uneven
Americans Received
Recommended health care
only 54.9% of the time!
McGlynn, EA, Asch, SM, Adams,J, et al. (2003) ”The Quality of health care
delivered to adults in the United States.” NEJM 348:2635-45
How good is American health care?
Based on an extensive literature review performed at RAND in 1998:
• Only 50% of Americans receive recommended
preventive care
• Patients with acute illness:
70% received recommended treatments
30% received contraindicated treatments
• Patients with chronic illness:
60% received recommended treatments
20% received contraindicated treatments
Schuster MA, McGlynn EA, Brook RH. How good is the quality of healthcare in the United
States? Milbank Quarterly 1998; 76(4):517-63 (Dec).
Hospital Safety and Medical Errors
Leapfrog Group Hospital Safety Measures
• Evidence-Based Hospital Referral (EHR)
• Computer Physician Order Entry (CPOE)
• ICU Physician Staffing (IPS) “Intensivists”
Leapfrog has added over 20 other safety measures
since beginning with these
Racial and Economic Disparities
40
All races
White
Black
30
20
10
0
1970
1980
1981
1982
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
Deaths per 1,000 Live Births
Infant Mortality Rates by Race*
United States, 1970-2003
Source: Health, United States, 2006, Table 22
*Race of mother
Years of Potential Life Lost
due to Diabetes Mellitus,
by race and Hispanic Origin, 2003
White
Am. Indian or Alaskan
Hispanic
Black
Asian/Pacific Islander
Years lost*
400
300
200
100
0
Source: Health, United States, 2006, Table 30
* Age-adjusted years lost before age
75 per 100,000 population under 75
years of age.
What would be the characteristics
of a well-designed system?
(At least, this was what we
thought for several years!)
IOM Aims for the 21st Century
Health Care System
•
•
•
•
•
•
Safe
Effective
Patient-centered
Timely
Efficient
Equitable
Source: IOM, Crossing the Quality Chasm, 2001, p. 5-6
1. Coverage
• We need universal coverage to make the
system work.
– “There will be no universal coverage unless it is
mandated by the Government.” (Lichtenstein)
– “You can’t have universal coverage without a
police state” (Newt Gingrich)
2. Financing
• Link the population to providers and hold
the providers accountable for costs and
quality.
• Rely primarily on prepaid, capitated
payments.
• Single payment integrates physician and
“facilities.”
3. Services
• Match level and type of services to needs of
the population- Epidemiologically-based
planning.
• Focus on primary care and prevention.
• Create a hierarchy of services.
• Concentrate high cost/low incidence
procedures in regional centers.
4. Cost Containment
• Reduce unnecessary care --hospital days,
procedures, lab tests, etc.
• Less duplication of costly technology.
• More reliance on primary care providers;
less on sub-specialists.
• Cost-effective prevention.
• Lower administrative costs.
5. Quality and Accountability
Systems should be held Accountable
for Quality and Cost, They should:
• Promote clinical effectiveness research.
• Only use effective procedures, therapies, tests, etc.
(Evidence-Based Medicine)
• Use clinical “guidelines,” “clinical pathways,” etc.
• Reduce errors
• Increase Patient Centeredness
• Follow ideals of TQM, CQI, Six Sigma, LEAN
Reporting Systems such as
HEDIS Can Be Used to Evaluate
Hospitals and Health Plans
•
•
•
•
•
Patient Satisfaction
Quality of Care
Costs
Access
Population Health Status
From the late 1980s through the
early 1990s, a “Revolution” in the
Organization of the Delivery System
Occurred -But it happened through market
mechanisms, not government
intervention (i.e. The Clinton Health
Plan)
There Was a Shift in the
Health Care Paradigm
Physicians
Solo Practice
Group Practice or
Employed
Hospitals
Free-standing,
community
Networks & Integrated
Delivery Systems
Insurance
Indemnity
Managed Care
Purchasers
Passive
“Prudent Purchaser”
as Proactive Partner
Source: J. Billi, MD, U of M
Change in Physician Roles
Traditional:
• Self-employed
• Solo practice
• Single specialty groups
• Fee-for-service
reimbursement for care of
individual patients
• No “gate keeping”
• Autonomy
Source: J. Billi, M.D., U of M
Managed Care Era:
• Employed
• Group practice
• Multi-specialty groups
• Capitated for care of
a population
• Primary care physician
gatekeeper
• Accountability
The Paradigm Shift was Closely
Associated with the Movement to
Managed Care and Integrated
Delivery Systems
*BUT,* Since the late 1990s, the
paradigm has shifted again!--Away
from tightly managed care and
toward a modified fee-for-service
system.
.
ACCESS TO CARE: Enrollment in Various Types of
Employment-Based Health Insurance
100%
90%
80%
70%
Conventional
60%
PPO
HMO
50%
40%
POS
30%
20%
10%
(1)
0%
1988
1993
1996
1999
2002
2005
Source: American Hospitals Association, TrendWatch ChartBook, 2006 (http://www.aha.org/aha/research-and-36
trends/health-and-hospital-trends/2006.html, accessed May 28, 2007)
The Decline of the Hospital
The Hospital is no Longer the
“Center of the Health Care
Universe.”
It is Now Becoming One of the
Pieces of an Integrated Delivery
System.
Since 1981, there has been an
incredible decrease in the use of
inpatient care
• Decline of 80 million patient days per year
– Financial Incentives (e.g. managed care)
– New Technology (e.g. Laparoscopy, new Rxs)
– Early Ambulation
• More hospital-based surgery is performed
on an outpatient basis than inpatient
Major Trends in the Hospital
Sector during the late 80’s and
90’s:
Mergers
Acquisitions
Downsizing
Re-engineering
Integration
System Formation
Managed Care
Many of these trends have
stopped or even reversed!
• System “divorces” (Stanford and UCSF)
• Virtual Integration
• Physician Practice Management Groups have
collapsed
Trends in Private Sector Health
Care Financing
• Shift of cost of care to employees
– Higher share of premiums
– Premiums for dependents
– Higher Co-pays and Deductibles (e.g. for hospital)
• Consumer–Directed Health Plans
– Health Savings Accounts,
– Defined Contribution Plans
• Avoidance of Employee Coverage (Walmart)
– Contractors
– Part-time employees
OTHER MAJOR ISSUES
• The Future of Medicare
– Unsustainable Growth in Costs
• Medicaid, SCHIP and the Uninsured
– Will we ever cover the whole population?
• Physician Workforce Issues
– Will we have a physician surplus or a shortage?
• Nursing Shortage
– How can we train more American Nurses?
• **How will we afford the costs of new
technology?**
The solutions to these problems
are complex:
Beware of anyone who says they
know a simple solution to our
health care dilemma!