Can you prove your health care is good? Contracting swings toward quality
Patients and payers will use hard quality numbers in the future
Can you prove that patients seeking treatment at your health system will receive quality care? Few systems can. But those that do will clearly have a leg up on the competition as managed care moves into the next millennium.
Experts agree that today health systems are on the doorstep of a new age in health care when true quality indicators will be used by both patients and providers patients looking for the health system that can provide the best treatment for their conditions and payers deciding which systems to contract with.
Ignore at your own peril!
Several dynamics taking place on the national health care landscape point to this as a future trend that executives can ignore at their own peril. Consider the following:
• Price differences between what health systems charge for care have been trending toward uniformity for several years, leaving health care purchasers to look at other factors one of which is quality when they decide where to get their health care. This trend toward price uniformity is expected to continue for the foreseeable future.
• Information systems that accurately track outcomes to determine quality are becoming increasingly more sophisticated. While this technology today is regarded to be still in its infancy, 10 to 15 years from now it is expected to be commonplace.
• The Joint Commission on Accreditation of Healthcare Organizations in Oakbrook Terrace, IL, has started to add quality indicators to its accreditation process. The number of areas health systems will have to report on will increase as the process evolves. (See story on on the Joint Commission program, p. 75.)
• As quality information becomes more commonplace, at least one consulting company has long-range plans to put a World Wide Web site on the Internet where anyone, including patients and providers, can make quick and easy quality comparisons.
Price uniformity
Today, most managed care providers compete mainly on price. But the day is coming when this may not be possible, says Stephen M. Cigich, FSA, an actuary and health care consultant with Milliman & Robertson in Brookfield, WI.
An annual national study conducted by the firm shows in hard numbers that premium rates charged by HMOs, and in turn, what hospitals and physicians are paid, are becoming more uniform. "Ignoring the highest cost region (New England) and the lowest cost region (Pacific Coast), the second highest cost region (West South Central} is 17% greater than the second lowest cost region (Mountain States)," states the 1996 HMO Intercompany Rate Survey, compiled from questionnaire responses from 446 HMOs across the country.
"If you look at that number over the past several years, you’ll find that that number has gotten smaller," says Cigich, an author of the report. "And as we go forward, I think we’ll continue to see that number get smaller still, and purchasing decisions are going to be made on other factors, like quality. [Health systems] are going to need the infrastructure necessary to measure outcomes so that they can demonstrate to the buyer that they are providing care of a much better quality than their competitors."
To add further credence to this observation, Cigich cites an informal conference survey that polled human resource benefits professionals major players in employer health care purchasing decisions about the importance of quality. "One-fourth of them believe that quality is now more important than price in assessing managed care plans," he says. "The implication is that three-fourths of them do not think quality is more important than price. Still, these are telling statistics. I bet that five years ago if you were to ask that question none of them would have thought quality was more important than price. Five years from now, I bet that number will be much higher than it is today."
Under the public microscope
Today, many providers rely on reputation in the community and the "warm fuzzies" commonly found in patient satisfaction surveys to demonstrate quality, rather than hard outcomes numbers, says Dennis Hulet, FSA, partner, Milliman & Robertson in Seattle. "Those things are fine and valid, to some extent," says Hulet. "But in coming years, providers that rely solely on that kind of quality information are going to be left behind."
Forward-thinking health systems will strive for data that relate more directly to true quality of care for specific procedures. For example, hip replacements would include summaries of length of stay, readmission rates, and cost per procedure. While some providers gather this type of information now, the clear trend is toward releasing only the positive results. "If they calculate measures and they are marginal or poor, they decline to let anybody know about it," Hulet adds.
But the days when providers can hide less than stellar performance quality numbers may be numbered. Milliman & Robertson is working toward establishing an Internet Web site that compares health system quality numbers obtained from review organizations. "I can see something like that being readily available 10 years from now or maybe even sooner the way technology is progressing," he adds.
What does this mean for health systems? Start preparing now for such public disclosures or be left at the bottom of the list when such information does see the light of day, Hulet adds.
Bottom line benefits
What some providers still don’t understand is that quality care is synonymous with long-term economically efficient care, says David W. Allen Jr., LLP, principal with the health care consulting firm of McGladrey & Pullen in Minneapolis. "You have to take the long-term perspective," Allen says. "If your going to be successful five or 10 years from now and have essentially the same patients, it is clearly in your best interest to take good care of those patients now. If you don’t, they are going to come to you at some point down the road in worse shape, and then it will be twice as hard to provide cost-effective care."
Hulet’s says quality care means getting a sick patient back to performing normal, everyday activities as quickly as possible. This not only means more efficient utilization of medical resources but also a shortened period of illness, which translates into quality.
Key to achieving this is reducing the amount of variation in the treatment of patients with similar illnesses through the use of best practice guidelines, which script treatment guidelines for the noncomplicated patient. "It seems very logical that things would be done that way," Hulet says. "But from talking to clinicians over and over again, we get the understanding that that is not the way they have been taught. They tend to prepare for the complication and thereby treat the patient as a complication before the complication even arises."
But by having a set series of treatments given in the proper order in a timely fashion, "you chop off all of those treatment U-turns and detours" in noncomplicated patients, Hulet says. "This isn’t about providing the patient any less care," he continues. It’s about ordering procedures properly "and then looking at the time [needed] to do those procedures and the time the patient needs to recover, and then moving all of that as far forward in the stay as possible."
Stephen Cigich, Actuary, Milliman & Robertson, 15800 W. Blue Mound Road, Suite 400, Brookfield, WI 53005-6064. Telephone: (414) 784-2250.
David W. Allen Jr., Principal, McGladrey & Pullen, 801 Nicollet Ave., Suite 1300, Minneapolis, MN 55402. Telephone: (612) 332-4300.
Dennis Hulet, Principal, Milliman & Robertson, 1301 Fifth Ave., Suite 3800, Seattle, WA 98101-2605. Telephone: (206) 624-7940.
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