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State’s largest health insurer offers plan to cut costs, improve service

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Don Berwick MD, CEO of the Institute for Healthcare Improvement.
Don Berwick MD, CEO of the Institute for Healthcare Improvement. - ()

The federal government is headed in the wrong direction when it comes to healthcare, according to Don Berwick, MD, the founding CEO of the Institute for Healthcare Improvement, a medical industry think tank.

Berwick, who was keynote speaker at the Horizon Blue Cross/Blue Shield of New Jersey’s fifth annual Patient-Centered Summit on October 5, told the audience “We now have a government that is threatening the care of the most vulnerable among us [by trying to eliminate the Affordable Care Act] and that will cause tremendous harm, and we should not tolerate it.”

At the summit, Horizon emphasized its commitment to providing value-based healthcare to its customers. Horizon has become the state’s largest health insurance provider with 4,500 primary care physicians and 1.5 million members in its network. Roughly 45 percent of its business is through Medicaid.

Allen Karp, Horizon’s senior vice president of healthcare management, told the audience of roughly 500 healthcare providers that the company’s commitment to value-based healthcare “puts us in a position to strive to lower cost and deliver better care and great patient experiences.”

Steps toward Efficient Healthcare

Here are nine steps, Berwick outlined in his presentation, and will be used by Horizon as broad guidelines going forward:

Avoid too much measurement. “We need to tame measurements,” Berwick said, referring to the healthcare system’s over-reliance on medical studies and reports when treating patients. “This country’s gone mad with measurements in healthcare. Doctors, nurses and hospitals are spending billions in generating and responding to reports that help no one at all. Measurement should be a servant, not a master.”

Eliminate complex incentives for doctors. “We need a moratorium on complex incentive programs,” Berwick said, referring to monetary incentives that doctors can claim if they meet certain patient and outcome quotas. “If incentives are too complicated to act on in order to deliver better service, then it isn’t an incentive program, it’s a computer program,” Berwick said.

Focus less on saving money. “Healthcare is about improving the match between the work you do and the need you’re trying to meet,” Berwick said. “The best route to financial success is not cutting costs, it’s improving the quality of service. That’s a fundamental tenet in business, and it needs to be in healthcare as well.”

Give up professional prerogatives at the expense of the whole. Berwick said that doctors need to work with patients more closely and give up their authoritative attitudes.

Recommit to improving science for modern methods. Berwin said that the U.S. healthcare system needs to be more open to change. For example, he said, the British adopted a new system after a study several years ago introduced scheduling approaches that dramatically cut down on delays and wait times at both doctors’ offices and hospitals. “This is about trying new approaches, techniques and technologies to improve processes,” Berwick said.

Enhance Transparency. Berwick emphasized that hospitals, doctors and administrators need to be more transparent in everything they’re doing. “You can’t have improvement without transparency,” he said.

Protect civility. Debate over how to improve the healthcare system needs to be civil in order to arrive at workable solutions, Berwick stressed. “Everything possible begins with civility. The accusatory postures don’t serve us well.”

Listening to the patients’ needs. “Listen, really listen to your patients,” he said. “Navigate care toward the needs of patients.”

Reject greed. “For whatever reason, we have shifted in this industry toward levels of greed,” Berwick said. “Pharmaceutical companies charge outrageous prices for irreplaceable drugs just because they can. Hospitals consolidate and then jack up prices through market leverage just because they can. That has to stop and we have a duty to stop that and to protect and declare moral values that underlie healthy communities.”

Berwick, the former head of the national Centers for Medicare and Medicaid Services, is widely respected as one of the nation’s top advocates for improving the healthcare system. He recalled a paper he co-authored several years ago that analyzed waste in American healthcare spending. That paper concluded that 34 percent of the money that consumers spend on healthcare is wasteful. It also concluded that generally, hospitals and healthcare providers are wrought with fraud and abuse in their billing systems; overuse treatment methods and overcharge for administrative costs.

He recalled a vacation with a friend two years ago as a real life example of waste in the healthcare system. His friend had a pre-existing heart condition and went to the local emergency room for a pain in his neck. Berwick recalled waiting with his friend for four hours before being cleared by a physician who concluded that he just had a neck sprain.

“A few weeks later my friend showed me his bill – it was $7,358 – and he said ‘I don’t understand, they didn’t do anything,’” Berwick said. “That bill was a travesty and the result of a system that snared both the doctor and the patient. The bill included dozens of checks that were standard for a hospital, but the physical examination was non-existent. The doctor ordered a chest x-ray that ended up costing 10 times what it should have,” he said.

That bill, Berwick said, “is one small symptom of a system that has gone off the deep end.”

He said that the country needs to usher in a new era of healthcare that should focus on service, not production and outlined nine steps to make that reality.

“We live in the tension between the beauty of healing and the best of care as production. I think that tension is erosive and, if we’re not careful, it could break us,” he said.

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Vince Calio

Vince Calio


Vince Calio covers healthcare and manufacturing for NJBIZ. You can contact him at vcalio@njbiz.com.

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