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"How is Health Care Cost Containment Like the Weather?" by Robert Seifert

My entry today picks up on the issue raised by Secretary Kirwan at the end of her recent post, in the hope of generating some informed exchange on the issue of cost containment. No one disputes the imperative of bringing health care spending under control; this is necessary for the continued viability of both the Chapter 58 coverage expansions and the U.S. health care system overall.

How do we do it? To be sure, cost containment is not an issue that has been ignored until now; many recent innovations in health care delivery and financing have this explicit goal. But let me offer these two pieces of information and then pose some questions:

1. At the annual meeting of the Health Care Quality and Cost Council last Friday, Stuart Altman presented a list of techniques for limiting growth in health spending, in ascending order (by his estimation) of impact:

Very limited impact
• Encourage greater use of preventive services
Limited impact
• Provide better price and quality information
• Require patients to pay more
• Restrict use of harmful care
• Create a governmental “high cost reinsurance system” with effective case management for chronic conditions
• Reduce expense and waste of medical malpractice system
• Pay-for-performance reimbursement

Greater impact
• Restructure delivery system (integrated care)
• Develop government programs to conduct “comparative effectiveness studies”
• Restrict use of marginally useful care
• Limit supply of expensive services
Greatest potential
• Regulate payments to providers
• Establish global budgets

2. Elliot Fisher, a professor at Dartmouth Medical School and expert in the study of regional variations in health care practice and spending for which the Dartmouth Atlas is nationally known, spoke to the Quality and Cost Council in June. (A version of the talk, presented to the Massachusetts Medical Society last fall, can be found here.) Dr. Fisher offered these conclusions from his research:
• Higher spending across regions and physician groups is largely due to overuse of supply-sensitive services -- hospital and ICU stays, MD visits, specialist consults; and more is worse.
• Overuse is largely a consequence of reasonable differences in clinical judgment (not errors) that arise in response to local organizational attributes (capacity, clinical culture) and state/national policies promoting growth and more care.
• Improving efficiency will require fostering local organizational accountability for the longitudinal costs and quality of care. Performance measurement, public reporting, payment reform and technical assistance should be aligned toward this goal.

Provocative views from respected and influential thinkers, which raise for me these questions: Are we doing enough to harness spending growth? Need we move to policy remedies (public and private) further down Prof. Altman’s list? Should we look at how “supply-sensitive services” are supplied in Massachusetts, and consider reducing oversupply for the sake of both cost and quality, as Dr. Fisher’s findings suggest? Based on the best evidence we have, how should the roles of government and the market be balanced to best control spending, a goal that all agree is essential? And how can we move the body politic in that direction?

Everybody talks about the weather, but no one does anything about it. Many things are being done about health care spending; will they be more effective than trying to stop the rain from falling?

Robert Seifert is Executive Director of the Massachusetts Medicaid Policy Institute

(note from admin. - this is a serious subject which I hope you'll all dig into...but in the meantime...what song pops into your head with Bob's last line?)

This program aired on September 27, 2007. The audio for this program is not available.

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