Prepaid Group Practice Delivery Systems:
The Chassis for Improved Health System
Performance?
Stephen M. Shortell, PhD, MPH
Blue Cross of California Distinguished Professor of Health Policy
and Management
Dean, School of Public Health
Professor of Organization Behavior
Haas School of Business
University of California, Berkeley
Is There a Future for Integrated Care
Systems in the Consumer Era?
AcademyHealth Annual Research Meeting
June 6, 2004
“I tell our trustees when you walk into (name of medical
group) you are walking into the arms of an organized
group practice. You walk into our competitor, you walk
into the equivalent of a farmer’s market where there are
a bunch of people sitting there in stalls, selling their
wares, and leaving at the end of the day when they are
done. They don’t particularly care what the farmer’s
market is like, as long as the bathrooms are clean and
the lights are on. They don’t particularly care who is
selling stuff next to them because they are not
integrated.”
Physician Leader of an Organized Delivery System
Recent DHHS report indicates
some progress is being made
• Death rates due to stroke have fallen by
more than one-third in the past two
decades
• Death rates from heart attacks have
been cut in half
• Millions of women enjoy longer lives
due to advances in breast cancer
treatment
But…
Only about half of Americans receive
recommended treatment for their condition.1
And
Physician organizations use less than half of
recommended care management processes
for patients with chronic illness.2
1
McGlynn et al. (2003). "The Quality of Health Care Delivered to
Adults in the United States." New England Journal of Medicine
348(26):
2635-645.
2 Casalino
et al. (2003). "External Incentives, Information
Technology, and Organized Processes to Improve Health Care
Quality for Patients with Chronic Diseases." Journal of the
American Medical Association 289(4): 434-441.
The American health system
is the poster child for
underachievement.
Examples of “Value Leakage”
Lives and costs that could be saved each year
by using recommended care
Care
Deaths
Controlling High Blood
Pressure
Diabetes HbA1c Control
Smoking Cessation
Cholesterol Management
28,000
Hospital
Costs
(in Millions)
$1,243
13,680
2,700
$178.5
$97.7
6,500
$94.2
Source: National Committee for Quality Assurance, Wall Street Journal,
December 21, 2003.
Achieving this vision will require many changes:
CARE SYSTEM
Supportive
payment and
regulatory
environment
Organizations
that facilitate
the work of
patientcentered teams
High
performing
patientcentered teams
Outcomes:
•Safe
•Effective
•Efficient
•Personalized
•Timely
•Equitable
REDESIGN IMPERATIVES: SIX CHALLENGES
• Redesigned care processes
• Effective use of information technologies
• Knowledge and skills management
• Development of effective teams
• Coordination of care across patient conditions, services,
and settings over time.
• Use of performance and outcome measurement for
continuous quality improvement and accountability
Source: Crossing the Quality Chasm, Institute of Medicine, Washington, D.C., 2001.
An ORGANIZED DELIVERY SYSTEM is
a network of organizations that provides
or arranges to provide a coordinated
continuum of services to a defined
population and is willing to be held
clinically and fiscally accountable for the
outcomes and health status of the
population served.”
Source: Shortell, Gillies, and Anderson, et al. Remaking Health Care
in America: Building Organized Delivery Systems, San Francisco:
Jossey-Bass, 1996, p. 7.
A PREPAID GROUP PRACTICE is an
organized delivery system based on an
accountable, multi-specialty group of
physicians and other health professionals
who work together in teams to provide
comprehensive care for a voluntarily
enrolled population within a per-capita
prospectively determined budget.”
Source: Shortell and Schmittdiel, “Prepaid Groups and Organized
Delivery Systems: Promise, Performance, and Potential,” in Toward
A 21st Century Health System: The Contributions and Promise of Prepaid Group Practice, Enthoven and Tollen (Editors) San Francisco:
Jossey-Bass, 2004.
Key Components
•
•
•
•
•
•
•
Multi-specialty groups
Health care teams
Defined populations
Aligned financing and payment
Effective medicine-management partnerships
Enhanced information management capability
Accountability
Existing Evidence
HMOs vs. Fee-for-Service
Preventive Care
HMOs better
Process Quality
HMOs slightly better but
essentially no difference
Outcome Quality
HMOs slightly better but
essentially no difference
Patient Satisfaction
Fee-for-service better
Costs
HMO physicians use
somewhat less costly and
less invasive interventions
Existing Evidence
HMOs vs. Fee-for-Service
Problem:
Existing research does not
separate out HMO’s by type—e.g.
“delivery system HMOs” based on
multi-specialty prepaid group
practices from “carrier HMOs” based
on insurance products.
Source: Chuang, Luft, and Dudley, “The Clinical and Economic
Performance of Prepaid Group Practice,” in Toward a 21st Century
Health System, Enthoven and Tollen (Editors), 2004, p. 45-61.
Safety
No evidence to date—important
area for further research
Effectiveness
New and Emerging Evidence
• Multi-specialty groups more likely to use
recommended evidence based care
management processes for patients with
chronic illness1
• Multi-specialty groups more likely to report a
positive financial outcome from their
investment1
• Groups affiliated with or owned by HMOs or
hospital/health systems use more
recommended processes than free-standing
groups2
Effectiveness (Cont.)
• Health plans closely affiliated with tightly managed
physician groups or that employ their own physicians
perform significantly better on clinical performance
measures with no difference on patient satisfaction in
comparison with other types of provider delivery
sytems3
• Kaiser Permanente consistently rated best in
California in providing breast and cervical cancer
screening, comprehensive diabetes care, cholesterol
management, and follow-up care after hospitalization
for mental illness.1 KP Northern California 15%
decline in cardiovascular death rate between 1990
and 1998 largely due to a coordinated strategy of
implementing guidelines.4
Effectiveness (Cont.)
Footnotes:
1 Shortell and Schmittdiel, (2004) “Prepaid Groups and Organized
Delivery Systems: Promise, Performance, and Potential,” in
Toward A 21st Century Health System: The Contributions and
Promise of Pre-paid Group Practice, Enthoven and Tollen
(Editors) San Francisco: Jossey-Bass.
2
Casalino et al. (2003). "External Incentives, Information Technology,
and Organized Processes to Improve Health Care Quality for
Patients with Chronic Diseases." Journal of the American Medical
Association 289(4): 434-441.
Chenok, and Pawlson et al. “A Comparison of Health Plans
and Their Delivery System Relationships on HEDIS Performance
Indicators.” Council of Accountable Physician Practices, February
2004, working paper - under review, do not cite.
3 Styf,
4 Levin,
E. (2002). K P Success in Reducing Mortality Rates from
Cardiovascular Disease,” American Heart Association Meetings.
Figure 1
Physician Organization Care Management Index1
(0 to 16)
16
14
12
10
8
6
4
2
0
Multi-Speciality Other Groups
Prepaid
with 100+
Groups (N=12) Physicians
(N=468)
All Groups
(N=1028)
1Use
of disease registries, patient self-management focus, guidelines,
automated reminders, performance feedback, etc.
Source: National Study of Physician Organizations and the Management
of Chronic Illness, School of Public Health, University of California, Berkeley,
November, 2002.
Figure 2
Chronic Care Management Index2
(0 to 11)
11
10
9
8
7
6
5
4
3
2
1
0
Multi-Speciality Other Groups
Prepaid
with 100+
Groups (N=12)
Physicians
(N=468)
All Groups
(N=1028)
2 Patient
self-management, linkages to community resources, delivery
system re-design, decision support tools, etc. (Wagner et al, 1996, 2001).
Source: National Study of Physician Organizations and the Management
of Chronic Illness, School of Public Health, University of California, Berkeley,
November, 2002.
Figure 3
Clinical Information Technology Index3
(0 to 6)
6
5
4
3
2
1
0
Multi-Speciality Other Groups
Prepaid
with 100+
Groups (N=12)
Physicians
(N=468)
All Groups
(N=1028)
3 Standardized
problem list, laboratory findings, medications prescribed,
radiology findings, progress notes, medication ordering reminders and / or
drug interaction information.
Source: National Study of Physician Organizations and the Management
of Chronic Illness, School of Public Health, University of California, Berkeley,
November, 2002.
Figure 4
External Incentives Index4
(0 to 7)
7
6
5
4
3
2
1
0
Multi-Speciality Other Groups
Prepaid
with 100+
Groups (N=12)
Physicians
(N=468)
All Groups
(N=1028)
4 Bonuses
from health plans, public recognition, better contracts with health
plans, quality reporting on HEDIS data, clinical outcome data, results of
quality improvement projects, patient satisfaction data.
Source: National Study of Physician Organizations and the Management
of Chronic Illness, School of Public Health, University of California, Berkeley,
November, 2002.
Table 1
Perceived Financial Impact of
Investment
Multi-specialty
Prepaid Groups
(N=12)
Other Groups
with 100+
Physicians
(N=468)
All
Groups
(N=1028)
41.7%
32.8
27.0
Congestive Heart Failure
75.0
36.8
29.5
Depression
27.3
14.6
13.5
Diabetes
75.0
42.0
37.7
100%
42.8
39.9
Asthma
Smoking Cessation
Programs for Patients
Source: National Study of Physician Organizations and the Management
of Chronic Illness, School of Public Health, University of California, Berkeley,
November, 2002.
Efficiency
Generally lower costs due to less hospital
use, more outpatient care and possibly
closer management of patients with
high cost chronic illness.1,2 Not due to
economies of scale or scope.3
1 Miller
and Luft, 2002. “HMO Plan Performance Update: An
Analysis of the Literature, 1997-2001,” Health Affairs, 21(4):63-86.
2 Feachem
et al. 2002. “Getting More for Their Dollar: A Comparison of
the NHS with California’s Kaiser Permanente.” British Medical
Journal, 324:135-141.
3 Pauly,
1996. “Will Medicare Reforms Increase Managed Care
Enrollment?” Health Affairs; Chevy Chase.
Personalized Patient Care
(Patient Satisfaction)
• Generally lower for all HMOs but recent
data suggests no difference for tightly
organized prepaid groups.1,2
• More research needed
1 Miller
and Luft, 2002. “HMO Plan Performance Update: An Analysis of
the Literature, 1997-2001,” Health Affairs, 21(4):63-86.
2 Styf,
Chenok, Pawlson et al. “A Comparison of Health Plans and Their
Delivery System Relationships on HEDIS Performance Indicators.”
Council of Accountable Physician Practices,
February 2004, working paper - under review, do not cite.
Timeliness
• Generally lower but may be changing
• More research needed
Equitable
Major area for research
Do prepaid multi-specialty groups provide
more equitable care than other delivery
arrangements?
From the Frontline
• Multi-specialty prepaid groups CAN promote
patient-centeredness—"Teamwork provides a
framework and a system for working with
patients over time.”
• It CAN provide greater efficiency through the
aligned financial incentives in which the
organization as a whole directly captures the
rewards of such efficiency.
• It CAN enhance effectiveness—”The integrated
model is the most advanced approach for dealing
with chronic illness management and disease
prevention.”
• It CAN effectively promote and use information
technology.
“Their integrated structure allows them to maximize
the return on their IT investments…through on-line
access to physicians, prescriptions, lab tests,
results and health care information.”
“It makes care more transparent. The common
electronic medical record changes our practice
style automatically because we are more prudent
about what we do.”
But…..
A lot of people still like farmers
markets!