AARP Presentation
Elliott Fisher, MD, MPH
February 12, 2007
CECS
Variations in practice and spending
Center for the
Evaluative
Clinical Sciences
across U.S. Regions
Bending the cost curve
Addressing the problem of “supply-sensitive” care
Elliott S. Fisher, MD, MPH
Professor of Medicine
Center for the Evaluative Clinical Sciences
Dartmouth Medical School
Senior Associate
VA Outcomes Group
White River Junction, Vermont
Slide 1
The paradox of plenty: cross sectional evidence
Trends in spending and quality
What do higher spending regions -- and systems -- get?
What do higher spending regions -- and systems -- get?
Resource levels1
More hospital beds per capita (32%)
More medical specialists (65%) and internists (75%)
Content / Quality of Care1,2
Technical quality worse
No more major elective surgery
More hospital stays, visits, specialist use, tests, procedures
Supply sensitive care
Health Outcomes1,2
Physician-reported
Worse communication among physicians
Greater difficulty ensuring continuity of care
Greater difficulty providing high quality care
Lower satisfaction with hospital care
Worse access to primary care
(1) Ann Intern Med: 2003; 138: 273-298
(2) Health Affairs web exclusives, October 7, 2004
(3) Health Affairs, web exclusives, Nov 16, 2005
(4) Health Affairs web exclusives, Feb 7, 2006
(5) Ann Intern Med: 2006; 144: 641-649
Slide 3
Slide 4
Differences in spending
Likely diagnosis
Local capacity and culture drive practice and spending
Slight preference for specialist care in high spending
No difference for tests (if MD says not needed)
No difference in preferences for aggressive EOL care
Malpractice environment3,4
Explains less than 10% of state differences in spending
Little impact on growth in utilization across states
system5
judgment6,7
Skinner, Health Affairs, February 2006
What are the underlying causes?
Patient preferences?1,2
Capacity / payment
Regions with greatest spending growth had smallest gains in heart attack
survival
Slightly higher mortality
No better function
quality5
Patient-reported quality1,3
Clinical
Slide 2
Capacity strongly correlated, but explains less than 50%
Payment system ensures all stay busy
No difference in decisions with strong evidence
More likely to intervene in “gray” areas
(when to see patient, when to refer, when to admit)
(1) Pritchard et al. J Am Geriatric Society; 46:1242-1250, 199
(2) Anthony et al, under review
(3) Kessler et al. Quarterly Journal of Medicine 1996;111(2):353-90
(4) Baicker, Chandra, NBER Working Paper W10709
(5) Fisher et al. Ann Intern Med: 2003; 138: 273-298
(6) Sirovich et al. Archives of Internal Medicine. 165(19):2252-6.
(7) Sirovich et al, J Gen Intern Med. 2006;21(Suppl4):164.
Clinical evidence (e.g. RCTs, guidelines) and
principles of professionalism are a critically important
-- but limited -- influence on clinical decision-making.
Policy Environment
(e.g. payment system)
Physicians practice within a local organizational
context and policy environment that profoundly
influences their decision-making. Payment system
ensures that existing (and new capacity) is fully
utilized -- and generously rewards growth.
Consequence: reasonable individual clinical and local
decisions lead, in aggregate, to higher utilization rates,
greater costs -- and inadvertently -- worse outcomes
Clinical Evidence
Professionalism
Slide 5
Local
Organizational Context
(e.g. capacity - culture)
Physician - Patient
Encounter
Slide 6
Page 1
AARP Presentation
Elliott Fisher, MD, MPH
February 12, 2007
Some examples
Some examples
A payment system that rewards growth and higher intensity care…
A payment system that rewards growth and higher intensity care…
Management of coronary artery disease -- the case of Elyria, Ohio
Management of coronary artery disease -- the case of Elyria, Ohio
Percutaneous
Coronary Interventions
Percutaneous
Coronary Interventions
Age-sex-race adjusted
rate per 1000 enrollees in
2003
Age-sex-race adjusted
rate per 1000 enrollees in
2003
Slide 7
Slide 8
Some examples
Some examples
A payment system that rewards growth and higher intensity care…
A payment system that rewards growth and higher intensity care…
Management of coronary artery disease -- the case of Elyria, Ohio
Management of coronary artery disease -- the case of Elyria, Ohio
Use of erythropoetin (under current payment system)
New York Times, August 18, 2006
New York Times, May 9, 2007
Slide 9
Slide 10
Some examples
Some thoughts on moving forward
A payment system that rewards growth and higher intensity care…
We need to consider underlying causes of rising costs, poor quality
Management of coronary artery disease -- the case of Elyria, Ohio
Use of erythropoetin (under current payment system)
Differences in use of physician workforce across academic medical
centers
Mayo
Duke
UCSF
UCLA
Cedars
Hospital days (L6M)*
12.9
Physician visits (L6M)*
23.8
14.0
13.2
19.2
23.1
23.3
30.4
52.1
71.3
Total Physician FTE (L2Y)**
20.3
21.1
24.5
40.6
52.2
Primary care FTE inputs (L2Y)**
7.0
6.4
10.8
9.3
12.8
Medical specialist FTE (L2Y)**
8.4
8.8
9.0
22.9
29.9
Underlying cause
General Approach
Failure to recognize key role of local
system (capacity, clinical culture) as
driver
Foster development of local organizations
(delivery systems) accountable for care (with
incentives to limit future growth)
Assumption that more is better
Equating less care with rationing
Balanced information on risks / benefits
Comprehensive performance measures
Payment system that rewards more
care, increased capacity, high margin
treatments, entrepreneurial behavior
Reform of payment system (long term)
Shared savings as interim approach
* Measures are per person / per decedent
** Measures are per 1000 decedents
Dartmouth Atlas of Health Care 2006
Slide 11
Slide 12
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AARP Presentation
Elliott Fisher, MD, MPH
February 12, 2007
Organizational accountability and incentives to slow growth
Organizational accountability and incentives to slow growth
Per-beneficiary spending in EHMS (n = 4772) sorted into quintiles
by magnitude of per-beneficiary growth (1999-2003)
Per-beneficiary spending in EHMS by BETOS category (highest
and lowest quintiles of per-beneficiary growth (1999-2003)
Average
spending*$3000
on MD services
per beneficiary
at EHMS
Percent
increase
99-03**
Average
Annual
Rate
$936
46%
9.9%
$675
33%
7.3%
$551
27%
6.1%
$431
21%
4.8%
$198
10%
2.4%
$2000
1999
46%
116%
3000
2500
27%
0%
65%
1500
2%
80%
1000
18%
29%
500
6%
19
99
20
03
Differences in growth likely due to:
• active recruitment of physicians
• physician location decisions
• expansion of facilities (imaging)
38%
10%
2000
Lowest Growth Quintile
Slide 13
19%
Percent increase in
per-beneficiary spending
0
2003
* Using standardized payments, using 2003 RVU
** Percent increase calculated relative to average 1999 per-beneficiary spending
3500
Medicare spending per enrollee
Absolute
increase
per benef.
$4000
Control of spending will require altering
incentives for growth
Other
Major Procedures
27% Minor Procedures
Tests
Imaging
E and M
19
99
20
03
Highest Growth Quintile
Each Quintile includes approximately 20% of the Medicare population
Slide 14
Payment reform
Challenges and opportunities
Barriers to comprehensive payment reform are substantial
Public opposition to capitation; provider concern about bearing risk
Development of other prospective payment approaches years away
Might “shared savings” approaches help in the interim?
Key notion: establish target growth rate; reward physician groups that achieve
per-beneficiary spending growth below the target with portion of savings
Theory being tested in the Physician Group Practice demonstration
Has important advantages:
• Preserves fee-for-service payment (a plus for patients and MDs)
• Provides incentive to avoid increases in capacity (and to reduce capacity
where feasible); and to improve care in domains previously ignored: care
coordination, end-of-life care
• Can be done with existing claims data
Slide 15
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