MIT SEMINAR ON
MIT
HEALTH CARE
ARE
SYSTEMS INNOVA
NNOVATION
TION
‘HEALTH
MIT ESD.69
MIT HST.926
(Special Student)
HMS HC.750
(Special Section)
CARE SYSTEMS’ FROM
POLICY PERSPECTIVE
A
HEALTH
Stan
St
Sta
an
nN
N.
Finkelstein,
inkelstein, M
M.D.
M.
D.
N FFinkelstein
Massachusetts Institute of Technology
S
Sept
eptember
emb
ber 16
16,
, 2010
COST
?
QUALITY
ACCESS
1
Timeline: Majjor Themes of U.S. Health Policy
y
Major Quality of Care Initiatives
1990
Market Approaches to Cost Containment
1980
‘Regulatory’ Approaches to Cost Containment
1970 - 80
Expand Access to Health Care
1945 1940
1950
1960
1970
1980
1990
2000
2009
2009
2
When National Health Care Spending Was Half
of Current Rates, Many Called its Growth,
“
“Unsustainable”
bl ”
bl
TOTAL HEALTH EXPENDITURE AS % GDP BY YEAR
% GDP
on
HEALTH
...
2008
SOURCE: WHO and OECD Data
3
1940’s and 50’s
Major Theme: Expand Access
• Origin of employer-based
employer based health insurance.
insurance
• National health insurance falls to be enacted.
• Hill-Burton Legislation (1946) – incentives to
build
ild newhhospit
italls and
dh
health
lth careffacilities.
iliti
• Major investment in medical research – National
Institutes of Health.
4
1960’s
Major Theme: Expand Access
• Medicare (1965) – Government insurance coverage for
elderly disabled.
elderly,
disabled
• Medicaid (1965) – Government insurance coverage for
indigent.
• ‘Regional
Regional Medical Programs’
Programs – Expand access to new
medical technology.
• ‘Health Professions Legislation’ – Incentives to build new
medical and other health professions schools, increase
number of graduates.
5
‘Moral Hazard’
The prospect that a party insulated from risk will behave differently from
the way it would behave if it were fully exposed to the risk.
‘Adverse Selection’
The more extensive the insurance coverage, one has, the more likely the
party will experience a loss.
‘Principal/Agent’ Problem
He/she who orders does not buy, and he/she who buys does not order.
‘Cost Reimbursement’
When costs are fully reimbursed by insurers, incentives don’t exist to
confirming the costs.
costs
6
When National Health Care Spending Was Half
of Current Rates, Many Called its Growth,
“
“Unsustainable”
bl ”
bl
TOTAL HEALTH EXPENDITURE AS % GDP BY YEAR
% GDP
on
HEALTH
7.8% in 1975
...
2008
SOURCE: WHO and OECD Data
7
1970’s
Technology: The Culprit Behind Rising
CCost
H lth Care
Health
C
ostts
s
‘Technological Imperative’
Doctors’ need to access the latest, most sophisticated technologies to
meet what they perceive to be the needs of their patients (Victor Fuchs,
1974).
‘Process Innovation Lags Product Innovation’
New technology should be cost reducing as process innovation typically
follows product innovation (James Utterback,
Utterback 1978).
1978)
THIS HAS NOT HAPPENED IN HEALTH CARE
‘P
‘Perverse
IIncenti
tives’’
If a doctor is an effective performer and ‘Health Triumphs Over Disease’,
he/she earns less compensation.
8
1970’s
Major Theme: Regulatory Approaches to
Health
H lt h C
CosttCContainmen
onttainment
i
tt
• Wage
Wage-Price
-Price Freeze
• Certificate of Need
• Rate Setting
• HMO Legislation (mixed regulatory, market approach)
• Peer Review
9
1980’s
Major Theme:
C
C Market
C Approaches to
C ontai
Health
Heal
lth CareC
ost
inment
C ontainment
C
• Revisions to HMO Legislation – reduce barriers to
entry
• ‘Prospective
Prospective Payment
Payment’ – Diagnosis Related Group
(DRG) Reimbursement
• ‘Managed
‘M
d Care’
C
’
• ‘Manag
ged Comp
petition’
• Rand Health Insurance Experiment
10
1990’s
Major Theme:
C
C Market
C Approaches to
C ontai
Health
Heal
lth CareC
ost
inment
C ontainment
C
• Clinton health reform plan fails to be enacted.
• Increasing penetration of ‘Managed
Managed Care’.
• ‘Unmanaged Competition’
• ‘Evidence-Based Medicine’
11
When National Health Care Spending Was Half
of Current Rates, Many Called its Growth,
“
“Unsustainable”
bl ”
bl
TOTAL HEALTH EXPENDITURE AS % GDP BY YEAR
% GDP
on
HEALTH
...
2008
SOURCE: WHO and OECD Data
12
2000
Major Theme: Quality Initiatives
ƒ 3 National Academy Reports
―
―
―
Err iis Human’
‘To E
‘T
H
’
‘Crossing the Quality Chasm’
‘Building a Better Delivery System’
• Interest in ‘Lean’ and other systems approaches
to fixing problems of health care delivery.
• Medicare prescription drug coverage.
• Cost containment efforts stymied – lack of
political will?
13
2009 Health Care Reform
Reform
• PPACA Initiati
Initiatives
es with
ith the
Potential to Improve the Value of
Health Deliver
Delivery
• Please refer to handout
14
MIT OpenCourseWare
http://ocw.mit.edu
ESD.69 / HST.926J Seminar on Health Care Systems Innovation
Fall 2010
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