Lessons Learned Series:

The payment for and delivery of healthcare needs radical change if we are to see any reductions in the exorbitant cost of health care in America. At 16.5 % of GDP this burden is the biggest risk to our financial future as a country. This is our attempt to document some critical concepts emerging from experiments around the country. Some of these experiments have been chronicled on this site under case studies and others are in progress. These important "lessons learned" are dynamic and will be updated as new models of payment and delivery emerge.

Key Lesson #1

The present payment system is seriously flawed. Providers are rewarded for over utilization by being paid on a "piecework" formula. The more procedures we do or patients we see the more we get paid. There is no consideration for quality of the product delivered and there is no consideration for the overall health outcomes. Probably the most glaring issue is the later. The U.S. ranks 31st in life expectancy and 36th in infant mortality when compared to other countries in the world (www.who.int/whosis/whostat2006). If we had a payment system that rewarded health outcomes the delivery of care would radically shift to more emphasis on prevention and less on sickness care. There would be intense efforts to prevent hospitalizations as well as focus on educating patients about health risk and self-care.

Key Lesson #2

Employers must have an over all plan to reduce their total health spend. They cannot rely on insurance companies to develop it for them. Employers know they carry all the risks for their employee health spend and they are developing innovative ways to better manage this risk (see case studies on this site). They now understand they are paying the entire bill and the only way they can mange this is to make employee health a no. 1 priority. That includes, wellness, disease management and narrowed specialty and hospital networks based on cost and quality. Many are moving to onsite clinics that manage most all of the ambulatory care process. Some are beginning to experiment with on site specialty care. Choice of doctor and hospital is still an option for these employees but employees pay much more out of pocket for that choice, in some cases as much as 40% more. With an effective plan costs can dramatically improve such as at Toyota in San Antonio where in the first year of their onsite clinic experience they reduced their specialty cost by 33 %. Or at Quad Graphics in Milwaukee where they have premium costs that are 30 % below the Midwest average in a market that is 40 % higher than the Midwest average.

Key Lesson #3

Transparency of quality and financial performance is necessary in order to make good purchasing decisions. Good data sites are emerging such as www.wchq.org, www.wipricepoint.org, www.wicheckpoint.org etc to review provider performance data(see physician performance tab on this website). It's important for H.R. professionals to educate themselves on these databases and use this information in making purchasing decisions. Most insurance companies do not have enough data from their own members to make accurate conclusions about provider performance. In Wisconsin we have been working on a common administrative claims database that all insurers contribute claims data to. This database has 1.6 million members in it now and it is projected to have millions more over the next few years. With this number of citizens in the database we can now begin to make accurate comparisons between primary and specialty physician groups on resource utilization. The goal is to publicly report this information once the data has been deemed to accurately reflect physician group performance.

The Center will be an important catalyst for the creation of an environment that encourages and supports the best health care providers to deliver value to their customers…