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Saturday, May 19, 2012

Timing is everything

I am involved in planning for major transitions in health care, working for a major health care system in the southeast. Everyone knows that something is coming. We have a basic idea of the nature of the transitions; moving from being paid "per click" to receiving bundled payments of some sort for the care delivered to populations of people. I work with very smart people with the right intentions and motivations. No matter how smart we are, we are only guessing as to exactly how this will all play out.

I think there are a few guiding principles which we need to stick to. First,  timing will be essential. This will not a work where the earliest adopters will be rewarded. I am reminded of an experience I had when growing up in upstate New York. We would regularly drive to visit my grandmother in Brooklyn, piling into the car late Friday afternoon for the 8+ hour drive on the NY Thruway. My father would stoically drive and we would arrive exhausted after midnight with cranky children. To add insult to injury, he would then need to get up early the next morning to move the car to the other side of the street since the alternate side parking rules were in effect.

Now if the challenge were that he simply had to drag himself out of bed, that would be one challenge. However, when moving the car, timing was important. Get up to move the car at 6 am when the change was required meant that all the good spots were already taken. Move too early and you could get ticketed for parking illegally. Early and late responders were both punished. People would sit in their cars waiting for the right time to make their move.

This is similar to what we face in the health care arena. Activities which generate large margins now run the risk of being cost centers some undefined time in the future. Moving from the "per click" world to the bundled payment world is analogous to moving from one side of the street to the other.  In the health care realm, we are pretty sure something will happen but we are not quire sure of what it will be and when it will happen.  At least my father knew that the parking switch had to happen and there was a fairly specific timetable (plus or minus a few key minutes).

We end up making all sorts of plans and hedges. When we are paid via bundled payments, we will want to care for patients in the lowest cost realm we can identify, without compromising care. Does that mean we should keep patients out of the hospital now even if hospitalizations are the engine which finances the system now? This highlights the second major principle. Systems which will survive will be ones that are nimble and can change course quickly. No matter how good your planning might be, most of the plan will be off base because the future is not knowable. The key to survival will be knowing the present and being able to define how the present present is different from the recently passed present in real time.

We will need to know what it costs to deliver specific elements of care and what value these elements actually deliver to patients. In a world where our payments are bundled and we care for populations for flat fees, delivery of expensive care which provides no value to patients is the fast track to extinction. Presently we are rewarded for doing high end things which enrich health systems and providers and may of may not do much for patients. When the switch happens, we are not going to be so inclined to continue expensive approaches when the expense is our own.

The distinction between being efficient and stinting on care is a nuanced one. Withholding something that provides patients value is stinting.  Failure to deliver what patients do not need is efficiency.  To make this distinction, you need to be able to measure the value delivered. We are not so good at this yet but we better get good at this soon. Our ability to define what we should provide and what we can afford to provide in a world of bundled payments is is the difference between enduring institutions and oblivion.

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