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Sunday, July 18, 2010

Innovation and changing behaviors in healthcare

This week I am on vacation and I have more time to think and reflect. I spent some time this morning perusing blogs and came upon two pieces from the current issue of Health Affairs which are sequential and remarkably enlightening, but not intentionally so. The first was:

How The Center For Medicare And Medicaid Innovation Should Test Accountable Care Organizations [Payment & Delivery]

The Patient Protection and Affordable Care Act establishes a national voluntary program for accountable care organizations (ACOs) by January 2012 under the auspices of the Centers for Medicare and Medicaid Services (CMS). The act also creates a Center for Medicare and Medicaid Innovation in the CMS. We propose that the CMS allow flexibility and tiers in ACOs based on their specific circumstances, such as the degree to which they are or are not fully integrated systems. Further, we propose that the CMS assume responsibility for ACO provisions and develop an ordered system for learning how to create and sustain ACOs. Key steps would include setting specific performance goals, developing skills and tools that facilitate change, establishing measurement and accountability mechanisms, and supporting leadership development.

Yes, such a simple task of creating a whole new system of practice as well as the feedback mechanisms which ultimately will be required to change human behavior.

The second article was:

How Medicare's Payment Cuts For Cancer Chemotherapy Drugs Changed Patterns Of Treatment [Web First]

The Medicare Prescription Drug, Improvement, and Modernization Act, enacted in 2003, substantially reduced payment rates for chemotherapy drugs administered on an outpatient basis starting in January 2005. We assessed how these reductions affected the likelihood and setting of chemotherapy treatment for Medicare beneficiaries with newly diagnosed lung cancer, as well as the types of agents they received. Contrary to concerns about access, we found that the changes actually increased the likelihood that lung cancer patients received chemotherapy. The type of chemotherapy agents administered also changed. Physicians switched from dispensing the drugs that experienced the largest cuts in profitability, carboplatin and paclitaxel, to other high-margin drugs, like docetaxel. We do not know what the effect was on cancer patients, but these changes may have offset some of the savings projected from passage of the legislation. The ultimate message is that payment reforms have real consequences and should be undertaken with caution.

In this case the government had no particular desire to change human behavior. They just wanted to save money. However, they changed the behavior of oncologists by altering the financial rewards for specific activities.   Offer to pay less for something and you are sending the signal that it is less valuable.Duh?  Thus, we have further evidence that markets are remarkably effective tools at changing human behavior, yet we still insist upon trying to create some new mechanism using untested tools.

Why are markets so good at this? It is because they are remarkably good at taking all types of information and distilling it down to a common language which virtually everyone understands. While the cost of any given good or service may not be affordable to everyone, the mechanism by which it is priced adds little to the cost of the item. I view the market pricing system as the original information superhighway. To replace this validated system the idea to create some command and control alternative, the inner workings of which are simply yet to be built and are likely to resemble some Soviet commissar's dream. This is not innovation despite any name assigned to it.  

1 comment:

  1. Creating a bureaucracy that will ensure that all those involved in health care (physicians, patients, insurance companies, drug manufacturers, etc) act in ways that promote health and cost effectiveness is certainly nonsense. The administration recognizes that current financial incentives encourage wasteful utilization of resources, but its "health care reform" solution creates an enormous bureaucracy . These "watchdogs" and "czars" will change the specific behaviors of the players because the financial incentives will be changed. However, they will not fundamentally change the motivations of the players, and they will simply find new ways to achieve their old goals.

    Your suggestion of using market forces to create appropriate incentives is a good one. It has certainly worked in many other instances. However, it is not sufficient, for at least two reasons. First, the health care system is remarkably closed. The "consumer" (patient) has no idea what anything costs. Alan Garber (Annals of Internal Medicine 148(12): 964-966) referred to our current system as a "Menu without Prices." People simply cannot shop around for the best price for their treatment because prices are not advertised. Second, even if the consumer did know the prices, he or she would still be relying on someone who may subject to perverse incentives (such as an insurance company or a physician) to make a recommendation as to what product to purchase before doing price comparison. When purchasing a computer or a vehicle, a consumer can consult an objective source such as Consumer Reports. When it comes to health care, however, the consumer relies on others to make recommendations.