A Medicare reform primer

The use of the federal budget process to change Medicare policy is of importance to physician executives because of its impact on the health care delivery system. In particular, changes in Medicare policy, driven by the need to shore up the solvency of a politically popular program, will create changes for other public and private purchasers of health care. Reforming Medicare through the budget process is not new. Physician fees have been frozen, reduced, and selectively increased as a result. In 1983, the hospital reimbursement methodology was changed to prospective payment through this process. The budget process will continue to be used to make policy changes because of the large amount that Medicare occupies of the federal budget. Given the profound impact changes in Medicare can have in other health care sectors, the lack of consensus for a long-term solution would mean those in the health care arena will have to be prepared for significant annual policy changes through the reconciliation process.     

Health care reform. Gridlock and pork?

Can Americans expect the same gridlock and pork between now and the 21st Century? What are the possible directions that the United States can move in regarding health care reform and the long-term financing of health entitlement programs? Here, the author offers a snapshot of current politics and some predictions for the next four years. And explores the question: Are Americans willing to make the necessary sacrifices for future generations to profit by the significant changes needed by entitlement and health reform, or will it be business as usual? America's centrist perspective was recently reinforced by the 1996 election, suggesting that no major innovations in entitlement or in the health system should be anticipated in the next four years.     

Quality improvement in the era of health reform

More and more scrutiny is certain for the health care field. The intense interest in medical quality management that has been a factor in the field for many years is certain to increase under any reform that the system undergoes. This is a unique opportunity for physician executives to play a leading role in the future course of health care delivery. The alternative of their involvement will be almost total control of the issue by regulators.     

Managed care in the pediatric subspecialty of neonatology. The challenges, impact, and consequences

As our health care system moves toward a more managed competition model, the delivery of pediatric and pediatric specialists' services, especially the intensive and procedural services of neonatology, will be impacted. Pediatricians and pediatric subspecialists cannot avoid being buffeted from the powerful market forces that are now driving revolutionary changes in our health care system; they, like nonpediatric physicians, are often concerned and bewildered about the new realities of the day.     

Ascendancy of primary care will create role intensification for physician executives

The need for physicians in management roles in the health care system has never been greater. And the years ahead will see that need broadened and intensified. To maintain their leadership role in medical affairs in hospitals and other types of health care delivery organizations, physician executives will have to envision provider organizations and systems that have not yet been conceived, let alone developed and implemented. They have to become totally open-minded and futuristic in their thinking. And they will have to help other physicians accommodate this new way of thinking if the medical profession is to continue in a leading role in health care matters. Although numerous factors will have to be anticipated and analyzed by these new physician leaders, the ascendancy of primary care in a managed health care world long dominated by the technical and technological superiority of hospital care will present a particular challenge to the physician executive.     

The digital transformation of health care

The arrival of the Internet offers the opportunity to fundamentally reinvent medicine and health care delivery. The "e-health" era is nothing less than the digital transformation of the practice of medicine, as well as the business side of the health industry. Health care is only now arriving in the "Information Economy." The Internet is the next frontier of health care. Health care consumers are flooding into cyberspace, and an Internet-based industry of health information providers is springing up to serve them. Internet technology may rank with antibiotics, genetics, and computers as among the most important changes for medical care delivery. Utilizing e-health strategies will expand exponentially in the next five years, as America's health care executives shift to applying IS/IT (information systems/information technology) to the fundamental business and clinical processes of the health care enterprise. Internet-savvy physician executives will provide a bridge between medicine and management in the adoption of e-health technology.     

Health care's power brokers in the 21st Century. Interview by Donna Vavala

Health care has undergone turbulent change in the 20th Century. In addition to dramatic pharmaceutical and technological advances, the entire health care delivery system has been significantly improved. Through all the turmoil, hospitals have been at the center of the health care universe. But, as the 21st Century approaches, that may change, too. What will become of hospitals, which for most of this century have played a commanding role? Will managed care organizations and group practices come out on top? And, once the new power broker takes over, what will be the impact on providers, insurers, and the government, and how will their relationships to each other change? Jeff Goldsmith, PhD, President of Health Futures, Inc., Bannockburn, Ill., and health care futurist, examines tomorrow's health care delivery system and makes some eye-opening predictions.     

Culture in chaos: the need for leadership and followership in medicine.

The health care industry is changing at a dizzying pace and most of its players are struggling to maintain some form of the status quo. But resisting change will not prove fruitful--ultimately, it will rob physician executives of the opportunity to be architects in designing a new, more efficient health care system and their role in it. Because health care is a complex adaptive system (CAS)--change occurs rapidly and events are unpredictable--the old command and control style of leadership and a linear way of interpreting events is too rigid and, therefore, an ineffective model for guiding change. Complexity science offers insights about leading for change. In CASs, changes emerge in response to environmental demands for adaptability. Since the nature of these demands is unpredictable, the role of leadership is to manage the relationships and context out of which these changes emerge. A leadership style is called for that leads to purpose, makes positive changes by influencing context and relationships, and takes followers to a better place.     

The role of the coordinator of care

Regardless of the specific outcome of the current health reform debate in Washington, it is likely that major changes to the health care system are in the offering. These changes, many of which are already in place or imminent in some locations, will have a major impact on the evolving relationships between physicians and hospitals. Most expect that these changes will accelerate the development of integrated health care delivery systems that will compete in the marketplace for a mixture of public and private health insurance dollars. In this system of "managed competition," health care dollars will flow to those systems that can ensure the best clinical outcomes while using the least economic resources. In this scenario, competing collaborative health networks that can manage the continuum of care will be central to the health care delivery system. The economic and political ties between physicians and hospitals will become more closely linked as government and private payers of health care services foster the development of these integrated, value-based health care delivery systems.     

Consumer-driven health care: a path to achieving shared goals

Consumers are the driving force for a transition to a best outcomes-driven health care system that values and rewards outreach, innovation, and the rapid translation of scientific advances into everyday practice. They are the engine for change that can drive outcomes improvement, encourage broader and more timely use of new knowledge, and demand mechanisms to evaluate and report the effects. Consumers alone are fueled by the passion and urgency that results from living with the effects of illness, or seeing those they care about suffer. This best outcomes-driven system will need to be defined by consumers, professionals, and scientific evidence. But to participate as effective change agents, consumers will need good information, decision-support tools, access to resources, and ongoing support from entities they trust. By putting the consumer in the center of a best outcomes-driven system, we can begin to achieve our shared goals: universal access to high-quality, affordable health care and the opportunity for everyone to achieve optimal health-related quality of life and function.     

Transition to capitation. Aligning incentives for success

Horror stories abound about providers that have failed to modify their incentive systems and have exhausted their annual capitation budget in the first six months of the plan year. Aligning the business strategy and financial incentives in advance is the best way to ensure that your integrated delivery system's transition to capitation is a success story. Rarely are physicians or hospitals with experience limited to the fee-for-service arena prepared to jump into a managed care or capitated compensation system. The transition can be eased by implementing a "shadow" capitation or similar arrangement that will test physician performance under a risk arrangement in advance. The information can be used to restructure the compensation system to ensure that the behaviors being encouraged will promote successful care and fiscal management.     

Self-directed health plans: alternatives to managed care enabled by new technologies

Few people believed the Internet would have much impact on the delivery of health care services. However, combined with technological advances in how computer systems are structured and implemented and knowing what doesn't work in managed care from bitter experience, the Internet is being used to create a new paradigm of alternative health insurance products. These products hold the potential to change for the better the face of health care as we know it. Self-directed health plans will be less expensive than managed care programs and offer greater predictability in health care spending. For health care providers, SDHPs' reliance upon episode allowances will create a new market for packaged or bundled services. Providers will be paid to provide solutions, not just treatment. This could represent a new model in which physicians accept a risk-adjusted payment and provide a warranty that they will do whatever necessary until the patient has reached the reasonably expected health status. This is a radical departure from the fee-for-service or capitation system.     

The ascendancy of primary care: permanent or temporary?

The conventional wisdom strongly suggests a health care provider food chain for the future: Primary care physicians (PCPs), principally family practitioners, on the top playing the lead role, distantly followed by specialists, with hospitals and other ancillary services even further down the line. Is this a reasonable expectation? Will PCPs dominate the new systems? Or will they be but one of many equally necessary components of these developing integrated health care delivery organizations? Looking at the various models now developing, it would seem that future integrated delivery systems will utilize both PCPs and specialists, but with strong augmentation from a diverse assortment of other health care professionals, including nonphysician providers, educators, and administrators. To separate the illusion of primary care dominance of the coming health care system from the likely reality, we should first determine what is driving the apparent present demand for primary care physicians. Next, we will examine the possible and probable reactions to that demand from an economic standpoint and from the points of view of both health care professionals and the public. Finally, we must try to picture how health care provider organizations of the future are likely to look and how they will integrate their health care professionals.     

Physician leadership. The time is now

During the past 30 years, third party payers have imposed virtually every imaginable form of external cost controls on the traditional health care system. All have failed. And now those paying the bills--the large-scale health care purchasers--have finally seized control. They are fomenting fundamental structural change in the health care system. In order to continue doing business with these purchasers, health care providers are finding that they must form alliances to present a comprehensive "package" of health services for the constituents of these purchasers. In short, they must form integrated delivery systems. Current developments have created a unique opportunity for physician leaders to take a commanding role in shaping the emerging American health care system.     

Strategic approach to the development of a superior product.

This article describes an innovative approach to the design and delivery of health care services; a brief summary of the underlying rationale of the approach; a comparison of the traditional health care delivery system with the new, extended product line (EPL) approach; and an evaluation of the extended product line process. Information regarding the extended product line will be presented as a case study, describing one hospital's experience with the development of a cardiac extended product line.     

The Informatics Institute: why do we need it?

Why should physician executives care about medical informatics? For that matter, what is medical informatics anyway? Broadly defined, medical informatics is the study of the collection, storage, retrieval, and analysis of data and information in health care to support clinical and administrative decision making. Informatics is important because, in the past 10 years, powerful computer, software, and information technologies have been developed to enable health care organizations to automate some of the work of decision making, for improved quality of care and cost control, and for successful managed care contracting. This new emphasis on informatics in health care was the impetus for the founding by ACPE earlier this year of The Informatics Institute, which will be involved in educational and research activities in the growing area of medical informatics. In this new column in Physician Executive, Dr. Marshall Ruffin, President and CEO of the Institute, will discuss the role of medical informatics in health care delivery and financing and its relation to physician executives.     

Physician payment in Canada, Germany, and the United States

As the debate about reforming the U.S. health care system intensifies, interest has focused on three alternative delivery systems: the predominantly private-sector model in the United States, the provincial-government health insurance model of Canada, and the social insurance model of Germany. The organization of physician payment is an important part of all these health care systems. To maintain an affordable system that delivers high-quality care, payment to physicians must be sufficient to attract and maintain an able group of doctors, while not exceeding an amount that the country can afford. In this article, these three systems will be examined, and an attempt will be made to apply the lessons learned from Germany and Canada to the direction of physician payment reform in the United States.     

Veteran's health care: time for a change?

The Department of Veterans Affairs' mission is "to care for him who are shall have borne the battle for his widow and orphan." The Veterans Health Administration comprises 172 hospitals that are the hub of the health care delivery system. It is the largest provider of graduate medical education, and one of the major research organizations in the United States. The medical care budget exceeds $17 billion annually. Most of the persons cared for are not legally entitled to this health care based on service connected disability. The utilization of acute care hospital beds appears excessive when compared to that obtainable with managed care for Medicare or commercial insurance beneficiaries--the cost per member per month is three times higher. There may also be exploitation of the Veterans Administration hospitals by university medical schools. The Veterans Health Administration is a very expensive way to deliver care to entitled service connected veterans. Therefore, it is suggested that privatization be considered as an alternative vehicle for delivering health care.     

Study tour examines health care systems in Germany, Holland--Part I: A comparison of three health care systems

In October 1992, the American College of Physician Executives sponsored a study tour to Berlin, Germany, and Amsterdam, Holland. Meetings were held with government officials, third-party payers, and providers, and onsite visits were made at hospitals, clinics, and academic centers. The purpose was to study the health care delivery system in those countries and to share some insights with the countries' hosts on the U.S. system. Beginning in this issue of the journal, 5 of the 10 study tour participants describe their impressions of the tour and of the health care systems in the countries that were visited. This first report compares the health care delivery systems of the United States, Germany, and Holland. In subsequent reports, the German and Dutch health care systems will be described in greater detail and the ability of the United States to adopt European health care systems will be assessed.