It's The Incentives, Stupid!

By Francois de Brantes

Healthcare is plagued by many things, but none is worse than the incentives that drive physician, hospital and patient behaviors. This book is a compilation of 18 months of reflections on those incentives and offers some solutions to the problems at hand.

• Language: English
• Publisher: Francois de Brantes
• Release date: Oct 18, 2012
• ISBN: 9780988438101

Francois de Brantes

As Executive Director of HCI3, Mr. de Brantes is responsible for setting and implementing the strategy of the organization. This includes supervising the implementations of Bridges To Excellence and PROMETHEUS Payment pilots, leading the development of new programs, and designing incentive efforts for employers, health plans and provider organizations. Previously, Mr. de Brantes was the Program Leader for various healthcare initiatives at GE Corporate Health Care Programs, responsible for developing the conceptual framework and the implementation of GE's Active Consumer strategy. Mr. de Brantes attended the University of Paris IX - Dauphine where he earned a MS in Economics and Finance. After completing his military service as a platoon leader in a Light Cavalry Regiment, he attended the Tuck School of Business Administration at Dartmouth College, where he graduated with an MBA.

Book preview

Foreword

Every week, for well over a year, I’ve opined on the state of healthcare, drawing lessons from papers being published, theories being advanced, and, most importantly, our field work.

The Health Care Incentives Improvement Institute is a not-for-profit organization that is dedicated to improving the quality and affordability of healthcare in the US. To accomplish that mission we’ve created and implemented a number of programs designed to reduce the negative incentives that currently warp the behaviors of many in the industry.

This ebook is an organized compilation of many of the weekly opinions and I’ve kept the original publication date on each entry to provide some context for some of the missives. For example, the entry for the week of July 4th 2012 refers to Joey Chestnut, the winner of the hot dog eating contest. While many will recognize the name, without the date, you might wonder why I would suddenly decide to use Joey to make a point.

While I’m an optimist by nature – I wouldn’t be trying to change the healthcare system if I weren’t – you’ll no doubt note the sometimes cynical and angry tone in these pages. And that’s because we should all be angry at some level with the current status quo. Every year tens of thousands of Americans are harmed by the healthcare system and no one seems to care. Folks in the know can get the best care in the world, whereas the average working person is left fending for themselves, in the dark, with barely any information on the price and quality of the services they’re getting. Any other industry operating like this one would have collapsed by now, but healthcare keeps chugging along because it’s being insulated from the normal market forces that have reshaped every other industry. And here’s the real rub: it doesn’t have to be this way. In fact, we know that with a few modifications in the current incentives – the way in which physicians and hospitals are paid, and the way in which health plan members buy services – the entire industry could shift in a radically better direction.

So I’ll keep sending out my weekly messages, some optimistic, some ranting, and hopefully all topical and timely. If you wish, sign-up.

Sincerely,

François de Brantes

Executive Director

Health Care Incentives Improvement Institute

Glossary

ABIM – American Board of Internal Medicine – is the organization that awards the designation of Board-certified to physicians who have trained in internal medicine.

ACO – Accountable Care Organizations – these are mainly health systems that have agreed to take financial responsibility for the management of patient care

CBO – Congressional Budget Office – a non-partisan office within Congress that measures the impact of certain proposed legislation, or of government programs and reports back to Congress

CMS – Center for Medicare and Medicaid Services – the organization within the Department of Health and Human Services that manages the Medicare program

CMMI – Center for Medicare and Medicaid Innovation – a new organization created by the Affordable Care Act (ACA), that has the authority to create and implement innovative programs designed to improve the quality and affordability of health care for Medicare and Medicaid beneficiaries

Commonwealth Fund, Robert Wood Johnson Foundation (RWJF), Colorado Health Foundation (COHF), New York State Health Foundation (NYSHF), Kaiser Family Foundation (KFF) – these charitable foundations are dedicated to improving the quality and affordability of healthcare and fund programs to accomplish that goal. Collectively they have been responsible for funding much of the innovation in care processes and payment in the US.

FFS – Fee-for-service – is the primary mode of paying for healthcare services, and the principal reason for medical cost inflation

GAO – Government Accounting Office – a division within the federal government that performs various analyses on government programs and initiatives

Health Affairs – a leading health care policy journal published monthly

NEJM – The New England Journal of Medicine – one of the most respected medical journals in the US, published weekly

Leapfrog Group – a non-profit organization founded by employers in 2000 to encourage hospitals to voluntarily report on their patient safety record

PCMH – Patient Centered Medical Homes – these are Primary Care Physician practices that have been recognized by the National Committee for Quality Assurance (NCQA) for having systems and processes in place to better manage patients

Providers – that’s the common terminology for those who provide health care services, such as physicians, nurses, hospital staff, home health agencies, etc…

Chapter 1 The Big Picture

Healthcare costs are rising, although they’ve moderated in recent years, and have sucked up most of the income gains that average Americans would otherwise have enjoyed this past decade.

It’s important to understand why these costs are rising. What’s causing rampant inflation in such a huge sector of the economy while costs are barely rising and even falling in other sectors? I propose some answers in this Chapter.

And beyond these answers, the Chapter also covers some other big picture issues that we face every day. Some are principles to which we should hold true, and others are aspirations that we should have for this country.

The Value of Human Life

May 25, 2012

On May 11th 1944, a few weeks before the allies land in Normandy, my grandfather (and namesake) dies in a concentration camp in Austria, of aggravated pneumonia, in an environment in which there was little to no value given to a human life. One of the enduring and endearing features of the US healthcare system is that it has, so far, refused to put a value on a human life. And we should always remember the stark contrast between the value given to a human life by the oppressors of freedom with that given by its defenders. Yet if we are to keep that value intact - and we must - we have to individually and collectively find the courage to radically change what we do and don't do. In a NEJM Perspective, Gregg Bloche argues that we must move to forms of rationing if we are to avoid fiscal ruin. We would argue that, instead, we must inject into US healthcare the same forces that have transformed every other industry - transparency in price and quality, activation of consumers as smart shoppers, and value-based purchasing. Recent research points clearly to the quantity of wasted resources, as well as the effects of pricing opacity and lack of consumer engagement. It also shows the hope and promise held in the better management of patients. These data tell us unambiguously that eliminating waste, improving quality and changing market dynamics can help us win this battle.

What this means to you - The US spends twice as much per capita in health care costs than the next country, yet does not achieve measurably better outcomes. So there should be no doubt in anyone's mind that we could freeze spending at current levels for way over a decade simply by reducing waste and improving quality. We could also reduce the overall weight of spending by transforming market dynamics. And we