The Value of Health in Health Reform

December 6, 2009

Health care reform is the topic of every conversation, it seems, and many of these conversations are quite impassioned.

Health care reform is the topic of every conversation, it seems, and many of these conversations are quite impassioned. The congressional recess did not cool the likes and dislikes, and airwaves and cyberspace are white-hot with suggestions. While some had hoped that policy would be finalized for health care reform, it does not appear likely; instead, as runners know, the legs are just getting warmed up from the 5K sprint that serves as an appropriate metaphor for these past few months. As the former chair of the Missouri Governor’s Council on Health and Fitness, I share a word to the wise: folks, it’s just beginning.

When asked to write about health care reform, I was hesitant. After all, the concept is politically charged and the recommendations seem to change almost hourly. Further, as the co-founder and CEO of an organization of innovators, I can assure you that working toward consensus is no easy feat. Staking a claim on a major issue such as health care reform has so many opportunities to derail any work we are doing that the risk seemed enormous. But for those who know my style, I am reluctant to shy away from causes that I believe in-and this is no exception. So, with the readers’ permission, I write this perspective both as the CEO and as a lifelong champion of improved health through personally responsible and fiscally sound efforts. I will carefully note for you where the two perspectives may diverge.

Health or Health Care?
The conversation on health care is intrinsically linked to the conversation and realities of economic security. Having moved to southwest Florida just over a year ago, I have witnessed the economic implosion from the battleground bunker: health care costs escalating at a rate that small businesses, then larger businesses, could not sustain; rising unemployment; foreclosures; bank and business closings; ponzi schemes that escalated the financial crisis; property taxes down 25%; rates for unreimbursable medical expenses decreasing; hospitals and pri-mary care physicians (who are already stretched and insufficient in numbers to serve the population) making cuts in services; health care service cuts leading to layoffs; and more foreclosures. The sunsets on the beach are spectacular, but the economy of 5 years ago has changed remarkably.

The questions that are posed at every level are not achieving the results we need for either improved health care or improved economics. The discussions are focused on payment reform (can we squeeze waste and change the format for paying for services?); delivery system reform (focused, but not exclusively, on health information technology [HIT], which also includes patient-centered care and coordinated delivery across all teams that touch care); and incentive-based designs (creating the choice architecture that guides patients to the effective and efficient care and services to improve health). These are all necessary. What is missing is the grander vision.

Building the Culture and Community of Health
The vision that must emerge is the unified vision of improving the health of Americans. The questions that would lead to the achievement of America as the healthiest nation are those that drive innovation and improvement, not reform. Reform is, by definition, better management of what exists. The problem is that what exists has not delivered health for 40 years; rather, it has delivered a health care system that is focused on service (good) that drives profits (could be good, could not be good-if the incentives are not aligned). So, let’s change the conversation to building the “Culture of Health” in America. Let’s reframe the questions as follows:
1. How do we purchase health? Health is achieved when responsibility and accountability are aligned across the demand and supply side, and the result is the productive American. Rethinking the incentives to encourage Americans to be healthier means a greater focus on prevention and wellness, which is achievable by any and all within their personal levels. It accounts for physical and behavioral limitations and still aligns incentives for continual health improvement. Every service, payment, and outcome would answer the question: how much health will this deliver? Inherent in the question is one of economic health as well as clinical health.
2. Who owns health? Americans own their health. Each of us is responsible and focused on our personal health and our impact on community health. Employers, community resources, and national and statewide safety nets should, first, focus on creating the accountability that comes through actionable information, economic and social impact (How will this affect my future? My family?), innovation for improved outcomes, and aligned resources that pay for improved health.
3. Who derails health? Americans derail their health by giving away the power of their productivity. We are capable of managing our health and our health resources, linking them to clinicians, finances, and choices that matter to each of us. What we need is reliable, at-the-moment information, which is why HIT is so important. HIT will not, in a vacuum, improve health. It will enable the improvement of health, but it has to be accessible and actionable at the point of service, whether in the doctor’s office or in the frozen-food aisle of the grocery store. In addition, Americans need to count on the alignment of information and timeliness to drive better outcomes. This leads to question 4.
4. How do we align incentives for better health? Aha! Our suppliers and purchasers are not purchasing from a “better health” platform. If they were, they would ask, “How many units of health will I get for this dollar?” just as they ask, “How many miles per gallon will this dollar of gas provide?” or “How many people will my company need to increase our productivity by X%?” or “How many people will this carton of orange juice feed?” Incentives for increased units of health must be the new currency for a culture of health.
5. Where are we not aligned on the health-value chain, and how do I realign my purchases to reduce friction? Another aha! moment. Aligned incentives come from a shared risk-reward platform-everyone and every purchase is focused on improved health of the community, the family, and the person. There are no “bad guys.” Health plans, PBMs, pharmaceutical companies, medical device firms, and biotech companies would all deliver improved health in this new system. They supply services and share in risks and rewards. The purchasers-employers, government, unions, and individuals-choose their health purchases on the basis of the impact on the improvement in health, wealth, and personal and organizational performance.

This means a new paradigm for contracting, called outcomes-based contracting (OBC), has just begun to emerge. OBC benchmarks the “as is,” creates meaningful metrics for improvement, and rewards progress. It is like the product incentive that goes with new refrigerators or new floor cleaners. There are some emerging models of this kind of contracting, currently called performance-based contracting or pay for performance, for example. However, even that nomenclature clouds the issue. What we need to purchase is better health, so we need to reward on the basis of better health. As long as we are contracting on market share, cost-only, or a combination of both (including rebates that support whichever is chosen), we are not focused on health outcomes.

As long as there is divergence in the rate of improvement of health versus productivity versus profitability, there is misalignment of incentives.

NOTE: The following is my personal view, not the center’s. OBC has the ability to supercharge comparative effectiveness. Value-based design lowers the “entry fee” to affordability of health management, whether it is lowered copays for pharmaceutical agents or waived out-of-pocket fees for prevention and wellness. If cost were the only variable keeping people from medical management, then every person who was in a reduced cost– share plan would be adherent to his or her treatment plan. But we know this is not so.

OBC refocuses incentives on improved health, which means we can now track those who veer off the adherence roadway; determine what their conditions, care, personal health, and communications were; and learn how these supported or derailed their adherence. We can learn, much faster, what the characteristics are of people who fall off in the first 6 months of cholesterol management as opposed to those who stay on track for 12 months. We can compare across organizational, community, and health resource environments. We can even compare across delivery system quality, access to HIT, benefit designs, and environmental influences.

Changing the Questions Changes the Answers
When folks kept saying, “just reduce the costs,” the market responded. When folks said, “just pay the physicians more,” models were developed to show the impact. When folks said, “reduction in copays will engage for adherence,” many created benefit plans that reduced copays, only to find that reductions without support systems and cultures of health did not prevent nonadherence. The problem was we were still focused on dollars instead of people. We simply must change what we are asking for and seek those who will share the risks and rewards of a healthier America. We must create products and services that improve health. We can start small, but we must dream big because the opportunity for loss is huge.

So when I finally made peace with the fact that I had a personal mission to weigh in on health care reform, and I had a responsibility to the board of our organization to do it in a thoughtful manner, I realized the answer was quite simple. Stop reforming, and change the culture. Create a vision worthy of the American ideals. Demand health. I’m in if you are.