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Will There Be a Productivity Revolution in Health Care? - David Cutler
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Will There Be a Productivity Revolution in Health Care? - David Cutler

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Health care is poised to undergo a revolution in productivity. With changes in organization and financing of care, we could improve productivity in medical practices, and for the system as a whole. …

Health care is poised to undergo a revolution in productivity. With changes in organization and financing of care, we could improve productivity in medical practices, and for the system as a whole. The talk will describe how health care productivity can be increased, and the paths that might be taken with or without reform.

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  • 1. Will There Be A Productivity Revolution in Health Care?
    David M. Cutler
    Harvard University
    May 2010
  • 2. What is reform about?
    Getting everyone covered
    Improving the value of care
    Addressing the US fiscal
    situation
  • 3. The Value Agenda
  • 4. Productivity has taken off in the US – except in health care
    Source: US Bureau of Economic Analysis
  • 5. Dimensions of productivity
    Experience of receiving care
    Very poor service quality
    Clinical quality
    Substantially higher costs than needed
  • 6. Service quality is poor
    Patients want to get better and to not worry about their interaction with the medical system
    They do not get that
    Lengthy wait times and times to appointment
    Limited ability to interact with providers (1/4 of people would like to e-mail MD but cannot)
    Lost/missing information
    31% had lost results, had to repeat test, or got different advice from different doctors
    6
  • 7. Who will handle coordination?
    Primary care provider (medical home)
    PhRMA companies
    Insurer
    Google/Microsoft
    iPhone developers
  • 8. Clinical Quality and Cost
    Premise: Medical care is inefficiently provided, and this both lowers quality and drives up cost.
    • Therefore, we should be able to
    improve quality and save money
    through system reform
    8
    8
  • 9. Low clinical productivity
    Overuse of administrative personnel
    Too much spending on care
    Medical errors
    Source: US Department of Labor
    9
  • 10. Appropriate organization is essential to productivity
    Productive enterprises join information, money, managerial talent, and worker empowerment
    The Hallmark of Productive Businesses
  • 11. IT: Data organization, retrieval, and analysis are key areas
    Patient encounters
    Cost-effectiveness analysis
    Learning which providers are better and worse
    11
  • 12. A framework for compensation
    Provider level payment
    Performance-based pay
    Payment for care coordination
    Payment across groups of providers
    Bundled payment
    Hospital picture
  • 13. A Note On Organization
    In every industry where information has become a key commodity and performance-based compensation has become the norm, firms have gotten bigger
    Retail trade (Walmart, Target, Best Buy)
    Banking (Bank of America)
    Legal services
    13
  • 14. Consolidation is almost certain to occur
    Regional/national expansion by big provider systems
    Some of this is already happening
    Closer coordination of MDs with hospitals
    14
  • 15. What Success Would Mean?
  • 16. How much could you take out of the typical hospital without affecting care?
    25 percent savings amounts to 10 percent savings in total health spending.
  • 17. Coordination between providers and insurers could save billions
    United Health Group: $300 billion to be saved over a decade.
    Source: US Department of Labor
  • 18. The Importance of Organizational Change
  • 19. What do the following people have in common?
    William Cook
  • 20. They are health care people in the Forbes 400
    20
  • 21. What is striking?
    They are all stuff you use.
    They are not organizational changes
  • 22. Retailers on Forbes list
  • 23. The next healthcare billionaires
    Whoever figures out how to:
    Coordinate care
    Streamline medical practice
    Overhaul administrative processes
    Ensure proper care combinations
    Manage information