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

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