Editor’s note: My article that follows originally appeared as a column in the Idaho Statesman’s Business Insider last month.The problems with the American health care system include fragmentation (care is delivered in many settings by many providers with little coordination) and misaligned incentives (payment methodologies do not create incentives for the results we say we want).
The fee-for-service approach, in which providers receive payment for each individual service they provide, has resulted in the provision of many low-value and even no-value services to patients. And some of these services (for example, imaging procedures) have the potential to cause harm through radiation exposure and unnecessary surgery for incidentally noticed findings that turn out to be of no concern.
Fee-for-service promotes continued fragmentation and lack of care coordination. The time, effort and resources needed to coordinate care and manage transitions of care are largely unreimbursed. They take physicians away from providing services that are reimbursed. Fee-for-service rewards physicians equally despite the necessity, quality and/or outcomes of the service. St. Luke's has long advocated for new, innovative methodologies to replace fee-for-service.
Idaho insurance companies and Medicare are working with us to try new models of pay for value. We are trying several different pilots to see what works and what doesn't. Last year, we announced a new relationship with an insurance company that will gradually transform from fee-for-service to one in which St. Luke's is accountable for the entire medical share of the insurance premium. The insurance company will be paid its actual costs of administration, plus a reasonable profit to allow the company to reinvest in technology, programs and services. St. Luke's will be responsible for managing the total cost of care for medical services. We believe that, with physicians and hospitals all in alignment, we can succeed at bending the cost curve and even reduce health care costs, allowing for a reduction in premiums.
St. Luke's also has partnered with an insurance company to see if a program of care coordination for the most costly members of the health plan can result in significantly improved outcomes and lower total costs. We hope that through better care coordination, we can reduce unnecessary hospitalizations, unnecessary readmissions, and complications, and the insurance company can pass savings along to Idahoans through lower premiums.
We recently announced that St. Luke's was accepted as the first and only Medicare accountable care organization in Idaho. If St. Luke's can achieve 33 new quality measures and reduce the total cost of care, we will be able to share in and use savings to provide services that promote health and wellness.
Finally, St. Luke's recently partnered with an insurance company to accept the full financial risk for one of the company's insurance products. In effect, we are saying we will take responsibility for the financial outcome.
This is a first for St. Luke's. It will more fully align incentives between the insurance company and the care delivery system to provide the highest quality, most efficient care possible.
There is no one fix to health care, but we can find answers when we are willing to try new ideas.
David C. Pate, M.D., J.D., is president and CEO of St. Luke's Health System, based in Boise, Idaho. Dr. Pate joined the System in 2009. He received his medical degree from Baylor College of Medicine in Houston and his law degree from the University of Houston Law Center.