Containing Costs Through Healthcare Reform

Orlando—Healthcare spending in the United States has reached $2.25 trillion, accounting for 16% of the country’s gross domestic product (GDP). Most experts expect it to keep rising and predict that by 2025, healthcare spending will account for as much as 20% of the US GDP.

Ray Fabius, MD, chief medical officer at Thomson Reuters Healthcare, said he has been warning people for 20 years that health spending is “out of control,” but to no avail. Now, more and more people are taking his words seriously and agree with his assertion that the current growth pattern is “unsustainable.”

During a keynote general session at the Spring Managed Care Forum titled Population Health: The Reality Behind Healthcare Reform, Dr. Fabius gave attendees the sobering facts and numbers associated with healthcare spending and noted that changes are inevitable in the way healthcare is delivered.

“It is finally reaching the breaking point,” Dr. Fabius said. “Clearly, we are getting the attention of very important sources to deal with us on [controlling costs].”

Dr. Fabius, a self-described “data geek,” said his company’s MarketScan^® database has information on 93 million lives in the United States. Thomson Reuters works with 200 of the Fortune 500 companies, >100 health plans, >3000 plans, and >25 state governments, as well as all of the major pharmaceutical companies and all of the federal government’s healthcare agencies.

According to Dr. Fabius, 4 market challenges are hindering the healthcare industry: (1) persistent employer pressures; (2) misaligned provider incentives; (3) unengaged healthcare consumers; and (4) dynamic insurance reforms. He said most people are affected, noting that employee insurance costs rose 7.3% in 2009 and insurance costs for small businesses (<5000 employees) increased 9.8%. He added that facility costs increased 12.8%, outpatient care costs increased 8.7%, professional costs increased 5.7%, and inpatient care costs increased 4.7%, all of which were >2 times the inflation rate. In addition, health issues contributed to substantial monetary and productivity losses.

Despite the challenges, Dr. Fabius said, “in the end, it is still about managing care and risk.” He provided a few examples of ways healthcare professionals can reach their goals, including the need for increased transparency and accountability.

For example, patients should be able to easily access the prices of certain treatments and contact information for physicians’ offices, and compare how much providers charge for services. Another effective strategy is implementing personalized health reminders, which Dr. Fabius said increases compliance. By accessing patients’ claims data, Thomson Reuters is able to send e-mails and text messages to remind them to take medications or inform them of upcoming appointments.

Dr. Fabius also said the healthcare industry can improve outcomes by borrowing some principles from behavioral economics. His suggestions included implementing interventional surveys as a measurement tool, providing rewards and recognitions for healthy behaviors such as regular exercise or smoking cessation, opting for a value-based benefit design, and comparing and ranking providers.

Furthermore, clinicians must gain influence in any new systems, according to Dr. Fabius. He said most disease management programs work in parallel with doctors, but they would work better if physicians were empowered to have more influence on ways the programs operate.

In particular, physicians are crucial to patient-centered medical homes, in which patients have an ongoing relationship with a physician who leads a team of providers caring for patients. Dr. Fabius emphasized the importance of having a “robust partnership” among physicians, patients, and their families through continued care, expanded hours, and better communication.

“We need to get people attached to trusted clinicians,” Dr. Fabius said.

Still, Dr. Fabius added that he is concerned with the dwindling number of primary care physicians. By 2025, there is expected to be a shortage of 180,000 primary care physicians, according to a 2008 report in Health Affairs.

To address the shortage, Dr. Fabius said good solutions include retail clinics or pharmacies. Retail clinics are open 7 days a week/24 hours a day, and patients do not need an appointment. Clinics accept most insurance plans and are staffed by nurse practitioners who are licensed to write prescriptions.

Some pharmacies provide drug monitoring, disease management, patient education, public health initiatives, drug utilization programs, and formulary management. Dr. Fabius said patients benefit from clinics, physician offices, and pharmacies that are convenient for them based on the office hours and/or distance from their home or office.

Dr. Fabius also discussed accountable care organizations (ACOs), which were included in the Patient Protection and Affordable Care Act. In an ACO, a group of providers coordinates care for patients and collaborates to meet patient needs, keep costs down, and reach specified quality standards. However, Dr. Fabius is skeptical of widespread adoption of the ACO model. In fact, he cited a study that found 45% of physicians had never heard of the ACO model of care and 20% of physicians did know of ACOs, but did not intend on participating in the initiative.

“[ACOs] sound wonderful, but nobody has seen one that is truly effective yet,” Dr. Fabius said.

Dr. Fabius concluded his presentation with a list of 7 ways that healthcare professionals can contain costs: (1) develop/embrace a vision for health; (2) gain management support and commitment; (3) address workplace policies and environment; (4) identify important diagnostics, informatics, and metrics; (5) set health goals and program elements; (6) create value-based plan designs; and (7) integrate patient-centered medical homes and chronic care management.

He added that there are 3 phases to creating a “culture of health” in a corporation. In the first phase, there is a focus on containing costs, managing high-cost diseases, and implementing a cost-shifting strategy. Next, there is a transition to a population health approach, a re-evaluation of cost shifting to recognize any financial barriers, and a greater involvement from senior leadership. The final phase consists of installing sophisticated health information technology, determining health policies, integrating employee health and productivity improvement strategies, and getting a commitment from senior leadership, management, and employees.