HEALTH CARE SPENDING OUT OF CONTROL? IT’S THE INCENTIVES—STUPID!

1. HEALTH CARE SPENDING OUT OF CONTROL?IT’S THE INCENTIVES—STUPID! SIEPR-FACS CONFERENCE STANFORD UNIVERSITY SEPTEMBER 10, 2003 ALAIN ENTHOVEN

2. DEFINITION OF TERMS • PPO • HMO • CARRIER HMO • PREPAID GROUP PRACTICE • POS

3. EMPLOYER A PAYS 90%(2003 FAMILY MONTHLY PREMIUMS)

4. EMPLOYER B PAYS 100%

5. EMPLOYER C PAYS 80%

6. EMPLOYER D DROPPED THE HMOs

7. EMPLOYER E PAYS ALL BUT $100

8. EMPLOYER F HIRES ONE CARRIER TO OFFER 3 PLANS

9. STANFORD, WELLS FARGO, U.C. AND H-P FIXED AMT

10. HOW MANY EMPLOYEES IN EACH?

11. STANFORD et.al. AFTER TAX

12. WHY A SINGLE CARRIER? • HISTORY • ADMINISTRATIVE COST • ADVERSE SELECTION • EFFECTIVE MANAGED CARE MAY NOT EXIST IN THEIR AREA

13. WHY CHOICE OFFERING EMPLOYERS SUBSIDIZE MORE COSTLY CARE? • HISTORY • “GIVEAWAY-TAKEAWAY” DILEMMA • FEAR NEGATIVE EMPLOYEE REACTION

14. CUTTING COST w/o CUTTING QUALITY OF CARE I • REGIONAL CONCENTRATION OF COMPLEX SURGERY • DISEASE PREVENTION, EARLY DETECTION • CHRONIC DISEASE MANAGEMENT • PROCESS RE-ENGINEERING

15. CUTTING COST w/o CUTTING THE QUALITY OF CARE II • TOTAL VALUE DRUG SELECTION AND PURCHASING • EVIDENCE-BASED PRACTICE GUIDELINES • ELECTRONIC MEDICAL RECORDS • CQI: MISTAKES COST MONEY

16. CUTTING COST w/o CUTTING THE QUALITY OF CARE III • SAFETY CULTURE & ERROR REDUCTION • ALLIED HEALTH PROFESSIONALS • MATCH RESOURCES TO NEEDS • STANDARDIZE EQUIPMENT, etc.

17. EFFECTIVE MANAGED CARE • COHESIVE GROUPS OF MDs UNDER COMMON MANAGEMENT • SELECT PHYSICIANS FOR QUALITY, EFFICIENCY AND TEAMWORK • PHYSICIANS AND PATIENTS THERE BY CHOICE • INTEGRATE FINANCING AND DELIVERY

18. EFFECTIVE MANAGED CARE • INTEGRATE FULL SPECTRUM OF CARE • EVIDENCE-BASED GUIDELINES • SHARED COMPREHENSIVE MEDICAL RECORD • CQI/TQM: PROCESS IMPROVEMENT

19. EFFECTIVE MANAGED CARE MUST BE A MATTER OF CHOICE FOR DOCTORS AND PATIENTS

20. WHAT MUST BE DONE? EVERYONE IN: • WIDE CHOICE • RESPONSIBLE CHOICE • INDIVIDUAL CHOICE • INFORMED CHOICE • MULTIPLE CHOICE

21. EXCHANGES ARRANGE MULTIPLE CHOICE • CalPERS • CALIFORNIA CHOICE • PacADVANTAGE

22. PUBLIC POLICY • INCENTIVES FOR EMPLOYERS TO CREATE EXCHANGES AND OFFER MULTIPLE CHOICE • ERISA EXEMPTION FOR EXCHANGES • REQUIRE FIXED DOLLAR CONTRIBUTIONS • LIMIT THE TAX BREAK

23. IMPLICATIONS FOR MEDICARE • COST BURDEN WILL BECOME INTOLERABLE • MEDICARE IS LOCKED INTO FFS COSTS • MUST BE TRANSFORMED INTO A MARKET DRIVEN MODEL

24. IMPLICATIONS FOR MEDICARE • TRANSITION A LOT EASIER IF PRIVATE SECTOR WERE THERE • TAX BREAK SUBSIDIZES ABILITY OF PRIVATE SECTOR TO COMPETE WITH MEDICARE • WE NEED BOTH PUBLIC AND PRIVATE SECTORS IN A MANAGED COMPETITION MODEL