August 7, 2009

Dr. Arnold Relman: Broad Principles of Health Care Reform

Dr. Arnold Relman, familiar to some readers of this blog from this post, writes to the NYTimes about how to reform Health Care:

To the Editor:

David Leonhardt (“Health Care and the T-Word,” Economic Scene, July 29) is quite correct in identifying the growth in health care spending at a rate far greater than the growth in the United States economy as the critical health care problem. He is also correct in noting the waste and unnecessary expense in our health system. But he is quite mistaken in believing that tax reform will eliminate the perverse incentives in the system and deliver the kind of system we need.

The “root of the problem,” to use his language, lies in the way doctors are organized and the way they practice and are paid. Doctors are, and should be, the most important factor in determining how clinical resources are used in the diagnosis and treatment of illness and injury. Neither insurers nor government administrators can make the medical care decisions in a given case. Only doctors and their patients can do that.

The solution to our problem is to cap total national expenditures through an earmarked, graduated health care tax, provide universal coverage on a prepaid basis and encourage physicians to practice in private, not-for-profit multispecialty groups, where they would work for salaries rather than fee-for-service.

That kind of reform will not be easy to achieve, but it should be the ultimate goal of our legislative efforts, because it would be the best — maybe the only — way to make the medical care system work efficiently for the benefit of patients, at a cost we can afford. Tinkering with taxes on private insurance isn’t going to do the job.

Arnold S. Relman
Boston, July 29, 2009

The writer is professor emeritus of medicine and of social medicine at Harvard Medical School and a former editor in chief of The New England Journal of Medicine.

Careful readers of this blog will expect my view on Relman's ideas: I agree with each of Dr. Relman points.

This leaves only the question of how to "encourage physicians to practice in private, not-for-profit multispecialty groups, where they would work for salaries rather than fee-for-service."

The best way to encourage organizations like this -- such as the Mayo Clinic for instance -- is to reimburse for outcomes-over-time, as laid out here on this blog with details such as how to create ongoing outcome criteria tables, how to handle partial successes, how to change the incentives in selecting and paying for drugs, and how to set outcome reimbursement rates via bidding. Paying for outcomes-over-time would reward the practices of these cooperative-care organizations.

Under a pay-for-outcome system, when a cooperative-care provider treats a patient more efficiently, such as by multispecialty pinpointing of the best treatment regimen, they would receive the same pay as a less efficient provider that takes longer and does more to achieve the same outcome. The same pay for the same outcome is only fair. This is widely referred to as "quality-" or "value-based" care.

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