To create meaningful health care reform that benefits patients, every stakeholder will have to rethink their role. As providers, we need to shift our primary focus from providing episodic care for the ill to providing continuing, preventive, coordinated care that keeps people health. There will always be a need for treating the ill, but that should not be the basis of a heatlh care system.

Reforming payment to reward coordinated care that creates value (better outcomes, better safety and better service) is something we at Mayo Clinic are excited about. This strategy aligns with the Mayo Clinic Health Policy Center cornerstones for health care reform -- Create Value, Coordinate Care, Reform the Payment System, and Provide Health Insurance for All. These cornerstones are the result of a consensus process involving more than 2,000 representatives of stakeholder groups inlcuding patients and families.

We should reward providers who work together for the good of the patient. Does this mean that we, as providers, need to change the way we work? Absolutely! And it is a change that is long overdue. How we can work together should be left up to the creativity and needs of providers -- the goals of coordinated care and better value could be obtained through formal health care provider groups, loose affiliations of providers or even virtual networks.

The focus of health care reform -- coordinated care and better value -- should remain squarely on the patient. When health care providers accomplish this, using whatever methods work, they should be rewarded.

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I would agree with Mr. Schaeffer. Rationing is indeed a red herring, especially because we already ration care based on ability to pay and health status. In reforming health care, the concept of shared responsibility is key, and that may mean providers get squeezed a bit, just like others in the system will get squeezed a bit. If this means more people are covered with affordable care that meets their needs, I'm not sure that's a bad thing.

And indeed, there is a lot that can be done in terms of reforming how we pay providers that the providers themselves are eager to try. I got in touch with Dr. Mai Pham, Senior Policy Advisor at the National Physicians Alliance, to explain from a doctor's point of view:

Effective leadership on health care reform does need to articulate common goals, and improved care coordination and efficiency are worthy ones. They are certainly consistent with the mission of the National Physicians Alliance to improve health and well being, and to ensure equitable, affordable, high quality health care. The next step entails not just setting incentives to motivate change, but also helping to identify the tools that patients, physicians, and hospitals need to create that change. Medical homes may be great, but how should I build one with the limited resources I have? Health care markets vary tremendously in both the expectations of their stakeholders and in how they operate. But even if one-size solutions won’t fit all markets and circumstances, some communities and providers will develop innovations that their peers elsewhere can adapt. If policymakers find ways to formalize and speed that seepage of knowledge, their reform efforts will go much farther, because it will empower providers rather than leaving them feeling like victims of a policy they don’t know how to respond to. Engaging patients and giving them some reasonable responsibility for outcomes would also signal that reform is a shared enterprise. Provider incentives alone, unless they are extremely large, may not do the trick. From this perspective, it may also be fruitful to focus reform initially on the innovators and learn from their experiences.

Resistance to change is a given, no matter how undesirable the status quo. We shouldn’t be deterred by early skepticism. If the long-term commitment is there, the operational details and know-how will come.

For this to work, everyone in this system must be open to reform. We should ignore the fear mongers like Mr. Goodman, who shout "cost-shifting" and "free market" without acknowledging that the free market health care system we have now has largely failed and that cost-shifting is not nearly the problem the insurance industry advertises it is. They want nothing but the status quo. The rest of us, providers included, are ready for reform without fear.

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All over the developed world there is a tendency to control health care costs by squeezing the providers of care. We have seen the same tendency in Medicare and Medicaid in the United States. Under Obama health reform, expect more of the same.

Yet shifting costs from one group to another is not the same thing as controlling costs. Cost shifting disguises social costs and gives the false appearance of having controlled them.

Ironically, the best way to control health care costs is to liberate providers. Free them to repackage and reprice their services any way they like, provided the cost to government does not go up and the quality of care for patients does not go down. The full proposal is here.

Our focus first and foremost must be on improving patient care, which includes addressing issues of coordination and continuity.   

According to a recent study by Jencks et al. in the April 2, 2009 New England Journal of Medicine, almost 20 percent of Medicare hospital patients in 2003-04 were readmitted within 30 days of discharge.  Over half of these patients had not visited an outpatient provider between their initial hospitalization and readmission.    

Hospitals and individual providers must better align care and patient coordination between hospital, ambulatory, and other settings.  New investments in health information technology should be used to improve care coordination, but technology alone will not ensure that patients are seen or that they can access health care before they become sick enough to require readmission.

Improved collaboration is imperative, and several proposals now under consideration hold the potential for promoting such teamwork.  Bundled payments, which combine payments across multiple sectors, will require improvements in provider communication.   New delivery models such as accountable care organizations and medical homes (which the AAMC endorsed over a year ago) may also play a role.  The nation’s teaching hospitals and physicians are committed to examining these, as well as other options, that help reduce staggering costs of care and improve the health care quality of all.

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If we are going to provide new health services to Americans who now lack them then one of two things has to happen. Either taxpayers are going to get squeezed (more than they are currently scheduled to be) or some providers are going to get less than they expected so that others serving the uninsured will get more. One person’s saving is another person’s squeeze. It is that simple. Doctors and hospitals as a group have no sacred right to ever-growing revenues, any more than computer makers or teachers do. The issue they should be concerned about is how savings are achieved. They can support market-based approaches – the basic pattern in other industries – where consumers ultimately control the dollars and doctors and hospitals compete to satisfy patients. Or they can get used to even more systematic price and volume controls, where they must satisfy CMS officials and Members of Congress.

Changing how the nation pays for health care is critical to improve value, achieve better quality, and slow cost growth. The comprehensive, integrated proposal offered by the Commonwealth Fund Commission on a High Performance Health System known as the "Path" framework includes fundamental provider payment reforms alongside affordable coverage expansion and new systems to promote better decision-making and improve population health.

Modeling by the Lewin Group shows that a combination of payment reforms--bundling payments to cover care over a specified period, revising fees to increase compensation for primary care, and offering providers financial incentives to serve as patient-centered medical homes--has the potential to slow the growth of health spending by $1 trillion through 2020.

While moving away from fee-for-service to new methods of payment that reward higher value represents a major step forward, the provider sector is likely to be acutely concerned about the overall level of payment and limits on the rate of increase in payment over time. It is therefore especially important to note that realigning payment incentives offers significant opportunity for innovative, efficient practices and allows for sustainable revenue growth across the entire sector. Aggregate provider revenue is projected to increase at an annual rate of 5.5 percent under the Path reforms, propelled initially by an infusion of funds to cover the uninsured and bring Medicaid reimbursement up to Medicare levels.

Pharmaceutical and device companies are deeply opposed to using payer purchasing power to set limits on payment rates. They have been particularly outspoken on the issue of linking comparative effectiveness research to insurance benefit design and payment. Many countries use such information as a basis for "reference pricing," i.e., paying the price of the lowest-cost equally effective drug, procedure, or treatment and requiring that patients electing a higher-price drug or imaging test, for example, pay the difference. A substantial portion of Path savings, an estimated $634 billion over 2010-2020, come from adopting such practices.

In the political fray over health reform, it's important to keep sight of one central question: what's best for patients? Changes to our inefficient and unsustainable payment system will be politically difficult, but everyone involved in health care shares a common concern: doing what's best for patients. Keeping that goal at the forefront will make it easier to enact meaningful reform that achieves affordable health insurance coverage for all, improves quality, and returns greater value for the resources we commit to health care.

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Effective health care reform should squeeze everyone a little bit.  Payment reform is an essential component of health care reform.  Coverage expansion can only be sustained if health care cost growth is reduced. We cannot continue to reward service volume, pay lip service to better outcomes and punish efforts to produce better care at lower costs in the marketplace.  The challenge will be to implement reimbursement strategies for hospitals and physicians that link payment with quality care and outcomes on a broad scale. There are many innovative strategies to correct the financial incentives that make U.S. health care unaffordable with uneven results (e.g. recalibrate FFS payments; bundle payment for episodes of care; P4P; capitation; and blending approaches.)  Providers and payers know what to do; they just need policymakers with the political will to make the changes that will squeeze financially, but will improve quality and access.

We are at a crossroads. Medicare, however, can play a significant leadership role in choosing a new direction. Other public and private payers will adopt changes in Medicare’s payment structure, creating the dynamic to fundamentally transform the underlying structure of health care delivery.  Now is the time to capitalize on the growing acceptance among providers that performance should be measured, reported and paid accordingly.  Under a reformed payment system, quality providers (and providers willing to improve their performance) should have nothing to fear.  In the politics of health care reform, “rationing” is a red herring.  The growing unaffordability of health care is the true problem. 

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There’s no doubt we need to reform the health care system and physicians are committed to making that goal a reality this year. Savings, such as those from improving efficiency, could help fund expanded coverage.

Dartmouth researchers concluded that hospital readmissions and post-acute care account for much of the variation in care. Delivery system reform that promotes better coordination could help reduce readmission rates, but we must be careful to “do no harm” to the vulnerable patients who are often transferred between hospitals, nursing homes and other post-acute care facilities. For example, simply stopping Medicare payments for all readmissions could harm the care of patients with legitimate readmissions and lead to greater fragmentation.

Concepts such as bundled payments and accountable care organizations are promising ideas – and the AMA is studying them – but there needs to be more meat on the bones of these concepts before they are widely implemented. Pilot testing, demonstration projects and inclusion of health care professionals in the decision-making process will help ensure that changes in the delivery and payment systems are properly implemented and accepted by those in the trenches providing patient care. The AMA is committed to improving the value our nation gets from its health care spending so that all patients get high quality care at the best cost.

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