Escalating Health Care Costs Threaten Nation's Future

Value-based purchasing, electronic health records, and a reorientation of physicians, payers, and patients to prevention and wellness—that is the future of American medicine.

So said Mike Leavitt, secretary of Health and Human Services, in an address to physicians at the interim meeting of the AMA's House of Delegates in Las Vegas last month.

Leavitt sketched a picture of American medicine on a collision course with the future as a result of steadily rising costs.

“When I was born, health care in this country occupied about 4 percent of the total economy,” he said. “When my daughter was born 25 years later, health care had doubled; it occupied 8 percent of the total economy. This year, a generation later, as my grandchild was born, it had doubled again. Health care occupies 16 percent of the gross domestic product. Then time will flash again, and my granddaughter will be the one holding a new baby. And by that time, unless something changes, health care will be 25 percent of the GDP of this country.

“We all know that can't happen,” Leavitt continued. “We will either change our course, or our nation will have been eliminated from the economic competition. In a global economy, there's no place on the leaderboard for a nation that spends 25 percent of its economy on health care. It won't be possible for us to stay prosperous.”

Leavitt spoke of the need for value-based purchasing and cost cutting at a time when house delegates were already roiling about impending cuts to Medicare reimbursement and about the government's commitment to pay for performance (see box and pages Original article: 1 and Original article: 7).

John McIntyre, M.D., chair of the AMA Section Council on Psychiatry, told Psychiatric News after the AMA meeting that persistent problems with the Medicare payment formula—especially the sustainable growth rate component—and the drastic cuts impending for 2007 had become a consuming focus of AMA delegates and leadership.

“Along with liability reform, this is one of the AMA's biggest issues,” he said. “Everyone agrees the sustainable growth rate is a bad formula. Despite that, the federal government, as evidenced by the secretary's comments, does not appear to be advancing any solution other than cutting physician payment. But there is no question that this will result in diminished access for seniors and other beneficiaries.”

Leavitt emphasized the need to reorient the health care delivery system toward prevention of disease and maintenance of health. “Until we begin to pursue prevention and staying healthy with the same rigor that we give treatment, our cost problems will persist,” he said. “Keeping ourselves healthy is clearly at the heart of cost containment. It is clearly the best cost-containment strategy.”

Integral to the vision of a reformed health care system is an electronic health records system.

“I'm persuaded that physicians understand very clearly the long-term value of interoperable electronic health records and are ready to adopt them,” he said. “However, in the short run, some—especially small-practice doctors—see them as added expense without a clear business model that justifies the investment. Lots of small practices have been putting investment off because they haven't been certain which system to buy; they want to make sure they buy a system that is interoperable, but interoperable with what?”

In answer to that question, Leavitt urged physicians to purchase systems that meet the certification requirements of the Certification Commission for Health Information Technology (CCHIT). “If you do, and if your vendor maintains CCHIT certification, you are on the pathway to interoperability,” he said.

He also underscored the government's determination to institute value-based purchasing through pay for performance, but seemed to acknowledge that the present state of quality measurement is unacceptable.

“I've learned we're not very good at quality measurement yet,” he said. “In most clinical settings, quality measurement is a nurse who comes in on a Saturday and sorts through a stack of paper medical records to see when somebody got their hemoglobin A1c tested, or if Mrs. Jones was advised to quit smoking. The nurse will communicate that manually to somebody who combines it with the work of other nurses, and nine months later the results are published.

“That is not a scaleable model. We have a lot to learn about measuring quality, and even more distance to travel until we can collect the information efficiently.”

And Leavitt also emphasized that ultimately it is physicians who must develop the measures of quality to be incorporated in any value-based purchasing program.

“I have observed firsthand that it is physicians who are driving the quality movement and that quality standards have to be developed by the doctors,” he said. “It will be a lot better if the M.D.s do it than the M.B.A.s. We need your continued involvement in this subject. The AMA has been heroic in its willingness to engage the specialty societies and to work to develop quality measures.” ▪