One of the highlights within politics this year is the presidential race in the U.S. Since Bernie Sanders describes himself as a social democrat and often refers to the Scandinavian model it is of extra interest to follow it from a safe distance.
Bernie Sanders runs on a platform of universal health care, Medicare for all if you will and this is highly controversial. Donald Trump calls him a socialist/communist saying he will tax people at 90%. On the other side of the political spectra the GOP candidates compete in their efforts to pledge to decommission Obama-care. Either way the election goes the healthcare can be up for tremendous changes. Given the intensity of the debate and the reactions amongst registered voters, healthcare triggers an emotional response.
Disregarding the political landscape I believe there are many improvements left to apply to healthcare both in Europe and in the U.S.
At its root healthcare is about distributive justice. The demand seems to always supersede supply and who to service is the core of all healthcare systems. In evaluating new methods of care the QALY (quality adjusted life year) is the preferred method to make sure the patients get the most bang for the buck. When it comes to healthcare management the dominating system is the new public management.
Some 30 years ago the Swedish healthcare was in chaos. Politicians were fed up by the inefficiencies and the characteristics of a society dominated by standing in line. To get a hip replacement a patient could have to wait for many months or more than a year. Maybe the discontent with the old system justified the ignorance that paved the way for the new public management model into Swedish healthcare; the decision was passed without much debate or resistance.
Thus in 1988 the DRG system based on diagnostic related groups made its way into Swedish healthcare and things would never be the same again. Regardless of the status of the patient or the healthcare provider the diagnostics would determine the reimbursement to the provider and a new playbook. The new rules changed the game and soon all players learned the rules the hard way and began to alter their behavior. Critics say the DRG system turned the focus away from patient benefit to a cynical system aiming to score high in the price list and secure maximum funding for the clinic.
To summarize the Diagnostic Related Groups model means all patients are coded with a diagnosis and the healthcare provider is reimbursed with a fixed rate fee. The more sick the patient the more financial burden on the clinic. There is a complexity to the system naturally, but in essence this is how the reimbursement works. One orthopedic group commented the DRG system impact on their clinic by saying they should locate the clinic on the first floor in a building without an elevator. This way they would architecturally block patients who were not profitable and be able to welcome only young people with a knee disorder from sports injuries. The financial result of the clinic would be hugely maximized.
The origin of the DRG model came from an electrical engineer named Robert B. Fetter who worked in scientific management in the U.S. Fetter became curious about why length of stay (LOS) could be so different for the same diagnosis and he started collecting thousands of diagnoses and grouped them after average time and resources required. Adding LOS numbers to the diagnoses allowed him to compare the efficiency between clinics.
Whereas it was never the intention of Fetter his comparisons would lead to a performance based system for healthcare it was nevertheless realized when Ronald Reagan looked for a new way to find Medicare. Fetters report, which was published in 1980, turned into reality a couple of years later.
The idea was to industrialize healthcare much in the same way as a car mechanic firm works. Each procedure would have an estimated time and the average resource requirement much like a cam shaft replacement. Before his system was put in place there were few measures to evaluate the effectiveness in the healthcare. I simplify the explanation of the system here, but at its core this is what it does.
What gets measured gets done. Really. And this was exactly what happened. Effectiveness came quickly, but at a high cost. By partitioning healthcare into strategic business units with its own budgets and results the procedure could very well be a masterpiece of perfection and greatly rewarded, even if the patient died.
The journalist Maciej Zarembas’ excellent articles in Swedish newspaper Dagens Nyheter illustrates the Achilles heel of the DRG system. His interviews with healthcare staff and directors reveal alienation and frustration with the DRG system. The DRG price list does not take into account the status of the patient, it only focuses on the procedure itself and the inherent services provided. Speed and throughput is rewarded whereas the quality of the delivered care or the patient outcome is overlooked.
“Basically we are rewarded for incorrect surgeries and we make a lot of money subjecting patients with infections. DRG has corrupted us.” said Per Okkels, Director of the Danish Regions in an interview headlined with the words: Scrap the DRG-system.
Now, more than 30 years after Fetter invented the foundations for the DRG system the U.S. is again in the forefront of a new system for healthcare management. Accountable care and integrated care are two terms in describing a new paradigm for healthcare in a world where the care is centralized around the patient and takes into consideration the outcome of the patient. Accountable Care Organizations for instance can get shared savings from CMS if they lower the cost for care whilst maintaining high quality care. CMS puts a significant burden on the healthcare provider to account for their care to be eligible for the shared savings, but in return rewards providers. Such checks can be in millions of dollars.
Another model is the prospective payment system, including bundled pricing for common procedures, such as dialysis care, for a group of patients. Coupled with shared savings models the clinics now have incentives to assume larger responsibility for the total care of the patient. Hopefully this care model can flush out such byproducts of the DRG system as the inclination to refer difficult and unprofitable patients elsewhere.
I believe for certain patients the fee for service business model is no longer sustainable and we as a society would benefit by moving away from the DRG-based healthcare. The transition has started slowly and for sure is the way to go. Learning from the implementation of the DRG system finding the perversions before a wide application shows we adapt and improve.
So with great excitement we at Lytics will have front row tickets to this transition and work closely with healthcare to provide tools helping them cope with the added burden and to better reap the benefits. To be truly accountable clinicians need a much better understanding of the patient in front of them and fortunately this transition coincides with the trend of having the patient as a partner in the healthcare delivery. I foresee a partially participatory healthcare within a five-year period. To speculate further I believe patients will be in the absolute center of care and wield their influence over their participatory carefully before I check out. As the saying goes here: he who lives, will find out.