The Medicare program is in trouble, as is our health care system generally. Annual Medicare spending is expected to increase to over a trillion dollars, or 18.5 percent of all federal spending, by 2022. U.S. health expenditures will likely grow to more than 20 percent of our annual gross domestic product over the same period. A recent report by the Institute of Medicine estimated that 30 percent of that huge bill is wasted. This situation is neither tolerable nor sustainable.
There are three basic ways to create an economically sustainable Medicare program and general health care system. The first is to cut payments to providers of care. This works in the short term, but for Medicare in particular, reducing payments relative to what doctors and hospitals earn from private insurers could make providers reluctant to care for older people.
A second approach is to ask consumers, including Medicare beneficiaries, to pay more of the health care bill. This could be done by increasing what they pay for coverage (health insurance premiums, supplementary coverage for Medicare, Medicare Part B and D premiums) or the amount they pay each time they receive care (deductibles and copays). Alternatively, private and public insurance programs could reduce covered services, such as the number of home care visits, nursing home days, or doctor visits they will pay for. Obviously, this could be painful for many citizens.
A third approach is to make the health care system more efficient by improving how care is delivered—by getting more services for the same amount of money, or the same services for less. Given the amount of waste in our health care system, this is eminently doable. It is also by far the most desirable approach, since it poses the least risk to consumers of vital health care services.
How can we make the health care system work better? The key is innovation: creative, positive change in how we organize and provide health care every day throughout our vast health care system. Innovation will have to take many forms: some related to payment, some related to organization of care, and some related to technologies that can make patients and their caretakers better at preventing and healing illness. Some of the necessary innovations are already taking shape, but innovation will have to accelerate if we are to minimize painful cuts in provider payments and consumer coverage.
The key to innovation in payment is to design ways to pay for what we really want: high-quality and efficient services. Today, Medicare and most insurance programs pay largely for the volume of services provided, without regard to their quality and efficiency. For example, we pay doctors and hospitals to provide a service—a visit, a procedure, a lab test—whether or not the patient benefited, the service was performed correctly, or the patient was harmed during the process. Finding fair and workable ways to adjust payments for the outcomes of care is now an area of active innovation on the part of the Medicare program and many private insurance companies. The Affordable Care Act—also known as Obamacare—initiated a large number of new programs that are trying out innovative payment approaches. For example, starting October 1, the Medicare program will begin reducing payments to hospitals whose Medicare patients are frequently readmitted within 30 days of discharge. By acting to prevent readmissions, hospitals and doctors could protect patients and reduce costs at the same time.
Innovation in the organization of care could take many different forms. One of the most promising is to greatly improve the way primary care services are organized so that they are more accessible and effective. Good primary care is associated with lower costs and higher quality of care because it can avoid unnecessary emergency room visits and increase use of preventive care, such as immunization for pneumonia and influenza. Medicare and private insurance companies are working throughout the United States to promote an organizational innovation known as the patient-centered medical home (PCMH). The PCMH is a primary care practice on steroids: reorganized to make it easier for doctors and nurses to provide primary care, and more convenient for patients as well. PCMHs make better use of information technology, such as electronic health records, stay open longer hours, and provide care in teams including not only physicians but nurse practitioners, medical assistants, and physician assistants.
could take many different forms. One of the most promising is to greatly improve the way primary care services are organized so that they are more accessible and effective. Good primary care is associated with lower costs and higher quality of care because it can avoid unnecessary emergency room visits and increase use of preventive care, such as immunization for pneumonia and influenza. Medicare and private insurance companies are working throughout the United States to promote an organizational innovation known as the (PCMH). The PCMH is a primary care practice on steroids: reorganized to make it easier for doctors and nurses to provide primary care, and more convenient for patients as well. PCMHs make better use of information technology, such as electronic health records, stay open longer hours, and provide care in teams including not only physicians but nurse practitioners, medical assistants, and physician assistants.
Innovative technologies offer still another way to reduce the costs and improve the quality of health care services. Promising technologies are numerous, but perhaps the most exciting affect how health care information is collected and deployed for the benefit of patients and their caretakers.
offer still another way to reduce the costs and improve the quality of health care services. Promising technologies are numerous, but perhaps the most exciting affect how health care information is collected and deployed for the benefit of patients and their caretakers.
Information is the lifeblood of health care. Caretakers cannot provide services effectively unless they are informed about each patient’s personal health care situation—history, health problems, physical exam, laboratory and x-ray findings, medications, allergies, and so on. With the right information, providers can make better decisions, avoid wasteful duplication of tests and procedures, and prevent problems—such as medication interactions—that result from incomplete information. But too often, that vital information is unavailable to doctors and nurses when they need it most, and to patients themselves, who may wish to play a greater role in managing their own care. There are many reasons for these information deficits, but one is that most health care information is recorded and stored on paper, and paper records are too often locked away and inaccessible (or unreadable!) when they are needed.
The solution is to get patient information into electronic form. Electronic health information can follow patients like the tail of a comet following its head. Right now, the federal government is putting tens of billions of dollars into encouraging health care providers to adopt electronic health records and engineer them so that they can transfer information from one record to another safely and securely. But that will be just the beginning of the innovation process.
Untold numbers of innovators and entrepreneurs in Silicon Valley and elsewhere are working to design new ways to link doctors and patients through cyberspace, and to give patients the information they need to take better care of themselves. The possibilities are almost endless. For example, in-home technology can track critical patient data, such as blood pressure, breathing, weight, blood sugar, and other indicators, and communicate them electronically to doctors’ offices. These so-called "remote" (from the doctor’s office) monitoring systems hold great promise for tipping off patients and doctors to early signs of health problems and preventing them from getting worse.
Another example is innovative applications designed to help patients become better health care consumers. These applications can use cell phones, tablets, or home computers to remind patients to take their medications, encourage them to exercise or check their blood sugar, or link them to other patients like themselves, so they can learn from one another about the best way to care for shared health conditions. Typical of these new resources is a website called Patients Like Me (http://www.patientslikeme.com/), through which thousands of patients share information about their drugs, treatments, and experiences with care and illness generally.
The problems facing our health system are daunting, but the opportunities to improve it are very promising as well. Innovation will be critical to ensuring that our health care system is humane and sustainable in the future. And consumers and patients will be vital participants in that innovation process.
David Blumenthal, MD, MPP, serves as chief health information and innovation officer at Partners Health System in Boston, Massachusetts, and is Samuel O. Thier professor of medicine and professor of health care policy at Massachusetts General Hospital/Harvard Medical School. In January 2013, he will become president and CEO of the Commonwealth Fund, a national health care philanthropy based in New York City.
From 2009 to 2011, Dr. Blumenthal was the national coordinator for health information technology under President Barack Obama. In this role he was charged with building an interoperable, private, and secure nationwide health information system and supporting the widespread, meaningful use of health information technology (health IT).
As a renowned health services researcher and national authority on health IT adoption, Dr. Blumenthal has authored more than 250 scholarly publications, including the seminal studies on the adoption and use of health IT in the United States.