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Weekly UpdatesInformation about the outcomes or performance for different types of procedures and hospitals is not readily available. A few states like Pennsylvania provide excellent information on the mortality and morbidity experience of hospitals and surgeons for certain selected procedures (PA Health Care Cost Containment Council 2003). Hospitals make the strategic error of becoming more similar to their competitors instead of distinguishing themselves through quality in certain services. For example in 2002, 139 hospitals had heart transplant units. Some had very few cases [Porter 2006, p. 49]. This not only greatly increases the cost but also decreases the overall quality of heart transplants. Studies have shown that volume is directly related to quality. For example, experts state that open heart surgery units should do at least 350 procedures per year to maintain skills at the highest level (Stark 2003, p. C1).
Health care is presently treated as a commodity when it is not. All health care is not the same, and quality and outcomes vary greatly as can be seen by various published outcome measures. Illustrative of the substantial differences in mortality and morbidity and charges are these examples from the Pennsylvania Health Care Cost Containment Council for 2003 for coronary artery graft bypass surgery. Lehigh Valley Hospital did 561 operations, had lower mortality and morbidity than expected for in-hospital and 30 days post operation, and had average charges of $95,377 while Temple University did 167 operations and had expected mortality and morbidity but had average charges of $369,069. Average charges range from $38,895 to $369,069 for hospitals experiencing expected mortality and morbidity (measured by readmission within 7 and 30 days). Simply encouraging patients to use high quality and low cost facilities would improve performance and lower cost.
Information also improves outcomes. For example, hospital deaths at Cleveland hospitals declined 11% between 1993 and 1997 when information on death rates was first reported [Porter 2006, p. 136]. After publishing outcome data for Coronary Artery Bypass Graft (CABG) surgery for 4 years, New York State had the lowest CABG mortality rates in the United States (Peterson 1998). Critics contended that this improvement was achieved by discontinuing the privileges of surgeons who had low volume and high mortality rates, and referring difficult cases out of state to better qualified heart clinics [Porter 2006, p. 137]. In fact this is the way the market is supposed to work as better quality care results in better outcomes for patients and drives out low quality providers.
In order for the various stakeholders in the health care market to improve value, one needs to know results and have outcome measures. Unfortunately, outcome measures historically were not available and when available were debated on how to adjust for patient severity. Even when available these data were not published. Measurements have now been developed and are becoming more available for many types of services. Studies have shown better quality also results in lower cost because not only are better quality physicians generally more efficient but costs are decreased by getting things right the first time. Again, the backward thinking of health plans is shown by their fear that outcome data will provide excellent physicians too much bargaining power and thus raise prices [Porter 2006, p. 135]. However, improving performance should actually save money for the insurance companies and increase value for the consumer.
Medical Errors
A major quality issue in health care today is medical errors: incorrect diagnoses, drug errors, unnecessary treatments, and failed treatments greatly increase the cost of health care. Early intervention is important. For example only 43% of individuals on dialysis had seen a nephrologist even once in the year prior to dialysis [Porter 2006, p. 107]. "The Institute of Medicine estimates that preventable medical errors involve between $36.7 and $50 billion each year in unnecessary costs with over half of the estimates representing direct cost of remedial health care" [Porter 2006, p. 109]. Intermountain Health Care by getting it right the first time has "systems cost for Medicare patients that are 34% below the national average and 14% below non-Intermountain Hospitals in Utah" [Porter 2006, p. 218]. Medical errors, which are a leading cause of death in the United States, have led both to many malpractice suits and to defensive medicine and unnecessary procedures. Malpractice cost might well decrease as quality increases.
Another way to increase value for the patient and to decrease errors is electronic medical records and electronic prescriptions. Many prescriptions are filled incorrectly because of poor handwriting by doctors. With current technology all prescriptions can now be electronically sent to pharmacies.
Also at issue are medical records. Given the current uncoordinated practice of medicine, physicians get their information from the patient. This can lead to considerably misinformation, especially in the case of the elderly, concerning medical history and current drug usage. Electronic medical records will give physicians better information, which will lead to better quality care and better results. Even though we advocate patients taking more responsibility for their health, it is difficult for patients to remember sufficiently their medical history. Also, fewer forms would have to be filled out so that instead of every doctor asking the same questions and getting different answers, the doctor can get accurate information and review it before seeing the patient.
A major development is the recent announcement that Intel, Wal-Mart, British Petroleum, among other firms, are planning to offer electronic medical records to their employees which could reduce duplicate medical tests and help prevent prescription errors as well as permit performance evaluation of doctors and hospitals (McWilliams 2006, p. 1).
Full Cycle of Care
The present structure of the delivery system needs to be changed to one that includes the full cycle of care. Outside of health care, functional structures have long been supplanted by more effective organizations organized around product or service lines, known as business unit structures [Porter 2006, p. 168]. For health care "Integrated Practice units are defined around medical conditions, not particular services, treatments or tests" [Porter 2006, p. 168]. An example of a successful integrated practice unit is Sentra which devised a program for congestive heart failure that decreased hospital readmissions by 82% and emergency room visits by 77% [Porter 2006, p. 171]. As a result outcomes and quality improved and cost decreased.
The present health care system lacks coordination. For example, the doctor who performs the operation has probably never met the physical therapist who is helping in the patient's rehabilitation, and the post-operative nurse is dealing with all types of cases and is probably not well versed in all of them. Also, those who have comorbidities are generally seen by separate doctors for each chronic disease with little overall coordination of care. This type of structure needs to change and doctors need to work as a team to foster better results. However, the current full service hospital system leads to hospitals wanting to be everything to everybody and not concentrating on areas where they can be excellent. Indeed, a study showed that death rates were only slightly lower at top hospitals. Excellence in particular procedures or conditions is what matters (Tannor 2006, p. A14). This full service approach also leads to low volume for various types of services, which, as discussed, often results in lower quality.
Specialty Hospitals
A movement towards integrated care has been the emergence of specialty hospitals which concentrate on one type of case such as cardiac or orthopedic. These hospitals provide competition for full service community hospitals, but their development has resulted in a political firestorm, and a moratorium on new specialty hospitals was in force until August 2006. Specialty hospitals claim they can provide better quality care because doctors and nurses are focused on certain types of procedures, which often leads to a more team oriented approach. Herzlinger extols the virtues of focused factories or specialty hospitals and how their implementation can increase quality and patient satisfaction. She claims that Shouldice Hernia Hospital "has an integrated operating system carefully designed so that each of its activities reinforces the other" (Herzlinger 1999, p. 159).
Further, the Shouldice policy is that if the hernia recurs because of surgical error the second operation is free. Such a scenario is rare in the present U.S. health care model. Generally when a person is readmitted to the hospital, the physician charges additional fees for service. Thus, poor performance is rewarded with increased revenues. The quality for the patient is greatly reduced and such a system leads to considerable cost for the health care system. It is estimated the poor process quality accounts for 30% of health care costs [Porter 2006, p. 185]. Indeed, Medicare has experimented with paying hospitals bonuses to improve performance (Abelson 2007).
Specialty hospitals have the potential to increase quality since they are more focused on a certain procedure than general hospitals. There exist various types of successful specialty hospitals internationally. Coxa hospital in Finland specializes in hip and knee replacement, has a complication rate of 0.1% compared to 10-12% in Finland's general hospitals, and more patients go straight home after surgery (Shactman 2005, p. 869). Further, in Canada, the Shouldice Hernia Hospital, which focuses only on simple inguinal hernias, has a recurrence rate of less than 1% which is the lowest in the world. Also, patients recuperate and return to work much faster. The price is considerably lower than in U.S. hospitals (Shactman 2005, p. 869).
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