On November 11, Leonhardt wrote in his column about the two goals of health reform: “The first – insuring the uninsured – carries grand overtones of social justice. The second-- making the health system more efficient – can seem abstract, technocratic, and a bit nerdy.” He then suggests the House bill passed last Saturday passes the first test and flunks the second. The following are his reasons for flunking the system reform test, and my reactions as a policy reformer of more than three decades.

1. Reform is not just about bending the medical cost curve, but about saving lives at risk in hospitals and from over-use of medicine, and passing the financial savings on to insurance premium and tax payers. He’s right. Peter Prenovost’s 18-month experiment in 108 Michigan hospitals that reduced deaths from preventable infections to near zero is not being repeated in the other 6,500 American hospitals because they are still being paid for errors and not being rewarded for no errors. It is CMS obligation and the Medicare and Medicaid payment system to stop paying for preventable mistakes and to steer insured Americans away from the recalcitrant. Nothing in the bill requires that, thanks to the AHA.

2. What works in medicine? Modern medicine is full of uncertainty, but much of that can be eliminated by funded research in effectiveness science. The medical industry at all levels has always objected to performance comparison and to the application of effectiveness science to its work product. The attacks this year on Dartmouth’s landmark work are evidence. So is two decades of industry lobbying Congress against comparative effectiveness. Stimulus investments in this science are being limited in application in the House bill by the industries involved. The White House can change this in conference.

3. A Federal Reserve Bank for Medicare payment reform which would have power to recommend payment changes to Congress which would go into effect unless vetoed or changed by Congress within 40 days of submission each year. The administration is willing to go down this road and the Senate may help. But experience with MedPAC tells us that the medical industry will find a way to own the commission or subvert its results before the days are up each year. This is big. The problem is the industry/Congress/lobbyist relationship, which is so pervasive that only a majority party needing meaningful health system reform can create the language it needs and assure the impartiality of the appointment process.

4. The McAllen, TX, problem references efforts on the part of conservative Democrats and some potential Republican Senate supporters to authorize Medicare to institute payment differentials based on the value of the care rather than the volume. We don’t need an IOM study – which was as far as Pelosi and the New York City/Los Angeles committee powers would go combined with demos. We need pilot projects – in effect different Medicare programs in different regions in the country – which go into effect after a five year demonstration of effectiveness. The MMA 646 Demo proposal from the upper Midwest 7-state consortium three years ago is an on-the-shelf model.

5. Expanding health insurance choice in the workplace. The president promised choice. The House did not deliver. The ERISA preemption for self-insured plans is so sacred to large employers and unions that they oppose efforts by Senator Ron Wyden (D-OR) to require employers over a certain number of employees to offer three health plan choices to their employees. Perhaps link access to these with health management services as well. This is the same “health insurance exchange” that members of Congress and we retirees have – a choice of chances to buy into good health and affordable coverage. The White House must support Wyden and Republicans should support him too even if they do not support the bill.

6. The Cadillac tax is not good tax policy. Every health policy reformer I know has tried to change the code to limit the subsidy to an average individual and average family plan. The unions have always objected. The unions stand to gain so much from the achievement of universal coverage, they ought to consider working with employers to share some of their financial subsidy excess with the uninsured and under-insured. Only the president can pull this one off and he must to take advantage of this once-in-a-lifetime opportunity to start down the path of cost reduction through smart purchasing.

7. The Doctor-Patient Relationship. Universal coverage is the first step to enabling accountable health care organizations to change their health system’s performance. The Congress is likely to treat physician payment reform separately in a bill to change Part B of Medicare. That’s not all that’s to it. How doctors get paid for what is critical to what they do and how well. The growing disparity between primary and specialty care led us to the RBRVS in the first place. It’s getting much worse, and SGR does nothing to make it better. Performance pay is essential. Issues around health professionals’ licensure don’t even come up, but are critical to improving efficiency and productivity in health systems. Access to comparable information is critical, as is removing presumed penalties for doctor’s judgment calls. David Blumenthal’s work on health information technology must be a priority. Informed Patient Choice is a new liability standard which must be combined with shared decision-making.

First, what he did NOT find. He did not find that universal coverage is “all the same.” Every country does it a little differently and their systems reflect the cultures and national priorities of the country. He did not find a predominance of “socialized medicine.” Private health care works in other rich democracies. Although some countries do have a single payer system, many more have a system of private payers. (Japan has more than 3,000 payers, Germany more than 200, and Switzerland around 70.)

Of the nearly 200 countries in the world, he could categorize all health care systems into four general models, determined by “who is the provider?” and “who is the payer?”

1. The Beverage model (developed in the UK): It is government’s role to pay for 100% of health care, “cradle to grave.” Taxes are high, but they pay half of what the U.S. does for health care. The government owns hospitals, pays doctors and pays bills. This is real socialized medicine. This is also used by Spain, Italy, New Zealand, Cuba and much of Scandinavia.

2. The Bismarck model (developed in Germany): Everyone is required to have insurance and premiums are split between employers and employees. There are private doctors, hospitals and insurance, but insurance is highly regulated and insurers are required to cover everyone and pay all claims. This model is also used by France, Netherlands, Switzerland and Japan.

3. National Health Insurance model (Canada): The program features private providers, but the government pays. “Premiums” (taxes) are paid to the government and they call it “medicare.” A gatekeeper system is used in which general practice doctors must make the referral to specialists. Reid singled out Canada’s approach for criticism because Canada has limited numbers of specialists and advanced equipment which leads to “lots of waiting" for non-emergency care. The model is popular in newly-rich countries such as Taiwan, which has avoided the waiting problems of Canada.

4. Out of pocket model (all poor countries of the world). Patient pays at point of service; if you have money, you’ll get care. Others rely on barter, charity or do without needed care.

All four models are in effect in the United States: the military and Native Americans have the Beverage model; the elderly have the NHI model though Medicare; more than 50 million employed people have the Bismarck model; and about 47 million Americans fall into the “out of pocket” model. This differs from the rest of the world in which most countries have just one model.

Why do most countries have one model? The reasons resonated strongly with the medical group managers at the MGMA conference:

1. It's simpler and cheaper to administer. Reid says in the U.S. we spend 18-25% of our health care dollars on administrative costs--which include only the administrative costs of the insurers, not the processing done by the providers. Other countries with private insurers, such as France or Japan, average around 5% administrative costs.

2. There are strong incentives for preventive health care and keeping people healthy. In the U.S., the average tenure of an individual in a health insurance plan is less than five years, so there is no incentive to spend the money to keep you healthy if you’ll soon be “someone else’s problem.”

3. It is "fairer" to have everyone have the same access to the same health care at the same cost.

Reid ended his remarks by saying that each country’s design of a health care system fundamentally reflects the country’s values. To summarize his book in one sentence, he said that, “If the U.S. could find the political will to commit to provide health care to everyone, the other rich countries of the world could help show us the way.”

Perhaps looking at other countries can help us envision a uniquely American health care system that reflects our national values and plays upon our strengths instead of emphasizing our weaknesses.

By Cindy Lorah

The key element of the Balanced Scorecard is, of course, balance. An organization can be viewed from many perspectives, but Kaplan and Norton identified four common perspectives from which an organization must examine its operations:

1. Financial
2. Customer
3. Internal process and innovation
4. Employee learning and growth

As an organization is viewed from each perspective, different measures of performance are important. Every perspective in a complete Balanced Scorecard contains a set of objectives, measures, targets and actions. These measures are displayed graphically in performance dashboards. In addition, each measure in each perspective must be linked to the organization’s overall strategy.

The indicators of performance in each of the four perspectives must be both leading (predicting the future) and lagging (reporting on performance today). Indicators also must be obtained from inside the organization and from the external environment.

Although many think of the balanced scorecard as a reporting technique, its true power comes from its ability to link strategy to action. Balanced Scorecard practitioners develop strategy maps that link projects and actions to outcomes in a series of maps. These maps display the “theory of the company” and can be evaluated and fine tuned. The illustration at the top of this post is a strategy map for implementing a medical home model in a clinic. Each initiative (in a box) is linked to other initiatives that eventually result in better patient care and improved financial performance. Follow this link to a set of videos that shows how to create Balanced Scorecards and strategy maps with PowerPoint and Excel.

Balanced Scorecards and performance dashboards have begun to be used more widely by health care organizations. In an extensive study of 139 hospitals, Kroch found that “greater hospital quality was linked to shorter, more focused use of dashboards for operations management and strong influence of board quality committees in dashboard content and implementation.” Denham undertook a study a health care leaders and found that “If the quality destination determines the performance profile required . . . then leaders really do need to be involved in the design of their performance measures, especially if they are taking a new transformative trajectory to high performance.”

The Balanced Scorecard approach is an effective tool to execute strategy and measure performance. To quote Don Berwick from the 10,000 lives campaign, “Some is not a number . . . soon is not a time.”

References
Denham, C. R. 2006. "Leaders Need Dashboards, Dashboards Need Leaders." Journal of Patient Safety 2(1)

Inamdar, N., and R. S. Kaplan. 2002. “Applying the Balanced Scorecard in Healthcare Provider Organizations.” Journal of Healthcare Management 47 (3): 179–95.

Kaplan, R. S., and D. P. Norton. 2001. The Strategy-Focused Organization: How Balanced Scorecard Companies Thrive in the New Business Environment. Boston: Harvard Business School Press.

Kroch, E., T. Vaughn, M. Koepke, S. Roman, D. Foster, S. Sinha, and S. Levy. 2006. "Hospital Boards and Quality Dashboards." J Patient Saf 2(1): 10.

Mankins, M. C., and R. Steele. 2005. “Turning Great Strategy into Great Performance.” Harvard Business Review 83 (7): 64–72.

Niven, P. R. 2002. Balanced Scorecard Step-by-Step: Maximizing Performance and Maintaining Results. New York: John Wiley & Sons.

A professor of health policy and a professor of social medicine at Harvard Medical School, Dr. Mongan also serves on the board of the Commonwealth Fund and chairs its Commission on a High Performance Health System.

Dr. Mongan is a member of the Institute of Medicine of the National Academy of Sciences. He has served on the boards of the American Hospital Association and the Kaiser Family Foundation, and was a member of both the Medicare Prospective Payment Assessment Commission established by Congress and the Institute of Medicine’s Commission on the Consequences of Uninsurance.

He has received numerous awards and was most recently recognized by Modern Healthcare as the Most Powerful Physician Executive in the U.S. in 2008.

The presentation will be held on October 7, 2009, at 6 p.m. in the Schulze Hall Auditorium, with a reception to follow in the Atrium.

Dr. William E. Petersen was chief medical officer for Allina Health System. Prior to that, he served as vice president of medical affairs at Abbott Northwestern Hospital. He was in private practice, specializing in internal medicine, for 32 years. He served as director of the Center for Health and Medical Affairs from 1995 until he retired in 1999. Throughout his career, Dr. Petersen has modeled the most positive aspects of the physician executive and leader.

Register online for this free event.

This year’s conference is “Where Innovation and Quality Will Take Us” and is presented in partnership with LarsonAllen and Fredrikson & Byron.

The conference will feature keynote speaker George Halvorson, Chairman & CEO, Kaiser Foundation Health Plan and author of Health Care Will Not Reform Itself (2009).

In addition, it will feature lively panel discussions on:

Innovators on the Fast Track – Breakthrough thinkers reveal their new models of health care excellence.
Featured speakers:
o Lou Cornacchia, President & CEO, Doctations, Inc.
o Marcus Osborne, Director of Health Clinics Design & Development, Wal-Mart Stores, Inc.
o Dr. Garrison Bliss, President & CMO, Qliance Medical Management

Providers Revolutionizing Quality – Organizational leaders share how their forward-thinking quality initiatives protect and enhance their bottom lines.
Featured speakers:
o Diane Gross, Vice President/General Counsel, Poudre Valley Health System – Fort Collins, CO (2008 Malcolm Baldrige National Quality Award winner)
o Ken Paulus, President & CEO, Allina Health System – Minneapolis, MN
o Dr. Edward Shultz, Director of Information Technology Integration, Vanderbilt University Medical Center – Nashville, TN

Registration is now available at http://ustfutureofhealthcare.com/

They are also nonprofit with a community benefit, not shareholder benefit, obligation. It's what happens when insurers are not adversaries of providers and purchasers and patients are people and citizens, not just consumers. Minnesota is the only state to require its HMOs to be nonprofit.

The same can be said for real insurance competition where only a few plans are in the market able to leverage on behalf of health care improvement. With five large plans in a metro market, providers have to respond. With 100, there are no incentives for providers to change or for informed choices by consumers. Republicans believe markets are made up of hundreds of medical specialty companies from which consumers in need make choices. To take on the problem of chronic illness they took a good idea, called special needs benefits, converted it into private Special Needs Health Plans in MMA 2003, paid them lots of Medicare money, and today we have thousands of these plans in illness specialties you can't even imagine. Are costs coming down? No. Just the opposite.

What makes for health system reform? Cooperation, not competition as we currently know it. In medium-sized Wisconsin communities with two medical clinics and hospitals, they call it “co-opetition.” Doctors cooperating to keep people well and out of hospitals and competing on the most productive and efficient use of hospitals, when needed.

Researchers inform us that Americans are becoming much more obese in the last 30-40 years. It is true that personal convenience is a major reason for changing our exercise and diet habits. The response to convenience is a food industry which is funding a nutrition science industry to produce a variety of “healthy” food elements which then become required food labeling which then excuse price increases on convenience foods. It is just short of a remarkable phenomenon in America that boys and girls and men and women are turning out in increasing numbers in exercise spots and that health and fitness clubs are in every hotel, hospital, and highway rest stop. It is also remarkable that the organic food movement is catching on quickly. Starting with “buy locally” – which, of course, has been quickly translated into “support your local any store (including Wal-Mart.)”

I have read and enjoyed In Defense of Food by Michael Pollan. My wife Susan and I enjoyed Food Inc. at our San Rafael, CA nonprofit movie theatre. It describes how four very large U.S. companies control access to and the quality of most of the essential ingredients of the food Americans consume. That agriculture company Monsanto has a corner on wherever soy beans end up. That the family farmer is anything but and is usually a victim of the co-op he/she has helped create to preserve a socio-economic system that no longer exists – except in Congress. Where it is used to enrich production food rather than production agriculture. That two-thirds of us prefer white meat to the dark meat so the chicken industry is producing – in 48 days from hatch to super market – chickens whose breasts are so large the chicken is unable to walk.

At the recent summer meeting of the Minnesota Medical Group Management Association my colleague, Professor Fritz Wenzel, provided a very useful overview of the characteristics of functional and dysfunctional boards of directors. He also outlined strategies to improve the performance of any board. As part of this presentation he also had a number of very specific recommendations to resolve common board problems. Here are some excerpts from his presentation:

Board effectiveness
Boards can be analyzed from four perspectives:

1. Process – How is board focus determined, how are decisions made, and how are meetings conducted?
2. Structure – What is the board composition, what are board roles and expectations, how are members oriented?
3. Behavior –How do board members act with the other board members, the organization and the external environment?
4. Performance – What is the board accountability for the organizational performance and what tools does it use to monitor execution?

Boards that pay attention to all of these questions will have superior performance.

Board Process Problems
Here are the top ten board process problems and some possible solutions:

1. Board attempts to micromanage – Clarify roles and keep focus.
2. Can’t make decisions and not united when they do – Formalize a decision matrix and create formal communications systems and deadlines.
3. Meetings last forever and are unproductive – Provide a formal timed agenda, document action plans and follow through.
4. Board members are recruited for the wrong reason – Establish criteria for board membership and formalize the process.
5. Roles are unclear – Document expectation and provide board education.
6. Board members lack organizational/strategic knowledge – Provide education and consider an external board assessment.
7. Members are not prepared – Call on members, revisit their role definitions.
8. Board practices “Group Think” – Assign a member to be “devil’s advocate” and institute board evaluations.
9. There are power struggles/factions – Deal directly and individually with members and heighten engagement of the total board.
10. A completely dysfunctional member – Options in increasing order of intensity: wait until term is over, off line discussions, neutral observer at board meetings, gracefully remove

Fritz Wenzel and his colleague Deborah Walker Keegan will present an extended workshop on this topic at the national Medical Group Management Association meeting on October 11-14 in Denver. If you are attending this conference, consider attending this session for a more in- depth look at this ongoing leadership challenge.

Baucus and Grassley are pushing the health insurance industry on real marketplace reform. They can push much harder, and get much more that's scoreable by CBO, if they are willing to drop the public plan or even the co-op with insurance exchange. There's lots of "quality and effectiveness" language in the liberal bills. But they can't be scored for savings. The only way to get savings is through differential payment by regions of the country pegged to competitive bidding or to some budget baselines and financial incentives to lower insurance costs by driving down supply-induced overutilization. Another way to do it is through capitation payments to accountable care organizations to take effect, say, four years out. Getting Medicare off the current Part B physician payment system with its volume penalties is the most important reform Congress can make – so long as it is linked to real financial results region by region.

DON'T SCORE SAVINGS FROM MEDPAC AS NATIONAL HEALTH BOARD
The president still believes it feasible to elevate the Medicare Payment Advisory Commission (MedPAC) into an independent effort at setting medical industry prices. As an advisory committee to the Congress, MedPAC has tried its very best to remain above special interest politics and to serve the needs of payment policy reform. But no matter how the Congress sets up appointment authority for MedPAC (it is currently the head of GAO, the fairly independent Comptroller General), the big medical interests that live on health policy find a way to the Congress, either in the appointments process or in the actual implementation of commission recommendations. It is impossible for Congress to ever fully delegate its power to an unelected agency and, with $3 trillion a year at stake, health financing policy isn't where a breakthrough is likely.

REAL HEALTH POLICY REFORM IS NOT IN THE OBAMA CARDS
My thoughts on the subject are included in the July 21, 2009, Minneapolis Star Tribune. But Janet Adamy in this Monday's Wall Street Journal nicely summarizes why this Congress is incapable of delivering on cost-saving health policy changes. If you can't change the way we pay doctors, you can't change the cost curve. If you have the endorsement of the American Medical Association (AMA), you haven't changed anything. You have the AMA endorsement not because America's lowest common denominator practice experts had a change of heart, but because the Congress and the White House have agreed to buy them off with a Part B "bail-out," which will cost taxpayers $245 billion over ten years.

The High Performance Health Care Blog is pleased to announce that former Senator Dave Durenberger will be a regular guest contributor. He will share his observations and insights into the latest health policy reform efforts.

Dave Durenberger launched a 30-plus year career in health policy by helping create the original BHCAG in Minneapolis, went on to three terms as a health policy expert on the U.S. Senate Finance and HELP committees and is now a Health Policy Fellow and chair of the National Institute of Health Policy at the University of St. Thomas. He has also served on various national health commissions and boards, including the Medicare Payment Advisory Commission (MedPAC). He currently serves on the Board of the National Commission on Quality Assurance (NCQA) and the Kaiser Commission on Medicaid and the Uninsured. No one knows health care policy reform better than Dave, as his nationally circulated Commentary suggests.