George’s Corner

Ancient Healthcare Truths ––>

George Pennebaker, Pharm.D.

Let us remember that there have always been healthcare providers. Often they were the smartest or most respected, or just learned from their mentors. They had little to go on because there was little knowledge. They were often helping people by just “bending” their minds.

A mentor once told me about an ancient payment method that encouraged excellent healthcare. 

It was a “compensation” system that rewarded the provider as long as the group was healthy, and reduced the reward when the group was not doing well. 

They got paid for keeping people healthy — not for treatments when they were sick.

But that was long ago.

For at least the last few hundred years we have been paying providers for services rendered. Healthcare providers have become very accustomed to being paid for individual healthcare services. A patient gets sick and goes to a diagnosis provider who charges for the time spent coming up with a diagnosis. The patient then goes to the providers of the services and products needed to treat that diagnosis, and those providers bill for the services and/or products.

If the patient gets well, that’s good. If not, the patient goes through the same process, the providers get the same payments, and the cycle repeats itself until either the patient is cured or everybody gives up. Of course, that is after referrals and many more visits and fees for service.

We are now in the 21st century. We are now turning to that ancient system to reform healthcare economics. The new name for the ancient system is “pay for performance” or “P4P.”

It is being recognized that the objective of healthcare is to get people healthy and keep them healthy. What P4P says is that the providers are rewarded when the patient gets better and is kept better.

The thing that is really weird is that the drug manufacturers are, in a sense, leading the way, with the new paradigm for pricing new drugs. They are figuring out how much it will cost to cure the patient using existing methods and pricing the new drug for that disease at the same cost. That’s why we end up with drugs that cost $1,000 per tablet to treat a disease that uses 100 tablets ($100,000) and would have cost $100,000 to treat without the new drug. Everyone gets upset about those big numbers, but there is a certain logic that is hard to refute. 

So the objective is to pay healthcare providers for keeping people well.

Doing this is not simple. Who pays them? Who gets paid? How much is paid?

The providers would be paid by the “insurance” program that is covering the patient’s care (private or government). These programs would also be involved in the creation of the principles regarding who gets paid and how much.

Who gets paid? It is difficult to pay each provider individually, because better care usually involves several providers working together. What is the individual provider’s share? How does it get to that person? This is easier to administer if all the providers are part of one managed care group. In this case, the “insurance” program would pay the managed care group, and the group would sort out the caregivers.

How much is paid?  When I worked on the Medicaid program in California, we often said that if we wanted something to get done we had to make sure the provider would be paid an acceptable fee for that service or product. That principle is still true. The something that needs to happen is care that keeps people as healthy as possible. Over time the expenses for that care will be less, but they are difficult to measure. We know that there are many efforts and ways to measure the quality of care. I am confident that the people developing these measurements will be able to provide the necessary tools.   

There is another paradigm shift in healthcare that is gathering momentum and will have a great impact. It is called “precision care.” It is a movement that causes caregivers to focus on patients as total individuals, rather than putting them in categorical boxes. The patient becomes “Mrs. Jones in 501B” instead of “the diabetic in 501B.”

This is a very important shift. Any one patient has many parts, all of which impact how that patient is cared for. I know one who has a bad hip joint and a herniated disk, and has had major intestinal surgeries. When pain occurs, it is hard to figure out which problem is generating the pain. Of course, that patient (and all others) is more complicated than just those major issues. “Precision care” says that all of the patient’s components — good, bad, and neutral — need to be included when evaluating what needs to be done. 

Precision care will improve quality. Improved quality will reduce total costs. P4P will foster better patient care and quality.

The challenge is to develop policies and systems that will manage the myriad of individual data elements that must be coordinated in order to have a solid financial foundation.

So far most of the analysis has been based on making measurable things important rather than making important things measurable.

Closing comment: I am 81 years old. I am still enjoying a fascinating career. With the challenges outlined above, I wish I could start over.  CT 

George Pennebaker, Pharm.D., is a consultant and past president of the California Pharmacists Association. The author can be reached at; 916/501-6541; and PO Box 25, Esparto, CA 95627.