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Is Gawande Right? Are Pilot Programs the Key to Delivery System Cost Reductions?

Atul Gawande’s most recent New Yorker article “Testing, Testing” addresses the critics who lament that there is no master plan to curb delivery system costs in pending health reform legislation.

Gawande retorts: “Is that a bad thing?”

…and he answers his own question by describing the value of pilot programs contained in both the Senate and House versions of health reform legislation.

Is Gawande correct?  Yes and no….

Gawande’s Viewpoint: Pilot Projects are the Answer to Critics Who Say “Health Reform Legislation Has No Cost Controls”

Here are some key excerpts from Gawande’s article:

Pick up the Senate health-care bill—yes, all 2,074 pages—and leaf through it. Almost half of it is devoted to programs that would test various ways to curb costs and increase quality. The bill is a hodgepodge. And it should be.

Does the bill end medicine’s destructive piecemeal payment system? Does it replace paying for quantity with paying for quality? Does it institute nationwide structural changes that curb costs and raise quality? It does not. Instead, what it offers is . . . pilot programs.

The bill tests, for instance, a number of ways that federal insurers could pay for care. Medicare and Medicaid currently pay clinicians the same amount regardless of results. But there is a pilot program to increase payments for doctors who deliver high-quality care at lower cost, while reducing payments for those who deliver low-quality care at higher cost. There’s a program that would pay bonuses to hospitals that improve patient results after heart failure, pneumonia, and surgery. There’s a program that would impose financial penalties on institutions with high rates of infections transmitted by health-care workers. Still another would test a system of penalties and rewards scaled to the quality of home health and rehabilitation care.

Other experiments try moving medicine away from fee-for-service payment altogether. A bundled-payment provision would pay medical teams just one thirty-day fee for all the outpatient and inpatient services related to, say, an operation. This would give clinicians an incentive to work together to smooth care and reduce complications. One pilot would go even further, encouraging clinicians to band together into “Accountable Care Organizations” that take responsibility for all their patients’ needs, including prevention—so that fewer patients need operations in the first place. These groups would be permitted to keep part of the savings they generate, as long as they meet quality and service thresholds.

Which of these programs will work? We can’t know. That’s why the Congressional Budget Office doesn’t credit any of them with substantial savings.

…medicine involves hundreds of thousands of local entities across the country—hospitals, clinics, pharmacies, home-health agencies, drug and device suppliers.

Government has a crucial role to play here—not running the system but guiding it, by looking for the best strategies and practices and finding ways to get them adopted, county by county.

Is Gawande’s Viewpoint Valid?

Yes and no.

Yes, the potential is there… I’ve written about prospects for success in upcoming Medicare pilots in two recent blog postings:

Medicare’s Biggest Change in 40 Years on the Horizon?

The Real Secret Sauce of Medicare’s Participation in Regional Collaboratives — Network Effects

Gawande makes a great theoretical argument: healthcare is complex, it’s unlikely that any reform legislation will hit the bullseye dead-center, we need to iterate toward a lower cost health system.

No, Gawande’s viewpoint is not grounded in reality…he does not address the very real challenges that Medicare pilot/demonstration projects have experienced over the past decade. There have been many failures.

Is there a synthesis here? Yes.

The potential for cost control truly does lie in pilot projects — in experimentation.

But we need to do pilot programs very differently than we’ve done them in the past…and I’ll suggest how in future posts in this series.

This work is licensed under a Creative Commons Attribution-Share Alike 3.0 Unported License. Feel free to republish this post with attribution.

1 Comment

  1. Vince Kuraitis on December 7, 2009 at 5:52 pm

    Is Gawande Right? Are Pilot Programs the Key to Delivery System Cost Reductions? http://bit.ly/4NRkyR #hcr #healthreform