Extreme Makeover

Better care at lower cost? It’s no pipe dream, says Robert Nesse, MD, CEO of Mayo Health System. It’s already happening

Mayo Clinic is recognized as a worldwide center of excellence for people with complex illnesses and advanced surgical needs. And its leaders expect to continue to earn that reputation for years to come. But Mayo and its component organizations have an additional mission in mind: To use the knowledge and experience of its clinical and administrative staffs to transform the outpatient practice of medicine. The end result? Mayo will be known as a trusted and affordable provider of primary and tertiary care, as well as health and wellness services, to the communities it serves.

“We are engaging with people wherever they are, and that, in my opinion, is a bold vision of what Mayo Clinic can become,” says Robert Nesse, MD, CEO of Mayo Health System, Rochester, Minn. Mayo Health System comprises nearly 800 physicians and 13,000 allied health professionals, as well as a network of clinics, hospitals and other facilities serving people in 70 communities in Minnesota, Iowa and Wisconsin.

Today, bold visions are just what the doctor ordered, says Nesse, who recently spoke with the Journal of Healthcare Contracting about accountable care organizations and the future of healthcare financing and delivery. That’s because all is not well with the U.S. healthcare system as it exists today.

Dysfunctional structure
“I’m still of the belief that the vast majority of people go into medicine because they want to help people,” says Nesse. “The providers I know are pursuing things that serve the interests of their patients, but they’re pursuing them in an economic model that limits their ability to take time with their patients and to do things that aren’t linked to their visits, but that lead to better outcomes …. They’re operating within an economic structure that is dysfunctional.”

The heart of that dysfunction is the fee-for-service system, which rewards doctors for providing services or performing procedures on patients – but not necessarily for keeping them well. At times, this model can actually discourage the delivery of high-value care and ongoing management and preventive care, says Nesse. What’s more, the nation can no longer foot the bill for it.

“Is there any alternative to changing the payment system to pay for value, given the cost inflation we’re seeing right now?” he asks. There had better be, as Americans appear unwilling to continue to pay for rising healthcare costs through additional taxes, as evidenced by the recent midterm elections.

Here’s one vision: “Instead of paying for each line-item service delivered, we should pay for good outcomes delivered in an environment of safety and good service,” says Nesse. Medical groups that deliver higher value care would be rewarded for doing so. That would be opposed to what’s currently happening, where groups are rewarded for performing expensive diagnostic imaging procedures or encouraging inpatient hospital stays. “Today’s payment system is saying [to providers], ‘If you decrease the amount of care delivered, we’ll decrease your bottom line.’” That only encourages greater usage of the healthcare system. “That can’t continue,” he says.

But does less care – and less expensive care – mean poorer care, with poorer outcomes? Not necessarily, says Nesse. In fact, the work of John Wennberg, MD, founder of the Dartmouth Atlas of Health Care, bears that out, he says. (The Dartmouth Atlas examines the patterns of medical resource intensity and utilization in the United States.) For example, government indices show that the state of Wisconsin delivers high-quality care at one of the lowest costs in the nation. And Dartmouth estimates that Mayo Clinic delivers outstanding care for as much as 30 percent less than other providers, he adds. “There’s lots of evidence that there are many opportunities for improvement.”

Accountable care organizations
Many experts believe that accountable care organizations may yield some solutions. Nesse doesn’t necessarily disagree. But he does caution that it’s a little too early to say for sure.

Written into recent healthcare reform legislation, accountable care organizations will – theoretically, at least – bring together inpatient and outpatient providers to deliver high-quality, efficient care to a specific patient population. Organizations that provide such care at a cost that is less than a target established by the government will get a percentage of the savings – though exactly how much is still unspecified. (See “Can we get it right this time?” October 2010 JHC.) The federal government will start recognizing and reimbursing accountable care organizations effective Jan. 1, 2012.

“The current description of an accountable care organization is … a provider-driven organization that is transparent for quality and cost, and is responsible for the care of a population,” says Nesse. “It does seem to be a promising way to pursue this issue. But realize, accountable care organizations as envisioned by the government don’t exist yet. In fact, the rules [for them] don’t exist yet. So we’re reacting to initial concepts: ‘Yes, it’s logical that we would be paid and supported for innovation and better outcomes.’ But right now, ‘accountable care organization’ means what a lot of people want it to mean.”

Flexibility is needed
In theory, accountable care organizations will receive episode-of-care payment and would be responsible for preventive care and wellness. It’s a tall order. And to deliver on the promise, these organizations will have to be extremely flexible, says Nesse.

“Within an accountable care population … you have to stop thinking of patients as a single monolithic group,” he says. Evidence supports that patients can, instead, be categorized three ways:

  • Those who are truly healthy, whose healthcare needs are limited primarily to preventive services and appropriate access to care should an acute condition arise.
  • Those who have chronic conditions, but who are fully functional, such as people with hypertension or hyperlipidemia. They need active medical management in order to remain symptom-free.
  • Those with symptomatic chronic disease, a category that includes many older people. This group – who consume the lion’s share of medical resources – need advanced medical care and monitoring

“When you think of these three different groups, you can imagine different payment models for each,” says Nesse. The first group – the truly well – could be cared for on a fee-for-service basis; preventive services could be capitated, since they are fairly predictable among this patient population. For the population in need of preventive services, care could be provided through some type of management contract, perhaps based on partial capitation. And for the most complex group, full capitation might be the best solution. “That might be the only way you can bring everyone together – case managers, nurse educators, physician-led teams – to work on comprehensive care management,” says Nesse.

Indeed, if flexibility is essential to tomorrow’s healthcare system, so too is alignment among multiple providers, says Nesse.

“Today, a lot of healthcare is actually aligned around support for the place where care is delivered,” he says. In other words, hospital administrators are concerned about preserving and growing their patient base, while physicians worry about generating enough revenue to support their staff, equipment and supplies. In such an environment, “putting together a coherent system [in pursuit of] a common purpose can’t work,” he says.

Instead of protecting their own turf, tomorrow’s providers will have to focus on the best interests of their patients. It’s something Mayo has been working on for the better part of a century, says Nesse. The family physician in a rural community has to be aligned with the neurosurgeon in the tertiary care facility, he says.

“If you have a group of people who are willing to be accountable, you have to ask, ‘Accountable for what?’ Accountable for the care of the patient – not for the hospital, or operating room, or doctor’s office.”

Moving toward patient-centered care will require new data systems, which will allow providers and case managers to look at the team’s performance on a day-by-day basis, says Nesse. No longer can providers afford to rely on their billing systems for such information. For one thing, the information such systems provide is often dated. But even more important, “When you’re responsible for the population, you’ll be responsible for much more than what you billed for, but also for what you didn’t bill for,” he says.

“An integrated delivery system – one that is physician-led or led by a combination of physicians and administrators – is in a better position to take advantage of the principles we’ve talked about than a system in which a hospital contracts with providers for the purpose of feeding patients to the hospital,” says Nesse.

The challenge for providers, whether they be part of accountable care organizations or not, is getting many providers to agree on purpose and strategies, while at the same time preserving their spirit of innovation and their ability to adapt to local conditions. It’s something that Mayo Health System – with 800 physicians – knows all too well.

“You take advantage of the opportunities to align your purpose, rather than trying to force things based on some sort of central plan.”