Global Convergence In Health

Health systems around the world must look to each other for answers to their problems, observes Rajarshi Sengupta

Globalisation of health has evolved in stages, creating both opportunities and challenges. These stages can be divided into ‘fundamental’ from 1950-1970, ‘discovery’ from 1970-1990, ‘reactive’ beginning in 1990 and estimated to transition till 2010 to the ‘sustaining’ stage that will define the next decade.

The fundamental stage saw the beginnings of globalisation and a global convergence in health. The discovery stage focussed on the advances in pharmaceuticals, and the spikes in demands and costs related to those advances. The reactive stage stressed on attempting to solve some of the local problems through global solutions. For instance, accreditation agencies with global reach are selling services globally. During the sustaining stage, health executives will need information, metrics, and transparency to support decision making. In countries with higher tax rates that pay for healthcare, residents will demand more transparency about how their taxes are being spent and how it helps them. Transparency enables a comparative study on access as well as the cost and quality of care. Understanding costs is seen as a key to reforming many countries’ health systems.

The Unsustainability Of Global Health Systems

PricewaterhouseCoopers’ (PwC) HealthCast 2020 survey showed that nearly half of the healthcare executives from 27 countries believe healthcare costs will increase at a higher rate of growth than in the past. PwC’s research included a survey of more than 580 executives of hospitals and hospital systems, physician groups, payers, Governments, medical supply companies and employers from around the world in 27 countries. In addition, PwC conducted in-depth interviews with more than 120 healthcare thought leaders in 16 countries.

The French healthcare system, ranked the best in the world by WHO in 2000, is on the verge of bankruptcy, losing euro 23,000 (USD 28,124) a minute and projected to collapse altogether by 2020. In England, despite record increase in health funding since 2000, increasing financial transparency is exposing multimillion-pound deficits across some regional healthcare systems.

Higher spending on healthcare is not necessarily bad. As economies grow, spending on healthcare also grows and contributes to a more productive society. However, critics say that at some point, higher health spending may deliver only modest additional returns. In addition, recent evidence shows higher spending may not result in buying better quality. According to Organisation for Economic Co-operation and Development (OECD) data, the US spends the most on healthcare per capita as a percentage of GDP, but ranks 22nd out of all the OECD countries in terms of life expectancy.

Features Of Sustainability

Sustainable systems demonstrate some or all of the following seven features:

Quest For Common Ground: A vision and strategy is needed to balance public versus private interests in building an infrastructure and in providing basic health benefits within the context of societal priorities.

A Digital Backbone: Better use of technology and interoperable electronic networks accelerate integration, standardisation, and knowledge transfer of administrative and clinical information.

Incentive Realignment: Incentive systems ensure and manage access to care while supporting accountability and responsibility for healthcare decisions.

Quality And Safety Standardisation: Defined and enforced clinical standards establish mechanisms for accountability and enhanced transparency, thereby building consumer trust.

Strategic Resource Deployment: Resource allocation appropriately satisfies competing demands on systems to control costs while providing sufficient access to care for most people.

Climate Of Innovation: Innovation, technology and process changes are a means to continuously improve treatment, efficiency and outcomes.

Adaptable Delivery Roles And Structures: Flexible healthcare settings and expanded clinical roles provide avenues for care that are centered on the needs of the patient.

Incentive Realignment

Incentive systems ensure and manage access to care while supporting accountability and responsibility for healthcare decisions. More than 80 per cent of HealthCast 2020 survey respondents said equal access was an important or very important factor in sustainability, and interviews indicated that demand management and incentives are crucial to expanding and ensuring access.

Health system leaders in Europe, North America, Africa, the Middle East, Australia and Asia universally expressed concern over the need to realign incentives. Healthcare organisations in the US and Europe have experienced consumer dissatisfaction and eroding trust with the blunt instruments of demand management, viz limited access to specialists in managed care and waiting lists in systems employing commissioning. Only 25 per cent of HealthCast 2020 survey respondents viewed queues as an effective way to manage demand.

Governments are responding to that view. In the last two years, waiting lists have been substantially pared in England and Ireland; Canada has a major effort to do the same. Nations have learned that waiting lists can impact productivity. The most effective means of demand management, according to HealthCast 2020 respondents are wellness, immunisation and disease management programmes.

Realigning incentives means reassessing the financial drivers for clinicians and patients. For instance, some organisations view IT as an enabler to deliver cost-effective care, but run into adoption problems.

As payers design incentive policies and procedures, they find the following challenges must be addressed:

• Patients’ demands are unlimited.
• Physicians have incentives to provide care beyond what is needed.
• Government must play a larger role in prevention of diseases and public health, but competing interests often interfere.

Transferable Lessons

Establish Shared Incentives To Accomplish Mutual Goals: Delivering care involves complex interrelationships among multidisciplinary providers of various services and products. HealthCast 2020 survey respondents said, sustainability depends on incentivising clinicians, hospitals, pharmaceutical companies and payers to integrate care and manage chronic conditions together.

In the US, hospitals can now share cost efficiencies with physicians through gain sharing, which is viewed as a way to control some medical technology costs. Through gain-sharing programmes, physicians can share in the cost savings achieved by changing the supplies that they purchase, provided that clinical quality is not adversely affected. Approved gain-sharing plans have common elements such as transparency, written disclosure to patients, and controlled distribution of profits to physicians for reducing incentives to push cost savings too far.

Make Wellness The Preferred, If Not Mandated, Lifestyle: As preventive care impacts long-term demand for curative or tertiary care, Governments must play a lead role in public health initiatives. For instance, Governments have a role in outlining healthy behaviours, an effort that costs nothing. In the face of limited budgets, Governments have historically spent more on hospital and physician services, leaving wellness and prevention programmes under-funded. An alternative approach by Governments is to motivate consumers by making unhealthy activity illegal. For instance, anti-smoking campaigns were the most-frequently ones mentioned by HealthCast 2020 respondents as being effective, yet that battle remains a challenge. In addition, a few countries have proposed initiatives to encourage consumers to undertake healthier diets.

Make Consumers Personally Responsible For Healthcare Cost: Forty-three per cent of HealthCast 2020 survey respondents said that direct cost sharing by patients was deemed to be an effective or very effective method to manage demand for healthcare services. However, under the current payment systems of most industrialised countries, consumers are separated from the direct cost of care. While a true market in healthcare is not practical, consumers need to understand the cost and value of health services and products.

The French Government is looking to give citizens a sense of responsibility regarding health costs. Beginning in 2005, each French citizen was required to elect a medic, who then must be consulted for a referral to a specialist. While French citizens may still consult specialists without first receiving a referral, the co-payment for such consultations would increase to a maximum of seven euro. In addition, each healthcare service received would include a charge of one euro that would not be reimbursed by the Government or by insurance.

Employers in the US are shifting more direct healthcare costs to their employees through consumer-directed health plans (CDHPs). Surveys show half of US employers are considering CDHPs in order to cut down their health plan costs. The idea of CDHP is to combine financial incentives with information about cost and quality to help consumers make better-informed decisions about their healthcare choices.

Reinforce Clinicians’ Roles As Facilitators Of Appropriate Care: Australia and the US are employing health coaches to help sick patients who are treated by numerous providers and to monitor risk factors. Trained as nurses, respiratory therapists, or pharmacists, such clinical coaches know how to navigate an increasingly complex system.

In Australia, case management is provided through health insurers, in which patients work with a health coach, weekly on risk factors identified voluntarily through self-assessment. If the risk factors change, the health coach will make an appointment with the patient’s general practitioner.

England, France and Italy are all focusing on physicians as gatekeepers to reduce overuse of specialists. Italian experts interviewed for this report agreed that co-payments tend to reduce demand, regardless of whether it is appropriate or unnecessary, whereas strengthening the role of the gatekeeper can reduce unnecessary demand.

Quality And Safety Standardisation

Defined and enforced clinical standards establish mechanisms for accountability, enhance transparency, and build trust.More than 80 per cent of respondents in the HealthCast 2020 survey said transparency in quality and pricing leads to sustainability. Interest in quality and safety has soared globally. However, Governments are not the only participants in the healthcare system who can do something about improving quality and safety. Programmes such as pay-for-performance and pharma covigilance, which focuses on drug safety, are being developed in the private sector.

So, what’s working in terms of quality? According to the HealthCast 2020 survey, physicians and hospitals were rated overall as making the most progress to improve healthcare quality. Interestingly, despite the attention received by employer coalitions, employers were rated last.

Patient safety is an important issue. In the US, medical errors are estimated to cost between 48,000 and 96,000 lives every year. In hospitals in UK, approximately 8,00,000 medical errors occur annually, which is a rate of around 11.7 per cent. In Canada, researchers found the rate of medical errors to be around 7.5 per cent. However, no one really knows how many errors or adverse events occur because of gaps in reporting processes and differences in definition.

As healthcare organisations and Governments design quality and safety programmes, they must solve the following challenges:

• Information about quality is sparse and occasionally contradictory.
• Reporting of errors and adverse events is poor.
• Definitions of quality vary.
• Paying for performance can have unexpected outcomes.

Transferable Lessons

Harmonise Quality Standards: Quality standards are evolving from those based on structure and documentation to those based on process and outcome. This evolution adds complexity. In the US, more than 100 independent organisations monitor quality. In addition, numerous payers and providers have their own ideas about what constitutes quality. Multiply that on a global scale. Some fear inappropriate translations of standards, potentially due to cultural differences, will complicate the process. To demonstrate quality, some hospitals are seeking accreditation that’s recognised globally.

When errors go unreported, no one learns from them. By encouraging voluntary and anonymous reporting, clinicians and organisations can understand how failures occur and adjust their processes. For instance, England’s new patient safety system adopts the principles of the Aviation Safety Reporting System, developed by the Federal Aviation Administration (FAA) for the aviation industry in the US. Like the aviation system, it’s voluntary, confidential and non-punitive.

Incentivise Clinicians For Outcomes, Not Activity:

Physicians are expected to be critical gatekeepers of access to care, but often their financial incentive is to deliver more care. Fee-for-service payment methods and malpractice litigation, both can increase the amount of care provided.

A trio of factors—information availability, online reporting and frustration with the pace of change—has led to the adoption of pay-for-performance. Pay-for-performance has become a natural extension of efforts to record and report quality and safety. Generally, pay-for-performance reward providers decide on five metrics:

• Outcomes
• Adherence to certain processes
• Patient satisfaction
• Cost efficiency
• Technology adoption

While many countries are moving towards performance-based reimbursement, they must balance against the risks voiced in the HealthCast 2020 survey.

When asked to rate the importance of reimbursement to providers in levering quality and patient safety mesures and the extent to which this is happening—HealthCast 2020 survey respondents provided quite different responses in 2005 than when we interviewed thought leaders in 2002. Support for pay-for-performance dropped slightly from 69 per cent in 2002 to 61 per cent in 2005. However, waning enthusiasm for pay-for-performance reflects the experience of some clinicians or organisations that are financially penalised or believe they will be.

Learn From Existing Systems: Since the US replaced fee-for-service payment with Diagnosis Related Group’s (DRGs) in the 1980s, this methodology has been viewed as a new way to finance health services. And DRGs have been revised and adapted: half dozen European systems are replacing fixed budgets with DRG-like systems that pay based on procedure, performance or a combination of both. In some regions of Spain, hospitals and primary care physicians are being contracted to private insurance companies that are paid by the Government on a capitated basis. The insurance companies are responsible for building the necessary infrastructure, recruiting the personnel, and operating the provider organisations. Consumers are free to choose to go to these private providers or travel to public services in other areas, in which case, the private company must reimburse the Government for the services received out of area. This business model has been used to build new hospitals in areas where public hospitals did not exist, as well to transform an existing public hospital.

Conclusion

Healthcare leaders around the world are exploring many of the same solutions related to the sustainable features discussed below:

Consumerism: Providers are reorganising themselves in a patient-centric continuum through care management approaches. Payers are developing consumer-oriented benefits plans. Pharmaceutical and life sciences companies are using new pharmacogenomic discoveries to pursue personalised medicine.

Transparency: New payment and reporting methods are emphasising safety, performance and accountability for health organisations across all industry sectors. Industry trade groups are establishing quality and safety standards. Governments are establishing reporting mechanisms and requirements.

The writer is the Executive Director, Healthcare practice for PwC in India