Dr. Brent James and Continuous Quality Improvement at Intermountain Healthcare

There is an absolutely wonderful article on Intermountain Healthcare’s approach to healthcare delivery by David Leonhardt in yesterday’s New York Times Magazine, which you can read here. We have mentioned Intermountain Healthcare in this blog before, and my colleagues and I interviewed one of Intermountain’s leaders for our weekly publication earlier in the year, so the details of Intermountain’s approach were not new to us, but the author presents a thoughtful consideration of other points of view, highlighting the difficulties of convincing doctors to adopt Intermountain’s approach.

Spearheaded by Dr. Brent James, Intermountain approaches quality in healthcare delivery much the same way that Toyota approaches quality manufacturing. It seeks to reduce variation in the way that its doctors treat patients who present with the same medical condition and then continuously refines its treatment protocols in a drive to improve patient outcomes. One criticism of this approach is that, unlike automobiles, each patient is unique, so a one-size-fits-all approach may result in some patients receiving sub-optimal care. Intermountain, however, recognizes that some patients may require deviations from the standard protocol. In Intermountain’s view, it is in precisely the ability to identify those cases that a physician’s experience and training are the most valuable. As Dr. John Wennberg and his colleagues at Dartmouth have repeatedly shown, however, unwarranted variations in physician treatment practices go a long way in explaining the high cost and poor quality of healthcare delivered in much of the US healthcare system.

One of the keys to Intermountain’s approach is being able to measure results, which is made possible by its electronic medical record (EMR) system. That is one reason why the Obama administration has placed so much emphasis on initiatives to have hospitals and physicians adopt EMRs. Adopting EMRs without changing the way medicine is practiced will not improve quality, but being able to track outcomes through EMRs could be a very important step, providing the foundation of evidence to help convince doctors to adopt best practices.

House Passes Healthcare Reform Bill

The House of Representative on Saturday passed its version of the healthcare reform bill by a vote of 220-215, with 39 Democrats voting against the bill and one Republican, Representative Ahn “Joseph” Cao of Louisiana, voting for the bill.

While the House vote is an important milestone, what will be most important to shaping the final legislation is what the Senate is able to pass. This week Senate Majority Leader Harry Reid is expected to unveil the Senate’s version of the bill, which is likely to include less generous subsidiaries for uninsured middle-income Americans to purchase health insurance in the new insurance exchanges, similar to the previous version of the bill put forth by Max Baucus and passed by his Senate Finance Committee.

While the House version of the bill would be very unlikely to pass the Senate, the eventual Senate version of the bill would, in all likelihood, pass the House, particularly since a more fiscally-conservative version of the bill would appeal to the Blue Dog Coalition of Democrats in the House, many of whom voted against the House version of the bill this past Saturday.

Threading the Needle

We had been expecting Senate Majority Leader Harry Reid to unveil the full Senate’s version of the healthcare reform bill last week, but today there is word that it may not even be released this week. While the specific reasons for the delay have not been disclosed, we suspect he is having difficulty balancing the need to rein in the total cost of the bill against the need to keep health insurance premiums low enough to attract the participation of relatively healthy middle-income Americans who currently lack health insurance.

For example, one criticism of the Baucus bill was that it did not provide sufficiently generous subsidies for middle-income Americans to purchase health insurance, even though limiting the subsidies helped lower the overall cost of the bill. For single Americans with income of $40-50,000, for example, the annual cost of purchasing health insurance in the new exchanges to be established is estimated to be approximately $5,000. There is a concern that younger and healthier Americans in that income range who lack health insurance may decide not to purchase health insurance. In fact, because new regulations would prevent insurance plans from excluding pre-existing conditions, nothing would prevent these Americans from purchasing insurance after they realized that they were sick. Accordingly, they may feel that there is little incentive for them to purchase insurance.

While an individual mandate that imposed high penalties on individuals who did not purchase insurance might avoid this “free rider” problem, Democratic leaders in Congress are reluctant to impose high penalties on middle-income Americans who do not purchase health insurance, particularly if the health insurance policies are not perceived to be easily affordable. High penalties would be politically unpopular, as well. Low penalties, however, are not likely to provide a sufficient incentive to purchase insurance.

One possible result would be that relatively young and healthy Americans who currently lack health insurance would choose not to participate in the insurance exchange, so that the insurance pool would consist of relatively unhealthy Americans with higher healthcare costs, thereby driving up average premium costs. As average premium costs rise, even fewer healthier Americans would choose to participate

To avoid this outcome, Senator Reid will need to find the right mix of subsidies as well as penalties associated with the individual mandate, all while reining in the overall cost of the bill. That it is a difficult needle to thread.