Do Price Controls Work?

Do price rice controls lower total spending: Physician fees example 2 * Fee for service Medicare beneficiaries. Source: Guterman, Stuart “Medicare Physician Payment: Are We Getting What We Pay For? Are We Paying for What We Want?” Invited testimony Energy and Commerce Committee Subcommittee on Health U.S. House of Representatives, July 25. Physician expenditures per Medicare beneficiary* Physician fees Annual % change

So, we also shouldn’t be surprised that we are spending less time with our physicians and having more tests ordered. It is a natural result of Medicare’s price control approach. We have run this experiment 3

Are health costs better in MD, a state with healthcare price controls? Source: statehealthfacts.org, accessed May 9, Healthcare expenditures per capita by state of residence ( ) $USD 4

Price controls vs utilization  Medicare has committed significant effort to figuring out the “ideal” price paid per unit of service to curb spending, when use rate is actually the more important variable.  The use rate is a direct function of the medical practice style in the delivery system. 5 Total Cost = Price x Use Rate

What is Value and How Might We Get it?

Value in health care can be defined Quality: Patient outcomes (e.g., mortality, faster return to work or functionality, readmission), Safety (e.g., fewer complications, less rework), Service (e.g., access to care, patient satisfaction). Total Cost: Spending over a defined time for a particular patient, a condition, or a population.

INTERFACE Reimbursement for care delivery INTERFACE Translation to care delivery Systematic View of Health Care Care Delivery Domain Knowledge Domain Payer Domain In USA ~17 years  = No reimbursement for product offering Insurance for All Science of Health Care Delivery Coordinated/ Integrated Care Create ValuePay for Value Individualized Medicine INTERFACE Medical Legal Domain PATIENT

Examples of Knowledge that is Unknown Central line infections Swann Ganz cathers Vioxx

10 Learning Healthcare System Knowledge Domain Care Delivery Domain Payer Domain Medical Legal Domain PATIENT

Enhancing Discovery and Translation Science of Health Care Delivery Translational Research Basic Research Clinical Practice New Clinical Practice Innovation (New Idea, Old Idea, New Way) Time, people and capital Value

Population At risk for illness/ chronic conditions Chronic conditions Acute illness To remain financially neutral/ self-sustaining, start at the “bottom” of the graph, i.e., with your sickest and most expensive patients Gradually move up through the rest of the segments and you will eventually address the needs of the full population Primary prevention Quaternary prevention Options for achieving high value healthcare 12 Secondary prevention Tertiary prevention

Now Cancer: hype vs accomplishment

Obama's new, new!, new!!, new!!!, new!!!! war on cancer: USA 1/14/16 Nixon, 1971: an extra $100 million to launch an intensive campaign to find a cure for cancer1971 Clinton, 1998: I propose a 21st century research fund for path-breaking scientific inquiry, the largest funding increase in history for the National Institutes of Health, the National Science Foundation, the National Cancer Institute1998

USA 1/14/17 Obama, 2009: invest in electronic health records. It will launch a new effort to…seek a cure for cancer in our time.2009 Obama, 2015: So tonight I'm launching a new precision medicine initiative to bring us closer to curing diseases like cancer and diabetes.2015 Obama, 2016: a new moonshot, America can cure cancer in charge of Mission Control.2016

Hype Cycle Gartner, Inc.

Three Stages of Insight Simon Wardley Beginner “we know nothing” Hazard “We know a lot” Expert “we know nothing” How much we think we know How much we actually know How much we don’t know Knowledg e Expertise

18 Learning Healthcare System Knowledge Domain Care Delivery Domain Payer Domain Medical Legal Domain PATIENT