Reframing Healthcare Reform: Cost-benefit, Systems Engineering, Both?

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Fixing U.S. Healthcare blog has championed the success of the Oregon Health Plan of 1994 (OHP), and has attributed its success to cost-benefit analysis.  But was cost-benefit analysis really the key factor in its success? Or did the OHP succeed for other more fundamental reasons? And what are the implications for healthcare reform now?

My answers in this blog post are inspired by Dr. Atul Gawande’s recent presentation to our local healthcare organization (and published at “Health Insurance Coverage and Health,” August 2017) .  Dr. Gawande is a noted Massachusetts General Hospital surgeon and Harvard professor, as well as author and lecturer, featured in a previous blog post.

Dr. Gawande’s Claims

Here are Dr. Gawande’s key claims:

  • New studies have shown that modern medical care can substantially improve overall health and wellbeing, including physical, mental, social and occupational function, beyond just longevity.
  • Conversely, lack of access to healthcare negatively impacts financial security (bankruptcies), overall health, and mortality. Having health insurance measurably extends lifespan at a cost to society of no more than $865,000 — this is a bargain compared to the widely accepted “willingness-to-pay” standard of $2.25 million per life saved. (See more at How Would Cost-Benefit Analysis Be Used)
  • Modern medical care is complicated. Medical technology now recognizes 87,000 separate diagnostic codes and 10,155 procedure codes. Moreover, chronic disease treatment, which now accounts for half of healthcare costs, require complex teamwork and coordination, not just the simple choice of one of those 87,000 discrete procedures like a surgery. Oregon’s original list of only 709 diagnosis-treatment pairs would not be an adequate framework for reforming healthcare today.

Systems Engineering: Key to Success

In addition, Dr. Gawande explains that U.S. healthcare has evolved into a complex system of systems. This means that reforming healthcare will require “systems re-engineering,” not just a “simple fix” change, nor a broad-brush “public health” approach. Dr. Gawande’s examples of systems re-engineering are

  • treatment checklists and surgical teamwork processes, which have dramatically reduced surgical complications and deaths (see more at Checklist Manifesto)
  • chronic care coordination programs
  • end-of-life care (see more at Being Mortal)

See also my previous post on systems engineering and related blogsite.

Why Did Oregon Health Plan Work? What Was Missing?

Based on these points, Dr. Gawande might well say that the real reason that the Oregon Health Plan worked was in fact the OHP’s use of a systems engineering approach.  As explained in my blog post “The Big Fix,” Oregon used health maintenance organizations (HMOs) for cost-effective delivery of services to Medicaid enrollees. And it implemented sophisticated incentives for doctors to provide quality care.

But I say that two other elements were needed to get the re-engineering plan off the ground in the first place.

  • First was an effective “messaging hook” to help Oregonians understand the healthcare problem. Oregon’s leaders used cost-benefit analysis to show Oregon citizens that healthcare services are not all of equal value. Some services are hardly worth the cost, and some are frankly harmful.
  • Second was public engagement. Oregon used town hall meetings to get common-sense public input to help further clarify values and goals. Public engagement shored up political support for the Plan.

What was missing in Oregon?

  • Healthcare reform is too complex and ever-changing to be once-and-done. Oregon started off on the right track and succeeded for 8 years. But then reduced financial backing, dwindling political support, and inattention to responsive re-engineering allowed the OHP to fizzle out.

Healthcare reform is not a race, and not even a marathon – it’s a continuing journey that is never finished.

Blogger’s Conclusions – Four Keys to Successful Healthcare Reform

  1. Using a cost-benefit “hook” that convinces the public that some healthcare is not worth what we spend on it. Cost-benefit analysis will at the same time highlight care that is truly valuable to all, both as individuals and as a nation. This idea must be coupled with Dr. Gawande’s data in order to counter the opposite argument that “nobody dies because they don’t have access to healthcare” (see CBS News clip). Dr. Gawande’s data (“Health Insurance Coverage and Health,” August 2017) disproves and debunks that cynical claim.
  2. Getting citizens engaged – town halls worked in 1994. Today, engagement might use “new power” that harnesses grass-roots social media.
  3. Using a systems engineering approach at every level throughout the healthcare system – every facility, delivery system, regional consortium, and national policy coordination.
  4. Fostering a sense of civic ownership for our healthcare system, with an perpetual unremitting focus on its mission of health and wellbeing, not profit.

Final Comment

Dr. Gawande asserts that the purpose of healthcare is just that – health and wellbeing. He further concludes that we are at a point, for the first time in human history, where healthcare, in fact, does measurably improve wellbeing. And he demonstrates that lack of access to healthcare measurably shortens life, diminishes wellbeing, and causes financial hardship.

Dr. Gawande concludes that our national goal should be to ensure universal access to healthcare for all.

I claim that Oregon showed the way toward universal access, sophisticated systems engineering, and cost-conscious stewardship, and that Oregon can teach us those lessons today.

Now take action.

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Image Credit:  By Martin Falbisoner – Own work, CC BY-SA 4.0, 

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