Health care is one of the most common topics we hear about from our business community (along with the workforce) and it’s one of the areas on which nearly everyone agrees: costs are out of control for patients, for insurance companies, and for the employers who are expected to pay a share. Hospitals and individual providers aren’t happy about the way things are going, either. And the nation has nothing to show for the expense, in terms of relative health outcomes. A lot of countries are doing much better.
This week’s Q & A stems from a conversation with Dr. David Pate, who has been the CEO of St. Luke’s Health System since 2009, the year before the Affordable Care Act became law. Pate, a physician and a lawyer, is not only responsible for an organization whose mission is to provide affordable health care to the community, he’s also head of the state’s largest private employer, and, as such, he’s trying to find a way to provide health insurance to 14,000 people who live and work in Idaho.
On Dec. 13, Pate was the featured speaker at the Boise Metro Chamber’s CEO speaker series and cost containment was his topic. Pate promised to bring a ray of hope to a group that is already facing another year of premium hikes, and he delivered.
Pate said it doesn’t make sense to rely on policymakers in Washington to solve the problem of out-of-control health care costs.
“I think we can do it right here in Idaho,” he said.
Pate told the group that repealing the Affordable Care Act doesn’t make sense. St. Luke’s did not support the huge health care law when it was passed in 2010, but Pate said there were pieces of the legislation that both the hospital and he personally agreed with.
“Our objection was the discussion that if we added tens of millions of people to the newly insured in what was at the time a broken health care delivery system, that somehow we’re going to end up saving money,” Pate said. “We did not believe that could occur.”
Instead of repealing the ACA, Pate said, it’s time to change the fee-for-service reimbursement model that generates a bill for every lab test, doctor visit and prescription, and results in fragmented delivery and sometimes unnecessary care and services. Pate estimated that 30 percent of health care spending now goes to services that are of low or no value.
He is instituting a system at St. Luke’s that aligns incentives for providers with the objective of making the patient better. In his system, which he calls pay-for-value, providers are rewarded for helping patients avoid the poor conditions (such as lack of transportation to pick up prescriptions) or behaviors (such as smoking) that make them expensive to treat. Under a fee-for-service plan, he said, providers aren’t generally rewarded for steering smokers to smoking cessation plans, coordinating information about family history into a treatment plan and schedule, or taking other steps to make sure patients carry out preventive care to avoid expensive hospital visits. Under pay-for-value, they are.
Part of the cost reduction, Pate said, is also standardizing care to make sure best practices are adopted everywhere – a move that will require a change in culture for providers who want to find their own solution and treatment plan.
Pate’s pay-for-value plan uses care managers and disease management specialists to coordinate treatment for the very sick patients who have many providers. Pay-for-value rewards the providers who talk to each other to coordinate a patient’s care, and puts steps in place to reduce the kind of fragmented case management that results in duplicate testing and other waste. It all sounds great – and it’s really happening, said Pate – starting January 1.
“It’s not just talking the talk,” he said. “We are very actively moving this new model forward.” He expects 25 percent of the health system’s revenue to come from the new model starting at the beginning of the new year, and then hopes 50 percent of revenue will be there sometime in 2018.
The Affordable Care Act itself contains rules and incentives designed to promote coordination of care, and to help providers move away from the inefficient fee-for-service model. But what Pate told the Chamber audience on Dec. 14 was that St. Luke’s is going to take the concept further. And for several reasons, including community partnerships, the community itself, and Pate’s faith in the health system’s volunteer board, Pate thinks Idaho is more likely to succeed on its own than it would by following rules thought up in Washington.
“We’re showing this can be done, and it can be done in Idaho in terms of driving the best possible outcomes at the lowest possible cost,” Pate said.
Meanwhile, Washington is starting to look less prepared than ever to hand down a workable plan.
“The current administration is all in favor of this; they would applaud what we are doing,” Pate said. But Pate is concerned about President-elect Donald Trump’s choice as secretary of Health and Human Services, Tom Price. Price, a physician and member of Congress from Georgia, is a strong opponent of the Affordable Care Act.
“I am not convinced, based on what I have read about him, that he believes in this,” Pate said of Price, regarding the pay-for-value model. “He’s a physician who came from the fee-for-service world and did well in that world.”
“We’re not counting on Washington to figure out how to fix health care; we’re going to move forward,” Pate said. “I think the question is, how difficult is the new administration going to make it for us to do this?”
Anne Wallace Allen is the editor of the Idaho Business Review.