Stephen M. Shortell, PhD, MPHBlue Cross of California Distinguished Professor of Health Policy

and ManagementDean, School of Public Health

Professor of Organization BehaviorHaas School of Business

University of California, Berkeley

Prepaid Group Practice Delivery Systems:The Chassis for Improved Health System

Performance?

Is There a Future for Integrated Care

Systems in the Consumer Era?

AcademyHealth Annual Research Meeting

June 6, 2004

“I tell our trustees when you walk into (name of medical group) you are walking into the arms of an organized group practice. You walk into our competitor, you walk into the equivalent of a farmer’s market where there are a bunch of people sitting there in stalls, selling their wares, and leaving at the end of the day when they are done. They don’t particularly care what the farmer’s market is like, as long as the bathrooms are clean and the lights are on. They don’t particularly care who is selling stuff next to them because they are not integrated.”

Physician Leader of an Organized Delivery System

Recent DHHS report indicates some progress is being made

• Death rates due to stroke have fallen by more than one-third in the past two decades

• Death rates from heart attacks have been cut in half

• Millions of women enjoy longer lives due to advances in breast cancer treatment

But… Only about half of Americans receive

recommended treatment for their condition.1

AndPhysician organizations use less than half of

recommended care management processes for patients with chronic illness.2

1 McGlynn et al. (2003). "The Quality of Health Care Delivered to Adults in the United States." New England Journal of Medicine 348(26): 2635-645.

2 Casalino et al. (2003). "External Incentives, Information Technology, and Organized Processes to Improve Health Care Quality for Patients with Chronic Diseases." Journal of the American Medical Association 289(4): 434-441.

The American health system is the poster child for underachievement.

Examples of “Value Leakage”Lives and costs that could be saved each year

by using recommended care

Care Deaths

Hospital Costs

(in Millions)

Controlling High Blood Pressure

28,000 $1,243

Diabetes HbA1c Control 13,680 $178.5

Smoking Cessation 2,700 $97.7

Cholesterol Management 6,500 $94.2

Source: National Committee for Quality Assurance, Wall Street Journal, December 21, 2003.

REDESIGN IMPERATIVES: SIX CHALLENGES• Redesigned care processes• Effective use of information technologies• Knowledge and skills management• Development of effective teams• Coordination of care across patient conditions, services,

and settings over time.• Use of performance and outcome measurement for

continuous quality improvement and accountability

Supportivepayment andregulatoryenvironment

Organizationsthat facilitatethe work ofpatient-centered teams

Highperformingpatient-centered teams

Outcomes:•Safe•Effective•Efficient•Personalized•Timely•Equitable

CARE SYSTEM

Source: Crossing the Quality Chasm, Institute of Medicine, Washington, D.C., 2001.

Achieving this vision will require many changes:

An ORGANIZED DELIVERY SYSTEM is a network of organizations that provides or arranges to provide a coordinated continuum of services to a defined population and is willing to be held clinically and fiscally accountable for the outcomes and health status of the population served.”

Source: Shortell, Gillies, and Anderson, et al. Remaking Health Care in America: Building Organized Delivery Systems, San Francisco: Jossey-Bass, 1996, p. 7.

A PREPAID GROUP PRACTICE is an organized delivery system based on an accountable, multi-specialty group of physicians and other health professionals who work together in teams to provide comprehensive care for a voluntarily enrolled population within a per-capita prospectively determined budget.”

Source: Shortell and Schmittdiel, “Prepaid Groups and Organized Delivery Systems: Promise, Performance, and Potential,” in TowardA 21st Century Health System: The Contributions and Promise of Pre-paid Group Practice, Enthoven and Tollen (Editors) San Francisco: Jossey-Bass, 2004.

Key Components

• Multi-specialty groups• Health care teams• Defined populations• Aligned financing and payment• Effective medicine-management partnerships• Enhanced information management capability• Accountability

Existing Evidence HMOs vs. Fee-for-Service

Preventive Care HMOs better

Process Quality HMOs slightly better but essentially no difference

Outcome Quality HMOs slightly better but essentially no difference

Patient Satisfaction Fee-for-service better

Costs HMO physicians use somewhat less costly and less invasive interventions

Existing Evidence HMOs vs. Fee-for-Service

Problem:Existing research does not

separate out HMO’s by type—e.g. “delivery system HMOs” based on multi-specialty prepaid group practices from “carrier HMOs” based on insurance products.

Source: Chuang, Luft, and Dudley, “The Clinical and Economic Performance of Prepaid Group Practice,” in Toward a 21st Century Health System, Enthoven and Tollen (Editors), 2004, p. 45-61.

Safety

No evidence to date—important area for further research

EffectivenessNew and Emerging Evidence

• Multi-specialty groups more likely to use recommended evidence based care management processes for patients with chronic illness1

• Multi-specialty groups more likely to report a positive financial outcome from their investment1

• Groups affiliated with or owned by HMOs or hospital/health systems use more recommended processes than free-standing groups2

Effectiveness (Cont.)• Health plans closely affiliated with tightly managed

physician groups or that employ their own physicians perform significantly better on clinical performance measures with no difference on patient satisfaction in comparison with other types of provider delivery sytems3

• Kaiser Permanente consistently rated best in California in providing breast and cervical cancer screening, comprehensive diabetes care, cholesterol management, and follow-up care after hospitalization for mental illness.1

KP Northern California 15% decline in cardiovascular death rate between 1990 and 1998 largely due to a coordinated strategy of implementing guidelines.4

Effectiveness (Cont.)Footnotes:1 Shortell and Schmittdiel, (2004) “Prepaid Groups and Organized

Delivery Systems: Promise, Performance, and Potential,” in Toward A 21st Century Health System: The Contributions and Promise of Pre-paid Group Practice, Enthoven and Tollen (Editors) San Francisco: Jossey-Bass.

2 Casalino et al. (2003). "External Incentives, Information Technology, and Organized Processes to Improve Health Care Quality for Patients with Chronic Diseases." Journal of the American Medical Association 289(4): 434-441.

3 Styf, Chenok, and Pawlson et al. “A Comparison of Health Plans and Their Delivery System Relationships on HEDIS Performance Indicators.” Council of Accountable Physician Practices, February 2004, working paper - under review, do not cite.

4 Levin, E. (2002). K P Success in Reducing Mortality Rates from Cardiovascular Disease,” American Heart Association Meetings.

Figure 1Physician Organization Care Management Index1

(0 to 16)

1Use of disease registries, patient self-management focus, guidelines, automated reminders, performance feedback, etc.

Source: National Study of Physician Organizations and the Management of Chronic Illness, School of Public Health, University of California, Berkeley,November, 2002.

024

68

10

121416

Multi-SpecialityPrepaid

Groups (N=12)

Other Groupswith 100+

Physicians(N=468)

All Groups(N=1028)

Figure 2Chronic Care Management Index2

(0 to 11)

2 Patient self-management, linkages to community resources, delivery system re-design, decision support tools, etc. (Wagner et al, 1996, 2001).

Source: National Study of Physician Organizations and the Management of Chronic Illness, School of Public Health, University of California, Berkeley,November, 2002.

0123456789

1011

Multi-SpecialityPrepaid

Groups (N=12)

Other Groupswith 100+

Physicians(N=468)

All Groups(N=1028)

Figure 3Clinical Information Technology Index3

(0 to 6)

3 Standardized problem list, laboratory findings, medications prescribed, radiology findings, progress notes, medication ordering reminders and / or drug interaction information.

Source: National Study of Physician Organizations and the Management of Chronic Illness, School of Public Health, University of California, Berkeley,November, 2002.

0

1

2

3

4

5

6

Multi-SpecialityPrepaid

Groups (N=12)

Other Groupswith 100+

Physicians(N=468)

All Groups(N=1028)

Figure 4External Incentives Index4

(0 to 7)

4 Bonuses from health plans, public recognition, better contracts with healthplans, quality reporting on HEDIS data, clinical outcome data, results ofquality improvement projects, patient satisfaction data.

Source: National Study of Physician Organizations and the Management of Chronic Illness, School of Public Health, University of California, Berkeley,November, 2002.

0

1

2

3

4

5

6

7

Multi-SpecialityPrepaid

Groups (N=12)

Other Groupswith 100+

Physicians(N=468)

All Groups(N=1028)

Table 1Perceived Financial Impact of

InvestmentMulti-specialty Prepaid Groups

(N=12)

Other Groups with 100+

Physicians (N=468)

All

Groups (N=1028)

Asthma 41.7% 32.8 27.0

Congestive Heart Failure 75.0 36.8 29.5

Depression 27.3 14.6 13.5

Diabetes 75.0 42.0 37.7

Smoking Cessation Programs for Patients

100% 42.8 39.9

Source: National Study of Physician Organizations and the Management of Chronic Illness, School of Public Health, University of California, Berkeley,November, 2002.

Efficiency

Generally lower costs due to less hospital use, more outpatient care and possibly closer management of patients with high cost chronic illness.1,2 Not due to economies of scale or scope.3

1 Miller and Luft, 2002. “HMO Plan Performance Update: AnAnalysis of the Literature, 1997-2001,” Health Affairs, 21(4):63-86.

2 Feachem et al. 2002. “Getting More for Their Dollar: A Comparison of the NHS with California’s Kaiser Permanente.” British Medical Journal, 324:135-141.

3 Pauly, 1996. “Will Medicare Reforms Increase Managed Care Enrollment?” Health Affairs; Chevy Chase.

Personalized Patient Care(Patient Satisfaction)

• Generally lower for all HMOs but recent data suggests no difference for tightly organized prepaid groups.1,2

• More research needed1 Miller and Luft, 2002. “HMO Plan Performance Update: An Analysis of

the Literature, 1997-2001,” Health Affairs, 21(4):63-86.2 Styf, Chenok, Pawlson et al. “A Comparison of Health Plans and Their

Delivery System Relationships on HEDIS Performance Indicators.” Council of Accountable Physician Practices, February 2004, working paper - under review, do not cite.

Timeliness

• Generally lower but may be changing

• More research needed

Equitable

Major area for research

Do prepaid multi-specialty groups provide more equitable care than other delivery arrangements?

From the Frontline

• Multi-specialty prepaid groups CAN promote patient-centeredness—"Teamwork provides a framework and a system for working with patients over time.”

• It CAN provide greater efficiency through the aligned financial incentives in which the organization as a whole directly captures the rewards of such efficiency.

• It CAN enhance effectiveness—”The integrated model is the most advanced approach for dealing with chronic illness management and disease prevention.”

• It CAN effectively promote and use information technology.

“Their integrated structure allows them to maximize the return on their IT investments…through on-line access to physicians, prescriptions, lab tests, results and health care information.”

“It makes care more transparent. The common electronic medical record changes our practice style automatically because we are more prudent about what we do.”

But…..

A lot of people still like farmers markets!