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Fostering Rapid Advances in
Health Care
Learning from System Demonstrations
.
Committee on Rapid Advance Demonstration Projects:
Health Care Finance and Delivery Systems
Janet M. Cowgan, Ann Greiner, Shari M. Erickson, Editors
Board on Health Care Services
INSTITUTE OF MEDICINE
OF THE NATIONAL ACADEM/E'
THE NATIONAL ACADEMIES PRESS
Washington, D.C.
www.nap.edu
L
.,
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THE NATIONAL ACADEMIES PRESS 500 FIFTH STREET, N.W. Washington, DC 20001
NOTICE: The project that is the subject of this report was approved by the Governing Board of the
National Research Council, whose members are drawn from the councils of the National Academy of
Sciences' the National Academy of Engineering, and the Institute of Medicine. The members of the
committee responsible for the report were chosen for their special competences and with regard for
appropriate balance.
Support for this project was provided by the National Academy of Sciences. The views presented in this
report are those of the Institute of Medicine Committee on Rapid Advance Demonstration Projects:
Health Care Finance and Delivery Systems and are not necessarily those of the funding agencies.
International Standard Book Number 0-309-08707-4
Additional copies of this report are available from the National Academies Press, 500 Fifth Street, N.W.,
Lockbox 285, Washington, DC 20055; (800) 624-6242 or (202) 334-3313 (in the Washington metropoli-
tan area); Internet, http://www.nap.edu.
For more information about the Institute of Medicine, visit the TOM home page at: www.iom.edu.
Copyright 2003 by the National Academy of Sciences. All rights reserved.
Printed in the United States of America.
The serpent has been a symbol of Tong life, healing, and knowledge among almost all cultures and
religions since the beginning of recorded history. The serpent adopted as a logotype by the Institute of
Medicine is a relief carving from ancient Greece, now held by the Staatliche Museen in Berlin.
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Shaping the future 10r Health
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THE NATIONAL ACADEMIES
Advisers 10 the Nation on Science/ Engineering/ and Medicine
The National Academy of Sciences is a private, nonprofit, self-perpetuating society of distinguished scholars engaged in
scientific and engineering research, dedicated to the furtherance of science and technology and to their use for the general
welfare. Upon the authority of the charter granted to it by the Congress in 1863, the Academy has a mandate that requires it to
advise the federal government on scientific and technical matters. Dr. Bruce M. Alberts is president of the National Academy
of Sciences.
Me National Academy of Engineering was established in 1964, under the charter of the National Academy of Sciences, as a
parallel organization of outstanding engineers. It is autonomous in its administration arid in the selection of its members,
sharing with the National Academy of Sciences the responsibility for advising the federal government. The National Academy
of Engineering also sponsors engineering programs aimed at meeting national needs, encourages education and research, and
recognizes the superior achievements of engineers. Dr. Wm. A. Wulf is president of the National Academy of Engineering.
lbe Institute of Medicine was established in 1970 by the National Academy of Sciences to secure the services of eminent
members of appropriate professions in the examination of policy matters pertaining to the health of the public. The Institute
acts under the responsibility given to the National Academy of Sciences by its congressional charter to be an adviser to the
federal government and, upon its own initiative, to identify issues of medical care, research, and education. Dr. Harvey V.
Fineberg is president of the Institute of Medicine.
The National Research Council was organized by the National Academy of Sciences in 1916 to associate the broad
community of science and technology with the Academy's purposes of furthering knowledge and advising the federal
government. Functioning in accordance with general policies determined by the Academy, the Council has become the
principal operating agency of both the National Academy of Sciences and the National Academy of Engineering in providing
services to the government, the public, and the scientific and engineering communities. The Council is administered jointly by
both Academies and the Institute of Medicine. Dr. Bruce M. Alberts and Dr. Wm. A. Wulf are chair and vice chair,
respectively, of the National Research Council.
.,
www.national-academies.org
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COMMITTEE ON RAPID ADVANCE DEMONSTRATION PROJECTS:
HEALTH CARE FINANCE AND DELIVERY SYSTEMS
GAIL L. WARDEN (Chair9, President and Chief Executive Officer, Henry Ford Health System,
Detroit, Michigan
ANNE M. BARRY, Acting Commissioner, Minnesota Nepal latent of Finance, St. Paul
ROBERT A. BERENSON, Senior Advisor, AcademyHealth, Washington, D.C.
DONALD M. BERWICK, President and CEO, Institute for Healthcare Improvement, Boston,
Massachusetts
BRUCE E. BRADLEY, Director, Health Plan Strategy and Public Policy, General Motors Corporation,
Detroit, Michigan
CHRISTINE K. CASSEL, Dean, School of Medicine and Vice President for Medical Affairs, Oregon
Health and Science University, Portland
KAREN DAVIS, President, The Commonwealth Fund, New York, New York
DON E. DETMER, Dennis Gillings Professor of Health Management, University of Cambridge,
United Kingdom, and Professor Emeritus and Professor of Medical Education, University of Virginia,
Chariottesv~le
ARTHUR GARSON, JR., Dean, School of Medicine and Vice President, University of Virginia,
Charlottesville
LARRY A. GREEN, Professor of Family Medicine, University of Colorado, Denver, and Director,
The Robert Graham Center, American Academy of Family Physicians, Washington, D.C.
JOSEPH P. NEWHOUSE, John D. MacArthur Professor of Health Policy and Management, Harvard
University, Cambridge, Massachusetts
WILLIAM L. ROPER, Dean, School of Public Health, The University of North Carolina at Chapel
Hill
WILLIAM M. SAGE, Professor of Law, Columbia University School of Thaw, New York, New York
MARLA E. SALMON, Dean and Professor, Nell Hodgson Woodruff School of Nursing, Emory
University, Atlanta, Georgia
WILLIAM W. STEAD, Associate Vice Chancellor for Health Affairs, Director of the Informatics
Center,and Professor of Medicine and Biomedical Informatics, Vanderbilt University, Nashville,
Tennessee
EDWARD H. WAGNER, Director, W.A. McColl Institute for Healthcare Innovation, Center for
Health Studies, Group Health Cooperative of Puget Sound, Seattle, Washington
IOM Council Liaison
MICHAEL M.E. JOlINS, Executive Vice President for Health Affairs and Director, Robert W
Woodruff Health Sciences Center, Emory University, Atlanta, Georgia
Study Staff
JANET M. CORRIGAN, Director, Board on Health Care Services
ANN GREINER, Deputy Director, Board on Health Care Services
SHARI M. ERICKSON, Research Associate
Special Consultants
RICK CURTIS, President, Institute for Health Policy Solutions, Washington, D.C.
RONA BRIERE, Briere Associates, ~c.
v
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REVIEWERS
This report has been reviewed in draft form by individuals chosen for their diverse perspectives and
technical expertise, in accordance with procedures approved by the NRC's Report Review Committee.
The purpose of this independent review is to provide candid and critical comments that will assist the
institution in making its published report as sound as possible and to ensure that the report meets institu-
tional standards for objectivity, evidence, and responsiveness to the study charge. The review comments
and draft manuscript remain confidential to protect the integrity of the deliberative process. We wish to
thank the following individuals for their review of this report:
GERARD F. ANDERSON, Professor, Department of Health Policy and Management Medicine and
Director, Center for Hospital Finance and Management, The Johns Hopkins University
RANDALL R. BOVBJERG, Principle Research Associate, The Urban Institute
DAVID C. CLASSEN, Associate Professor of Medicine, University of Utah and Vice President, First
Consulting Group
ROBERT M. CRANE, Director, Kaiser Permanente Institute for Health Policy, Kaiser Foundation
Health Plan, ~c.
SH BERRY GLIED, Assistant Professor of Public Health, Columbia University
BONNIE LEFKOWITZ, Consultant
DENISE LOVE, Executive Director, National Association of Health Data Organizations
BLACKFORD MIDDLETON, Clinical Informatics R&D, Partners HealthCare System
ALAN NELSON, Special Advisor to the Executive Vice President, American College of Physicians-
American Society of Internal Medicine
LEN NICIIOLS, Vice President, Center for Studying Health System Change
JANET OLSZEWSKI, Vice President, Government Programs and Regulation, MCARE, University
of Michigan
NANCY A. W~TELAW, The National Council on the Aging
.
.,
Although the reviewers listed above have provided many constructive comments and suggestions, they
were not asked to endorse the conclusions or recommendations nor did they see the final draft of the
report before its release. The review of this report was overseen by ELAINE L. LARSON, Professor
of Pharmaceutical and Therapeutic Research, Columbia University, School of Nursing and
BRADFORD H. GRAY, Editor, The Milbank Quarterly and Director, Division of Health & Science
Policy, New York Academy of Medicine. Appointed by the National Research Council and Institute of
Medicine, they were responsible for making certain that an independent examination of this report was
earned out in accordance with institutional procedures and that all review comments were carefully
considered. Responsibility for the final content of this report rests entirely with the authoring committee
and the institution.
. .
V11
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Foreword
In June 2002, Health and Human Services Secretary, Tommy Thompson, met with leaders from The
National Academies, including the Presidents and selected members from the Institute of Medicine, the
National Academy of Sciences and the National Academy of Engineering. Paramount among his
concerns were the serious problems confronting the health care delivery system, including rapidly rising
health care costs, serious quality and safety shortcomings, growing numbers of uninsured, racial and
ethnic disparities in access and quality of care, and workforce shortages.
The Secretary challenged the National Academies to identify several bold ideas that might change
conventional thinking about the most serious problems facing the health care system. Throughout our
history, the Academies have welcomed tough assignments. Since our founding in ~ 863, we have called
upon leading scientists to examine difficult problems and produce original insights or solutions. The
recent report, Making the Nation Safer, describes a wide range of threats to homeland security and
recommends actions to protect the nation against terrorism. The current crisis confronting the nation's
health care delivery system is no less important to our long-term national interests.
O
The TOM responded to the Secretary~s challenge through the Committee on Rapid Advance Demon-
stration Projects: Health Care Finance and Delivery Systems. The committee was charged with identify-
ing a set of demonstration projects that have the potential to lead fundamental change in the health care
system. The ideas presented are bold, and testing them will require resources. However, the scale of the
problem requires not only paradigm shifting ideas, but a rigorous and full scale testing of those ideas
before they are considered for national implementation. Under current assumptions, the Medicare
trustees project that in 75 Years. health care could account for 40 percent of GNP. Chancing that traiec-
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.~ - . . ~ . ~ . . .. . ~ . .. ...
tory w111 require wide rangmg reforms and changes on the part oi consumers, employers and health care
professionals alike. The Secretary's request to the National Academies and others to think creatively and
unconventionally is an important step in creating alternative paths to assure quality health care for the
American people without preempting other vital national interests.
Sharing the Secretary's sense of urgency, the IOM committee has moved expeditiously to identify a
set of demonstration projects intended to produce model delivery systems within 5 years. As a country,
we must now begin the challenging task of building a health care system for the 2ISt century.
Harvey V. Fineberg, M.D., Ph.D.
Presidlent,, Institute of Medicine
November 2002
1X
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Acknowledgments
The Committee on Rapid Advance Demonstration Projects wishes to acknowledge the many people
whose contributions made this report possible. First and foremost, special thanks goes to the
consultants listed below who provided their insight, support, and expertise to the project.
DAVID W. BATES, Chief, Division of General Medicine, Brigham and Women's Hospital, Boston,
Massachusetts
MOLLY JOEL COVE, President, Health Technology Center, San Francisco, California
ARNOLD S. MILSTEIN, William M. Mercer, Inc., San Francisco, California
PATRICIA SALBER, Medical Director, Managed Care Health Care Initiatives, General Motors
Corporation, Larkspur, California
EDWARD PI. SlIORTLIFFE, Professor and Chair, Department of Medical Tnformatics, Columbia
University College of Physicians and Surgeons, New York New York
Several other individuals also made important contributions to the committee's work. They
include David Doolan of Hunter Health in New South Wales, Australia; Christopher Koppen of the
National Association of Community Health Centers; Freda Mitchem of the National Association of
Community Health Centers; Patricia Rutherford of the Institute for Healthcare Improvement; David M.
Stevens, Ilealth Resources and Services Administration; Kenneth E. Thorpe of the School of Public
Health at Emory University; Tricia Trinite of the Health Resources and Services Administration; Nancy
Whitelaw of the Henry Ford Health System and the National Council on Aging. We would also like to
thank the following institute of Medicine staff members for their valuable contributions: Philip Asp~en;
Wilhelmine Miller; and Dianne Wolman.
X1
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Contents
EXECUTIVE SUMMARY
eeeeeeeeeeeeeeeeeeee~eeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeaeeeeeeeeeeeaee..eeeeeeeeeee..eeee..eeeee..eeeeeee 1
1 TIIE TIME FOR CHANGE HAS COME eeeeeeeeeeeeeee~eeeeeeee~~eeeeeeeeeeeeeee~eeeeeeeeeeee~eeeee~~~eeee~ see 17
Origins of This Report 19
Criteria for Selection of Demonstrations 19
Supporting and Evaluating the Demonstrations 21
Other Possible Demonstration Areas 23
2 CI1RONIC CARE REDUCING THE TOLL OF CLONIC CONDITIONS
ON INDIVII)UALS AND COMMUNITIESeeeeeee.~eeeeeeeeeeeeeee.~.eeeeeee.~. 27
Summary Description 27
Background 28
Amp 29
30
36
Demonstration Attributes .............................................
Possible Demonstration Expansions.............................
3. PEUMARY CARE 40 STELLAR COM1\'IUNITY EIEALTI~I CENTERS e.~eee. 41
Summary Description...
Rid ~l~m-~1 amp
Demonstration Attributes ......................................................
42
46
47
4. INFOEU`IATION AND COMMUNICATIONS TECHNOLOGY
INFRASTRUCTURE A ``PAPERI~ESS', H h,ALTEI CARE SYSTEMe.~.eee.~. 57
Summary Description 57
n~k~^llna 5 8
60
61
64
Demonstration Attributes ..........................................................................
Making Progress Toward a National ICT Infrastructure
5. STATE HEALTH INSURANCE: MAKING AFFORDABLE COVERAGE
AVAILABLE TO ALL AMERICANS 69
Summary Description
Background
Demonstration Attributes .....
Implementation Issues..........
Q
. . .
X111
69
69
.71
72
76
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XIV
CONTENTS
6. LIABILITY: PATIENT-CENTERED AND SAFETY-FOCUSED, NONJUDICIAI
COMPENSATION 81
Summary Description
Background .........
Goals................................
Demonstration Attributes
GLOSSARY AND ACRONYM LIST
.,
81
82
85
85
....................................................................................... 91