D
Keynote Speech: Bridging the Quality Chasm

David Lawrence, Kaiser Permanente

I am going to talk about the IOM report Crossing the Quality Chasm and I wish to address it from the perspective of trying to deal with the scientific and technological breakthroughs as they are made available to the health care delivery system. We struggle to keep up with the pace of innovation and to move these innovations into practice in a way that is safe, responsive, and high quality.

As Jerry Grossman pointed out yesterday, it is fair to say that “the tools of care” have far outstripped “the tools for caring.” The science and technology of medical care have moved far faster than the tools we have available for delivering these breakthroughs. Stated somewhat differently, over the last half of the 20th century we have tried in a variety of ways to attach a more and more sophisticated jet engine to a horse and buggy in order to make a jet airplane. We continue to struggle with what happens when we try to deliver highly sophisticated and increasingly complex science and technology through a system that is not up to the task.

THE IOM QUALITY OF HEALTH CARE INITIATIVE

Thinking about the subject of the IOM reports really began in about 1995 here at the IOM when we had a roundtable on quality of care, cochaired by Bob Galvin from Motorola and Mark Chassin, the then Commissioner of Health in New York, and now at Mount Sinai Hospital, New York. We looked at the whole question of what was happening with the quality of care in the United States. We looked at about 30 years worth of



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Medical Innovation in the Changing Healthcare Marketplace: Conference Summary D Keynote Speech: Bridging the Quality Chasm David Lawrence, Kaiser Permanente I am going to talk about the IOM report Crossing the Quality Chasm and I wish to address it from the perspective of trying to deal with the scientific and technological breakthroughs as they are made available to the health care delivery system. We struggle to keep up with the pace of innovation and to move these innovations into practice in a way that is safe, responsive, and high quality. As Jerry Grossman pointed out yesterday, it is fair to say that “the tools of care” have far outstripped “the tools for caring.” The science and technology of medical care have moved far faster than the tools we have available for delivering these breakthroughs. Stated somewhat differently, over the last half of the 20th century we have tried in a variety of ways to attach a more and more sophisticated jet engine to a horse and buggy in order to make a jet airplane. We continue to struggle with what happens when we try to deliver highly sophisticated and increasingly complex science and technology through a system that is not up to the task. THE IOM QUALITY OF HEALTH CARE INITIATIVE Thinking about the subject of the IOM reports really began in about 1995 here at the IOM when we had a roundtable on quality of care, cochaired by Bob Galvin from Motorola and Mark Chassin, the then Commissioner of Health in New York, and now at Mount Sinai Hospital, New York. We looked at the whole question of what was happening with the quality of care in the United States. We looked at about 30 years worth of

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Medical Innovation in the Changing Healthcare Marketplace: Conference Summary documentation and identified conclusions that were summarized in a paper in the Journal of the American Medical Association in 1998.23 Somewhat overstated, the quality of care in the United States approximates a random walk. The quality is highly variable. There is a substantial amount of overuse, misuse, and underuse of the available science and technologies— all independent of geography, independent of payment type, and independent of when or where people were trained to practice as physicians. It was a rather devastating conclusion. From that roundtable, the IOM launched the next series of studies, overseen by the Committee on Quality of Health Care in America, chaired by Bill Richardson, formerly the president of Johns Hopkins University and now head of the Kellogg Foundation. Chuck Buck and I were on that committee, and several others participated, including Jerry Grossman. In the second piece of work that we did, we focused on the issue of safety. It led to the To Err Is Human report published in 1999. This spring, we published the final report Crossing the Quality Chasm. THE SYMPTOMS OF A SYSTEM THAT IS BROKEN The quality and safety reports are linked together. Essentially, the examination of quality and the examination of safety were both looking at the symptoms of a system that is broken. As we examined that system, we came to more and more firm conclusions that there was a mismatch between the rate and the quantity of scientific and technological innovation occurring and the ability of the delivery system to deliver it safely and responsibly. When we published the last report, it was an attempt to understand in more detail the nature of that mismatch and to recommend interventions that could accelerate the rate of innovation on the delivery side to improve the match between the care and the caring. What I would like to do is briefly review those symptoms for you, talk about the reasons for the conclusions we reached in the IOM report, and then describe the opportunities for innovation on the delivery side. In so doing, I will touch briefly on some of the policy levers, because there are significant policy barriers or opportunities among the various tools that we have available for intervening. Wide variations in quality practice were documented back as far as 1975 in the small area variation analysis by John Wennberg, MD, and in a variety of studies across the country over the last 30 years. The more recent 23   Chassin, Mark R., Robert W. Galvin, and the National Roundtable on Health Care Quality. 1998. The urgent need to improve health care quality. JAMA 280(11):1000-1005.

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Medical Innovation in the Changing Healthcare Marketplace: Conference Summary safety studies, primarily but not exclusively those of Lucien Leape and his colleagues at Harvard, identified occurrence of a variety of medical errors that result in morbidity and mortality—errors caused not by physician malfeasance, but by system error. The numbers of hospital deaths range anywhere from 30,000 to 80,000. At this point, we have no understanding and little documentation of the rate of error that is occurring in the ambulatory setting. We have some early estimates from the British Medical Journal and others, some work in England, and some work in the United States. The total number of deaths occurring as a result of errors in the health care system we think could be as high as 150,000, or even 200,000 per year. There is another measure that Barbara Starfield has published in a JAMA article a year ago. Dr. Starfield looked at the whole question of system-related deaths for whatever reasons, including errors. Her conclusion was that there are somewhere between 200,000 and 250,000 deaths per year from system-related causes, of which error is the most notable. Starfield also made interesting comparisons between our system and others, using a variety of measures of health outcomes. She concluded, as many have, that although we spend an enormous amount on health care and lead the world in scientific innovation and technology, the results in terms of improved health do not match that level of investment. There are other symptoms that we looked at in the IOM study. One of them has to do with responsiveness. In the Picker Institute studies of patient assessment of their health care experiences, about three-quarters of those surveyed indicated that their experience with the health care system led them to conclude that it was a “nightmare” to navigate. They identified duplication, lack of communication, conflicting points of view about what should be done, and lack of understanding about what the science suggested. In summary, we have a non-patient-centric system. It is a system that is fragmented and fractured. Finally, we examined data on the cost of poor quality care, which has interesting implications for innovation. Between 30 and 40 cents of every dollar spent on health care is spent on the costs of poor quality. This is an extraordinary number representing slightly more than about a half trillion dollars a year. That is a vast amount of money wasted on overuse, underuse, misuse, duplication, system failures, unnecessary repetition, the lack of communication, and inefficiency. These high costs of poor quality are not much different from the experience that General Electric Co. and others have had in more tightly managed and highly organized manufacturing systems. When one seeks to understand what the costs of poor quality are, it is not unusual to find substantial opportunities for improvements in the cost performance of the system, by applying the tools of quality improvement. Health care does not

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Medical Innovation in the Changing Healthcare Marketplace: Conference Summary even come close to matching well-organized, systematically designed production or manufacturing systems. Our experience in Kaiser Permanente suggests that these numbers are not exaggerations. When seeking opportunities to improve the organization and delivery of care, we often find substantial improvements in the underlying cost performance of the organization. In fact, the whole premise on which we compete is to drive costs down by improving quality. TREMENDOUS GROWTH IN THE COMPLEXITY OF HEALTH CARE Why is this happening? What seems to be the problem for health care here? There are five major issues that I want to highlight. The first is that most of the scientific and technological breakthroughs that have occurred since World War II have not simplified the task of taking care of patients. They have made it more complex, or certainly raised the standards for delivery of quality care. Here are a few examples, to make the point: At the end of World War II, as we entered the 1950s, there were about 10 to 12 categories of health care professionals in the United States. Today, there are over 220 categories of health care professionals. Right after World War II, there were about six to eight—depending on how you counted them—specialties in medicine. Today, there are over one hundred. In 1970 shortly after I finished medical school, there were approximately 100 published randomized control trials in the American medical literature. In 1999, there were just under 10,000 published that year alone. One-half of all of the randomized control trials published in the United States have appeared in the last 5 years. Consider a disease like pediatric asthma, and look at what has happened since 1950 in the way in which we care for children with asthma. We have added an extraordinary array of drugs, an astonishing array of diagnostic instruments, and a considerable science concerning not only how to care for the individual with asthma but also how asthma is triggered. We also have a good understanding of how to educate families so that they can more effectively participate in the disease management process. Science and technology have certainly stimulated a growing complexity in medicine. Increasing numbers of people involved, increasing categories of people involved, increasing expectations about what has to be done to treat people well, and increasing science and technology to manage in the process. Largely as a result of science and technology advances the medical care system is far more complex in terms of the number of institutions and

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Medical Innovation in the Changing Healthcare Marketplace: Conference Summary types of health care practitioners that are engaged in it than was the case in 1950. MULTIPLE CONNECTION POINTS TO THE HEALTH CARE SYSTEM As a result of this increased complexity, it has become much more difficult for the individual to connect with the medical care system, and patients and families have multiple connection points with the health care system. I often ask audiences to whom I speak, how many have a chronic illness or are taking care of someone with a chronic illness. Typically, about half the audience raise their hands. I then ask them how many people they connect with in the health care system. The first thing they do is count the doctors. It is anywhere from 3 to 10, depending on the nature of the illness. When I say, “What about the nurse, the pharmacist, the nutritionist, the physical therapist, and so on?” The numbers go up as high as 50 to 75 contacts. That is issue number one. This is a system or non-system that has grown enormously over the last 50 years, and it has failed to keep the patient and the patient’s family at the center of its enterprise. It is small wonder that people identify the system as a nightmare to navigate. It is not patient-centered. LACK OF ATTENTION TO PRODUCTION DESIGN What would happen in sectors where the complexity of the system had significantly increased? You would create a highly sophisticated production design or manufacturing design process to handle the complexity. You would invest in an information technology infrastructure. You would create teams. You would create flow systems to manage the support activities required to carry out these processes. You would change the training of the people involved. You would work very hard to set new standards for what is quality in the production process. In medicine, we have done very little of this. Physicians are still trained with the principle of individual, professional autonomy and yet, in reality they are not working in autonomous situations at all. Production design is a foreign word. In fact, it is almost sacrilegious to talk about production design in medicine. This is a religion we practice, not a science. This is not a production process that we are engaged in; it is an act that comes close to approximating what a priest does with a petitioner in a confessional box. We have not created the tools, the capabilities, or the mindset to respond to this complexity on the delivery system side. We have not applied the tools of production design at the units where patients get care.

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Medical Innovation in the Changing Healthcare Marketplace: Conference Summary DIFFICULT TO SCALE-UP HEALTH CARE DELIVERY The third issue that we identified is that it has proven extraordinarily difficult to scale up medical care delivery. We have not been able to create very many examples of scaled delivery where the care is integrated across the ambulatory and inpatient settings and the other settings in which care is given such as the hospice or the home. We have not found very many systems that enable physicians to work in collectives. We have not found many systems that enable us to capture capital and re-invest capital in the delivery system infrastructure. With 80 percent of physicians in groups of less than 10, we still operate as though medicine were a single interaction between a patient and a doctor. While the patient-doctor interaction remains absolutely essential to the enterprise, the enterprise itself now involves a much more complex set of interactions. Apart from the Veterans Health Administration, Kaiser Permanente is the largest delivery system operating at any scale, with 10,000 physicians. The next largest may be the Mayo Clinic. Most of those that remain are regional players on the delivery system side. We have scaled up enterprises on the insurance side but not on the delivery system side. Until we understand how to make that happen, it will be difficult to collect and reinvest the capital required to build and support the production capability essential to deliver the science and technology that the innovators are creating for us. A PUBLIC POLICY ENVIRONMENT INHIBITING THE RESHAPING OF THE DELIVERY SYSTEM Fourth, our public policy environment is structured to inhibit the reshaping of the medical care delivery system. Let me give you a couple of examples. In Wisconsin, there are 27 licensed categories of health care professionals, each with its own board of practice. Medicine is about removing boundaries so that people can flow seamlessly among a variety of practitioners, based on what the technology requires and what the patient needs. These regulatory or license-based silos create barriers between one professional and the next. You have to break through these barriers to create teams and to deliver the integrated care. It can be done, but with great effort. The licensing system is designed to protect the interests of particular professional groups within medicine, not to enhance the creation of integrated delivery capabilities. Another example is the staffing requirements built into law. I sit on a board of Agilent Technologies, a spin-off of Hewlett-Packard. Imagine what would happen if there were a legal requirement that on the production line at Agilent a certain number of people of a certain kind of training had to operate and work for a certain number of hours. Agilent would go

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Medical Innovation in the Changing Healthcare Marketplace: Conference Summary up in smoke. Silicon Valley would go up in smoke for reasons other than economic downturn. Of course it would not happen. Any legislature that tried to pass that would be impeached. In health care, we wrestle constantly with efforts to freeze the system in the name of patient safety and quality of care by mandating staffing requirements. When you think about health care as a process that has to innovate in its “manufacturing” as rapidly as it is innovating in its “products,” freezing the delivery system by laying out the staffing requirements is a remarkably stupid thing to do. Yet, we continue to do it, state by state. Let us take another example. CMS, formerly HCFA, has 130,000 pages of rules, regulations, and guidelines that we have to deal with, while the IRS has only 10,000 pages. This suggests that there may be excessive regulatory costs that inhibit building the IT infrastructure and the production capabilities to deliver medical care innovations as safely and effectively and in as patient-centric a way as we need. Consider what it costs an organization like ours to deal with the patchwork quilt of local, state, and national health care regulations that have absolutely no central theme to them at all. We have done some very preliminary estimates in our organization, and we think that we spend somewhere between 5 and 7.5 percent of our total revenue stream on meeting regulatory requirements. That is the regulatory burden that we have to pay. It is close to a billion dollars. On the reimbursement side, the fee-for-service system is designed to reward individual acts by individual clinicians. If we think about the need to create integrated delivery capabilities, the reimbursement system we currently have does not support that very effectively. The Crossing the Quality Chasm report called for experimentation in a variety of reimbursement approaches to find those that would stimulate the creation of integrated delivery capabilities. It may be prepayment or capitation. There may be other tools as well, but the fact remains that the classic form of fee-for-service system is a barrier to the development of collaborative medicine. LACK OF INVESTMENT IN INFORMATION TECHNOLOGY The final major issue that we identified in the IOM report is the fact that IT is not being deployed into the delivery system in the way that one would expect for such an information-rich industry. We estimate that between one to two percent of total revenues in healthcare is now invested in IT infrastructure. We see much higher levels being invested on the health insurance side, but on the delivery system side it is still much lower than other industries or the medical technologies industry. I know the share of revenues of Agilent that is spent on the IT infrastructure is far higher than

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Medical Innovation in the Changing Healthcare Marketplace: Conference Summary what is spent in health care. Yet, health care is arguably one of the most information-rich decision-complex production systems on the planet. We are not making the required levels of investment in IT. Finding capital, either by aggregating organizations to generate the capital or creating other ways to build that capital, is a major issue. We cannot do the kind of innovation in health care delivery that matches the complexity of the science If you are a physician trying to keep up with 10,000 randomized clinical trials in a year, how can you practice evidence-based medicine without an information technology decision support system? It simply is beyond the capacity of individuals to keep up. The progressive narrowing of the practice of medicine into deeper and deeper specialties may be a reaction to that, but even narrow specialists find it very difficult to keep current with the evidence. THE OPPORTUNITIES FOR INNOVATION So where are the opportunities for innovation? In my view the areas I identified as problems are the focal points for the innovations that we need to see on the delivery side. Improving the Way Patients Interconnect with the Delivery System The first priority for intervention is to improve the ways in which patients can connect with the medical care delivery system. We are talking about monitoring, diagnosis, and treatment technologies that enable the patient to self-manage or at least communicate on a regular ongoing basis with the health care system. It does not make sense to continue to invest heavily in the bricks and mortar of the classic delivery systems when there are other vehicles for taking care of patients in a far more responsive, patient-centric way. Both giving the tools to the patient and creating the bridges between the patient and the delivery system is one focus for innovation. Let me be more specific. One of many promising innovations is the ability to test whether Coumadin is operating at therapeutic levels using a handheld testing device that is managed by the patient. This is just one of many examples. Blood sugar testing is another. There are many such devices that will substantially improve the connection between the patient and the system and put more capability in the hands of the patient. It also decreases our dependence on brick and mortar solutions for the delivery system.

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Medical Innovation in the Changing Healthcare Marketplace: Conference Summary Improving the Production Process The second major area for innovation is to take the tools of manufacturing and production in goods and services and translate them into language that applies in health care. I would argue that the production of medical care today is the most complex production challenge that exists on the planet. Think about what is involved in running a hospital. There are about 250 beds, a wide array of diagnoses, a multitude of judgments being made by the team of professionals who interact with patients, plus all the support production that makes this happen hour after hour, 24 hours a day, seven days a week. It is an extraordinarily complex production challenge. Today, we do not use the language of production in medicine, and we do not bring many of the tools of production design and monitoring to the task of taking care of patients, whether in the hospital or in the outpatient setting. Bringing the tools of production management and control to health care, translating them to health care, is an important innovation. This will require further changes in training, in team formation, and in communications. So the second focus for innovation is at the micro level of production, taking care of diabetic patients, taking care of patients with cancer. We have a great deal to learn about how to put together those production systems. In introducing new systems approaches, we have to figure out ways to maintain the relationship between the caregiver and the patient, because this is where a great deal of the communication takes place, a great deal of the trust is created, and a great deal of the caring occurs. This is another substantial innovation challenge. Moving from the current way in which most medical care is organized to the required level of sophistication is a long road, but we have to travel it. Given what is coming along in medical science and technology, how much more complexity that will be introduced into the caring for patients, and how much greater production design challenge that is going to create, we have to start soon. Creating Larger Health Care Delivery Units The third area of innovation involves organizational design or scaling. It has proven extremely difficult to figure out how to create sufficient scale on the delivery system side so that you can get the capital needed and the systems and the training capabilities and the other things that larger organizations can provide, applied to the delivery of care. We have been able to do it in certain health care settings for example, hospitals or nursing homes or laboratories or pharmacies. It has proven extremely difficult, however,

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Medical Innovation in the Changing Healthcare Marketplace: Conference Summary to create any kind of organizational scale for building integrated delivery capabilities. Kaiser Permanente has pulled back from 20-year experiments attempting to do that in four parts of the country. Efforts to expand by integrated delivery systems have proven almost impossible. Certainly very long periods of time are required before you can get it to succeed. Until we experiment with a variety of organizational forms, we are going to have a great deal of difficulty getting to any kind of scale that enables the creation of the infrastructure required. We have small islands of excellence around the country. But putting them together so that you begin the transformation of the entire system is going to be difficult. In the Institute of Medicine report we discussed self-organizing systems, drawing on the experiences of the military and some of the new theories about organizational design. But their application in health care is still in the very early stages. Public Policy Initiatives Lastly, opportunities exist at the national policy level to intervene in regulation, reimbursement, and, possibly, the financing of the information technology infrastructure in medicine. It may be that the financing of the information technology infrastructure exceeds the capacity of the private marketplace, given the current organization of health care. Perhaps the state of medicine requires us to create the medical equivalent of the Superfund for environmental cleanup, focused on building the IT infrastructure for the delivery system. This involves more than the electronic medical record, which is simply a way of capturing and moving information to support decision making. A robust infrastructure would incorporate analytic tools that would enable study of the epidemiology of disease. Without this infrastructure it is going to be hard for us to test whether or not these micro production units are working well and whether we are getting anywhere with the larger organizational entities that are required to help get to some sort of scale. Let me close by reiterating that the message of the Institute of Medicine’s report, Crossing the Quality Chasm, is that the mismatch between the pace and scope of medical science and technological innovation and delivery system innovation has created a chasm. It is aggravated by the shifting demographics of the country and the shifting disease burden of the country to an increasingly chronic disease burden. The complexity that both bring to the task of taking care of patients has not been matched by an equivalent sophistication on the delivery system side. In response to these changes, we have created complexity on the delivery system side. But we have not turned that complexity into a delivery capability that matches the sophistication of what we are trying to do for patients.

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Medical Innovation in the Changing Healthcare Marketplace: Conference Summary DISCUSSION Chuck Buck, General Electric (ret.): Clay Christiansen in his work on disruptive innovations talks about major changes in major industries often coming from stealth movements way down below the radar of the big companies like Kaiser Permanente. These movements then grow and they learn and they take on more and more over time. Where will pockets of innovation start that will connect with the consumer and provide the systems approach that you talked about? I am wondering if it is not the groups of ten that you say are too small. Maybe those are the places to start to grow this. So how do you see this working through the marketplace? David Lawrence: What I observe as I talk to physicians outside of Kaiser Permanente is that the impetus for innovation is largely coming from an interesting group of physicians, the cohort of physicians in their midthirties to mid-forties who have always driven innovation in medical care delivery. There is some very exciting innovation going on around the country that gives some hope that the transformation may occur from these isolated, fragmented groups of less than ten and may turn into something that looks like a virtual production capability. At the moment, most of these groups are dealing with simple problems such as how they communicate more effectively among themselves. They have not yet gotten to the issue of how to create multidisciplinary teams to take care of chronic illness, for example, or how to deal with the production system underneath them so that it operates more efficiently. But they are at least a start. To employers or purchasers I say, “Do not be captive of the mainstream delivery system.” There are solutions lurking out there that ought to be purchased or supported, for example, chronic disease management capabilities that may or may not be associated with a particular fixed geographic delivery system. Looking for these kinds of innovations, just as you do in purchasing everything you buy, is important. Mary Jo Deering, Department of Health and Human Services: You have alluded to the disparity between the rate of growth of medical innovation and the pace of change in the industry, and you allude to this disparity as a chasm. Frankly, it sounds like the chasm is getting deeper and wider, and that is likely to become worse in the future. In terms of priorities for federal spending in the near to medium term, does that not suggest more investments should be focused on the system itself and on developing that infrastructure to absorb innovations? David Lawrence: The simple answer is yes. I have despaired watching the congressional debate on the Patient’s Bill of Rights, saying, “Congratulations, you have just solved a non-problem. I hope you all get re-elected.”

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Medical Innovation in the Changing Healthcare Marketplace: Conference Summary An extraordinary amount of time, energy, and political clout is being spent on that question. It is probably a problem that needs to be solved, but it has nothing to do with the core issues. Investments in the medical care delivery system are really where we have to go, and I think the federal government has a role to play in this, either as a purchaser or as an investor. As I said earlier, the need to develop the IT infrastructure may be a case of where government can have an impact. I would also like to see the federal government take the lead in dealing with the regulatory morass that we are facing in health care. I would also like to see the federal government experiment with different reimbursement approaches to see whether or not we can create integrated approaches for delivering care at the micro level. Triggering this transformation has to start at the micro level. At some point, we will get enough things aggregating that we can call them systems. But we are years away from even creating the right templates at the local level. I would like to see the federal government make some initiatives here. To paraphrase an ex-President’s election mantra, “It is the delivery system, stupid.” Jean-Paul Gagnon, Aventis Pharmaceutical: In your IOM discussions did you talk about an electronic customer relationship management (eCRM) approach? One policy approach might be to have the government fund the Agency for Healthcare Research and Quality to support the development of eCRM. eCRM is consumer relationship management. It is an important movement now within many corporations to tie everything together, so that when the patient calls, whomever answers the phone has access immediately to how many times that patient has been in contact, who has been contacted, and what was discussed. The customer does not respond, “ I’ve called this place 10 times, and now I’ve got to tell my whole story all over again.” David Lawrence: To do what you are talking about requires a communications infrastructure. It is very hard to collate information, when no one is linked to anyone else on the delivery side, which is the situation today. The impetus behind the clinical information system that we at Kaiser are investing about a billion and a half dollars in over the next 3 or 4 years is to do precisely that. But remember, the core problem is achieving any kind of scale that would aggregate enough of those contact points. The big problem for many patients is that they go from one health care silo to another. The only common thread is the patient and the patient’s family. There is no system, there is no communications capability. There is not even consistent science that is being applied from place to place. To accomplish eCRM would require at least the identification of the types of organizational forms that would begin to pull together this highly fractionated system. Kevin Finneran, Issues in Science and Technology, NRC: You mentioned the use of consumer-oriented home devices that people might use to

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Medical Innovation in the Changing Healthcare Marketplace: Conference Summary improve the control and management of their own health care. How can the use of these devices be facilitated through public policy initiatives, whether through reimbursement policies, regulations, or standards for the equipment? What stands in the way of greater use of consumer-oriented home devices? David Lawrence: My biggest fear is not that they will not be used, but that they will be used out of coordination with the rest of the delivery system. I am more worried about the bridging systems than the innovations that will likely be very attractive to consumers. One of the fastest-growing areas of medical expenditure is for self-managed diagnostic and monitoring devices. The key question is, how do you link these devices back into the delivery system, so that the patient’s information is available and used? Agilent and other organizations have spent some time investigating what share of laboratory information on patients that actually gets into the patient’s medical record of the health care institution. Only about 20 percent of all the information that is generated about the patient’s status actually gets into the medical record and is usable by the medical care delivery system. The barriers to the bridging process are my biggest concern. Obviously, lack of capital to build the bridging telecommunications systems is another concern. We are spending a substantial share of $1.5 billion to build the communications links between the patients and our health care delivery system. Not many organizations have the capital available to do that. There is one more issue that is a slight digression from what you are saying. One of the potential areas for technological breakthrough is not really in medical care per se, but are in quality of life enhancing capabilities. Let me give you two examples. If you had a stroke and you no longer can speak, you still think. You may be able to communicate by computer. Think of the person who is born with cerebral palsy, unable to speak, wonderful mind, great ideas, and unable to communicate those ideas except by computer with a pencil. How many people who are not in the work force can afford those technologies? Or think about the disabled person who wants to have access to a robotic wheelchair? It is now in the last stages of clinical trials through FDA. How do we pay for those? I do not know that the medical care system or medical insurance can pay for them, but we surely need a financing system for those kinds of technologies that are supplemental to what medical care would be delivering. That is another barrier. David Gilman: You have very cheerfully presented a devastating landscape. It is hard to know where to begin. I think that one of our biggest problems, is knowing where we can make a significant difference without ripping up the whole thing and starting over again. What we need is a hit

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Medical Innovation in the Changing Healthcare Marketplace: Conference Summary list, where it might make the most difference to engage with the agencies and the Congress. The things that you say should be done must be going on at Kaiser Permanente. Could you give us a couple of examples about teamwork at Kaiser Permanente? In connection with this notion of everything being fragmented, especially in the reimbursement area, we should try capitation models. You have a large-scale capitation model that we should know more about. David Lawrence: Let me take your points in reverse order. Ed Wagner and Don Berwick are doing some very interesting work, trying to bring together the experiences of integrated delivery for specific diseases, primarily chronic illnesses, documenting the impact that the integrated delivery capability has on the outcomes and also the cost. There appears to be great promise in what they are doing. We see the same thing in Kaiser Permanente. Don Berwick has said in some of his comments to our people, “Whenever I want to find a best practice, the first place I go is Kaiser Permanente. I usually can find it there.” Unfortunately, it is just a best practice. The hardest thing in Kaiser Permanente, as it is in the rest of the country, is to move that science to standard practice. You do not tell doctors you need this; you do not tell professionals to do that. I am very excited about where organizations like ours are moving around the issues of integrating at the micro level, and creating team-based approaches for care. We have a wide array of examples now, and are moving in that direction through something we call the Care Management Institute. This institute identifies not only the scientific base of how we should practice from a clinical guidelines point of view, but also what is the best evidence-supported way of organizing the delivery of care to achieve those outcomes. Then finally, the clinical information system, where implemented, has shown dramatic impacts on the ability of the infrastructure to organize in the way you have described. So we have a number of examples. We still have a long way to go, like most health care organizations do. But I really believe that organizations like ours are about 10 to 20 years further up the learning curve than the rest of the health care system in terms of putting together these kinds of systems. Turning to your question about what should be on the hit list. I think it is possible to put together more than one list. There is a public policy list addressing regulation at the macro level. That list should be broadened to include reimbursement, IT investment, and perhaps work force training and work force redeployment. The latter is a major impediment to making change in the health care system. I would go back downstream to the patient and develop the health care connection hit list. What are the sorts of things that need to be done that could foster the development of really sophisticated and appropriate sys-

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Medical Innovation in the Changing Healthcare Marketplace: Conference Summary tems that link the patient most effectively to the medical care delivery system? Then I would also develop a hit list around how one works at the micro level. The major investments that need to be made here, include, first, the training of physicians, and, second, translating the language and tools of organizational design for production and manufacturing industries into medical care. We simply do not have the language to talk about it in a way that works for us as professional caregivers. Susan Foote, University of Minnesota: It occurred to me as I was listening that we have got a policy chasm as well as an organizational and delivery system chasm. I will talk a little bit about it later, but all this fragmentation and complexity that you talk about from the delivery side is reflected in the political side. There are institutional changes that have occurred internally in Congress, and entrepreneurial politics that have gotten in the way of big wise solutions. But I think the provider side and the delivery system side has to take some responsibility for the condition of the public policy interventions. The Patient’s Bill of Rights did not emerge from the minds of the members of Congress. It was requested by a fragmented group of individual providers and organizations who demanded it and then fought about it. There is an expectation that the political process can come in and think big. But all the representatives of the medical delivery system are in there, the nurse anesthetists versus the anesthesiologists fighting on payment. The big picture will not come from the Congress sui generis, and it does not seem to be coming from any leadership on the private sector side. How are we going to break that syndrome to get to the solutions that you have identified? David Lawrence: A wonderful question. One of the issues that we have been wrestling with is the analogies that can we draw from other industries, where fractured, fragmented, entrepreneurial activity somehow coalesced into a set of standards and approaches that then was reflected in a rational national policy. There are some analogues in the telecommunications industry. There may be some in other sectors as well. We need to look at that to see whether or not there are some lessons to be drawn about how to answer your question. What is happening in Congress is a reflection of the fragmentation in the delivery system and the financing system. The financing system, the insurance side, actually is far better organized than the delivery system side is. The delivery system is fragmented by professional interest group (nurses, doctors, hospital administrators, and so on) and entrepreneurial activities (not-for-profit, for-profit). I do not yet know where the opportunities lie for a few of the major

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Medical Innovation in the Changing Healthcare Marketplace: Conference Summary players on the delivery side to aggregate and create a political pressure point that would then encourage Congress to respond. Congress is nothing more than a reflection of the constituents. It is not going to come up with the big ideas on its own. We have watched that rise and fall once, and I do not think that is going to come again. Stephen Merrill, NRC: When one thinks of federal investments in IT infrastructure, one thinks of one fantastically successful recent jumpstart, namely the Internet and several highly troubled internal systems like those of the Social Security Administration, Internal Revenue Service, and the Federal Aviation Administration. Do you have any model for how the federal government could invest in IT in health care successfully? David Lawrence: Singapore may be showing us a way through the creation of an investment pool for IT experiments. Where does the capital come from to invest in the experiments and the tests and the kind of innovations that we spoke of earlier? It is not coming from Wall Street. It is not coming from private venture capital on the delivery system side. It is not coming from the health care systems themselves, because there is very little margin there. So in my judgment the model is an investment bank model, which is not solution driven but experiment and innovation driven. If we could create that kind of a fund, I think we would then see a number of major experiments, not the kind of micro experiments that are going on now but major experiments. Out of that we would begin to define a way forward.