The objectives for the health care finance system articulated by participants in this session were to create a system that helps prevent the onset of disease and comorbidities; impedes the progression of chronic illness; and pays for effective, evidence-based health care. The participants also underscored that any changes to the finance system should be budget neutral—meaning that the issue is not the absence of sufficient resources. To the contrary, many participants noted that, if anything, the current system is characterized by substantial waste, and the needed changes involve redirecting and redistributing revenue streams rather than just spending more money. As a result, it must be accepted that there will be winners and losers. The challenge identified by the group was to overcome the considerable incentives to maintain the status quo among those who might be negatively impacted. Participants suggested that the key will be to align payments with incentives for providing high-quality care.

This sentiment was also echoed in Don Berwick’s keynote speech when he called for payment reform—not more money, but different ways to pay—as a critical strategy for improving the quality of health care for all Americans. Throughout his address, he provided numerous examples of overuse of procedures that do not help, or even harm, patients; underuse of procedures that are proven to be beneficial to patients; and misuse or errors of execution of care (Chassin and Galvin, 1998). These examples included, respectively, excessive use of intensive care and invasive care at the end of life (Wennberg et al., 2004); failure to adhere to evidence-based care protocols for diagnosing, treating, and monitoring depression, as illustrated by Martha Whitecotton’s presentation (see Chapter 4) (Wang et al., 2000); and the ill effects of medication errors experienced by 7 of every 100 patients admitted to America’s hospitals (Bates et al., 1995).

Berwick also cited the work of John Wennberg at Dartmouth College—a pioneer in the study of variation in the delivery of care—and others to demonstrate that inconsistencies in care persist throughout the country despite first being called to our attention more than 30 years ago (Wennberg and Gittelsohn, 1973). For example, in a study using Medicare data, even after controlling for confounding variables, a 400 percent variation was found nationwide, by hospital service area, in the likelihood that a person with heart failure would be admitted to the hospital (Fisher et al., 2000). Another study identified the potential for generating savings to Medicare of almost 30 percent of total costs if all regions provided care as efficiently as do those in the top quartile, with some indications that more efficient areas provide higher-quality care (Fisher et al., 2003a,b). In response, Berwick proposed ridding the existing health care system of waste and addressing variations in care, rather than funneling more money into the system (which currently accounts for more than 15 percent of gross domestic product) (Levit et al., 2004). He urged finding better ways to pay for chronic care, move payment toward better alignment with high quality, encourage best practices, and increase cooperation among providers (Berwick, 2004).

“The United States spends 40 percent more than any other western democracy on health care per capita…for which our outcomes of care are generally no better than, and in many well-documented cases worse than, care in these other countries. We spend more and we get less.”

—Don Berwick, summit keynote speaker

An important caveat expressed during the session was that finance strategies, such as those discussed at the summit, developed to do more on a prepayment basis focus on individuals who are already part of the health care system and have some type of insurance coverage, excluding the uninsured. The IOM has issued several reports calling for universal health insurance coverage (IOM, 2002a, 2003a, 2004). While this issue was not a specific focus of the

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