On March 23, 2010 the Patient Protection and Affordable Care Act (PPACA) was signed into law after a contentious political process and remains controversial four years later. The powerful economic forces related to the increasing cost of health care in the United States have drawn attention to health care reform for decades. We spend twice as much per capita on health care as the average of other industrialized countries, yet we receive poorer population health outcomes largely due to the mal-distribution of health care to the uninsured. The PPACA aims to make health insurance available to the uninsured through regulation of coverage criteria, new health care industry fees, subsidies for those with low incomes, and mandated coverage. Taken together, it represents reform of the health care insurance industry. However, the most significant contribution of the PPACA will likely be spurring of the private sector to develop coordinated systems of care that reduce cost and improve the quality of clinical results.
This transformation of health care delivery is well underway with investments in medical management, information technology and payment reform that encourages cultural change toward higher quality of care at a lower cost. An Institute of Medicine committee has estimated that 30 percent of health care spending in the United States is unnecessary. The investments made by these coordinated systems of care allow them to identify this unnecessary medical care that does not follow national guidelines. At the same time, these new systems of care coordination highlight instances where patients have not received care that is known to be beneficial. The PPACA has promoted this shift toward Accountable Care Organizations (ACOs) for the Medicare population and the same concepts are being applied to populations covered by employer-based benefit plans.
Accountable care also seeks to reduce practice variation. For example, the total cost of care for a Medicare beneficiary can vary by as much as three fold from one city to another. Reducing this variability around best practices, as determined by evidence from clinical trials, reduces cost and creates better results for patients. This form of medical care is not new and has been practiced for decades by organizations such as the Mayo Clinic, Geisinger Health System, Intermountain Healthcare and many other multispecialty medical groups across the United States. Total medical cost savings of 10 to 30 percent are achieved by these coordinated systems of care.
The PPACA remains controversial and flawed and can best be viewed as version 1.0 of health care reform. A majority of Americans may not be truly happy with it until we have reached version 3.0. Improvements to the law will take time because of the controversial nature of health care. In the meantime, the private sector is moving ahead with improvements in health care delivery. Employers can look forward to increased value from these ACOs. As more employers engage ACOs to help manage their health care costs, more ACOs will emerge creating a competitive market.
America is facing a health care cost crisis. Rather than resorting to price controls as some countries have done to contain health care costs, the hope is that the health care industry will innovate our way out of this problem. The accountable care movement initiated by the PPACA will be the American innovation that promises to solve our health care cost crisis.
Spencer Berthelsen, M.D. is Chairman and Managing Director of Kelsey-Seybold Medical Group, based in Houston.
Listen now: episode 7 of #AskaCEO is all about the CEO's responsibility to manage executive leaders. How do you manage a VP of marketing, for example, if you've never done a marketing function? #CEO #leadership podcasts.apple.com/us/podcast…
Have you been to one of Amazon's 4-star stores? Texas's first opens today in Frisco. dallasnews.com/business/retai…