Changing Our Reference Point

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Commentary – April 2011

By Jim Walton, DO, MBA

A recent review of two articles from national journals gave me reason to pause. Atul Gawande's "The Hot Spotters" (New Yorker Magazine, Jan. 24, 2011) and Michael Porter's "The Big Idea" (Harvard Business Review, January/February 2011) give us an opportunity to change our reference point on health care reform. 

Dr. Gawande's article describes the directly proportional relationship between the growth of health care costs and the neediest patients. Not really earth-shattering news, but his story is about the creativity of one of our physician colleagues. In doing so, he shines a bright light on one physician's ability to develop innovative solutions for the most expensive (and neediest) patients in Camden, N.J.  His story of Dr. Jeff Brenner's work among Camden's neediest patients seriously challenges the status quo. What's missing is the typical handwringing concern about failures of the health care system and its custodial leaders.

Additionally, you won't find much mention of government-sponsored interventional failures. At its root, you will find the concern and compassion of one physician for his patients and community linked to an entrepreneurial spirit.

Dr. Brenner's work illustrates the type of ingenuity that new health information technology enables. Using information supplied by four competing hospitals in Camden, Dr. Brenner mapped the city's leading areas of hospital emergency department utilization, i.e., "hot spotting." He identified two blocks where 900 residents accounted for more than 4,000 emergency department visits and $200 million in health care bills. He adapted his logic from community police work, the Compstat approach, which maps crime statistics and focuses police efforts in the "hot spots."  One quote is particularly interesting: "…. and if the stats approach to crime was right, targeting those with the highest health care costs would help lower the entire city's health care costs."

The article caught my attention because I know Dr. Jeff Brenner and have had the opportunity to visit his work. Our work has a great deal in common. Convinced of the truth that 1 percent to 5 percent of the patient population currently drives 30 percent to 60 percent of health care costs, we discovered that we both had started projects within our own communities, demonstrating cost savings by taking care to patients instead of waiting for them to come to us. The unique and sometimes overlooked detail of this work is that we targeted the most clinically and socially difficult patients. 

Mr. Porter's article describes his ideas on reinventing capitalism. The story of Dr. Brenner and "The Hot Spotters" aligns perfectly with Mr. Porter's logic: "societal needs, not just conventional economic needs, define markets, and social harm can create internal costs for firms." That is to say, capitalism often is hampered by societal needs because of the increased costs they create for both corporations and governments. Surprisingly, Mr. Porter breaks from the tired logic of corporate social responsibility and advances a new idea of "corporate shared value." His new conceptualization of capitalism suggests that a corporation's robust commitment to capitalism is not incongruent with creating shared social value (going beyond product, job, and profit creation). 

This suggests that a more sophisticated form of capitalism is needed, one which includes a social purpose. Mr. Porter wrote "… that purpose should arise not out of charity but out of a deeper understanding of competition and economic value creation." He goes on: "It is not philanthropy, but rather self-interested behavior to create economic value by creating societal value. If all companies (physician practices and hospitals) individually pursued shared value connected to their particular businesses, society's overall interests would be served. And companies would acquire legitimacy in the eyes of the communities in which they operated, which would allow democracy to work as governments set policies that fostered and supported business."

The article challenges some of the traditional thinking of what health care providers and hospitals are. Are they simply private enterprises producing value by "manufacturing health outcomes" (i.e., units of health care service to sick people)? Physicians usually view themselves as entrepreneurs when they create and sustain small businesses providing billable units of health care services that produce health outcomes. However, due to the mounting "internal cost" pressures on local corporations and governments, applying one of Mr. Porter's key points should lead us to the consideration of reinventing our local health care capitalism for the next generation. A key point for the local/regional health care delivery system is the need for us to reconceptualize our health care capitalism through the lens of the interconnected nature of a community's diverse business enterprises. As we think about health care reform, we have a unique opportunity to help shape the conversations locally and regionally because of this new perspective. 

A Human Touch

Perhaps these two articles, when considered in a complementary way can produce conclusions that further our collective thought.  I often consider how we might connect the strong individualistic health care capitalism of Dallas with the obvious unmet needs among the neediest patients within our market. In its simplest economic form, it is the costs that these neediest patients incur and are passed along to our community's corporations, school districts, and government agencies that place our practices and hospital institutions at most financial risk.

Applying Mr. Porter's thesis, corporations, school districts, and government institutions must pass these internal cost increases to employees and their families, effectively pricing many of them out of the health insurance market. Likewise, governments must manage these internal costs by increasing taxes or reducing provider reimbursements. These adverse economic outcomes only increase the number of uninsured patients, perpetuating a vicious negative cycle.

As Mr. Porter points out, our capitalistic reflexes should help us see that it is in our self-interest as physicians to learn from Dr. Brenner and his "hot spotting" strategy. He is reinventing capitalism in Camden, demonstrating the societal and economic value in caring for the area's most needy patients and reducing the uncompensated health care costs passed on to insured consumers. His work is not the old "feel good" strategies that we have come to dismiss, but a newly reinvented capitalistic model producing positive economic outcomes through the provision of vital evidence-based health care services to the neediest residents of Camden. Unfortunately, his work, infiltrated with Mr. Porter's idea of "corporate shared value," struggles from being under-capitalized. 

Similarly, Project Access Dallas volunteers bring a human touch to the needy patients who historically drive up uncompensated health care, erode corporate profitability, and create adverse societal costs. Through the collective experience of creating shared social and economic value, Dallas health care leaders have helped create more value in their respective business enterprises. These models deserve to be spotlighted during this season of intense health care criticism and reform. It seems too simplistic to resign ourselves to a position of "reacting" to media attacks on the individuals and institutions that have stood in the gap for decades on behalf of medically vulnerable populations. Instead, this is the time to put forth our best ideas. As such, we would do ourselves and our communities a favor by redesigning business relationships so the vulnerable residents among us receive the best possible care and ideas we can muster.  Dr. Brenner's "hot spotting" is one with which we can begin.

As the 2011 Texas legislative session continues, it is our duty and responsibility to share our home-grown innovation. This is the time for us to boldly proclaim our support for a "positive strategy," which will redirect unproven, reform-minded, cost-cutting theories toward Mr. Porter's reinvented capitalistic ideas. We have already introduced some of our best ideas to our local community, and they have proven their worth. We now have the opportunity to expand them, helping to solve the very pressing problems faced by our state's Medicaid program. To get started, we should support innovative ideas and legislative policies, such as:  

  • Create pilot programs that use existing information systems to identify the top 1 percent (i.e., most expensive) of the Medicaid population in five medical trading areas: four urban and one rural;
  • Create local health information exchanges between practitioners and hospitals in each pilot medical trading area;
  • Create a contracting vehicle between the Texas Department of Health and Human Services and local provider group(s) willing to coordinate the care in the pilots for the top 1 percent of the Medicaid population residing in each medical marketplace;
  • Develop an incentive plan that allows the contracted local provider group to share and distribute the year-over-year financial savings for the 1 percent of the Medicaid population residing in each medical trading area;
  • Provide seed funding for each local provider group to build and link a dedicated care coordination team, enabling them to reach the 1percent of the Medicaid population residing in each medical trading area; and
  • Develop an agreed-upon methodology to calculate the value proposition of this specific effort (i.e., Value = Quality/Costs) for each medical trading area.  

Dr. Walton is vice president and chief health equity officer for Baylor Health Care System in Dallas and medical director of Project Access Dallas, a network of more than 2,000 physicians and 15 hospitals providing comprehensive health care access to uninsured people throughout Dallas County.  Dr. Walton currently serves on the Board of Directors of the Dallas County Medical Society.

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