19 thoughts on “Intermountain Healthcare — Proof That U.S. Hospitals Can Improve”

1. I read stuff like this and suddenly I’m not quite as frustrated. Maybe there really IS hope! I thought it was excellent…but the medical mafia isn’t totally out of the picture, did you catch that paragraph near the end where they were able to lower their costs but they did not pass those savings on? “It would cost us millions.” Non-profit indeed.

2. Lisa–
   Yes, I did notice that.
   I, too, was disappointed. To me, that was the one weak spot in the story.
   But to comment, I would need to know more about their costs- and what Brent James would have to say about why they could or couldn’t pass those savings along.
   I wish the reporter had pressed harder at that point. I would have liked three paragraphs instead of one.
   But overall, he did a superb job, so I’m not complaining. . .

3. Awww…c’mon…because they wanted to keep the savings on their bottom line, that’s why.
   But that’s no surprise to any of us, overall it was indeed full of good news.

4. Lisa and Maggie —
   In a rational world, the idea that a medical system would keep profits from lower costs rather than passing the savings through would be a bad thing. Unfortunately, health care is not a rational world. As the Leonhardt article points out, in its discussion of ICU babies, with our current payment system institutions that are innovators in quality and effectiveness often hurt their financial results by doing so. As Leonhardt notes, poor practice is often financially rewarding.
   Mayo CEO Denis Cortese and his voice in the senate, Amy Klobuchar, are pushing for changes in Medicare payments to emphasize quality and outcomes and reward high quality with higher payments while penalizing low quality and poor outcomes.
   If that type of payment system is adopted by Medicare and other payers, then it will become rational to pass savings through. Until then, it is hard for institutions to exist if they do not keep windfall profits to make up for losses due to poorly rewarded excellence.

5. Maggie–
   First of all, I’m new here, so, hi!
   I was wondering if were aware of Dr. Andrew Weil’s views on health care and his solutions and had any thoughts on them?
   One of the main ones being that integrative medicine should be taught to everyone in every medical field tests across the board(he founded a hospital of the type here in AZ…I think even coined the term).
   I agree with his views except on capping malpractice payouts, which doesn’t seem like the right thing to do.
   Here’s his blog, which has some of his solutions.
   http://www.huffingtonpost.com/andrew-weil-md
   There’s a blog on my URL when you click my name (kind of), which is called 138 beats per minute. It’s something I’ve noticed that the world has a rhythm where things happen right on cue with it. This surely must lead to many great discoveries, including health, if there were some research behind it. For now, doctors could use it for something such as communicating and talking on a rhythm and breathing on rhythm and helping patients breath on the rhythm–getting everyone in their rhythms. Maybe that is one reason many of us become ill or stay ill; we’re not in tune with nature.

6. great Leonhardt article raises two questions. one is why there’s no mention of anything being done in a big northeastern city where costs are extraordinarily high and the other is his sense that change would take decades.
   finally, there’s this:
   Leonhardt describes a few of the Medicare reforms that the legislation calls for: “One is a bundling program, in which Medicare would pay hospitals a set fee for certain operations or chronic illnesses, rather than paying piecemeal for every aspect of the treatment. Hospitals would then have an incentive to avoid complications and readmissions, because they would no longer be automatically reimbursed for them. The hospitals that did the best job of keeping their patients healthy would end up helping their bottom lines. The details are still being fleshed out, but Medicare or private hospital groups would most likely monitor outcomes to make sure the incentives didn’t lead hospitals to skimp on care or turn away the sickest patients.
   I’m at a loss as to how this differs from the DRG system that now pays hospitals a flat fee based on the diagnosis and demographic factors of the patient. as things now stand, hospital that uses fewer resources makes money and one that uses many loses. that’s current system, isn’t it?

7. Medicare costs per person in the heartland is $5000 a year and on the coasts it is $12,000 a year. What accounts for a factor of 2 difference and no great difference in health outcomes?
   My friends, the ER doctors at our hospital in New Jersey, tell me that 70% of their CAT scans are done for defensive purposes. C-section rates used to be 14% and now are 30-40%. End of life care costs Medicare 30-50% of all medicare costs.
   It seems doctors and our system, can’t say no to any care. We do all this testing and caring and do it to assuage our patients so they like us and won’t sue us.
   Defensive medicine is politically stated to cost 1% of health costs, but the above facts show that defensive costs are 20-25%.
   This could be lowered by changing malpractice lawsuits, with exaggerating or lying expert plaintiff experts, who are doctors, to:health courts, A workers’ Comp-like system, panels of doctors and lawyers, or mandatory arbitration. This would compensate more patients , more quickly and not have a debate in court as to liability.
   A private sector non profit mutual, coop, or utility ins co would save overhead and profits, and not give more of our health system to a bankrupt government.
   Why not save 400-800 billion a year as a start, rather than cost 100-200 billion more a year?

8. Sidney:
   I like your idea of a non-profit such as a coop, a 501(c)(12).
   In addition, the members would have individual ownership.
   Of course, the coop would have ownership as a collective, which actually increases the members’ overall worth.
   Wouldn’t it be better to (1) have actual reserves, and (2) have these reserves owned individually and ci]collectively by private parties.
   Don Levit

9. Everyone–
   An interesting thread.
   I’ll catch up with you and respond to comments tomorrow-
   Best, Maggie

10. This Leonhardt article, the piece he mentions in the New Yorker about IVs, and numerous other sources (including this very insightful blog and its author) highlight the massive opportunity to reduce cost and improve outcomes in our system. One element (of many) that I don’t understand is this: why has n’t the private system been able to contain costs? I thought that the basic premise of the HMO was that it would be able to limit the providers that its members could use. Many HMOs appear at this point to have enough share in the markets that they serve to potentially have a major impact on cost/quality of care by requiring hospitals and doctors groups to adopt these practices. Why has this not happened? Thanks for your thoughts…

11. While there may not be anything Mormon about waiting until week 39 to deliver a baby I think there is a social compact in Utah that makes people more likely to go along with central direction.
    The organization controls 45% of the hospital beds in the state. That’s got to give them the market power to establish standards and stick to them.
    I don’t think that’s necessarily a bad thing, but I can see how in more competitive areas of the country any one hospital can’t strike out too much for concern over losing patients to hospitals who do what’s commonly done or what patients like best.

12. Maggie,
    I am a long-time admirer of this blog, Money Driven Medicine, and the Dartmouth Health Atlas. Have you seen this article from the journal Circulation (http://circoutcomes.ahajournals.org/cgi/rapidpdf/CIRCOUTCOMES.108.825612v1.pdf),which questions some of the Dartmouth work? If so, what do you think of it??

13. sg
    Yes, I’ve read it. And I have been in e-mail contact with one of the authors of the article.
    He is an ardent fan of the Dartmouth resereach and said that all of the article’s authors were very concerned that the article was being used by some people to try to discredit the Dartmouth reserach.
    The authors were going to make a statement that I could publish on HealthBeat, but after a flurry of phone calls, just couldn’t come up with language that they all agreed on. (I think there are 8 or 10 authors. Try getting 8-10 people to agree on a movie to go to!)
    Anyway, the Circulation study is very small. And it looks at only one piece of Dartmouth research which uses restrospective reserach–looking at records of patients who had died.
    The Circulation article is using forward-looking research– looking at outcomes for patients who are still alive, and the article says that could make a different.
    But other Dartmouth studies have used forward-looking reserach–and hte results are always the same.
    When patients receive more aggressive care, using more resources, outcomes are no better, and sometimes they are worse.
    I would say the major problem with the Circulation study is its small size. It looks at just a handful of hosptials. When you set it against the huge studies Dartmouth has done it just doesn’t stand up.

14. Lisa , Pat S., Keith, Jim,Sidney, Don, Phil, Ginger
    Lisa—It’s easy to be cynical, but , Intermountain is a non-profit and is not sending savings to its “bottom line.”
    In fact, a book about INtermountain points out that “Drawing on a recent surplus, IHC refunded 6% of annual insurance premiums to the 460,000 members of its health plans.”
    When was the last time your insurance company send you a refund?
    Pat S.–
    You’re entirely right that when hospitals improve quality and save money, their reimbursements often fall.
    Meanwhile inefficient hostpials receive higher reimbursements.
    But it turns out that Intermountain does not keep all of the savings from quality improvements.
    This is from a book about Intermountain:
    “Drawing on a recent surplus, IHC refunded 6% of annual insurance premiums to the 460,000 members of its health plans”
    You might find the book interesting. Chapter 5 is here http://www.longwoods.com/product.php?productid=20146
    Keith– Welcome.
    And I’ll look at that link.
    I agree that capping malpractice rewards is not the answer.
    I’ll also take a look at your URL
    Jim–
    The medical culture in the Northeast is very differnt.
    Doctors in the Northeast are much more likely to prefer working alone or in very small groups. And they don’t want to be on salary; most want to be paid fee-for-service. The more they do, the more they make. Many fear that if they were part of a large organization and on salary, they might wind up working harder than someone else, but would be paid no more.
    By contrast, the Northwest and the upper mid-west have a long tradition of collaborative medicine going back to the founding of the Mayo Clinic and Kaiser.
    Not long ago, someone at a conference I attended (I think it was Don Berwick, maybe Elliot Fisher) explained the difference in medical cultures by pointing out that the Northwest and upper middle-west was settled by people who got there via wagon train.
    The Northesast was settled by people who came by ship.
    The folks on the wagon trains had to work together. Rich or poor, when the Indians attack, you’re all part of one circle.
    Wagon trains were pretty communal. People shared.
    And if someone became sick they tried very, very hard not to leave a wagon behind.
    If the person driving a wagon was sick or injured, typically an adult male from another wagon would drive for him.
    By contrast, families that came over by ship were not dependent on each other to survive. (They were dependent on the crew and ship captain)
    And typically, wealthier and poorer people were in different parts of the ship. They were not healping each other out.
    Each family took care of itself.
    Finally, a great many of the people settling the NOrthwest were coming from Scandanavian countires with a long tradition of working together collabroratively. (You can see this in farming practices in places like Minnesota).
    By contrast, people who settled the Northeast tended to be coming from countires where each family takes care of its own–the less communal cultures of Anglo-Saxons, Germans, etc.
    DRGs are completely different from bundled patients.
    Imagine that a woman goes to the hospital to have a baby. No complications are anticipated. So she is assigned the DRG for an uncomplicated birth.
    Then after four hours of labor, the doctor decides to do a C-sectoin (Often, we do C-sections even when not medically necessary. We do many more C-sections than other countries–with no better outcomes. Maternal mortality rates during childbrith are actually higher in the U.S.)
    At that point, the hospital “ups” the DRG to the DRG for a C-Section. Much more expensive.
    Unfortunately, the woman then develops an infection at the site of the incision.
    Another DRG for the extra days of hospitalization treating the infection.
    Meanwhile, someone decides to put the baby in the pediatric ICU “just to be safe.” (We way overuse pediatric ICU’s. They are very expensive and this is the only way to pay for them. Medical reserach shows that it’s not good for well babies to be put in ICU with very weak or sick babies, but often they are.)
    In the ICU, the baby catches a cold (probably from another baby).
    New DRG for baby.
    Final bill: much,much higher than the original DRG.
    By contrast, if payment were bundled, the hospital would expect to be paid a certain lump sum for a
    straightforward delivery.
    Mother healthy, no sign of complications.
    In addition to the lump sum, the hospital would get a bonus for a good outcomes at a price that not too much higher what it would cost at one of our most efficient hosptials. (Those efficient hosptials would servve as benchmarks).
    IF the woman developed an infection, the baby got a cold, etc. the lump sum would not be raised. The hospital would have to absorb the cost. (If she had a c-section that was medically necessary, then the lump sum would be raised to reflect c-section)
    The lump sum would be high enough to make this affordable for the hospital as long as infections, baby catching cold, unnecessary C-sections didn’t happen too often.
    But if complications are commonplace, then this hospital is going to have a hard time making it.
    The hosptial CEO knows this and is going to begin to invest resources in infection control, insisting on C-section only when there is a medical necessity etc.
    Finally, the lump sum that the hospital gets for a delivery includes not only the hospital but the OB-gyn who cared for the woman throughout her pregnancy and the ob-gyn she sees for 3 months after she is discharged from the hospital and the pediatrician who sees the child for 3 months after the child leaves the hosptial.
    This lump sum is divvied up among all of the health care providers who cared for mother and child during this “episode of care” (pregnancy, birth, and check-ups after birth).
    Geisinger actually does this and it works.
    Because payment for all of these providers is “bundled” they have an incentive to collaborate with each other.
    No one gets the bonus unless the outcome is very good– and the care is efficient.
    The DRG system has not contained costs. That’s why MedPAC and others say we need to replace it.
    Sidney–
    I think that, in many cases, arbritration could solve malpractice cases–especially if the doctor and hospital disclose exactly what happened after everyone agrees to arbitratoin. Openness and transparency are important.
    But I disagree on one point: the “expret witnesses” representing docs and hostpials also are paid to testify, and they are just as likely to exaggerate or even lie.
    Moreover, the difference in costs between the East cost and the midwest has little to do with malpractice and defensive medicine.
    Docs in the Midwest are sued too.
    And we know that when we put caps on malpractice awards in Texas, overtreatment continued.
    See Dr. Atul Gawande’s article in the June 1 New Yorker to help explain why some regions are so much more expensive.
    Co-ops have been tried in a great many places–and have failed. I’ve talked to the folks at the Group Health Co-op in the State of Washington about this. They have survived for a long time, and they point out it’s not because they are a co-op, but because they focus on efficiency and quality. Docs are on salary, they do their best to contain costs, emphasize preventive care, chronic disease management, etc.
    In other words, they are much like Mayo–or Intermountain.
    Don-
    See the end of my response to Sidney.
    Phil–
    HMOs did try to control costs in the 1990s–and they succeeded in reining in health care inflation. But the backlash–from the public, from doctors, and from the media was huge.
    There constantly stories on the evening news about “care denied”–HMO refuses to cover potentially life-saving procedure.
    Sometimes the HMO was right. Sometimes it was wrong. The problem is that by the 1990s, most HMOs were for-profit and so they tended to decide whether or not to cover something based on price rather than whether the treatment would be effective . .
    A for-profit HMO’s first obligation is to its shareholders–that means protecting the bottom line.
    The good news is that, under reform, both Medicare and the public plan will operate more like HMO’s–but they’ll be non-profits.
    Their long term goal will be to keep their patients as healthy as possible–out of the hospital, etc.
    So they’ll have every incentive to cover needed, effective care–while steering patients and docs away from unncessary care, using higher co-pays and lower fees for less effective treatments.
    Ginger G– I agree that the culture in Utah–and the way things are organized–creates a better, more rational medical culture.
    In parts of the country where hospitals and doctors are competing with each other, we know that the competition becomes descrutive–prices are higher and patient care is not as good because it’s so fragmented.
    Patients receive the best care when doctors and hosptials collaborate with each other.
    Under reform, doctors who join collaborative doctor/hospital groups will receive bonsues from Medicare. Increasinaly Medicare (and then the public plan) will be using financial carrots and sticks to encourage a less fragmented, less competitive medical culture.

15. My insurance company sends me dividends every year. Just in time for Xmas. Another benefit of my father’s life-long service in the military. It’s not for health insurance, though.

16. The non-profits can be just as bottom line as the for profits. At least the for profits are honest about it.
    At the bottom line non-profits, they talk all politically correct as a cover for hidden deals, executive enrichment, sex money and cars.
    Get a grip, many are just as bad, if not worse, in “academia.” And because of the hidden nature of a private non-profit, they can hide the shenannigans.

17. Ed
    I work for a non-profit.
    No sex, money and cars here. (Trust me, I would have noticed.)
    See my reply to Lisa which explains that “Drawing on a recent surplus, Intermountain recently refunded 6% of annual insurance premiums to the 460,000 members of its health plans”
    Has your insurance plan sent you a refund recently?
    http://www.longwoods.com/product.php?productid=20146

18. I am a long-time admirer of this blog, Money Driven Medicine, and the Dartmouth Health Atlas. Have you seen this article from the journal Circulation
    Green Tea

19. Awww…c’mon…because they wanted to keep the savings on their bottom line, that’s why.

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