Brent James, M.D., one of the industry’s most respected figures, gave his audience a rousing closing keynote address on May 17, as the Healthcare Informatics Executive Summit concluded at the Sir Francis Drake Hotel in San Francisco. James, the executive director of the Institute for Health Care Delivery Research, and vice president of Medical Research and Continuing Medical Education at the Salt Lake City-based Intermountain Healthcare, challenged healthcare IT leaders to help the industry reach new levels of capability, in order to address long-term financial challenges that could cripple the U.S. healthcare system and American society.
Using statistics and analysis to present a compelling case for an emerging healthcare cost catastrophe, James told his audience flatly that because of the emerging cost scenario, “The ultimate result will be severe cuts in healthcare provider reimbursement; there is no question about that,” James said. “When we passed the ACA [Affordable Care Act], one of the assumptions in the legislation, in order to make it politically palatable, was a dramatic drop in Medicare spending in the years following the ACA’s passage. No one believed that that was a real assumption at the time.” As a result, he said, the only way for federal legislators to make things work out will be mind-boggling payment cuts to hospitals and physicians in the near future. “If you think that the financial pressures in the past have been pretty intense, you ain’t seen nothin’ yet,” he intoned. “The financial pressures on healthcare are going to be dramatically more intense,” he emphasized.
What’s more, James said, the two main strategies that U.S. hospitals and doctors have used with some success to offset reimbursement cuts will soon reach the limit of their effectiveness. “First,” he said, most providers have been top-line revenue-focused. They’ve been focused on supplying more services to increase more revenues. They’ve been increasing the number and volume of their services, ordering more lab tests and imaging procedures, adding new and enhanced services, and so on, as well as consolidating to negotiate with purchasers and build market power.” Providers have also done what they could to eliminate obvious business waste in the system, though those strategies have not touched on core care delivery issues, he noted.
Inevitably, James predicted, some of the elements of accountable care programs—not only the Medicare Shared Savings Programs for accountable care organizations (ACOs), but also private ACO initiatives—will lead to a gradual shift towards full capitation in healthcare, as ACO development evolves forward through a series of stages that lead initially to upside-only shared savings, but eventually open onto upside-plus-downside shared savings agreements, disease-based capitation, and ultimately, full capitation without disease management, and full population-level care management responsibility on the part of providers.
This second-generation capitation wave will be fundamentally different from the previous experiments in capitated payment in the 1990s, James noted, because this time, providers will be in charge of, and responsible for, using care management tools and strategies to improve the health status of their patients and consumers, and manage their care; and, because this second wave of capitated arrangements will be facilitated by powerful information technology solutions that will transform care management.
Given all this, James told his audience, “Here’s the future: quality becomes the core business strategy in healthcare; the key is clinical management, and our name for clinical management is quality improvement,” James said. “And there will be two core elements to that core strategy: one element will encompass demonstrated performance for key clinical processes, and systems designed around clinical decision support. The second core element will be ‘bottom-line’ cost control and waste elimination.” And clinical information systems built into physician and clinician workflow will power that work, he predicted. Eliminating unjustified clinical practice variation, and eliminating medical errors, will be key areas of focus, and the use of such performance improvement methodologies as Lean management, will be essential to progress in that entire area.
What are the implications of all this for healthcare IT leaders specifically? Among the areas of innovation that will need to emerge, James said, are “activity-based” electronic health record designs; fully integrated, activity-based costing and inventory relief; support for knowledge management, and new knowledge generation; support for very rapid rates of change (such as the monthly updating of evidence-based care protocols); “services-oriented architecture” supporting a “rapidly evolving, app-driven world, as well as vastly improved interfaces to what he called “best-in-class sub-applications”; and, ultimately, possibly, some form of open-source electronic health record, and other clinical information systems.
James’s address concluded the proceedings of the third annual HCI Executive Summit, whose sessions encompassed a wide variety of presentations and panel discussions, organized around the broad themes of population health and analytics. In the coming months, Healthcare Informatics will announce the details of the programming of its next Executive Summit.