Articles, PSQH December 7, 2010

Show Me the Money

by Barry P Chaiken, MD

The most important lesson in medical care comes from a bank robber who stole more than $2 million and spent more than half his life in jail. Named after Willie Sutton, the one of the most prolific bank robbers in history, Sutton’s law states that when diagnosing, one must consider the obvious. Diagnosticians should first conduct those tests that will confirm the most likely diagnosis, and order them in a sequence that has the highest probability of delivering an accurate diagnosis. This approach also minimizes unnecessary tests and reduces costs.

Sutton’s law grew out of a famous response to a reporter’s question attributed (perhaps falsely) to Sutton. When asked by a reporter why he robbed banks, Sutton allegedly replied, “because that’s where the money is.” In reality, he probably said, “Go where the money is… and go there often.”

More than 20 years ago, payors and providers experimented with capitated arrangements where IPAs—Independent Practice Associations often constructed from a broad swatch of primary care and/or specialty physicians—contracted with payors to provide services to a population of insured individuals. Although numerous variations of capitation were tried during that time, capitation arrangements did not succeed in reducing costs, increasing provider compensation, or improving quality of care. Many physicians continued to over-utilize services.

Like so many ideas in healthcare, the old, after a time of dormancy, becomes the new. The excitement around accountable care organizations (ACOs) and patient-centered medical home projects is based upon much of the same thinking that excited healthcare policy makers 20 years ago. With ACOs and patient-centered medical homes, primary care physicians would be responsible for both the care and cost of care for patients assigned to them. Those physicians able to keep their patient population healthy while reducing the cost burden associated with treating their population would share in the savings to the payor.

What our healthcare system will look like at the end of 2014, when the final provisions of the Affordable Care Act of 2010 become active, may be fuzzy today, but a rough picture of it can be drawn by following the flow of financial incentives. By 2014 the effects of removing lifetime caps on medical costs, eliminating the process of denying coverage due to pre-existing conditions, emphasizing the use of proven disease treatments, and reducing reimbursement for preventable medical errors and readmissions shifts the care incentive from providing more care to providing only care that is needed.

Healthcare information technology will play a critical role in delivering these new models of care delivery and financing. Only through robust information technology can we track and report on performance, offer clinical decision support to enhance safety and quality, and monitor the health of populations of patients. Healthcare information technology offers the critical tools to move clinicians from their focus on episodic care, where financial incentives were based upon piecework, to much broader population-based care, where financial incentives promote the delivery of favored clinical outcomes that efficiently utilize resources. Therefore, to understand the current and future changes to our healthcare system, you need only to know where the money is and where it is flowing.

Excerpts from: Show Me the Money? PSQH, November/December, 2010


Leave a comment

This site uses Akismet to reduce spam. Learn how your comment data is processed.