I’m just grabbing a lot of very good information from Health Affair’s Carmela Coyle on the Maryland experiment on cost control and quality improvement:
midway through year two of a five-year demonstration period that Princeton University health care economist Uwe Reinhardt called “the boldest proposal in the United States in the last half century to grab the problem of cost growth by the horns,” Maryland, with hospitals leading the way, has made remarkable strides in pursuit of that Triple Aim. Included in this progress is significant headway on the agreement’s quality metrics and a savings to Medicare of $116 million thus far. And while there have certainly been challenges in making such a historic change, the progress is undeniable…..
For four of the five metrics, hospitals are exceeding the target (as an example, prior to the waiver’s passage, hospital revenue growth averaged more than 6 percent; in the first year, it was a scant 1.47 percent). On readmissions, while the rate of reduction is short of the goal, hospitals are reducing readmissions and reducing readmissionsfaster than the rest of the nation. Overall, the new model is proving successful at bending the cost and quality curves.
Maryland has reorganized how its hospitals get paid. They are spending less money while improving quality. This is amazing.
The change is how hospitals have been getting paid. They now get a fixed pot of money to take care of all patients on Medicare and Medicaid instead of charging for each service. A global budget means they only make money if the services provided are effective and efficient. Under the old fee for service regime, a patient who came back six weeks later complaining of the same problem was a revenue and profit center. Now that person is a cost center. It makes financial sense for hospitals and providers to solve the problem the first time and to do so in a manner that does not create additional problems (like hospital acquired infections).
I want to see another couple of years of data, but a model like this is an excellent pilot study of what the next round of healthcare reform could look like as we are getting coverage expansion done now, and then have to focus on systemic cost control in round 2.