Editor's Corner: Sutton's Law and the Direction of Health Care in the Next Decade
Willie Sutton was a bank robber who eventually spent more than half of his adult life in prison. When asked by a reporter why he robbed banks he replied, “Because that’s where the money is.” In this era of health care, Sutton’s Law contributes to the thinking of most health care executives who are responsible for the functioning of a health care system, and who see their goal as making enough money from their health care operations to at least break even, and in many cases, earn a profit.
This goal leads the executives to seek high-return procedures and to hire physicians with the potential to earn significant returns from their clinical activity. These physicians tend to be proceduralists who perform surgical procedures or diagnostic procedures, such as image-based, noninvasive procedures or invasive procedures like cardiac catheterization and interventions.
Our health care economy works by providing services for patients to improve their health. The current fee-for-service payment system tends to emphasize procedural medicine, which provides a set payment for a well-defined procedure or combination of procedures. In contrast, there is limited financial reward for the physicians who want to provide care management as a health manager or health coach.
"Transitioning from an ingrained volume-based system to a value-based system may require an entire generation to accomplish."
The procedure-based approach allows physicians and hospital administrators to budget their financial activities based on the number of procedures anticipated in a given month. Payers can budget their costs for providing care too. This fee-for-service system has worked for many decades. Both providers and payers can anticipate their needs within this system, and accounting only requires identification of the procedure by an established code that also provides the approved payment.
In this system, patients, providers and administrators can speak a common language. A patient can say they had their gallbladder removed, the physician will call it by its Latin name (cholecystectomy), and an administrator can attach the established code. All three can communicate their information as needed in their own version of a medical language.
Yet, this fee-for-service system seems to have some flaws. The most concerning is the high cost of health care in the United States compared with many other modern, well-developed countries that have government-funded health systems. The fee-for-service system, despite higher costs, serves our citizens well who have or can afford health care. The dependence on employer-funded health insurance is a way of life in the United States. It works well for many millions of employed citizens who receive their health care insurance through an employer. Health insurance support remains high on the agenda in most employee union contract negotiations with management.
Individuals are concerned about maintaining a good level of funding from employers for health insurance, while employers are concerned about the costs. The rising costs of health insurance and the perpetually increasing costs of health care, and the economic consequences in terms of its proportion of the national budget, has spurred serious efforts to reduce costs, reduce the rate of growth of health care costs, and provide affordable health care to a broader number of Americans.
One attempt to improve both cost and quality within our health care system is embodied in the Medicare Access and CHIP Reauthorization Act (MACRA). The basic tenet of MACRA is to transition, over some years, from a volume-based to a value-based payment system that rewards quality and outcomes.
The Centers for Medicare and Medicaid Services (CMS) is designing the system for this transition from volume to value. It will affect every health care provider in the United States. In 2018, the shift will begin, after a year of data gathering to establish norms for four performance categories: quality, resource use, practice improvement and meaningful use of electronic records. A scoring system will be established and all health care providers will be required to report their data to CMS, receive a performance score, and be compared with their peers in the four categories.
The overall performance score will determine whether a practitioner receives a bonus or a penalty in their Medicare payments. The complexity (and enormity) of this change requires the transition to be rolled out over a few years. While there will be some performance measures incorporated in the next two years, the financial impact of the changes will be small initially and then slowly increase. Our fee-for-service world is not likely to disappear quickly. The merit system will take many years to implement.
We should all be thinking of how to incorporate the quality measures into our practices, so that we can report the data when it becomes necessary. Transitioning from an ingrained volume-based system to a value-based system may require an entire generation to accomplish. We all understand that the shift will be slow, and are prepared to participate, but it’s not a foregone conclusion that the new system will work.
Alfred A. Bove, MD, PhD, MACC, is professor emeritus of medicine at Temple University School of Medicine in Philadelphia, and a former president of the ACC.
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