Wednesday, August 12, 2009

Health Innovators Series - Simeon Schwartz, MD on the

Dr. Simeon Schwartz is president and founder of The Westchester Medical Group, a 150 physician multi specialty group practice. He is a board certified hematologist and medical oncologist. After receiving his undergraduate education at the Massachusetts Institute of Technology and his Medical Degree from Yale University, he completed his residency at Cornell –New York Hospital and a fellowship at Memorial Sloan Kettering Cancer Center. Under Dr. Schwartz’ leadership, The Westchester Medical Group was an early adapter of electronic health records and has continued to use health information technology to transform the practice’s delivery system. Their unique focus on patient centered, coordinated care has led to dramatic improvements in clinical efficiency, total cost and quality measurements.

Why are you excited about being involved in an X-Prize?

I’m excited to be involved in the X-Prize because the United States has the finest healthcare system in the world, but it has come to a point where the costs are unsustainable, and many patients are not getting the quality and the efficiency of care that they should. In other words, we’re not maximizing the opportunity to get the best care for the largest number of people at a price that we can afford as a society.

What is your general point of view on health care reform?

As a result of our fee for service health care model focusing on acute episodes of care, we have created a cost prohibitive system that fails to deliver evidence based services and high quality outcomes. Reform will require transformation of our payment system with focus on rewarding quality based outcomes, provider incentives for cost control, and enhanced preventative services. Development of national metrics for both cost and quality will allow reimbursement to be tied to value. Accountable care organizations with the governance and leadership to manage significant patient populations should be the focus of a reformed delivery model.

What challenges do you face with the current payment system?

Some of the challenges of the current system of payment is that when the primary model is fee for service, the incentive for the physician is to provide as many services as possible. Unfortunately, many of those services are not reimbursed based on the quality of those services nor on the outcome achieved. Alternatively, some of the markets in the country pay physicians flat fees in the form of capitation. The incentive in those payment models is to minimize the number of services that are provided. A good payment model for any healthcare system would maximize the number of patients getting the right service for the right condition at the right time within the right payment structure. Currently in the United States, the variation on the number of services in different communities and the different patterns of care could not possibly be explained by the biological differences between the patients.

What challenges do you face in providing care to patients?

Unfortunately, we’re facing increasing challenges in providing care to our patients. Our goal is to provide coordinated, efficient, quality care, but the current system impedes that goal in many ways. An example is is that it’s hard to provide efficient care when you have to spend a lot of your staff time and money obtaining pre-certifications and pre-authorizations from insurance companies for services that are obviously needed. In addition to that, the patients frequently do not understand their own benefit plans, and physicians have to take time trying to explain to patients why this service or this drug is not covered for or by their insurance company. When you add up all of our costs for administrative activities that are largely wasted, we’re spending more than 20 percent of our revenue dealing with the cost of administering just a small portion of the healthcare system.

Additional challenges that we face include the poor flow of clinical information from one group of proivders to another, even within our own community. Within our practice, which is paperless and filmless, the flow of information all takes place within our IT systems. When patients are seen by outside providers from our practice, which is common, we frequently have a great deal of difficulty getting access to that information or even sharing our own information with them. In addition, although we have a lot of desire to continue to improve our quality programs and invest in additional quality programs, the current fee for service reimbursement model really provides funding for such activities.

What challenges do you face with administration, paperwork and reimbursement?

The challenges of our paperwork and reimbursement from their insurance companies is largely based on the different rules that each carrier has, and in our practice setting, we deal with as many as 50 or 70 different insurance companies. In order to train our staff, our physicians and our patients to deal with that complexity, it adds a great deal of waste to the system that’s not productive. I’m very concerned that we continue to waste this much money; money which could be used toward quality programs and improved access for patients who are not insured.

What are the challenges faced by the healthcare industry as a whole?

Healthcare in the United States is facing many challenges besides the compensation model. In order to deliver excellent care, we need to invest in newer, more modern facilities with more equipment. The capitalization necessary to do that requires a healthcare organizations to be profitable so that they have funds to reinvest. Many of the healthcare organizations in this country at this time, particularly New York state, are not profitable. Very importantly, we need to transition care from the expensive inpatient setting to more efficient, less expensive outpatient settings. This model has been successful in many parts of the United States and in other parts of the world. However, it requires enough money to be able to close some of the older facilities that are less efficient on the inpatient side and construct new facilities. There are substantial investments necessary in information technology and healthcare analytics, which is the statistical analysis of the information so that we know precisely what is going on in terms of whether patients are achieving the quality outcomes of care that we expect.

How do you think we should look at the healthcare system differently?

Given the recent economic challenges, the healthcare system will be under greater stress as patients seek to find more value in healthcare services. In an economic sense, value is usually defined as quality divided by price. As you increase quality, you’re increasing the value of the service if the price remains the same. Alternatively, if you keep the quality the same and lower the price, you also increase value. What the public of the United States wants is really value driven healthcare, and the way you can increase value is both by lowering price while simultaneously improving quality. Our society would be much better off if we were more value conscious in our healthcare purchasing. Patients need access to transparent pricing, and they need meaningful data about quality so they can make informed healthcare decisions. Providers should be rewarded both on quality and on price efficiency.

We’ve watched around the country the success of large retailers such as Wal-Mart with their value based pricing. Their concept was that the consumer, given the opportunity, would be inclined to purchase goods and services where they could buy the same item at a lower cost. Imagine that you have a standard item like a container of Tide detergent. The consumer can go to several stores and see what that price is. They should be able to do the same in healthcare. They should be able to know what the standard product is, and they should be able to know what their costs are for that product. It’s easy to assume that the consumer will not make the right decision, but frequently in healthcare, the consumer has no information that’s useful to make the right decision.

Another notion is the idea of the coordination and organization of care. The United States has a large number of medical practices with one or two physicians. It is analogous to the situation before large scale retailers came to the United States, and some of my friends pejoratively refer to this as the "Walmart-ization" of medicine. But one of the advantages that we’ve seen in many industries, whether it be package delivery like UPS or FedEx or in the auto industry and other service industries, is that the consolidation of the number of players in the market results in improvements of efficiency. In healthcare, we have been impressed by the opportunities for consolidation, for improvements of information systems, for improvements of efficiency, for coordination of service, and part of the redesign of healthcare really should encourage the further consolidation of medicine, not to the level of monopolies and cartels but so there’s meaningful competitions of organizations that are large enough to be adequately funded and capitalized to be effective competitors.

Why do you think an X PRIZE is a good way to address those challenges?

I believe that a prize is a good way to address some of the challenges in the healthcare payment system because of the complexity of the system. When you have a system that is in excess of 2 trillion dollars a year, any change causes a large number of winners and losers. In our politically charged world, both of those parties will lobby aggressively both Congress and companies and other entities to make sure that they are not economically disadvantaged by the changes. The only meaningful way that we will achieve fundamental change is to reach a consensus largely supported by the public for meaningful change. I believe that the prize generates a great deal of interest in the redesign. In this political season where much of the conversation has been about payment for the uninsured, and very little of the conversation has been about the redesign of our delivery system, we need to refocus the public on the redesign of our delivery system and on improving the value in healthcare.

What outcomes would you like to see as part of the Healthcare X PRIZE?

There are several outcomes that I’d like to see from this process. First of all, I’d like to see agreement on the metrics of quality care so that there can be a standard benchmark. A lot of progress has been made with the specialty to societies defining what is optimal care. In medicine, there’s still an art, and not everything can be put in the form of a measurement, but a great deal of medicine does lend itself to measurements, and performance and outcomes can be determined for many of our common illnesses and for many of the parameters of good, preventive primary care. I believe that the country will be better off if we’re able to have a value based compensation system. I believe providers should be rewarded for their quality and their efficiency, not for their number of services. And finally, I believe if this project is successful, the United States will continue to have the finest healthcare system in the world.
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