Health care is poised to undergo a revolution in productivity. With changes in organization and financing of care, we could improve productivity in medical practices, and for the system as a whole. The talk will describe how health care productivity can be increased, and the paths that might be taken with or without reform.

1. Will There Be A Productivity Revolution in Health Care? David M. Cutler Harvard University May 2010

2. What is reform about? Getting everyone covered Improving the value of care Addressing the US fiscal situation

3. The Value Agenda

4. Productivity has taken off in the US – except in health care Source: US Bureau of Economic Analysis

5. Dimensions of productivity Experience of receiving care Very poor service quality Clinical quality Substantially higher costs than needed

6. Service quality is poor Patients want to get better and to not worry about their interaction with the medical system They do not get that Lengthy wait times and times to appointment Limited ability to interact with providers (1/4 of people would like to e-mail MD but cannot) Lost/missing information 31% had lost results, had to repeat test, or got different advice from different doctors 6

7. Who will handle coordination? Primary care provider (medical home) PhRMA companies Insurer Google/Microsoft iPhone developers

8. Clinical Quality and Cost Premise: Medical care is inefficiently provided, and this both lowers quality and drives up cost. • Therefore, we should be able to improve quality and save money through system reform 8 8

9. Low clinical productivity Overuse of administrative personnel Too much spending on care Medical errors Source: US Department of Labor 9

10. Appropriate organization is essential to productivity Productive enterprises join information, money, managerial talent, and worker empowerment The Hallmark of Productive Businesses

11. IT: Data organization, retrieval, and analysis are key areas Patient encounters Cost-effectiveness analysis Learning which providers are better and worse 11

12. A framework for compensation Provider level payment Performance-based pay Payment for care coordination Payment across groups of providers Bundled payment Hospital picture

13. A Note On Organization In every industry where information has become a key commodity and performance-based compensation has become the norm, firms have gotten bigger Retail trade (Walmart, Target, Best Buy) Banking (Bank of America) Legal services 13

14. Consolidation is almost certain to occur Regional/national expansion by big provider systems Some of this is already happening Closer coordination of MDs with hospitals 14

15. What Success Would Mean?

16. How much could you take out of the typical hospital without affecting care? 25 percent savings amounts to 10 percent savings in total health spending.

17. Coordination between providers and insurers could save billions United Health Group: $300 billion to be saved over a decade. Source: US Department of Labor

18. The Importance of Organizational Change

19. What do the following people have in common? William Cook

20. They are health care people in the Forbes 400 20

21. What is striking? They are all stuff you use. They are not organizational changes

22. Retailers on Forbes list

23. The next healthcare billionaires Whoever figures out how to: Coordinate care Streamline medical practice Overhaul administrative processes Ensure proper care combinations Manage information