Reengineering USA Healthcare
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VIEWPOINT Reengineering US Health Care Ari Hoffman, MD Ezekiel J. Emanuel, MD, PhD I N AUGUST 1910, THE NEW YORK TIMES PUBLISHED AN AR- ticle about Paul Ehrlich, the Nobel Prizewinning Ger- man scientist, who had discovered a compound to treat syphilis—the “magic bullet.” 1 In August 2010, The New York Times published an article about Americans avoiding ba- sic and necessary health care because it is too expensive. 2 One hundred years after discovery of the first treatment for syphi- lis and nearly 3 years after passage of the Affordable Care Act, the core health policy question remains the same: is there a single solution to improve the quality of US health care while simultaneously controlling costs? In the treatment of many diseases, modern medicine has found treatments similar to Ehrlich’s discovery. However, for more complex chronic conditions, such as congestive heart failure and diabetes, multimodality approaches that integrate different medical therapies with lifestyle changes and comprehensive outpatient care are required. Likewise, health reform requires fixing a chronically dysfunctional sys- tem. While it is tempting to try to identify a single solution to this complex problem, the cure will require a multimo- dality approach with a focus on reengineering the entire care delivery process. Searching for a Single Solution Many experts have advocated myriad changes—health in- formation technology (HIT), pay-for-performance, chronic disease management, malpractice reform, comparative ef- fectiveness research, payment reform—to solve the health care cost and quality problems. Each of these changes is nec- essary, but none is sufficient. When implemented individu- ally, these changes almost invariably fall short of expecta- tions to improve quality and reduce costs. Chronic disease management is a good example. Accord- ing to a Congressional Budget Office (CBO) review, Medi- care funded 34 demonstration programs aiming to main- tain or improve quality of care while reducing costs primarily by preventing hospitalizations. These programs sought to achieve this goal through enhanced coordination of care for beneficiaries with common chronic conditions. After col- lecting 10 years of data, the results were disappointing. The nonpartisan CBO reported no net effect on hospital admis- sion rates or Medicare expenditures. 3 Once the fees in- curred by Medicare were accounted for, almost every pro- gram either cost more money or saved none. With regard to quality, these programs had “little or no systematic ef- fects on the process of care measures that were examined,” which included routine preventive and screening services based on guidelines. In other words, the programs failed to show a net effect on both quality and costs. Single, incremental changes, such as disease manage- ment systems and HIT, may have effects, but are not solu- tions. As another CBO report states, new electronic sys- tems can “make it easier to reduce health spending if other steps in the broader health care system are also taken to alter incentives to promote savings.... [but] by itself, the adop- tion of more health IT is generally not sufficient to pro- duce significant cost savings” [emphasis added]. 4 Present- ing HIT, disease management programs, comparative effectiveness, or payment reform as fundamental solutions distracts from the more comprehensive reorganization nec- essary to accomplish the dual goals of quality improve- ment and cost control. The Reengineering Imperative Reform to improve quality and reduce costs requires a mul- timodality approach. Hammer and Champy have defined reengineering as “the fundamental rethinking and radical redesign of business processes to achieve dramatic improve- ments in critical, contemporary measures of perfor- mance.” 5 Consider changes at IBM Credit, a subsidiary that finances the products sold by IBM. Initially, it took IBM Credit an average of 6 days to move from credit request through issuance, with 6 distinct steps, each performed by a different individual in a different de- partment. The company attempted to improve its effi- ciency by streamlining each individual task, but failed to re- duce turnaround time. Other fixes were tried. The company installed a control desk that logged each step, allowing sales representatives to track their deals. Ironically, this added Author Audio Interview available at www.jama.com. Author Affiliations: Department of Internal Medicine, University of California, San Francisco (Dr Hoffman); Office of the Provost and Department of Medical Ethics and Health Policy, Perelman School of Medicine and Wharton School, University of Pennsylvania, Philadelphia (Dr Emanuel). Corresponding Author: Ari Hoffman, MD, University of California, San Francisco, 505 Parnassus Ave, Room 987, San Francisco, CA 94143-0119 ([email protected]). ©2013 American Medical Association. All rights reserved. JAMA, February 20, 2013—Vol 309, No. 7 661 Downloaded From: http://jama.jamanetwork.com/ by a University of Utah User on 03/21/2013
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Great article by Ari Hoffman, MD and Ezekiel J. Emanuel, MD, PhD
Transcript of Reengineering USA Healthcare
VIEWPOINT
Reengineering US Health CareAri Hoffman, MDEzekiel J. Emanuel, MD, PhD
IN AUGUST 1910, THE NEW YORK TIMES PUBLISHED AN AR-ticle about Paul Ehrlich, the Nobel Prize�winning Ger-man scientist, who had discovered a compound to treatsyphilis—the “magic bullet.”1 In August 2010, The New
York Times published an article about Americans avoiding ba-sic and necessary health care because it is too expensive.2 Onehundred years after discovery of the first treatment for syphi-lis and nearly 3 years after passage of the Affordable Care Act,the core health policy question remains the same: is there asingle solution to improve the quality of US health care whilesimultaneously controlling costs?
In the treatment of many diseases, modern medicine hasfound treatments similar to Ehrlich’s discovery. However,for more complex chronic conditions, such as congestiveheart failure and diabetes, multimodality approaches thatintegrate different medical therapies with lifestyle changesand comprehensive outpatient care are required. Likewise,health reform requires fixing a chronically dysfunctional sys-tem. While it is tempting to try to identify a single solutionto this complex problem, the cure will require a multimo-dality approach with a focus on reengineering the entire caredelivery process.
Searching for a Single SolutionMany experts have advocated myriad changes—health in-formation technology (HIT), pay-for-performance, chronicdisease management, malpractice reform, comparative ef-fectiveness research, payment reform—to solve the healthcare cost and quality problems. Each of these changes is nec-essary, but none is sufficient. When implemented individu-ally, these changes almost invariably fall short of expecta-tions to improve quality and reduce costs.
Chronic disease management is a good example. Accord-ing to a Congressional Budget Office (CBO) review, Medi-care funded 34 demonstration programs aiming to main-tain or improve quality of care while reducing costs primarilyby preventing hospitalizations. These programs sought toachieve this goal through enhanced coordination of care forbeneficiaries with common chronic conditions. After col-
lecting 10 years of data, the results were disappointing. Thenonpartisan CBO reported no net effect on hospital admis-sion rates or Medicare expenditures.3 Once the fees in-curred by Medicare were accounted for, almost every pro-gram either cost more money or saved none. With regardto quality, these programs had “little or no systematic ef-fects on the process of care measures that were examined,”which included routine preventive and screening servicesbased on guidelines. In other words, the programs failed toshow a net effect on both quality and costs.
Single, incremental changes, such as disease manage-ment systems and HIT, may have effects, but are not solu-tions. As another CBO report states, new electronic sys-tems can “make it easier to reduce health spending if othersteps in the broader health care system are also taken to alterincentives to promote savings. . . . [but] by itself, the adop-tion of more health IT is generally not sufficient to pro-duce significant cost savings” [emphasis added].4 Present-ing HIT, disease management programs, comparativeeffectiveness, or payment reform as fundamental solutionsdistracts from the more comprehensive reorganization nec-essary to accomplish the dual goals of quality improve-ment and cost control.
The Reengineering ImperativeReform to improve quality and reduce costs requires a mul-timodality approach. Hammer and Champy have definedreengineering as “the fundamental rethinking and radicalredesign of business processes to achieve dramatic improve-ments in critical, contemporary measures of perfor-mance.”5 Consider changes at IBM Credit, a subsidiary thatfinances the products sold by IBM.
Initially, it took IBM Credit an average of 6 days to movefrom credit request through issuance, with 6 distinct steps,each performed by a different individual in a different de-partment. The company attempted to improve its effi-ciency by streamlining each individual task, but failed to re-duce turnaround time. Other fixes were tried. The companyinstalled a control desk that logged each step, allowing salesrepresentatives to track their deals. Ironically, this added
Author Audio Interview available at www.jama.com.
Author Affiliations: Department of Internal Medicine, University of California, SanFrancisco (Dr Hoffman); Office of the Provost and Department of Medical Ethicsand Health Policy, Perelman School of Medicine and Wharton School, Universityof Pennsylvania, Philadelphia (Dr Emanuel).CorrespondingAuthor:AriHoffman,MD,UniversityofCalifornia, SanFrancisco,505Parnassus Ave, Room 987, San Francisco, CA 94143-0119 ([email protected]).
©2013 American Medical Association. All rights reserved. JAMA, February 20, 2013—Vol 309, No. 7 661
Downloaded From: http://jama.jamanetwork.com/ by a University of Utah User on 03/21/2013
to turnaround time and required more administrative per-sonnel at higher costs, a similar effect that electronic medi-cal records (EMRs) have in some settings.
Those early efforts were well-implemented incrementalreforms that honed each step to a matter of minutes, butoverall efficiency actually decreased. The processing sys-tem was broken.
A new management team reengineered IBM’s system, de-veloping a generalist “deal structurer” position to managethe entire process with the support of a new computer sys-tem and available specialists capable of handling the diffi-cult cases. Surprisingly, the average total time plummetedfrom 7 days to 4 hours and the number of deals increased ahundred-fold.
The take-home lessons include fundamentally rethink-ing the overall process rather than focusing on individualtasks; abandoning long-established procedures in favor ofan entirely new approach; and entrusting individuals withstandardized processes while providing them with the nec-essary tools and backup specialists for challenging cases.
Reengineering for Health CareThree types of businesses undertake reengineering: (1) thoseat the peak of their game with ambitious executives, (2) thosethat reengineer to stay ahead, and (3) those in deep trouble.The US health care system is in trouble, and rather than singlereforms, it needs reengineering. For many reasons, this willnot be easy: focusing on the entire process of care ratherthan a single intervention is more difficult to understandand rigorously evaluate; the pressure to prove effective-ness through evidence-based research methods leads to theidentification of individual variables rather than multimo-dality thinking; and systems-level changes require broadbuy-in and culture change.
Reengineering may be difficult, but seeking single solu-tions for the health care system is likely to fail, and failurewill continue to fuel opposition to health reform. Individu-ally implemented changes are divisive rather than unifyingwith respect to the stakeholders in health care, and they jeop-ardize the fundamental rethinking of health care delivery.
Reengineering is possible. As with the IBM example, theprinciples of successful change can be applied to health care.Successful reengineering proceeds in an orderly manner: re-think, redesign, and then apply necessary tools. Isolated so-lutions like disease management approach the problem back-ward, applying tools to a faulty delivery system. Fundamentalrethinking will require addressing broad questions of whoprovides health services, how services are paid for, and howmuch society should pay. Radical redesign will involve sys-
tems overhaul in the domains of education, research, infra-structure, and public health in addition to new systems forhealth care delivery and payment. Application of necessarytools like EMRs, decision support, malpractice reform, andcare coordination build on a solid foundation.
As the IBM example makes clear, reengineering of thehealth system will require a focus on health outcomes ratherthan serial treatments by clinicians, overall value of healthinterventions, and changes to all domains affecting health.This starts with the patient as the end-user of health care,and it ends with a hundred-fold increase in productivity.Like IBM, US health care can harness the power of a gen-eralist heading an interdisciplinary team of clinicians. Theywill need reliable and actionable EMRs and standardized,evidence-based processes of care for common problems withaccess to specialists for challenging cases.
In addition, clinicians need to abandon their long-established approach of caring for patients in the hospitalor the office. They have to provide constant access to a cli-nician who knows the patient and encourage communica-tion with whatever mode patients are comfortable with—telephone, e-mail, or office visits. Patients spend most of theirtime away from the health care system and the focus has tobe one of managing their health literally where they live withmuch more wireless monitoring, electronic and phone vis-its, at-home care, and patient engagement.
No single change will solve the health care value prob-lem. With a focus on reengineering, the nation may suc-ceed not only in implementing systematic health care re-form, but reform that actually improves the health ofAmericans while simultaneously controlling unsustain-able costs.
Conflict of Interest Disclosures: Both authors have completed and submitted theICMJE Form for Disclosure of Potential Conflicts of Interest. Dr Emanuel reportedreceiving payment for speaking engagements unrelated to this work.Online-Only Material: Author Audio Interview is available at http://www.jama.com.
REFERENCES
1. Bachalar N. Paul Ehrlich, 1908. New York Times. February 1, 2010. http://www.nytimes.com/2010/02/02/health/02first.html. Accessed January 7, 2013.2. Pear R. Economy led to cuts in use of health care. New York Times. August 16,2010. http://www.nytimes.com/2010/08/17/health/policy/17health.html. Ac-cessed January 7, 2013.3. Nelson L. Lessons From Medicare’s Demonstration Projects on Disease Man-agement and Care Coordination. Congressional Budget Office Working Paper. Janu-ary 2012.4. Orszag P. Evidence on the Costs and Benefits of Health Information Technology.Congressional Budget Office; May 2008. http://www.cbo.gov/sites/default/files/cbofiles/ftpdocs/91xx/doc9168/05-20-healthit.pdf. Accessed January 7, 2013.5. Hammer M, Champy J. Reengineering the Corporation: A Manifesto for Busi-ness Revolution. New York, NY: HarperCollins Publishers; 2003.
VIEWPOINT
662 JAMA, February 20, 2013—Vol 309, No. 7 ©2013 American Medical Association. All rights reserved.
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