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Remember the song, “We’re # 37“? It came out in 2009, the beginning of the debate about the ineffectiveness of the American healthcare system and the need for change. The video went viral, more because of the catchy tune and cute visuals, I’m afraid, than for the message. Here we are 6 years later and even with the Obamazation of health care our system is still last in the industrialized world. We still do not offer access to all of our citizens (witness the 24 states that deny access to the working poor), Our system remains very inefficient with 30% of spending wasted on inefficiency and unnecessary care. We deny people access to measure proven to extend lives and do so in a manner that punishes those of color disproportionately. Worse, we do it in a manner that costs twice as much as other industrialized countries, with most of that money coming from taxpayers.  .

As a part of a class I am taking, I have been reading a lot about change management. This weekend, I read John Kotter’s book Leading Change. In this book he identifies 8 components necessary to change an entrenched system in the business world:

  1. Establishing a Sense of Urgency (people need to sense that the platform is on fire before they jump into the ocean)
  2. Forming a Powerful Guiding Coalition
  3. Creating a Vision
  4. Communicating the Vision
  5. Empowering Others to Act on the Vision
  6. Planning for and Creating Short Term Wins
  7. Consolidating Improvements and Producing Still More Change
  8. Institutionalizing New Approaches

Why are we still last? It appears that we skipped the first step. Most people never use healthcare at all. thus they are unaware that the platform is burning. Or, even if they do, it is for an urgent problem (my throat hurts, I have a cough) and our system is really good at getting folks in and out for self limited problems in a very expensive manner ($111 to tell you “It’s a cold, live with it“). For the 20% who need our system a lot, the system has moved most of the costs to the taxpayer, so the true costs are hidden. Of course, this is after the family has bankrupted themselves but the expression “blood from a turnip” comes to mind.

Turns out that part one of the Obamazation was “getting all people access” and that wasn’t even in Kotter’s book. Part two, “transform the system”, started last week. Sylvia Burwell, secretary of Health and Human Services, announced last week a series of sweeping Medicare payment changes.  In effect, the platform has been set on fire. The changes moving 50% of the money from fee-for-service to quality by 2018 with an interim goal of 30% by 2016. What does this mean?

[The adminstration] plans to tie 85 percent of all Medicare payments to outcomes by the end of 2016 — rising to 90 percent by 2018.

A subset of those payments — 30 percent in 2016 and 50 percent in 2018 — will have to be part of what the government calls “alternative payment models.” These are contracts where groups of doctors and hospitals and pharmacists — a big enough network, essentially, to cover a patients’ whole spectrum of health care needs — get a lump sum of money to take care of a set number of patients.

This, in addition to the 40% of commercial contracts that currently include a value component, means that over half of all dollars in health care will be contingent on quality. Is that smoke I smell?

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