Karen Davis

Toward a High Performance Health System

VTR Date: December 17, 2005

Economist Dr. Karen Davis gives a 2005 health care progress report.


GUEST: Karen Davis, Ph.D.
AIR DATE: 12/17/2005
VTR: 10/31/2005

I’m Richard Heffner, your host on THE OPEN MIND.

And when Dr. Karen Davis, my guest today first joined me here at the very turn of our new century – late in December, 2000 – she spoke with characteristic verve and determination about what she called “A 20/20 Vision for American Health Care” by the year 2020.

Well, even then my guest – a nationally recognized economist, with a distinguished career in public policy and research, President of the Commonwealth Fund, a major national philanthropy heavily engaged in independent research on health and social issues – optimistically listed five basic features for “A 20/20 Vision for Health Care” … 1) automatic and affordable health insurance for all; 2) access to health care for all; 3) patient responsive health care; 4) information driven health care, and 5) commitment to quality improvement.

Yet now, in the fall of 2005, already a quarter of the way toward her earlier “20/20 Vision for American Health Care” and even as the Commonwealth Fund launches a distinguished and quite high powered new Commission directed “Toward a High Performance Health System”, the Fund itself recognizes how critical this particular health care junction is. “Double-digit growth in health insurance premium, loss of insurance coverage, and a ‘chasm’ in the delivery of safe, effective medical care affect millions of American families and businesses.”

In addition, Karen Davis herself says, “nearly everyone with intimate knowledge of our health system acknowledges that it is plagued by waste, duplication, needless and costly errors, and fragmented insurance administration.”

Respectfully then and eagerly, but surely not optimistically, let me ask my guest how in the world the Commonwealth Fund’s new Commission is going to deal with these harsh and seemingly intractable realities. I know that’s a tough question, but I think it’s a fair one.

DAVIS: Well, you’re right, a number of things have gotten worse in the last five years, certainly the numbers of uninsured have increased. So today we have about 46 million uninsured and about five years ago it was about 40 million uninsured. So we’re going in the wrong direction on insurance coverage.

On the other hand, I do see some positive developments in terms of quality. I think we’re more aware of what our deficiencies are in the quality of care. We’re getting better at measuring it and we’re starting to get better data. What’s the hospital quality in this country? And also at the individual physician level, so progress … one step forward … one step back. But a lot to be done.

HEFFNER: Well, that’s better than one step forward, two steps back.

DAVIS: That’s right.

HEFFNER: What do you anticipate will happen with this Commission?

DAVIS: Well, the Commonwealth fund is very committed to a Commission on a High Performance Health System to really look not just at quality or medical errors, or even the cost of health care, but look at it all together. How are we doing about ensuring access to care for everyone? Not just those with good insurance coverage. How are we doing about improving quality of care and making care safe for patients? How are we doing about coordinating care? One of the major problems we see is that patients with complex problems go from doctor to doctor, hospital to hospital trying to find all of the care that they need, but no one’s really helping them navigate this very complex health care system.

HEFFNER: How do you coordinate in that kind of problem?

DAVIS: Well, I think for one thing it’s important to have a team approach to care and to use nurses more extensively than we do now; to follow up when a patient’s discharged from the hospital; maybe even make a home visit … see if they understand the medications they’re supposed to be taking. If they have a follow up appointment with their doctor, make sure nothing falls through the cracks.

We’re find far too many patients wind up in the hospital again in a few days, a week … 30 days later because they haven’t understood the instructions that they’ve been given and aren’t able to help manage their own health condition.

HEFFNER: That makes it much more expensive, doesn’t it?

DAVIS: You know our studies find that these nurses actually save money. We funded an evaluation of using nurse-practitioners to follow patients with congestive heart failure, home from the hospital. And yes, we have to pay for that nurse practitioner visit at home, but there’s a 35% reduction in the patients that are re-admitted to the hospital, a 35% reduction in the total cost of care. So it’s truly a … early intervention that pays for itself for the long run.

HEFFNER: Where is the reluctance to do those common sense things?

DAVIS: Well, we have a very fragmented health care system and there’s a lot of worry if we pay for a nurse visit, we don’t now pay for or if pay for a pharmacist to monitor whether patients are refilling their medications and taking them appropriately. That will add to cost. We’re not willing to say they’ll be offsetting savings from reduced hospitalization or reduced Emergency Room visits.

So one of the tasks for this new Commission is to really look at the inner connections among services and where there are opportunities for greater efficiency in terms of better quality at lower cost by having an investment in primary care, preventive care, following patients, coordinating care and stopping conditions from getting to the high cost condition that requires them to be back in the hospital.

HEFFNER: Now when you were here in 2000, you could refer to a wonderful, generous surplus that we had in this country, and you could make your plans or dream your dreams about adequate health care in those terms. Today what’s the situation?

DAVIS: Well, the budget reality is quite different today. In the year 2000 we had a ten year projected surplus of 5.6 trillion dollars. Today we’re talking about several trillion dollars of deficit … no surplus.

And our estimates are that it would cost about a trillion dollars to provide health insurance coverage to everyone, something on the order of $70 to $100 billion dollars a year.

So certainly there would have to be some new money to provide coverage and insure the adequacy of that coverage for everyone and to guarantee that no one loses coverage and falls through the cracks.

On the other hand, there are things we can do to save money. And that’s why shifting resources into better preventive and primary care … the low cost services that are often under-utilized leading to conditions getting out control.

HEFFNER: Why? Why are we not wise enough to have recognized that has as a possible … not way out of our situation … but an ameliorative action?

DAVIS: Well I think we get what we pay for in the health care system. We pay a lot for doing back surgery. We don’t pay for physical therapy to keep somebody from needing that surgery or give people information on what are the risks and benefits of different treatment options that are available to them.

We pay a lot for hospital stays, but we don’t pay to keep people out of the hospital. So what we need to do is to really move toward what we think of as “pay for performance”. And that’s starting to gain ground. Not just the old “pay for services rendered”, but paying for results …


DAVIS: Is the hypertension controlled? Is the diabetes controlled? Is the cholesterol controlled? Pay for results.

HEFFNER: I did wonder, when I saw that phrase “pay for performance”, just precisely what you mean and how you feel it can be accomplished.

DAVIS: Well, there are about a hundred different private plans out there right now that are rewarding in some way improvement for quality. A study that the Commonwealth Fund paid for evaluated those incentives and found, for example, that physicians that got bonuses for making sure that patients were getting Pap smears had a higher rate of that preventive service.

So these are being tried in a variety of ways. They’re just not being tried on a large scale. The Medicare program has a very interesting demonstration, where they’re paying 10 physician group practices extra money if they control chronic conditions like diabetes and congestive heart failure and if they slow down the rate of total health care spending.

Then they get to keep 80% of the savings, if they’re effective in holding the growth in costs and meeting quality targets.

HEFFNER: You have no problem with that entrepreneurial approach?

DAVIS: Well, I think what we have in our current system is an entrepreneurial approach, but it rewards the wrong thing. It rewards patients getting sick and providing services to them. It doesn’t reward keeping patients well and not requiring those kinds of complex procedures and high cost services.

So I think it’s a matter of tilting the system more in the direction of prevention and primary care and rewarding, particularly as our Baby Boom generation ages, keeping those chronic conditions under control. That’s really the secret. We know that large numbers of people have diabetes, large number of people have high blood pressure; they have high cholesterol. The real secret is intervening early and keeping those conditions under control.

HEFFNER: And who controls that secret? Who has it in her or his pocket?

DAVIS: Well, I think everybody can contribute to the solution. I think certainly …

HEFFNER: The people watching us?

DAVIS: Yes. Absolutely, everybody can contribute to the solution. First of all I think the government … with its programs like Medicare for the elderly and disabled can take a leadership role in putting information on quality of care into the public domain, up on the Internet, so people know what the experience is at different hospitals, for different physicians, different nursing homes. So information is key.

Secondly, the government can change the way it pays, it’s part of the problem of paying for doing more procedures rather than paying for effective control of conditions. So that’s something.

Private insurance certainly can do this. Some companies, for example, are identifying surgeons, rather specialists that provide high quality care at lower total bills, and rewarding those by putting them into their preferred network. So that’s a solution.

I think patients are very much a part of the solution. Getting information on how they can manage their conditions. They should insist that their doctors give them what’s called a “Self-Care” plan so they know how often they ought to be going back to the doctor; that they ought to be having their feet checked or their eyes checked if they have diabetes. What they can do to be partners with their physicians in their care and to help manage their own conditions.

HEFFNER: Now a sea change obviously has taken place, if physicians are willing to be partners instead of “Herr Doctor”. Has this taken place in the years that you have presided over the Commonwealth Fund?

DAVIS: Well, there’s some promising developments. First of all there are physicians that are participating in things called “Advanced Access” to change their practice so that you can get an appointment with your doctor today or tomorrow if that’s what you need, instead of having to wait six weeks, eight weeks to get care. So that’s spreading.

HEFFNER: But isn’t that for the rich?

DAVIS: No. In fact, we have funded in New York City an organization to work with low income, primary care clinics to clear out that backlog, streamline their operations, take care of things over the phone that can be taken care over the phone, and they, in fact, can see patients a lot faster.

Some of the techniques are pretty simple. It’s, it’s starting the day with all of the records and all of the supplies that you’re going to need all day long, so you don’t spend time running around saying “Where is this? Where is that?”.

So this, this has been demonstrated and it’s spreading around to other countries, as well. This whole notion of, of let’s re-design office visits so that we can get patients in and out in 45 minutes instead of three hours and we can change our scheduling so that we can accommodate patients.

So that’s important. First … access to primary care. Get these simple things dealt with quickly and efficiently.

The second thing that I find very encouraging is called shared decision-making, the development of videos on conditions for everything from low back pain to prostate conditions so that patients know what their treatment choices are. And many times, when they really understand the risk and benefits of different ways of dealing with the problem, they’ll pick one that’s both got better outcomes and lower costs.

HEFFNER: Is there any concern that patients involved in this way mislead themselves … and I’m not now talking only about advertising … use this drug, use that drug … but rather doing the things that I do, unfortunately …and I come a’cropper often with that … looking on the Internet for this, that or the other thing and then getting scared to death, certainly scared out of my wits … my wits being what I need when I deal with my doctor. Isn’t that a concern for you?

DAVIS: Well, I think people seeking information is good. And the Internet makes that possible, but what you really and truly need is a long-standing relationship with a good primary care physician who understands you, understands your condition. And unfortunately, only about a third of people in the US have been with the same doctor for five years or more.

We went through a whole experiment with managed care that had people changing their doctors every year because their insurance plan changed. We find in other countries that 60% of people have been with the same doctor at least five years. So continuity of care, we haven’t stressed that in the US health care system, and we need to do that.

We also need to improve communication between patients and physicians. A lot of physicians think they’re doing a good job, but they don’t ever ask patients to rate their care. Only about a third of primary care physicians, for example, have feedback from patient surveys that say, “Yes, I got the answers to the questions. Yes, the doctor understood me. I understood the doctor. I didn’t leave the office with questions unanswered.”

But, too often, that communication fails. And what we find, when that communication fails … the patient walks out of that office and a fourth of them don’t do what the doctor told them to do.

HEFFNER: A fourth?

DAVIS: They don’t fill the medication, they don’t go to a specialist that the doctor told them to do. And the physician has no information system so that he even knows that the patient didn’t follow through with the advice that he gave the patient. So improving communication, improving trust and having systems that follow and make sure that patients get the recommended treatment, is very important.

It’s also important that the doctor and the patient agree. So that the doctor says, “You know, is this something you plan to do? Is this something we agree on as, as the plan that we’re gong to follow?”

HEFFNER: Systems. You spoke about systems when you were here five years ago. Have we made substantial progress?

DAVIS: We have made some progress. About a fourth of all physicians now have electronic medical records. About 90% of them bill electronically. So they have the capacity to use computers in their offices. But it’s not being used as much as it really should be used.

HEFFNER: Strange question … why not? One would think that that would be such an attractive development.

DAVIS: Well, a lot of physicians are worried about the cost. We recently …

HEFFNER: Need they worry about that?

DAVIS: Well, it is expensive. And they’re worried about getting the wrong system. Buying a computer or software package and then, that doesn’t work and you have to start over with something else. Or having your whole medical practice break down because you can’t retrieve the patient’s medical record, or it’s going to take time and you’re too busy to take the time to, to learn the new system.

So those are some of the reasons. But what we found in one of the studies that we funded … even small physician practices … they can get a decent electronic medical system for an upfront cost of about $40,000 and about $8,000 a year. And they can recover the cost of that in about three years … in two ways. One they tend to bill for everything that they’re doing, whereas right now a lot of things fall through the cracks, so some of it’s increased revenue.

And then the other half is what you would expect … fewer people that are needed to file records, retrieve records, find records … all that paperwork that goes on in the doctor’s office. So they, they can be cost effective, but those are pretty simple systems and they don’t do a lot about reminding the doctor that this patient is on a drug and maybe this new drug shouldn’t be prescribed, given what the patient’s already taking.

HEFFNER: Now, we’re talking about doctors. What about hospitals? More progress there?

DAVIS: Again, some progress with hospitals. Certainly some of them are using what’s called computerized physician order entry, so ordering the prescription, ordering the lab tests, electronically and that eliminates errors.

HEFFNER: The scribbles …

DAVIS: We find that it does eliminate the errors and that that’s good both for the patient and also preventing adverse reactions or problems that, that can be costly.

But again, those systems are expensive, so you’re talking about less than a fourth of hospitals in this country that have those kinds of systems.

Some of them are using things that are simpler, called bar-coding. So you wear a little wrist band with some identification, that helps prevent getting the wrong drug to the wrong patient, or maybe doing the wrong procedure on the wrong patient. So, there are some, some advances on those fronts.

HEFFNER: Have the numbers of Americans who die each year or are seriously compromised, whose health is seriously compromised because of errors, are those numbers going down substantially? Staying the same?

DAVIS: Well, we don’t have a lot of information that gives us good depth in data unfortunately, but we did find a five year evaluation of a report that was put out by the Institute of Medicine, called “To Err is Human”. That was issued in November of 1999 and five years later the experts attending that Conference gave the US a C-plus on how they’ve been doing.

Again, some things have improved. The Joint Commission on Accreditation of, of Health Care Organizations that accredits hospitals have said that, that hospitals need to tell patients if a medical error has occurred. So, the National Quality Forum has listed about 27 things they call “never events” … you know, taking off the wrong limb. Or performing a procedure on the wrong patient or leaving something in the patient (called a foreign object) after the surgery. Things we don’t want to happen to us.

And so, they called attention to that and there are some health systems, I must say in this country, who have decided, “We won’t bill patients if we make one of these mistakes.” So that certainly brings it home on the bottom, bottom line.

HEFFNER: Of course …

DAVIS: We’re still a long way from having good systems in place.

HEFFNER: I think I’d rather pay than ….

DAVIS: (Laughter)

HEFFNER: … than just get a freebie there. But you mentioned “other nations”. How do we compare with other Western countries?

DAVIS: Well, we …

HEFFNER: Let’s take English speaking countries.

DAVIS: We have a higher rate of medical errors. Our most recent survey found that a third of patients report they experienced either a medical mistake, or a medication error, that means getting the wrong drug or the wrong dose.

HEFFNER: A third?

DAVIS: Or the other problem are with lab tests. You know, people think this just happens in the hospital. But it often happens in the physicians’ office … you have a lab test and you think … you don’t hear from the doctor and you think everything was fine. But it turns out you might have had abnormal findings and they were never communicated to the patient. Or you didn’t find out for months and months and months.

So altogether about a third of Americans say one of these things happened to them in the last two years. Now you look at other countries … like the UK, like Canada, like Germany, like Australia, like New Zealand, it’s more like a fifth of patients. Still a serious problem. But it’s higher in the US.

HEFFNER: Why? Why?

DAVIS: Partly it’s that we have more medications and more doctors involved in people’s care. We find that if you go to more than four doctors, your chances of something falling through the cracks are just much higher. One doctor’s giving you one medicine. Another doctor’s giving you another medicine. And nobody’s reviewing all of the medicines that you’re taking to make sure that, together, they’re an appropriate package for you to be taking.

So you don’t, your doctor doesn’t hear about an Emergency Room visit you made. Or might not even know you were in the hospital. So, there’s not good communication and there’s not good transitional care, there’s nobody coordinating that care, following you as you go from place to place, keeping all of your medical records in one place and, and making sure you’re getting appropriate care.

HEFFNER: Do you see that as a medical insurance obligation that the big companies who are involved in insuring us should be doing that?

DAVIS: Well, I think there are things insurance companies can do. There are things that government programs, like Medicare and Medicaid can do. First of all they can ask people to pick a doctor who’s responsible for your care.

That’s a simple thing. But we don’t do that in Medicare. So there’s no single place that has all of your medical information. We think that everyone should have a medical “home”. And that somebody should be responsible for coordinating care. They should be responsible for sending you reminders.

HEFFNER: Is there any movement in that direction?

DAVIS: In, in small steps. Certainly some of the professional associations like the American Academy of Pediatrics had recommended medical “homes” particularly for children with special health care needs. But again, we’re a long way away from … everybody in this country having a place that they stick with, that they can get in to see quickly, that gives them information on their medical … lets them see their medical record … reminds them when they need preventive services. There’s a lot we could do that’s pretty simple in this country, that we’re simply not doing.

HEFFNER: And the other countries you feel have grabbed on to those changes that need to be made.

DAVIS: Well, every country has their problems. So I don’t … I wouldn’t say that there’s any country that’s go a perfect system. But there’s some interesting things to learn from other countries.

In England they do have nurse direct call lines, so that you could call if you have a question on nights and weekends and be triaged by a nurse who can tell you whether you can deal with that at home or whether you really do need to get in and see a doctor right away.

In Denmark they have physicians who do this … called an off-hour service. So at night or weekends, you call this number, you get a physician right there on the phone who can pull up your medical registry information and prescribe a medication or say, you know, you need to come in and see one of the doctors here at the clinic. Or even have a house visit in some of these countries.

HEFFNER: Of course, when we first spoke, it wasn’t a dirty trick on my part, but each time you mentioned another country, I asked about the population of that country. Because numbers must be what is doing us in, to a large extent.

DAVIS: Well, that’s part of it. We have 280 million people and we have very different performance across those states, where you see that insurance coverage varies state to state, quality of care varies state to state. The extent of integrated health care systems that really take responsibility, varies from one place to another.

HEFFNER: Dr. Davis, it looks as though your Commission has its work cut out for them. And I want to thank you for coming and talking about health care in America here on The Open Mind.

And thanks, too, to you in the audience. I hope you join us again next time, and if you would like a transcript of today’s program, please send $4.00 in check or money order to The Open Mind, P. O. Box 7977, FDR Station, New York, New York 10150.

Meanwhile, as an old friend used to say, “Good night and good luck.”

N.B. Every effort has been made to ensure the accuracy of this transcript. It may not, however, be a verbatim copy of the program.