Population Health

Oct 18, 2013

Most health insurance companies in 2013 remain focused on the financial health of their organization.  In today’s environment most large employer groups self-insure and pay all their own medical costs and a fee for services to the insurance company.  When providing coverage for individuals, insurance companies now avoid people who are likely to use much in the way of medical care.  This means trying to insure only people who are likely to remain healthy and who have no history of serious disease.  The sad truth is that looking for ways to improve the health of the people they insure is not a priority.  Neither is looking for ways to lower medical costs.  If care costs more, the insurance companies simply pass these costs on, reserving a share of the total payment for their own operations.  Higher medical spending actually means more financial support since this is often tied to a percent of premium.

Our providers also have had little incentive to take the larger view of reducing medical costs.  The payment system that we all operate under here in Montana is fee for service.  While paying for what you use makes sense for most commodities, the upshot of this approach in health care is that the more services that are provided, the higher the total income.  If profitability is a major driving factor behind the success of our hospitals, our doctors, and other health care providers, then providing more care is the result.  Not to say that inappropriate and excessive medical care is the goal of anyone.  But, looking for ways to improve quality and lower costs has not been the focus of either our insurers or our providers.

This is about to change.  Assuming that the Affordable Care Act and all its components actually start working in the next few months, we are about to enter an entirely different landscape.   If as is planned, we actually start providing health insurance to nearly everyone in Montana, then spending cannot be lowered by refusing to insure people with bad health.  They can no longer be denied coverage.  When everyone is insured, the cost of insurance is directly related to the total cost of providing care in our communities.  If we in Missoula add another cancer treatment center, another obstetrical unit, or create a for-profit hospital, then total spending goes up for everyone and so do insurance prices.

Right now, surgical complications actually increase profitability for hospitals.  No one is intentionally causing complications, but there are few systems in place which are actually designed to identify, measure, and prevent these problems.  Until we actually know the rate and type of complications, we can’t understand where and why these are happening, and we can’t take steps to change our processes.

Chronic medical illness is responsible for about 75% of our medical spending.  Management of people with chronic disease is extremely variable.  It often lacks continuity and there is no detailed understanding of how medical care is delivered.  Every provider does the best they can, but working harder at an individual level doesn’t solve the problems. 

We are at the very beginning of supporting effective chronic disease management; making sure that people with diabetes and high blood pressure are seeing their doctors as needed and that their illness is well controlled.  Measuring these factors and designing universal approaches to make sure that issues are dealt with before people end up in an expensive hospital bed surely makes sense.  Unfortunately, until now those resources have been put almost entirely into managing the sick endpoints of heart disease and stroke.  Our financial model has been driving us in that direction.

Taking care of the whole population means understanding what we are doing now and finding ways to improve the quality of the medical care we are providing.  Improvement in quality will almost always lead to lowered costs.  But, at the same time, we also need to recognize that direct medical care explains less than 20% of our health status.  And yet this is where we spend 90% of our health care dollars.  We are just beginning to think about how our mental health, the environment, education, and economic policies affect our well-being.  Meanwhile our public health departments receive only about 1% of total health care dollars.

Change is probably inevitable; in large part because our escalating spending and poor health outcomes are not sustainable.  Whatever you think of Obamacare, it at least takes us a step further in the direction of improving population health and controlling costs.