OBSERVATIONS - AUGUST 20, 2007

IHP Roundtable Explores "Systemness"

On August 7, the Kaiser Permanente Institute for Health Policy, the Commonwealth Fund’s Commission on a High-Performance Health System, and the Council of Accountable Physician Practices held a roundtable on “Improving Health Care ‘Systemness’: A Look at the Evidence and Policy Implications.” About three dozen researchers, policy analysts, and leaders of large health care delivery organizations addressed the promise of achieving improved efficiency and quality by promoting greater “systemness” across today’s fragmented, inflationary, and inequitable health care industry. While we may not agree completely on what comprises the essential ingredients of systemness, we know it when we see it – and we definitely know when it’s lacking.

The Institute of Medicine’s seminal report Crossing the Quality Chasm noted that fundamental redesign of the delivery system is required. What are the organizational attributes of a redesigned delivery system? What can we learn from existing systems? Roundtable participants discussed these and other questions about organized delivery systems (in general) and multispecialty physician groups (in particular), focusing on policies to promote quality and efficiency through “systemness” – both real and virtual.

The primary takeaway messages were as follows:

Leadership is urgently needed. Some participants suggested reprising something similar to the Jackson Hole Group of the 1990s – a group of leaders with recognized moral authority and expertise who can bring together the different stakeholders and strategies to craft an actionable systemness agenda for purchasers and policymakers. Physicians themselves may be the most likely candidates for leading the charge. However, systems thinking, group culture, and leadership within the physician community must be strengthened and supported – a task requiring changes in medical school curriculum and residency programs.

No amount of leadership training will help if the payment system does not support systemness. Fee-for-service payment, which has acted as a barrier, is not going away anytime soon, so innovative ways must be found to work with it or around it, such as payment for bundled episodes of care. Several participants noted that in California in the 1990s, physician groups experimented with mixed forms of capitation and FFS, and the results were not encouraging. All agreed that we need a better understanding of that experience – what led to the failures of some capitated groups and the continued success of others, and what lessons are applicable today? Lessons can also be learned from bundled payment experiments in other parts of the country, as well as ongoing pay-for-performance initiatives.

Everyone agreed that an organized delivery system would better align financial incentives for hospitals and physicians, but the role of hospitals is a subject of contention. Some participants felt that the hospital was a logical focal point for organizing the system, particularly given the work of Elliot Fisher and colleagues showing that most physicians admit most of their patients to a single hospital. Others thought that the hospital was the worst possible focal point for the delivery system, not only because care is shifting to the outpatient setting, but also because hospitals’ governance structures can make them slow to change. We need to better understand the successes and failures of the physician-hospital organization experiments that have taken place in the last 20 years.

Strong forces are working against the cause of health care systemness. Vested interests, including many patients, like their health care “system” the way it is right now. We need solutions that make real systemness more attractive to all parties – in part, by bringing human scale and patient-centeredness to large organizations. We must also work with providers where they are today, and for the most part, they are in small group practices. Mandating greater organization of the delivery system will likely backfire, as will setting the bar for payment so high that only the few largest, most integrated delivery organizations can meet it.

We must focus on the macro-environment, which can make organized systems more or less appealing to purchasers and consumers. Consumers still do not have the ability to make a truly cost-conscious choice among delivery systems. Alain Enthoven has written extensively on this point. The issue of consumer choice, largely lacking in the small-employer market, is critical to any discussion about improving the systemness of health care.

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