There Is a Better Way for Health Care Reform

Henry J. Aaron
Henry J. Aaron The Bruce and Virginia MacLaury Chair, Senior Fellow Emeritus - Economic Studies

September 9, 2009

Senior Fellow Henry Aaron reviews the new book, Chaos and Organization in Health Care (MIT Press, 2009), by Thomas H. Lee and JamesJ. Mongan.

Physicians often complain that they are underrepresented indiscussions of health system reform. This book shows why theyare right. Tom Lee and Jim Mongan, both physicians, have writtenwhat is, perhaps, the single most informative and absorbingexamination of what is wrong with the U.S. health care systemand what to do about it. Their book is laced with compellinganecdotes and real-life cases. It is written with clarity andpassion. Most importantly, it is at once a practical guide toaction and a warning not to expect quick results. No readerof this book can fail to understand that health system reformis the work not of one presidential term or even one presidencybut of a generation.

The message is straightforward. The hurtling advance of biomedicalscience has vastly multiplied the range of beneficial servicesthat health care providers can deliver and are delivering. Still,what is being delivered is tragically short of what is possible.The financing and organization of health care delivery wereformed in an age when one doctor could master most of medicalknowledge and supervise the diagnosis and treatment of mostconditions. If consultations were needed, they could be arrangedon an ad hoc basis.

That age is dead and gone. Advancing science has pushed therange and complexity of health care far beyond the capacityof any one person to master. Norms emphasizing physician independencethat evolved when such mastery was possible have become dangerous.Forced to deal with the mounting responsibilities and capabilitiesgenerated by modern medical science, fragmented health caredelivery is prone to error and incapable of effectively mobilizingavailable technology.

The solution that Lee and Mongan prescribe is team-based deliveryof care, supported by modern information technology and backedup by extensive research on effectiveness, careful monitoringof results, and alignment of incentives with goals. A few systemsare moving toward that ideal: Mayo Clinic, Intermountain Healthcare,the Geisinger system, and, surprisingly to many, the VeteransHealth Administration. Even they, however, do not yet have theinformation base necessary for providing the best care thatavailable techniques make possible.

Unlike many commentators who describe an ideal system and thenneglect the obstacles to its realization, Lee and Mongan startwith health care arrangements as they exist, describe the myriadobstacles to change, and try to identify practical ways in whichthat system could be made to evolve into a better one. The keywords in the preceding sentence are “evolve” (not “transform”)and “better” (not “ideal”).

The reason they adopt this evolutionary (as opposed to “revolutionary”)perspective is rooted in their own experience within one ofthis nation’s premier, but (until recently) quite traditional,health systems—Partners HealthCare—which consistsof various hospitals, clinics, and affiliated physicians. Nudgingtop-flight physicians, steeped in traditional medical practice,into the collaborative team approach is hard and it is slow.Getting highly respected practitioners to subject themselvesand what they do to observation, quantitative measurement, andthe criticism of others is very hard as well as slow. The bookcontains a long section that details Partners’ effortsto encourage this evolution.

Lee and Mongan examine various proposed transformational changes,point out the promise that each holds, and then deflate exaggeratedclaims about their effectiveness. These “unmagic bullets” includepassionately advocated beliefs of the left and right. Is increasedpatient choice the road to high-quality health care? Well, notreally, because free patient choice of providers actually aggravatesfragmentation; and furthermore, patients aren’t very goodjudges of quality. Can market forces control spending growth?Nope—patients just don’t like and won’t joinplans that expose them to high costs during serious illnesses,and patients are not very effective at using the informationthey are provided. How about a single-payer system? It can covereveryone, but will it improve the quality of care and hold downspending? Maybe, but there is nothing in single-payer planshere (Medicare) or abroad to suggest that a single, government-managedplan will necessarily reduce fragmentation or slow spendinggrowth. Will more preventive care lower spending growth? Countlessstudies say “no,” because prevention costs as much as it saves.And, oh yes, the doctor’s favorite—is physicianautonomy the key to high-quality health care? Nope; in fact,physician autonomy is the problem, not the solution.

On perhaps the most important issue—will the reorganizationthat the authors recommend reduce costs as well as improve quality?—theyare not entirely clear, and, I believe, for good reasons. Theissues are analytically complex, and the results depend noton technical matters but on political decisions no one can anticipate.On page 235, they label the view that higher quality will reducecosts a myth: “We really wish this myth were true. …The harshreality is that better quality generally means higher costs,not lower ones.” Yet six pages later, they write on the promiseof payment reform that “if providers were effective, efficient,and creative in their care, they could share in the substantialsavings that result from averted hospitalizations.”

How can both statements be true? The answer, I believe, is thatthe current system contains considerable duplication and waste,whose elimination could save billions of dollars and sacrificenothing. Some of it arises from the disorganization that Leeand Mongan target and some from poor information or none atall about what methods of diagnosis and treatment work best.Many of the savings from improved organization and informationwill accrue slowly, for reasons Lee and Mongan emphasize—ittook twenty-five years for the use of beta-blockers and aspirinafter coronaries to become routine, although the evidence wasclear and the intervention was cheap. Billions saved, over anindeterminate period, in a system that is growing more than$100 billion a year may be hard to detect. Furthermore, farmore is spent on services that are beneficial, but only marginallyso, than is spent on pure waste. Curbing this spending wouldmean that someone—elected officials, insurers, doctors,hospital administrators—would have to utter the ultimatepolitical obscenity: rationing. Furthermore, even as increasedefficiency lowers low- and no-benefit spending, it will raiseoutlays to provide care to those who should be treated but aren’t.

Lee and Mongan are instructive even with this bit of perhapsunintended ambiguity about the impact on cost of reforms theydescribe and prescribe, because it mirrors the awkward complexityof the cost challenge that health care presents to this nation.

My bottom line is simple. This book is fun to read, enormouslyinstructive, and devoid of ideological cant. Read it!