Report

Transforming U.S. Health Care: Policy Challenges Affecting the Integration and Improvement of Care

James J. Mongan, Robert E. Mechanic and Thomas H. Lee

Because of advances in medical knowledge, the sickest and most costly patients usually receive care from multiple physicians who are often based at multiple institutions. We argue that organization of providers into integrated delivery networks is an important tactic for promoting coordination among physicians. However, the development of such provider organizations is discouraged by antitrust policies, which reflect greater concern for protecting consumers from price increases than optimism that organized providers might deliver better and more efficient care.

Broad consensus exists that the challenges facing U.S. healthcare require implementation of information systems and other programs to improve quality and efficiency. However, the development of provider organizations that can implement such systems is being slowed by obstacles including (1) a culture of physician autonomy; (2) laws and regulations that restrict development of integrated delivery networks; (3) lack of consensus on how to measure quality and value; and (4) uncertainty about the design of financial incentives to improve care for providers and for consumers.

In fact, evidence to date is mixed on the impact of provider organizations on cost and quality. However, these data do not reflect the benefits of effective use of electronic medical records and other systems that are increasingly available within provider organizations. Demonstration of the contribution of provider organizations is further complicated by lack of consensus on how quality and efficiency should be measured, and which national or regional organizations should do that measuring. Perhaps the most difficult policy choice is whether incentives to improve care should be aimed at providers through pay-for-performance programs; or at consumers through high-deductible insurance products. Serious concerns exist about the potential impact of consumer-oriented incentives on quality. To mitigate this risk, we believe that providers should be encouraged to organize themselves to respond to pay-for-performance incentives. However, policy decisions at federal and state levels will greatly influence the extent to which this occurs.