The Next Reform

Dennis Cortese, MD, president and chief executive of the Mayo Clinic, says that since healthcare reform has become law, now would be a good time to start thinking about the one thing that should have been, but wasn’t, the basis of any sensible reform: value.

“If Medicare looked for value, and found a way to measure it and pay for it,” he told attendees of the World Health Care Congress in Washington last month, “that would trickle down to the private payers, and you’d start to see the whole healthcare system self-organize around that [concept].”

No industry deserves to survive that cannot demonstrate the value it adds to its community. In healthcare, though, value is a mind-bending concept. American healthcare is the most expensive in the world, and maybe it is the best. But value is the thing that lies at the nexus of cost and quality. It is the answer to the question: Is this thing worth the price?

When you start to think about healthcare in those terms, it becomes clear why we struggle to discuss the issue without lunging for each other’s throats. Value is by necessity defined individually - I don’t understand why someone would pay $1,300 for a pair of Jimmy Choo pumps, but Jimmy’s customers probably don’t understand why I buy almost all of my clothes at Old Navy.

Normally we can live and let live. But we do not have an individualized healthcare system, so we’re all stuck, in one way or another, with each other’s decisions. The Old Navy folks have to pony up for someone else’s Jimmy Choos, and if they complain that they’re not getting their money’s worth, they’re denounced as healthcare rationers. Because Americans don’t pay for healthcare directly, they don’t know how to make value judgments about it, and in any case, they don’t have access to the kind of information that would help guide sensible choices.

This is the basic dynamic that drives up U.S. healthcare costs: A determination to spread the costs around in order to be fair, combined with an equally powerful aversion to hard choices about what health services we won’t pay for.

Cortese’s Mayo Clinic was repeatedly hailed last year by President Obama as a model for how American healthcare should work. “We want to help the whole country learn from what Mayo is doing,” the president said in September. It’s telling, then, that Mayo recently stopped accepting new primary-care patients at its Arizona clinic. Mayo determined that once its payer mix in Glendale hit 70 percent Medicare it started losing money. “Medicare is one of our lowest payers,” Cortese says.

The CEO of the presumed model for health reform says the reform that passed is “a small step forward” toward insurance restructuring that will not alter America’s healthcare delivery system. More meaningful reform is necessary, he says - and inevitable, if only because the current madness is unsustainable.

“We have to come to grips with that,” Cortese told CNBC from the conference floor. “The key issue as we go forward is: How do we change the delivery of care? … How do we get better results at lower costs? Are we willing as a country to look for innovative ways to care for people, to acknowledge that, and to pay for it?”

Bob Keaveney is editorial director for Physicians Practice. He can be contacted via e-mail at bob.keaveney@cmpmedica.com.

This article originally appeared in the May 2010 issue of Physicians Practice.