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To prepare for healthcare reform, Cleveland Clinic is transforming the way care is delivered to patients. Over the past several years, we have had an ongoing focus on driving efficiencies, lowering costs, reducing duplication in services and enhancing quality to make healthcare affordable to patients.
Cosgrove also said the health care law, which was recently upheld by the U.S. Supreme Court, doesn't control costs or contain many incentives for people to take care of themselves.
WSJ: How does the health overhaul affect you?
Dr. Cosgrove: We knew that we had to reduce costs and we had to drive a more efficient health-care delivery system. [The law] just gave additional impetus to get that done.
Indeed, the point of reform is to lower costs and improve quality. Turning a bloated sector into an efficient one that delivers a better product. Sounds like it's working.
The Cleveland Clinic has always been a good example of the rhetoric vs. reality on the ACA's payment and delivery reforms (the "it doesn't control costs!" rhetoric vs. the reality that, oh wait, it does).
For instance, the Cleveland Clinic's CEO, Toby Cosgrove, offered some of the rhetoric in the pages of the WSJ in the summer of 2012:
But by the time he gave an interview to the WSJ last December, he let the reality slip in a bit:
An "impetus" for major groups of hospitals and doctors to cut costs sure, "controlling costs" absolutely not!
The law creates an entity known as the Independent Payment Advisory Board (IPAB). The group will make recommendations to Congress about Medicare physician payment levels if the growth of Medicare spending gets too far ahead of inflation. The recommendations will automatically go into effect unless Congress votes to rein in spending another way.
It is how the costs are lowered by PPACA that make the difference. The cost savings are achieved by simply lowereing the reimbursement rates offered under Medicare and Medicaid/CHIP (which is also expanded under PPACA).
(Reuters Health) - A program focused on primary care and coordination of services between groups of doctors and hospitals reduced costs for patients who were not even covered by the plan, according to a new study.
Less than five months before the Affordable Care Act fully kicks in, hospitals are improving care and saving millions of dollars with one of the least touted but potentially most effective provisions of the law. . .
Under the program, hospitals and physician practices take responsibility for tracking and maintaining the health of elderly and disabled patients. If costs rise beyond an agreed upon level, hospitals may become responsible for reimbursing the government. If they cut the cost of care while maintaining quality, hospitals share in the savings. The government expects the savings may be as much as $1.9 billion from 2012 to 2015. Early indications suggest they are starting to add up.
An ambitious program under the health law to change how care is paid for lost nearly a third of its participants after the first year, but not before all were able to boost the quality of care provided to patients in an experiment that some experts say holds promise to bring down health care costs in the long run.
The Centers for Medicare & Medicaid Services announced Tuesday that all 32 health care organizations had hit performance benchmarks for improving care in the Pioneer Accountable Care Organization program, and 13 had done so while substantially lowering Medicare costs. In part, that was by reducing hospitalization and rehospitalizations, CMS reported.
In site visits and interviews conducted for our ongoing qualitative research, the Center for Studying Health System Change found strong provider interest in payment reform and efforts to prepare for it, with the prospect of increasing constraint on Medicare payment rates cited as motivation. We see a combination of reformed delivery of care and broader units of payment as having the potential to allow providers to generate savings through steps that are less threatening to quality of care and access than are cuts in payment rates. More concretely, payment on the basis of shared savings or partial capitation can reward providers for delivering care more efficiently. This approach is preferable to merely paying providers less and less for business as usual.
There is a historical precedent for harsh, simple-minded cuts setting the stage for broad-based payment reform. Up until the early 1980s, Medicare reimbursed hospitals for costs incurred, subject to ceilings. The Tax Equity and Fiscal Responsibility Act of 1982 substantially tightened those limits, leaving hospitals with no upside — they could not earn a profit by reducing costs — and a growing downside for those whose costs exceeded the limits. The next year, legislation was passed, with the support of the hospital industry, replacing cost reimbursement with the inpatient prospective payment system (IPPS), with rates initially calibrated to leave Medicare outlays unchanged. Hospitals then had the opportunity to reduce costs per admission by shortening lengths of stay and to earn a positive margin in the process.
The IPPS is generally viewed as a major policy success: it encouraged hospitals to seek efficiencies, and when they found those efficiencies, it allowed the federal government to share in the savings. Should ACOs and other reforms prove effective, they will provide broader opportunities to increase the efficiency of delivery beyond shortening lengths of stay, such as managing chronic disease more effectively so as to keep beneficiaries out of the hospital in the first place. But our current challenge is more complex than the one faced in the early 1980s. Broadening the unit of payment will require reaching across different types of providers and helping to stitch together real delivery systems in places where now there are none.
The federal government (and state governments, too, since they're also working on this) is a payer, meaning the leverage it has to reform health care is payment policy. But the goal of changing payment policy is to prompt providers to redesign the delivery of care to make it better coordinated and more efficient and to deliver a better product. In other words, reward them for better care, make it financially feasible and desirable to offer better care more efficiently, and if necessary offer them some technical assistance to help them figure out how to make those changes. Then watch as they redesign what they do to produce better results more cheaply. This is what the Cleveland Clinic is doing. Yes, it's in response to payment policy, which is the reason those policies were instituted in the first place. To change behavior and produce better care.
The ACA has launched a number of payment reform experiments for providers who want to try them out and they're showing promise:
Obamacare-like groups may produce 'spillover' savings
Obamacare Shows Hospital Savings as Patients Make Gains
Obamacare pilot project lowers Medicare costs
But at a larger level, the law calls for reimbursement increases to providers across the Medicare program (except physicians under the Part B fee schedule) to slow over this decade. The idea is that this provides the impetus (in Cosgrove's own words!), along with the help provided by new payment model opportunities and other assistance in the law, to reform the delivery of health care to make it better and less costly. And if the Cleveland Clinic is any indication, it's already starting to work.
Anyway, this NEJM perspective from March 2012 lays out the rationale for cuts to spur progress: Slower Growth in Medicare Spending — Is This the New Normal?
If by working you mean massive layoffs will occur and more people will then queue up for fewer care providers, that must do ever more government paperwork, then it is working. Obviously if your clinic now has a staff of 40, but can afford only a staff of 30, under the new payment system, then they must drop 10 employees. The question is: did those 10 employees really do nothing of value and can the remaining 30 actually provide as much care without them?
More layoffs due to Obamacare...
Layoffs coming to Cleveland Clinic in plan to reduce budget by $330 million | wkyc.com
More layoffs due to Obamacare...
Layoffs coming to Cleveland Clinic in plan to reduce budget by $330 million | wkyc.com
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