Executive Summary

Barriers To Health-Care Reform

George Halverson
Chairman & CEO of HealthPartners, Inc.

August 1993

We are rapidly approaching a major crossroads in the reform of health-care financing and delivery in this country--and the choices we make as a society will either point us down the road to continuously improving quality and efficiency, or down a much less desirable road of health-care rationing and crippling regulation.

Health-care purchasers at all levels are unanimous in demanding that health-care expenditures be somehow controlled. The problem is that no one seems to have any clear ideas about how that control might be accomplished.

Some current reform proponents favor fee caps and mandatory expenditures limits. Others favor a Canadian single payer system (leaving the current delivery system in place but with the government as the sole insurer.) Still others favor "pay or play" scenarios that force all employers to offer health- care coverage to their employees.

None of these proposed solutions, however, deals in any meaningful way with the two key factors that are driving up costs and increasing the waste, inefficiency, and expense that characterize too much of our health-care delivery system.

The two, closely related, factors are:

1. The health-care delivery system in this country is, in actuality, a non-system. We have hundreds of thousands of independent health providers that have no structural ability and no shared financial incentive to work together to improve either the quality of care or the efficiency of its delivery.

2. Our fee-for-service payment approach rewards high-cost, high-tech, and high- volume care and underpays lower cost, higher quality providers. As a result, there is usually no relationship whatsoever between the cost of services and the outcome of care.

The result of these two key factors, is a health-care delivery system that continues to increase in complexity and cost--with no guarantee of a commensurate improvement in either quality of care or health outcomes for the general population in this country.

We don't pay providers for creating better health outcomes. Instead, we pay for each service on a piecework basis that treats each provider as a separate, unrelated craftsperson, a separate business.

What's more, we don't even track basic health-care performances--much less make that information easily available to consumers so they can make meaningful choices that reward high quality and cost-effective care providers.

That's where the key health-care reform has to take place. We need to start comparing the health outcomes achieved by one system of care with the health outcomes achieved by competing systems of care.

For example, buyers and consumers should know what health plans have high rates of hospital admissions for asthma patients, and even what plans have the lowest rate of recidivism for patients who stop smoking.

Buyers should be able to compare the price of competing health systems to focus on both costs and provable quality. The alternatives to competing systems all lead to health-care rationing and excessively escalating costs.

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