Reform will fail unless it controls inflation

There is a strong chance that the Senate will soon pass a version of mandatory U. S. health insurance, negotiate its differences with the House and enable Congress to pass legislation extending health care to tens of millions of additional Americans. That’s the good news. Unfortunately, this is dwarfed by the bad news: The focus of the legislation is providing health care for the uninsured, not actually fixing our broken health care system.

Somehow, a crippling problem — unsustainably high health care inflation — is barely being addressed at all. Health care premiums have soared because health care inflation is nearly triple the overall inflation rate. Health care costs are expected to consume nearly 20 percent of the gross domestic product by 2017. Fortunately, multiple players in the private sector, including Psilos Group’s portfolio companies, have made considerable progress addressing health care inflation on various fronts.

Here are six ways this can be accomplished:

• Embrace “accountable care” for chronic illness. Chronic illness, including diabetes and high blood pressure, is the biggest burden on health care. Accountable care organizations have produced significant quality improvements and cost reductions and could save $750 billion over 10 years.

• Use technology to eliminate hospital errors. Hospital errors account for $7 billion to $10 billion annually in excess Medicare costs alone. Several companies now have products that mitigate or eliminate these errors but the technology is not widely adopted.

• Create electronic personal medical records consolidated around the patient. These records should be delivered directly to physicians at the point of care to improve medical decision-making. This could produce savings of $500 billion over 10 years.

• Reform “defensive medicine” practices. Physicians often provide unnecessary treatments because failure to do so may result in a malpractice suit. We must establish a culture of doing the right thing and adopt legal reforms that enable good medicine to flourish.

• Replace “fee for service” with performance- based reimbursement. Accountable care organizations reward clinical outcomes, rather than reimburse providers based on the number of procedures performed.

• Provide incentives for healthier lifestyles and behavior. New “value-based” health plans incentivize patients to care for themselves through preventative programs and compliance with chronic illness treatment plans. These plans have demonstrated substantial savings to both patient and payer. Health care reform is essential and the tipping point is here. We can still cover the uninsured if we refocus reform on creating value for health spending and align incentives around good medicine.