Why is healthcare delivery system reform necessary?

Because Americans spend more on health care than any other industrialized nation, yet our health and medical outcomes are among the worst:

Administrative Costs = 25%

Administrative costs account for 25 percent of total U.S. hospital spending. The United States had the highest administrative costs; Scotland and Canada had the lowest.

169th in Infant Mortality

The United States ranks 169 of the 224 countries surveyed in infant mortality

U.S. Seniors Sickest out of 11 Countries

A survey of older people in 11 countries finds that U.S. adults are sicker than their counterparts abroad, as well as the most likely to have problems paying their medical bills and getting needed healthcare.

Difficulty Getting Timely Care

U.S. adults report difficulty getting care in a timely fashion and using emergency departments for issues that a primary care physician could treat.

200,000 Preventable Medical Errors Annually

Approximately 200,000 Americans die from preventable medical errors including facility-acquired conditions.

ADEs = 1/3 Adverse Events

Research indicates that adverse drug events (ADEs) are among the largest contributors to hospital-related complications. ADEs comprise 1/3 of hospital adverse events, affect 2 million hospital stays annually, and prolong hospital length of stay by 1.7 to 4.6 days.

The various healthcare reform provisions of the Patient Protection and Affordable Care Act and the Health Care Education and Reconciliation Act — together known as the Affordable Care Act (ACA) — strive to achieve the “Triple Aim:”

  • Improving the patient experience
  • Improving the overall health of populations
  • Lowering healthcare costs

To achieve those goals, the current health care delivery system needs to move away from its current episodic, fee-for-service payment approach and toward a values-based payment model for care. Why? The current payment system creates incentives for providers to deliver more — but not necessarily better — care. Healthcare in the US is the most expensive in the world, but our patient outcomes are far from the best. (see Health Care Facts on this website). Developing a values-based payment system is necessary to rein in healthcare costs and improve the overall quality of the healthcare system.

In addition, it is also necessary to change the way care is delivered. How? By creating high-performing healthcare systems that use care coordination, quality improvement and information technology to prevent illness, enhance healthcare access and improve outcomes. This is what Accountable Care Organizations do — and they are the ideal care model to achieve the Triple Aim under the ACA.

What’s wrong with the way our healthcare system is currently structured?

There are several models of healthcare delivery in the U.S.

Range of Integration Across America’s Health Care Delivery System

Less Integrated or Organized Systems
  • No integration

    Single MDs, single hospitals, small groups

  • Slight integration

    Independent physician associations, single specialty groups, hospital chains

  • Some Integration

    Hospital groups; some university practices

More Integrated or Organized Systems
  • More integration

    Multi-specialty group practices

  • Well integrated

    Clinically integrated

  • Total Integration

    Clinically & financially integrated systems

In the more traditional model, solo physicians and physician groups work independently of each other and other providers, such as hospitals, nursing facilities, etc. Because of this fragmentation, healthcare providers have difficulty sharing information and keeping track of a patient’s care and condition. Higher costs and less optimal quality are often the result.

At the other end of the continuum, there are larger, more organized healthcare systems with hospitals, doctors, and even health plans that all work together. This allows for better care coordination and quality improvement because they use the same health information technology for documenting healthcare delivery. This saves money, enhances quality and creates value.

What will happen if the Affordable Care Act is repealed?

As the current “repeal or replace” debate over the structure of America’s healthcare system continues, CAPP urges decision-makers to focus on health care delivery initiatives that are improving patient care, reducing medical errors and lowering the overall cost of healthcare.

CAPP has produced a primer detailing the three most critical areas of reform. They are quality measurement, payment reform and healthcare information technology. Read more in our Candidate Primer.

What is an Accountable Care Organization (ACO)?

An Accountable Care Organization (ACO) is a partnership of healthcare providers who work together in a way that improves the quality, coordination and efficiency of the care they deliver to a defined group of patients. ACOs are comprised of primary care doctors, specialists, hospitals, therapists, and other medical professionals. The goal is to better organize the way care is delivered by removing the fragmentation and silos that exist between care providers. ACOs also measure and report on the quality of their medical care — which is what makes them “accountable.”

ACOs are now being formed around the country for people over 65 to meet the care guidelines of Medicare, and for people who have insurance through their employers, like Blue Cross, United, Aetna, etc. ACOs are also being formed to serve Medicaid patients in order to improve care coordination.

What’s the difference between an ACO and a CAPP medical group that considers itself an “accountable physician practice”?

The concept of ACOs was built on research conducted with CAPP medical groups and others who believe that organized systems of healthcare are better able to:

  • Measure and monitor the care they deliver
  • Continuously engage in quality improvement
  • Control healthcare costs

Many CAPP and AMGA medical groups have worked with Medicare and private insurers as ACOs. However, CAPP groups have been providing care in an accountable way for decades. Our organizations pioneered this kind of medical care. We welcome the move towards more “system-ness” in healthcare and more accountability.  We will continue to watch and guide the current ACO movement to ensure the evolution of the American healthcare system stays on course.

Why are Accountable Care Organizations important to achieve improved cost and quality?

ACOs can achieve both cost and quality improvements because the delivery system itself is paid for and rewarded for its outcomes, not for its volume of services. ACOs may be the most promising mechanism to control costs and improve quality and healthcare access in the US. According to the Commonwealth Fund, 54 percent of health care opinion leaders believe that ACOs are an effective model for moving the U.S. health care system toward population-based, accountable care. The Congressional Budget Office projects that the Shared Savings Program will save the Federal government $5 billion between 2010 and 2019.

ACOs not only care for Medicare patients; private-sector insurers are also sponsoring plans that care for patients of all ages within the ACO model.

How can accountable care transform the U.S. health system?

The fact is that our current system is not providing better care for Americans, even though we lead the world in healthcare spending. Our system is fragmented, providing care in silos where no one is accountable for monitoring patients to ensure good health outcomes.  Our current system pays for every service provided, rewarding providers for the volume of services but not for the quality.

Accountable Care Organizations are centers for leadership and change. They are led by physicians who strive for the best outcomes. They believe in being strong stewards of healthcare resources and dollars, and in providing patient-centered care. That means delivering integrated care across the continuum with an ongoing focus on quality improvement. In this setting, value-based payment models are proving to lower healthcare costs.

What is the importance of linking of outcomes measures to payments?

It demands accountability. The current fragmented, volume-based, system is not accountable to anyone — payers or consumers — and is unsustainable.

The Affordable Care Act recognizes the need for care coordination and accountability. Outcomes-based payment models assure that payers and consumers are getting value for their healthcare dollar.