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Health Record: The Great Shell Game

Dr Paul Barach

An estimated $200 billion is planned to be spent on new hospital construction in the US in the next decade. The global economic crash, however, has the potential to derail this plan and create barriers to the design of better quality healthcare environments, leading to years of postponement or cancellation of new hospital design and construction.


Widespread bank failures worldwide are threatening to impair the lending capacity of the financial system to healthcare systems for years to come. As US Federal Chairman, Ben Bernanke said recently: “As in all past crises, at the root of the problem is a loss of confidence by investors and the public in the strength of key financial institutions and markets...”

Banks, like healthcare systems are vulnerable to loss of confidence. In fact, healthcare continues to become less trustworthy, costlier, quality is spotty, and the gap between the service we believe possible and the current system is widening. There are several trends that are promising, but they define an opportunity, rather than a policy:

Escalating costs – Controlling medical costs has become the ‘Great Shell Game’. A global recession and reduced funds for hospital construction and service improvement will threaten the efforts to make healthcare safer. In the US, Congress put a cap on Medicare payments for 467 medical procedures, and hospitals just pass the costs off to the states. States puts their own caps on Medicaid hospital payments, and hospitals just move the pea to private insurers and Blue Cross and Blue Shield. Congress caps payments to physicians in hospitals, and doctors move the pea outside the hospital to their offices or clinics where there are no caps. The new caps on hospital costs paid by Medicare and many states allow politicians to boast about cutting deficits. But they do little to reduce costs. In 2009, these costs will continue their inflationary assault on the US economy at double or triple the rate of increase in the Consumer Price Index. And Americans will spend more than $1 billion a day for healthcare. In Europe, where essentially all care is state subsidised, and 90% of hospital reimbursement is fixed irrespective of patient outcomes, quality improvement is stalled as unions battle to maintain jobs amid cost cutting and reduced working hours.

Role of governance in managing costs – Business alone cannot control healthcare costs but will require transparent cost accounting and better fiscal governance and smart regulatory oversight. We need national policies to restructure financial incentives in the healthcare industry: where possible, to instill some marketplace discipline; and where not, some controls. Costs disappearing from the Federal healthcare budget have a remarkable ability to reappear elsewhere in these noncompetitive systems. The net result is a hidden tax on business and citizens. The Government has simply hidden the pea under another shell.

Health information technology – Developing an effective national HIT plan is a huge undertaking that requires broad, non-ideological thinking. The danger we face now is throwing good money after bad. We don’t need merely a readjustment of how health IT dollars are spent. We need to reboot the entire debate about how health IT relates to health, healthcare, and healthcare reform. We don’t just need more HIT; we need more evidence to support an array of functions that can deliver better care at lower cost with less waste.

Empowering providers – Engaging doctors and healthcare providers remains the real challenge to reform, requiring a payment policy that they can buy into, and at the same time creating a sustainable cost platform. Making heathcare safer, such as encouraging providers to wash their hands beyond the 30% most research studies show, will require cultural change, and an alignment of incentives to modify their behaviour.

Evidence-based design – Analysis of more than 1200 research studies shows a direct link between quality of care, patient health, and the way a hospital is designed. The new foundation for understanding human errors considers that mistakes are made because the systems, tasks, and processes used by healthcare providers are poorly designed. A reduction in medical errors can be accomplished through better design of the physical environment where numerous microsystems interact every day.

Role of the patient – Patients have emerged as a powerful ally and advocate for change towards greater quality and safety. Patients want care that is coordinated, not fragmented, across the continuum of settings. And they want care that is personal, affordable and convenient.

Dr Paul Barach is professor of Safety Science and Anesthesiology, a director of the New South Wales Injury Risk Management Centre, and head of the School of Risk and Safety Sciences, University of New South Wales, Sydney, Australia.








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