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Mitchell T. Rabkin and John S. Cook: Our Health System's Two Big Flaws

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By Mitchell T. Rabkin and John S. Cook
Tuesday, September 15, 2009; 11:43 AM

Whatever the virtues of the "public option" in health care reform, if it is structured in the way most health care today is financed and delivered, it will only hasten the impending crisis.

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Like it or not, we must confront two flaws:

-Fee-for-service payment. This worked reasonably well decades ago when there was less to know, less the physician could do, and less he or she could charge for. But with the abundance of technologies and treatment possibilities now available, fee-for-service is inflationary and will continue to be so. This is becoming widely recognized, but few have come up with effective ways to deal with our nation's ever-rising cost.

-In general, physicians are not accountable for cost. The actions for containing costs are largely in the hands of the insurers. Payment policies, shaped pretty much by Medicare, give insurers the decision on what to pay for and what not, and how much to pay. That has neither controlled inappropriate rise in health care costs nor cut down on unnecessary care.

These two flaws are so firmly built in to the way most health care is financed and delivered that it would be most unlikely, practically as well as politically, to make the needed corrective changes on a national level. What makes sense is a series of pilot programs to test out new ideas that offer potential remedies. Pilot programs should be large enough to be valid but small enough to avoid the impact of lobbying efforts arguing for the status quo. They could be run through Medicare, which can get (and has gotten) various pilot studies underway without the need for new legislation.

The approach we favor begins with groups of primary care physicians, along with nurse practitioners, physician's assistants and others as a team providing or arranging for the patients' total care needs, and a financing mechanism that eliminates fee-for-service through risk-adjusted capitation, in which physician groups get a certain payment for every patient enrolled. The physician group is accountable for quality of care, patient satisfaction and budget control. Patients still have freedom of choice, although going out of system incurs some out-of pocket expense. And there are meaningful incentives rewarding patients, caregivers and hospitals for successful outcomes.

Mitchell T. Rabkin is a professor of medicine at Harvard Medical School and CEO emeritus of Boston's Beth Israel Hospital. John S. Cook is an independent consultant in health-care payment.


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