Dartmouth is a natural for this sort of endeavor primarily because it is home to the Dartmouth Institute for Health Policy and the Dartmouth Atlas of Health Care, which have been studying variation in health care delivery and spending for a couple of decades.  But while the Atlas gives Dartmouth the data, the college’s home state, New Hampshire, isn’t exactly a shining example of health care value. 

At more than $7,800 per Medicare recipient per year, New Hampshire spends nearly 20 percent more than Iowa ($6,686).  Of course, that’s not nearly as bad as nearby Massachusetts ($9,568) or New York ($9,995), both of which should provide convenient laboratories for what not to do for value-based health care delivery. 

This is worth noting because of something Dartmouth’s president, Jim Yong Kim, mentioned when the center was announced over the weekend.  According to Associated Press coverage of the story, Kim and state leaders have “discussed using the center to make New Hampshire a model for innovative health care.” 

This brings one thought immediately to mind: Why not Iowa? 

Obviously, Dartmouth has every right and reason to focus on its home state.  But this deserves serious consideration in Iowa, where IHA has made “value” a health care watchword.  Certainly, the tools and the people are there. The Iowa Healthcare Collaborative has united hospital and physician interests under the value flag and, like the Dartmouth Atlas, has become a vast data collector.  

The University of Iowa (UI) and Des Moines University both offer excellent schools of health care administration and medicine with easy access to not only urban medical centers but also nearby rural referral centers and Critical Access Hospitals, many of which are on the cutting edge of innovative health care delivery models.  The schools of engineering at UI and Iowa State, along with major businesses (including hospitals) that have adopted ideas like Lean and the Toyota model of process improvement, offer expertise and laboratories for systems analysis. 

What Iowa doesn’t have is seed money, like the $35 million that was anonymously donated to fund the Dartmouth center.  Perhaps if we can broaden our state leaders’ views on what drives a healthy economy (hint: it’s more than wind turbines and gambling halls) and quality of life (more than good schools and smooth roads) to realize the impact of high-value health care, some investment capital might emerge.

Donald Berwick

Bringing real value to government-supported health care will be Dr. Berwick’s foremost challenge.  And with health care reform set to trim billions of dollars from the Medicare program while adding millions of new enrollees to Medicaid, it is a formidable challenge, indeed. 

But Dr. Berwick has two things going for him.  First, he knows what he is talking about.  His work and leadership at the Institute for Healthcare Improvement (IHI), which he cofounded nearly 20 years ago, has led to changes in the way hospitals provide health care that have saved lives, lowered costs and improved quality.  IHI’s current initiative, it’s “Improvement Map,” is perhaps its most ambitious.  

The Improvement Map is an interactive, Web-based tool designed to bring together the best knowledge available on key process improvements that lead to exceptional patient care. It offers clear guidance through the often confusing health care landscape, helping hospitals set change agendas, establish priorities, organize work and optimize resources.  The Improvement Map is also a testament to IHI’s dedication to shared learning, which it established from its beginning through collaboratives, learning networks and mentor hospitals (among these are Mercy Medical Center and St. Luke’s Hospital in Cedar Rapids, University of Iowa Hospitals and Clinics in Iowa City and Buena Vista Regional Medical Center in Storm Lake). 

But leaders succeed only when they energize followers, and that is Dr. Berwick’s other strength.  Throughout the medical world, Dr. Berwick is highly respected not only for his ideas but for his ability to bring key players to the table and keep them there.  Time and again, Dr. Berwick has been described as “a visionary.”  Hospital leaders in Iowa continue to be pleased about his nomination: 

“I was very excited to hear of the nomination of Dr. Don Berwick as the administrator for CMS,” said Jim FitzPatrick, CEO at Mercy Medical Center-North Iowa in Mason City.  “Dr. Berwick has spent his career on a quest for improving quality in the nation’s health care system.  His passion for improving processes for our patients and keeping focus on the ‘big dot’ issues to eliminate defects in care makes him the perfect leader for CMS. 

“Dr. Berwick’s appointment to CMS would be very positive for the health care industry,” said Eric Lothe, administrator at Iowa Lutheran Hospital in Des Moines.  “He has a long history of setting transformational goals for health care quality and then achieving great results.  Dr. Berwick would continue the focused work of IHI to help physicians and hospitals improve quality, reduce errors and eliminate adverse events.” 

The real question is, can Dr. Berwick’s ability to unite diverse interests come through in a U.S. Senate that remains bitterly divided over health care reform?  Can he show that not only can Medicare and Medicaid lead the way in improving care, but they can do it at less cost?  And can he hold his ground should talk of “rationing” and perhaps even “death panels” rear its ugly head? 

Answers should come fairly quickly, as Dr. Berwick’s first stop will be in front of the Senate Finance Committee and its ranking Republican, Iowa’s own Chuck Grassley.

The central point of the editorial is that neither of these cost-saving approaches has been as widely adopted as one might expect.  Why?  Because the insurance companies – both public and private – have provided few, if any, incentives to adopt them. 

This is yet another illustration of how health care spending is being driven by something other than value.  Instead, it is driven by a system that rewards quantity – a physician who does more testing and procedures will be paid, even if those tests were not the best or possibly even unnecessary. 

The Globe emphasizes evidence-based best practices and notes that “Medicare should have the authority to weigh both comparative effectiveness and cost in steering doctors to the best practices.”  In other words, Effectiveness + Cost = Value. 

In Iowa, we are fortunate to have a health care system that, particularly in the community hospital setting, is dominated by a culture of patient-centered primary care.  This means care tends to be provided in a coordinated fashion with the primary care physician at its foundation.  Patient-centered primary care works when best practices are emphasized.  And when that happens, real value in health care is the result.  

This is why Medicare would save billions of dollars every year if it demanded, as the Globe editorial suggests, the same value from others that Iowa already provides.

He immediately trots out the tired old arguments about how the high cost of living and large number of impoverished patients drive up health care costs in certain places.  He doesn’t say exactly where those places are, so I’ll assume he means very large cities, like Manhattan, where his hospital is located. 

The problem with this argument is that there are other, similarly high-cost and high-poverty urban areas where health care costs are notably lower.  For example, according to the Dartmouth Atlas of Health Care, which has studied geographic variation in health care costs – specifically in the Medicare program – for decades, hospitals in Manhattan spend an average of $81,143 on each Medicare patient during the last two years of life (at Presbyterian, it’s $91,113).  In Los Angeles, the cost is $77,411.  In Chicago, it’s $62,565.  In Boston, it’s $57,057.  (In Iowa, it’s $33,864.) 

But it’s not just about how much it costs to provide health care, it’s also about how much health care is provided and whether or not it’s necessary.  The first part is about intensity, and one measure of intensity is the number of days a patient spends in the hospital.  In Manhattan, the typical Medicare patient spends nearly 35 days in the hospital during the last two years of life.  In Los Angeles, it’s 28 days.  In Chicago, it’s 26 days.  In Boston, it’s 21 days. (In Iowa, it’s about 16 days.) 

But doesn’t more time in the hospital – more health care – mean healthier patients?  The studies say no. 

Rather than making excuses about high-cost health care, hospital leaders should follow Iowa’s example by learning what creates high-value health care and then implementing it.  And Medicare should recognize and reward that value.

As many Iowans know, our state’s hospitals spend far less (and receive far less) Medicare funds than most other states.  The Dartmouth Atlas of Health Care has documented that higher-spending hospitals and states are not providing any better care and, in fact, much of that extra spending is simply wasted.  The White House and much of Congress is in agreement, and this is making some high-spending hospitals nervous, the New York Times reports: 

The issue pits hospitals in more rural states like Iowa and Minnesota, where spending tends to be lower, against those in areas like New York City and Los Angeles, and revolves around a question that has bedeviled the medical establishment for decades: how much money do hospitals need to provide adequate care for patients…

Urban hospitals are countering that they serve poorer, sicker patients.  But that does not explain why similar hospitals – such as highly regarded academic medical centers in urban areas – have extraordinary differences.  Take a look at the table below (this information all pertains to Medicare patient averages during the last two years of life): 

These hospitals all happen to appear at the top of U.S. News & World Report’s “Best Hospitals” list and they all serve very urban populations.  Yet the differences are stark and raise many questions.  Why, for example, are patients spending 10 more days at UCLA Medical Center then its sister institution in San Francisco?  Why are 26 more physician visits needed at New York-Presbyterian than Johns Hopkins? 

Now, just for perspective, here are the numbers for Iowa’s major medical centers, along with the overall U.S. average: 

One last thing:  Though it’s convenient from a media perspective, this is not necessarily an urban vs. rural issue.  There are, as the tables above show, urban hospitals that are providing value to the Medicare and there are rural facilities that are extreme outliers when it comes to Medicare spending.  The point is it is time for Medicare, as a health care consumer, to seek out and reward value – wherever it is found.

In health care, value works differently.  One big reason is that most of us are insured and therefore insulated from the actual cost of care.  But you would think those who do pay – the insurers, mostly – would care about value.  Well, for the most part, they don’t.

Start paying for value, not volume

Iowa hospitals want this to change, particularly in the Medicare program.  IHA has consistently and continually lobbied for “value-based purchasing,” which would require Medicare to rethink how it pays hospitals and physicians.  Essentially, it would move Medicare away from simply paying for volume and start paying for value.

Why is this important?  Because there is strong evidence that Medicare spends enormous sums of money on care that is simply wasted.

Research shows that more spending does not equal better care

As we’ve discussed before, the Dartmouth Atlas of Healthcare has shown, over decades of research, that some parts of the country spend much, much more on health care without getting any better results.  Even more evidence was released recently by the Agency for Healthcare Research and Quality (AHRQ), the federal agency whose mission is to improve the quality, safety, efficiency and effectiveness of health care for all Americans.

AHRQ released state-by-state health care quality data that looks at a broad list of quality measures:  type of care (preventive, acute and chronic care), setting of care (hospitals, ambulatory, nursing homes and home health care) and clinical area (cancer, diabetes, heart disease, maternal and child health, and respiratory disease).  Iowa happened to rank 11th in the nation based on a composite score based on these measures.

The AHRQ results become much more interesting when they are graphed along with the cost of care (in this case, Medicare’s annual spending per beneficiary) as a way of illustrating value.  As this graph shows, there are states that offer low value (poor quality at high cost) and those that offer high value (higher quality at relatively low cost), and that is where you find Iowa.

At least geographically, there is a clear pattern to these results; many of the states that fall into the high-quality/low-cost quadrant are in the Upper Midwest.  Some states with high costs would argue it’s more expensive for them to provide care.  That may be true to some extent, but it doesn’t explain why it costs so much more to care for essentially the same population of patients.

And looking more closely, it doesn’t explain why some expensive cities – like San Diego, Orlando and Seattle – have much lower costs than other similarly pricey cities – like Miami, Boston and Los Angeles.  And it certainly doesn’t explain why McAllen, a small city in Texas, spends far more than Houston, one of the largest cities in the country.

These disparities need to be understood and corrected

Beginning with the well-researched and documented information from Dartmouth, Medicare and other insurers need to find out why these disparities exist and what can be done to make more of the country more like Iowa.

Paying for the right care in the right place and at the right time would probably be a good place to start.

We wrote about that earlier and noted, as the New York Times did, that Iowa is also a high-value state.  How does Iowa compare to Green Bay?  Well, a few minutes spent working with Dartmouth’s data tables revealed that the president chose well, but he could have done better by coming to Dubuque…or Mason City…or Iowa City…or Cedar Rapids.

When looking at Medicare spending during the last two years of a Medicare recipient’s life, a key measure in the Dartmouth report and in the Post story, the hospitals in those Iowa cities spend less than Green Bay, which came in at $33,334.  And the hospitals in Sioux City and even Des Moines – and the average for all of Iowa – were only about $500 higher. Overall, Iowa ($33,864) is a significantly better value than Wisconsin ($37,217).  (The national average is $46,412, while the average in the president’s hometown of Chicago is $62,565).

Patients in Dubuque and Mason City also spent less time in the hospital than in Green Bay, and patients in Mason City and Iowa City spent less time in intensive care units.  Patients in Mason City, Sioux City and Iowa City also had fewer visits with medical specialists, which helps keep costs lower.

Obviously, there are other factors at work to bring the president to Green Bay (including access to media).  But know this:  When the president talks about doing medicine the right way – the high-value way – he’s also talking about Iowa.