Dr. Don Berwick spoke to health care leaders and providers on health reform in 1994. He cited the willy-nilly responses to managed care, including mergers, acquisitions, layoffs, shuffling CEO's, and price cutting, He likened it to an anthill that had been trodden upon, lots of scurrying with an unclear purpose. Berwick shared:
One CEO said "my overhead is killing me. I want to improve but don’t have the time. I've never been so scared in my life." Underneath confident deal makers, CEO’s who end up on top of mergers have no clue what to do. This is crazy. Everybody's running around, but no one knows what to do. All we know is doing nothing is unacceptable. We're afraid of being left out. There's never been a time when common sense is so uncommon.
Ironically Berwick heads the Centers for Medicare/Medicaid Services, which implements the current version of health reform. Managed care has been rebranded Accountable Care Organizations, capitation renamed "bundled payment". CMS released rules for Accountable Care Organizations, causing heath care leaders and providers to scurry around frantically.
Huge hospital systems in Texas are talking merger to increase the size and scale of ACO operations. Health care systems look beyond state lines for merger partners. As in any corporate combination, layoffs are required to achieve cost savings.
ACO rules are Rube Goldberg complexification. Medicare's Shared Savings Program leverages one horrific management practice, the splitting of "savings" with a contract group. I never understood what an organization already being paid to do good work, to manage well, needed another incentive.
Extrinsic motivators work best for simple processes, generally under the control or one person. They distort behavior in systems that require cooperation. Incentive programs can drive short term behavior change, but come with cheating and fraud. Nearly 30% of executives backdated stock option grants over a decade to maximize incentive compensation.
Health care costs need to be cut in a hurry, to legitimize PPACA. OMB Chief Peter Orszag, an architect of health reform, told the Washington Economic Club he would "throw things against the wall to see what sticks."
Accountable Care Organizations and Medicare's Shared Savings Programs may stick, with what odor? What does it mean wihen the feds have to incentivize ACO's to even apply? Don Berwick once called pay for performance a "toxic daisy chain." Yet, he combines two bad practices, P4P and shared savings, in one deform effort.
Berwick's pushing this version of anthill scurrying makes it more bizarre. Health care providers no longer have good work to do. Just like corporate CEO's, they need complex, inane incentive schemes to do their torturous jobs. That's the precisely wrong leadership transformation.
Do we have White House Health Czar Nancy Ann Deparle, an ex-private equity underwriter (PEU), to thank for this mess? Now that Uncle Sam is advancing start up ACO capital, PEU's should have the scent.
"Will they ever learn?"--Dr. W. Edwards DemingGreed will not save health care. God help us to remember what we've forgotten.
Update 9-3-12: Berwick's 1994 resurfaces.
Update 8-6-16: After years of insanely high health insurance premium increases the public is concerned about affordability, according to several of the highly conflicted people who helped create PPACA. After reforming healthcare Nancy Ann Deparle returned to private equity as founder of Consonance Capital which specializes in health care.