Friday, November 12, 2010

Doing It Again

It looks as though we are about to do it again.

High and rising cost is a major issue in health care and there is great interest in doing something about it. But rather than holding doctors, hospitals and other providers responsible for getting their costs under control, with due rewards for those who succeed and penalties for those who don’t, we try to tell them how to do it. The result is that they increase their costs by focusing on doing what they are told rather than on the goal of getting cost down.

The main example has been information technology. Information technology is a tool, not a purpose. But the entire effort has been to get providers to make more use of it, not on achieving the purposes of improving quality and reducing cost. Providers have responded by spending tons of money on hardware and software, thus increasing cost while making only modest progress towards improving quality.

Now it seems that we are about to repeat the error. Among the latest fads in health care is something called the Accountable Care Organization (ACO). The idea of an ACO is to get all the providers of care, including physicians, within a single organizational structure so that care can be better coordinated and more efficient. The recently enacted health care reform legislation provides some money to encourage the development of ACOs.

The November 1 issue of Modern Healthcare has an article about existing ACOs, casting doubt on whether they save any money. Most likely they won’t so long as the emphasis is on creating them rather than on what they are supposed to achieve.

Winston Churchill is reported as having said that the Americans could always be counted on to do the right thing, after they had tried all the others. It looks as though he was onto something.

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