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MIT MIT MIT MIT S EMINAR ON S EMINAR ON MIT ESD.69 EMINAR ON EMINAR ON MIT HST.926 H EALTH EALTH C ARE (Special Student) ARE HMS HC.750 (Special Section) S YSTEMS YSTEMS I NNOVA NNOV TION ATION H EALTH EALTH C ARE ARE S YSTEMS FROM

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SLIDE 1

MIT ESD.69

MIT MIT MIT MIT SEMINAR ON

EMINAR ON

MIT HST.926

SEMINAR ON

EMINAR ON

(Special Student)

HEALTH

EALTH CARE ARE

HMS HC.750

SYSTEMS

YSTEMS INNOVA NNOV TION ATION

(Special Section)

‘HEALTH EALTH CARE ARE SYSTEMS’ FROM YSTEMS’ A FROM A HEALTH EALTH

P P POLICY

OLICY PERSPECTIVE ERSPECTIVE Stan an Stan an N.

  • N. F

Fink nkels elstein ein F ink nkels elstein ein M. M D. D . . St Sta St St n an N N N Fink nkels elstein ein F , ink nkels elstein ein, M M D M D

Massac Massachuse husetts Ins tts Institut itute of e of Technology nology Massac Massachuse husetts Ins tts Institut itute of e of Technology nology

Sep Sept temb t er ember 16 16 16, 16 2010 , 2010 b 2010 b 2010

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SLIDE 2

COST

?

QUALI TY

ACCESS

?

QUALI TY

ACCESS

1

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SLIDE 3

Timeline: Maj Timeline: Major Themes of U.S. Health Policy

  • r Themes of U.S. Health Policy

y y

Major Quality of Care I nitiatives 1 9 9 0 Market Approaches to Cost Containm ent 1 9 8 0 ‘Regulatory’ Approaches to Cost Containm ent 1 9 7 0 - 8 0 Expand Access to Health Care 1 9 4 5

1 9 4 0 1 9 4 0 1 9 5 0 1 9 5 0 1 9 6 0 1 9 7 0 1 9 8 0 1 9 9 0 2 0 0 0 2 0 0 9 1 9 6 0 1 9 7 0 1 9 8 0 1 9 9 0 2 0 0 0 2 0 0 9

2

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SLIDE 4

When National Health Care Spending When National Was Half Health Care Spending Was Half

  • f Current Rates, Many Called its Growth,
  • f Current Rates, Many Called its Growth,

“ b “ l bl “Unsustainable” “Unsustainable” ”

TOTAL HEALTH EXPENDITURE AS % GDP BY YEAR

% GDP

  • n

HEALTH

. . . 2008 SOURCE: WHO and OECD Data

3

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SLIDE 5
  • 1940’s and 50’s

1940’s and 50’s Major Theme: Major Theme: Major Theme: Major Theme: Expand Access Expand Access Expand Access Expand Access

  • Origin of employer based health insurance

Origin of employer-based health insurance.

  • National health insurance falls to be enacted.
  • Hill-Burton Legislation (1946) – incentives to

build ild new h h ospit ital ls and h d health lth care f f acilities. iliti

  • Major investment in medical research – National

National Major investment in medical research Institutes of Health.

4

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SLIDE 6
  • 1960’s

1960’s Major Theme: Major Theme: Major Theme: Major Theme: Expand Access Expand Access Expand Access Expand Access

  • Medicare (1965) – Government insurance coverage for

elderly disabled elderly, disabled.

  • Medicaid (1965) – Government insurance coverage for

indigent.

  • ‘Regional Medical Programs’ – Expand access to new

Expand access to new Regional Medical Programs medical technology.

  • ‘Health Professions Legislation’ – Incentives to build new

medical and other health professions schools, increase number of graduates.

5

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SLIDE 7

‘Moral Hazard’

The prospect that a party insulated from risk will behave differently from The prospect that a party insulated from risk will behave differently from the way it would behave if it were fully exposed to the risk.

‘Adverse Selection’

The more extensive the insurance coverage, one has, the more likely the party will experience a loss.

‘Principal/Agent’ Problem

He/she who orders does not buy, and he/she who buys does not order.

‘Cost Reimbursement’

When costs are fully reimbursed by insurers, incentives don’t exist to confirming the costs confirming the costs.

6

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SLIDE 8

When National Health Care Spending When National Was Half Health Care Spending Was Half

  • f Current Rates, Many Called its Growth,
  • f Current Rates, Many Called its Growth,

“ b “ l bl “Unsustainable” “Unsustainable” ”

TOTAL HEALTH EXPENDITURE AS % GDP BY YEAR

% GDP

  • n

HEALTH

7.8% in 1975 . . . 2008 SOURCE: WHO and OECD Data

7

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SLIDE 9

t t t t 1970’s 1970’s Technology: The Culprit Behind Rising Technology: The Culprit Behind Rising H l h H l C h C Health Care C Health Care C C ost

  • s s

ts

‘Technological Imperative’

Doctors’ need to access the latest, most sophisticated technologies to meet what they perceive to be the needs of their patients (Victor Fuchs, 1974).

‘Process Innovation Lags Product Innovation’

New technology should be cost reducing as process innovation typically follows product innovation (James Utterback 1978) follows product innovation (James Utterback, 1978). THI S HAS NOT HAPPENED I N HEALTH CARE

‘P I ’ ‘Perverse Incenti ti ves’

If a doctor is an effective performer and ‘Health Triumphs Over Disease’, he/she earns less compensation.

8

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SLIDE 10

t t t t t t t t

  • 1970’s

1970’s Major Theme: Regulatory Major Theme: Approaches to Regulatory Approaches to H l h C i H l h C i Health Cost C Health Cost C C ontainmen

  • n

t tainment

  • Wage

Wage-Price Freeze Price Freeze

  • Certificate of Need
  • Rate Setting
  • HMO Legislation (mixed regulatory, market approach)
  • Peer Review

9

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SLIDE 11
  • 1980’s

1980’s Major Theme: Market Approaches to Major Theme: Market Approaches to H l H l Heal H t ealth C h C h Care h Care C C C ost C ost C C C onta C ontainment inment

  • Revisions to HMO Legislation – reduce barriers to

entry

  • ‘Prospective Payment’ – Diagnosis Related Group

Diagnosis Related Group Prospective Payment (DRG) Reimbursement

  • ‘M

d C ‘Managed Care’ ’

  • ‘Managed Comp

petition’

  • Rand Health Insurance Experiment

10

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SLIDE 12
  • 1990’s

1990’s Major Theme: Market Approaches to Major Theme: Market Approaches to H l H l Heal H t ealth C h C h Care h Care C C C ost C ost C C C onta C ontainment inment

  • Clinton health reform plan fails to be enacted.
  • Increasing penetration of ‘Managed Care

Managed Care ’. Increasing penetration of

  • ‘Unmanaged Competition’
  • ‘Evidence-Based Medicine’

11

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SLIDE 13

When National Health Care Spending When National Was Half Health Care Spending Was Half

  • f Current Rates, Many Called its Growth,
  • f Current Rates, Many Called its Growth,

“ b “ l bl “Unsustainable” “Unsustainable” ”

TOTAL HEALTH EXPENDITURE AS % GDP BY YEAR

% GDP

  • n

HEALTH

. . . 2008 SOURCE: WHO and OECD Data

12

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SLIDE 14

2000 2000 Major Theme: Major Theme: Major Theme: Major Theme: Quality Initiatives Quality Initiatives Quality Initiatives Quality Initiatives

ƒ 3 National Academy Reports

― ‘T E i H ’ ‘To Err is Human’ ― ‘Crossing the Quality Chasm’ ― ‘Building a Better Delivery System’

  • Interest in ‘Lean’ and other systems approaches

to fixing problems of health care delivery.

  • Medicare prescription drug coverage.
  • Cost containment efforts stymied – lack of

political will?

13

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SLIDE 15

2009 Health Care Reform 2009 Health Care Reform

PPACA Initiati es ith the

  • PPACA Initiatives with the

Potential to Improve the Value of Health Deliver Health Delivery

  • Please refer to handout

14

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SLIDE 16

MIT OpenCourseWare http://ocw.mit.edu

ESD.69 / HST.926J Seminar on Health Care Systems Innovation

Fall 2010 For information about citing these materials or our Terms of Use, visit: http://ocw.mit.edu/terms.