Universal principles for health care refor A health care systems fundamental problems can be addressed if the decision makers recognize the interlocking nature of its elements. FEBRUARY 2007. Diana Farrell, Nicolaus P Henke, and Paul D. Mango Source: Healthcare Payor and Provider Practice In This article Exhibit 1: Seven common princip les, applicable to a broad spectrum of health systems, provid framework to guide decision making Exhibit 2: Health-care system leaders should deploy three main approaches to implementation about the autho Comments Health care systems around the world struggle to reconcile three com peting objectives: equitable access, high quality, and low cost. The these goals are inherently political. Should governments, for example, ration capacity in order to lower costs, even if doing so creates longer waiting times for care? Should they provide coverage to all citizens? Mandate quality standards? As political and local as such choices may seem, many of the challenges reformers face are common to almost every health care system: for instance, increased supply creates additional demand for care and often fails to generate commensurately better outcomes, such as longer life expectancy. In many countries, higher spending does not correlate with higher-quality health care as perceived by consumers A comprehensive approach The universal features of health care systems across the developed world suggest that today s reformers, who tend to be piecemeal in their interventions, would benefit from a more holistic approach: one that recognizes the strong
Universal principles for health care reform A health care system's fundamental problems can be addressed if the decision makers recognize the interlocking nature of its elements. FEBRUARY 2007 • Diana Farrell, Nicolaus P. Henke, and Paul D. Mango Source: Healthcare Payor and Provider Practice In This Article • Exhibit 1: Seven common principles, applicable to a broad spectrum of health systems, provide a framework to guide decision making. • Exhibit 2: Health-care system leaders should deploy three main approaches to implementation. • About the authors • Comments Health care systems around the world struggle to reconcile three competing objectives: equitable access, high quality, and low cost. The trade -offs among these goals are inherently political. Should governments, for example, ration capacity in order to lower costs, even if doing so creates longer waiting times for care? Should they provide coverage to all citizens? Mandate quality standards? As political and local as such choices may seem, many of the challenges reformers face are common to almost every health care system: for instance, increased supply creates additional demand for care and often fails to generate commensurately better outcomes, such as longer life expectancy. In many countries, higher spending does not correlate with higher-quality health care as perceived by consumers. A comprehensive approach The universal features of health care systems across the developed world suggest that today’s reformers, who tend to be piecemeal in their interventions, would benefit from a more holistic approach: one that recognizes the strong
interdependency of seemingly autonomous actions. Reformers need a comprehensive perspective lest their remedies for one aspect of a health care system generate unintended-and potentially negative and costly-im plications for another part Developing a com prehensive perspective for such a com plex challenge requires a framework to help guide decision making To create an overview of the complicated relationship between the com peting goals common to all health systems, we identified and unbundled the primary elements of supply and demand. (The full report, A Framework to Guide Health Care System Reform, was published in January 2007 and is available free of charge online. In so doing we formulated six principles that apply to a broad spectrum of health care systems. Two of these principles relate to demand, three to supply and one to intermediation between supply and demand we then derived a seventh principle concerning the organizational and operational framework necessary to im plement these concepts(Exhibit 1). Despite the unique characteristics of health care, our findings should refute the notion that it is fundamentally beyond the possibility of structured, logical, economically rational reform
interdependency of seemingly autonomous actions. Reformers need a comprehensive perspective lest their remedies for one aspect of a health care system generate unintended—and potentially negative and costly—implications for another part. Developing a comprehensive perspective for such a complex challenge requires a framework to help guide decision making. To create an overview of the complicated relationship between the competing goals common to all health systems, we identified and unbundled the primary elements of supply and demand. (The full report, A Framework to Guide Health Care System Reform, was published in January 2007 and is available free of charge online.) In so doing, we formulated six principles that apply to a broad spectrum of health care systems. Two of these principles relate to demand, three to supply, and one to intermediation between supply and demand. We then derived a seventh principle, concerning the organizational and operational framework necessary to implement these concepts (Exhibit 1). Despite the unique characteristics of health care, our findings should refute the notion that it is fundamentally beyond the possibility of structured, logical, economically rational reform
Your javascript is turned off. Javascript is required to view exhibits Back to top Seven principles to guide health care reform While these principles are not necessarily new they provide a systematic basis for aligning supply with demand and thus for characterizing the levers available to a health system's policy makers. The framework of the seven principles will give policy makers an additional tool for com paring a health system' s performance with others and, when necessary, for reprioritizing areas of reform-to optimize performance and to reconcile the inherent conflicts among the objectives of access, quality, and cost. 1. Prevent illness and injury Most health care systems focus on care for those already ill or injured. Yet policies aimed at promoting health and reducing the amount of sickness and injury decrease the demand for medical services and may produce better health outcomes at lower cost. Obvious as this opportunity might seem, many reformers prefer to deal with more complicated matters before addressing it, perhaps in part because they believe that health and wellness are personal matters while access to care and its financing are more political ones. we have identified four levers that help prevent illness Build an infrastructure to support basic levels of hygiene. Proper sanitation, clean drinking water, and safe, reliable energy all have an im pact on health. Inner cities, remote areas of developed countries, and developing economies typically fall short in these areas. Reduce environmental hazards. The link between pollution and illness is now well accepted. Despite the improvements some nations have made, large variations in pollution levels and environmental standards persist around the world-the United States em its nearly five times more carbon monoxide per capita than the United Kingdom, Germany, or Japan, for instance In national debates, health system leaders must illustrate the link between environment and health more forcefully Establish effective and comprehensive immunization programs. Even in some developed countries, immunization programs fall short of reaching 100 percent of the population. In developed countries, the vaccination rates of one-year-olds for measles and hepatitis b, for example vary from 8o to 99 percent and from o to 2 percent, respectively. Even allowing for questions about the efficacy and possible side effects of some vaccines, we believe that immunization rates should be more uniform
Your javascript is turned off. Javascript is required to view exhibits. Back to top Seven principles to guide health care reform While these principles are not necessarily new, they provide a systematic basis for aligning supply with demand and thus for characterizing the levers available to a health system’s policy makers. The framework of the seven principles will give policy makers an additional tool for comparing a health system’s performance with others and, when necessary, for reprioritizing areas of reform—to optimize performance and to reconcile the inherent conflicts among the objectives of access, quality, and cost. 1. Prevent illness and injury Most health care systems focus on care for those already ill or injured. Yet policies aimed at promoting health and reducing the amount of sickness and injury decrease the demand for medical services and may produce better health outcomes at lower cost. Obvious as this opportunity might seem, many reformers prefer to deal with more complicated matters before addressing it, perhaps in part because they believe that health and wellness are personal matters, while access to care and its financing are more political ones. We have identified four levers that help prevent illness. Build an infrastructure to support basic levels of hygiene. Proper sanitation, clean drinking water, and safe, reliable energy all have an impact on health. Inner cities, remote areas of developed countries, and developing economies typically fall short in these areas. Reduce environmental hazards. The link between pollution and illness is now well accepted. Despite the improvements some nations have made, large variations in pollution levels and environmental standards persist around the world—the United States emits nearly five times more carbon monoxide per capita than the United Kingdom, Germany, or Japan, for instance. In national debates, health system leaders must illustrate the link between environment and health more forcefully. Establish effective and comprehensive immunization programs. Even in some developed countries, immunization programs fall short of reaching 100 percent of the population. In developed countries, the vaccination rates of one-year-olds for measles and hepatitis B, for example, vary from 80 to 99 percent and from 0 to 92 percent, respectively. Even allowing for questions about the efficacy and possible side effects of some vaccines, we believe that immunization rates should be more uniform
Encourage healthy lifestyles. It is widely acknowledged that an increased risk of diabetes, heart disease, and cancer, for instance is linked with poor diet, sedentary lifestyles, and smoking Public-education campaigns can be effective-since the 1980s, for instance the United Kingdom and the United States have reduced tobacco consumption per capita by approximately 5o percent But unhealthy lifestyles remain pervasive in most developed Western economies and the health of the overall population continues to deteriorate 2. Promote value-conscious consumption The quality and efficiency of any health care system can be improved through value-conscious consumption, but that is difficult to achieve when customers dont know what constitutes superior quality and what that quality costs and don't have financial accountability for their decisions. Health system leaders should act on two fronts to ensure that decisions about health care consumption are made in the same way as other decisions involving discretionary economic trade-offs Provide information and flexibility to support rational choice. At present, the level of transparency along the dimensions of price, quality, and service isn 't enough to support economically efficient decision making But there has been some progress In the United States, for example, the Centers for Medicare Medicaid Services(CMS) now publishes statistics on the complication and mortality rates at hospitals. However, more information should be made available and consumers should have the ability to select providers freely. Foster consumer accountability. Transparency is a prerequisite for rational choice but won't fully bring it about unless financial benefits and consequences are attached to the resulting decisions. Health care consumption has been isolated from nearly all economic trade-offs through the introduction of third-party intermediaries, yet different providers and treatments often involve vastly different levels of resource consumption-without a corresponding difference in benefits. In other words, consumer accountability is lacking. 3. Analyze under- and overcapacity We found evidence of both under-and overcapacity in different areas of all the health care systems we examined. The most glaring cases of undersupply are in frican countries, where hardly any national health care systems have the resources to purchase adequate supplies of drug gs, equipment, and devices. An example of overcapacity, in contrast, is the large number of MRi scanners per capita in Japan -more than six times as many as in germany or the United Kingdom. While policy makers should try to limit their influence on capacity
Encourage healthy lifestyles. It is widely acknowledged that an increased risk of diabetes, heart disease, and cancer, for instance, is linked with poor diet, sedentary lifestyles, and smoking. Public-education campaigns can be effective—since the 1980s, for instance, the United Kingdom and the United States have reduced tobacco consumption per capita by approximately 50 percent. But unhealthy lifestyles remain pervasive in most developed Western economies, and the health of the overall population continues to deteriorate. 2. Promote value-conscious consumption The quality and efficiency of any health care system can be improved through value-conscious consumption, but that is difficult to achieve when customers don’t know what constitutes superior quality and what that quality costs and don’t have financial accountability for their decisions. Health system leaders should act on two fronts to ensure that decisions about health care consumption are made in the same way as other decisions involving discretionary economic trade-offs. Provide information and flexibility to support rational choice. At present, the level of transparency along the dimensions of price, quality, and service isn’t enough to support economically efficient decision making. But there has been some progress. In the United States, for example, the Centers for Medicare & Medicaid Services (CMS) 1 now publishes statistics on the complication and mortality rates at hospitals. However, more information should be made available, and consumers should have the ability to select providers freely. Foster consumer accountability. Transparency is a prerequisite for rational choice but won’t fully bring it about unless financial benefits and consequences are attached to the resulting decisions. Health care consumption has been isolated from nearly all economic trade-offs through the introduction of third-party intermediaries, yet different providers and treatments often involve vastly different levels of resource consumption—without a corresponding difference in benefits. In other words, consumer accountability is lacking. 3. Analyze under- and overcapacity We found evidence of both under- and overcapacity in different areas of all the health care systems we examined. The most glaring cases of undersupply are in African countries, where hardly any national health care systems have the resources to purchase adequate supplies of drugs, equipment, and devices. An example of overcapacity, in contrast, is the large number of MRI scanners per capita in Japan—more than six times as many as in Germany or the United Kingdom. While policy makers should try to limit their influence on capacity
issues-poor investment decisions and regulation too easily lead to over-or undersupply-they should still aim to avoid extreme undercapacity in for ur areas Physical capital and capacity. adequate health care coverage depends on a sufficient supply of hospitals and related physical resources, but even developed economies sometimes have trouble meeting these requirements. In Britains National Health Service(NHS), for example, some 41 percent of patients requiring elective surgery have to wait longer than four months for their operations, an indication of undercapacity or of inefficient use of available capacity. Demand assessments and sustainable capacity. Traditional metrics may be misleading. In the United States, for example, simply counting the number of beds per capita suggests undercapacity. However, actual statistics for admissions and for the duration of hospital stays show that the country has too many hospital Labor. The failure to match labor supply with demand is a key factor limiting the provision of health care services. It is not easy, even in developed economies, to ensure an adequate labor supply-the training of doctors and nurses involves long lead times and can be made more difficult by professional associations that exercise a large degree of control over the number of educational and training positions in some countries. Many nations have resorted to im porting health care workers-although this practice is proving increasingly controversial as it often takes those workers from the developing countries that educated and trained t Technology. The right quantity and mix of technology is necessary to secure an adequate supply of the most efficacious drugs and the most effective equipment Innovation must be actively promoted to ensure that technology continually improves, but technology must be targeted to meet the health needs of the population in question. The newest and most expensive machines or devices are not always the most appropriate; technology like physical resources, labor, and IT, may be in under-or oversupply. 4. Safeguard the quality of suppliers Efforts to improve the quality of health care, which varies considerably among systems and even more strikingly within them, face two major challenges. First the lack of reliable data on quality, safety, and service can hinder the development and monitoring of the most effective treatments. Second, quality and service problems often stem from system-level issues, such as a lack of adequate funding, so they have to be examined along with the other supply factors. Policy makers should focus their attention on three areas of im portance
issues—poor investment decisions and regulation too easily lead to over- or undersupply—they should still aim to avoid extreme undercapacity in four areas. Physical capital and capacity. Adequate health care coverage depends on a sufficient supply of hospitals and related physical resources, but even developed economies sometimes have trouble meeting these requirements. In Britain’s National Health Service (NHS), for example, some 41 percent of patients requiring elective surgery have to wait longer than four months for their operations, an indication of undercapacity or of inefficient use of available capacity. Demand assessments and sustainable capacity. Traditional metrics may be misleading. In the United States, for example, simply counting the number of beds per capita suggests undercapacity. However, actual statistics for admissions and for the duration of hospital stays show that the country has too many hospital beds. Labor. The failure to match labor supply with demand is a key factor limiting the provision of health care services. It is not easy, even in developed economies, to ensure an adequate labor supply—the training of doctors and nurses involves long lead times and can be made more difficult by professional associations that exercise a large degree of control over the number of educational and training positions in some countries. Many nations have resorted to importing health care workers—although this practice is proving increasingly controversial as it often takes those workers from the developing countries that educated and trained them. Technology. The right quantity and mix of technology is necessary to secure an adequate supply of the most efficacious drugs and the most effective equipment. Innovation must be actively promoted to ensure that technology continually improves, but technology must be targeted to meet the health needs of the population in question. The newest and most expensive machines or devices are not always the most appropriate; technology, like physical resources, labor, and IT, may be in under- or oversupply. 4. Safeguard the quality of suppliers Efforts to improve the quality of health care, which varies considerably among systems and even more strikingly within them, face two major challenges. First, the lack of reliable data on quality, safety, and service can hinder the development and monitoring of the most effective treatments. Second, quality and service problems often stem from system-level issues, such as a lack of adequate funding, so they have to be examined along with the other supply factors. Policy makers should focus their attention on three areas of importance