Reform should reward great care, not 'procedures'

This article is the archived version of a report that appeared in the August 2009 Consumer Reports magazine.

The episode began, Eloise Kay recalls, when her mother's doctor ran a test to check on her rectal ulcer. The results suggested possible Crohn's disease, and a gastroenterologist prescribed drugs. Soon after, Mirium Kay began having abdominal pain and another doctor put her on a different drug. But when the pain worsened, both doctors suggested she go to the emergency room, where a hospitalist, a physician who practices only inside a hospital, took over.

"The hospitalist was great," Eloise Kay says, "but I don't think she had records on my mother. I'm a psychiatric nurse practitioner, so I could give a history. But with somebody who didn't know anything about health care, the history would have been sketchy."

After three days of interrupted sleep, hospital food, and diagnostic tests, it turned out that Mirium Kay had a duodenal ulcer that was easily treatable with inexpensive oral antibiotics. "But they also found a bacterium that is often associated with hospitals," her daughter says, so Mirium Kay got another antibiotic that cost $400. Total tab: over $11,000.

"I still don't understand why hospital resources were needed for the diagnosis," Eloise Kay says, "to say nothing of the cost and delays."

CU recommends

Today, insurers pay a fee for every test, pill, consultation, and procedure—which means that the more care given, the more providers get paid. Even without questioning anyone's motives, it's easy to see how such a system is biased toward overtreatment. And indeed, studies show that those who get more care don't necessarily do better, and often do worse, as a result.

Under patient-centered reform, doctors, hospitals, and labs would earn a combined flat fee for managing an "episode of illness." They'd be rewarded for quality of outcome, not quantity of care, so their main incentive would be to work together to make you well. Electronic records would ensure that with your permission, any doctor could access your history. Together, those reforms would help improve care and reduce costs.