The New England Journal of Medicine December 29, 2011 Vol. 365 No. 26

The New England Journal of Medicine

Issue Index Table of contents for December 29, 2011 Vol. 365 No. 26 PERSPECTIVE

Building the Path to Accountable Care

2445-2447

E.S. Fisher, M.B. McClellan, and D.G. Safran

Copyright and Open Access at the Bedside

2447-2449

John C. Newman, and Robin Feldman

The Road Less Traveled

2449-2451

D.R. Fingold

The Savings Illusion — Why Clinical Quality Improvement Fails to Deliver Bottom-Line Results

e48

S.S. Rauh, E.B. Wadsworth, W.B. Weeks, and J.N. Weinstein ORIGINAL ARTICLES

Liberal or Restrictive Transfusion in High-Risk Patients after Hip Surgery

2453-2462

J.L. Carson and Others

Low-Molecular-Weight Heparin and Mortality in Acutely Ill Medical Patients

2463-2472

A.K. Kakkar and Others

Incorporation of Bevacizumab in the Primary Treatment of Ovarian Cancer

2473-2483

R.A. Burger and Others

A Phase 3 Trial of Bevacizumab in Ovarian Cancer

2484-2496

T.J. Perren and Others

SF3B1 and Other Novel Cancer Genes in Chronic Lymphocytic Leukemia

2497-2506

L. Wang and Others REVIEW ARTICLE

Mechanisms of Disease: Proprotein Convertases in Health and Disease

2507-2518

A.W. Artenstein and S.M. Opal EDITORIALS

Transfusion Thresholds in FOCUS

2532-2533

P.J. Barr and K.E.M. Bailie

Mutations in RNA Splicing Machinery in Human Cancers

2534-2535

B. Ebert and O.A. Bernard CORRESPONDENCE

Adenocarcinoma in Barrett's Esophagus

2539-2540

Change in FEV1 over Time in COPD

2540-2541

Community Transmission of Oseltamivir-Resistant A(H1N1)pdm09 Influenza

2541-2542

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december 29, 2011

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Perspective december 29, 2011

Building the Path to Accountable Care Elliott S. Fisher, M.D., M.P.H., Mark B. McClellan, M.D., Ph.D., and Dana G. Safran, Sc.D.

T

he recent release of the regulations that will govern the early years of Medicare’s implementation of accountable care organizations (ACOs) provides an important moment to reflect on the transition to this new payment model, which offers health care providers flexible financial support for improving care in return for accepting accountability for its overall quality and cost. It’s also an appropriate moment to explore the challenges that must be overcome in order to make more rapid progress. The final regulations for the Medicare Shared Savings Program, released on October 20, 2011, represent diligent work to try to address many concerns raised in response to the draft regulations.1 The regulations allow a broader range of ACO governance structures, reduce the number of required quality measures, create more opportunities for saving

while delaying risk bearing, permit care provided by a greater variety of clinicians (including specialists) to determine which patients are assigned to a given ACO, and allow ACOs to more effectively identify and reach out to their patients. Outside of Medicare, almost 100 provider organizations are already working with private health plans toward contracts containing the core elements of the ACO model: payment tied to improving patient care across the continuum and reducing overall spending growth. Other ACOrelated initiatives are emerging at the regional or state level (e.g., Vermont) or through state Medicaid programs (e.g., New Jersey

and Texas). At least 12 states have enacted legislation to facilitate accountable care reforms. Although no systematic evaluation of emerging ACOs is yet available, early work provides important insights. There is remarkable diversity: some ACOs are starting from scratch by assembling a new network of physicians, with or without a partnering hospital, and others are well-­ established individual practice associations or integrated systems; they have varying levels of prior experience with performance measurement and risk bearing.2,3 Even integrated systems, however, are finding that they need substantial time and resources to develop the informational, technical, financial, and professional capabilities required to provide and reward coordinated, longitudinal, population-based care. Most private-sector initiatives are therefore emerging as negotiated part-

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PERSPE C T I V E

Building the Path to Accountable Care

Challenges to the Successful Diffusion of the ACO Model and Approaches to Overcoming Them. Challenge

Approach

Providing timely and useful data

Payers provide ACOs with patient-level data to support care management. Quality measures used for accountability are also useful for care improvement.

Overcoming transition costs

Use quality-related payments to support needed ACO investments. Provide up-front funding options for provider groups that need them.

Gaining consumer support

Adopt performance measures that are more meaningful to consumers. Support consumer choice and allow consumers to share savings as well.

Learning what works; using that knowledge to inform policy and practice

Develop and test multipayer or all-payer ACOs where possible. Track and evaluate both public and private ACO implementation.

Clarifying the path forward

Create meaningful alternatives to fee for service for all providers. Measure effect on overall quality and cost in all payment reforms.

nerships between providers and a payer; both sides are investing in infrastructure, data sharing, risk management, patient engagement, and performance-improvement approaches.2,3 These observations suggest that ACO formation should be understood not through the lens of a specific settled contract, but rather as an emerging payment model that can be implemented alongside the fee-forservice payment system while supporting a transition to the goal of fully coordinated and accountable care. Implementation is still at an early stage. We have only preliminary information about the actual performance of many ACOs and no strong evidence on which features are most likely to lead to success in specific circumstances or how ACOs can best be integrated with other reforms intended to promote accountability and high-value care. On the basis of the growing set of ACO experiences and the extensive public comments regarding the Medicare ACO program, we have identified five key challenges and possible approaches to overcoming them (see table). The first challenge is providing timely data and useful performance measures. Even when providers have rich clinical data about 2446

care within their own setting, they are generally blind to the care provided elsewhere. Timely provision of consistent public and private data (including both timely claims data and increasingly sophisticated clinical data) would help ACO clinicians to improve and coordinate care. Performance measures for accountability should be based on data sources that can be used to support care improvement and should be aligned, to the extent possible, across providers and payers to minimize the burden and optimize the effect. The second challenge is overcoming transition costs. Any group that is implementing an ACO faces substantial infrastructure costs to support improved and coordinated care — a necessity that raises questions about whether ACO reforms will generate sufficient returns for providers.4 The Centers for Medicare and Medicaid Services (CMS) took steps to address this concern, including sharing first-dollar savings with ACOs that meet minimum savings thresholds, implementing a program to finance start-up costs for poorly capitalized groups (including physicianled organizations without a hospital and rural ACOs), and aligning ACO performance measures with those of Medicare’s Physician

Quality Reporting System. Other payers are linking ACOs to related reforms (medical homes or episode-based payments) to provide additional support. For example, in its global payment model, Blue Cross Blue Shield of Massachusetts uses a broad set of approaches to help practices develop the capacity to function as an ACO, including in-kind data support, shared-savings and quality payments, and in some cases, direct financial support for initial infrastructure needs. With such assistance, more than two thirds of physicians in Massachusetts are now participating in Blue Cross Blue Shield’s Alternative Quality Contract. Gaining consumer support is the third challenge. If consumers become worried that ACOs are stinting on care, the approach will be quickly rejected. The CMS and private payers should move to incorporate performance measures that have more direct meaning to consumers, such as patient-reported outcomes and additional measures of patients’ experience of care. Many new ACOs have found that making clear to patients that they can continue to choose their providers can allay consumers’ concerns; such choice is a feature of the Medicare regulations. Some ACOs now enable their members

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PERSPECTIVE

Building the Path to Accountable Care

to share in the savings from accountable care, which can foster greater consumer engagement and support for these delivery reforms. The fourth challenge is to learn what works — and what doesn’t — and then to use that new understanding to inform policy and practice. Assuming responsibility for spending, quality, and health outcomes represents a major shift for most U.S. providers and requires changes to information systems, care processes, staffing, governance, leadership, and approaches to patient engagement. Implementing such changes is particularly challenging for ACOs that face mixed payment models ranging from fee for service to capitation, with many alternatives in between. Developing and testing multipayer ACOs will be important. Funding agencies and foundations should also support a comprehensive effort to track and evaluate both public and private ACO initiatives so that policymakers can make midcourse corrections and ACOs and payers can be better informed about successful strategies. Finally, the fifth challenge is clarifying and reinforcing the path forward. The ongoing debate about the future of health care

reform may encourage some providers to adopt a “wait and see” approach. But the current political debate is unlikely to slow what appears to be an inexorable transition in both public and private insurance programs away from traditional fee-for-service reimbursement. Opponents of the Affordable Care Act support private payers’ efforts to implement payment reforms for accountable care. Consequently, it is more important than ever for providers to consider how they can demonstrably improve care while lowering costs and how they can use emerging payment methods to help them do so. Both the CMS and private payers should also continue to emphasize their commitment to the same goal. A broad range of potentially reinforcing payment models (such as episodebased and medical-home payments) can provide additional momentum for accountable care, especially when performance measures for these other payment models incorporate accountability for overall costs and quality. The success of the ACO model in any of its specific current contractual structures is not ensured, but early results are promising.5 Traditional fee-for-service models

will almost certainly see continued cuts in payment rates — which will make physicians’ and other providers’ work even more difficult if they remain under this payment model. Additional steps to accelerate the transition toward accountable care offer the public and providers a better and more hopeful path. Disclosure forms provided by the authors are available with the full text of this article at NEJM.org. From the Dartmouth Institute for Health Policy and Clinical Practice, Lebanon, NH (E.S.F.); the Engleberg Center for Health Care Reform, Brookings Institution, Washington, DC (M.B.M.); and Blue Cross Blue Shield of Massachusetts, Boston (D.G.S.). 1. Berwick DM. Making good on ACOs’ promise — the final rule for the Medicare Shared Savings Program. N Engl J Med 2011; 365:1753-6. 2. Van Citters AD, Larson BK, Carluzzo KL, et al. Toward accountable care: four health care organizations’ efforts to improve patient care and reduce costs. New York: The Commonwealth Fund, December 2011. 3. Chernew ME, Mechanic RE, Landon BE, Safran DG. Private-payer innovation in Massachusetts: the “Alternative Quality Contract.” Health Aff (Millwood) 2011;30:51-61. 4. Haywood TT, Kosel KC. The ACO model — a three-year financial loss? N Engl J Med 2011;364(14):e27. 5. Song Z, Safran DG, Landon BE, et al. Health care spending and quality in year 1 of the Alternative Quality Contract. N Engl J Med 2011;365:909-18. Copyright © 2011 Massachusetts Medical Society.

Copyright and Open Access at the Bedside John C. Newman, M.D., Ph.D., and Robin Feldman, J.D.

F

or three decades after its publication, in 1975, the Mini– Mental State Examination (MMSE) was widely distributed in textbooks, pocket guides, and Web sites and memorized by countless residents and medical students. The simplicity and ubiquity of this 30-item screening test — covering such functions as arith-

metic, memory, language comprehension, visuospatial skills, and orientation — made it the de facto standard for cognitive screening. Yet all that time, it was under copyright protection. In 2000, its authors, Marshal Folstein, Susan Folstein, and Paul McHugh, began taking steps to enforce their rights, first transferring the copy-

right to MiniMental, a corporation the Folsteins founded, and then in 2001 granting a worldwide exclusive license to Psychological Assessment Resources (PAR) to publish, distribute, and manage all intellectual property rights.1,2 A licensed version of the MMSE can now be purchased from PAR for $1.23 per test. The

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Copyright and Open Access at the Bedside

MMSE form is gradually disappearing from textbooks, Web sites, and clinical tool kits.1 Clinicians’ response to this “lockdown” has been muted. A few commentators have expressed concern about continuing to use a now-proprietary tool in training2 or about implications for the developing world,1 echoing debates about patented pharmaceuticals. In our experience, many clinicians are either unaware of the MMSE’s copyright restrictions or simply ignore them, despite the risk of copyright infringement. But then in March 2011, a promising new cognitive screening tool that was to be available through “open access,” the Sweet 16 — a 16-item assessment of thinking, learning, and memory developed by Harvard’s Tamara Fong3 — was removed from the Internet at the request of PAR in an apparent copyright dispute.4 The Sweet 16 includes orientation and three-object recall items, similar to the MMSE’s, along with a digit-span item. This action, unprecedented for a bedside clinical assessment tool, has sent a chill through the academic community; clearly, clinicians and researchers can no longer live in blissful ignorance of copyright. Copyright derives from one of the few powers explicitly mentioned in the U.S. Constitution. Any new intellectual work is under copyright protection automatically from the moment it is fixed in a tangible medium of expression — a category now including blog posts, iPhone apps, and cognitive screening tools. Copyright law grants the author (or owner, for copyright can be transferred) exclusive rights to copy the work, distribute it, make works derivative of it, and perform or display it publicly. These rights last for 2448

70 years past the date of the author’s death, or up to 120 years from the time of creation if the work was done “for hire.” This duration has been retroactively extended several times, so that works published as early as 1923 may remain under copyright today (and will until at least 2019). For persons or entities other than the copyright holder to copy or distribute a work, they must have permission from the owner, usually in the form of a license. Copying or distribution without permission is copyright infringement and carries stiff civil or even criminal penalties. There is limited protection under “fair use” law for certain nonprofit uses of limited parts of a work — for example, for teaching or research — but that exception is narrower than it sounds. One need not have intended to infringe someone’s copyright to be subject to damages of up to $30,000 per work, and willful infringers pay up to $150,000 — and may, under certain circumstances, be subject to a jail term. For clinicians, the risk of infringement is real. Photocopying or downloading the MMSE probably constitutes infringement; those who publish the MMSE on a Web site or pocket card could incur more severe penalties for distribution. Even more chilling is the “takedown” of the Sweet 16, apparently under threat of legal action from PAR (although PAR has not commented publicly). Are the creators of any new cognitive test that includes orientation questions or requires a patient to recall three items subject to action by PAR? However disputable the legal niceties, few physicians or institutions would want to have to argue their case in court. The MMSE case may be a har-

binger of more to come. Many clinical tools we take for granted, such as the Katz Index of Independence in Activities of Daily Living, fall into the same “benign neglect” copyright category as the MMSE did before 2000. At any time, they might be pulled back behind a wall of active copyright enforcement by the authors or their heirs. What can researchers do to ensure that our colleagues can use the tools we develop to improve patient care? One option is to essentially place works in the public domain by declaring free and open rights for all users. The Geriatric Depression Scale, the Patient Health Questionnaire (PHQ-9) depression scale, and the Saint Louis University Mental Status (SLUMS) cognitive assessment tool are all in the public domain. That domain, however offers no mechanism for ensuring that authors are recognized or compensated and no means of guaranteeing that later improvements will be made freely available. The ability to improve a clinical tool is crucial. Even licenses granting wide permission to copy, such as those of the Montreal Cognitive Assessment and the Lawton Instrumental Activities of Daily Living (IADL) scale, while laudable, might still inhibit innovation by permitting legal challenges to improved tools perceived as derivative (as may have been the case with Sweet 16 and the MMSE). A better solution is to apply the principle of “copyleft” from the open-source technology movement to encourage innovation and access while protecting authors’ rights. Copyleft is intellectual jujitsu that uses copyright protection to guarantee the right of anyone to use, modify, copy, and distribute a work, as long as it

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PERSPECTIVE

Copyright and Open Access at the Bedside

and any derivatives remain under the same license. The author retains the right to offer the work under a different license simultaneously — for example, giving a company specific license to commercialize the work without copy­ left protections. Popular copyleft licenses include the Creative Commons Attribution-ShareAlike license and the GNU Free Documentation License. Google, Apple, Facebook, and Twitter all use open-source software at the heart of their products, because there is a clear economic benefit to using well-tested, well-validated, continually improved software in the core of complex products. Similarly, there is a clear clinical benefit to using well-tested, well-validated, continually improved clinical tools in complex patient care — as demonstrated by the MMSE’s use before 2000. In a sense, copyleft is how academic medicine has always been assumed to work.2 Restrictive licensing of such basic tools wastes resources, prevents standardization, and detracts from efforts to improve patient care.

We suggest that authors of widely used clinical tools provide explicit permissive licensing, ideally with a form of copyleft. Any new tool developed with public funds should be required to use a copyleft or similar license to guarantee the freedom to distribute and improve it, similar to the requirement for open-access publication of research funded by the National Institutes of Health.5 The solution can be as simple as placing a copy of the tool on the authors’ Web site, with a statement naming or linking to the license. Clinicians and researchers would be free to use, copy, and improve the tool; improvements would have to offer a similar copyleft license, perpetuating the benefits. Yet authors would maintain ownership and copyright of their tool and could profit by licensing it for a fee to commercial users or publishers who wished to include it in a noncopyleft work. The restrictions on the MMSE’s use present clinicians with difficult choices: increase practice costs and complexity, risk copyright in-

fringement, or sacrifice 30 years of practical experience and validation to adopt new cognitive assessment tools. By embracing the principles of copyleft licensing, we can avoid such setbacks and build a more open future of continually improving patient care. Disclosure forms provided by the authors are available with the full text of this article at NEJM.org. From the Division of Geriatrics, San Francisco Veterans Affairs Medical Center, and the University of California San Francisco (J.C.N.); and the Law and Bioscience Project, University of California Hastings College of the Law (R.F.) — all in San Francisco. 1. Martin R, O’Neill D. Taxing your memory. Lancet 2009;373:2009-10. 2. Powsner S, Powsner D. Cognition, copyright, and the classroom. Am J Psychiatry 2005;162:627-8. 3. Fong TG, Jones RN, Rudolph JL, et al. Development and validation of a brief cognitive assessment tool: the Sweet 16. Arch Intern Med 2011;171:432-7. 4. The Hospital Elder Life Program (HELP) (http://www.hospitalelderlifeprogram.org/ private/sweet16-disclaimer.php?pageid= 01.09.00). 5. Feldman R, Nelson C. Open source, open access, and open transfer: market approaches to research bottlenecks. Northwestern Journal of Technology and Intellectual Property. Fall 2008:14-32. Copyright © 2011 Massachusetts Medical Society.

The Road Less Traveled Diane R. Fingold, M.D.

I 

worry that the primary care physician is a dying breed. Though it was once considered the noblest profession, U.S. medical students today believe the work is too hard, the hours too long, the pay too low. So they’re choosing to hit the “ROAD” — the high-paying specialties of radiology, ophthalmology, anesthesia, and dermatology. But if you think being a primary care doctor is hard, meet Mary. Not many people have it

harder than Mary. She always leaps to mind when I consider how our health care system fails our patients — and why I chose primary care. I’m Mary’s doctor, and though I care deeply about her, seeing her name on my schedule evokes mixed feelings: irritation that I’ll be an hour behind schedule the rest of the day; trepidation over the 50-50 chance she’ll need to be admitted, disrupting my busy day; and fear about intractable social problems.

Boston Irish, Mary has striking white hair and mischievous blue eyes; she’s feisty, funny, and utterly determined. Her neighborhood has seen generations of immigrants; its streets are lined with two-family homes and historic red brick churches, and there are pubs on every corner. Born and raised not far from her current apartment, she was stricken with rheumatic fever as a young girl. She remembers her youth as plagued by poor health, yet she

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graduated from high school, worked, married, and raised three children. But the early heart infection took a toll. By her mid-40s, Mary had an increasingly calcified mitral valve, an enlarging heart, and a damaged conduction system that caused atrial fibrillation and hypertension. Then came the stroke and a life forever changed. The paralysis of her right side was devastating enough, but she was also left unable to speak. Ultimately, with great difficulty, she began to utter a few simple words. Overwhelmed by her disabilities and dependent on others as never before, Mary saw her losses mount when her husband, unable to cope with her situation, left her. Soon thereafter, Mary’s creatinine level began to climb. No diabetes, no new meds, no obvious explanation for her failing kidneys. She saw a nephrologist and had innumerable blood and urine tests and finally a renal biopsy — the challenge of each experience heightened by the difficulty of communication and her loss of mobility. Eventually, she received a diagnosis of focal glomerular sclerosis. The kidney deterioration couldn’t be stopped, and she became overloaded with fluid and toxins. Mary had multiple hospital admissions for congestive heart failure and was facing the prospect of dialysis. An attempt at mitral valvuloplasty bought her a little time, but the admissions soon resumed. Then hemodialysis began. Consider the logistics of requiring a wheelchair, being unable to communicate over the phone, and needing to get to dialysis appointments three times a week. Add to the mix that Mary was unemployed, estranged from her children, took 16 medications 2450

daily, and also had to get to appointments for physical, occupational, and speech therapy — plus regular visits to the nephrologist, the cardiologist, and me. Somehow, she did it: her tenacity is astounding. Finally, Mary got a lucky break: a cadaveric kidney that was a close match. She had a rocky perioperative course but ultimately a good outcome. Mary’s joy at not having to return to dialysis was palpable; she strained to utter the words, “Thanks, thanks!” Mary’s pharmacy is one of few that still have the personal touch — Mary receives her pills in blister packs weekly by mail. There’s a real pharmacist I can speak to on the phone; he knows Mary well, knows all her meds, and is there every day, so whenever I adjust Mary’s Lasix dose, I can call him and get an extra blister pack sent to her the next day. It seems like a gift from above. Traveling by wheelchair down the sidewalk of her bustling neighborhood is part of Mary’s daily routine. Draped over the back of her wheelchair, she keeps a bag containing all her medications and a book with her doctors’ phone numbers and upcoming appointments; it makes her feel secure. But one day, a desperate stranger found it too tempting: a disabled woman, all alone, with that bag just dangling for the taking. In a moment, it was gone. Mary felt like her world was gone, too. “I understand she’s not due for her medications yet, but as I just explained to you, her medications were stolen.” I don’t know how many people I spoke to, but no one seemed to be able to fix the problem. Without her Lasix, Mary would probably be in heart failure in 48 hours, and her immunosuppressants and prednisone prevent

acute rejection of her transplanted kidney. Finding someone who understood the seriousness of the situation and could help seemed impossible. Even her pharmacist was willing to give her only a few days’ supply until Mary sorted things out with the insurance company — our government. But how could she “sort things out” when she couldn’t even speak? Somehow, miraculously, I persuaded someone to replace Mary’s pills. But for Mary, such miracles are rare. She arrives at my office for a follow-up visit, clearly distraught. She struggles through tears to choke out a few words (“darn, thanks, yes”) that don’t convey what she needs to say. She points to the phone, “You want me to call someone?” I ask. She nods emphatically. “Who? A relative? One of your specialists? Do you need a refill on one of your medications?” She lurches forward. I’m on the right track. “Which one?” I ask. She frowns. Off track. “OK, you don’t need a refill; what do you need?” Of course I know she can’t answer that. And if I’m feeling this frustrated, how does Mary feel every hour of every day? How does she go on? I finally figure out that she wants me to call her pharmacist. Without knowing why, I dial the number. “I was expecting your call,” he says. There’s a “problem” with Mary’s treatment. She’s been dropped from Medicaid and is no longer eligible for her medications. My heart sinks. Mary’s eyes are filled with fear — it’s as bad as she thinks. Again, the pharmacist offers a few days’ supply until Mary can straighten things out. I want to scream, “But she can’t speak!” I talk to social workers. Connected with every department in the vast Medicaid bureaucracy, I

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PERSPECTIVE

The Road Less Traveled

repeat the story, getting variations on a standard response: “That shouldn’t have happened, but I’m not sure how to reverse the problem.” Luckily, the pharmacist is flexible about “a few days,” and after about a month, Mary is back on the Medicaid logs. It was a fluke, I’m told — a simple error that could send a life into a tailspin. Mary’s life is filled with such stories, but she musters awe-­ inspiring strength and determination for each challenge. At times, it does feel too hard to be Mary’s doctor. But it also has priceless rewards — which those medical

students on the ROAD don’t yet understand and may never get to experience. Every time Mary rolls into the emergency department, the overworked housestaff quickly tire of being unable to “get the story” from her. They just give her a squirt of Lasix or an antibiotic and head for the door. I understand their frustration. But what about Mary? I get the call and head over to the ED. As I pull back the curtain, a smile of recognition spreads over Mary’s face. She can relax now. She knows I care, that I’ll figure out her story and make sure the ED docs know all her

meds, allergies, and complications; I’ll let her specialists know she’s here. She knows that if her medicines change, I’ll contact her pharmacy to ensure she gets a new blister pack. She lies back and breathes more comfortably. And at times like this, I recognize my deep satisfaction with the road I’ve chosen to travel. Disclosure forms provided by the author are available with the full text of this article at NEJM.org. From Harvard Medical School and Massachusetts General Hospital — both in Boston. Copyright © 2011 Massachusetts Medical Society.

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The

NEW ENGLA ND JOURNAL

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Perspective The Savings Illusion — Why Clinical Quality Improvement Fails to Deliver Bottom-Line Results Stephen S. Rauh, M.B.A., C.F.A., Eric B. Wadsworth, Ph.D., C.P.A., William B. Weeks, M.D., M.B.A., and James N. Weinstein, D.O.

I

t has become a core belief in U.S. health care that improving clinical quality will reduce health care costs. It seems intuitive that reducing readmissions, shortening lengths of stay, and building efficiency

into clinical processes will reduce resource utilization and thereby lower costs. Certainly, evidence suggests that there is no association between high quality and high costs.1 Yet true bottom-line savings from improved clinical quality rarely materialize, and costs continue to climb. Manufacturing and service companies around the world have demonstrated the cost benefits of improving product quality and production efficiency. So why haven’t nearly two decades of work on improving health care quality had a measurable effect on health care costs? The explanation lies in the cost

structure of the typical health care setting. Its management and organization create a rigid cost structure that is relatively insensitive to small changes in patient volume, resource use, or the severity of patients’ health conditions. This fixed-cost dilemma leaves most health care costs insensitive to changes in volume and utilization, so clinical quality improvements typically create additional capacity rather than bottom-line savings.2 An examination of the different cost layers highlights the distinction between variable costs, such as supplies and medications, where reduced use produces true savings, and

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fixed costs, such as facilities and ancillary services, where the costs persist despite reduced use. To better understand the cost structure of health care delivery, it can be useful to consider how different costs behave depending on the degree to which they are sensitive to changes in resource utilization. The four cost layers we have identified are defined in the table. Clinical improvements that reduce layer 1 costs, such as those of supplies and medications, will generally create bottom-line savings, since these are the only truly variable clinical costs in a hospital. To generate savings by reducing use of the resources that account for layer 2 costs, the need for the resource must be reduced enough to allow elimination of a payable unit. For instance, a single nursing unit might have to e48(1)

PERSPE C T I V E

The Savings Illusion

Behavior of the Various Cost Layers in the Health Care System. Cost Layer

Effects of Reduction in Use

Layer 1: truly variable costs of patient care

The item is not consumed, does not need to be replaced, and is available for later use.

Supplies, medications

Layer 2: semivariable costs of patient care

The item is not consumed, but the ability to repurpose the item is limited by time. Costs of providing the service may be reduced with sufficient ­reduction in volume.

Direct hourly nursing, respiratory therapists, physical therapists

Layer 3: semifixed costs of patient care

The item is not consumed, but the obligation to continue to pay for the item does not change.

Equipment, operating-room time, physician salaries, ancillary services

Layer 4: fixed costs not asso­ ciated with patient care

Resource consumption is not altered in the short run but may be altered in the next operating cycle.

Billing, organizational overhead, ­finance

discharge multiple patients before any savings in hourly nursing ­labor costs could be captured by allowing an hourly employee to go home early. Reducing layer 3 resources — those for equipment, operating-room time, or physicians’ salaries, for example — almost always produces additional capacity without bottom-line savings. If an intervention reduces operating-room time by 15 minutes, the costs of the equipment and salaried staff required to run the operating room do not change. Nonclinical layer 4 costs are primarily fixed in the short run, but reducing administrative labor costs by achieving administrative efficiency will produce true savings in future operating cycles. Because of these cost behaviors, quality-improvement efforts that reduce lengths of stay or readmissions or increase radiology throughput do not create substantive bottom-line savings. They generally create capacity to treat additional patients. Similarly, efforts to expand the access of disadvantaged populations to primary care under the assumption that such access will be paid for through avoiding use of highcost care sites — such as emergency departments — do not generate cost savings. The cost of e48(2)

Examples

staffing and equipping an emergency department does not change if there are small reductions in utilization. Indeed, improved access will increase health care costs if new physicians and staff are hired to serve new patients in primary care practices. Although capacity creation does not generate bottom-line savings, it does create an opportunity to admit another patient and collect additional revenue. Because health care costs are relatively fixed and do not change much at the margin, the cost of admitting a new patient is remarkably low, making volume growth a highly profitable strategy. Volume growth also can give the appearance of reducing costs, since the cost per case decreases when the high fixed costs are spread over a larger number of patients, although total costs will probably continue to rise. Growing volume and increasing revenue, rather than creating true bottom-line savings, are typically at the core of the business case for high-quality care.3 Because of the rigid cost structures, incremental reductions in resource use are unlikely to generate cost savings for either a health care setting or the health care system. The most meaningful way to achieve savings is to

focus on overall reductions in utilization rates for health care services and to eliminate the associated unnecessary capacity. In a recent article, Kaplan and Porter argue that most health care costs are not fixed.4 Postulating that personnel costs can be adjusted and space reallocated on the basis of demand and patient mix, they suggest that cost behaviors are not responsible for the inability to generate cost savings, but “management inattention” is. Although we do not dispute this logic, its practical application is dependent on both procedure volume and the time horizon required for aligning resources with demand. High-volume procedures and treatments for which resource use can be standardized across the cycle of care and for which capacity can be readily adjusted to accommodate appropriate volume appear to be best suited to the aggressive cost management advocated by Kaplan and Porter. Presumably, lower-volume treatments and procedures would have to be consolidated regionally to be more amenable to effective cost management. Until that happens, the fixed-cost dilemma will remain an obstacle. Cost layering provides management with a framework for targeting chang-

10.1056/nejmp1111662  nejm.org

The New England Journal of Medicine Copyright © 2011 Massachusetts Medical Society. All rights reserved.

PERSPECTIVE

The Savings Illusion

es that will generate the most immediate savings. Whereas quality improvement is producing significant benefits for patients, quality initiatives will continue to produce disappointing bottom-line savings as long as the capacity created is used to support growth in patient volume. As the U.S. health care system begins shifting its focus from volume to value, hospitals

will need to adapt their cost structures and capacity to accommodate lower per capita utilization rates as well as reductions in the per-episode intensity of care. Disclosure forms provided by the authors are available with the full text of this article at NEJM.org. From the Dartmouth Institute for Health Policy and Clinical Practice, Lebanon, NH. This article (10.1056/NEJMp1111662) was published on December 14, 2011, at NEJM.org.

10.1056/nejmp1111662  nejm.org

The New England Journal of Medicine Copyright © 2011 Massachusetts Medical Society. All rights reserved.

1. Yasaitis L, Fisher ES, Skinner JS, Chandra A. Hospital quality and intensity of spending: is there an association? Health Aff (Millwood) 2009;28:w566-w572. 2. Rauh SS, Wadsworth E, Weeks WB. The fixed cost dilemma: what counts when counting cost reduction efforts? Healthc Financ Manage 2010;64:60-3. 3. Gross PA, Ferguson JP, DeMauro P, et al. The business case for quality at a university teaching hospital. Jt Comm J Qual Patient Saf 2007;33:163-70. 4. Kaplan RS, Porter ME. How to solve the cost crisis in health care. Harv Bus Rev 2011; 89:46-52. Copyright © 2011 Massachusetts Medical Society.

e48(3)

new england journal of medicine The

established in 1812

december 29, 2011

vol. 365  no. 26

Liberal or Restrictive Transfusion in High-Risk Patients after Hip Surgery Jeffrey L. Carson, M.D., Michael L. Terrin, M.D., M.P.H., Helaine Noveck, M.P.H., David W. Sanders, M.D., Bernard R. Chaitman, M.D., George G. Rhoads, M.D., M.P.H., George Nemo, Ph.D., Karen Dragert, R.N., Lauren Beaupre, P.T., Ph.D., Kevin Hildebrand, M.D., William Macaulay, M.D., Courtland Lewis, M.D., Donald Richard Cook, B.M.Sc., M.D., Gwendolyn Dobbin, C.C.R.P., Khwaja J. Zakriya, M.D., Fred S. Apple, Ph.D., Rebecca A. Horney, B.A., and Jay Magaziner, Ph.D., M.S.Hyg., for the FOCUS Investigators*

A bs t r ac t Background

The hemoglobin threshold at which postoperative red-cell transfusion is warranted is controversial. We conducted a randomized trial to determine whether a higher threshold for blood transfusion would improve recovery in patients who had undergone surgery for hip fracture. Methods

We enrolled 2016 patients who were 50 years of age or older, who had either a history of or risk factors for cardiovascular disease, and whose hemoglobin level was below 10 g per deciliter after hip-fracture surgery. We randomly assigned patients to a liberal transfusion strategy (a hemoglobin threshold of 10 g per deciliter) or a restrictive transfusion strategy (symptoms of anemia or at physician discretion for a hemoglobin level of