During a recent presentation at the fifth annual healthcare industry forum at Emory University's Goizueta Business School, Fred Sanfilippo turned to a PowerPoint slide: “Change vs. Inertia + Entropy.” Sanfilippo, the executive vice president for Health Affairs, CEO of the Woodruff Health Sciences Center and chairman of the board of Emory Healthcare, knows well that the healthcare industry suffers from inertia, entropy, and resistance to change.

(Former) Vice-President Al Gore makes an address on cancer at the Emory University campus in Atlanta on June ,2000 (TLC/JP / Reuters)

Americans tend to agree on healthcare’s problems—costs that continue to rise, sub par outcomes and safety figures, access and utilization issues, low satisfaction rates, as well as ineffective delivery of healthcare. “We spend a huge amount [of money] but the value is a lot less,” says Sanfilippo.

According to the National Coalition on Healthcare, healthcare spending in the U.S. reached $2.4 trillion in 2008. That number is expected to top $3 trillion by 2012 and bloom to $4.3 trillion by 2016. The U.S. healthcare system currently accounts for 16 percent of the country’s GDP and is projected to consume a quarter of total GDP within the next 10 years—a total that exceeds (by a wide margin) other industrialized nations that provide health insurance to their citizens. “We’re not getting our money’s worth,” says Sanfilippo. “Not at all.” And that $19 billion earmarked to improve healthcare IT in last year’s stimulus package? “A drop in the bucket.”

Another slide appears behind Sanfilippo: “Change = Vision + Plan x Dissatisfaction.” The overriding reason there hasn’t been real, lasting change in healthcare delivery isn’t resistance to change, inertia, or dissatisfaction; it is “the absence of a vision and a plan,” he says. That’s due in part to the fact that assigning a 'who' or 'what' to mandate such a plan hasn’t been settled (albeit the U.S. government is the frontrunner). But who or what will the government mandate? Employers? Health Plans? Consumers? Providers? And what should the ultimate goal of a mandate be? Sanfilippo believes the goal should be higher consumer satisfaction.

To give Goizueta students a feel for why the industry is in crisis, Sanfilippo described a trio of underlying problems—reimbursement, the lack of personalized, predictive care, and the industry’s current delivery model. He then suggested how the industry could improve these issues.

Currently, healthcare reimbursement is tied to volume and encounters. As a result, says Sanfilippo, “The system drives more and more encounters and more volume. And it’s independent of cost and value.” This means healthcare acts more like a commodity than a professional service. “If you treat it like a commodity, you get the things you’d expect,” he adds—such as a system incented to treat illnesses and conditions rather than prevent them. “The [patient] churning you see is a fundamental problem and it’s tied to the way we reimburse healthcare,” he notes. It affects patient safety and influences the way the public views healthcare—more as a short-term benefit than a long- term one.

To combat the reimbursement problem, Sanfilippo suggests rules for financing, rules for competition (not so easy to apply when it comes to healthcare delivery), and standards for access.

As the co-chair of the Blue Ridge Academic Health Group, an organization that studies and reports on issues of importance to improving the healthcare system, Sanfilippo cites a suggestion published in the Group’s Fall 2008 Policy Proposal: Use the Federal Reserve as a model to reform healthcare’s current payment system.

The U.S. had difficulty establishing a central bank in the first part of the 1900s in part because its citizens weren’t comfortable with concentrated power. To allay those fears, the Federal Reserve was created—an independent federal agency with a Board of Governors headquartered in Washington, D.C. that would oversee a dozen regional banks—banks that possessed both public and private elements and that had the power to make decisions for their districts.

Like the current Federal Reserve Board, the Blue Ridge group proposes the creation of the “United States Health Board,” which would consist of district boards that would provide oversight and act as a clearinghouse for transactions. Another advantage of this proposed system is that it would serve as a data repository and create and use standardized information. Presently, most health data is from insurance claims, but with standardized claims and a uniform collection of clinical information, a bevy of comparable data could be collected, sorted and shared.

Defining value in healthcare

Fred Sanfilippo

Sanfilippo thinks consumers should pay for quality, value and efficiency. Which brings up an important point: How does one focus on value? “IT drives quality and productivity,” says Sanfilippo. “Healthcare provides the most complicated information to process of anything one can think of.” While advances in medical technology have led to remarkable feats in medicine, the field has been notoriously slow to apply IT applications that would streamline the delivery of care and make it more safe and effective. If the industry were able to increase its accuracy and speed, enhance process controls, access to information, and provide decision support tools in real time, value would go up. “But cost and compliance are barriers,” he says.

Still, Sanfilippo contends that these barriers can be overcome and real-time access achieved. Sanfilippo, who is a past president of the American Society of Transplantation, points to the transplant model, or the Organ Procurement and Transplantation Network (OPTN), a private, non-profit transplant network established by the U.S. Congress in 1984. As part of OPTN, the United Network of Organ Sharing—a system that stresses efficiency, effectiveness and fair allocation—was established. After more than two decades, that model continues to well serve the transplantation community of patients, payers and providers.

Another major issue is healthcare’s focus on the average results of large population based studies, rather than the parameters associated with individual outcomes that vary tremendously in most such studies. Likewise, medicine currently tends to concentrate on biologic and genetic factors, but behavior and environment can trump them both in predicting the risk and response to disease as well as treatment, explains Sanfilippo. “What good is making a correct diagnosis and proposing the most appropriate intervention if the socioeconomic status of the individual results in non-compliance or adherence?”

Enhancing care for the individual

In addition, Sanfilippo would like to see healthcare delivery—the communication between parties, the decision-making process, and its value—be more focused on the individual patient and on predictive care. He suggests using informatics—the science that deals with information, its structure, acquisition and use—to help tailor healthcare delivery to individuals.

At Ohio State University, where Sanfilippo was senior vice president for health sciences and CEO prior to coming to Emory, the university instituted its own health plan for employees. Called, “Your Plan For Health,” it was based on individual patient information garnered from surveys and health screenings. Based on that information, employees received health coaching, disease management, email consultations, lifestyle improvement programs and decision support that assisted them in understanding the risks and benefits of medical procedures and treatment options. Instituted in 2006 after two years of planning, it’s had a big impact on efficiency and satisfaction, says Sanfilippo. In an effort to combat rising healthcare costs and create a healthier workforce, more and more organizations and companies are trying similar programs. “Many employers are stepping up,” he says.

Another area that needs improvement is the delivery model of healthcare. “No physician in any specialty knows all the information available to make the best decisions at all times,” says Sanfilippo. “We need to create new specialties and professions that interface with existing ones.” He notes this won’t be easy given the “big food fights” that occur at some hospitals and among medical specialties. For instance, if a patient has back pain, the most appropriate treatment recommended shouldn’t be dependent upon what medical or surgical specialist one sees first.

While the loss of specialty identity and loss of control are major barriers to adapting such changes, Sanfilippo believes the multidisciplinary, multispecialty team approach to most situations would lead to better delivery of healthcare. “It’s a culture change,” he admits, adding “those [healthcare professionals] able to organize in a different manner will have an enormous sustained advantage.”

It may seem like a huge task, but it has been done before. In 1910, Abraham Flexner released his “Flexner Report,” a study that called for reform in how American medical professionals were trained. Back then, many medical schools were for profit, and degrees were often handed out after a few years of study with the only prerequisite being the ability to pay tuition. Flexner recommended that academic standards for doctors be raised, that their education be based on scientific knowledge, and the content of that education be standardized. To this day, the Flexner report influences the medical profession.

Sanfilippo believes it is time for Flexner-like changes again—especially when it comes to the creation and interactions of new specialties and professions. Moving from medical care tied to the decisions and recommendations of individual physicians to healthcare delivered by vertically and horizontally integrated health teams is really important, he says. “It changed 100 years ago and we need that now. We need different specialties now. We need to provide 24/7 care in a way to fully engage people in a system they can navigate. It means developing new, interdisciplinary, teams focused on the patient —a different approach.”

He knows these are not easy changes, “especially when you think of the complex interactions that go on in health centers,” he says. In an academic health center like Emory, there are three distinct organizations and cultures—the hospital, the practice plan and the academic school. Each has a reward system and each measures success differently. Notes Sanfilippo: “Aligning all of these in the most productive manner is the biggest problem and opportunity to cure healthcare delivery.”

Sanfilippo tells the students that input from the business community is helpful. Healthcare could benefit from the business precepts of the service value-chain, as well as those of organizational structure-function and leadership. Applying lessons learned from high performing organizations would go a long way. As healthcare changes dramatically in the coming years, change management will become an even greater necessity. “We’ll need to help folks understand and drive huge changes,” he says. “Helping them see the value of this transformation will be essential to success.”