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Healthcare reform — I am talking about true, structural reform that actually saves real money (versus CBO estimates) — is not going to come from Washington.  It will come one hospital, one provider, one community at a time, led by CEOs who are willing to take risks and empower their physicians and employees to rethink how care should be delivered.

The irony in this scenario is that it will be the blunt force of the federal government's biggest and most compelling weapon — the power of the purse — that will be needed to unleash the creative forces necessary to craft innovative new models.  Unfortunately, we are an industry that does not like to consider game-changing reform until forced to do so. 

Here is one interesting example of where a creative group of healthcare executives conceived a plan to improve quality and access while saving real-world dollars.  MedStar, the Fort Worth/Tarrant County emergency medical services authority which operates 911 and non-emergency transports without subsidy from its member cities or the county, is in the midst of a program trial designed to reduce the unnecessary transport of patients with chronic illnesses such as diabetes and pulmonary disease.  By making house calls when the advanced paramedics were available in the area where one of the study patients resided, MedStar recorded significant reductions in the number of unnecessary transports that clogged the county trauma center and added big costs to the taxpayers who provided for indigent care through ad-valorem taxes.  MedStar is now preparing to launch a nurse triage program to direct patients who do not need emergency transport, to more appropriate and cost-effective patient care settings.  This, too, should help reduce costs to the taxpayer and free up valuable resources at the public hospital to care for those who need a higher level of treatment. By some estimates this limited trial program has saved hospitals, primarily the public trauma center where many of these patients would have ended up, millions of dollars.

While showing great promise, this approach cannot be easily replicated in America's largest cities, regardless of the savings or benefits to the patients. Why?  Because the vast majority of the big-city EMS services are operated by fire departments, organizations with union bargaining agreements and work rules.

Herein lies an interesting twist to the local reform concept.  Fire department EMS providers are often the most inefficient providers of EMS services, even though the quality of care data does not conclusively justify their high costs. For example, there are typically the same number of fire department operated ambulances on duty at 3 AM on Sunday morning as there are on a payday Friday night. By contrast, MedStar flexes their unit hours and staffing based on computer models that forecast demand by time of day, day of week. Moreover, the paramedics do not sit around at a fire station waiting for a call.  Dispatchers, using the demand forecasts, "post" the ambulances in an area where calls are likely to come. That eliminates overhead costs that are almost always born by the taxpayers and improves response times.  There are fire departments that are experimenting with innovative programs but these, too, are underwritten by taxpayers.  

MedStar's fees for service may be higher than a typical fire department charges for a similar service, but consumers can join a membership program to protect against out-of-pocket expenses.  Moreover, indigent patients are never denied care. Even without taxpayer support, he system is currently financially self-sufficient, but they are not resting on their laurels.  They know that cuts in reimbursement will be painful.  "We will either innovate or become irrelevant," one senior MedStar exectuve said recently.

The healthcare industry is going to change. To remain relevant, providers, and the companies who provide services or products, must innovate and then redeploy technology to rewrite the rules for how we will all operate in the future.

© 2011 John Gregory Self

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