Healthcare CEOs Offer Quality-Driven Payment Model

Janice Simmons, for HealthLeaders Media , June 15, 2009

A group of healthcare CEOs, meeting near the Capitol on Friday, urged Congress to move ahead with reform plans to improve patient access to care, reduce cost growth, and enhance quality.

The group, called Health CEOs for Health Reform, issued a white paper that focused on creating a new payment system that they said would reward high-quality care while discouraging fragmented low-value care.

Nancy-Ann DeParle, head of the White House Office of Health Reform, who introduced the group, told them that they were "putting your money where your mouth is by doing the hard work of identifying the $500 million to $600 million" that could be saved over the next 10 years to reform the system.

"These folks are willing to put their own business models up to the looking glass and say how we might realign incentives to better serve the patient we're serving now," said Len Nichols, director of the Health Policy Program of the New America Foundation, which organized the CEO group.

Scott Armstrong, president and CEO of Group Health Cooperative, headquartered in Seattle, talked about how investment in an electronic medical records system "changed the way we practice medicine in our organization" and how they "eliminated wasteful redundant decisions thousand of times a day."

Overall, "we do know how to deliver care differently," said Nicholas Wolter, MD, of the Billings (MT) Clinic. With more physician-hospital organizations and other integrated approaches emerging, changes can occur, but it has to happen "fairly quickly because we do not have longer than 5 to 10 years to deal with what is truly becoming not just a healthcare burden but a burden on our entire society."

Among the proposals the group made are:

  • Switch Medicare fee-for-service payments with outcome-driven bundled payments.
  • Hold higher cost-providers accountable to the cost, quality, and utilization standards reached by more efficient peers.
  • Give providers a bundled payment based on comprehensive services and shared risk.
  • Eliminate the Sustainable Growth Rate formula for determining physician payments.
  • Regionalize high-cost, resource-intensive services under Medicare.
  • Continue investments in quality infrastructure, including health information technology, decision-support tools, and comparative effectiveness research.

Other members of the CEO team are:

Bruce Bodaken, president, chairman and CEO, Blue Shield of California; Lloyd Dean; president and CEO, Catholic Healthcare West; Kenneth C. Frazier, president, Global Human Health, Merck & Co. Inc.; Patricia A. Gabow, MD, CEO and medical director, Denver Health; Gary Kaplan, MD, chairman and CEO, Virginia Mason Medical Center; Donna Katen Bahensky, president and CEO, University of Wisconsin Hospital and Clinics; and Anthony R. Tersigni, EdD, FACHE, president and CEO, Ascension Health.

Janice Simmons is a senior editor and Washington, DC, correspondent for HealthLeaders Media Online. She can be reached at

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