Financial reforms for innovation in care need to be implemented for early diagnosis and effective disease management at low costs, writes Lord Ara Darzi

Ara Darzi

Ara Darzi

Ara Darzi

Modern innovations in health care are increasingly focused on providing treatment earlier in the disease course, outside hospital in the community, closer to patient’s homes. But a frequent barrier to their being widely adopted is the failure to find innovative ways of paying for them.

If a hospital receives a payment each time a diabetic patient attends for care, there is no incentive for it to invest time, effort and resources in supporting a scheme to allow the same patient to be treated at home. Yet this may mean the patient achieves better diabetes control.

Innovations in the way care is paid for can be as important as innovations in the way it is provided.

Our current ways of paying for healthcare, whether they be fee for service or department-wide budgets, are poorly designed to encourage achievement of the best outcomes at lowest cost

Instead of paying providers for the activities they carry out – the number of treatments delivered or operations performed - we can encourage the uptake of innovative approaches to care by paying for the outcomes they achieve – such as an increase in the proportion of patients whose diabetes is controlled. This is accountable care.

As health systems around the world struggle to meet growing demand in the face of squeezed budgets there is growing interest in accountable care with its focus on outcome (how well the patient does) rather than process (what is done to the patient).  

For example, in Spain the regional government in Valencia has adopted an outcomes-based payment system for the Hospital de la Ribera in Alzira.

In contrast to other providers in the region, which are paid on a fee for service basis, the Hospital de la Ribera is funded with an annual capitation fee, an index-linked lump sum for each local resident, in return for which it provides the full range of healthcare services free to the population within the designated area.

Under a fee for service system each admission earns cash for the hospital. Under a capitation system, each admission costs the hospital cash.

The new payment model has had a dramatic effect. Patients have benefited from shorter waiting times while hospital readmissions are down by 26 per cent and emergencies down by 16 per cent.

Advances in medicine, social care and digital technologies are opening up new opportunities for earlier diagnosis and more effective disease management

A similar scheme, the Better Together programme, is being piloted in Nottinghamshire where 10,000 high risk patients have been identified from among a population of 300,000. A capitation fee has been agreed which includes social care as well as health care.

Early results show a 5 per cent decrease in inappropriate visits to A&E and a reduction in hospital visits for patients aged over 80.

In the US, accountable care approaches have improved the quality of care, patient satisfaction and communication. The Rio Grande Valley Accountable Care Organisation provides care to 8,500 patients in South Texas, half of whom are diabetic and eligible for Medicare and Medicaid.  

The organisation has extended its primary care network to provide 13 physician practices staffed by 18 physicians, nurses and physician assistants. Results show improvement in 32 out of 33 performance measures and a 14 per cent reduction in the per capita cost of care.  

Overall there is growing evidence that measures such as these can bring cost reductions and more effective use of resources, as well as achieving better outcomes.

They have involved shifts to person-focused payments, in some cases targeted at broad populations while in others at patients with particular conditions, such as diabetes or pregnancy.

As health systems around the world struggle to meet growing demand in the face of squeezed budgets there is growing interest in accountable care with its focus on outcome rather than process

Key factors for success are outlined in a report, Implementing accountable care to achieve better care at lower cost, by an international expert group presented at the World Innovation Summit for Health (WISH) in Doha last month.

They include payments determined by performance goals, strong local clinical leadership and low cost technology to engage the population and identify programme participants.

Our current ways of paying for healthcare, whether they be fee for service or department-wide budgets, are poorly designed to encourage achievement of the best outcomes at lowest cost. Yet advances in medicine, social care and digital technologies are opening up new opportunities for earlier diagnosis and more effective disease management.

We cannot achieve the one without the other. We must implement the financial reforms necessary for innovations in care to succeed.

Lord Darzi is a surgeon and executive chair of the World Innovation Summit for Health (WISH), an initiative of the Qatar Foundation.