Performance Improvement in Health Care — Seizing the Moment — NEJM

Apr 26, 2012


Performance Improvement in Health Care — Seizing the Moment

David Blumenthal, M.D., M.P.P.

April 25, 2012 (10.1056/NEJMp1203427)


We have an unprecedented opportunity to create a high-performance health system in the United States. Recent statutes, including the Affordable Care Act, the American Recovery and Reinvestment Act, and the Health Information Technology for Economic and Clinical Health Act, provide the federal government with important powers for catalyzing improvement in service delivery. These new powers touch all the critical levers for advancing health system performance: payment policy, organization and infrastructure, public health, and essential information for health care decision making.

The national performance-improvement toolbox is now well stocked.

But using that toolbox effectively is enormously challenging. Federal budget deficits and rising health care expenditures create pressures to quickly adopt simple expedients, such as cuts in benefits and provider payments. At the same time, the very number and diversity of available forms of authority, each with its own legal quirks and restrictions, creates huge conceptual and logistic complexity.

So how can the federal government seize this moment to improve health system performance? Without close coordination driven by an overriding vision, the dutiful, line-by-line implementation of each individual program will not create the breakthroughs in performance that are needed to make our health system sustainable. The Commonwealth Fund Commission on a High Performance Health System, which I chair, believes that the government needs a comprehensive, disciplined implementation plan for health system improvement that takes full, thoughtful advantage of its new opportunities.1

First, the commission believes, government leadership for performance improvement requires clear goals, beginning with concrete cost-containment and quality-improvement targets. The federal government should aim to reduce the rate of increase in national health expenditures per capita to the annual projected growth of the gross domestic product (GDP) per capita plus 0.5 percentage points by 2016 and to maintain that rate through

2021. Achieving this target would reduce national health care expenditures by $893 billion over 10 years and hold health care spending as a share of the GDP in 2021 to 18.9%, as compared with the current projection of 20.1%. The target for health care quality should be to double the annual rate of improvement on the quality metrics tracked by the Agency for Healthcare Research and Quality, from the current 2.3% to 4.6% by 2016.

The guiding vision should also be based on the understanding that performance improvement requires that clinicians and patients be enabled to make better health care decisions by giving them the best available information when and where they need it and making it easy to do the right thing. Clinicians and patients need information about patients’ personal health and health care and about medical evidence relevant to their decisions. Clinicians need environmental supports and financial incentives to choose diagnostic and therapeutic pathways that maximize the value of care. Organizational arrangements must support collaboration, teamwork, and coordination of care.

The federal government can and should facilitate the creation of these conditions, and it should certainly avoid actions that undermine them. But the actual work will fall overwhelmingly to millions of people and institutions in the private and public sectors working together in local communities; they will need to set clear priorities, preferably through a collaborative process that involves states and private-sector entities. For both humane and pragmatic reasons, the federal government should start by focusing its robust new forms of authority on improving care for high-cost patients with multiple chronic conditions. Patients with one or more chronic conditions use 96% of home health visits, 93% of prescriptions, and nearly 80% of physician visits and hospital stays — and these sickest patients account for a disproportionate share of U.S. health care expenditures (see graph

Distribution of Health Care Expenditures for the U.S. Population, According to Magnitude of Expenditure, 2009.).2 Any successful cost-containment effort will have to address their resource utilization. Furthermore, such patients are disproportionately affected by the quality and safety deficits in our health care system and stand to benefit greatly from performance improvements.

The challenge is to find a way to empower providers and patients to rapidly improve the care they offer and receive. Though there is no battle-tested plan for doing so, a logical approach would emphasize three tools and one overall policy strategy.

The tools are improved primary care, payment reform, and better information. Nothing is more important for improving performance in caring for patients with complex conditions than coordinating care and enhancing access during normal office hours, nights, and weekends3 — precisely the role that good primary care plays in high-performing health systems. Payment reform is essential to enabling providers, and perhaps patients, to participate in the savings that result from reductions in costs and improvements in quality.4 One stakeholder’s cost is another’s revenue or desired service; to support the reduction of unnecessary or marginally useful services, financial incentives must reward rather than punish such behavior, since it affects all payers, providers, and patients, not just Medicare. And care coordination and cost management depend on having accurate, timely, and actionable information in real time at the point of decision making. The availability and effective use of health information technology are therefore essential to improving health system performance for high-cost patients.

So, what policies are needed to get these tools installed and functioning effectively? Since health care systems are local phenomena, their reform must occur locally. The Commission on a High Performance Health System proposes that the federal government work with other stakeholders to launch a nationwide, community-based initiative as soon as possible to improve the care of high-cost patients with multiple chronic conditions. This program should recruit 50 to 100 geographic areas or health improvement communities (HICs), encompassing a substantial segment of the U.S. population (approaching 60%). The definition of “community” will vary — from a city to a county, a hospital-referral region, a neighborhood, or a state — but to be eligible, a community should have a substantial concentration of high-cost patients.

In return for financial and technical support and regulatory accommodations, such as necessary Medicare and Medicaid waivers, participating communities should involve all or most local payers and providers in community-based accountable care arrangements. Recent research suggests that this type of program could save $184 billion, or about 21% of the $893 billion savings target for national health care expenditures.5

Supporting a community-based initiative for high-cost patients would fit within the mandate of the new Center for Medicare and Medicaid Innovation, which has broad authority and $10 billion to undertake new programs to contain Medicare and Medicaid costs while protecting the quality of care. The federal government should also use a range of additional programs and resources to help fundamentally redesign payment, primary care, and information use in participating HICs. HICs should be encouraged to develop innovative gain-sharing payment arrangements that are consistent across public and private payers. Payment redesign should materially improve the revenue, flexibility, and resources available to medical homes in ways that promote and reward the coordination of care by primary care providers for high-cost patients. HICs should be strongly encouraged to have comprehensive health information technology plans for their communities. In all this work, the Center for Medicare and Medicaid Innovation should provide as much flexibility as possible to HICs, respond rapidly to their needs for federal data, and minimize any regulatory and reporting burdens not vital to ensuring cost containment and quality improvement.

For decades, the United States has seemed powerless to curb excessive health care spending and improve the quality of care. Now, the tools for achieving fundamental reform are in place, but using them requires the federal government and its private and public partners to leave business as usual behind and to create and implement a plan that addresses the root causes of our health care crisis. Our commission believes that the establishment of HICs to transform the care of patients with multiple chronic conditions could provide such a plan. Other approaches may be equally sound. But above all else, we must act.

Disclosure forms provided by the author are available with the full text of this article at

This article (10.1056/NEJMp1203427) was published on April 25, 2012, at

Source Information

From Harvard Medical School, Boston; and the Commission on a High Performance Health System, Commonwealth Fund, New York.


  1. 1

    Commission on a High Performance Health System. The performance improvement imperative: utilizing a coordinated, community-based approach to improve care and lower costs for chronically ill patients. New York: The Commonwealth Fund, April 2012.

  2. 2

    Anderson G. Chronic care: making the case for ongoing care. Princeton, NJ: Robert Wood Johnson Foundation, February 2010.

  3. 3

    Bodenheimer T, Wagner EH, Grumbach K. Improving primary care for patients with chronic illness. JAMA 2002;288:1775-1779
    CrossRef | Web of Science | Medline

  4. 4

    Guterman S, Davis K, Schoen C, Stremikis K. Reforming provider payment: essential building block for health reform. New York: The Commonwealth Fund, March 2009.

  5. 5

    Holahan J, Schoen C, McMorrow S. The potential savings from enhanced chronic care management policies. Washington, DC: Urban Institute, November 2011.

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