Employer Coalition Leaps at Challenge of Grappling With Misaligned Incentives

A Conversation with Suzanne F. Delbanco

The executive director of the Leapfrog Group says that the organization pleads guilty to trying to create ‘aspirational’ standards for health care.

Suzanne F. Delbanco is the first executive director of the Leapfrog Group. Founded by the Business Roundtable in the fall of 2000, the group seeks to mobilize employer purchasing power to improve the safety and value of health care for American consumers. Toward that end, the group established standards calling for hospitals to install computerized physician order entry (CPOE) systems, staff intensive care units with physicians who specialize in such care, and refer patients for certain procedures to facilities that have a track record of doing them well. The group’s growing consortium of more than 130 Fortune 500 companies and other large private and public health care purchasers provides health benefits to more than 33 million Americans, and spends more than $56 billion on health care annually. Delbanco is a member of the NCQA Purchaser Advisory Council and the National Quality Forum’s Safe Practices Advisory Panel.

Before joining Leapfrog, she was a senior manager at the Pacific Business Group on Health where she worked on the Quality Team. Prior to joining PBGH, Delbanco worked on reproductive health policy and the changing health care marketplace initiative at the Henry J. Kaiser Family Foundation. She holds a PhD in public policy from the Goldman School of Public Policy and an MPH from the School of Public Health at the University of California, Berkeley. She spoke recently with Senior Contributing Editor Patrick Mullen.

MANAGED CARE: What prompted the creation of the Leapfrog Group?

SUZANNE DELBANCO: The group emerged from a sense of frustration with rising health care costs and a greater understanding of the degree to which the quality of health care varies. The seven founding purchasers decided to rethink their role so they could be sure they were buying the highest overall value of health care they could for their employees. That doesn’t mean buying the cheapest health care, because if purchasers send signals to the health care system that they want the lowest cost possible, we’re less likely to see breakthrough improvements in quality.

MC: How did Leapfrog’s founders decide to use their leverage as purchasers to change the health care system?

DELBANCO: The group identified two fundamental ways to use their role as purchasers to create change. One was to inform and educate employees about how quality varies and how important it is to consider whatever information they can get their hands on to make more informed choices. Second was the idea of rewarding quality. Employers today typically pay the same for care whether it’s free of mistakes or completely fraught with mistakes. The idea is to start differentiating and rewarding health care providers that make breakthroughs in the quality of what they provide. With that framework in mind, the group — though eager to improve every aspect of care and every type of quality — agreed that it needed to start with a narrow focus. Our goal was to identify rough equivalents of antilock brakes, airbags, and seat belts for the health care system. We talked to patient-safety and health-quality experts and reviewed the literature, and identified the first three leaps: computerized physician order entry, intensivist staffing in intensive care units and evidence-based hospital referrals, which gets to the need to refer patients to hospitals where their outcomes are likely to be best, especially for certain high-risk surgeries and conditions where we know referrals can make a big difference.

MC: How do you direct referrals if you don’t know which hospitals have the best outcomes?

DELBANCO: Ideally, those referrals would be based on the most sophisticated measures possible, which could be risk-adjusted outcomes data. Absent such data, we could look at whether hospitals follow key processes in caring for patients that are associated with quality, or we may have to rely on a simpler sort of proxy measure like volume. When we got started, we had to focus on volume because it was very hard to find the other data.

MC: In April, Leapfrog announced some updates to its recommendations. Before we get into the specifics, how accurate were press accounts that suggested the changes relaxed your standards?

DELBANCO: I think that’s an interesting characterization because in some ways they’ve been made much more rigorous. That interpretation came about because we have been disappointed by the evolution of CPOE technology and felt we needed to extend the timeframe we set for hospitals to fully implement it from 2004 to 2005.

MC: How many hospitals have CPOE systems installed or in the works?

DELBANCO: Among the 800 hospitals that fill out our survey — admittedly a self-selected group — about 5 percent have fully implemented systems today, but another 22 percent say that they’ll have fully implemented systems by 2004. So more than a quarter of hospitals will have these systems, despite the fact that vendors have lagged in improving the technology. We’ve seen a more rapid evolution than we expected. We can’t attribute that all to Leapfrog but I’m sure that our emphasis on the importance of CPOE has helped.

MC: How has the ICU physician-staffing standard changed in the most recent update?

DELBANCO: The major change is how we define an intensivist. We are counting as intensivists those physicians who finished the training before 1987, before it was possible to do an intensivist residency, but who have focused in the intensive care unit over time. We feel comfortable with that change. The only other change is that partial credit is available for hospitals that haven’t fully implemented our leap, but which involve intensivists in such things as discharge decisions.

MC: How has the hospital-based referral standard changed?

DELBANCO: This is where the biggest changes come. Initially, our primary reliance was on volume. We have always been eager to move to more sophisticated measures and we feel like we’re starting to get there. For most of the conditions that we focus on, we now have process indicators that we will ask hospitals to report on. In other words, we will ask whether they take certain steps that are affiliated with higher quality in treating certain patients.

MC: So it’s still an indirect measure but it’s getting closer to measuring outcomes?

DELBANCO: Right. When it comes to coronary artery bypass graft surgery and angioplasty, the two areas we emphasize in terms of volume-outcome relationships, we now give hospitals a few different ways in which they can report outcomes to us. For coronary artery bypass graft surgery, we allow hospitals in states like Pennsylvania, New York, New Jersey, and California that have rigorous reporting programs to report how they fare compared to their colleagues in terms of risk-adjusted outcomes. Hospitals report their performance to us by quartile, if they’re in the top 25 percent, the top 50 percent, and so on. If they perform well they can get more credit than if they just meet the volume standard. Hospitals in other states can report similarly through participation in a benchmarking program run by the Society for Thoracic Surgery that includes a risk-adjustment methodology and a reporting program. Hospitals have historically held the results privately, but they have the option of volunteering the information to us, again by quartile.

MC: Hospitals willing to share the information would tend to be the best performers, but from your viewpoint, that’s fine because that’s who you’re trying to identify, right?

DELBANCO: Exactly. Similarly, with angioplasty, the American College of Cardiology has a risk-adjustment reporting program so hospitals can report to us not just their volume but how their outcomes compared to their peers. We’ve also expanded beyond angioplasty to look at other percutaneous interventions. With intensive care units, we’re more than halfway through a project with the Joint Commission on Accreditation of Healthcare Organizations to develop a risk-adjustment methodology and reporting program for intensive care unit outcomes, so maybe next year’s survey will measure not just ICU staffing but also outcomes.

MC: At what point do you expect Leapfrog’s attention to expand into outpatient care?

DELBANCO: Our members have always been interested in outpatient measures. We focused on hospitals because so much more is known about how mistakes get made in hospitals and what kind of interventions can be successful. A lot more work is being done to identify improvements that can be made in outpatient care. My hope is that over time, we can partner with groups like the NCQA. They’ve started some pilot projects around physician-level measurement and recognition. Another exciting development is that within the next year or year and a half, we’ll be able to start broadening our horizons, in part because of work that’s being done by the National Quality Forum. They’re a national consensus-building organization that includes purchasers, providers, consumer groups, and quality-improvement organizations. They use a consensus process to come up with nationally standardized and endorsed health care performance measures. They will endorse our three leaps, along with measures developed by others that specifically relate to patient safety and other more general quality measures. Eventually, we’ll move into measures that deal with physician-level care.

MC: Is there much evidence that Leapfrog members have changed purchasing patterns based on how hospitals performed on the first three measures?

DELBANCO: One point that may not seem radical to people who are outside of health care but that might seem radical to your readers is that the overwhelming majority of Leapfrog members communicate with their employees about quality issues. While that may seem like a small step, the fact is most employers hardly ever communicate with employees about quality issues. They communicate with employees about health care once a year during open enrollment but are fairly silent the rest of the year. Based on a member survey that we’re doing, we estimate that about 85 percent of our members have already communicated with their enrollees, employees, retirees, and dependents about the issues that Leapfrog is working on. The other evidence of change is growing use of our request-for-information document that was created to use in negotiating with health plans before contracting, to find out what kind of support they’ll offer for the Leapfrog efforts. The document has a common set of questions that I think the majority of our members will be using by next year. We’ve also created standard contract language that employers can use to contract with plans. Use of that is growing. The piece that’s most difficult for our members, but is also growing, is the reward and recognition piece, deciding how to reward providers for meeting our standards and going the extra step to protect patients. There are a handful of programs trying to do that.

MC: For example.

DELBANCO: For example, in New York City, Empire Blue Cross Blue Shield [now WellChoice] and four major employers — IBM, Xerox, Verizon, and Pepsi — have joined to provide quarterly bonus payments to hospitals in the Empire network that have implemented computerized physician order entry and ICU staffing. The size of the incentive is still challenging if you don’t have a critical mass of purchasers all doing the same thing. While the bonus is noticeable and appreciated by hospitals, it’s not like it makes it affordable suddenly to buy a CPOE system. We’ve worked hard on that issue with a multi-stakeholder incentives and rewards workgroup. We’ve included contracting experts from hospitals and health plans, physicians, employers, and consumer experts working with actuaries. We’re trying to figure out how much can be saved by implementing these practices and how to feed those savings back to the providers who made those investments. We recently posted a toolkit on our web site to help our members get started on calculating potential savings in their own markets, depending on how many hospitals have these practices in place. The idea is to work with health plans to help hospitals reap some of those rewards no matter how the hospital is paid.

MC: Beyond the current three standards, what other specific measures are on the horizon?

DELBANCO: I would put them in three buckets. We talked about one, the endorsed safety practices and hospital quality measures that are coming out of the National Quality Forum. Second, we’re looking at a way of measuring how well a physician’s office is outfitted with clinical decision support. For example, do they have an electronic clinical information system that allows them to retrieve a patient’s lab results or order drugs? Does the system have reminders built into it to help clinicians remember to get certain screenings to certain patients? Does it have practice guidelines built into it that prompts the clinician to ask certain questions of certain patients because of their medical histories? We’ve been working on that in partnership with the Agency for Health Care Research and Quality, as well as the Centers for Medicare and Medicaid Services.

MC: When Leapfrog was formed, Sidney Wolfe, MD, head of Public Citizen’s Health Research Group, said that your focus was misplaced, that as long as health care is a for-profit industry, your efforts wouldn’t be as successful as they could be. What’s your response?

DELBANCO: I think that our health care system is in big trouble and we can debate about the many fundamental changes that are needed. I would question whether the issue is for-profit versus not-for-profit. The reason Leapfrog took the approach it did is because as long as we have the current employer-based health care system, employers and other purchasers have to leverage to try to drive change. Our members are trying to take on that responsibility in a more rigorous way. We see two major roadblocks to permanent improvement. The first is consumers who have no way of judging who’s a better provider and are thus not able to make informed choices that reinforce superior providers in the marketplace. Second, we have a system with all kinds of misaligned incentives. A hospital that’s paid on a per-diem basis might actually make more money by prescribing the wrong drug to a patient and prolonging that patient’s stay by five days. As we have consumers who aren’t engaged and incentives that are misaligned, we’re not likely to make huge improvements. We decided to focus on this because we felt like this is where the gridlock really rests and with some new thinking we might be able to Leapfrog it.

MC: Researchers at the Harvard School of Public Health recently published an article in Health Affairs in which they warn of a possible unintended consequence of Leapfrog’s work. They suggest that your standards could become legally binding, and the basis for medical malpractice suits. That would put Leapfrog in the odd position of fueling health care inflation. What’s your response to the article?

DELBANCO: It’s an interesting and provocative piece but I don’t think there’s a whole lot of evidence that our standards will be brought into court. Time will tell. We responded with a letter to the publication. Essentially, we said that it’s unfortunate the authors didn’t spend some time figuring out how to reform the tort system, because that’s really what the issue is. Second, they call our standards aspirational, and we completely agree. We’re not trying to set minimum standards the way the Joint Commission does that could become the basis for lawsuits if they’re not met. Using the excuse of a broken tort system to say we should sit back and not try and raise the bar contributes to tens of thousands of people continuing to die each year from medical mistakes. Worrying about the tort system is not enough of an excuse to not try to improve quality. Finally, all of the research on which our standards are based is out there in the peer-reviewed published literature. The fact that we exist doesn’t change what the evidence shows.

MC: Thank you.

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