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At NJ Healthcare Conference, Successful Strategies for Cutting Costs, Improving Outcomes

One key message: By driving out waste, healthcare reform will stabilize or even decrease prices.

Research shows that regions of the United States with the highest healthcare spending aren't getting better results for their money -- and New Jersey is one of the biggest spenders. But that's good news, according to Dr. Elliott S. Fisher, Dartmouth Institute director of Population Health and Policy.

"We do have quite a remarkable opportunity" to save money due to healthcare reform, Fisher told the audience at a New Jersey Hospital Association conference Wednesday. As the new legislation pushes doctors and hospitals to collaborate in order to elevate quality and squeeze out waste, the state's high cost is unlikely to rise and could even drop.

"I believe this moment is the best opportunity we have had in 20 years" to make progress on bending the healthcare cost curve, said Fisher. The opportunity is especially rich in New Jersey, which ranks in the top quintile for per capita Medicare spending, according to the Dartmouth Atlas of Health Care, which tracks costs and quality in healthcare around the country. The Dartmouth Atlas shows that " "higher spending is almost entirely devoted to extra use of the hospital as a site of care, more frequent physician visits, and greater use of diagnostic tests and imaging studies."

As a result of the 2010 Affordable Care Act, Medicare this year started reducing hospital reimbursements and in coming years will penalize hospitals with high rates of avoidable hospital readmission. The ACA is also creating financial incentives for doctors and hospitals to form Accountable Care Organizations that will share in the savings to Medicare if unnecessary spending is reduced. "If everyone practiced the way the low-spending regions do, Medicare spending would fall 30 percent."

Several speakers described their initiatives to reform healthcare delivery in New Jersey and so far, seem to be achieving significant results. Dr. Katherine Schneider is senior vice president of the healthcare system AtlantiCare, which five years ago created the Special Care Center to meet the needs of Atlantic City hotel and restaurant workers for better, more affordable, healthcare. Their union "came to us and said 'we need a better solution for these folks: the 20 percent sickest people are eating up 80 percent of the healthcare dollars.'"

By focusing on people with chronic illnesses, and designing a healthcare system that kept track of their care and their health, "we created a really effective microsystem of transformed care that drove down hospitalizations by 50 percent, emergency rooms visits by 40 percent to 50 percent, and reduced the total cost of care well into the double digits," Schneider said. "This was not an incremental change; this was really building something new. For the first time in our history, we have the opportunity to have a business model that supports a vision of improving healthcare in our community."

AtlantiCare's 8,500 employees and their family members were given an incentive to use the Special Care Center: no out-of-pockets costs, either for medical visits or drugs.

"If you want a diabetic, asthmatic, or heart disease patient to have a good outcome it is probably not the best strategy to have a $50 copay for each of their medications, because then they don't comply" with the doctor's instructions, Schneider said. "They are just trying to pay their electric bill and they are not going to spend $350 a month in copays on medication that we want them to take." In the past, only about 40 percent of AtlanticCare employees saw a doctor at least once a year; with the Special Care Center, that rose to 95 percent. Schneider said lives have been saved: "individuals had things detected early that they would not have otherwise gotten taken care of."

Dr. Richard Popiel is president of Horizon Healthcare Innovations, a subsidiary of Horizon Blue Cross Blue Shield of New Jersey launched a year ago. HHI is piloting patient-centered medical homes with eight primary care physician practices that have 65 doctors and 23,000 patients. The goal is of the PCMH is to coordinate all the care received by the patient, whether by the primary care doctors or specialists, and to both make sure that all needed care is delivered and to reduce unnecessary procedures, tests, and hospitalizations.

At the center of the project is the difficult work of transforming a primary care practice into a patient-centered medical home, Popiel said. The problem faced by primary care physicians "is they are underfunded and they are on a treadmill from the beginning of the day to the end," Popiel said. "They really don't have time to coordinate care; they only have time to deliver care to the patient in the examining room."

HHI pays the cost of staffing the physician practices with nurses known as " population care coordinators" who help the physicians manage the care of the patient population, making sure patients who are sick get the attention they need. Figuring out how to redesign practices to improve primary care is an ongoing process, Popiel said. "The doctors help us create design elements that they can insert into their practice and then test the effectiveness of that design element. That work is ongoing, that work is taking time, that work is slower than we would have liked it to be -- but that work is required to create transformation."

And then, once you "get the healthcare delivery system humming, it can only perform if the patients are following treatment recommendations," Popiel said, adding studies have shown a large number of patients don't take prescribed drugs, or they take them for a while, then stop. A major frontier for healthcare is to inspire consumer engagement, he said.

The conference was jointly sponsored by the Medical Society of New Jersey, the New Jersey Hospital Association, and Horizon Healthcare Innovations.

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