Healthcare Experts See Cost Pressures Driving Innovation in Medical Field

Andrew Kitchenman | April 2, 2014 | Health Care
It may seem counterintuitive, but panelists contend that lowering costs could create space for new treatments

From left: Steven Peskin, David Knowlton, Karen Licitra, Richard Bagger, Ruth Perry, and Anthony Slonim
As the pressure to control healthcare costs increases, the way treatments and therapies are paid for is undergoing steady change. But while these financial constraints might be expected to be a problem for those looking to develop new medications and medical procedures, the opposite could actually be true.

This attitude is shared by some New Jersey hospital, insurance, and pharmaceutical executives, as well as public health advocates. They believe that one of the keys to controlling costs is by ensuring that patients at risk of chronic conditions have access to primary care. Similarly, improving care coordination should also keep costs in check. Perhaps most important of all, they think that providing financial incentives to accomplish these reforms may ultimately lower costs and encourage new therapies.

For example, hospitals can improve their outcomes by carefully using patient data and ensuring that doctors are using the latest treatments and engaging directly with those patients, according to Dr. Anthony Slonim, executive vice president and chief medical officer at Barnabas Health Medical Group. In addition, patients need to work more closely with primary-care doctors, he said.

Slonim was one of seven panelists at an event yesterday sponsored by the Network for Excellence in Health Innovation, a national health policy organization, and the HealthCare Institute of New Jersey, a trade group representing pharmaceutical and other life-sciences companies.

Slonim said that innovation could be driven by tightly aligning the financial incentives in new payment systems with changes in behavior.

“We have to figure out that dynamic now,” said Slonim, adding that upfront payments for care coordination — rather than future payments based on potential savings as in the Medicare program — may prove to be a stronger incentive.

Slonim added that there is some urgency to the issue, particularly since providers must quickly determine how they will care for the large number of patients newly insured by Medicaid due to the ACA.

Insurers see improvements to healthcare being accomplished through team-based care, in which doctors and other healthcare providers work closely together to coordinate patients’ needs, according to Dr. Steven Peskin, senior medical director of clinical innovations at Horizon Blue Cross Blue Shield of New Jersey.

One expert at the front lines of care coordination is Dr. Ruth Perry, executive director of the Trenton Health Team, an organization that coordinates the work of two Trenton-area hospitals, a federally qualified health center, and city health officials. Perry noted that in recent years, most Trenton residents didn’t have a primary-care provider, leading to unnecessary and costly emergency-room visits.

NEHI board member Jonathan Fleming expressed concern that innovative new treatment may not become available if the healthcare system focuses only on costs.

But most disagreed and said they believed that payment reforms in the United States wouldn’t stop these innovations.

Perry said that the savings generated by reducing the costs caused by poorly managed care will make it so that providers and insurers “won’t have to nitpick” when deciding on access to innovative treatments.

New Jersey Health Care Quality Institute President and CEO David Knowlton said that the pressure to lower costs should be used to reform the entire system of delivering healthcare.

“There’s only three imperatives in health reform: cost, cost and cost,” Knowlton said.

He said that having more information about the quality of providers and insurers would help healthcare consumers make better decisions about their care.

If savings are found only through techniques such as health plans that include few providers in their networks “we lose the opportunity for innovations that truly address costs,” Knowlton said.

While hospitals and primary-care physicians are looking to increase the value provided by care by increasing coordination, pharmaceutical companies also must prove that their services also increase the value of care.

Johnson & Johnson executive Karen Licitra said life-sciences companies must demonstrate to hospital executives that their services will deliver greater value than current practices. She cited as an example her company’s work on providing a comprehensive set of tools to help hospitals manage the care of older patients with broken bones and other orthopedic problems. She is Johnson & Johnson’s corporate vice president for worldwide government affairs and policy.

Richard Bagger, senior vice president for Summit-based biotechnology company Celgene, said the healthcare system in the state is in a better position to focus on making payment reforms based on providing value and positive outcomes to patients than it was in the early 1990s.

Slonim noted a central challenge is having doctors communicate well with patients and other doctors. He cited as an example his own mother, who has lost 20 pounds in recent months but has struggled to receive appropriate healthcare. If someone whose son can help her access thousands of doctors is struggling, the problem is even greater for those with fewer resources, he noted.

“We should be able to figure this out,” Slonim said.

Slonim emphasized that healthcare for many residents can be improved by better coordinating and improving access to long-established services like treating diabetes and hypertension.

“A lot of the stuff that we’re talking about for the masses, is very fundamental, not particularly innovative and old-school,” Slonim said. “And that’s where the work is, that’s where we need help on the ground, in delivering the services.”