Peter Neupert
Health Technology Executive

Peter Neupert

Peter Neupert is Microsoft’s corporate vice president for the Health Solutions Group. He led from 1998 to 2001.

Diagnosing and Treating the Health Non-System

In order to prescribe the top priority for health-reform legislation, one first has to recognize that we do not currently have a health system at all: it is a health non-system. Successful treatment requires a clear diagnosis.

As with many very sick patients, the health non-system has multiple symptoms and ailments that interact with one another. The three principal "diseases" are:

-Access (too many uninsured people)

-Value (too much spending for the health results delivered)

-Ignorance (at every level - who really pays for health, misaligned incentives, true costs, quality measures, transparency and more)

Of these three the most important "disease" to fix is value -- how do we improve health outcomes for the same or lower economic cost? Why is this most important? First, everyone acknowledges that health spending is already in an economic crisis - both near term and certainly long term (Medicare's unfunded liability exceeds $36 trillion!). Even if everyone in the country woke up tomorrow morning with health insurance coverage it still would not address the hard economic truth - we must get more value, as measured by better health outcomes, for every dollar we spend on health.

Secondly, Congress should focus on improving value in the health non-system because the whole operating framework surrounding the health delivery system requires re-engineering. There is innovation in health around new drugs, new devices or new procedures because people can get economically rewarded for their innovation.

This innovation happens in little pockets and can produce great results. We need broad-scale innovation around health delivery for chronic disease management which accounts for 70% or more of total spending. The reason this innovation and re-engineering isn't happening right now in the delivery of health services is because of the inflexibility in the payment system and misaligned incentives -- largely the result of Medicare rules and regulations driven by Congress today.

Each of us pays for health care (taxes, lower incomes, cash). I want Congress to focus on building an operating framework of rules and regulations that aligns physician and hospital payment with health outcomes and encourages innovation on how best to deliver it.

By Peter Neupert  |  June 7, 2009; 2:23 PM ET  | Category:  Health Care Reform , Insurance Save & Share:  Send E-mail   Facebook   Twitter   Digg   Yahoo Buzz   StumbleUpon   Technorati  
Previous: Building Healthy Communities | Next: The Solution Is Medicare Payment Reform


Please report offensive comments below.

do not side with big business and the insurance companies and pers drug companies.....side with the AMERICAN PEOPLE AND BARACK OBAMA .........THAT IS THE REASON HE WAS ELECTED...WHEN IT COMES TO HEALTHCARE IN OUR COUNTRY. The insurance companies and buisness work to its time for the government and the people to work gether we succeed.

Posted by: STANTONCAROL | June 14, 2009 8:44 AM
Report Offensive Comment

Treating the value problem

Improving health outcomes at lower cost should be possible, if there are excess patient care services delivered, that can be identified and removed. Hospitals are the easiest places to start this process. Thirty percent of healthcare dollars are spent there.

Problems arise in hospitals because the responsibilities of physicians are separate from the responsibilities of department heads and senior administration. Atul Gawande’s article in The New Yorker on June 1st identified some of the issues, and reported the surprise of some of administrators when told that their costs were much higher than in other areas of the state and country.

Patient cost accounting systems overcome some of the separation of responsibility problems. Costing systems from Eclipsys, McKesson, MedAssets and others lay the groundwork for much more thorough analytical systems to pinpoint the location and extent of excess costs being incurred, and the affected groups of patients. Analytical approaches can also be used to simulate the effects of changes in the mix of patients and changes in treatment protocols, and even more. This would allow for advanced support for detailed budgeting beyond the traditional flexible budgeting available in costing systems.

Unfortunately, there are no commercially available systems that can easily give the extra analytical capabilities above the patient costing systems used by about 2,000 hospitals.

Posted by: ColinLay | June 11, 2009 10:27 PM
Report Offensive Comment

Good post. Value will be realized once the correct business model is put in place. Right now the system rewards quantity which encourages test after test. This should be an interesting next few years...

Posted by: chrisgem | June 9, 2009 1:37 PM
Report Offensive Comment

The comments to this entry are closed.

RSS Feed
Subscribe to The Post

© 2010 The Washington Post Company