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Hospital Group Offering 90-Day Warranty On Its Health Care

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By REED ABELSON, The New York Times

Published: May 17, 2007

Updated: 05/16/2007 11:11 pm

What if medical care came with a 90-day warranty?

That is what a hospital group in central Pennsylvania is trying to learn in an experiment that some experts say is a radically new way to encourage hospitals and doctors to provide high-quality care and avoid costly mistakes.

The group, Geisinger Health System, has overhauled its approach to surgery. Taking a cue from the makers of televisions, washing machines and other consumer products, Geisinger essentially guarantees its workmanship, charging a flat fee that includes 90 days of follow-up treatment.

Even if a patient suffers complications or has to come back to the hospital, Geisinger promises not to send the insurer another bill.

Geisinger is not the only hospital system rethinking ways to better deliver care that might also reduce costs. Its effort, though, is noteworthy as a distinct departure from the typical medical reimbursement system in the United States, under which doctors and hospitals are paid for delivering more care - not necessarily better care.

Since Geisinger began its experiment in February 2006, focusing on elective heart bypass surgery, it says patients have been less likely to return to intensive care, have spent fewer days in the hospital, and are more likely to return directly to their own homes instead of a nursing home.

Geisinger presented the first-year results of its experimental program at an April meeting of the American Surgical Association.

Approach Brings Praise

Geisinger stands out as a group that has transformed the way it delivers care, said Donald Berwick, the chief executive of Institute for Healthcare Improvement, a national nonprofit organization whose goal is better patient care.

In almost no other field would consumers tolerate the frequency of error common in medicine, Berwick said, and Geisinger has managed to reduce the rate significantly. 'Getting everything right is really, really hard,' he said.

It is too early to know whether the approach, which Geisinger calls ProvenCare, will catch on with employers and health insurers.

So far, the only insurer that Geisinger has contracted with under the new arrangement is its own insurance unit, which covers about 210,000 people in Pennsylvania. Eventually, Geisinger hopes to attract other insurers and employers that provide health benefits by expanding the approach into other lines of care provided by the nearly 660 doctors it employs at its three hospitals and 55 offices in the region.

Fixing A Flaw

Geisinger is trying to address what it views as a fundamental flaw in the typical medical reimbursement system.

Under the typical system, missing an antibiotic or giving poor instructions when a patient is released from the hospital results in a perverse reward: the chance to bill the patient again if more treatment becomes necessary.

As a result, doctors and hospitals have little incentive to make sure they consistently provide the treatments that medical research has shown to produce the best results.

Researchers estimate that about half of U.S. patients never get the most basic recommended treatments - such as an aspirin after a heart attack, for example, or antibiotics before hip surgery.

The wide variation in treatments can translate to big differences in death rates and surgical complications. In Pennsylvania, the mortality rate during a hospital stay for heart surgery varies from zero in the best-performing hospital to nearly 5 percent at the worst performer, according to the Pennsylvania Health Care Cost Containment Council, a state agency.

Around the world, other modern industries - whether car manufacturing or computer-chip making - long have understood the importance of improving each piece of the production process to tamp down costs and improve overall quality.

Hospitals, however, have been slow to focus their attention on standardizing the way they deliver care, said Arnold Milstein, the medical director for the Pacific Business Group on Health, a California organization of large companies that provide medical benefits to their workers. He called Geisinger 'one of the few systems in the country that is just beginning to understand the lessons of global manufacturing.'

In reassessing how they perform bypass surgery, Geisinger doctors identified 40 essential steps. They then devised procedures to ensure that those steps always would be followed, regardless of which surgeon or which one of its three hospitals was involved.

From screening a patient for the risk of a stroke before surgery to making sure the patient has started on a daily aspirin regimen upon discharge, Geisinger's 40-step system makes sure every patient gets the recommended treatment.

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