At the March 13 California Improvement Network (CIN) meeting, I had the opportunity to learn more about a topic I don’t know a great deal about — managing financial risk and total cost of care. I thought it would be a wonderful opportunity to learn from some of the best and brightest.

The highlight of the meeting for me was hearing from Mitch Katz, MD, president and CEO of New York City Health + Hospitals. Katz is the former head of the Los Angeles County Health Agency and was the director and health officer at the San Francisco Department of Health. He has a deep understanding of how public systems work and about total cost of care as it relates to quality and outcomes.

Katz started by pointing out how difficult it is to truly decrease costs while also improving patient experience and results. While we all aspire to achieve both goals, it doesn’t happen very often. Many providers find it uncomfortable to discuss lowering costs. Most of us got into this work to make people’s lives better, not to focus on the bottom line. But we have to have honest discussions about underlying costs and their relationship to overall health system spending. It’s up to all of us to engage openly about it.

There are many reasons to care about this bigger issue of skyrocketing spending, but one is particularly compelling. Health care spending is consuming a huge chunk of our state and national budgets, and this makes it challenging for us as a society to make all the necessary investments essential to a high-functioning society — education, social services, and the environment, to name a few. Research shows that even if we’re comfortable with the status quo, we’re not getting good value for the money we are spending.

Most of us got into this work to make people’s lives better, not to focus on the bottom line. But we have to have honest discussions about underlying costs and their relationship to overall health system spending.

So, how do we start changing this trajectory? Katz shared a number of ways to think about this.

First, we need to focus on the highest-cost population and be clear about how we define them. This has been a huge challenge for safety-net health systems, since our populations are often shifting, and our data systems and capabilities have not historically been strong and accurate enough to be able to identify and predict who these patients will be. We have to get better at collecting and analyzing data, so we’ll know who to target.

Second, we have to recognize that health systems won’t save money by spending more of it. Adding layers of care, like case management, for example, requires new staff and new costs. While case management can help improve health care quality and patient experience, it doesn’t always result in savings. In addition, we need to find ways to reduce unnecessary care. This is easier said than done, as it requires tough conversations with patients and providers alike about what is “necessary” care versus “nice-to-have” care.

Right now, I’m left with more questions than answers. But I am certain about one thing: We need to continue these honest discussions. Because first and foremost, controlling costs and overall spending in the health care system requires a shift in thinking.

CIN aims to advance the Quadruple Aim by identifying and spreading better ideas for care delivery and by strengthening relationships between commercial and safety-net provider and health plan communities in California. Learn more and sign up for updates from CIN. 

Veenu Aulakh

Veenu Aulakh is president of the Center for Care Innovations (CCI). Veenu is responsible for the organization’s overall strategy, building critical partnerships, and helping to ensure CCI continues to make an impact in transforming care for vulnerable populations by supporting innovation in safety net systems. Read More