Alain C. Enthoven

Should operations be regionalized? The empirical relation between surgical volume and mortality.

Abstract This study examines mortality rates for 12 surgical procedures of varying complexity in 1498 hospitals to determine whether there is a relation between a hospitals surgical volume and its...

A Consumer-Choice Health Plan for the 1990s

We describe the characteristics necessary for a plan for universal health insurance to find broad acceptance. Such a plan must represent incremental, not radical, change; must respect the preferences of voters, patients, and providers; must avoid major disruption in satisfactory existing arrangements; must avoid creating major windfall gains or losses; must avoid large-scale income redistribution; and must not be inflationary. Our proposal would create a framework that would encourage the efficient organization of care. Successful organizations would probably be those that attracted the loyalty and commitment of physicians, integrated insurance and the provision of care, and aligned the interests of doctors and patients toward high-quality, cost-effective care. The proposals chief potential disadvantage would be its effect on the employment opportunities of low-wage workers, but this effect could be minimized. In addition, we discuss a proposal to mandate coverage by employers of full-time employees, legislation enacted recently in Massachusetts, high-risk pools, and the system followed in Canada, comparing each of these alternatives with our proposal.

Consumer-choice health plan (first of two parts). Inflation and inequity in health care today: alternatives for cost control and an analysis of proposals for national health insurance.

The financing system for medical costs in this country suffers from severe inflation and inequity. The tax-supported system of fee for service for doctors, third-party intermediaries and cost reimbursement for hospitals produces inflation by rewarding cost-increasing behavior and failing to provide incentives for economy. The system is inequitable because the government pays more on behalf of those who choose more costly systems of care, because tax benefits subsidize the health insurance of the well-to-do, while not helping many low-income people, and because employment health insurance does not guarantee continuity of coverage and is regressive in its financing. Analysis of previous proposals for national health insurance shows none to be capable of solving most of these problems. Direct economic regulation by government will not improve the situation. Cost controls through incentives and regulated competition in the private sector are most likely to be effective.

Consumer-Choice Health plan (second of two parts). A national-health-insurance proposal based on regulated competition in the private sector.

Medical costs are straining public finances. Direct economic regulation will raise costs, retard beneficial innovation and be increasingly burdensome to physicians. As an alternative, I suggest that the government change financial incentives by creating a system of competing health plans in which physicians and consumers can benefit from using resources wisely. Main proposals consist of changed tax laws, Medicare and Medicaid to subsidize individual premium payments by an amount based on financial and predicted medical need, as well as subsidies usable only for premiums in qualified health insurance or delivery plans operating under rules that include periodic open enrollment, community rating by actuarial category, premium rating by market area and a limit on each persons out-of pocket costs. Also, efficient systems should be allowed to pass on the full savings to consumers. Finally, incremental changes should be made in the present system to alter it fundamentally, but gradually and voluntarily. Freedom of choice for consumers and physicians should be preserved.

Managed Competition of Alternative Delivery Systems

The markets for health insurance and health care are not naturally competitive: they are susceptible to many forms of market failure. Health plans and consumers may use strategies that lead to inequity and inefficiency. But experience with successful models of competition suggests that tools are available to enable sponsors (active collective agents on the demand side who contract with health plans to structure and manage competition) to use competition to achieve a reasonable degree of efficiency and equity for their sponsored populations. All this implies a more complex, dynamic, and sophisticated view of competition than one usually finds in apologia for free markets. A free market is not possible in health insurance.

Consumer-Choice Health Plan

Medical costs are straining public finances. Direct economic regulation will raise costs, retard beneficial innovation and be increasingly burdensome to physicians. As an alternative, I suggest that the government change financial incentives by creating a system of competing health plans in which physicians and consumers can benefit from using resources wisely. Main proposals consist of changed tax laws, Medicare and Medicaid to subsidize individual premium payments by an amount based on financial and predicted medical need, as well as subsidies usable only for premiums in qualified health insurance or delivery plans operating under rules that include periodic open enrollment, community rating by actuarial category, premium rating by market area and a limit on each persons out-of pocket costs. Also, efficient systems should be allowed to pass on the full savings to consumers. Finally, incremental changes should be made in the present system to alter it fundamentally, but gradually and voluntarily. Freedom of choice for consumers and physicians should be preserved.

On the ideal market structure for third-party purchasing of health care

The ideal market structure would give each medical care organization effective incentives to produce maximum value for money for enrolled subscribers. It should be based on integrated financing and delivery systems--partnerships that link doctors, hospitals and insurers--with per capita prepayment, with providers at risk for cost of care and cost of poor quality, publicly accountable for quality and per capita costs. The ideal market structure must be managed by active intelligent collective purchasing agents, called sponsors, that contract with health care systems and set the rules of competition. Sponsors structure and manage the enrollment process; they create price-elastic demand; they manage risk selection; and they create and administer equitable rules of coverage. Microeconomic theory tells us what sponsors should do to get the market incentives right. There is no comparable political theory to tell us how their boards of directors should be constituted. The paper offers a list of undesirable political arrangements to be avoided and some desirable features of sponsor constitutions.

Should operations be regionalized? The empirical relation between surgical volume and mortality. 1979.

This study examines mortality rates for 12 surgical procedures of varying complexity in 1498 hospitals to determine whether there is a relation between a hospitals surgical volume and its surgical mortality. The mortality of open-heart surgery, vascular surgery, transurethral resection of the prostate, and coronary bypass decreased with increasing number of operations. Hospitals in which 200 or more of these operations were done annually had death rates, adjusted for case mix, 25 to 41 per cent lower than hospitals with lower volumes. For other procedures, the mortality curve flattened at lower volumes. For example, hospitals doing 50 to 100 total hip replacements attained a mortality rate for this procedure almost as low as that of hospitals doing 200 or more. Some procedures, such as cholecystectomy, showed no relation between volume and mortality. The results may reflect the effect of volume or experience on mortality, or referrals to institutions with better outcomes, as well as a number of other factors, such as patient selection. Regardless of the explanation, these data support the value of regionalization for certain operations. (N Engl J Med 301:1364-1369, 1979)

Should Surgery Be Regionalized

The authors suggest that new surgical procedures be carried out initially in selected institutions and that complex procedures for which it has been or can be demonstrated that mortality is inversely related to the volume of experience also be regionalized. Regionalization in the latter instance can have a small overall impact on surgical practice but a large impact on the adverse consequences of high risk operations that are performed only occasionally.

The competition strategy: status and prospects.

The 96th Congress saw the introduction of five procompetition bills for reform of the nations health-services system. In order of appearance, their authors were Senator David Durenberger (R.-Minn....