Government officials are pursuing multiple plans to reduce healthcare spending while making America healthier. Meanwhile, countless clinicians are already getting the job done—and being punished for it. Why not unleash them?
Americans like to imagine we lead the world in healthcare innovation. It’s plausible if we’re talking about developing new drugs or medical devices. But when it comes to delivering healthcare services, our system is so averse to innovation that it ranks dead last compared to similar countries.
To appreciate how innovation gets smothered in our healthcare system, you first need to understand how clinicians bill for their services. By law, the American Medical Association oversees a list of over 11,000 healthcare services. Each service has a unique five-digit billing code. For example:
99214 = complex primary care visit
97162 = physical therapy, hands-on manipulation
76857 = limited ultrasound exam of the pelvis
Nearly every hospital, clinic, and healthcare practice in America uses these codes to bill for services.
But when an inventive doctor develops a better way of delivering care, the new service has no pre-existing code—which means they can’t bill for it. The value of that innovation is, by definition, zero. Imagine what would happen to the energy and vibrancy of Silicon Valley if the price of any new gadget was set at zero until a centralized body approved a five-digit code.
In theory, any clinician can apply for a code that makes a new service billable. In practice, however, the approval process takes 18 to 24 months and involves a showstopping amount of paperwork. Researchers at Northwestern University found that even when many clinicians want a new billing code, bureaucratic hurdles mean “nobody has the incentive to get it approved.”
When our healthcare system penalizes clinician-innovators in this way, we all share the burden of inflated healthcare costs.
Consider Dr. Nancy Murphy, a Utah physician at Primary Children’s Hospital. Her clinic cares for children with complex medical conditions, including congenital abnormalities, genetic syndromes, brain and spinal cord injuries, and neuromuscular disorders. Families for these children often get overwhelmed keeping up with appointments and trying to make sense of overlapping medical directives.
Murphy’s response has been to invest more in primary care, aiming to both improve outcomes and reduce costs. Family appointments run as long as 90 minutes, involving separate conversations with Murphy, a nurse practitioner, a nurse care manager, and a medical assistant. The care team then huddles to agree on priorities to discuss with the family. It’s an intensive approach; the practice dedicates a full third of its schedule to coordinating care with specialists and communicating with families.
In a published ten-year review of their outcomes, ER visits were down 15 percent, hospitalizations down 32 percent, and hospital costs down 69 percent. Patient families report high satisfaction. And as one of us wrote about in the book How Physicians Can Fix Health Care, total system costs declined by an estimated 12 percent.
Murphy’s clinic delivers better outcomes and lower costs, but it operates in the red because it can’t bill for all services it provides. She told us her clinic survives only because Primary Children’s has been willing to absorb losses in pursuit of its mission.
And she’s not the only one. Clinicians have found ways to save money when treating ailments as varied as back pain to cancer to rheumatoid arthritis—and faced similar billing challenges.
To be sure, policymakers have tried to address this innovation problem. At least in early drafts, the Affordable Care Act included robust support for more sensible ways to pay for healthcare. Alas, we appear to be stuck with five-digit codes.
Instead of bureaucratic hurdles, clinician-innovators need a fast-track application that can provide local, provisional approval for a new billing code within just a few weeks. If an innovation demonstrates better outcomes at lower costs, a permanent code can be approved.
Researchers have estimated that 25 to 30 percent of health care spending is wasted. About one-third of that waste, roughly $400B, falls into categories that front-line clinician-innovators can address, such as failures in care delivery, failures in care coordination, overtreatment, or low value care.
These are low-risk innovations. Many take the form of, quite simply, more talking. Longer conversations, often between patients and nontraditional health workers, can lead to closer connection with patients, more engagement in managing chronic conditions, more deeply considered decisions where their views are respected, and better coordination of care–all of which can improve outcomes and reduce costs.
The risks aren’t zero, but they’re tiny compared to those involved when injecting a novel molecule or implanting a high-tech gizmo in the body. As such, service innovations should be evaluated differently than medical innovations, based on outcomes and costs rather than the results of multi-year randomized controlled trials.
America’s healthcare system has stymied service innovation for decades, all for lack of five-digit billing codes. The silver lining is an abundance of untapped opportunities to improve patient outcomes while reducing costs on the clinical frontlines—but only if we stop blocking clinicians who have the insight and ingenuity to transform care.
Chris Trimble is the author of How Physicians Can Fix Health Care: One Innovation at a Time.
Glyn Elwyn has written about how patients and clinicians can collaborate when they make healthcare decisions. They co-host Unleashed: Redesigning Health Care, a podcast from The Dartmouth Institute of Health Policy and Clinical Practice.
