| By Haydn Bush | September 21, 2011 |
| At IBM, executives closely examine regional health care costs when deciding where to locate jobs. | |
As hospitals prepare for the unprecedented shift from fee-for-service reimbursement to value-based payment, the importance of controlling costs has never been greater. Our readers are certainly focused on this challenge: A recent H&HN Daily article on using Lean strategies to control costs was one of our most popular articles of the year and provoked a passionate discussion. And starting next month, H&HN will be exploring the challenges of cost containment in a new series. But for hospitals and other providers, there may be a more immediate reason to get engaged in the cost containment struggle: the economic health of the communities and regions they serve.
Paul Grundy, M.D. director of IBM's Healthcare Transformation Group, made this argument during a speech at last week's Mayo Clinic Transform Symposium in Rochester, Minn. According to Grundy, IBM now closely factors area health care costs into its business expansion decisions. In 2009, when IBM executives decided to open a new U.S. call center, they were attracted to Dubuque, Iowa, in part by low health care costs. While the U.S. is still far and away the nation with the highest per-capita health care costs, Dubuque's costs compare favorably with other parts of the world, Grundy noted. IBM ultimately added 1,300 jobs there.
"We move jobs to where we get a better value proposition for health care," Grundy said.
Getting a handle on health care costs, of course, is a knotty task that hospitals and other providers have been struggling with forever. Grundy believes the key will be shifting the industry from a focus on the best care at all costs to a more population-based, medical home approach, which IBM is involved in through its participation with the Patient-Centered Primary Home Collaborative. Leveraging better data along with emerging clinical support tools like the artificial intelligence system and Jeopardy! champion Watson, Grundy and IBM are hoping that U.S. providers can begin to move to more population-based, and ultimately more cost-effective, models of care.
"We want care that's comprehensive, integrated, coordinated and accessible," Grundy said. "We no longer want to buy ? an episode of care."
To illustrate this point, Grundy recalled a meeting with executives from an unnamed hospital that publicized its delivery of the "best heart care" with billboards throughout the surrounding area.
"We told them they'd never get another job," from IBM, Grundy said.
And a more population-health focused strategy, Grundy argued, has implications far beyond the cost of care. When Grundy traveled to Denmark earlier this year, shortly after the January shooting of U.S. Rep. Gabrielle Giffords (D-Tucson), he had a fascinating revelation about cultural differences about the role of health care.
"They asked who the shooter's doctor was," Grundy said of the Danish people he spoke to. "We think of health care as an episode of care. They think of health care as managing the population."
Haydn Bush is senior online editor for Hospitals & Health Networks magazine.
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