Each year the state of Massachusetts holds a costs trends hearing where they discuss the drivers of healthcare costs and examine what various healthcare constituencies are doing to rein it in. I came across this response from Partners Healthcare System responding to a series of questions from the state. It’s kind of heavy but definitely worth reading if you’re into this type of thing.

In it, Partners lays out its strategy to reduce costs. The primary driver of cost reduction is population health management.

There are two key components to their population health management plan:

Patient Centered Medical Homes. Partners is requiring all of their primary care providers to become patient centered medical homes which is a team-based approach to care that is led by a PCP working with nurses, mental health experts, case managers and supported by an integrated technology system. This gives the PCP all of the resources and infrastructure to truly manage the health of a patient and keep them healthy and out of the hospital. Rather than seeing the patient and sending them to a specialist or off to the hospital without any care coordination, the PCP has a team that is dedicated to making that patient healthy and following the patient through the entire continuum of care. It’s easy to see how this approach is better than the old model.
Integrated Care Management Program. This is a program that focuses only on the 5% of the population that drives 50% of healthcare costs – i.e. patients that have the multiple, complex conditions. Each patient is continuously monitored by a nurse manager and a PCP that proactively identify and address issues and ensure medication and appointment compliance. Again, the goal being to ensure that these patients are requiring and consuming less and less complex care.

In addition, in partnership with Medicare and other commercial payers, Partners has aligned its population health management approach with its business model as it has begun to take on more and more risk-based contracts so that they’re on the line financially for keeping patients healthy.

Partners is not alone. Most, if not all of the other large providers in the state have similar plans.

Regardless of your opinions on the ACA or your opinions on Partners, it's pretty amazing to see how far Massachusetts has come in being a system that cares for the sick to a system that keeps people healthy.

Imagine for a moment if you were a widget manufacturer and the government came to you and said you have to do something about your revenues, they’re simply too high. You’d say, “Ok, no problem, I’ll just stop making as many widgets, lay-off some employees and close a couple factories.”

You’d make less revenue but you’d keep your profit margin.

The analogy to healthcare is that imagine if instead of cutting its production, that manufacturer actually made a deal with the government and said “Ok, I'll sell fewer widgets. But, you have to agree to pay me a monthly fee for me to proactively go out and invest in programs that will make the community not want or need my widgets. And for every widget that I sell, you can take that out of my monthly fee.”

That’s literally what’s happening in Massachusetts healthcare. The hospitals are taking on a completely new approach to business and caring for patients. Their model is rapidly becoming one where they will not make money when people get sick, they’ll make money when they’re not treating the sick.

This stuff is great to see.