The Iron Triangle of Health Care – Implications for the PPACA

I was recently working on a consultation gig and came across a report from the FTC and the DOJ entitled ‘Improving Health Care: a Dose of Competition’, which included a reference to the so-called Iron Triangle of Health Care. William Kissick initially proposed this concept in 1994 when he described medicine’s dilemma of infinite needs versus finite resources. The three vertices of the triangle are cost, quality, and access. As I read the description of the equilibrium established by this triangle of consequences, I visualized the three corners of this triangle, each connected by springs to the other two. Attempts to reduce costs in the system must, according to the theory, result in either reduced quality of care, or reduced access to care, or both. Likewise, improving quality either increases costs, or reduces access, and so on.

Is it possible to reduce costs and maintain or even improve quality and increase access? If you assume there is a lot of waste, fraud, and excess that increases costs but does not contribute to the quality of care, or a lot of inefficiency in resource utilization that undermines access; then perhaps the springs can be stretched a bit without pulling in the other corners of the triangle. Well, we know there is waste, and we know there is inefficiency, so it should be possible to rein in costs, or at least hold steady there, and still improve the effectiveness of our health care model (or any health care model, for that matter). The question is: will Obamacare achieve this goal?

It seems to me that the Patient Protection and Affordable Care Act was a step in the right direction, but a very imperfect and unsteady, wavering step. (By the way, I always try to include the ‘patient protection’ part of the name, which I think is all too often and inappropriately left off when it is cited.) Undoubtedly, politics had something to do with these imperfections, but the omissions are glaring, and the reliance on for-profit insurance plans to fulfill this promise of better care at less cost for more Americans is in my opinion questionable if not outright inoperable. Likewise, the focus on fraud is necessary (if it’s done right) but omitting any real effort at liability reform really tightens up the springs between cost, quality and access; making it more difficult to tackle the risk-aversion on the part of providers (and patients) that contributes to unnecessary and cost-ineffective care.

The pay-for-performance incentives in the PPACA are an effort to restructure the incentives that encourage unnecessary care and instead promote effectiveness; but this ‘restructure’ is more of a reversal of incentives. Putting providers at risk for the cost of care will, likely, reduce access (let’s be honest and call the result ‘rationing’ – the dreaded R word) as much as it might improve quality. Liability reform would likely do as much to reduce unnecessary care as risk-sharing and pay for performance, and at the same time, actually improve access, especially for difficult, litigation prone care, like high-risk obstetrical services. Liability reform is effectively missing in action in the PPACA.

Likewise, bringing more uninsured citizens under the ‘protection’ of insurance through expansion of Medicaid, an attempt to expand access to care, can only succeed if providers are willing to accept the traditionally dismal Medicaid payment rates for their services. Insurance coverage is no guarantee of access, and of course, the costs will be significant. One way to improve access to care, without tugging too hard on the cost or quality connectors, is to reduce the inefficiencies in the existing system, in particular the excessive administrative overhead in US health care. This is why I believe the reliance on for-profit health plans under Obamacare missed the boat: it just perpetuates a system that sucks up 20 percent of premiums for management, when Medicare does it just as well with a 4 percent administrative burden. If you think that the PPACA provisions requiring plans to meet minimum medical loss ratio standards will help, think again: these plans know and will use every trick in the book to shift administrative costs over to the health services side of the equation to maximize their retained earnings and management compensation.

Every one of the quality enhancement initiatives in the PPACA suffers from the same inherent weakness: the assumption that quality in medicine is readily defined, always appreciated, and universally desired. Not so, and the reason is that medicine is as much art as science. The practice of medicine is so arcane to most ‘purchasers’ that neither payers nor patients can distinguish between good care and care that looks good. There is a way to improve quality without sacrificing access or increasing costs; but it requires re-education of providers, payers, and consumers. Providers need to better understand what the words ‘good outcomes’ really mean, payers need to better understand how to measure and incent ‘effective performance’, and patients need to learn the difference between quality of life and life-span.

What’s missing in the PPACA is a program to re-educate every stake-holder in the health care system, because what really drives the more efficient and effective health care programs in most other advanced countries isn’t science, or technology, or the profit motive, or regulation: it's culture. We really need to change the culture of health care if we are to change the equilibrium between cost, quality and access in this country: a little social combustion to soften up and reshape the iron triangle. Our politicians just weren’t willing to take the heat.

(PS: the only politician I know who was ever willing to engage the public in discussions of the social and cultural issues around quality of life and cost-effective care is John Kitzhaber, two time Governor of Oregon. Perhaps this is because John is also an emergency physician.)

This post also appears on The Fickle Finger