Healthcare is a troubled industry. There is no known health service system that would work to the satisfaction of all major stakeholders, patients, providers, and payers. No matter the amounts spent, nothing is ever enough.

The resource problem looks different in the rich and in the developing world. In affluent countries demand is relentlessly driven by new technologies and cures, ageing populations, life-style –related problems and the medicalization of trivial ailments. Islands of undercare dot a sea of overcare. In the developing world the situation is the reverse.

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All responsible governments have noticed that the situation is unsustainable. In Finland gross health service expenses have doubled since the year 2000 outpacing economic growth by several percentage points. Health and welfare has become the cuckold that kicks other public tasks, such as infrastructure, education and defense out of the nest.

The obvious counter-measure is to increase productivity. According to a recent study by Aalto University, there is ample room for that. If all districts in the country, after adjusting for local variations in population and morbidity, would perform at the level of the national average, one billion euro could be saved out of a total expenditure of eighteen billion. If all would perform at the level of the best, no innovations required, the savings could be three billions.

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Such regional variation is puzzling in a health system that is to ninety percent tax financed and centrally regulated. Neither the government, nor the professions have been able to implement standardized best practices. There is a strong case for Lean healthcare.

Raw improvement of everything, however, may be a dull weapon. There are several interesting patterns that are not visible to the naked eye. A data –driven helicopter perspective is needed. There are areas where improvement would be especially welcome, and not only in the shape of smooth processes but better structures and allocations.

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Curiously, there can be simultaneous overspending and undercare. A common observation is that healthcare expenditure follows the Pareto distribution or the 20/80 rule: one fifth of the population spends four fifths of the resources. In a recent study, The Nordic Healthcare Group (NHG), a consultancy, studied the health expenses in a medium-sized city. The distribution was sharper than the traditional Pareto. Ten percent consumed seventy percent. There was a hard core of high spenders, a few hundred individuals that consumed more than half of the total municipal health and welfare budget. They could be divided into three categories: expensive somatic cases such as premature and massive trauma; elderly multi-morbidity patients in around-the-clock care; and the sad combination of substance abuse and mental disorder. With the possible exception of the first group, these people did not get value for the money. Their quality of life was overall bad.

This happens in a welfare society that has for decades mobilized the full force of the state and committed massive resources to universal access and equality of care. Still there some people are simultaneously overserved and undercared.

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Growth has been fastest in the extremes of the care spectrum. The most technically advanced specialist care spends like there were no tomorrow. The low end of home and community care is not that expensive per unit, but the number of cases increases dramatically. In Finland between the years 2000 and 2014 expenditure for specialist care doubled, long-term care for the elderly and handicapped grew 160%, while primary care have had to do with a paltry 60% increase. The trouble is in the middle.

Since WHO’s Alma Ata declaration in 1978 every policymaker has paid lip service to the strengthening of primary care. Therapies should be administered at the lowest sufficient level to save the specialized resources to those that truly need them. It is better to treat diseases early than to allow time to turn them into complications. Despite the best of intentions, quite the opposite is happening. A relatively weakened primary care feeds growing numbers of increasingly sick people to hospitals.

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It is common knowledge that free markets do not work in healthcare. The relative weights of primary and secondary care, however are powerfully market driven. Consider two hypothetical doctors. A is an accomplished neurosurgeon, who successfully saves lives by removing brain tumors. B is a general practitioner, whose working day is an endless stream of small infections, minor trauma, and unspecified pain. As a patient, taxpayer, or regulator, how much would you be willing to pay for a day’s work to A and to B?

The answer is obvious. Medical students, investors and decision makers have long since decided to follow the money. In the Nordic countries center-left governments have traditionally been suspicious, if not openly hostile to markets in healthcare. Still, and despite all the Alma Ata –rhetoric, they have been incapable of stemming this particular market mechanism.

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This points to a broader problem. It appears that even in publicly financed and administered systems, public sector provision is not under public sector control. The government did not call for rampant cost-inflation. No politician has demanded queues and increasing socio-economic health inequality. Still it happens.

The Norwegian political scientist Stein Ringen has eloquently described this phenomenon in his book A Nation of Devils. Politicians may think they are in charge. As a matter of fact they don’t do things, they just issue statements, make decisions and allocate money. Before anything real happens on the ground, the issue has to travel through a lengthy chain of civil servants and administrators, who have every opportunity to turn gold into lead.

It is well known that a core issue in health policy is the information asymmetry between patients and doctors. A similar, perhaps even more devastating asymmetry is between politicians and professionals. For this reason planned economies have never worked as planned.

If markets don’t work and command-and-control is hopeless, something else needs to be done. The answer is to be sought from the design of quasi-markets. While greed is and has always been pervasive, nothing controls the greed of a seller as efficiently as the greed of a buyer.

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The current center-right Finnish Government has realized the problem and initiated a sweeping reform. While the initiative sill has to run the gauntlet of entrenched interest groups and parliamentary opposition the basic principles are clear.

For a nation to contain health expenditures at a sustainable level without endangering public health, some or all of the following mechanisms must be put at work:

– Care should be initiated at the right time; not too early, not too late.

– Care should be administered at the lowest sufficient level; primary and secondary care must take joint responsibility of care pathways.

– The care of very expensive multi-morbidity cases must be integrated to include somatic, psychiatric and social care.

– The overall productivity and quality of care processes and administration must be improved following the principles of Lean healthcare.

– Care should, when possible, be evidence –based not to do useless interventions.

– Increasing health literacy and the awareness of life-style related diseases should reduce demand.

The core issue is how to design a system that can put to work all or some of these mechanisms. There are no simple solutions. Policy makers have two levers at their disposal, information and money.

The information should be about value. As Michael Porter and other proponents of the Value –based Healthcare movement have suggested, value is the relation between health outcomes and the money spent, measured at the patient level over a full cycle of care. To develop accurate and comparable measures of health outcomes is a formidable task that is currently undertaken by several research and development initiatives around the world.

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If such information were available, policy makers could design health finance systems that could align the interests of patients, payers and providers.

In Finland some of the central policy proposals are, first, a single-payer system. The state collects all money and distributes them to regional authorities.

Second, all caregivers should be organized as limited liability companies with standardized accounting and reporting. While most of the money will still flow from the taxpayers, every caregiver would get its income following the same rules and be subject to the same outcome measures. The current public providers who would loose their privileges and be forced to compete, obviously, will furiously resist.

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Third, to allow patient choice and strengthen primary care, a finance system based on capitation is proposed. Each citizen should register with a health- and welfare center, which would then receive a fixed annual per capita remuneration from the government.

The amount of the capitation money, and the corresponding variety of services that it should cover, are hotly debated. At the low end, the amount could be calculated based on the average annual spend of the healthy adult population, which currently is in the range of 250 €. At the high end it could include just everything and be about 3 500 €, which is the total per capita expenditure. In the latter case the primary care centers would get full control of all financial flows. On the behalf of patients they would purchase clinical interventions from specialist hospitals as needed, essentially taking the role of an insurer. There would be several problems with such drastic measures, so there will probably be a compromise allowing some part of the specialist care to be financed on a fee-for-service –basis by the regions.

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While capitation –based finance provides strong incentives to primary care; there are some known pitfalls. Since the income comes by registered citizen and the costs come from the resources needed to provide service, there is a temptation to engage in skimming, i.e. lure healthy individuals to register while denying service from those with pre-existing conditions. This can be tackled by legislation that prohibits denying anybody from registering as well as kicking anybody off the list. There would still be the risk of undercare and cost-shifting, i.e. costly patients are referred to specialist care, and to be paid directly by the government.

The design of a quasi-market with regulated competition and patient choice requires accurate and publicly available information on value: the relation between outcomes and euros spent at each care organization. Therefore the key task for researchers and policy makers is to develop and experiment with information systems that could do this.

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For health policy makers in India and other rapidly developing countries this may sound like a rich-man’s problem. Indeed it is. The message, however, should be that money will not solve a nations health problems. The pit has no bottom. Health systems emerge slowly and are difficult to change. Latecomers can always have the privilege to learn from other’s mistakes and make a mighty leap to the front.

About the author

Paul Lillrank has been Professor of Quality and Service Management at Aalto University since 1994. He has served as the Head of the Department of Industrial Engineering and Management and been Academic Dean of the school’s MBA program. He received a Ph.D. in Social and Political Sciences at Helsinki University in 1988 after spending six years as a post-graduate student in Japan where he researched quality management in Japanese industry. He is a pioneer in introducing industrial management methods to the study of healthcare service production. He has been visiting professor at the University of Tokyo, and teaches regularly at the Indian Institute of Technology, Kharagpur.

Author suggests that home healthcare is the way forward to improve elderly care and reduce healthcare cost in India

The rapidly growing elderly population is driving the rise in healthcare cost globally. In India, the situation will be no different in the forthcoming years. Given the increase in life expectancy due to medical advances and other factors, India’s 60+ population will grow from 100 million today, to over 300 million by 2050. Out of the 300 million people aged above 60 years, 200 million are likely to be suffering from chronic diseases. The profound shift to chronic conditions such as chronic obstructive pulmonary disease, cardiovascular conditions, endocrinal conditions (diabetes and thyroid disorders), and cancer, directly or indirectly, cause around 50% of all deaths in the Indian subcontinent. This shift to non-communicable diseases will impact the elderly population much more than other age cohorts. This calls for a serious focus on elderly care. This article evaluates the potential of a globally successful care delivery model – “home-based health care” in improving ‘Aging in Place’ and reducing healthcare cost in India.

What is Home Care?

Globally, Home Care has evolved around the idea of providing medical and non-medical services to a person who is ill enough to need care, but stable enough not to have been admitted in a hospital or a long term care facility. These services are delivered to a person in his or her own home. Home Care consists of two broad categories of services:

Home Health Care – medical care provided to individuals in their homes. Trained medical professionals such as doctors and nurses provide these services including, but not limited to, physical therapy, occupational therapy, speech therapy and nursing.

Non-Medical Home care / Personal Care – non-medical home care is typically provided to assist individuals in performing activities of daily living (ADL) in order for them to continue living life from the comfort of their own home. These services are rendered by caregivers but not trained medical professionals. Personal care services include assistance in bathing, eating, mobility, and general household chores such as housekeeping, laundry, shopping for groceries, transportation and preparation of meals.

According to Transparency Market Research’s featured report on global home healthcare market, the home care market will grow at a progressive 8.1% CAGR during 2014 to 2020. This report titled “Global Home Healthcare Market Industry Analysis, Size, Share, Growth, Trends and Forecast, 2014-2020” further states that the global home healthcare market in 2013 was worth US$176,107.9 million, and is estimated to reach a market revenue of US$303,605.9 million by 2020.

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Patients who are suffering from chronic conditions do not really need to remain in hospitals or long term care facilities. As a result of advances in telecommunications and medical technology, most part of the patient monitoring and care delivery, which was earlier possible only in hospitals, can now be done in a patient’s home. This can result in improved health conditions, reduced hospital re-admissions and lower medical cost for patients. With increase in average life expectancy, homebased care in India is becoming a need rather than a choice.

In developed nations such as United States, Canada and United Kingdom, the concept of Assisted Living Residence or Assisted Living Facility (ALF) for elderly population emerged in 1990s as an eldercare alternative for people who do not need the 24-hour medical care provided by a nursing home and want to live independently with dignity. These facilities provide assistance with activities of daily living (ADLs); coordination of services by outside

health care providers; and monitoring of resident activities to help to ensure their health, safety, and well-being. However, the concept of old-age homes to a large extent is socially unacceptable in India and therefore home healthcare services will become vital in the continuum of care for elderly population in India.

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Role of Technology

The success of Home-based healthcare in improving elderly care, reducing medical costs and improving care outcomes in India is only possible with the effective use of Healthcare Information Technology. From accurate scheduling of caregiver visits to a patient’s home, co-ordination between back office and caregivers in the fields, capturing and documenting patient’s data at the point of care, delivering medical and non-medical services as per the patient’s care plan and standard protocols, patient billing, staff payroll and adhering to regulatory compliances – it requires a robust integrated system to manage every aspect of home care.

Further, the latest advances in IT have the potential to transform home-based care in many ways:

Tele-health applications to connect patients and their families to their health care providers. Such an ecosystem can be very useful in reducing the need of hospitalization and emergency room visits in patients with chronic conditions. Many pilot studies such as asthma Tele-monitoring system and Telematics Management of Insulin-Dependent Diabetes Mellitus have shown promising results.

Web-based social networks have emerged to connect patients with their families, doctors, friends and community for real-time information sharing. These virtual communities of patients with similar conditions can be a very powerful medium of educating, discussing issues, sharing resources and consulting with experts from the comfort of home.

Digital storage and management of personal health records so that patients can increase their health understanding and participate in clinical decision-making.

Personal Emergency Response Services (PERS) – use of Artificial Intelligence and bio-sensors for passive monitoring and management of patients in their homes. Example, wearable medical devices such as wrist bands or neck pendants for fall detection in the elderly people, wearable patch to monitor blood-sugar levels and blood-pressure. These sensors can share the data in real-time and trigger alerts to family members and healthcare providers for immediate medical intervention.

Role of Health Insurance

Unlike developed nations, home care services in India are not covered by health insurance policies. In fact, the overall awareness and adoption of Health Insurance in India is still very low. The Home Care industry has gained a lot of traction in India recently with some domestic and international companies setting up their home health care businesses in metros and other cities. However, increasing the penetration of affordable Health Insurance in India with the coverage of home care services by government and private health insurance plans is imperative to the growth of organized and regulated home care services sector for elderly care in the country. Setting up national and state level regulatory bodies for home care and investments by organized players like big hospitals can bring scale, standards and credibility to this type of care delivery model in India. This would also encourage health insurance companies to cover home care services in their policies.

Undoubtedly, home care led by Healthcare IT, investments from domestic and international players and government initiatives has the power to transform elderly care and reduce medical cost in India in the coming years.

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