Blog | Friday, June 8, 2012


The Wall Street Journal ran a story about a new plan in Oregon to provide health care for less money.

Paradoxically, the federal government is giving the state $1.9 billion over five years to make it happen. According to the state's health authority director (and quoted from the article), "The state expects to net a full return on the federal investment within five years."

The plan invests in the state's Medicaid program.

Most Oregonians on Medicaid are already enrolled in managed care plans, the type that force people with that type insurance to get care at specified places with specified doctors using a restricted list of state-approved medications.

Nothing really novel in that approach. There simply has to be some way to rein in costs.

In this 21st century version of managed care, the state will organize doctors into groups, and pay them a set monthly fee based on the number of Medicaid patients that they care for.

When health care is paid for like this, people get excited.

On the plus side, the medical establishment is incentivized to find cost-effective ways to treat people and prevent expensive things like hospital admissions. This is an overall good, in that it usually drives innovation and greater attention to a process known as case management. More attention is paid to those with chronic conditions like heart failure, diabetes, or emphysema.

On the minus side (and we had experience with this in the 20th century), incentives to lower costs can lead to skimping as the main means of controlling costs. For every insured patient that doesn't use health services, more of the pot of money stays around.

One thing I find interesting about the Oregon experiment is that instead of using the already-cliched term accountable care organization, the term here is coordinated care organization.

Is this just a tweak in jargon or a meaningful change in lexicon?

This post by John H. Schumann, MD, FACP, originally appeared at GlassHospital. Dr. Schumann is a general internist. His blog, GlassHospital, seeks to bring transparency to medical practice and to improve the patient experience.