On Healthcare Reform – A Systems Engineering Approach

On Healthcare Reform – A Systems Engineering Approach - DSI-165-GaryWaissi.pdf

Gary Waissi, ON HEALTHCARE REFORM A SYSTEMS ENGINEERING APPROACH, Decision Sciences Institute (DSI) 2010 Conference Proceedings, Vol 1, p390, San Diego, CA

ABSTRACT

We discuss a systems engineering approach for comprehensive reform of the healthcare system of the United States. The goal is to improve both the quality and cost performance of the entire healthcare system when compared to other leading industrialized nations. We identify three main sources of variability impacting both the healthcare system performance and total costs, and propose how to address these sources of variability.

Proposed Approach

The proposed solution to address the sources of variability consists of the following three parts:

• a)  Introduce national level standards and incentives for the creation of an integrated healthcare information system for the United States. This addresses variability from all three sources listed above.
• b)  Standardize external operating conditions. Pass a national medical malpractice liability bill using as the model the observed best practices. In addition, pass comprehensive national tort reform to provide a standardized framework of liability for businesses including pharmaceutical and medical technology companies. This addresses variability from source 2.
• c)  Introduce competition for the current form of health insurance. We propose a novel approach for providing competition for the current form of health insurance in form of a virtual Health Coverage Transaction Facilitator – Enterprise Resource Planning solution, (HCTF - ERP). We outline this concept next. This addresses variability from sources 1 and 3 above.

A Re-engineered Model for Providing Health Coverage

To create more competition, reduce regional and individual treatment variability, and to address the “administrative cost” category, we propose the creation of a virtual not-for-profit corporation, a non-governmental health coverage transaction facilitator (HCTF) based on an Enterprise Resource Planning (ERP) solution. In the proposed model, the doctor, healthcare provider and patient assume complete responsibility as decision makers, away from the health insurance company. The primary role of the HCTF-ERP is to serve as a facilitator for premium and claims transactions (like NASDAQ as an automated facilitator of investment transactions). The proposed solution would essentially replace the healthcare insurance company function as it currently exists.

The HCTF-ERP has the following main characteristics:

• A virtual organization consisting of a fully-integrated, standardized and automated Internet based Enterprise Resource Planning (ERP) system for healthcare management. The role of the virtual organization is to serve as a transaction facilitator and enabler between healthcare providers, doctors and consumers.
• Decision makers are the patient and provider/doctor, with the insurer’s role reduced to transaction facilitation (HCTF-ERP).
• Role of the Management is to work with healthcare providers to advance adoption and sharing of standardized- and best practices across healthcare domains.
• Coverage criteria and premiums will be driven by actual cumulative pool expenditures. All subscribers are considered one pool with access to healthcare without discrimination.
• Secure personal accounts and level of authorized access are provided for each user. Each user (healthcare provider, doctor, consumer) has a “personal” secure account with preset levels and authorization for access.
• Completely standardized and automated claims processing.
• Fraud detection and system abuse using a fraud detection program checking statistics against best practices for frequency of services, number and type of prescriptions and unusual treatment patterns.
• Potential  benefits  at  the  “ system” level  include significantly reduced administrative costs and overhead due to reduced administrative structure, automated and standardized claims processing and reduced need for physical infrastructure. Additional benefits would include a sales, enrollment processing, underwriting and “pool” pricing.
• Potential benefits to healthcare consumers and healthcare providers include improvements in healthcare quality and reduction in per patient health care expenditures, because of standardization, transparency and automation of records and reporting, integration of information systems, sharing of best practices and thereby reduction of individual- and geographic treatment quality- and cost variability.
• Requirements for success include regulatory and policy changes, national level standardization, policy support, incentives as well as an initial investment to support development, testing and launch of such a HCTF – ERP solution. It should be noted, that, for efficiency, such a system should not necessarily be one large system for the entire U.S., but rather an integrated network of state- or regional-level HCTF-ERP systems.