CARL HEARD: We must address healthcare system's fundamental flaw

As a primary care physician and researcher, I believe that the most fundamental challenge in reforming healthcare is recognizing that our system rewards physicians by the number of patients they see each day (encounters) and by the procedures they perform.

As a result we have a medical system that is very good at delivering encounters and procedures, but remarkably less capable of improving the health of individuals. The concept of "quality care" is oft spoken but, in reality, ignored.

The result is that Americans are getting from our health care system what they're paying for: encounters and procedures rather than measurably improved health.

This is a troubling reality on professional, ethical and public policy levels. It is my conviction that the only way we can improve patient health and reign in escalating healthcare costs is by reforming the way physicians and clinicians are compensated.

Today, primary care provider compensation is based on the false assumption that all encounters provided are equal. Even when "pay-for-performance" reform measures are incorporated, compensation is still linked to encounters. This is akin to redesigning a car without considering the type of fuel it will use. Instead we must recognize that the difficulties and relative costs in helping patients choose a healthier future are particular to the individual.

The failure to recognize and quantify this fact has been the root cause of resistance to quality and the evolution of value-based compensation.

Electronic health records, impressive computing power and advances in predicting the probable health future of individuals have created the circumstances which allow the public and private sectors to pay for measurably improved health. In other words, we are now able to create payment relationships which align compensation with what is desired of the healthcare system: objectively improved health.

Once this model of compensation is widespread I imagine it will unleash the amazing force of our market economy to improve the health of the American public.

Payment for encounters and procedures, regardless of the impact on survival or avoidance of future diseases, will further confound efforts to improve the health of the population at large and make the deficit worse through uncontrolled growth in healthcare costs.

As a member of the non-profit Western Clinician's Network (WCN), I am developing an approach using predictive analytics to calculate the contribution by provider and patient to the changes in health outcomes. WCN is compiling the determinants of a patient's ability to choose a healthier future, and creating unbiased measures of the provider's impact on these outcomes. While our work is being conducted with community health center patients, the results apply to the entire healthcare industry.

The immediate benefits of our research will focus resources for patients with specific diagnoses (e.g. chronic diseases such as diabetes; hypertension; heart disease, etc.); aid practices in redesigning compensation relationships with third party payers and accountable care organizations; and cause a profound shift in the practice of medicine and unleash an untapped capacity for innovation, quality improvement, and cost reductions.

The challenge for lawmakers is to finally embrace the fundamental tenet of economics and begin to design a healthcare industry that is properly aligned with that which every person ultimately desires: measurably improved health.

• Carl Heard, M.D., of Carson City serves on the board of the Western Clinician's Network, a non-profit organization that provides education, training, peer support and research in order to improve primary care and public health.