Minor Thoughts from me to you

Geisinger Health System is trying an innovative approach to lowering healthcare costs: offering a warranty for certain surgeries.

Under the typical system, missing an antibiotic or giving poor instructions when a patient is released from the hospital results in a perverse reward: the chance to bill the patient again if more treatment is necessary. As a result, doctors and hospitals have little incentive to ensure they consistently provide the treatments that medical research has shown to produce the best results.

Taking a cue from the makers of television sets, washing machines and consumer products, Geisinger essentially guarantees its workmanship, charging a flat fee that includes 90 days of follow-up treatment.

Even if a patient suffers complications or has to come back to the hospital, Geisinger promises not to send the insurer another bill.

Since Geisinger began its experiment in February 2006, focusing on elective heart bypass surgery, it says patients have been less likely to return to intensive care, have spent fewer days in the hospital and are more likely to return directly to their own homes instead of a nursing home.

Unfortunately, the healthcare system isn't usually an innovator:

But hospitals have been slow to focus their attention on standardizing the way they deliver care, said Dr. Arnold Milstein, the medical director for the Pacific Business Group on Health, a California organization of large companies that provide medical benefits to their workers. Geisinger "is one of the few systems in the country that is just beginning to understand the lessons of global manufacturing," Dr. Milstein said.

Geisinger is improving care by identifying the best practices possible in cardiac surgery and then making sure that those practices are followed in every surgery. It's a simple idea, but one that doctors have been resistent to implement in the past.

Controlling costs are a large reason for the experiment:

Heart surgery and follow-up care, which runs about $30,000, are among the biggest-ticket medical offerings that Geisinger provides. But Geisinger executives say outside insurers and employers have indicated that Geisinger would need to include from 5 to 10 other procedures under its plan before they would have enough of their employees affected to make it worth their while to sign up.

Under the experiment, the hospital charges a flat fee for the surgery, plus half the amount it has calculated as the historical cost of related care for the next 90 days. So instead of billing for any additional hospital stays "” which typically run $12,000 to $15,000 "” Geisinger absorbs that extra cost.

This is the kind of healthcare reform that I get excited about. George Halvorson's idea is quite lame compared to this.