Arnie Milstein Stanford CERC

Comprehensive care that cuts costs: Stanford’s big idea

by Dona Cutsogeorge, MA, blog writer and communications coordinator at the MacColl Center for Health Care Innovation.

Arnold Milstein MD has been at the forefront of health care performance improvement for decades. He cofounded the Leapfrog Group and the Consumer-–Purchaser Disclosure Project, served as a congressionally appointed Medicare Payment Advisory Commission Commissioner, and is a Stanford University professor directing its Clinical Excellence Research Center.  

He says health care is a 5/50, 10/70 world: Regardless of how they’re insured, 5 percent of patients account for 50 percent of health care spending, and 10 percent account for 70 percent. The sickest patients use the most resources and incur the highest costs to the system. US health care is currently failing to address this problem: Patients with complex and multiple chronic conditions can strain systems and providers to the breaking point.

So Dr. Milstein decided to pilot his ideas for fixing the system by testing a new model within Stanford’s University’s employee health care system, and invited his friend Alan Glaseroff to join him.  Dr. Glaseroff is a Humboldt County primary care physician known for pioneering an innovative population-based approach to successful diabetes care that kept costs low. The result was Stanford Coordinated Care (SCC) which helps patients manage chronic illness and coordinates their medical care.

Better lives, lower costs

SCC organizes care around the highest utilizers much like a hospital organizes its nurses, doctors, and technology for ICU patients. They use a team-based model, with each provider working at the top of their license. This allows SCC to meet the most common needs and to avoid most referrals, which lowers costs. 

Transformative changes in service delivery necessitate changes in payment structure. The need for alternatives to traditional fee-for-service payment structure goes hand in hand with a shift to a non-traditional delivery model like Stanford’s.  SCC operates under a per-member, per-month payment plan. The comprehensive care it provides not only helps patients live better lives, it also saves costs to the system. Aside from one very expensive heart transplant, caring for SCC’s 253 patients in its first six months of operation cut costs by 13 percent compared to the previous six months.

Read the story of how these cutting-edge providers got their clinic up and running, how they implemented their alternative payment model, and the extraordinary outcomes their patients are achieving at Stanford Coordinated Care.

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