Karen Davis, who has led the Commonwealth Fund since 1995 in its efforts to improve performance of the nation's health care system, will step down at the end of 2012. She evaluates progress on national quality initiatives, implementation of the Patient Protection and Affordable Care Act and remaining challenges to payment reform.

Interviewed by Bob Kehoe

How would you grade America's health care system today on quality?

Davis: The Commonwealth Fund began issuing report cards on U.S. health care system performance in 2006 and we have found steady improvement on quality of care. In the third national scorecard on U.S. health system performance released in October 2011, the United States scored 64 out of 100 on 42 key indicators of health care that included quality, access, efficiency, equity and healthy lives. In the quality domain that year, the nation scored 75 out of 100, which was certainly better than the 70 that we found in 2006.

We've also seen major improvements in the control of blood pressure. In the most recent scorecard, it is 50 percent versus only 31 percent in the first scorecard. We've seen progress on hospital quality indicators for treatment of heart attack, heart failure, pneumonia and prevention of surgical complications. That's contributed to reducing the standardized mortality rate, which indicates the importance of publicly reporting quality data and doing so in a way that makes it easy for hospitals to assess what they're doing and what peers are achieving. Our scorecards have always emphasized what the best 10 percent are doing that all hospitals, physicians and health care providers should attempt to achieve.

H&HN Web Exclusive

As she prepares to retire at the end of 2012, Commonwealth Fund president Karen Davis assesses the current state of health care quality and where we should be heading. Running time: 3:42

What are the greatest remaining challenges to improving quality?

Davis: There continues to be unwarranted and wide variation in the quality of care. We were excited to see a 13 percent drop in hospital admissions for heart failure and hospital admissions for pediatric asthma, but when you look across states you see two- to fourfold variation on indicators like these, so we still have a long way to go. I'm also disappointed that we haven't made more headway on reducing hospital readmissions. Our first scorecard found wide variation across hospitals and across states in the percentage of Medicare patients readmitted within 30 days and that's highly correlated with Medicare costs across geographic areas. We need to work on this.

How long will it take to build a value-based system of care to replace the volume-based care system?

Davis: More work needs to be done to move us toward financial incentives that reward the kind of care we'd like to see delivered. The Affordable Care Act will move us a long way toward universal health insurance coverage and that will help people get care and improve benefits. We're already seeing better Medicare benefits for preventive care and prescription drug coverage, gradually phasing out the donut hole in Medicare. To achieve the longer-term effect of creating a well-coordinated integrated delivery system that has an incentive to deliver top-flight quality and provide efficient care, eliminate waste and avoid hospitalizations or readmissions will take further change.

There are provisions in the Affordable Care Act that if well-implemented could move us forward. The Independent Payment Advisory Board, for example, can make recommendations to change our current payment system if some of these innovations are found to be effective. There are provisions that let the HHS secretary spread innovations if they improve quality or lower cost. Hospitals and health systems see the Affordable Care Act as setting the strategic direction for the next decade and are trying to position their organizations to take advantage of it. What remains to be seen is whether we will implement in a vigorous way provisions like the Independent Payment Advisory Board and whether further legislation is needed to institute comprehensive payment reform that goes beyond the Medicare program to the entire health care system.

Are we fully harnessing the power of the data being collected on quality?

Davis: We are beginning to do so. The Commonwealth Fund website, www.whynotthebest.org, has more than 7,500 people who have asked to be alerted whenever new data are posted. For the most part, it's based on data that the Medicare program or state government collects. The nice thing about it is it lets hospitals compare themselves with whatever peer set of institutions they think are most relevant. The appetite for that information is growing with the changes occurring in the delivery system, with some of the opportunities now available through the CMS Innovation Center.

Do we need to consolidate, standardize or reduce the number of scorecards on quality?

Davis: I believe there will be some consolidation. Because government didn't lead for a while, there were many private sector efforts. We supported evaluations of fine systems like one in Wisconsin that led the way in collecting quality data. But, obviously, it is burdensome to report data to multiple sources, so whether it's the Medicare program or state all-payer claims data systems, we eventually will move to a simpler integrated data strategy.

But I look at countries such as Germany, which has about 300 metrics of quality performance. The data captured is actionable. You see the complication rates for a given type of surgery and how much it varies from one hospital to another.

What they do is send a team of peers, surgeons let's say, to a low-performing hospital to find out what they're doing and to suggest a better way of improving performance. And within two years they find that those bottom deciles of high complication rates begin to move up to benchmark levels of performance.

Where does our health system need to go in the next decade and beyond?

Davis: We need to invest in the next generation of leaders. The Commonwealth Fund has supported a minority health policy fellowship with more than 100 minority physician leaders trained to work in various capacities, whether in policy positions in the federal or state government or working within safety net institutions to ensure that we get high-performance care for vulnerable populations.

Investing in people to lead this change, particularly for the populations that are most vulnerable, is a priority going forward.