Thursday, December 18, 2008

Happy Holidays - Hug Your Health System!

This Propeller Head is out of the country on personal business until the New Year. While I am keeping up on the news, I won't have time to post.

Look for the propeller to begin spinning again at high speed come January 11, 2009. With just 9 days before the inauguration there will certainly be a lot to follow.

Be safe and happy!

Tuesday, December 9, 2008

Low-Cost and High-Quality: An Ill-Considered Goal?

Sometimes synergy just jumps right up out of bed in smacks you across the face.

A while back I started plowing through the IBM Healthcare 2015 documents – and even posted an entry about their opening concepts of the role of delivery networks and personal responsibility in improving health and reducing cost.

The next place I was intending to go was an interesting expansion of the discussion about the various types of healthcare delivery organizations that might emerge from an evolved healthcare ecosystem. IBM titles this conversation, “New Models, New Competencies – Recommendations for Care Providers,” and sets out to challenge the traditional approach of hospitals/care delivery organizations (CDOs) operating under “broad and abstract targets” attempting to be all things to all people and still compete effectively.

If you buy that premise, and I’ve seen little evidence to the contrary, you are quickly lured into a seemingly irrational conversation – the infamous “Low-Cost, High-Quality” debate. That’s where synergy comes in. This morning I finally got caught up on some email and one of the articles in the inbox was a HealthLeaders editorial with the intriguing title, “Improving Your Way to Oblivion.” It’s a rhapsody that echoes the all-to-common strains of the reform debate. How can health care costs continue to rise at meteoric rates without unacceptably crippling the national economy? A reasonable question, and one I’ve puzzled over here before. It seems every time I read something that digs into this question though, the punch line is the same…CDOs must improve themselves so they deliver top-notch quality while constantly pushing costs lower and lower.

The HealthLeader’s author, Philip Betbeze, writes, “[this] is why my panelists from HealthLeaders Media's Top Leadership Teams event are so focused on improving by cutting the cost of care. That's right, they see their long-term survival in being among the low-cost leaders—a counterintuitive concept in an industry that has the power of inelasticity of demand.” He goes on to quote Jeff Thompson, CEO of Gundersen Lutheran Health System in La Crosse, WI – identified by the Dartmouth Atlas as one of America’s highest quality, lowest cost institutions - "The ultimate prize is making the cost not only low enough to compete but to improve health of communities."


Our cars will be safer and more fuel efficient if we make them less expensive to produce.

Buy that?

Now, call off the dogs. I understand the principles of efficiency, process improvement and eliminating waste. And yes, since it’s only been 20 years since prospective payment, hospitals are still working on becoming lean operations. But it seems to me this is a flawed philosophy.

The argument goes that, if we make the provision of care efficient based on demonstrated best practices, it will free up dollars in the system to reinvest in prevention and population health. Research from all corners suggests efficiency and cost gains can be made without impacting quality – heck even moving mediocre providers up the quality chain. All good things.

My concern is that this view perpetuates the organizing principle of “all things to all citizens.” To the best of my imagination, no other industry on earth – beyond public utilities, and is that the desired endgame for CDOs? – operates this way. The closest proxy is air travel, where everyone, except Southwest and JetBlue, believe their raison d’ĂȘtre is to provide cheap, economy air travel with perks and premiums for more desirable clients; simultaneously advancing positioning of egalitarian utilitarianism with premium-quality snob appeal. At least the Chrysler K car admitted it was a K car!

It seems to me that model isn’t working for airlines and it won’t work in healthcare. Alternatively, the wonks at IBM suggest CDOs intentionally migrate to one of four delivery models:
  1. Community Health Networks, focusing on optimizing access across a defined geography.
  2. Centers of Excellence, focusing on optimizing clinical quality and safety for specific medical conditions.
  3. Medical Concierges, focusing on optimizing patient experience, differentiating itself on the quality of its service.
  4. Price Leaders, focusing on optimizing productivity and workflow.
“Each of these models places different emphasis on the value dimensions of access, clinical quality, service quality and cost. Successful organizations will likely meet a threshold or minimally acceptable level of performance on all four service delivery models and differentiate on one or more models.” I’ve said before that I’m intrigued by this construct. It disassembles the current modus operandi and suggests hospital leaders, strategists and planners do something they hate – make a choice!

The next step in this discussion goes to what IBM labels the Five Strategic Competencies and how they work in different proportions in each model. That’s a conversation for another day.

My question for today is, what would it take to get there? I work under the hypothesis that a minority of US hospitals can truly achieve Low-Cost, High-Quality, and in the attempted pursuit of the panacea-ic goal we’ll end up with some distribution of High-Cost, High-Quality (the Unabashed Dominants), Lower-Cost, Moderately-High Quality (the Model Tertiary Community Hospital), Mid-Cost, Mid-Quality (the Fat Risky Middle), and the Barely-to-Unprofitable Basically Safe (the Yugos). In this scenario, I imagine most Americans receiving healthcare in one of the two last categories. Success!! Not.

The problem is that the reimbursement structure, as it currently exists is discussed as Obama-Care begins to shape up, seems to not jive with the IBM vision of intentional, specialized care models. That is the next thorny question, and one I believe they address in the next chapter of the tome. I’ll get to that.

So, am I just too jaded to believe we can build a network of Southwest Airlines hospitals from sea to shining sea? I have a hunch, A. We can’t and B. It’s not a good goal.

More to come…

Thursday, November 20, 2008

I Can't Believe the News Today

Today, I completely intended to charge ahead through the IBM Global Business Services Healthcare 2015 report, diving into the fascinating conversation about new ways to promote health and deliver care, but there are two news stories today that are very distracting/attention getting.

On Sunday, the Boston Globe featured a story on payment differences between Boston-area hospitals. Broken down simply, Partners Healthcare, specifically Mass General and The Brigham, are, gasp, getting paid more by insurers to do procedures, run tests, per admission than non-Partners hospitals. In the end it’s a matter of negotiating clout and the value consumers place on access to those brands.

Today’s Globe contains a follow-up to Sunday’s story, that opens with what I hope is a bit of literary license, specifically; “Leaders of some large academic medical centers and community hospitals called for Governor Deval Patrick to examine how Massachusetts General Hospital, Brigham and Women's Hospital, Children's Hospital, and a few other institutions are able to obtain higher prices from health insurers even though there is, especially for the most common procedures, often no demonstrated difference in the quality of the care delivered by those hospitals.”

When I say I hope there is some license involved, I personally would be disturbed if AMC CEO’s in Boston were actually clamoring for the State (the Commonwealth more accurately) to investigate something. That just smells. Call the State dogs out to sick your competitor when they’ve done nothing more wrong then build their brand and leverage their market position? What’s next? Flying chartered jets to DC in pursuit of a piece of the bailout pie?

Don’t get me wrong. The sentiment of value-based competition on results is something I strongly favor. If Mass General and the Brigham (I believe Boston Children’s is a totally different matter) deliver better value, they should be rewarded in rates and volume. But urging the State to dig around into a private business matter between health plans who freely negotiate with the hospitals on behalf of their members is just wrong. The health plans need to find a better way to play hard ball and Partners’ competitors need to figure out how to close the perception gap with their rivals and figure out how to negotiate the best deals they can. Period.

Then, today’s New York Times leads with the eye-popper, “Health Insurers Offer to Accept All Applicants, on Condition.” In a huge step toward monumental change in the US health system, “The health insurance industry said Wednesday that it would support a health care overhaul requiring insurers to accept all customers, regardless of illness or disability. But in return, the industry said, Congress should require all Americans to have coverage.”

In separate proposals the Blue Cross Blue Shield Association and America’s Health Insurance Plans (no shrinking violets, either of them) announced guaranteed coverage of all pre-existing conditions as long as there is an “enforceable mandate for individual coverage.” This is a dizzying 180-degree spin from the fiasco that was the Clinton Health Reform effort in 1994. Clearly they are saying they want guaranteed risk pool growth in return for accommodating all comers, which makes total sense, and is the only way universal coverage can work anyway. And it places private insurance at the heart of the new system. Quite frankly a smart strategic plan and wise fiscal play in comparison to Senator Kennedy’s loopy “Medicare for all” ideas.

Now the $64,000 question is elucidated in the article, “While insurers would be required to sell insurance to any applicant, nothing would guarantee that consumers could afford it. Rate regulation promises to be a highly contentious issue, since it pits the financial interests of insurers against those of consumers.”

Here’s where some of the 1994 thinking is valuable. To make this all work, it seems like massive regional risk pools and group rating are absolutely essential. It could be done without everyone buying insurance from the feds. State insurance commissions could create and administer the pools. Then it could permit the Government to stay out of the business of collecting premiums but rather use existing structures/bureaucracies to provide subsidies and vouchers to the pool on behalf of lower income Americans. And you could fiddle with the tax code too, if tax credits are needed as the carrot to encourage participation.

It’s all workable. Having the industry inside the tent significantly ups the likelihood something will get done early in the Obama presidency.

Taken together, these two stories present and interesting strategic reality for hospitals. Expanded coverage and increased interest in value-based competition could be a boon for providers. But, the devil is in the details and, once the coverage issue is solved, then we’ll have to get serious about population health and re-engineering the delivery system. Which, in some sense, is refreshing.

And a great segue way to a continued discussion about new ways to promote health and deliver care…

Tuesday, November 18, 2008

Of Delivery Models. Competencies and Personal Responsibility

So, I donned one of the propeller beanies I keep at home and, over the weekend, waded through one of the publications in the IBM Global Business Services series on Healthcare 2015, “Delivery Models Refined, Competencies Defined.” This book is mostly the supporting text to the executive summary I wrote about last week.

The piece’s thesis is summed up in the opening paragraph (sorry, it’s a little long but a good challenge):

“Healthcare providers can work collaboratively to achieve new milestones in defining, measuring and delivering value, activating responsible citizens and developing new models for promoting health and delivering care, even within growing resource constraints and other challenges. This is important more than ever before as the paths of healthcare systems in many countries are increasingly unsustainable. Moreover, we envision this will lead to a variety of strategic decisions affecting service delivery models and underlying competencies. These decisions could impact the organization’s leadership, culture, business models, organizational structures, skills, processes and technologies.”

There’s a lot in this tome, so I’ll focus today on one idea that is central to their set-up. They build on Porter’s work and the growing chorus of “value” (although the skeptic could wonder if this is a phrase that is soon to lose its meaning through overuse?). “Transforming healthcare requires a corresponding transformation in understanding the value that care providers deliver. In many countries the main focus of care providers is to diagnose and treat sick patients…But, a system that is focused on proactive care strategies, such as personalized prevention, prediction and early detection/treatment and disease management, can help create and maintain a healthier population, possibly at a lower cost.”

There’s nothing too much new here so far. They do later state something I’ve pondered about before in relationship to chronic care and the medical home concept. “There are other potential facets to quality care in a value-based healthcare system: the focus on prediction, prevention, and early detection and intervention; correct and timely diagnosis; the ability to educate patient in managing their conditions and health, and communicate effectively to bolster patient comprehension, compliance, and recall; responsiveness to patient preferences and values, where appropriate; and the ability to coordinate care across venues, care providers and time.”

Now, I wonder aloud, who is doing this and who can really do this? The institutional healthcare superstructure flat-out stinks at it. I giggled aloud at the directive to, “communicate effectively to bolster patient comprehension, compliance and recall.” But boy, for how bad healthcare providers are at this today, it sure is an interesting clarion call for the healthcare communicator of the future. If I were plotting a strategic plan for the marketing communications department of the future, these would be powerful guiding principles that I’d use to challenge the organization.

Complicate this a little further, the document goes next to puzzle on, quite frankly, healthcare’s 800 lb. gorilla; lazy human beings. In “Activating citizens – From ‘fix me’ to personal health management,” they examine the “blind reliance on publicly supported healthcare to compensate for individual health behaviors” which they ultimately determine is an “increasingly unsustainable and unrealistic position,” demanding that “citizen activation has to be a key part of the solution.”

To do this a couple of things have to happen. One is shaped like a carrot; the other is shaped like a stick. The carrot end is the idea of greater individual engagement and activism in their own health decisions. Is it wishful thinking to expect people will ultimately learn more about their health and, as the IBM folks propose, “co-produce healthcare?” I can imagine how this could give rise to a more enlightened populace with a greater satisfaction in their healthcare. But, is it a bridge too far?

The stick end is financial. Will we accept punitive premiums for continued bad health? If a Medicare enrollee maintains and unhealthy BMI and doesn’t bring their Type 2 diabetes under control, will they get nailed with an extra annual premium? Will employers safely follow the lead of places like the Cleveland Clinic and not employ smokers? Further, should we as a system and society be more explicit in the expectation that people have a personal responsibility for financing their health? Should health services be planned like retirement – with the expectation set that very little is guaranteed by society and the rest is yours to fund through a variety of mechanisms? Would that be “mandate” that ultimately pushes people into value consciousness?

The report is practical: “Many citizens, regardless of how well-intended, will not be able to become activated, responsible citizens on their own…they ma need help from a variety of coaches.” They then go on to describe three types of health advisors – health coaches, value coaches and wealth coaches – that would work like contemporary personal financial planners to help people make responsible decisions and plans.

On it’s face it seems like we’ll need a really big stick for that to happen. That said, it would be fascinating to see the activated youth of the 2008 election marching against the AARP legions in Washington DC! Remember what McKinsey & Company reported, that one way to stem out-of-control demand was for the young to finally get angry to the point of refusing to fund the old any longer.

“CDOs [Care Delivery Organizations] can play a key role in helping activate citizens—and that will be increasingly expected by the purchasers of health-related services such as governments, employers or individuals.”

Fascinating implications for institutional healthcare system planners and marketing strategists!

Friday, November 14, 2008

All Things to All People All the Time

Today I just started wading through a series of white papers from IBM Global Business Services titled “Healthcare 2015 and Care Delivery.” The series consists of three parts; Delivery models refined, competencies defined, Healthcare 2015 and U.S. health plans, and A portrait and path to successful transformation. These are not light tomes. Because I have a closet full of propeller beanies, I will be happily devouring the 100+ pages. They will provide great conversation starters for days & weeks to come.

I buzzed through the executive summary today and already like where they are going.

The fundamental thesis of the piece is that “Historically, care delivery organizations (CDOs) could declare broad and abstract targets, or even attempt to be ‘all things to all citizens’ and still compete effectively. But in the future, we believe it will be harder to maintain an undifferentiated service delivery model, whether it be a public or private healthcare system model.”

I couldn’t agree more. We’ve likely all worked at places (either as insiders or advisors) where the Mission and/or Vision statement included some variant on the phrase, “the communities we serve.” The trouble for us has historically been that these CDOs have rarely, if ever, defined “communities” beyond some geographic criteria.

IBM goes on to say, “the increasing focus on value, the rising need to activate responsible citizens, and the changing requirements of care delivery will force many CDOs to adopt and develop service delivery models with new and sharper strategic focus.”

Can I get an “Amen!” from the congregation!

They go on to assert that all CDOs currently fall into one of four service delivery models:
  • Community health networks focusing on optimizing access across a defined geography
  • Centers of excellence, focusing on optimizing clinical quality and safety for specific medical conditions
  • Medical concierges, focusing on optimizing the citizen/patient experience and relationship
  • Price leaders, focusing on optimizing productivity and workflow
They are kind in not admonishing many (most?) CDOs for two common faults; not being intentional about who they are, and trying to be 2, 3 or even all 4 of these things simultaneously. The word I keep hearing over and over again is “focus.”

GE got a lot of press—deserved or not—under Jack Welch’s leadership for his infamous, “number one or number two in an industry” strategy. Perhaps more marketing than true business strategy, the sentiment is “focus.” Be good at a finite number of things. It’s the Sony story writ large by new chairman Sir Howard Stringer: “If Apple can create a company with a market cap of $50 billion on the basis of a handful of products and we (i.e., Sony) do it on the basis of a thousand, aren’t we then too much of a department store?”

Said another way, those who try to be 2, 3, or all 4 of these different types of CDOs will lack the focus and differentiable distinction that will make them susceptible to more focused, more excellent competitors.

IBM asserts there are 5 key competencies that CDOs must consider and, depending on the service delivery model they strategically settle on, emphasize in different combinations. Those competencies are:

  • Empower and activate consumers
  • Collaborate and integrate
  • Innovate
  • Optimize operational efficiencies
  • Enable through IT
What I see here is an powerful framework for strategic planning.

Their final piece of advice: “Develop a plan to transition to the new delivery model—or new ways of implementing existing models [that is, choose what your future is, and, by reduction, explicitly state what it is not, and design the plan to become it]—and develop the new competencies required to support the roles models.

“Last year plus a little more” is not a viable strategy in these transformative times. Healthcare organizations have a long history of reacting—to new regulations, payment model changes, shifts in consumer behavior—instead of planning and executing the plan. This looks like a good framework through which healthcare strategists could organize their thoughts and prepare to influence the future direction of their organizations.

I look forward to sharing more from these books.

Thursday, November 13, 2008

The Marginalization of the Healthcare Marketer

Yesterday morning I participated in a new business pitch. In the room were marketing directors from three quite successful hospitals; hospitals with bold plans and the financial strength to be moving full-speed-ahead on a pair of $100+ million building projects and one coming off the grand opening of a new replacement hospital within the last 12 months. These are successful institutions with thoughtful leaders who seem to routinely make wise decisions.

During our conversations we discussed what they’d like to change in their organizations in respect to marketing communications. They replied with a range of thoughts, from staffing to budget questions to more cooperative surgeons. But one comment on which there was quick consensus by the group was, “greater access to senior management.”

They embellished this idea by sharing that they had frequently only “heard about things after they happened” and been asked to manage communications in response. This was a real head-scratcher for us. These are successful businesses. How could marketing be so far out of the loop? We asked about their organizations’ strategic plans and marketing’s role in those plans and heard equally dismal responses. For all their success, here were another three healthcare marketers who, in their organizations’ eyes, just did stuff.

This has been something of a personal cause for me recently. So much so that I called a friend of mine at the Advisory Board Company to chat about it. My friend reported a frightening, albeit unscientific, observation. Over the past four years, she has, with her colleagues, presented in a few hundred hospital executive suites. We all know what it takes to be an Advisory Board member, so these are organizations with a measure of financial strength and an intellectual commitment to “right answers.” To the best of this consultant’s recollection, for all the strategic business development and corporate strategy conversations she’s had, she couldn’t remember one time, let me repeat that, one time, when a VP or Director of Marketing was in the room.

While I can imagine how healthcare marketers got themselves into this position—by not dispelling the “we just do stuff” perception—I’m more disturbed by how little many are doing to get out of it.

Last Fall, Booz Allen Hamilton published a study about The New Complete Marketer in which they reported, “growth in revenue and profitability is strongest among those companies that elevate marketing’s role to the strategic level.” Booz & Company surveyed Chief Marketing Officers at large, consumer-focused firms like Yahoo and Proctor & Gamble where driving sales is the heart of the company’s daily mission. Accountable to Wall Street, these companies trace a very direct path between Point A (current sales) and Point B (future, higher sales) that cuts right through three key disciplines: sales, marketing and product innovation.

To get to Point B, simply put, these experts agreed the best CMOs:
  • Put the consumer at the heart of marketing (especially moving from "checking-" or "validating-" focused research to true consumer knowledge research)
  • Make marketing accountable
  • Embrace the challenges of new media
  • Recognize the new organizational imperative (“Successful companies are building marketing organizations that leverage and balance generalist and specialist talent.” This refers to building marketing teams that complement category expertise with good, comprehensive marketing skills. Also, “marketing can no longer live on an island.” Marketing has organization-wide responsibility.)
  • Live a new agency paradigm (“Every effective marketing program now has a solid base in disciplined metrics that keep department goals closely aligned with the company’s strategic objectives.” This is the heart of transforming away from “just doing nice stuff.” How can your marketing strategies evolve from manufacturing and pushing ideas to co-creation of customer/patient experiences?)
  • Remain adaptable

So, it seems the challenge healthcare marketers have not taken up fully is a willingness and ability to demonstrate —and take accountability for— marketing’s role in helping their hospital achieve the goals outlined in the strategic plan.

Something we hear often is, “well that’s all fine and good for [computers/cookies/insurance] but healthcare is different.” The learning is relevant. More and more, healthcare marketers can most definitely learn from other categories where advertising and communications are an established, time-tested element of business strategy. Healthcare may be more complicated, but it’s not all that different. People don’t make important decisions in all the aspects of their life one way and then totally differently when it comes to their health. In the end, principles of quality, value and service are universal. The lessons are transferable.

Access is earned. Start thinking about rebuilding the hospital marketing function along the guidelines these successful CMOs have shown to work. Let’s work our way back into the boardroom.

Tuesday, November 11, 2008

Tough Travel Day

Not enough time to do a good job. But, I've got some thoughts I'll pound out on Wednesday.

Stay tuned!

Monday, November 10, 2008

Last Time, I Promise (for a while anyway)

Because I lead a somewhat pathetic existence, I couldn’t keep my self from jumping into the Health Affairs article from August 2006, “The Rise In Spending Among Medicare Beneficiaries” this weekend. Go ahead, be jealous of the fun in our household!

The article opens with a recurring theme that has stickiness with me, “Medicare spending is projected to nearly triple from 3 percent of U.S. gross domestic product (GDP) in 2006 to 8.8 percent by 2030.” Depending on whose article you read, numbers like these vary study-to-study, but the trend is incontrovertible; Medicare is the gasoline that is fueling healthcare’s unsustainable assault on the US economy. And, if something isn’t done in fairly short order, “Government” is going to have to respond in one of three ways: 1. Raise general revenues (i.e., taxes), 2. Cut spending of other federally supported programs (e.g., defense, social security, other social services), or 3. Cut spending on health.

Assuming 1 and 2 are not terribly practical and/or in and of themselves insufficient to tame the beast, that leaves one option....

Last week I mentioned that the magnitude of cuts necessary to meet regulatory guidelines are too draconian to be feasible. So, that seems to steer us back to, gasp, personal responsibility and the role of chronic conditions. The article points to research that show “increases in treated disease prevalence during the 1990s account for a large share of the growth in spending by private health insurers.” I like that phrase, “treated disease prevalence.” It is non-judgmental. It just captures how much more disease was treated. The causes of this rise includes, “increases in the population prevalence of disease, more aggressive treatment of asymptomatic or mildly symptomatic patients, better detection of diseases, innovation and new technologies that allow the treatment of conditions previously left untreated, and declining mortality.”

To get at the heart of understanding this rise in treated disease prevalence, the authors dig into data surrounding “metabolic syndrome” which encompasses many of the key risk factors of heart disease; glucose levels, HDL cholesterol, blood pressure and triglycerides as well as abdominal obesity. They then examine these factors against three variables that can drive increased cost of treated disease: 1. Change in prevalence of the condition in the population, 2. Change in cost per case for treating the condition and 3. Change in the number of people in the Medicare program.

Their findings, boiled down: The top ten conditions accounted for two-thirds of the rise in Medicare spending between 1987 and 2002, and three conditions, hypertension, diabetes and high cholesterol account for 16.1% of the increase. Interestingly, the growth in the cost of treating each of these conditions is fueled by a different factor: high cholesterol growth was fed primarily (65%) by growth in prevalence, high blood pressure by change in cost per case (65%) – likely the development of new drugs, and diabetes mostly by change in enrollment (42%) though change in prevalence accounted for 34% of the growth in treatment costs.

Now the big, “duh” here is the high correlation between abdominal obesity and these growth rates. “The share of obese Medicare beneficiaries in the …data sets increased from 9.4 percent in 1987 to 22.5 percent in 2002…Overall, the prevalence of obesity among Medicare beneficiaries has doubled since 1987, but the share of spending incurred by obese beneficiaries has almost tripled.”

Now I didn’t set out to pen an anti-obesity screed. That’s not the point. The point is, again, that Medicare’s appetite for federal dollars is tied to its beneficiaries “appetites” and the ultimate victims, other than the patients themselves, will be hospitals and physicians in the form of reduced payments. Some argue that medical education add-ons will be the first to go, followed by critical access or disproportionate share payments. That, in essence, amounts to punishing some of the most critical elements of the US healthcare system because of America’s addiction to high fructose corn syrup!

McKinsey & Company conducted an interesting analysis that examined the drivers of healthcare costs on both the supply and demand side of the equation. One of the demand drivers they identify that might play a role in this battle is what they term “social norms.” Generally, “social norms dictate the frequency with which people consume health care products and services.” McK & Co. theorize that, “if social norms were to shift dramatically so that overeating and under exercising became truly abhorrent, demand for health care could fall.” Unfortunately, they don’t believe this is likely. In fact, they predict the opposite, “more likely, though, as incomes rise and as people see friends and neighbors consulting their doctors for obscure and perhaps even trivial health problems, demand will continue to rise.”

I believe now is the time is for an institutional healthcare-government partnership to attack these behavioral diseases. It could energize the disease management functions within private health insurers with “bonuses” for results. The problem has to be attacked in the pre-Medicare population and then continued under the Medicare program, perhaps with a penalty/premium for patients under management.

This might be the runner in me being mean, but the numbers are too sobering to ignore.

Friday, November 7, 2008

Life as a House

Granted, it’s a pretty bad movie—Kevin Kline in the role of George Monroe, who, when diagnosed with terminal cancer sets out to demolish a decrepit metaphor, er family shack, and build a new, beautiful home with his dipsh!t son overacted as usual by Hayden “Anikin Skywalker” Christensen. But, in light of yesterday’s conversation, it seemed a useful setup.

The September/October 2008 issue of Health Affairs features an interesting primer on the patient-centered medical home idea. Definitionally, “a medical home, in broad terms, is a physician-directed practice that provides care that is accessible, continuous, comprehensive and coordinated and delivered in the context of family and community.”

Stop me if you’ve heard this one before.

The article continues, “the current interest in the medical home has derived from growing recognition that even patients with insurance coverage might not have an established source of access to basic primary care services and that care fragmentation affects the quality and cost of care.” Here’s where the link to yesterday’s conversation comes in. Remember that 75% of health spending is tied to a handful of common, chronic conditions often best managed by a primary care quarterback in the outpatient setting.

I think I prefer the idea of “Quarterback” over the 90’s notion of PCP as “Gatekeeper.” The latter suggests a responsibility for denying access while the former elevates and celebrates the pivotal, important role of the primary physician. Virtually all Medicare spending growth from 1987 to 2002 has been traced to beneficiaries being treated for five or more conditions. If you’d like a practical manifestation of this, imagine the plastic pill case. My Mother, like her Mother before, performs the weekly ritual of filling the 7-compartmented plastic case, stamped with the letters of the days of the week, with the assortment of pills that to get her through the day. Many of these pills make the other pills work in the face of the effects of some of the other pills. Makes sense, eh?

And, integrated disease management programs are like Bigfoot, the stuff of legend that few have ever seen. Although, the Chronic Care Model in place at the MacColl Institute in Seattle, might be a talisman for the re-imagining of primary care and a rational assault on chronic expense growth.

This brings me back to provider strategy. One of the biggest barriers to expansion of the medical home idea is a beleaguered primary care physician base – overworked, poorly compensated – and a financing structure that doesn’t reward the type of challenging work, frankly, it seems PCPs are best trained to do. The Health Affairs article reports, “Some interviewed physicians…told us not to ‘help’ them, even with additional payment, by expecting their practices to carry out activities they were not capable of or interested in providing.”

Why keep harping on this? Large institutional structures—tertiary hospitals, academic medical centers, research institutes, etc.—depend on massive flows of cash like swarms of grasshoppers eating their way through a Midwestern grain field. If the field is dead when the grasshoppers get there, they’re screwed. It seems to me a key to sustaining America’s institutional healthcare infrastructure depends on beating the plague that is eating away at the cash stream upon which it depends. The institutional system’s fate is tied to the non-institutional system’s ability to get control of the country’s common health.

What is the right role of the institutional system in advancing ideas like the medical home, especially when some primary care physicians aren’t interested in the job? Certainly highly-functioning EMRs are a core component to the success of a concept like the medical home and the institutional system can facilitate EMR expansion and integration. But, it seems to me, the know-how and resources of the institutional system could be somehow leveraged to help the cause.

I don’t have the answer to this one. But I’ll keep looking. I have to. It seems like a key pillar of our system’s future is rotten at its base and all our strategies, from communications to research to service line growth, are tied to reigning in the appetite of the swarm.

As always, I’m appreciative of suggestions.

Thursday, November 6, 2008

Good for the Ego

It was nice to power-up the computer today and find other people echoing yesterday’s post about the President Obama and the reality of health reform. Even the Wall Street Journal today provided a timely supplement to yesterday’s post with 230-words on how “Medicare, Medicaid Deficits Loom over Health Priorities.” While not certainly visionary, I’ll take validation in being swift!

I think I’d like to use this as a jumping off point for a riddle that has left my brain twisted for the past few months. Beyond then-candidate Obama trotting out well-worn standards such as health IT, I was troubled that the near-entirety of the healthcare reform conversation during the campaign focused on financing; worse, financing issues around the most profitable, vital pool of patients in the payer mix, people with employer-sponsored coverage. While Senator Obama advocated universal coverage for children and a “pay-or-play” structure that would presumably compel a shrinking of the ranks of the uninsured; neither candidate said anything meaningful about the true cost drivers in the system. So, it felt to me like we were talking about all the wrong stuff.

Yesterday I mentioned the McKinsey & Company study that discusses the prospect of healthcare costs devouring the country’s entire economic output. Obviously, the drivers of such a problem have very little to do with employer-sponsored insurance.

I’ve revisited two documents recently whose pedigrees couldn’t be farther from each other—Why Not the Best? The Commonwealth Fund Commission on a High Performance Health System report of July 2008, and an article from the November 2008, Reader’s Digest, 18 Big Ideas to Fix Health Care Now—struck by a key common conclusion: So much bad health and health system costs are the result of things we don’t pay much attention to.

The Commonwealth Fund report dissects “Preventable Mortality,” defined as “deaths before the age 75 caused by at least partially preventable or treatable conditions, such as bacterial infections, screenable cancers, diabetes, heart disease, stroke and complications of common surgical procedures.” They pursue this point from an epidemiologic perspective, advising that U.S. mortality could be (seemingly) easily improved to levels achieved by leading countries, translating into 101,000 fewer deaths per year.

On a slightly different tack, the Reader’s Digest article cites the Kaiser Foundation Health Plan report Health Care Reform Now! A Prescription for Change pointing out that, “common chronic conditions (including coronary artery disease, diabetes, congestive heart failure, asthma and depression) are responsible for 75% of our health care spending.

75%. Wow. The Kaiser report suggests, “If just 1% of people with these conditions were successfully treated we could shave at least $77 billion off the health care tab.”

Type 2 diabetes is a lifestyle disease. Successful management of CAD is economical with diet, exercise, anti-hypertensive drugs and statins. CHF clinics have shown they manage patients better than cardiologists and PCPs, aggressively monitoring health data and confidently juggling ACE inhibitors, BETA-blockers and other meds at safe, effective levels that normally scare other physicians. I’ll park a conversation on America’s trouble with mental health care and the issue of depression in the Remote Lot for now.

So, there’s a two-pronged problem. First is human behavior. How can we get Americans to improve their diet, put down the remote and get moving? Financial incentives through experience rating on premiums? Second is the institutional health system. The truly integrated health system, the Geisinger and St. John’s Clinics of the world, are the exception, not the rule. The ability to take a systematic approach to these chronic conditions is extremely limited. Acute care, community, tertiary hospitals are factories cranking out hip replacements, heart operations and cancer treatments. The delivery system is not engineered to impact the key drivers of cost and cost escalation. Not to mention, the need to sustain and renew the hospital physical plant significantly distracts from such public health initiatives.

I’ll throw it back to you. What is the appropriate institutional and federal/payer response to getting control of fuel that’s feeding cost escalation? Should we go back to the 90’s and get all IDS (Integrated Delivery System) again? Do we further rely on payment systems to penalize and reward? Do we follow Michael Porter’s advice and steer patients to programs that deliver better quality based on outcomes and value?

If we don’t get at the core of the problem, the only levers the economy will have left to pull are financing ones, and that usually translates into lower rates. CMS will cut Medicare first and then all the private insurers with contracts based on Medicare fee schedules will follow suit. Then, it’s just a race to the bottom.

That sounds horrible.

Wednesday, November 5, 2008

Yes We Did

Red or Blue. Republican or Democrat. Adam Smith of the St. Petersburg Times got it right, “Whether you celebrate this outcome or lament it, the American ideal is true: Anything is possible. We are today a very different country than yesterday.”

I’ll avoid the temptation to philosophize about the events that culminated with Election Day 2008—there are enough other, better people out there to do that. But, now that the potential angles have been reduced by one-half, we can begin a more focused conversation about the federal government and any likely impacts of yesterday’s vote on the US healthcare system.

There appear to be three highly-interconnected, concrete realities that will shape the macro conversation:

1. The Wars and the Economy are Jobs #1 and #2. President Obama has an ideological promise to fulfill on one and a practical necessity to tackle on the other. His transition and key policy energy has to be focused here—especially in the immediate-term. These are so complicated, so tricky and so potentially politically dangerous they will require great attention and care. Barack is a student of history and surely doesn’t want a repeat of the first two years of the Clinton administration. He will have to reign in Congress and any desires to force a partisan agenda. He seems to understand the magnitude of the work to be done and surely knows he can’t afford a mid-term election revolution like the one led by Speaker Gingrich in 1994.

2. There Simply Isn’t Any Money. President Obama has to deliver the tax cut he promised and prove Joe the Plummer isn’t going to be screwed. Further, it looks like he’s going to inherit a budget deficit approaching $1 trillion. There’s no way he’ll be able to advance a complex, expensive healthcare system overhaul through the Congress. Nor would it be an expedient use of political capital. There aren’t riots in the streets over this issue. Again, President and now-Senator Clinton got scalded for overreaching unnecessarily on healthcare reform. See item #1. He’s got bigger fish to fry and there’s no cash for this.

3. Medicare is a Ticking Time Bomb. In September 2008, McKinsey & Company published a study projecting that, “[i]f current trends persist…by 2080…the United States will devote more than half of GDP to [healthcare].” They go on to posit, “What will have to change to prevent health care from devouring half of a national economy? There are a few possibilities. Younger people may eventually balk at paying for older people’s health care. The competition for public funds will become keener, as governments must also cope with rising demand for education, defense and, especially, pensions.”

Medicare’s own trustees predict the program will go broke long before 2080—in 2018 or 2019. It will start paying out more than it takes in several years before that, just as the baby boomers are flooding into the program. Geoff Colvin of Fortune Magazine sees it worse, “Somewhere in the next president’s first term, Medicare Part A will go cash-flow-negative.” He goes on to cite the Financial Report of the US Government’s projections requiring physician payment cuts of 41% over the next 9 years to stay in line with statutory guidelines. The Report is practical, admitting cuts of that magnitude are simply not feasible.

But, some action is necessary. Obama won’t be able to invest in infrastructure, fuel economic stimulus, and cut taxes without getting serious on Medicare. When it comes to healthcare in America, this issue will likely move front and center very, very quickly, taking away whatever political oxygen might have been available for considerable benefit/insurance expansion. It will be the show to watch, as the program will likely have to change in dramatic ways that will impact hospital strategy significantly.

A last, more temporary factor is the tight credit market. We are already seeing hospitals freeze and/or eliminate budgets for capital and other expenditures. Adding this hospital skittishness over the availability and cost of capital to a preoccupied federal legislature leads me to believe we can safely table talk of sweeping federalization of the healthcare system.

Tuesday, November 4, 2008

The Lost Day

It’s 9:30 am and it’s become clear that productivity in our suburban Chicago office is going to take a beating today. It’s understandable. Nearly two years after it started, the long march to the general election has reached what many sensationalists in the media would call its “historic conclusion.” Here, that means a lot of excited “watercooler” talk, stories of lining up at 5:00 am and free Starbucks.

As auspicious as any other day, today seemed a good day to wander into the realm of blogging. I’ve been reading quite a few over the past year, some I’d even recommend, like
Professor John Quelch, Senior Associate Dean of Harvard Business School, looking to see if there was any open space in the web’s crowd. There certainly is a lot of information and opinion—some bordering on evangelism—out there. Probably no value adding to that discordant symphony.

Foremost, I’m a wonderer, not an expert. I have an informed, thoughtful point of view—on anything to be sure—but I believe in the aphorism, “All of us are smarter than one of us.” One thing I thought I might do a bit differently is present this space as a whiteboard for fellow healthcare propellerheads. Use this forum as a venue to work through ideas, knotty questions, and host conversations. As healthcare strategists, we are certainly all sifting through the experts, the pundits, the analysts and commentators trying to turn notions into advice for organizations. Plus, I just love having complex conversations with people, sharing them, strapping on the propeller beanie and giving an idea a thorough going over!

My plan is to tee up an idea or two at a time, share and invite leading thought on the topic, exercise it a bit, and get the people who read this one step closer to strategically sound action.

Rather than go too far too fast, I’ll break here. Let’s see how the red states and blue states fall tonight and then explore some implications germane to the immediate and long-term future of health care and America’s health care system.
Besides, the whole day can’t be lost to matter the fun of the excuse!