Healthcare Propeller Heads

Talking to Americans About the Health System

2009-07-23T17:43:00.003-05:00

I’ve wanted to take a break from the endless drumming on health reform for, as I said two weeks ago, there’s more to our business than reform. Then I had a couple of energizing experiences that both evolved and reinforced this idea.

For a project we’re working on with Geisinger Health System, we’re having long, complicated conversations about discussing health reform with the general public. The major news outlets have the political and policy stuff well covered. Where is there room for another voice (and is it needed) on the topic? In researching the project we found an interview from October 2008, with Geisinger CEO Dr. Glenn Steele that inspired and brought clarity to the project. In a blog post/interview with the New America Foundation Dr. Steele discusses what in the Geisinger system is “generalizable” and scalable to the larger US health system. The interviewer writes, “Dr. Steele isn't all that focused on reform from Washington in the next administration. If he has a wish list for the next president, he isn't sharing it. "What can Washington do? Who the heck knows?"

Who the heck knows?

Then it hit us what we—in all our propellerheaded geekiness—were missing. While payment reforms and insurance structures are important and certainly impact providers, providers can only lightly influence what will ultimately come out of Washington. However, regardless of legislation, they can and should act independently to modify their processes and systems to constantly revolutionize quality and cost-effectiveness of care. I mean, in radical, forward-thinking ways that are not just “quality improvement” but actual delivery system reform. The REAL reform.

If you’re interested, Google “Geisinger Transitions of Care” and “Geisinger Personalized Medicine” and you’ll quickly find articles and resources that discuss powerful transformations of the healthcare landscape. Stuff that will impact patients, improving their quality of life, care experiences and drive down their lifetime cost of medical care.

Also, last week I spent 2½ days in and around Mankato, MN working with ISJ Regional Medical Center of the Mayo Health System. The visit culminated with a 2-hour-plus discussion with the system CEO about the remarkable accomplishments and potential of their integrated system of critical access hospitals, physician offices, outpatient facilities, the ISJ Regional Medical Center hospital in Mankato, and the Mayo Clinic.

The long and the short of it being citizens in small communities throughout rural southern Minnesota have access to a level of care that is simply not found many other places in the US. Docs in clinics and at these critical access hospitals are all integrated on a common (Mayo) electronic health record, taking advantage of Mayo Clinic best practices and patient care materials, successfully leveraging specialty care outreach from Mankato and Rochester, all well-positioned to accept case rate risk for episodic and chronic/ongoing care.

Digesting these two projects the question quickly becomes, “How do you engage the average American in a conversation about health care delivery reform?” Can you? Here’s where the mainstream media can’t and won’t be effective. Worse, voters’ eyes glaze over when the policy bickering goes high-octane. Add to that the $1 trillion question posed in yesterday’s New York Times–What’s in it for Me?—and the uncomfortable answer that comes with it, and you have a serious health care communications dilemma.

Right now, the answer feels like “small bites” and “straight talk.” We (the collective “health care marketing communications” We) struggle with the conversation around quality, wondering if we can have engaging conversations about Core Measures, HCAHPS scores, and mortality rates. It seems to me that perhaps that’s focusing on the wrong end of the elephant.

If people understand that the transition from hospital to home is a very important step in their care and that has to be planned carefully at their time of admission (if not before) perhaps they’ll engage and drive improvement. If people realize that simply having a computer in your physician’s office doesn’t mean they are getting best practices cues for managing your type 2 diabetes then they have to demand a more enlightened approach to care.

But that seems like asking way too much. So then maybe it’s more about helping them understand the difference between providers—hospitals, networks and systems—which are actively revolutionizing care to improve quality, satisfaction and cost-effectiveness and those who are not. Then, we are left to hope, in the presence or absence of enlightened payment changes emanating from Washington, they choose more evolved models over less evolved ones. But sadly, we all know, hope is not a strategy.

So then we have to get even further.

Can’t say that nut is completely cracked yet.

Getting Back To Things

2009-07-21T13:14:00.004-05:00

Sorry for the long, cold silence. I am just back in the office after a wonderful week of vacation and family time. So much has happened in 2 weeks and the debate here so interesting and useful. It's great to see.

Then there's "The Bill": The 1000-page piece of garbage that came out of the House last Friday that Pelosi is just daring the White House to oppose. What a disaster.

I don't want to leave the blog silent during this time, but my vacation has buggered my production schedule, so, I'll direct you to two fantastic essays - One is an analysis of the steaming pile of health legislation penned by oft-cited guru Jeff Goldsmith. Read his pointed analysis here.

The second is a great Opinion piece that appeared in today's Wall Street Journal discussing how the House Bill angles to disembowel ERISA (one of the few pieces of health-related regulation that works very well).

I've been working on some projects with Geisinger and Mayo Health System that are truly inspiring and will be the subject of the next post. I just need a little more time to get caught up and produce.

Spin on!

DWM

How Big is 1 Trillion?

2009-07-07T15:19:00.002-05:00

1,000,000,000,000.

That’s 12 zeros. I heard a mathematics professor on NPR once explain, “imagine your kid’s first grade class, 1 teacher, 15 kids, comfortable but not spacious room; chalkboard at the front, ABC’s on the wall above. Consider that the number 1,000.”

Now we have to make the journey of multiples of 1,000. Imagine that same room, and that teacher, but now with 15,000 kids. That’s 1 million. Imagine that room with 15,000,000 kids. That’s 1 billion. Imagine that room with 15,000,000,000 kids (15 billion kids, wow!). That’s a trillion. Crowded, eh?

So I have to chuckle at today’s big news story: “Hospitals Reach Deal with Administration - $155 Billion in Health Savings Offered.” To quote, “The nation's hospitals agreed last night to contribute $155 billion over 10 years toward the cost of insuring the 47 million Americans without health coverage, according to two industry sources.” Contribute? They make it sound like a tax-deductible sponsorship for some PBS programming. Where’s it to come from? Medicare and Medicaid reimbursements and $40 billion in compensation for uninsured patients.

There’s an old joke about morals and prostitution that points out once you’ve established that you’re the latter, what’s left is quibbling about the price. “Hospitals” (“Agreeing to the plan were the American Hospital Association, the Federation of American Hospitals and the Catholic Health Association”) have bought a ticket to the party for $155 Big. So, if 155 is the 15 kids in that classroom, all we need is to get 6.5 more kids into that classroom to pay for the public plan (estimated cost $1 x 10 to the 12th power).

Apparently the hospitals have agreed to swallow hard if the final legislation includes a public plan and will take Medicare-or-less rates without a fight. And you thought the recession hurt hospital perfomance...seems like they’ve put $155 billion on the roulette table in hopes they can pressure the Administration to find a not-a-public-option.

By coming to the roulette table now, hospitals allegedly saved themselves $45 billion in cuts (the Administration’s threat was $200 billion) and they got to the table before the docs and the insurance industry. It seems everyone has to take a number and, when called, take a few lashes.

Jeff Goldsmith recently posted about the dangers of the public plan as the pathway to universal coverage. Quoting at length:

“The idea that you can simply insert a new public plan into the existing insurance market without the presently insured noticing any difference is political fiction, not market reality. Think of the private health insurance market as a $900 billion pool of money held back by a vast earthen dam consisting largely of provider/payer contracts. This pool has shrunk by some estimates by as much as 9 million lives due to the recession, due to people losing employer provided coverage.

Obviously, some of those newly insured through health reform will choose private plans and the size of the lake behind the dam could thus grow. Even with no public plan, it is absolutely appropriate for health reformers to demand concessions from private insurers for creating all these new customers.

However, if you also drill, say, a 3 foot wide hole in the dam, (the width of the hole depends on the cost difference between the new public plan and existing private offerings) both lives and dollars will gush out. Depending on the width of the hole, many previously private health plan enrollees will defect to the public plan, and the composition of the risk pool remaining behind the dam will change in completely unpredictable ways. Health plans will have to lower their premiums to avoid being run out of business, and many will gush red ink until they can revise their existing network contracts, many of which contain multi-year rate guarantees.”

Clearly there is an imperative for reform. The stress of the Baby Boom generation on the federal budget is soon to be overwhelming, nearly doubling Medicare Part A expenditures between 2000 and 2030—a burden that, if unchecked, will make it hard for the government to do much else and force a heavy tax burden onto American workers. The growth health costs is certainly impacting small business’ ability to fuel economic recovery and sustain long-term growth. I personally try to avoid being suckered into the “moral imperative” debate often tied to the uninsured but I do believe there are macroeconomic impacts to personal bankruptcies tied to medical care. Add to all this the matter of the US’s overall poor health for the dollar and certainly there is little basis for opposition to reform.

But is $155 billion a necessary Faustian bargain for American hospitals? Here’s one where I would have liked to seen more of a fight. Getting behind real payment and delivery reform in return for a slow, phased path to universal coverage – but only after the fixes suggested by the Health CEO’s for Health Reform parameters were implemented. Let the Government wield a heavy axe of deadlines on those recommended changes as the cost of patience. Hospitals, submit to overall cuts only after having failed to work with Medicare/Medicaid and the private insurance community to make real cost reduction systemic. Otherwise, signing off on $100 billion in cuts is essentially negotiating future update factors without changing anything that will actually improve the system.

Enough on this topic for now. There’s more to our business than reform. Stay tuned for a new theme later in the week.

Of Real and Virtual People

2009-06-26T11:06:00.002-05:00

I was reading an article from last week’s Wall Street Journal titled, “The Myth of Prevention” by Abraham Verghese, MD. The bulk of the article focused on health reform and the specter of phantom savings derived from a greater focus on prevention. Specifically, more screenings find more diseases, get more patients on more drugs and the economics of how, as awful as it might be to say, hundreds of thousands of dollars spent on new care spawned of “prevention” may not really return high numbers of years or lives saved; begging the question, is all that prevention delivering real health system value or will it actually drive costs up with little return?

A fascinating economics-ethics debate for sure. But not today.

For today, however is a discussion that Dr. Verghese sparks near the end of the piece. “[The EMR will] ensure that we doctors, nurses, therapists, particularly in hospitals will be spending more and more time focused on the computer, communicating with each other, ordering and getting tests, buffing and caring for our virtual patient—the iPatient is my term for this phenomenon—while the patient in the bed wonders where everybody is.”

He continues, “I have felt for some time that the patient in the bed has become an icon for the real focus of our attention, the iPatient.”

This intrigues me. Computers are about data, and the “insights” that data can deliver. I am knee deep in a digital project right now, awash in all the conversation/debate about what is measurable and what is trackable – connectable and projectable to some form of real or modeled ROI. The inherent data-collectability of digital activities, be they website clicks, ad views, drugs prescribed, or digital x-rays reviewed very well may be distracting us from the humanity and reality of what we do as providers, planners, marketers, communicators and strategists.

Or to Dr. Verghese’s point, are our tools shifting our focus from the human to the digital representations of the human – their medical data, the data about their behaviors in digital space, their purchase data, their attitudinal data?

An extension of the iPatient is the iConsumer. We’re guilty of this in marketing communications—boiling people down to numerical representations of the larger population’s humanity.

I can’t say that I have a pointed opinion or conclusion to offer here, other than to wonder when the last time was one of us sat down with a real patient and listened to their story. Not for the purpose of collecting data about who they think is “best” or “most preferred” or how they engaged the internet in tackling their health condition or whether a ad made them trust a hospital more or less, but rather just listened to the reality of confronting disease and what’s needed to find peace of mind within a disorganized network of care providers. While your customers should never develop your strategy for you, they certainly inform your planning.

Maybe that’s the difference between “research” and “listening.” In research we have a goal in mind. We ultimately want the target to either confirm our suspicions (brilliance) or report our effectiveness in influencing their rational thinking to our point of view. In listening we should have no agenda for what they are to give us, other than connecting in real, human terms. Sure, compile enough connections and the inquisitive mind can craft correlations, conclusions and relations. Even insights.

As we rush forward, in policy around reform, in strategy responding to changing technologies, economies and care delivery models, in communications marshalling the unrivaled power of digital mediums, tools and all the data they can spew at us, perhaps we should all make a concentrated effort to talk to, and listen to humans.

Wow!

2009-06-16T12:24:00.003-05:00

I hope someone in DC is paying attention, because a dose of solid logic just succinctly, realistically, actionably, landed on their doorstep.

I was tipped off by a HealthLeaders article titled, “Healthcare CEOs Offer Quality-Driven Payment Model.” An organization called Health CEOs for Health Reform issued the white paper “Realigning U.S. health Care Incentives to Better Serve Patients and Taxpayers,” and, according to the HL article was led to Congress by the Reform Czar herself, Nancy-Ann DeParle. Having read the 12-page paper, I can see why.

They get it.

They begin by agreeing to quality, affordable coverage for all, with limits (among them, no new public plan – YAY!) and only permitting an individual mandate once coverage systems are proven to be accessible and affordable. No rush to create a mess that would distract from real reform. Good.

Then they spend the next 9 pages succinctly running down how to do the thing(s) that most need to be done – reforming the delivery of care to bring down cost and improve quality facilitated by broad payment system reforms. There’s an old planning adage, “you are what you measure,” and its corollary, “what gets measured gets done,” and they, rightly, frame nearly all their suggestions on the canvas of incentives. Markets work wonders!

“We will not control health care costs until we create clear incentives for providers…to focus on quality and efficiency. Likewise, patients must be encouraged to make healthier choices through changes to their incentives…This will require…courageous provider leadership and significant cultural change.”

The authors present a comprehensive range of ideas, but focus primarily on concrete steps that could be undertaken tomorrow to get us moving down this pathway: End fee-for-service payments, hold providers accountable to cost and quality standards by a specified date, and move to bundled payment models. The last point begs questions (which they address) about how to pull this off. It’s powerful stuff.

A corner post of the plan to move to bundled payments rekindles the 90’s-era conversations around full- and partial-risk contracts and accountable care organizations (called integrated delivery systems back in the day, supported by things like PHO’s). It was a great idea then, it’s a good idea now. But, I wondered, why would it work this time?

A few possibilities came to mind. First is scale. When only capitated HMO contracts were the drivers of these ideas, there was no reason to push ahead, really. It was too small a portion of the payment stream to a hospital/practice to meaningfully change behavior. If fee-for-service goes away entirely and all payers of all stripes move to a bundled methodology, it would force change.

Secondly, the 90's effort emphasized the primary care “gatekeeper” as blocker, er coordinator, of care. Even the phrase “gatekeeper” suggested restricting access. Bad. While the exact specifics of how care organizations are formed and identified for bundled payment purposes are not clear (for obvious reasons) it feels more like primary care physician-as-care-quarterback than as preventer of care.

And that changes because under the old “full risk” models, the PCPs sat on the capitation cash and had to pay bills to others, incentivising the hoarding of cash and a stinginess to refer. If the payer holds the cash and reconciles payments later based on performance it removes that power role from the relationship between providers and might inspire greater care team cooperation. That said, if you don’t capitate, how do you make this work practically? Case rates for inpatient services that cover the right quantity of pre- and post-admission elements of care? On the outpatient side, what? Some modified ICD structure? The devil's in the details.

Lastly, the 90’s model emphasized capturing covered lives. More was better. This compelled odd alliances, irrational hospital system relationships and emphasized scale over outcomes. While Health CEOs for Health Reform do suggest regionalizing high-cost, resource-intensive services, network scale is not necessarily an advantage (fairly, nor a disadvantage). If a small community hospital has a system and processes for delivering excellent outcomes in chronic disease management they can do quite fine financially. That seems sensible.

This opens up a host of strategic, marketing and business planning questions. How should care delivery organization leaders begin to re-engineer their businesses in light of an end to fee-for-service? What are the right business/system organization structures to support clinicians and promote success under bundled payments? If there are national benchmarks for clinical performance with financial penalties for falling below the mark, does quality of care muscle its way back into the strategic plan?

I hope these ideas get some traction on the Hill. They’re offering good advice that wouldn’t cost an arm and a leg to implement and would actually attack the heart of the problem.

However, hope is not a strategy. Maybe I need to email my elected leaders….

Required Reading

2009-06-10T09:26:00.003-05:00

I think I’d be kicked out of the blogger’s union if I didn’t comment on Dr. Atul Gawande’s article in the June 1, 2009, issue of the New Yorker. Commentary on it is all over the blogosphere. Then yesterday, the New York Times, on its front page, reported that President Obama “summoned aides to the Oval Office to discuss [the article.]”

“He came into the meeting with that article having affected his thinking dramatically,” said Senator Ron Wyden, Democrat of Oregon. “He, in effect, took that article and put it in front of a big group of senators and said, ‘This is what we’ve got to fix.’ ”

So I guess that makes it required reading.

As not to insult your ability to read, briefly, the story tells the tale of McAllen, Texas (MSA total population just over 700,00+) and how it is the second most “expensive” Medicare market in the country. Nationwide, Medicare spends twice the national average – roughly $15,000 – per enrollee here per year. Only Miami, with significantly higher labor and living costs, is more expensive. Worse, in 1992 in the McAllen market, the average cost per Medicare enrollee was $4,891, almost exactly the national average. “But since then, year after year, McAllen’s health costs have grown faster than any other market in the country, ultimately soaring by more than ten thousand dollars per person.”

Interesting side note, the average income per capita in McAllen is right around $12,000 per year…so on an “average” senior, Medicare pays out $3,000 more than that person earns in a year.

A fun exchange in the article comes when Dr. Gawande sits down to dinner with six McAllen doctors. “All bread-and-butter physicians: busy, full-time private-practice doctors who work from seven in the morning to seven at night and sometimes later…” of different specialties. Their explanations run the gamut: “Maybe the service is better here,” says one while an FP says, “It’s malpractice [insurance expense].” A cardiologist agreed, saying McAllen was “legal hell,” before ultimately admitting that since Texas passed tough malpractice laws that limited pain and suffering payouts to $250,000 lawsuits have gown down, “practically to zero.”

“’Come on,’ the general surgeon finally said. ‘We all know these arguments are bulls---. There is overutilization here, pure and simple…the way to practice medicine has changed completely. Before it was about how to do a good job. Now it is about, how much will you benefit?”

Dr. Gawande digs further and proves, in fact, patients in McAllen get more of just about everything – more diagnostic testing, more hospital treatment, more surgery, more home care – than patient nationwide.

Read the article for yourself. You’ll be amazed.

But that’s not the point of today. Yesterday’s NYT article is. It contained some scary stuff. I am going to quote at length here, sorry…

“As part of the larger effort to overhaul health care, lawmakers are trying to address the problem that intrigues Mr. Obama so much — the huge geographic variations in Medicare spending per beneficiary. Two decades of research suggests that the higher spending does not produce better results for patients but may be evidence of inefficiency.”

“Members of Congress are seriously considering proposals to rein in the growth of health spending by taking tens of billions of dollars of Medicare money away from doctors and hospitals in high-cost areas and using it to help cover the uninsured or treat patients in lower-cost regions.”

“The Senate Finance Committee recently suggested that one way to pay for health care overhaul would be to reduce geographic variations by cutting or capping Medicare payments in “areas where per-beneficiary spending is above a certain threshold, compared with the national average.”

“Another proposal would spare health care providers in low-spending, efficient areas from across-the-board cuts in Medicare payments.”

“Dr. Langberg [a senior vice president at Cedars-Sinai Medical Center in Los Angeles] endorsed the goal of covering the uninsured, but said, “We do not believe that rushing to make large cuts in Medicare payments to hospitals is the right way to fund that coverage.”

The reason this got my cackles up was fear of what I see as a tremendously flawed premise. The logic chain goes something like this: 1. Universal coverage is a must [not necessarily], 2. This will be expensive for a variety reasons – a public plan, increased utilization etc. [very true but again, based on a shaky foundational assumption], 3. Providers are paid too much, let’s move cash from care to coverage and overhead [there’s certainly merit to attacking overuse and duplication but that will only go so far, and do any providers think they are paid too much?], 4. That’s not going to be enough money, we’re going to need more and since employer sponsored benefits are sacrosanct [not true] we’ll have to tax those too.

Today I will begin to read the legislative analysis of the 615-page bill that came out of the Senate Health, Education, Labor and Pensions Committee yesterday, but early reports lead me to expect the worst.

So where is all this going? On Monday I posted about hospital CEO’s in a real American town and their differing views on the right strategy for the future. Late last week I sat in on some consumer focus groups to hear them talk about and react to statements about hospital quality. A fascinating study. By and large people know two things: Cleanliness and “reputation,” which, when pressed they can’t elaborate, clarify or define.

I’m confounded because I see all three of these points as deeply, importantly connected. If “reputation” is some nebulous trigonometry of chance, our Big Dog hospital from Monday might be on the right track because better outcomes and lower costs might just not matter to people. But, if some form of payment system reform incentivizes and rewards integration and best practices, maybe, Hospital #2 might be well situated in theory, but if no one goes there, does it really matter? So then that leaves an increasingly larger Federal infrastructure (remember we expanded coverage and costs so now we’re all on the hook for even more) with only one tool to impact both behavior and costs – the hammer of pricing. But now it’s not just pricing on 25%-50% of your business, it could be much more. That makes the hammer bigger and the pain of being hit greater.

God-freaking-dammit Charlie, back up the bus! Go back to the New Yorker article. Think this through. What does the Dartmouth (and others) analysis tell us? It tells us we have a long way to go in best practices implementation and integration before we’re ready pile on a bazillion dollars in new costs! It means we should partner with payers of all stripes to test and trial incentive payment programs to advance best practices and integration. Oh and by the way, it’s going to take hospital/health system innovators a few years to re-engineer the delivery system. It’s hard to redecorate your living room when your kitchen’s on fire.

Ugh.

Evolution or De-volution?

2009-06-08T12:50:00.002-05:00

Not a big scholarly effort today, just an idea for conversation....

Friday I was involved in a new business pitch. The market situation in this town (metropolitan population 350,000ish) was interesting and one I wanted to share. The prospect hospital is in a three-hospital town. There is a "Big Dog" market leader - 600 beds. The #2 hospital is a vibrant place – 350 beds - that can “provide 90% - 95% of the services” #1 can. The #3 hospital is smaller still – 150 beds - and serves a very distinct local community primarily. While each hospital has its share of dedicated, loyalist physicians, the loyalists skew toward primary care with the specialist community mostly splitting their admissions between the top two hospitals. It is not uncommon for the larger specialty practices to favor the Big Dog, with some specialty practices treating their public assistance patients at #2 and their "good paying" patients at #1.

In some specialties (such as neurosurgery) there is only one practice in town. Recently the Big Dog began an aggressive campaign to buy these exclusive specialties, essentially leaving the other hospitals in the market without access to these capabilities. And for something like neurosurgery, you can imagine the impossibility of both supporting and recruiting a second group to the area. The market's just not big enough to make that practical.

Here's where the strategy discussion begins. The Big Dog's strategy is to become more and more academic. This town is within 2 ½ hours of 3 different urban centers, each with true academic medical center destinations, but Big Dog is embarking on a strategy of greater and greater technological advancement, sub-specialization and crafting a public image as the region's closest thing to the "cathedral of medicine" [my words] mystique that surrounds a larger, urban AMC.

Hospital #2 (our prospect) seems to be a wily competitor. Nice facilities, but not as grand and polished as the Big Dog. Again, providing almost all the same services - including open heart surgery, bone marrow transplant, tomotherapy, DaVinci surgical options for minimally invasive therapies, and the like. Data would indicate #2 is home to higher clinical quality (Core Measures and other data) and lower cost than the #1 (less expensive infrastructure to support).

The CEO at #2 is pursuing a different strategy than the Big Dog. He's not engaging in a medical arms race, not going to try to go claim-for-claim, specialty-for-specialty with #1 (for reasons very practical as well as strategic). In his view, the future of US health care will not necessarily reward bigger, more specialized, more complex, more inpatient focused (Big Dog strategy). He is looking across the continuum of care and embracing the Accountable Care Organization/Medical Home model (although not explicitly) - believing that health reform will incentivize and reward prevention, wellness, health promotion, organization and integration - especially interoperable EMR and data integration - and value/cost efficiency at the institutional/inpatient setting. Philosophically and theoretically it's a powerful counterpoint.

Because #3 is so much smaller as a market competitor, less clinically capable than #1 and #2 and more community based we can respectfully leave it out of this conversation.

Thinking about human behavior and the strategy of competition, what might be the winning approach? People certainly admire large, shiny new buildings, equate technological advancement and specialization with quality and capability. More powerfully, they also tend to derive a significant measure of confidence from these kinds of organizations. And, in health care, patients want to be confident in their care decisions.

But then there's economics and the specter of reform. Demonstrated quality and lower cost can be powerful market tools for competition, though currently there’s little evidence they can move market share. Integration *might* be marketable as more in line with the future of health care while massing inpatient resources could be seen as backward looking, duplicative and part of the health care cost problem.

It's a fascinating situation because it's not theoretical. This is a real market. These are real hospitals treating real patients, wooing real physicians and making real capital allocation decisions based on strategies. The hospitals are going to go down different paths. One's strategy will be more successful than the other's.

I understand and admire each hospital's vision. This seems like sheer force (e.g., Big Dog) vs. betting on a vision of the future much different from today. It’s a bold gamble – perhaps the one #2 is forced to take – that could leave #2 slugging it out for every last high margin admission as consumers struggle to get their mind around some difference based on “system-ness.” That said, a unique worldview, scaled appropriately, can be powerful (see also: Mac vs. PC) and profitable, if not visionary and respected. To make that strategy work, though, product has to match communications; the promoted difference, attitude and advantages have to be real.

I won’t advance any strategic recommendations or conclusions at this time, as there is more info to gather. But, what do you think it will take for each of these hospitals to succeed on their chosen path?

The "In" Crowd

2009-06-04T12:07:00.002-05:00

Triangulation. That’s really what this project is about; I grab a thing from here, a thing from there, some stuff from over yonder and find a thematic link that intrigues me (at least) and you (hopefully).

Today’s exercise in triangulation is just that – two articles on similar topics that spark imagination and discussion.

The first appeared in the Harvard Business Review Blogs where Umair Hague posed the question, “Is Your Innovation Really Unnovation?” His premise: “In the race to innovate, most organizations forget a simple but fundamental economic truth. A new process, product, service, business design, or strategy can only be described as an innovation if it results in (or is the result of) authentic, durable economic gains.”

From there: “Most innovation, well, isn't: it is "unnovation," or innovation that fails to create authentic, meaningful value. The biggest stumbling block to innovation is unnovation: most companies are too busy unnovating to ever learn how to truly innovate.”

His post provides some examples of “unnovation” – The Hummer, Collateralized Debt Obligations, carmakers getting into the financing business – and challenges that “innovation today demands more substance and less hype. [My favorite line coming next!] A bigger SUV with even worse mileage or a razor with yet another blade are only innovative if wearing my socks inside out is too. All three create roughly the same amount of economic value.”

The second point on the triangle, and how this becomes healthcare-relevant, was an editorial piece in HealthLeaders that appeared, coincidentally, the next day titled, “Hospitals May Need Operators, Not Innovators.” In this article, the oft-engaging Philip Betbeze puzzles over the need for innovation in the ranks of hospital leadership. His hypothesis goes, “Maybe we're better off with people who are good at executing, but who are not necessarily idea people. With drastic healthcare reform proposals on the horizon, are we better off with a majority of operators versus innovators? It's possible we are. The industry is already the most regulated on the planet, and I include financial services in that assessment, even with recent unprecedented government intervention in that sector. As government works to further regulate healthcare, are innovators really what is needed? I'm not sure, but…[w]ith further regulation, I'm coming down on the side of the efficient operators.”

There’s certainly merit to Philip’s point-of-view. “So bring on the operators. People who can effectively navigate through bureaucratic hoops and chart a path to profitability without sacrificing patient care. Those are the people healthcare is going to need in the immediate future, where the line between surviving and thriving might live on the razor's edge.” If you don’t have excellent operators at your hospital, you quite possibly guilty of a degree of professional malfeasance.

That said, it led me to wonder, though, what is true innovation in health care delivery? For guidance, go back to Umair Hague’s guideline: “A new process, product, service, business design, or strategy can only be described as an innovation if it results in (or is the result of) authentic, durable economic gains.”

This led me to Michael Porter and Elizabeth Olmsted Teisberg’s 2006 doorstop, “Redefining Health Care.” It’s excellent (but dense), focusing entirely on the question of value and how the health care delivery system has systemically destroyed (unnovated?) value more often than it has created it.

[Sidebar: Maybe another time we can digress on both the destruction of value and the role of non-provider elements within the system have played in creating real value, but I don’t want to get too far off topic right now.]

On page 111 Porter and Teisberg offer a nice guideline in this discussion, “Value in health care delivery is created by doing a few things well, not by trying to do everything. Yet, health care delivery is currently not organized this way—indeed, the current system encourages just the opposite.” When they say "current system" they largely mean reimbursement - both private insurance and Medicare - although other elements, like research funding, professional compensation, rewards and recognition, etc. certainly also contribute.

Further on, they suggest, “The combined effects of experience, scale, and learning create a virtuous circle in which the value delivered by a provider can improve rapidly.” They draw a believable connection between deeper specialization, efficiencies, practice development, innovation and better results, with better results aiding reputation and compelling even greater volume.

The conclusion they suggest, which conforms to Hague’s definition of real value creation and innovation, is that if the US health system encourages and rewards value-based competition on results, the inevitable output will be better product and better quality of life at a lower cost. Real value.

Realists, they do point out, “The relationship among experience, scale, and results is not automatic, especially when providers do not have to compete on results. An important factor is learning.” This sparked a thought…is that like quality? If it’s not planned for, if it’s not an organizational strategic priority, is high-octane, propelling learning unlikely? “Learning requires an active process of review and improvement.”

So, to be part of the “In” crowd, that is the “innovating” crowd, my a-ha was organizational commitments to specialization and active learning with an eye on value creation.

At first I thought I’d end up thinking tools like EMRs, Accountable Care Organizations, and the like would be examples of innovation in health care. But, now, I’m compelled to think that strategic decisions around specialization, delivery system integration and business process tools are just means to an end. Real value creation, real innovation, is the role of learning and the strategic commitment to pursue learning within such a system.

That’s a durable challenge under any regulatory scenario. Operators are necessary, for sure. Innovators are welcome, and needed.

It's Geek Time!

2009-06-01T12:08:00.002-05:00

Wow, what a wonderful time to be a healthcare geek! The Obama Health Reform train is fully gassed and charging out of the station…coming this weekend to a living room near you!

In case you missed it, Organizing for America has reached out to David Plouffe’s massive database to enlist grass-roots support for the President’s health reform plan. This Saturday (June 6) people will be hosting house parties across America to discuss reform. Whoda thunkit? Tupperware parties across the U.S. to talk about re-engineering the US health system. Funny thing is, I don’t expect these to be “open-sourcing the solution” events, but rather, “call your representative and tell your friends to do the same” kind of things. I gotta find one to attend! Rumor has it these events are motivated, in part, as a response to Rick Scott’s one-man crusade for personal vindication—but dare I digress.

With that as a backdrop, I loved a HealthLeaders piece from last week titled, “Targeted Tax Hikes Would Raise Billions for Health Reforms.” It had lots of potential blog fodder in it, but my favorite lines came from Michael Cannon, director of health policy at the Cato Institute (just to the right of Ayn Rand). Quote, “It’s a flawed premise—that the problem with healthcare in America is we aren’t spending enough.” If you haven’t seen, there’s a bunch of new taxes being floated out there as a way to pay for the increased costs of universal coverage, including a smack on high-fructose corn syrup-containing sodas. A possible “beer tax” has made news recently as part of a higher levy on alcohol. Then there's everything I blogged about last week about "missed revenue" from taxing employer provided benefits and similar targets (hope you're not in love with your MSA/HSA!).

Today, HLM reported from the blogosphere with posts from top government officials, OMB Director Orszag and CBO Director Elmendorf (everybody blogs these days!). Orszag: “Healthcare reform will likely increase total national spending as healthcare coverage expands under current proposals. However, reform actions eventually will slow the growth of healthcare spending. "What we see is that it takes only 10 to 16 years after reform for federal healthcare spending to be lower than it would have been in the absence of reform.”

“Within the 10 year budget window, the impact of healthcare reform on the budget will be "negligible" because the plan is fully paid for [read: taxes]. The short term increase in spending will be offset with greater revenues. Over the longer term, the budget situation "improves considerably" because healthcare spending declines and because taxable compensation increases.”

Looking back over past blog posts, I know some people might suspect I am a conservative Republican in the classic style. I’m not. Seriously. I’m socially liberal and fiscally conservative…that makes me…well…confused mostly. But I am skeptical of Orszag’s assertion that “the situation” will improve because of projected spending declines and increased tax revenue. I think you can plan for the latter but there’s little-to-no proof you should expect the former.

In the HealthLeaders article, President Obama told the footsoldiers, “If we don't get it done this year, we're not going to get it done…We're going to need to mobilize all of you." I wish I knew where the fire was. Yes it’s a huge and growing portion of the national budget, but, jeezus, taxing the snot out of the populace is not a prescription for political survival. At a time when people are seemingly comfortable to forgo medical treatment, telling them you’re going to pile on their burden so they can be better off…it just doesn’t seem like folks are saying they want it.

I suspect universal coverage has to happen. It’s the only thing the President can do by executive fiat (other than car mergers) and claim victory come campaign time. He can’t stand up at a re-election rally and cry, “on my watch we’ve launched 16 demonstration projects of which 7 show real promise and scalability for long-term health system reform some day!” He can, however, say, “they said it couldn’t be done. But we showed the nay-sayers that by ____ (insert date here), every man, woman and child will have the security of health insurance and no American will ever have to wonder about changing jobs, losing their job or making the right choice for their family because of health insurance.”

So, it’s inevitable. It’s going to be a mess. Senator Kennedy’s Health, Education, Labor and Pensions Committee seems ready to buy-off physicians with the promise of a Medicare +10% fee schedule in return for support of some public plan.

I want it all to work, I really do. And, you don’t make meaningful long-term progress without bold, often controversial short-term actions. I must say that, more than anything else, I am surprised at the size of the risk the President and Congress are willing to take.

Oh, and if anyone gets to one of these health care house parties, please post!!

Planning for Quality

2009-05-26T10:54:00.002-05:00

First, a note of sincere thanks to my colleague Dan Dunlop who, in his blog, recently offered far kinder words than I deserve for my sporadic efforts here at hcpropellerheads. To quote Hamlet’s Polonious, “Brevity is the soul of wit,” and Dan’s daily shots of idea-juice show he is a man of concentrated wit (and, possibly, reveal the “witless” nature of my long rambles…) with considerable chops to spark intense, thoughtful discussion. Thank you Dan for introducing your fans to this little project. I hope some of you find it intriguing and helpful.

I spent a lot of last week on airplanes and had the chance to catch up on some reading. One article I found particularly interesting appeared in a supplement to Health Affairs. The entire supplement is dedicated to “Value in Health Care” with some impressive minds providing interesting perspectives on the ubiquitous concept of “value.”

In, “Building Organizational Capacity: A Cornerstone of Health System Reform,” Janet Corrigan and Dwight McNeill from the National Quality Forum posit, “achieving higher levels of performance requires organizational capacity, including information technology and specialized expertise, not present in most settings.” While I could certainly go after this set-up (not today) I’d rather focus on a potentially inflammatory notion they put forth:

“[T]he health sector lacks the ability to bring these innovations [in quality of care systems] to scale; best practices in care delivery may take years, if not decades, to spread throughout an institution, much less the nation. Moreover, what we have not seen is fundamental reform in the delivery system aimed at the development of new organizational models capable of consistently providing effective, safe, and efficient care across each entire patient-focused episode.”

Now, fairly, Corrigan and McNeill can cite studies, like those spotlighted in Modern Healthcare recently, that suggest, despite decades of work, the delivery system struggles to make meaningful gains in quality and efficiency.

Before I proceed, a moment of full disclosure. The Joint Commission is a client of SPM’s and a client with whose work I am intimately involved. And, to quote the old adage, “where you stand depends on where you sit,” I also acknowledge that NQF, the Leapfrog Group, HealthGrades (authors of the two reports cited in the Modern Healthcare article) and The Joint Commission, all have biases and agendas that fuel their respective assertions. I get that. It’s out on the table, admitted. Now, let’s move on.

I have two points to make today. The first is, to say that broad, national progress on key measures of patient safety, quality and efficacy have not been realized and can’t be realized on a broad scale is simply not true. On The Joint Commissio n’s website you can view the 2008 Report on Quality and Safety. There you’ll see, perhaps self-servingly, that Joint Commission accredited hospitals deliver evidence-based treatment of heart attack 96% of the time – up from 87% in 2002. Further, with many National Patient Safety Goals, such as accurate patient identification, “read-backs” of orders and test results, reducing falls, and implementing the universal protocol, average national performance at Joint Commission accredited hospitals exceeds 95%.

Admittedly, The Joint Commission is an organization that has room for improvement. There is considerable debate about standards and how things like the universal protocol were developed and deployed. True. Fix it. But, to claim that little progress has been made, and that the system is incapable of making leading practice common practice nationwide is pure hyperbole. In my own, biased, opinion I believe The Joint Commission, for all its warts, has been and will continue to be the best catalyst for health system improvements in safety, quality and efficiency.

But, that’s not even my primary point for today. My second concern involves hospital/health system strategic planning and the right role of clinical improvement. Recently I was reviewing a hospital strategic plan for a fairly large (> 500 bed) institution. This particular plan, at first, reinforced a belief of mine that hospital strategic plans typically don’t get much beyond being budget justifications. This plan is much better than most (it included actual decisions on priorities) and, to be fair, acts like a business development plan more than a strategic plan. It outlines programs of excellence, investment, delivery system strategy and criteria for evaluating the future mix of services and programs (all things I love to see in a plan).

However, for all its specificity around target markets, services, programs and capabilities, the discussion around quality was vague. The plan calls for investment in IT and EMR as tools to aiding improvement, the development of new platforms to take a non-siloed approach to quality and patient safety improvement and greater transparency/accountability. Above I said, “at first” because my initial reaction was to be disappointed by the light treatment the issue of clinical practice of medicine received; especially when I read further on that attaining market leadership in patient safety, clinical and service quality are seen as key forces for market differentiation.

What I instinctively wanted to see was a conversation about things like Core Measures, National Patient Safety Goals, demonstrated best practices, evidence based medicine, etc. I later realized that, perhaps, the most important next step for this institution may be organizing better to attack specifics such as this. So, I cut them some slack.

However, that did fuel a question – should we expect/hope to see greater specificity in hospital/health system strategic plans around their pathway to clinical improvement? Just two weeks ago, providers promised the President they could shave $2 trillion over 10 years. “The crux of the plan is to merge more streamlined care and a focus on quality and efficiency with “common sense improvements.” One tenet urges the better coordination of care and adherence to evidence-based best practices. Another calls for better use of health information technology. The groups have wagered that such changes can greatly cut how much is spent each year on healthcare.”

I imagine proceeding down such a pathway – rightly – will require engaging a hospital’s medical and clinical staff in a way they have not before. It’s one thing to pay lip service to quality improvement in a strategic plan and then leave it to task forces and work groups to muddle through sufficiently to meet accreditation and payer standards. But to see actual, planned quality improvement, the kind places like Geisinger [full disclosure part II, also an SPM client] have been recognized for, is for my skeptical mind, a leap. Don’t get me wrong, I believe business development and strategic clinical quality improvement (and marketing communications strategy and brand development) all can and should walk hand in hand.

Are hospital leaders up to the task?

Everybody Pays

2009-05-19T09:23:00.002-05:00

I just finished reading the Senate Finance Committee’s “Financing Comprehensive Health Care Reform: Proposed Health System Savings and Revenue Options.” It’s an interesting document (from a Propellerhead perspective) in that it provides a fairly comprehensive-yet-understandable look into the confusing mosaic of America’s health-related financing and regulatory system. It was a sobering illustration of how complicated life in big systems of humans can become.

The key take away for me was the size of the bulls-eye on the back of employer sponsored health insurance. A table on page 5 identifies “Exclusion of employer sponsored health care (income)" as representing $132.7 billion of a possible $194.2 billion in annual “lost revenue” for the Federal coffers. For reference, #2 item on the list is “Exclusion of Medicare benefits from income” that total $40.6 billion. You don’t need an advanced degree in applied mathematical theory or public policy to guess what has the pols’ attention when it comes to paying for expanding coverage (and buoying a soon-to-be-bankrupt Medicare Inpatient Trust Fund).

Yes, your memory serves you correctly. President Obama did take Senator McCain to task during the campaign for basing his health reform program on this very principle. During the last debate, Senator Obama referred to such an approach as a new tax on working Americans.

Now, the Senate Finance Committee paper proposes that a progressive approach be taken, only categorizing this benefit as incremental income for people earning $200,000 or above, phasing in the full incremental tax at some yet-unspoken salary level north of $200,000.

[Sidebar for a second…the Administration’s previous conversations around tax rates have targeted people earning $250,000+. Now the bar seems to have quietly slipped down $50,000. Does this represent an alarming trend?]

The compounding factor here lies in the discussion from earlier on the principles of expanding coverage. In a “pay or play” model such as the one the Committee has thrown around, employers will be “fined” for not offering benefits. So…everyone has to have coverage, and that coverage will likely be taxed one way or another. That’s an interesting double whammy (or triple whammy – if you consider the fine for not providing benefits a de-facto tax on employers).

There is also disturbing language in the report that, in essence, suggests providers might earn too much through programs like IME, GME, DSH and mechanical issues like market basket updates to base payment rates. While certainly these formulas have evolved to level of complexity that makes the IRS tax code seem simple, there are surely legitimate opportunities to refine and tighten the programs. The underlying suggestion that providers might be earning too much – the document singles out home health agencies – is scary.

The AHA has released its most recent batch of comments on the Senate Finance Committee’s policy ideas – with cautionary words regarding how much savings are truly possible through delivery system reform in the short term, identifying possible winners and losers along the way. The AHA is providing thoughtful, sound advice.

Essentially, in two words, “Slow Down.”

But alas, it seems the bull is in the china shop. We’re going to have one heck of an aftermath to figure out.

Not So Fast (Part I)

2009-04-24T07:33:00.002-05:00

While it might not be the “Harry and Louise” full-frontal assault that battered the Clinton administration efforts on system reform, smart, measured resistance to the Obama Principles of Reform are bubbling up all around. To his credit, the President has prescribed an open process, with very public dialog; one suspects the goal is both to avoid the aura of secrecy that clouded the Clinton effort and actually hear from the industry’s best and brightest to leverage their thinking.

A third goal, I suspect, was to amass public support from the same best and brightest as a way of selling the Administration’s vision for the future of the American health system. Seems a funny thing happened on the way to the group hug…people are presenting reasoned, polite dissent. The Administration isn’t getting the, “you’ve got it right” stamp of approval it might have hoped for from the field.

Two instances this week were particularly interesting. First, on Tuesday research appeared on Health Affairs’ website posting the question, “Will Americans Support the Individual Mandate?” This study aimed to assess if an individual mandate, on its own, similar to the Massachusetts plan, could have wide public support, or if something more faceted would be politically necessary.

Respondents to the study’s survey were asked their opinions on two different approaches, the “stand-alone mandate” and a “shared-responsibility plan” each described as follows:

Stand-Alone Mandate: "This proposal would require all Americans to have insurance. Most people would still get insurance through their work. People who don't get insurance from work would have to buy it themselves, or pay a fine if they don't. People with lower incomes would get help from the government paying the cost of health insurance."

Shared-Responsibility Plan: "This proposal would place requirements on individuals, employers, the government, and insurance companies so that everyone shares in the responsibility. Individuals who don't already have insurance would be required to buy it or pay a fine, with financial help from the government for people with lower incomes. Employers would be required to cover their workers, or pay money into a pool that helps people buy insurance. Government health insurance programs would be expanded. Insurance plans would be required to take anyone who applies, even if they have a prior illness."

The stand-alone plan is an easier platform on which to campaign; it doesn’t take a lengthy explanation to get across and the principle is simple. While the President didn’t/hasn’t come down firmly in this camp (he supported a mandate for children, while Hillary Clinton went for the full mandate), he has expressed an openness to it.

The noise out of DC and the trial balloons being floated from Congresses work groups suggest the task forces are leaning more toward a “shared-responsibility” model [and what a great name! Who could be against a concept like shared responsibility?]. This study seems to think this is a politically viable course of action.

Essentially, “48 percent of the public supported the stand-alone individual mandate. It was not as popular as some incremental approaches to partially covering the uninsured population (assessed in another recent Kaiser Family Foundation survey), such as expanding state government programs for low-income people (72 percent) and offering businesses incentives to insure their employees (79 percent). It was slightly more popular than a single-payer government plan financed through taxes (44 percent).”

“A shared-responsibility plan was more popular than the stand-alone mandate in 2008. Fifty-nine percent of the public supported it, compared to the 48 percent who supported the stand-alone mandate. All groups, regardless of political affiliation, income, race, age, and education, were more supportive of the shared-responsibility plan than the stand-alone mandate, except the Hispanic/other race subgroup, which appeared to be indifferent about which of the two options was better.”

This all sounds encouraging, until you hit this sentence: “’shared-responsibility’ enjoyed majority support among every measured subgroup except Republicans (44 percent), respondents over age sixty-five (50 percent), and college-educated people (50 percent).” Huh? That sent my radar buzzing. One of our two major political parties, one of our largest voting blocks (and the largest healthcare consuming demographic, and the “elite” class the President is supposed to represent. Support really drops off when you talk to wage earners garnering between $80,000 - $100,000.

If support for even the better approach is wanting among these significant groups, does that suggest that neither idea is very well-liked? The reasons given for not supporting any form of mandate are predictable and reveal fundamental disagreements on the government’s right role in healthcare; the belief that either approach “would lead to government-run health care or higher taxes, or both. The Democrats who opposed the plans were significantly more likely than the Republicans to say that these reform options were the wrong approach because a single government health plan was needed. Republicans and Democrats also disagreed on the issue of the individual mandate itself. A higher percentage of Republican opponents than Democratic opponents disagreed with the principle of government requiring people to buy insurance. More Democrats than Republicans opposed mandates because they thought that people might not be able to afford the insurance they were being required to purchase.”

Jeff Goldsmith posed the question, especially in this economy, where is the money to fund any of this going to come from? Even if you favor the “shared-responsibility” approach, Mr. Goldsmith points out, “mandating that employers offer health insurance to their workers if they do not already do so is, in effect, taxing them. Those that do not play would be asked explicitly to pay an equivalent amount (6-8% of payroll?) to a fund that would help finance those not covered by employer plans.”

“The president recently reaffirmed his support for the so-called Employee Free Choice Act, which would also increase employment costs by rapidly accelerating unionization. How you can heap these two economic burdens on employers, which are laying off 650,000 workers a month, and expect to get back to 7.9% unemployment next year or even the year after, beggars the imagination.”

This was the most sobering cry in the wilderness yet. While those who support either mandate do so most often on the basis of moral principle – it’s the right thing to do. I can’t imagine how job #1, re-energizing the economy, can take a back seat to some halcyon moral imperative.

Then, there’s the advice – FINALLY – that this whole debate is focusing on the wrong problem. But that’s a topic for next week.

Healthcare Wisdom from 'Dancing with the Stars'

2009-04-15T13:18:00.003-05:00

Well, something’s gonna happen.

On April 9, 2009, President Obama made it official: there is a new White House Office of Health Reform. Through an executive order President Obama assigned the task of pressing his goal of expanding and improving health coverage in America.

Then, just yesterday, Dora Hughes, HHS’ counselor for public health and science, said during the 6th Annual World Health Care Congress in Washington, that the administration remains optimistic that Congress will able to produce a bipartisan healthcare reform bill by the end of August.

The hope is that Congress will make a good-faith effort to reflect the President’s eight principles for reform: protect families’ financial health; make healthcare coverage affordable; cover all Americans; provide portability of coverage; guarantee choice; invest in prevention and wellness; improve patient safety and quality care; and maintain long-term fiscal sustainability.

Monday night on 'Dancing with the Stars,' Judge Len Goodman remarked, "just because you're moving doesn't mean you'rE dancing." There might be a parallel. Just because you're fiddling with health, it doesn't mean you're fixing anything.

Sunday’s New York Times reported former Missouri congressman Dick Gephardt is suggesting the administration and Congress “Think Smaller. Seek Less. Don’t Fail.” According to the Times, “now Mr. Gephardt says universal or near-universal coverage cannot pass this year — and he is urging the White House to defer that goal until it enacts cost-saving reforms in health care delivery.”

And I have to believe Mr. Gephardt is imagining real savings beyond the phantoms of “efficiencies” to be derived from expanded health IT.

Further on in the NYT article, “Representative Ron Kind, a Wisconsin Democrat who serves on the Ways and Means Committee, insists that Congress must address cost and coverage “on parallel tracks.” Indeed, Mr. Kind sees savings from “system delivery reform,” like improved approaches to preventive care and treatment of chronic diseases, as the way to pay for expanded coverage.”

Therein lies the rub of healthcare (and not health system reform): the divergent but intertwined challenges of cost and coverage.

Re-reading the President’s eight principles, the focus is populist, clearly aimed at coverage over cost. The insiders would direct us to “invest in prevention and wellness; improve patient safety and quality of care; and maintain long-term fiscal sustainability” as proof of commitment to the “cost” side of the ledger. Sounds like shadow boxing to me.

Months ago I agreed with Jeff Goldsmith who urged, essentially, raging incrementalism. Go slow. Try things. Fix things. Go for the prize (i.e., universal coverage) with success under your belt. It would seem to me the smart pathway to reform would be strategic demonstrations, testing different health system reforms to see which work best. Transferring knowledge and best practices is working in medicine, why abandon it in system reform with an all-or-nothing bet?

The dumb guy question I often ask (and receive blank stares in response) is, “how will universal coverage reduce the burden of the Medicare program on the Federal budget?” Not to be redundant, but it is the “$34 trillion problem.” Sometime soon (e.g., in the President’s first term), Fortune Magazine reports, “Medicare Part A will go cash-flow-negative.” What it will take to stabilize Payer #1 could completely swamp the best intentions of universal coverage advocates.

Monday’s conversation of ACO’s is an interesting first step. Some contend that, beyond Geisinger, Mayo and Kaiser system reforms imagined by The Commonwealth Fund are not doable? Why? Presumably, because their integrated structure is unique and not replicable. Un-integrated entities are not organized or capable of actually profiting on lower reimbursements driven by improved efficiency and outcomes.

Again, I say bully to that. Why can’t the system be reformed before the financing system is thrown into a blender (OK, or at least at a similarly measured, insulated pace)?

Now, the Times article suggests the motivation is *gasp* political. System reforms will be glacial, certainly longer than election cycles can tolerate. Can a candidate run on the success of demonstration projects and incremental learning? No. Universal coverage can happen by matter of fiat, the single stroke of a pen. Then you can stump on accomplishing the long dreamed of ideal of many great Americans. Otherwise, will voters might just wonder, “what exactly did you do?”

How about, “we simply saved the American economy for generations to come”?

A Safety Net?

2009-04-13T09:41:00.002-05:00

An interesting article trickled across the wires the morning courtesy of HC Pro. Subtly titled “Could ACO’s Appear on the Medicare Payment Horizon?” it tees up an interesting conversation I’ll get to in a second. First, a couple of prefaces that made this story particularly interesting.

On January 21, 2009, an article by primary care physician, Benjamin Brewer, M.D., appeared in the Wall Street Journal under the title, “How to Make Primary Care Better.” Among other prescriptions, one line particularly caught my eye: “To get real reform we're going to need to put more money into primary care. I have a few suggestions about where to start looking for it…we can revoke the tax exemptions of supposedly nonprofit hospitals that don't fulfill their mission of community service.”

I had forgotten about this piece until a front-page article appeared in the Chicago Tribune last week, “Are Hospitals Passing Off Their Low Profit Patients?” The article bluntly rapped metro-Chicago hospitals for the amount of charity care (more specifically, the small amount of charity care) they provide. A sidebar article recounted the Illinois Supreme Court’s decision last fall rejecting Provena Covenant Medical Center’s (Champaign-Urbana, IL) argument that free care should not be the sole determinant in deciding if a hospital is keeping its charitable promise. Provena Covenant had its tax-exemption repealed 5 years ago and remains in court on the issue.

Over the past few years, presumptive Illinois Gubernatorial hopeful, now-Attorney-General Lisa Madigan has made noise about hospital tax exemptions. The sharks are certainly circling.

That said, the economy is doing hospitals some favors. Uncompensated care cases are up. And, with non-operating, investment income in the toilet, it’s probably politically unpalatable to hunt wounded organizations - especially the only sector that has, up until recently, added 13,000 -17,000 jobs to the economy month to month.

This leads me back to the opening article of interest on the latest healthcare acronym…ACOs. An ACO, an Accountable Care Organization, “can include a variety of hospitals, primary care physicians, and possibly specialists. Potential ACOs could be made up of integrated delivery systems, PHOs, hospitals with multispecialty groups, or even academic centers.”

“However, ACOs would work to promote improved "care coordination and collaboration with providers," working with a defined group of Medicare patients, "the hope would be that unnecessary services would be reduced and quality would be improved."

“In turn, provider payments or bonuses would be tied to quality and resource use. Quality benchmarks, for instance, could include objectives such as lower mortality rates or hospital readmissions.”

An intriguing idea. Finally, serious talk about how to hold the hopefully-reasonably-integrated delivery system accountable for performance, and rewarding them for doing a good job. MedPAC reports there’s support for the idea in Congress as health reform motors along.

So, this is where the safety net might come in. With snipers poised like Navy Seals, holding tax-exempt status in their sights, it seems to me that hospitals are the most capable enterprises to construct/sponsor ACOs. They have the management, the cash, the business systems and the know-how to corral the disparate pieces an ACO would need to be successful. In the Integrated Healthcare movement of the 90’s, beyond a few exceptions at places like Alta Bates and San Jose, hospitals were the agents of integration. This time around though, the spin is more productive. The 90’s were all about control of covered lives. The more you had – hoarding them like rollover minutes in a popular cell phone commercial – the more power you had.

The idea is not completely new. An article appeared in Health Affairs back in December 2006, introducing the ACO as an, “Extended Hospital Medical Staff” as “essentially a hospital-associated multi-specialty group practice that is empirically defined by physicians’ direct or indirect referral patterns to a hospital.”

In February 2007, the Commonwealth Fund reported on the paper, noting, “seriously ill patients receive care from many clinicians in many care settings, proper coordination among these professionals is critical to ensuring that no significant gaps in quality occur. That is why reform efforts focused solely on holding individual providers accountable for the care within their direct control may do little in the end to improve the overall quality of care…Previous efforts in this direction have targeted traditional health maintenance organizations or multispecialty group practices. But these groups represent only a tiny share of the current market: most U.S. physicians are employed in solo or small group practices.”

“Performance measurement and public reporting at the extended hospital staff level is the logical first step to implementing such a system and could begin nationwide relatively quickly.”

While maybe not echoing the acronym, in their February 2009, publication, “The Path to a High Performance U.S. Health System” the Commonwealth Fund did “encourage greater shared accountability for a continuum of health care services. Bundling payments for care needs over a period of time—including physician, hospital, and other clinical care—provides a financial incentive for hospitals and physicians to join forces to improve quality of care and reduce avoidable complications, hospital readmissions or episodes of care.”

As a hospital strategist, I would be attracted to the possibility of the ACO as a pathway to legitimized authority within the delivery system and a defense against cash hungry taxing authorities. It’s always better to be able to show you’re part of the solution than part of the problem.

My Chronic Condition

2009-01-27T12:01:00.003-06:00

I don’t know why, but I can’t stop reading about, thinking about, and writing about Chronic Illness Care. The latest edition of Health Affairs focuses on the topic with a number of great essays. I won’t cite them individually, but there are a number worth reading.

I’m also a sucker for a great opening. Health Affairs' Editor-In-Chief kicks it all off with this doozy, “As in many things in health care and health spending, American “exceptionalism” is the rule. The United States is doing an especially rotten job of delivering chronic care, at spectacular cost.” How can you not read on?

She cites a November 2008 Commonwealth Fund survey of 7,500 chronically ill patients in eight countries, including the US, UK and Germany that found “US patients are far more likely than those in the other countries to report high out-of-pocket costs; to forgo care due to the expense; and to experience high rates of medical errors.” The study also found that the care systems in these countries were likely to fall short in delivering chronic care, with care coordination lacking everywhere.

In one essay, Paez, et. al. report, “In 2005, 43.8 percent of the US civilian noninstitutionalized population had one or more conditions that we classified as chronic. One in five reported living with one chronic condition while 10.7 percent of respondents reported two conditions, and 13.3 percent had three or more conditions.” Further, “An overall shift occurred from people reporting zero or only one chronic condition to people reporting multiple chronic conditions, particularly among people in midlife [45-64] and older.” Especially interesting to me was that socioeconomic status was not as correlated to increases in chronic conditions as you’d intuitively expect. From 1999 to 2005 the percentage of people with three or more chronic conditions grew 5.6% among the Poor, 5.5% among those categorized as Middle Income, and 6.7% among High Income individuals.

Beyond the incidence data, the question of prevention and treatment looms. Paez and her partners reported, “Higher drug copayments and three-tier pharmacy plans have been found to reduce adherence to drugs for management of such chronic conditions as diabetes, hypercholesterolemia, hypertension and schizophrenia. Reduced drug adherence includes delaying prescription fills, failing to fill prescriptions, cutting dosages and reducing the frequency of administration.”

So what to do? The suggestions that come from the issue’s authors seem to coalesce around a three-pronged approach: 1. Insurance initiatives, 2. Delivery system initiatives, and 3. Social initiatives.

Insurance Initiatives: Paez and her co-authors conclude by suggesting, “Insurers should consider value-based insurance designs that subsidize high-value chronic care while increasing cost sharing for elective services without proven benefit.” Bodenheimer et. al. assert, “Payment reform should move toward risk-adjusted per patient payment for incentives for quality, services provided by nonclinician team members [more in that in a bit] and population oriented panel management.”

Delivery System Initiatives: Ron Goetzel from Emory University tees up the notion that some big gains, and major innovation, in prevention could be, and is being realized in nonclinical settings, such as the workplace. Gabel, et. al. study the success of attacking obesity in the workplace and suggest, while they have made gains, questions about the right way to fund the programs (paid benefit, reduced premium from carriers, employee responsibility, etc.) persist.

On this topic I was most interested in Bodenheimer, et. al. and their paper on “Confronting the Growing Burden of Chronic Disease: Can the U.S. Health Care Workforce Do the Job?” They present research that on average, “family physicians manage 3.05 problems per [patient] visit; the number of problems grows to 3.88 for people over age sixty-five and 4.6 for patients with diabetes.” This leads to two conclusions. 1. Under current reimbursement pressures, physicians simply don’t have enough time to spend with complicated patients, and 2. Specialists are inefficient tools for tackling these complicated patients because of the multiple systems and comorbidities that interact with one another (and their medications).

They find, “Specialists are better than PCPs at treating some specific diagnoses and can provided procedural interventions that PCPs are not trained to do. Yet PCPs, compared with specialists, provide equal quality of care at lower cost for patients with diabetes, hypertension and lower back pain.”

However, there are problems with the PCP model too. They report patients who are seen for multiple chronic conditions by PCPs report low understanding of their care and only 9 percent of the time do they participate in clinical decisions.

Then there’s the issue of time. “It has been estimated that it would take a PCP 10.6 hours per working day to provide high-quality chronic care to a typical patient panel.”

This leads the authors and other essayists to advance the multidisciplinary team scenario. Simply put, there is evidence a coordinated team approach, often lead by medical assistants or Nurse Practitioners as care quarterbacks are delivering better results at a better price. My question is, who will own this solution? All the evidence comes from controlled situations like the Group Health Cooperative of Puget Sound or Kaiser Permanente. In the fantasyland of the 1990’s, integrated delivery systems, receiving global capitation would be incentivized to force this kind of structural change. Without such a payment and delivery structure, this might become disintermediated to retail clinics…not necessarily more organized, just cheaper per encounter transactions.

Social Initiatives: Until chronic ill health, obesity, and “un-fitness” attain the stigma of drunk driving and smoking in public places, can we reasonably expect social forces to impact behavior? Borrowing from a colleague’s note, “Steven Gortmaker, professor of society, human development, and health at the [Harvard]School of Public Health, observes that the convenience-food culture is so ubiquitous that even conscientious parents have trouble steering their children away from junk food. "You let your kids go on a ‘play date,’" says
the father of two, "and they come home and say, ‘We went to Burger King for
lunch.’" (He notes that on any given day, 30 percent of American children
aged four to 19 eat fast food, and older and wealthier ones eat even more.
Overall, 7 percent of the U.S. population visits McDonald’s each day, and 20
to 25 percent eat in some kind of fast-food restaurant.)

Bodenheimer et. al. summarize it nicely when they conclude, “If payment restricted to face-to-face clinician visits continues as the dominant payment mode, high-quality chronic care will remain an unfulfilled dream…Without a multidisciplinary team, consistently good chronic care is impossible. Without payment reform, multidisciplinary teams are impossible.

And without societal disgust at a ballooning federal budget deficit, increased taxes and other hard choices regarding desired government programs, we’ll stay [seated of course] on this merry-go-round.

You're Fired.

2009-01-16T14:02:00.001-06:00

A friend recently asserted that 1-in-5 hospital CEO’s turnover every year. Truth is, it’s consistently been about 15% or 1-in-6.7, according to ACHE. My bold prediction for the new decade: That number jumps closer to my friend’s 20% figure, perhaps even higher. Why? Failure to anticipate the meteor.

I’m talking about the dinosaurs. They couldn’t have seen it coming, but man, when it hit, they were done. Like hospital CEO’s, even if TRex saw the meteor days, weeks, heck months before it hit, they were ill-equipped (short arms being what they are) to change their fate.

I’ve gotten back to IBM’s “Healthcare 2015: Win-win or lose-lose?” and the opening pages of “A portrait and a path to successful transformation” are sobering. IBM identifies three channels of transformation; 1. Transforming Value, 2. Transforming Consumer Responsibility, and 3. Transforming Care Delivery.

There are a myriad of ways to go from that jumping-off point, but a few consistent threads kept bringing me back to the structural centerpiece of the current US health system, the acute care, general hospital. Through this lense I perceive so much opportunity for failure that the demise of the hospital CEO appears nearly assured.

Inability to Transform Value. The cornerstone of this argument is that, by 2015, consumers will “assume much greater financial oversight and responsibility for their healthcare, which, in turn, will drive the demand for value data that is readily accessible, reliable and understandable. Payers will take a more holistic view of value…and [societies] will demand that payment for and quality of healthcare services be aligned to the value those services return both to the individual and to the country or region as a whole.”

My same friend correctly points out that hospitals are the last great bulwarks of information hoarding. Interoperability is something to which we award gold stars because it largely can’t be done. Hospitals have resisted all pressures for transparency that is “readily accessible, reliable and understandable.” They’ve even paid others to obfuscate the issue, such as HealthGrades, US News and World Report, Thompson-Reuters and Healthcare Compare. Once you’ve ceded ground it’s hard to get it back.

Prediction: Hospitals will wrestle this back, with the help of, perhaps, organizations like the Joint Commission (frankly, their biggest potential ally in the quest, because they have more useful information than anyone else), but I suspect the current leadership of hospitals won’t be the ones with the fortitude to do it.

Inability to Transform Consumer Responsibility. Well, this won’t really be the hospital CEO’s fault, but it will happen on the current batch’s watch. Personally, I think this will be the last thing to piece of the puzzle to fall into place, unless the financing mechanism becomes amazingly punitive for preventable, chronic conditions. How it gets hospital CEO’s is this: 1. Financing structures finally change to the point that bad behavior becomes really expensive for Joe Sixpack to maintain. 2. The financial pressure on patients changes their healthcare shopping habits – bearing more of the financial burden, they look to new (retail and other) delivery sites to get their act together. 3. Hospitals realize they are losing connections to customers and those formerly loyal patients begin heeding the advice of new mid-level providers (with no loyalty to the general hospital) in these new care settings. Desperate, they try to close the proverbial barn door after the horse is out. 4. Hospitals begin a scramble to re-engage with people with whom they should have never lost touch. 5. The turnover of hospital marketing directors begins, not because of this failure, but their likely inability to do anything about it. The tide of continued failure drags hospital CEO’s along.

Inability to Transform Care Delivery. Here’s the big one; the “fundamental shift in the nature, mode and means of care delivery.” I’ve gone on in the past about the issue of chronic care, and the current edition of Health Affairs redoubles the call for meaningful change in the US approach to 75%+ of the $2 trillion spent annually on chronic diseases. “Today, preventative care…is a concept without a champion…consumers ignore it, payers do not incentivize it, and providers do not profit from it.”

They go on, “by 2015, we believe chronic patients will be empowered to take control of their diseases through IT-enabled disease management programs that improve outcomes and lower costs. Their treatment will center on their location, thanks to home monitoring devices, which will automatically evaluate data and when needed generate alerts and action recommendations to patients and providers. Patients and their families, assisted by health infomediaries, will replace doctors as the leaders in chronic care management, a shift that will eliminate a major contributor to its cost and, because of doctor time constraints, its brevity.” Only a small, confident slice of visionary hospital leaders will involve themselves here.

This suggests a further decentralization of medical decision-making and authority, away from acute care hospitals. Economy and effectiveness will be described in terms that have less and less to do with general hospitals. IBM proposes this is an opportunity, “encourag[ing] the transformation of today’s massive, general purpose hospitals into centers of excellence devoted to specific conditions and combination triage centers.”

We can debate the pace and likelihood of such a massive transformation, but where I become most skeptical is the defensive mentality of most acute care organizations. “If I can just continue to steal enough heart surgeries from my competitor, I don’t have to do this integration, decentralization thing.” That sounds to me like Big Detroit Auto Thinking, and I believe those three bosses should be shown the door.

I think about the many ways hospital CEO’s will have to transform if the hospital is to remain a key player in the process (which their unique cash and debt position gives them power and influence), and question their track record. Regardless of the pace or ultimate magnitude of the shift, it surely seems hospitals will need to become:

More physically decentralized
More specialized
More integrated with physicians and a new class of mid-level providers
More non-acute focused and successful
More data integrated
More data transparent

And that seems like an unreasonably tall order. Necessary, but beyond many CEO’s grasps.

Oh, and you can follow me on Twitter. I’m dmiers!

Reform Is Coming

2009-01-12T13:53:00.002-06:00

Two particularly interesting and important things happened at the end of last week. One, as reported by the New York Times (“Daschle Lays Out a Plan to Overhaul Healthcare”), was presumptive Health Czar Tom Daschle’s visit to friendly confines of the US Senate to chitchat about reform. The article reports he appeared fluent on the topic, didn’t need to resort to notes and enjoyed a very favorable reception from his former colleagues. Granted, it seems he wasn’t thrown too many hardballs, but his message was quite clear: “as we face a harsh and deep recession, the problem of the uninsured is likely to grow.” Acknowledging criticisms of the failed 1994 attempt to address the systems shortcomings, Mr. Daschle asserted, “The[y] are good arguments for undertaking reform in a way that is aggressive, open and responsive to Americans’ concerns,” he said. “They are not good arguments for ignoring the problem.”

While many, like Jeff Goldsmith, had suggested a go-slow approach on health reform, it appears clear something more aggressive will happen. The Administration will join the growing chorus of proposals gathering for consideration and vote.

Which leads to the other item that appeared on Friday. The Commonwealth Fund Commission on a High Performance Health System issues their analysis (part I of II) of Leading Congressional Health Care Bills. It’s an interesting tome and a surprisingly fast read. Admittedly, I have spent the most time on the section dealing with mixed private-public insurance with a shared responsibility for financing advanced through proposals by President-elect, Senator Max Baucus and the “Building Blocks” plan offered by the Commonwealth Fund itself. Ego being what it is, I assume the bill that finally goes to the floors of Congress for debate, vote and conferencing will resemble the President’s view of the universe. He is the “Noun” to the verb “Change.” He gets to claim victory and credit (and, if necessary, blame).

The details of the proposal are fairly clear and widely available. Two items jumped out at me though which are worth mention.

First, Figure 3 of the report compares US Population by Primary Source of Insurance under Current Law and Proposals, 2010. Under the Obama-Baucus-Building Blocks (OBBB) model, the Employer Sponsored insurance market is projected to change very little. – covering 49% of all Americans, down from 53% currently. I personally found that small shift surprising. in the election, the Doom-And-Gloomers often said that if the Goverment was providing and "out" employers would take it. Guess not.

The Connector – the new mechanism that will be the market-maker for insuring the currently uninsured and which is also expected to pick up some people currently covered by Medicaid – will become the third largest “insurer” at an estimate 19% of the population, behind Medicaid/SCHIP (45%) and just ahead of Medicare (10%).

It is expected, in this model, that providers would receive Medicare rates for people insured under the Connector, so Medicare’s fee schedule would cover 29% of the population. An intriguing question. Can hospital operators profitably serve a third of their patient population at Medicare rates? Maybe more intriguing is the financing aspect of the OBBB plan that places a 4 percent assessment on hospital gross revenues and 2 percent on physician revenues to partially fund the expansion of access. Gross revenues, not net. This is an interesting kettle of fish; a tax dressed up in sheep’s clothing. It could certainly impact hospital pricing strategies. I foresee an abundance of multivariate analyses calculating how much prices could increase and still deliver bottom line benefit in excess of new taxes.

Beyond the fun questions of profitable business management and pricing strategies, the bigger question that bubbled up was the issue of tax-exempt status. Once you’ve started to tax, it’s hard to stop.

So if the total uninsured burden on the US economy drops to 1% of the population (4 million people) and the care for 78% of all citizens is paid at Medicare rates or better, what becomes of hospitals’ charitable missions? Losses on serving Medicaid, providing medical education, and under/unfunded research burdens can’t justify millions of dollars of foregone state and local tax receipts. Even if they were to receive credit for the assessments that help fund the Connector program, it seems hospitals will be exposed to a significant, non-defensible assault.

I won’t argue that this is a bad thing. I can imagine a provider revenue boom (not to mention savings in collections, something hosptials particularly stink at). As a marketer, in a land of taxable hospitals, I see incredible marketing opportunities – grow sales at all costs to spread fixed costs across more cases and drive marginal revenue. Relieved of the burden of the uninsured/no-pay patients, does a new “Wild West” of health care competition emerge? Puzzling questions I don’t have full ideas on yet.

But if I were a gambling man, I’d continue to put chips down on “Change.”

“Changes aren’t permanent, but change is.”

Happy Holidays - Hug Your Health System!

2008-12-18T22:25:00.002-06:00

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!

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

2008-12-09T11:07:00.002-06:00

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."

Huh?

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’être 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:

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 patient experience, differentiating itself on the quality of its service.
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…

I Can't Believe the News Today

2008-11-20T09:02:00.002-06:00

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…

Of Delivery Models. Competencies and Personal Responsibility

2008-11-18T09:34:00.002-06:00

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!

All Things to All People All the Time

2008-11-14T10:26:00.002-06:00

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.

The Marginalization of the Healthcare Marketer

2008-11-13T10:32:00.002-06:00

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.

Tough Travel Day

2008-11-11T22:38:00.000-06:00

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

Stay tuned!

Last Time, I Promise (for a while anyway)

2008-11-10T10:06:00.001-06:00

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.

Life as a House

2008-11-07T09:44:00.003-06:00

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.

Good for the Ego

2008-11-06T10:05:00.002-06:00

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.

Yes We Did

2008-11-05T09:45:00.002-06:00

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.

The Lost Day

2008-11-04T10:28:00.004-06:00

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 this...no matter the fun of the excuse!