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.
Thursday, July 23, 2009
Tuesday, July 21, 2009
Getting Back To Things
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
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
Tuesday, July 7, 2009
How Big is 1 Trillion?
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.
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.
Friday, June 26, 2009
Of Real and Virtual People
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.
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.
Tuesday, June 16, 2009
Wow!
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….
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….
Wednesday, June 10, 2009
Required Reading
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.
“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.
Monday, June 8, 2009
Evolution or De-volution?
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?
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?
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