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.
Thursday, June 4, 2009
Monday, June 1, 2009
It's Geek Time!
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!!
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!!
Tuesday, May 26, 2009
Planning for Quality
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 Commission’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?
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 Commission’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?
Tuesday, May 19, 2009
Everybody Pays
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.
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.
Friday, April 24, 2009
Not So Fast (Part I)
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.
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.
Wednesday, April 15, 2009
Healthcare Wisdom from 'Dancing with the Stars'
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”?
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”?
Monday, April 13, 2009
A Safety Net?
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.
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.
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