I don’t know why, but I can’t stop reading about, thinking about, and writing about Chronic Illness Care. The latest edition of Health Affairs focuses on the topic with a number of great essays. I won’t cite them individually, but there are a number worth reading.
I’m also a sucker for a great opening. Health Affairs' Editor-In-Chief kicks it all off with this doozy, “As in many things in health care and health spending, American “exceptionalism” is the rule. The United States is doing an especially rotten job of delivering chronic care, at spectacular cost.” How can you not read on?
She cites a November 2008 Commonwealth Fund survey of 7,500 chronically ill patients in eight countries, including the US, UK and Germany that found “US patients are far more likely than those in the other countries to report high out-of-pocket costs; to forgo care due to the expense; and to experience high rates of medical errors.” The study also found that the care systems in these countries were likely to fall short in delivering chronic care, with care coordination lacking everywhere.
In one essay, Paez, et. al. report, “In 2005, 43.8 percent of the US civilian noninstitutionalized population had one or more conditions that we classified as chronic. One in five reported living with one chronic condition while 10.7 percent of respondents reported two conditions, and 13.3 percent had three or more conditions.” Further, “An overall shift occurred from people reporting zero or only one chronic condition to people reporting multiple chronic conditions, particularly among people in midlife [45-64] and older.” Especially interesting to me was that socioeconomic status was not as correlated to increases in chronic conditions as you’d intuitively expect. From 1999 to 2005 the percentage of people with three or more chronic conditions grew 5.6% among the Poor, 5.5% among those categorized as Middle Income, and 6.7% among High Income individuals.
Beyond the incidence data, the question of prevention and treatment looms. Paez and her partners reported, “Higher drug copayments and three-tier pharmacy plans have been found to reduce adherence to drugs for management of such chronic conditions as diabetes, hypercholesterolemia, hypertension and schizophrenia. Reduced drug adherence includes delaying prescription fills, failing to fill prescriptions, cutting dosages and reducing the frequency of administration.”
So what to do? The suggestions that come from the issue’s authors seem to coalesce around a three-pronged approach: 1. Insurance initiatives, 2. Delivery system initiatives, and 3. Social initiatives.
Insurance Initiatives: Paez and her co-authors conclude by suggesting, “Insurers should consider value-based insurance designs that subsidize high-value chronic care while increasing cost sharing for elective services without proven benefit.” Bodenheimer et. al. assert, “Payment reform should move toward risk-adjusted per patient payment for incentives for quality, services provided by nonclinician team members [more in that in a bit] and population oriented panel management.”
Delivery System Initiatives: Ron Goetzel from Emory University tees up the notion that some big gains, and major innovation, in prevention could be, and is being realized in nonclinical settings, such as the workplace. Gabel, et. al. study the success of attacking obesity in the workplace and suggest, while they have made gains, questions about the right way to fund the programs (paid benefit, reduced premium from carriers, employee responsibility, etc.) persist.
On this topic I was most interested in Bodenheimer, et. al. and their paper on “Confronting the Growing Burden of Chronic Disease: Can the U.S. Health Care Workforce Do the Job?” They present research that on average, “family physicians manage 3.05 problems per [patient] visit; the number of problems grows to 3.88 for people over age sixty-five and 4.6 for patients with diabetes.” This leads to two conclusions. 1. Under current reimbursement pressures, physicians simply don’t have enough time to spend with complicated patients, and 2. Specialists are inefficient tools for tackling these complicated patients because of the multiple systems and comorbidities that interact with one another (and their medications).
They find, “Specialists are better than PCPs at treating some specific diagnoses and can provided procedural interventions that PCPs are not trained to do. Yet PCPs, compared with specialists, provide equal quality of care at lower cost for patients with diabetes, hypertension and lower back pain.”
However, there are problems with the PCP model too. They report patients who are seen for multiple chronic conditions by PCPs report low understanding of their care and only 9 percent of the time do they participate in clinical decisions.
Then there’s the issue of time. “It has been estimated that it would take a PCP 10.6 hours per working day to provide high-quality chronic care to a typical patient panel.”
This leads the authors and other essayists to advance the multidisciplinary team scenario. Simply put, there is evidence a coordinated team approach, often lead by medical assistants or Nurse Practitioners as care quarterbacks are delivering better results at a better price. My question is, who will own this solution? All the evidence comes from controlled situations like the Group Health Cooperative of Puget Sound or Kaiser Permanente. In the fantasyland of the 1990’s, integrated delivery systems, receiving global capitation would be incentivized to force this kind of structural change. Without such a payment and delivery structure, this might become disintermediated to retail clinics…not necessarily more organized, just cheaper per encounter transactions.
Social Initiatives: Until chronic ill health, obesity, and “un-fitness” attain the stigma of drunk driving and smoking in public places, can we reasonably expect social forces to impact behavior? Borrowing from a colleague’s note, “Steven Gortmaker, professor of society, human development, and health at the [Harvard]School of Public Health, observes that the convenience-food culture is so ubiquitous that even conscientious parents have trouble steering their children away from junk food. "You let your kids go on a ‘play date,’" says
the father of two, "and they come home and say, ‘We went to Burger King for
lunch.’" (He notes that on any given day, 30 percent of American children
aged four to 19 eat fast food, and older and wealthier ones eat even more.
Overall, 7 percent of the U.S. population visits McDonald’s each day, and 20
to 25 percent eat in some kind of fast-food restaurant.)
Bodenheimer et. al. summarize it nicely when they conclude, “If payment restricted to face-to-face clinician visits continues as the dominant payment mode, high-quality chronic care will remain an unfulfilled dream…Without a multidisciplinary team, consistently good chronic care is impossible. Without payment reform, multidisciplinary teams are impossible.
And without societal disgust at a ballooning federal budget deficit, increased taxes and other hard choices regarding desired government programs, we’ll stay [seated of course] on this merry-go-round.
Tuesday, January 27, 2009
Friday, January 16, 2009
You're Fired.
A friend recently asserted that 1-in-5 hospital CEO’s turnover every year. Truth is, it’s consistently been about 15% or 1-in-6.7, according to ACHE. My bold prediction for the new decade: That number jumps closer to my friend’s 20% figure, perhaps even higher. Why? Failure to anticipate the meteor.
I’m talking about the dinosaurs. They couldn’t have seen it coming, but man, when it hit, they were done. Like hospital CEO’s, even if TRex saw the meteor days, weeks, heck months before it hit, they were ill-equipped (short arms being what they are) to change their fate.
I’ve gotten back to IBM’s “Healthcare 2015: Win-win or lose-lose?” and the opening pages of “A portrait and a path to successful transformation” are sobering. IBM identifies three channels of transformation; 1. Transforming Value, 2. Transforming Consumer Responsibility, and 3. Transforming Care Delivery.
There are a myriad of ways to go from that jumping-off point, but a few consistent threads kept bringing me back to the structural centerpiece of the current US health system, the acute care, general hospital. Through this lense I perceive so much opportunity for failure that the demise of the hospital CEO appears nearly assured.
Inability to Transform Value. The cornerstone of this argument is that, by 2015, consumers will “assume much greater financial oversight and responsibility for their healthcare, which, in turn, will drive the demand for value data that is readily accessible, reliable and understandable. Payers will take a more holistic view of value…and [societies] will demand that payment for and quality of healthcare services be aligned to the value those services return both to the individual and to the country or region as a whole.”
My same friend correctly points out that hospitals are the last great bulwarks of information hoarding. Interoperability is something to which we award gold stars because it largely can’t be done. Hospitals have resisted all pressures for transparency that is “readily accessible, reliable and understandable.” They’ve even paid others to obfuscate the issue, such as HealthGrades, US News and World Report, Thompson-Reuters and Healthcare Compare. Once you’ve ceded ground it’s hard to get it back.
Prediction: Hospitals will wrestle this back, with the help of, perhaps, organizations like the Joint Commission (frankly, their biggest potential ally in the quest, because they have more useful information than anyone else), but I suspect the current leadership of hospitals won’t be the ones with the fortitude to do it.
Inability to Transform Consumer Responsibility. Well, this won’t really be the hospital CEO’s fault, but it will happen on the current batch’s watch. Personally, I think this will be the last thing to piece of the puzzle to fall into place, unless the financing mechanism becomes amazingly punitive for preventable, chronic conditions. How it gets hospital CEO’s is this: 1. Financing structures finally change to the point that bad behavior becomes really expensive for Joe Sixpack to maintain. 2. The financial pressure on patients changes their healthcare shopping habits – bearing more of the financial burden, they look to new (retail and other) delivery sites to get their act together. 3. Hospitals realize they are losing connections to customers and those formerly loyal patients begin heeding the advice of new mid-level providers (with no loyalty to the general hospital) in these new care settings. Desperate, they try to close the proverbial barn door after the horse is out. 4. Hospitals begin a scramble to re-engage with people with whom they should have never lost touch. 5. The turnover of hospital marketing directors begins, not because of this failure, but their likely inability to do anything about it. The tide of continued failure drags hospital CEO’s along.
Inability to Transform Care Delivery. Here’s the big one; the “fundamental shift in the nature, mode and means of care delivery.” I’ve gone on in the past about the issue of chronic care, and the current edition of Health Affairs redoubles the call for meaningful change in the US approach to 75%+ of the $2 trillion spent annually on chronic diseases. “Today, preventative care…is a concept without a champion…consumers ignore it, payers do not incentivize it, and providers do not profit from it.”
They go on, “by 2015, we believe chronic patients will be empowered to take control of their diseases through IT-enabled disease management programs that improve outcomes and lower costs. Their treatment will center on their location, thanks to home monitoring devices, which will automatically evaluate data and when needed generate alerts and action recommendations to patients and providers. Patients and their families, assisted by health infomediaries, will replace doctors as the leaders in chronic care management, a shift that will eliminate a major contributor to its cost and, because of doctor time constraints, its brevity.” Only a small, confident slice of visionary hospital leaders will involve themselves here.
This suggests a further decentralization of medical decision-making and authority, away from acute care hospitals. Economy and effectiveness will be described in terms that have less and less to do with general hospitals. IBM proposes this is an opportunity, “encourag[ing] the transformation of today’s massive, general purpose hospitals into centers of excellence devoted to specific conditions and combination triage centers.”
We can debate the pace and likelihood of such a massive transformation, but where I become most skeptical is the defensive mentality of most acute care organizations. “If I can just continue to steal enough heart surgeries from my competitor, I don’t have to do this integration, decentralization thing.” That sounds to me like Big Detroit Auto Thinking, and I believe those three bosses should be shown the door.
I think about the many ways hospital CEO’s will have to transform if the hospital is to remain a key player in the process (which their unique cash and debt position gives them power and influence), and question their track record. Regardless of the pace or ultimate magnitude of the shift, it surely seems hospitals will need to become:
And that seems like an unreasonably tall order. Necessary, but beyond many CEO’s grasps.
Oh, and you can follow me on Twitter. I’m dmiers!
I’m talking about the dinosaurs. They couldn’t have seen it coming, but man, when it hit, they were done. Like hospital CEO’s, even if TRex saw the meteor days, weeks, heck months before it hit, they were ill-equipped (short arms being what they are) to change their fate.
I’ve gotten back to IBM’s “Healthcare 2015: Win-win or lose-lose?” and the opening pages of “A portrait and a path to successful transformation” are sobering. IBM identifies three channels of transformation; 1. Transforming Value, 2. Transforming Consumer Responsibility, and 3. Transforming Care Delivery.
There are a myriad of ways to go from that jumping-off point, but a few consistent threads kept bringing me back to the structural centerpiece of the current US health system, the acute care, general hospital. Through this lense I perceive so much opportunity for failure that the demise of the hospital CEO appears nearly assured.
Inability to Transform Value. The cornerstone of this argument is that, by 2015, consumers will “assume much greater financial oversight and responsibility for their healthcare, which, in turn, will drive the demand for value data that is readily accessible, reliable and understandable. Payers will take a more holistic view of value…and [societies] will demand that payment for and quality of healthcare services be aligned to the value those services return both to the individual and to the country or region as a whole.”
My same friend correctly points out that hospitals are the last great bulwarks of information hoarding. Interoperability is something to which we award gold stars because it largely can’t be done. Hospitals have resisted all pressures for transparency that is “readily accessible, reliable and understandable.” They’ve even paid others to obfuscate the issue, such as HealthGrades, US News and World Report, Thompson-Reuters and Healthcare Compare. Once you’ve ceded ground it’s hard to get it back.
Prediction: Hospitals will wrestle this back, with the help of, perhaps, organizations like the Joint Commission (frankly, their biggest potential ally in the quest, because they have more useful information than anyone else), but I suspect the current leadership of hospitals won’t be the ones with the fortitude to do it.
Inability to Transform Consumer Responsibility. Well, this won’t really be the hospital CEO’s fault, but it will happen on the current batch’s watch. Personally, I think this will be the last thing to piece of the puzzle to fall into place, unless the financing mechanism becomes amazingly punitive for preventable, chronic conditions. How it gets hospital CEO’s is this: 1. Financing structures finally change to the point that bad behavior becomes really expensive for Joe Sixpack to maintain. 2. The financial pressure on patients changes their healthcare shopping habits – bearing more of the financial burden, they look to new (retail and other) delivery sites to get their act together. 3. Hospitals realize they are losing connections to customers and those formerly loyal patients begin heeding the advice of new mid-level providers (with no loyalty to the general hospital) in these new care settings. Desperate, they try to close the proverbial barn door after the horse is out. 4. Hospitals begin a scramble to re-engage with people with whom they should have never lost touch. 5. The turnover of hospital marketing directors begins, not because of this failure, but their likely inability to do anything about it. The tide of continued failure drags hospital CEO’s along.
Inability to Transform Care Delivery. Here’s the big one; the “fundamental shift in the nature, mode and means of care delivery.” I’ve gone on in the past about the issue of chronic care, and the current edition of Health Affairs redoubles the call for meaningful change in the US approach to 75%+ of the $2 trillion spent annually on chronic diseases. “Today, preventative care…is a concept without a champion…consumers ignore it, payers do not incentivize it, and providers do not profit from it.”
They go on, “by 2015, we believe chronic patients will be empowered to take control of their diseases through IT-enabled disease management programs that improve outcomes and lower costs. Their treatment will center on their location, thanks to home monitoring devices, which will automatically evaluate data and when needed generate alerts and action recommendations to patients and providers. Patients and their families, assisted by health infomediaries, will replace doctors as the leaders in chronic care management, a shift that will eliminate a major contributor to its cost and, because of doctor time constraints, its brevity.” Only a small, confident slice of visionary hospital leaders will involve themselves here.
This suggests a further decentralization of medical decision-making and authority, away from acute care hospitals. Economy and effectiveness will be described in terms that have less and less to do with general hospitals. IBM proposes this is an opportunity, “encourag[ing] the transformation of today’s massive, general purpose hospitals into centers of excellence devoted to specific conditions and combination triage centers.”
We can debate the pace and likelihood of such a massive transformation, but where I become most skeptical is the defensive mentality of most acute care organizations. “If I can just continue to steal enough heart surgeries from my competitor, I don’t have to do this integration, decentralization thing.” That sounds to me like Big Detroit Auto Thinking, and I believe those three bosses should be shown the door.
I think about the many ways hospital CEO’s will have to transform if the hospital is to remain a key player in the process (which their unique cash and debt position gives them power and influence), and question their track record. Regardless of the pace or ultimate magnitude of the shift, it surely seems hospitals will need to become:
- More physically decentralized
- More specialized
- More integrated with physicians and a new class of mid-level providers
- More non-acute focused and successful
- More data integrated
- More data transparent
And that seems like an unreasonably tall order. Necessary, but beyond many CEO’s grasps.
Oh, and you can follow me on Twitter. I’m dmiers!
Monday, January 12, 2009
Reform Is Coming
Two particularly interesting and important things happened at the end of last week. One, as reported by the New York Times (“Daschle Lays Out a Plan to Overhaul Healthcare”), was presumptive Health Czar Tom Daschle’s visit to friendly confines of the US Senate to chitchat about reform. The article reports he appeared fluent on the topic, didn’t need to resort to notes and enjoyed a very favorable reception from his former colleagues. Granted, it seems he wasn’t thrown too many hardballs, but his message was quite clear: “as we face a harsh and deep recession, the problem of the uninsured is likely to grow.” Acknowledging criticisms of the failed 1994 attempt to address the systems shortcomings, Mr. Daschle asserted, “The[y] are good arguments for undertaking reform in a way that is aggressive, open and responsive to Americans’ concerns,” he said. “They are not good arguments for ignoring the problem.”
While many, like Jeff Goldsmith, had suggested a go-slow approach on health reform, it appears clear something more aggressive will happen. The Administration will join the growing chorus of proposals gathering for consideration and vote.
Which leads to the other item that appeared on Friday. The Commonwealth Fund Commission on a High Performance Health System issues their analysis (part I of II) of Leading Congressional Health Care Bills. It’s an interesting tome and a surprisingly fast read. Admittedly, I have spent the most time on the section dealing with mixed private-public insurance with a shared responsibility for financing advanced through proposals by President-elect, Senator Max Baucus and the “Building Blocks” plan offered by the Commonwealth Fund itself. Ego being what it is, I assume the bill that finally goes to the floors of Congress for debate, vote and conferencing will resemble the President’s view of the universe. He is the “Noun” to the verb “Change.” He gets to claim victory and credit (and, if necessary, blame).
The details of the proposal are fairly clear and widely available. Two items jumped out at me though which are worth mention.
First, Figure 3 of the report compares US Population by Primary Source of Insurance under Current Law and Proposals, 2010. Under the Obama-Baucus-Building Blocks (OBBB) model, the Employer Sponsored insurance market is projected to change very little. – covering 49% of all Americans, down from 53% currently. I personally found that small shift surprising. in the election, the Doom-And-Gloomers often said that if the Goverment was providing and "out" employers would take it. Guess not.
The Connector – the new mechanism that will be the market-maker for insuring the currently uninsured and which is also expected to pick up some people currently covered by Medicaid – will become the third largest “insurer” at an estimate 19% of the population, behind Medicaid/SCHIP (45%) and just ahead of Medicare (10%).
It is expected, in this model, that providers would receive Medicare rates for people insured under the Connector, so Medicare’s fee schedule would cover 29% of the population. An intriguing question. Can hospital operators profitably serve a third of their patient population at Medicare rates? Maybe more intriguing is the financing aspect of the OBBB plan that places a 4 percent assessment on hospital gross revenues and 2 percent on physician revenues to partially fund the expansion of access. Gross revenues, not net. This is an interesting kettle of fish; a tax dressed up in sheep’s clothing. It could certainly impact hospital pricing strategies. I foresee an abundance of multivariate analyses calculating how much prices could increase and still deliver bottom line benefit in excess of new taxes.
Beyond the fun questions of profitable business management and pricing strategies, the bigger question that bubbled up was the issue of tax-exempt status. Once you’ve started to tax, it’s hard to stop.
So if the total uninsured burden on the US economy drops to 1% of the population (4 million people) and the care for 78% of all citizens is paid at Medicare rates or better, what becomes of hospitals’ charitable missions? Losses on serving Medicaid, providing medical education, and under/unfunded research burdens can’t justify millions of dollars of foregone state and local tax receipts. Even if they were to receive credit for the assessments that help fund the Connector program, it seems hospitals will be exposed to a significant, non-defensible assault.
I won’t argue that this is a bad thing. I can imagine a provider revenue boom (not to mention savings in collections, something hosptials particularly stink at). As a marketer, in a land of taxable hospitals, I see incredible marketing opportunities – grow sales at all costs to spread fixed costs across more cases and drive marginal revenue. Relieved of the burden of the uninsured/no-pay patients, does a new “Wild West” of health care competition emerge? Puzzling questions I don’t have full ideas on yet.
But if I were a gambling man, I’d continue to put chips down on “Change.”
“Changes aren’t permanent, but change is.”
While many, like Jeff Goldsmith, had suggested a go-slow approach on health reform, it appears clear something more aggressive will happen. The Administration will join the growing chorus of proposals gathering for consideration and vote.
Which leads to the other item that appeared on Friday. The Commonwealth Fund Commission on a High Performance Health System issues their analysis (part I of II) of Leading Congressional Health Care Bills. It’s an interesting tome and a surprisingly fast read. Admittedly, I have spent the most time on the section dealing with mixed private-public insurance with a shared responsibility for financing advanced through proposals by President-elect, Senator Max Baucus and the “Building Blocks” plan offered by the Commonwealth Fund itself. Ego being what it is, I assume the bill that finally goes to the floors of Congress for debate, vote and conferencing will resemble the President’s view of the universe. He is the “Noun” to the verb “Change.” He gets to claim victory and credit (and, if necessary, blame).
The details of the proposal are fairly clear and widely available. Two items jumped out at me though which are worth mention.
First, Figure 3 of the report compares US Population by Primary Source of Insurance under Current Law and Proposals, 2010. Under the Obama-Baucus-Building Blocks (OBBB) model, the Employer Sponsored insurance market is projected to change very little. – covering 49% of all Americans, down from 53% currently. I personally found that small shift surprising. in the election, the Doom-And-Gloomers often said that if the Goverment was providing and "out" employers would take it. Guess not.
The Connector – the new mechanism that will be the market-maker for insuring the currently uninsured and which is also expected to pick up some people currently covered by Medicaid – will become the third largest “insurer” at an estimate 19% of the population, behind Medicaid/SCHIP (45%) and just ahead of Medicare (10%).
It is expected, in this model, that providers would receive Medicare rates for people insured under the Connector, so Medicare’s fee schedule would cover 29% of the population. An intriguing question. Can hospital operators profitably serve a third of their patient population at Medicare rates? Maybe more intriguing is the financing aspect of the OBBB plan that places a 4 percent assessment on hospital gross revenues and 2 percent on physician revenues to partially fund the expansion of access. Gross revenues, not net. This is an interesting kettle of fish; a tax dressed up in sheep’s clothing. It could certainly impact hospital pricing strategies. I foresee an abundance of multivariate analyses calculating how much prices could increase and still deliver bottom line benefit in excess of new taxes.
Beyond the fun questions of profitable business management and pricing strategies, the bigger question that bubbled up was the issue of tax-exempt status. Once you’ve started to tax, it’s hard to stop.
So if the total uninsured burden on the US economy drops to 1% of the population (4 million people) and the care for 78% of all citizens is paid at Medicare rates or better, what becomes of hospitals’ charitable missions? Losses on serving Medicaid, providing medical education, and under/unfunded research burdens can’t justify millions of dollars of foregone state and local tax receipts. Even if they were to receive credit for the assessments that help fund the Connector program, it seems hospitals will be exposed to a significant, non-defensible assault.
I won’t argue that this is a bad thing. I can imagine a provider revenue boom (not to mention savings in collections, something hosptials particularly stink at). As a marketer, in a land of taxable hospitals, I see incredible marketing opportunities – grow sales at all costs to spread fixed costs across more cases and drive marginal revenue. Relieved of the burden of the uninsured/no-pay patients, does a new “Wild West” of health care competition emerge? Puzzling questions I don’t have full ideas on yet.
But if I were a gambling man, I’d continue to put chips down on “Change.”
“Changes aren’t permanent, but change is.”
Thursday, December 18, 2008
Happy Holidays - Hug Your Health System!
This Propeller Head is out of the country on personal business until the New Year. While I am keeping up on the news, I won't have time to post.
Look for the propeller to begin spinning again at high speed come January 11, 2009. With just 9 days before the inauguration there will certainly be a lot to follow.
Be safe and happy!
Look for the propeller to begin spinning again at high speed come January 11, 2009. With just 9 days before the inauguration there will certainly be a lot to follow.
Be safe and happy!
Tuesday, December 9, 2008
Low-Cost and High-Quality: An Ill-Considered Goal?
Sometimes synergy just jumps right up out of bed in smacks you across the face.
A while back I started plowing through the IBM Healthcare 2015 documents – and even posted an entry about their opening concepts of the role of delivery networks and personal responsibility in improving health and reducing cost.
The next place I was intending to go was an interesting expansion of the discussion about the various types of healthcare delivery organizations that might emerge from an evolved healthcare ecosystem. IBM titles this conversation, “New Models, New Competencies – Recommendations for Care Providers,” and sets out to challenge the traditional approach of hospitals/care delivery organizations (CDOs) operating under “broad and abstract targets” attempting to be all things to all people and still compete effectively.
If you buy that premise, and I’ve seen little evidence to the contrary, you are quickly lured into a seemingly irrational conversation – the infamous “Low-Cost, High-Quality” debate. That’s where synergy comes in. This morning I finally got caught up on some email and one of the articles in the inbox was a HealthLeaders editorial with the intriguing title, “Improving Your Way to Oblivion.” It’s a rhapsody that echoes the all-to-common strains of the reform debate. How can health care costs continue to rise at meteoric rates without unacceptably crippling the national economy? A reasonable question, and one I’ve puzzled over here before. It seems every time I read something that digs into this question though, the punch line is the same…CDOs must improve themselves so they deliver top-notch quality while constantly pushing costs lower and lower.
The HealthLeader’s author, Philip Betbeze, writes, “[this] is why my panelists from HealthLeaders Media's Top Leadership Teams event are so focused on improving by cutting the cost of care. That's right, they see their long-term survival in being among the low-cost leaders—a counterintuitive concept in an industry that has the power of inelasticity of demand.” He goes on to quote Jeff Thompson, CEO of Gundersen Lutheran Health System in La Crosse, WI – identified by the Dartmouth Atlas as one of America’s highest quality, lowest cost institutions - "The ultimate prize is making the cost not only low enough to compete but to improve health of communities."
Huh?
Our cars will be safer and more fuel efficient if we make them less expensive to produce.
Buy that?
Now, call off the dogs. I understand the principles of efficiency, process improvement and eliminating waste. And yes, since it’s only been 20 years since prospective payment, hospitals are still working on becoming lean operations. But it seems to me this is a flawed philosophy.
The argument goes that, if we make the provision of care efficient based on demonstrated best practices, it will free up dollars in the system to reinvest in prevention and population health. Research from all corners suggests efficiency and cost gains can be made without impacting quality – heck even moving mediocre providers up the quality chain. All good things.
My concern is that this view perpetuates the organizing principle of “all things to all citizens.” To the best of my imagination, no other industry on earth – beyond public utilities, and is that the desired endgame for CDOs? – operates this way. The closest proxy is air travel, where everyone, except Southwest and JetBlue, believe their raison d’être is to provide cheap, economy air travel with perks and premiums for more desirable clients; simultaneously advancing positioning of egalitarian utilitarianism with premium-quality snob appeal. At least the Chrysler K car admitted it was a K car!
It seems to me that model isn’t working for airlines and it won’t work in healthcare. Alternatively, the wonks at IBM suggest CDOs intentionally migrate to one of four delivery models:
The next step in this discussion goes to what IBM labels the Five Strategic Competencies and how they work in different proportions in each model. That’s a conversation for another day.
My question for today is, what would it take to get there? I work under the hypothesis that a minority of US hospitals can truly achieve Low-Cost, High-Quality, and in the attempted pursuit of the panacea-ic goal we’ll end up with some distribution of High-Cost, High-Quality (the Unabashed Dominants), Lower-Cost, Moderately-High Quality (the Model Tertiary Community Hospital), Mid-Cost, Mid-Quality (the Fat Risky Middle), and the Barely-to-Unprofitable Basically Safe (the Yugos). In this scenario, I imagine most Americans receiving healthcare in one of the two last categories. Success!! Not.
The problem is that the reimbursement structure, as it currently exists is discussed as Obama-Care begins to shape up, seems to not jive with the IBM vision of intentional, specialized care models. That is the next thorny question, and one I believe they address in the next chapter of the tome. I’ll get to that.
So, am I just too jaded to believe we can build a network of Southwest Airlines hospitals from sea to shining sea? I have a hunch, A. We can’t and B. It’s not a good goal.
More to come…
A while back I started plowing through the IBM Healthcare 2015 documents – and even posted an entry about their opening concepts of the role of delivery networks and personal responsibility in improving health and reducing cost.
The next place I was intending to go was an interesting expansion of the discussion about the various types of healthcare delivery organizations that might emerge from an evolved healthcare ecosystem. IBM titles this conversation, “New Models, New Competencies – Recommendations for Care Providers,” and sets out to challenge the traditional approach of hospitals/care delivery organizations (CDOs) operating under “broad and abstract targets” attempting to be all things to all people and still compete effectively.
If you buy that premise, and I’ve seen little evidence to the contrary, you are quickly lured into a seemingly irrational conversation – the infamous “Low-Cost, High-Quality” debate. That’s where synergy comes in. This morning I finally got caught up on some email and one of the articles in the inbox was a HealthLeaders editorial with the intriguing title, “Improving Your Way to Oblivion.” It’s a rhapsody that echoes the all-to-common strains of the reform debate. How can health care costs continue to rise at meteoric rates without unacceptably crippling the national economy? A reasonable question, and one I’ve puzzled over here before. It seems every time I read something that digs into this question though, the punch line is the same…CDOs must improve themselves so they deliver top-notch quality while constantly pushing costs lower and lower.
The HealthLeader’s author, Philip Betbeze, writes, “[this] is why my panelists from HealthLeaders Media's Top Leadership Teams event are so focused on improving by cutting the cost of care. That's right, they see their long-term survival in being among the low-cost leaders—a counterintuitive concept in an industry that has the power of inelasticity of demand.” He goes on to quote Jeff Thompson, CEO of Gundersen Lutheran Health System in La Crosse, WI – identified by the Dartmouth Atlas as one of America’s highest quality, lowest cost institutions - "The ultimate prize is making the cost not only low enough to compete but to improve health of communities."
Huh?
Our cars will be safer and more fuel efficient if we make them less expensive to produce.
Buy that?
Now, call off the dogs. I understand the principles of efficiency, process improvement and eliminating waste. And yes, since it’s only been 20 years since prospective payment, hospitals are still working on becoming lean operations. But it seems to me this is a flawed philosophy.
The argument goes that, if we make the provision of care efficient based on demonstrated best practices, it will free up dollars in the system to reinvest in prevention and population health. Research from all corners suggests efficiency and cost gains can be made without impacting quality – heck even moving mediocre providers up the quality chain. All good things.
My concern is that this view perpetuates the organizing principle of “all things to all citizens.” To the best of my imagination, no other industry on earth – beyond public utilities, and is that the desired endgame for CDOs? – operates this way. The closest proxy is air travel, where everyone, except Southwest and JetBlue, believe their raison d’être is to provide cheap, economy air travel with perks and premiums for more desirable clients; simultaneously advancing positioning of egalitarian utilitarianism with premium-quality snob appeal. At least the Chrysler K car admitted it was a K car!
It seems to me that model isn’t working for airlines and it won’t work in healthcare. Alternatively, the wonks at IBM suggest CDOs intentionally migrate to one of four delivery models:
- Community Health Networks, focusing on optimizing access across a defined geography.
- Centers of Excellence, focusing on optimizing clinical quality and safety for specific medical conditions.
- Medical Concierges, focusing on optimizing patient experience, differentiating itself on the quality of its service.
- Price Leaders, focusing on optimizing productivity and workflow.
The next step in this discussion goes to what IBM labels the Five Strategic Competencies and how they work in different proportions in each model. That’s a conversation for another day.
My question for today is, what would it take to get there? I work under the hypothesis that a minority of US hospitals can truly achieve Low-Cost, High-Quality, and in the attempted pursuit of the panacea-ic goal we’ll end up with some distribution of High-Cost, High-Quality (the Unabashed Dominants), Lower-Cost, Moderately-High Quality (the Model Tertiary Community Hospital), Mid-Cost, Mid-Quality (the Fat Risky Middle), and the Barely-to-Unprofitable Basically Safe (the Yugos). In this scenario, I imagine most Americans receiving healthcare in one of the two last categories. Success!! Not.
The problem is that the reimbursement structure, as it currently exists is discussed as Obama-Care begins to shape up, seems to not jive with the IBM vision of intentional, specialized care models. That is the next thorny question, and one I believe they address in the next chapter of the tome. I’ll get to that.
So, am I just too jaded to believe we can build a network of Southwest Airlines hospitals from sea to shining sea? I have a hunch, A. We can’t and B. It’s not a good goal.
More to come…
Thursday, November 20, 2008
I Can't Believe the News Today
Today, I completely intended to charge ahead through the IBM Global Business Services Healthcare 2015 report, diving into the fascinating conversation about new ways to promote health and deliver care, but there are two news stories today that are very distracting/attention getting.
On Sunday, the Boston Globe featured a story on payment differences between Boston-area hospitals. Broken down simply, Partners Healthcare, specifically Mass General and The Brigham, are, gasp, getting paid more by insurers to do procedures, run tests, per admission than non-Partners hospitals. In the end it’s a matter of negotiating clout and the value consumers place on access to those brands.
Today’s Globe contains a follow-up to Sunday’s story, that opens with what I hope is a bit of literary license, specifically; “Leaders of some large academic medical centers and community hospitals called for Governor Deval Patrick to examine how Massachusetts General Hospital, Brigham and Women's Hospital, Children's Hospital, and a few other institutions are able to obtain higher prices from health insurers even though there is, especially for the most common procedures, often no demonstrated difference in the quality of the care delivered by those hospitals.”
When I say I hope there is some license involved, I personally would be disturbed if AMC CEO’s in Boston were actually clamoring for the State (the Commonwealth more accurately) to investigate something. That just smells. Call the State dogs out to sick your competitor when they’ve done nothing more wrong then build their brand and leverage their market position? What’s next? Flying chartered jets to DC in pursuit of a piece of the bailout pie?
Don’t get me wrong. The sentiment of value-based competition on results is something I strongly favor. If Mass General and the Brigham (I believe Boston Children’s is a totally different matter) deliver better value, they should be rewarded in rates and volume. But urging the State to dig around into a private business matter between health plans who freely negotiate with the hospitals on behalf of their members is just wrong. The health plans need to find a better way to play hard ball and Partners’ competitors need to figure out how to close the perception gap with their rivals and figure out how to negotiate the best deals they can. Period.
Then, today’s New York Times leads with the eye-popper, “Health Insurers Offer to Accept All Applicants, on Condition.” In a huge step toward monumental change in the US health system, “The health insurance industry said Wednesday that it would support a health care overhaul requiring insurers to accept all customers, regardless of illness or disability. But in return, the industry said, Congress should require all Americans to have coverage.”
In separate proposals the Blue Cross Blue Shield Association and America’s Health Insurance Plans (no shrinking violets, either of them) announced guaranteed coverage of all pre-existing conditions as long as there is an “enforceable mandate for individual coverage.” This is a dizzying 180-degree spin from the fiasco that was the Clinton Health Reform effort in 1994. Clearly they are saying they want guaranteed risk pool growth in return for accommodating all comers, which makes total sense, and is the only way universal coverage can work anyway. And it places private insurance at the heart of the new system. Quite frankly a smart strategic plan and wise fiscal play in comparison to Senator Kennedy’s loopy “Medicare for all” ideas.
Now the $64,000 question is elucidated in the article, “While insurers would be required to sell insurance to any applicant, nothing would guarantee that consumers could afford it. Rate regulation promises to be a highly contentious issue, since it pits the financial interests of insurers against those of consumers.”
Here’s where some of the 1994 thinking is valuable. To make this all work, it seems like massive regional risk pools and group rating are absolutely essential. It could be done without everyone buying insurance from the feds. State insurance commissions could create and administer the pools. Then it could permit the Government to stay out of the business of collecting premiums but rather use existing structures/bureaucracies to provide subsidies and vouchers to the pool on behalf of lower income Americans. And you could fiddle with the tax code too, if tax credits are needed as the carrot to encourage participation.
It’s all workable. Having the industry inside the tent significantly ups the likelihood something will get done early in the Obama presidency.
Taken together, these two stories present and interesting strategic reality for hospitals. Expanded coverage and increased interest in value-based competition could be a boon for providers. But, the devil is in the details and, once the coverage issue is solved, then we’ll have to get serious about population health and re-engineering the delivery system. Which, in some sense, is refreshing.
And a great segue way to a continued discussion about new ways to promote health and deliver care…
On Sunday, the Boston Globe featured a story on payment differences between Boston-area hospitals. Broken down simply, Partners Healthcare, specifically Mass General and The Brigham, are, gasp, getting paid more by insurers to do procedures, run tests, per admission than non-Partners hospitals. In the end it’s a matter of negotiating clout and the value consumers place on access to those brands.
Today’s Globe contains a follow-up to Sunday’s story, that opens with what I hope is a bit of literary license, specifically; “Leaders of some large academic medical centers and community hospitals called for Governor Deval Patrick to examine how Massachusetts General Hospital, Brigham and Women's Hospital, Children's Hospital, and a few other institutions are able to obtain higher prices from health insurers even though there is, especially for the most common procedures, often no demonstrated difference in the quality of the care delivered by those hospitals.”
When I say I hope there is some license involved, I personally would be disturbed if AMC CEO’s in Boston were actually clamoring for the State (the Commonwealth more accurately) to investigate something. That just smells. Call the State dogs out to sick your competitor when they’ve done nothing more wrong then build their brand and leverage their market position? What’s next? Flying chartered jets to DC in pursuit of a piece of the bailout pie?
Don’t get me wrong. The sentiment of value-based competition on results is something I strongly favor. If Mass General and the Brigham (I believe Boston Children’s is a totally different matter) deliver better value, they should be rewarded in rates and volume. But urging the State to dig around into a private business matter between health plans who freely negotiate with the hospitals on behalf of their members is just wrong. The health plans need to find a better way to play hard ball and Partners’ competitors need to figure out how to close the perception gap with their rivals and figure out how to negotiate the best deals they can. Period.
Then, today’s New York Times leads with the eye-popper, “Health Insurers Offer to Accept All Applicants, on Condition.” In a huge step toward monumental change in the US health system, “The health insurance industry said Wednesday that it would support a health care overhaul requiring insurers to accept all customers, regardless of illness or disability. But in return, the industry said, Congress should require all Americans to have coverage.”
In separate proposals the Blue Cross Blue Shield Association and America’s Health Insurance Plans (no shrinking violets, either of them) announced guaranteed coverage of all pre-existing conditions as long as there is an “enforceable mandate for individual coverage.” This is a dizzying 180-degree spin from the fiasco that was the Clinton Health Reform effort in 1994. Clearly they are saying they want guaranteed risk pool growth in return for accommodating all comers, which makes total sense, and is the only way universal coverage can work anyway. And it places private insurance at the heart of the new system. Quite frankly a smart strategic plan and wise fiscal play in comparison to Senator Kennedy’s loopy “Medicare for all” ideas.
Now the $64,000 question is elucidated in the article, “While insurers would be required to sell insurance to any applicant, nothing would guarantee that consumers could afford it. Rate regulation promises to be a highly contentious issue, since it pits the financial interests of insurers against those of consumers.”
Here’s where some of the 1994 thinking is valuable. To make this all work, it seems like massive regional risk pools and group rating are absolutely essential. It could be done without everyone buying insurance from the feds. State insurance commissions could create and administer the pools. Then it could permit the Government to stay out of the business of collecting premiums but rather use existing structures/bureaucracies to provide subsidies and vouchers to the pool on behalf of lower income Americans. And you could fiddle with the tax code too, if tax credits are needed as the carrot to encourage participation.
It’s all workable. Having the industry inside the tent significantly ups the likelihood something will get done early in the Obama presidency.
Taken together, these two stories present and interesting strategic reality for hospitals. Expanded coverage and increased interest in value-based competition could be a boon for providers. But, the devil is in the details and, once the coverage issue is solved, then we’ll have to get serious about population health and re-engineering the delivery system. Which, in some sense, is refreshing.
And a great segue way to a continued discussion about new ways to promote health and deliver care…
Tuesday, November 18, 2008
Of Delivery Models. Competencies and Personal Responsibility
So, I donned one of the propeller beanies I keep at home and, over the weekend, waded through one of the publications in the IBM Global Business Services series on Healthcare 2015, “Delivery Models Refined, Competencies Defined.” This book is mostly the supporting text to the executive summary I wrote about last week.
The piece’s thesis is summed up in the opening paragraph (sorry, it’s a little long but a good challenge):
“Healthcare providers can work collaboratively to achieve new milestones in defining, measuring and delivering value, activating responsible citizens and developing new models for promoting health and delivering care, even within growing resource constraints and other challenges. This is important more than ever before as the paths of healthcare systems in many countries are increasingly unsustainable. Moreover, we envision this will lead to a variety of strategic decisions affecting service delivery models and underlying competencies. These decisions could impact the organization’s leadership, culture, business models, organizational structures, skills, processes and technologies.”
There’s a lot in this tome, so I’ll focus today on one idea that is central to their set-up. They build on Porter’s work and the growing chorus of “value” (although the skeptic could wonder if this is a phrase that is soon to lose its meaning through overuse?). “Transforming healthcare requires a corresponding transformation in understanding the value that care providers deliver. In many countries the main focus of care providers is to diagnose and treat sick patients…But, a system that is focused on proactive care strategies, such as personalized prevention, prediction and early detection/treatment and disease management, can help create and maintain a healthier population, possibly at a lower cost.”
There’s nothing too much new here so far. They do later state something I’ve pondered about before in relationship to chronic care and the medical home concept. “There are other potential facets to quality care in a value-based healthcare system: the focus on prediction, prevention, and early detection and intervention; correct and timely diagnosis; the ability to educate patient in managing their conditions and health, and communicate effectively to bolster patient comprehension, compliance, and recall; responsiveness to patient preferences and values, where appropriate; and the ability to coordinate care across venues, care providers and time.”
Now, I wonder aloud, who is doing this and who can really do this? The institutional healthcare superstructure flat-out stinks at it. I giggled aloud at the directive to, “communicate effectively to bolster patient comprehension, compliance and recall.” But boy, for how bad healthcare providers are at this today, it sure is an interesting clarion call for the healthcare communicator of the future. If I were plotting a strategic plan for the marketing communications department of the future, these would be powerful guiding principles that I’d use to challenge the organization.
Complicate this a little further, the document goes next to puzzle on, quite frankly, healthcare’s 800 lb. gorilla; lazy human beings. In “Activating citizens – From ‘fix me’ to personal health management,” they examine the “blind reliance on publicly supported healthcare to compensate for individual health behaviors” which they ultimately determine is an “increasingly unsustainable and unrealistic position,” demanding that “citizen activation has to be a key part of the solution.”
To do this a couple of things have to happen. One is shaped like a carrot; the other is shaped like a stick. The carrot end is the idea of greater individual engagement and activism in their own health decisions. Is it wishful thinking to expect people will ultimately learn more about their health and, as the IBM folks propose, “co-produce healthcare?” I can imagine how this could give rise to a more enlightened populace with a greater satisfaction in their healthcare. But, is it a bridge too far?
The stick end is financial. Will we accept punitive premiums for continued bad health? If a Medicare enrollee maintains and unhealthy BMI and doesn’t bring their Type 2 diabetes under control, will they get nailed with an extra annual premium? Will employers safely follow the lead of places like the Cleveland Clinic and not employ smokers? Further, should we as a system and society be more explicit in the expectation that people have a personal responsibility for financing their health? Should health services be planned like retirement – with the expectation set that very little is guaranteed by society and the rest is yours to fund through a variety of mechanisms? Would that be “mandate” that ultimately pushes people into value consciousness?
The report is practical: “Many citizens, regardless of how well-intended, will not be able to become activated, responsible citizens on their own…they ma need help from a variety of coaches.” They then go on to describe three types of health advisors – health coaches, value coaches and wealth coaches – that would work like contemporary personal financial planners to help people make responsible decisions and plans.
On it’s face it seems like we’ll need a really big stick for that to happen. That said, it would be fascinating to see the activated youth of the 2008 election marching against the AARP legions in Washington DC! Remember what McKinsey & Company reported, that one way to stem out-of-control demand was for the young to finally get angry to the point of refusing to fund the old any longer.
“CDOs [Care Delivery Organizations] can play a key role in helping activate citizens—and that will be increasingly expected by the purchasers of health-related services such as governments, employers or individuals.”
Fascinating implications for institutional healthcare system planners and marketing strategists!
The piece’s thesis is summed up in the opening paragraph (sorry, it’s a little long but a good challenge):
“Healthcare providers can work collaboratively to achieve new milestones in defining, measuring and delivering value, activating responsible citizens and developing new models for promoting health and delivering care, even within growing resource constraints and other challenges. This is important more than ever before as the paths of healthcare systems in many countries are increasingly unsustainable. Moreover, we envision this will lead to a variety of strategic decisions affecting service delivery models and underlying competencies. These decisions could impact the organization’s leadership, culture, business models, organizational structures, skills, processes and technologies.”
There’s a lot in this tome, so I’ll focus today on one idea that is central to their set-up. They build on Porter’s work and the growing chorus of “value” (although the skeptic could wonder if this is a phrase that is soon to lose its meaning through overuse?). “Transforming healthcare requires a corresponding transformation in understanding the value that care providers deliver. In many countries the main focus of care providers is to diagnose and treat sick patients…But, a system that is focused on proactive care strategies, such as personalized prevention, prediction and early detection/treatment and disease management, can help create and maintain a healthier population, possibly at a lower cost.”
There’s nothing too much new here so far. They do later state something I’ve pondered about before in relationship to chronic care and the medical home concept. “There are other potential facets to quality care in a value-based healthcare system: the focus on prediction, prevention, and early detection and intervention; correct and timely diagnosis; the ability to educate patient in managing their conditions and health, and communicate effectively to bolster patient comprehension, compliance, and recall; responsiveness to patient preferences and values, where appropriate; and the ability to coordinate care across venues, care providers and time.”
Now, I wonder aloud, who is doing this and who can really do this? The institutional healthcare superstructure flat-out stinks at it. I giggled aloud at the directive to, “communicate effectively to bolster patient comprehension, compliance and recall.” But boy, for how bad healthcare providers are at this today, it sure is an interesting clarion call for the healthcare communicator of the future. If I were plotting a strategic plan for the marketing communications department of the future, these would be powerful guiding principles that I’d use to challenge the organization.
Complicate this a little further, the document goes next to puzzle on, quite frankly, healthcare’s 800 lb. gorilla; lazy human beings. In “Activating citizens – From ‘fix me’ to personal health management,” they examine the “blind reliance on publicly supported healthcare to compensate for individual health behaviors” which they ultimately determine is an “increasingly unsustainable and unrealistic position,” demanding that “citizen activation has to be a key part of the solution.”
To do this a couple of things have to happen. One is shaped like a carrot; the other is shaped like a stick. The carrot end is the idea of greater individual engagement and activism in their own health decisions. Is it wishful thinking to expect people will ultimately learn more about their health and, as the IBM folks propose, “co-produce healthcare?” I can imagine how this could give rise to a more enlightened populace with a greater satisfaction in their healthcare. But, is it a bridge too far?
The stick end is financial. Will we accept punitive premiums for continued bad health? If a Medicare enrollee maintains and unhealthy BMI and doesn’t bring their Type 2 diabetes under control, will they get nailed with an extra annual premium? Will employers safely follow the lead of places like the Cleveland Clinic and not employ smokers? Further, should we as a system and society be more explicit in the expectation that people have a personal responsibility for financing their health? Should health services be planned like retirement – with the expectation set that very little is guaranteed by society and the rest is yours to fund through a variety of mechanisms? Would that be “mandate” that ultimately pushes people into value consciousness?
The report is practical: “Many citizens, regardless of how well-intended, will not be able to become activated, responsible citizens on their own…they ma need help from a variety of coaches.” They then go on to describe three types of health advisors – health coaches, value coaches and wealth coaches – that would work like contemporary personal financial planners to help people make responsible decisions and plans.
On it’s face it seems like we’ll need a really big stick for that to happen. That said, it would be fascinating to see the activated youth of the 2008 election marching against the AARP legions in Washington DC! Remember what McKinsey & Company reported, that one way to stem out-of-control demand was for the young to finally get angry to the point of refusing to fund the old any longer.
“CDOs [Care Delivery Organizations] can play a key role in helping activate citizens—and that will be increasingly expected by the purchasers of health-related services such as governments, employers or individuals.”
Fascinating implications for institutional healthcare system planners and marketing strategists!
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