By Jeff Goldsmith

There has been a lot of controversy in health policy circles recently about hospital market consolidation and its effect on costs.  However, less noticed than the quickened pace of industry consolidation is a more puzzling and largely unremarked-upon development:  hospitals seem to have hit the wall in technological innovation.   One can wonder if the two phenomena are related somehow.

During the last three decades of the twentieth century, health policymakers warned constantly that medical technology was driving up costs inexorably, and that unless we could somehow harness technological change, we’d be forced to ration care.  The most prominent statement of this thesis was Henry Aaron and William Schwartz’s Painful Prescription (1984).  Advocates of technological change argued that higher prices for care were justified by substantial qualitative improvements in hospitals’ output.

Perhaps policymakers should be careful what they wish for.  The care provided in the American hospital of 2013 seems eerily similar to that of the hospital of the year 2000, albeit far more expensive.    This is despite some powerful incentives for manufacturers and inventors to innovate (like an aging boomer generation, advances in materials, and a revolution in genetics), and the widespread persistence of  fee for service insurance payment that rewards hospitals for offering a more complex product.

Technology junkies should feel free to quarrel with these observations.  But the last major new imaging platform in the health system was PET , which was introduced into hospital use in the early 1990’s.  Though fusion technologies like PET/CT and PET/MR were introduced later, the last “got to have it” major imaging product was the 64 slice CT Scanner, which was introduced in 1998.  Both PET and CT angiography were subjects of fierce controversy over CMS decisions to pay for the services.

Continue reading “Hospitals’ Twenty First Century Time Warp”

By Shiv Gaglani

What if the next time you step into your doctor’s office for an examination, she reaches into her white coat pocket and pulls out an iPhone instead of a stethoscope? That’s the idea behind The Smartphone Physical, a re-imagination of the physical exam using only smartphones and a few devices that connect to them. These include a weight scale, blood pressure cuff, pulse oximeter, ophthalmoscope, otoscope, spirometer, ECG, stethoscope, and ultrasound. Want to know more? I’ve answered some questions here for THCB. And have a few myself.

By Michael Fleming, MD

Years ago, as a family physician in Louisiana, I made house calls. Certain patients were too sick or too hurt to get to my office. Sometimes a condition or injury had worsened, requiring my evaluation bedside. I would visit patients at home for the simplest of reasons: home was where they needed care.

By the mid-1980s, the pressures of time and money prevented most physicians from making house calls anymore. But I kept seeing patients at home until I retired from my practice after 29 years. Home visits enabled me to better detect, diagnose and treat most health conditions. Many of the patients I saw might otherwise have wound up in an emergency room and eventually been admitted to a hospital.

If we hope to rein in health care costs and improve quality, we need, in effect, to bring back the house call. Americans are living longer than ever before and a higher percentage of the population is elderly, with both trends sure to accelerate drastically in the decades ahead. Baby Boomers are now turning age 65 at the rate of roughly 10,000 per day.

As the older demographic expands, so, too, does the number of people who live with chronic diseases, chiefly diabetes, high blood pressure and heart failure. About three in four of Americans age 65-plus suffer from more than one such chronic condition. The single biggest and fastest-growing contributor to healthcare costs is chronic disease. That’s why an estimated, 49% of our health care costs go toward 5% of Medicare beneficiaries.

Yet the U.S. health care system is still based on a massive misconception: that health care for the sickest of the sick, typically the elderly and the chronically ill, should be carried out almost exclusively in institutions, primarily hospitals, but also nursing homes and assisted living facilities. And that health care delivery should consist largely of, say, a trip to the emergency room or a four-day hospital visit for pneumonia. That kind of episodic engagement represents short-term thinking. When it comes to health care, hospitals are essential, but are only a part of the answer.

Continue reading “Bringing Back the House Call”

By David Halpert, MD

Last week, CMS unilaterally released chargemaster data from 300 hospitals around the country. As David Dranove summed up well in his recent piece, this is an old hat. Yes, there are big variations in hospitals’ chargemasters. And yes, there is a lot of buzz around consumer price shopping.

A Kayak for hospitals is all well and good, but hospitals are cash-strapped as it is and there is only so much money to be saved by driving down the costs the hospital charges the health care plan unless the waste within the hospital is addressed. I would like to highlight perhaps one of the most exciting things going on under the radar in US healthcare today: using price transparency data within the hospital.

Hospitals are now reimbursed a capitated amount according to each patient’s diagnostic-related group. Capitated payment means, essentially, that the hospital receives a set amount of dollars for each patient that walks through its doors with a given diagnosis — say, $X for a patient with pneumonia or $Y for a patient with MI. Regardless of how many drugs, tests, or scans the hospital uses for the patient, it will still get the same compensation from the insurance company.

Yet, the physician up until now still acts as a kid in a candy store, running up a bill without awareness of cost or value. This is largely because the doctor is ordering from a menu without prices. I have talked to many physicians, in both out-patient and in-patient settings across seven health care systems around the country — they want a menu with prices.

I have seen firsthand the motivation for this, as pay-for-performance model is beginning to take over with my own practice. Gone are the days where doctors’ salaries are unhitched to the cost-effectiveness of care. Everyone is now in the same boat.As a neurologist, I want to share a few examples regarding stroke care that illustrate the potential savings available from educating physicians regarding cost, and also some pitfalls to avoid that could compromise patient care.

Continue reading “Using Price Transparency Data Within the Hospital”

By Dan Diamond

“Why is Wal-Mart speaking at a health care summit?” the company’s vice president for health and wellness, Marcus Osborne, rhetorically offered up at a conference back in January.

“Wal-Mart’s in retail, we’re not in health care.”

But as analysts, researchers, and other experts who spoke with me. took care to point out, Wal-Mart is in health care, and getting further entrenched by the year. In the past six months alone, Wal-Mart launched a major contracting initiative with half-a-dozen major hospitals, and dropped hints — since retracted — that the company is exploring new services like a health insurance exchange.

Notably, Osborne teased a broader health care strategy for Wal-Mart that would include “full primary care services over the next five to seven years,” in a Q&A at that January conference captured by the Orlando Business Journal.

Wal-Mart has since denied Osborne’s comments — the second time in about 18 months that the company has had to walk back stories about its planned primary care services — and Osborne subsequently stopped talking to the press. (Wal-Mart declined to comment, and Osborne did not respond to an interview request for this story.)
But Osborne’s remarks from that January conference, and his other archived speeches, are still readily accessible. And they paint a vivid picture of a company that’s not just a potential market-mover and disruptive innovator, but an organization that could do a lot to positively reform health care.

Background: Wal-Mart’s Growing Role in U.S. Health Care System

In many ways, this isn’t a new story. Back in 2007, Princeton University’s Uwe Reinhardt suggested to NPR that Wal-Mart could be “taking aim at the entire health care system” by expanding its new discount drug program.

“I think it’s a really fascinating way to come out of the corner and really slug the system,” Reinhardt said at the time. “At the moment, the body blows don’t hurt. But they add up. I’m watching this with great fascination, and expect more from them.”

And in subsequent years, Wal-Mart did grow its health care footprint, from launching retail clinics based within its stores to advocating for national health reform. Considering its history — as recently as 2005, Wal-Mart had little involvement in the health care market and was being pilloried for skimping on its own employees’ benefits — it’s been a significant turnaround for the firm, and has positioned Wal-Mart as one of the leading disruptive innovators in health care. Continue reading “Wal-Mart Could Transform Care–But Does It Want To?”

By Jason Shafrin

HealthPartners argues that the answer is yes. In a 2013 Health Affairs article, they argue the following:

HealthPartners in Minnesota launched an online clinic called virtuwell in late 2010. After more than 40,000 cases, we report an average $88 lower cost per episode compared with care received in traditional settings, strong indicators of clinical effectiveness, and a 98 percent “would recommend” rating from customers. The possibility of extrapolating such savings to larger volumes of cases is compelling.

Although I believe that there will be some savings from online health clinics, I believe that much of this perceived savings is due to patients sorting. If relatively healthier patients use the online health clinic, then it could be the case that average costs will be lower for those who use the online services simply due to patient sorting. The report does risk adjust for patient comorbidities and other factors.

Risk adjustment, however, is always imperfect. Thus, three confounding factors could bias these estimates.

1. Individuals who are more educated, wealthier, more technologically savvy are more likely to use the online health clinic, but are also more likely to be relatively healthy conditional on observables.
2. Individuals who use the online clinics may be more likely to seek treatment for less severe cases. If this is the case, then the treatment received during the online clinic may appear cheaper than is really the case since treating this same people in the clinic may have been cheaper than the average patient. Thus, there would still be cost savingings but the magnitude would not be as large.
3. Whereas the points above mention that there could be differences in the types of patients that use the online services, within each individual preferences for online treatment may vary. The less serious an illness appears to be (i.e., the lower the likelihood urgent care is needed from the patient’s perspective) the more likely individuals will seek online care.

   Continue reading “Is the Online Health Clinic the Wave of the Future?”

By Fred Trotter

There are two definitions of the word “Hacker”. One is an original and authentic term that the geekdom uses with respect. This is a cherished label in the technical community, which might read something like:

“A person adept at solving technical problems in clever and delightful ways”

While the one portrayed by popular culture is what real hackers call “crackers”

“Someone who breaks into other people computers and causes havok on the Internet”

People who aspire to be hackers, like me, resent it when other people use the term in a demeaning and co-opted manner.  Or at least, that is what I used to think. For years, I have had a growing unease about the “split” between these two definitions. The original Hackers at the MIT AI lab did spend time breaking into computer resources… it is not an accident that the word has come to mean two things.. It is from observing e-patients, who I consider to be the hackers of the healthcare world, that I have come to understand a higher level definition that encompasses both of these terms.

Hacking is the act of using clever and delightful technical workarounds to reject the morality embedded default settings embedded in a given system.

This puts “Hacking” more on the footing with “Protesting”. This is why crackers give real Hackers a bad name. While crackers might technically be engaged in Hacking, they are doing so in a base and ethically bankrupt manner. Martin Luther King Jr. certainly deserves the moniker of “protester” and this is not made any less noble because Westboro Baptist Church members are labeled protesters too.

Continue reading “Hacking Healthcare”

The E-mail I Want to Send to Our Tech Guys But Keep Deleting (40)

By Shirie Leng, MD

It really shouldn’t be this hard. This doesn’t seem like rocket science, but you keep telling us it is. What’s the deal with the passwords? Why can’t computers at different hospitals talk to each other? What’s the story with the obsession with mindless data entry? Have you ever tried using one of these things? Harvard’s Shirie Leng speaks for a growing chorus of annoyed EMR users.

By Rob Lamberts, MD

There was a hole in the wall of our bathroom that was a painful reminder of a bad encounter with a plumber.  Yes, that hole has been there about a year, and it has been on my to-d0 list for the duration, daring me to show if I inherited any of the fix-it genes I got from my father.  Why not hire someone to come fix it?  I also got (as I mentioned in my last post) dutch genes, which scream at me whenever I reach for my wallet.  So this hole was giving me shame in surround-sound.

I attempted to fix it the hole last year, even going to the degree of asking for  a router table for my birthday.  Since there was previously no way to get to this all-important access to the shower fixture without cutting through the sheetrock, I decided I would take a board, cut it larger than the hole, then use the router to make a rabbet cut so the panel would fit snuggly.  Up until then, I thought a rabbet cut was a surgery to keep the family pet population under control, but my vocabulary was suddenly expanded to include words like rabbet, roundover, chamfer, dado and round nose. Unfortunately, my success only came in the realm of vocabulary, as I was not able to successfully master the rabbet cut without making the wood become a classic example of the early american gouge woodworking style.

I am not sure why, but something inside me told me today was the day to give this another shot, and to my shock (and that of my family), I was successful!

This home project is actually a late comer to the DIY party I’ve been holding for the past few months.

• Don’t like your practice?  Build your own from scratch!
• Don’t like the health care system, build a new one!

My latest DIY venture is in an area I swore I’d not go: I’m building my own record system.

Continue reading “The DIY Electronic Medical Record”

By Les Funtleyder

The Kaiser Family Foundation (KFF) recently released a study that showed that 42% of Americans are unaware that Obamacare (the Affordable Care Act) remains the “law of the land.” News like this seems to us, to act as a Rorschach test on how observers feel about the law. Considering 50% of Americans can’t identify New York on a map we tend not to read too much into these polls. However, according to the logic of extrapolation, since we know that the ACA remains law, we are in the elite 58% (it’s about time we made it into the elite of something).

In almost parallel to the KFF news, the New England Journal of Medicine published a follow-up study of the “Oregon experiment.” For those who haven’t been following closely, the study found that previously uninsured people who were enrolled in Medicaid did not see an improvement in clinical measures when compared to those who remained uninsured. The study did seem to show a reduction in the amount of financial distress for the insured however.

Another contentious study, another Rorschach test (example, example). The problem we see with the polarity of views is that both sides seem to be cranking up the extrapolation machine and use single studies/data points to draw broad conclusions to gin up opinions about ACA’s success or lack thereof. In light of the fact that for most practical matters ACA doesn’t really get going until 2014, use of the extrapolation noise generator approach smacks of a lack of analytical rigor in our view. We will know soon enough how the program is doing… exchanges start enrolling on 10/1.

As investors, we should state upfront that we tend to give more weight to financial returns than what the philosopher-kings might call the political context. So what caught our eye in the Oregon study was that Medicaid recipients had higher healthcare utilization rates (and associated costs) than the uninsured. The connection between gaining insured status and healthcare utilization should not come as a surprise since there is a very extensive literature elucidating this connection.

Continue reading “Into the Extrapolation Machine”