Healthcare is Different

Healthcare is Different

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I’m often asked why healthcare has been slow to automate its processes compared to other industries such as the airlines, shipping/logistics, or the financial services industry.

Many clinicians say that healthcare is different.

I’m going to be a bit controversial in this post and agree that healthcare has unique challenges that make it more difficult to automate than other industries.

Here’s an inventory of the issues

1.  Flow of funds – Hospitals and professionals are seldom paid by their customer.   Payment usually comes from an intermediary such as the government or insurance payer.  Thus, healthcare IT resources are focused on back office systems that facilitate communications between providers and payers rather than innovative retail workflows such as those found at the Apple Store.

2. Hiring and training the workforce – Important members of the workforce, the physicians delivering care, are seldom employed by the hospital.   This is rare if not non-existent in any other industry.  It’s as if Toyota built a factory that anyone can use but does not hire or train the workers who build cars.   If someone wanted to create a Toyota with wings and an outboard motor, they would have the freedom to do it.

3. Negotiating Price – Reimbursement no longer is based on a price schedule hospitals and professionals can control.   It is based on a prospective payment model such as DRGs that someone else designs and dictates.   Where else in the US do prices get dictated to a firm?

4. Establishing referral relationships – We cannot market services to those who control our patient flow due to Stark anti-kickback regulations.   In other industries, you can build relationships, offer special incentives, and arrange mutually beneficial deals to develop your referral business.   In health care, it’s illegal even when unilaterally funding an action would make things easier for both parties and the patient.

5. Standardizing the product – In most industries, the product or service can be standardized to improve efficiency and quality.   In health care, every person is chemically, structurally, and emotionally unique.   What works for one person may or may not work for another.   In this environment, it is difficult to standardize and personalize care in parallel.

6. Choosing the customer – In most other industries, you can chose with whom you do business.    Not so in health care.   If you have an emergency department, you must provide treatment even if the customer has no means to pay.

7. Compliance – Data flows in healthcare in increasingly regulated.    What other business, including the IRS, is required to produce, on-demand, a three year look back of everyone who accessed your information within their firm.

As I noted in my recent post about the Burden of Compliance “the more complex a health system becomes, the more difficult it becomes to find any system design that has a higher fitness.”

We are successfully automating healthcare workflows, motivated by HITECH incentives and the requirements of healthcare reform.   The 7 characteristics above have required vendors to create full featured software applications and organizations to create complex rollout/funding models that take time.  By 2015 we will be there and I will be proud of all we’ve accomplished, given that the constraints on the healthcare industry are truly different than industries which have been earlier adopters of technology.

John Halamka, MD, is the CIO at Beth Israel Deconess Medical Center and the author of the popular Life as a Healthcare CIO blog, where he writes about technology, the business of healthcare and the issues he faces as the leader of the IT department of a major hospital system. He is a frequent contributor to THCB.

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78 Comments on "Healthcare is Different"


Member
May 28, 2015

Interesting blog.
Source: http://tariqdrabu.co.uk/

Guest
Jan 1, 2015

My relatives always say that I am wasting my time here at net, except I know
I am getting knowledge everyday by reading thes fastidious articles.

Guest
Sep 9, 2011

Wonderful and very interesting blog, it is really helpful. I like it. Look forward to reading more your words.

IT & Healthcare can be more useful if collaborated together.
EMR(a software for doctors)

Guest
Sep 6, 2011

Not to beat a dead horse, but those commenters who insist that understanding the business of healthcare is not for physicians, or who don’t think it respectable to acknowledge that healthcare is a business, will find an article in today’s NY Times interesting.

http://www.nytimes.com/2011/09/06/business/doctors-discover-the-benefits-of-business-school.html?_r=1&ref=health

Guest
claire
Aug 24, 2011

great article! healthcare may have challenges but it def should stick to its goal. to serve people better.

Claire
diabetesshield.com

Guest
Aug 19, 2011

“Some hospitals and specialists are reimbursed a lot more than others for the same work even though quality and outcomes are often no better.”

Agree.

The hospitals are paid too much, the specialists are paid too much, and the insurers agree to pay too much. Everybody’s making a buck except Quack and me. But we’re responsible for solving the problem?

I think not.

As medicine in this country rapidly changes from a profession to a investor-backed business, the profit motive will only become stronger.

Guest
Craig "Quack" Vickstrom, M.D.
Aug 19, 2011

Well said, my esteemed colleague.

Guest
Barry Carol
Aug 19, 2011

“go where the money is”

Pcp —

That would be hospital based care and care provided by hospital owned facilities including imaging centers. PCP referrals to specialists and for tests have a direct influence on where patients receive care. Some hospitals and specialists are reimbursed a lot more than others for the same work even though quality and outcomes are often no better. The 99213 PCP visits are not the issue. Scooters are an issue for CMS to deal with. Pricing information would be helpful to both patients and referring doctors in pushing back against the high cost providers.

Insurers, for their part, are moving toward insurance policies based on so-called value based insurance design which charge patients higher co-insurance if they go to a provider that costs significantly more for comparable quality care. Large employers are finally starting to embrace that approach and it’s about time. I get that doctors should be rewarded through shared savings if they help to save money for the system. Sometimes, though, I get the impression that asking doctors to help us get more bang for our healthcare dollar is asking them to do something they see as either unseemly or beneath them or, at best, they feel too busy to be bothered with it. I thought they were smart enough to realize that a financially sustainable healthcare system is in their own best long term interest.

Guest
Aug 19, 2011

“I don’t think you’re understanding the text here. This article is an explanation why medical practice is different from running a business.”

Craig, I understand the point of this blog very well. Of course medicine at the micro level is different from other professions. But at the macro/management level it is not. It iS a business.

No one is trying to turn you into an accountant or marketer or a lawyer, but If you and every other care provider ignore the fact that healthcare IS a business — in fact the biggest business in our economy — and fail to run it like one, you are destined to bankrupt your practice, your hospital and our economy.

Barry Carrol is absolutely right. It no longer is acceptable or tolerable for a doctor to put his/her head in the sand and say “don’t bother me with the business aspects of medicine; I’m saving lives.” You’ll not save lives if you are out of business!

You can’t be one-dimensional — and the sooner every care provider recognizes that, as well as the fact they are the ones who dictate and thereby can control healthcare costs, the better. You should know what treatments and meds cost, who provides the services you need for your patients, etc.

Guest
Craig "Quack" Vickstrom, M.D.
Aug 19, 2011

Medicine is a business on the macro level. Very well, we need people to manage that, but they should not be doctors. I am supposed to do the best I can for a patient, regardless of ability to pay. If the patient can’t or won’t pay, then I advise the next best thing. And if not that, then so on. But I cannot have a conflict of interest, balancing the needs of the patient with the needs of society.

I suppose what we could do is have a position of “rationers” whose job is to deny and cancel as many tests and treatments that doctors order that they possibly can. Two different sets of interests, two different persons, two different jobs. We already do have that, in the form of Medicare/MedicAid and private insurance prior auth people. We just ramp that up a bit. I’m sure there are plenty of people who can conscience that. I cannot.

Guest
Barry Carol
Aug 19, 2011

“I’m trained to perform a diagnostic workup and then find a treatment.”

Craig –

Of course you are and when you and your colleagues do that job, you collectively drive most healthcare spending. Yet resources are finite. You don’t consider it part of your job to know or care about costs. Yet if someone else, like insurers or CMS tries to care about costs, you and your colleagues complain that these outsiders are interfering with your ability to practice as you see fit and in your patient’s best interest. The healthcare system is not financially sustainable if costs continue to increase faster than general inflation and faster that overall economic growth.

So, if you don’t care about costs and you complain when others try to, how are we supposed to sustain the system? For all the good work that doctors do, it’s this conundrum that gets financial types like me frustrated. I wholeheartedly support the docs on issues like tort reform. I think you all would help your cause if you supported efforts develop price and quality transparency tools to allow you and your staff to more easily steer patients to the most cost-effective providers and stopped opposing strategies like allowing NP’s to practice at the top of their license to increase the supply of primary care.

Guest
Aug 19, 2011

” you collectively drive most healthcare spending. Yet resources are finite. You don’t consider it part of your job to know or care about costs.”

I’m sure Quack, like every other primary care doc I know, knows exactly how much the services he provides cost. And they’re a bargain, and represent a tremendous return on investment for the system.

But don’t hold him (or me) responsible when insurers voluntarily pay 1000% above overhead for scans and tests so they can increase marketability of their product. Don’t blame him for the billions in “facility fees” that encourage inefficiency. Don’t blame him when Medicare pays 100% above market rates for unnecessary scooters, or when medical suppliers jack up their charges 5x above retail.

Yes, go after wasteful spending, but do it like Willie Sutton: go where the money is, and let Quack and myself practice the most effective, efficient medical care we can.

Guest
Aug 17, 2011

No one “hates” you for being a doctor. But no one likes you for being disrespectful of others and what they do. It’s very unbecoming.

If you think you haven’t demeaned others, you’d better re-read your comments, both word and tone.

I also suggest you learn somehing about the business operations of your practice and hospital, and show those who run them the same kind of respect you want them to show you. For if they fail to do their jobs well you may not have a place to ply your trade no matter how important you think you are!

Guest
Craig "Quack" Vickstrom, M.D.
Aug 19, 2011

Mr. Bushkin,

I don’t think you’re understanding the text here. This article is an explanation why medical practice is different from running a business. The point is I’m not an accountant, or a rationing officer, or a lawyer or a hedge fund manager. Doesn’t mean that I hate them or demean them, just that I’m not them and my role is fundamentally different from theirs. When health care policy people get on the boards here and post comments like, “Why can’t doctors be more like X businessmen,” I get a bit irritated. I’m not trained in accounting, and should not have to act like it. How many times on this blog have people opined that accountants should seek out medical training and knowledge? Why should they?

Yes, I’m quite proud of my profession. Yes, I believe I have a very useful and valuable skill. And I’m happy to use it. I admit that I am puffing my profession up (not with inscrutable motive), but that does not imply that I am putting other professions down. My profession has its unique needs and situations. It irritates me when people from outside my profession come on the Health Care Blog and tell me and I need to act more like X profession. Um, no. I’m not them. I’m a doctor. I’m trained to perform a diagnostic workup and then find a treatment. Let people who are trained to do those other things do them.

Guest
Aug 17, 2011

Craig, it’s clear that you don’t have a clue what other professionals do, the pressures they feel, or the impact they have on hundreds or thousands of people. Worse, you appear to be too self-absorbed to be interested in learning.

You treat patients when they are ill. Their employers live with them when they are ill and well. They give them jobs and pay them wages or salaries that enable them to fulfill their potential as human beings, educate themselves and their children and raise their standard of living and that of everyone around them. When you have shouldered a fraction of their responsibilities and walked in their shoes even briefly, you’ll understand that they are every bit your equal — and maybe more!

You have every right to be proud of what you do and the role you play in our society but so do others. Stop demeaning everyone else and what they do, and spare us the suggestion that your role is superior, more noble or more important than the roles played by business executives, lawyers, judges, scientists, educators, artists, et al.

Our complex society requires all of them to do their jobs well, and to live and prosper side by side. Without any one of them, we all are diminished. Your car may not run. You may not have power to light or heat your house or office. You may not have food to eat or laws to live by. Your tools and instruments may not work. Your electronic gadgets, from computers to iPhones to iPads, may not work, etc. The sooner you realize that, the better you’ll understand your patients, and the more effective you’ll be as both a doctor and a member of your community.

Guest
Craig "Quack" Vickstrom, M.D.
Aug 17, 2011

“Stop demeaning everyone else and what they do,”

Strange, I don’t recall demeaning anyone in this thread. It is true I don’t really find trial lawyers and insurance authorizers and bureaucrats all that useful, if not downright parasitic. But I don’t recall demeaning teachers, laboratory techs, soldiers, clerks or police officers. Ahem.

How do you know that a physician’s shoes are the only shoes I’ve walked in, eh?

Physicians are in a special category because we are regularly responsible for people’s lives. Maintaining them. Saving them. I do find it interesting how people hate us for assuming this responsibility. I find it interesting how many people want to strip us of our authority, but want us to keep all the responsibility. The buck ultimately stops, often unfairly, at us. Ultimate responsibility = ultimate authority, at least in a just world.

Health care is different, indeed.

Guest
Barry Carol
Aug 17, 2011

“I’m not responsible for people’s financial lives or their social lives, I’m responsible for their *lives.*”

With all due respect, this is one of the biggest problems with the financial or business side of healthcare. Doctors drive most healthcare spending through their decisions to order tests, prescribe drugs, admit patients to the hospital, refer them to specialists, consult with patients and perform procedures themselves. Yet, most never considered it part of their job to know or care about costs. If the local AMC charges 5-10 times more for an MRI than a nearby non-hospital owned imaging center, it’s not your concern since you assume insurance is paying all or most of the bill anyway. If one hospital in town can provide comparable quality care for 30% less than its competitor across town, you probably don’t know that and don’t care though part of the reason is the lack of available price transparency tools that list actual contract reimbursement rates and per diem rates.

If a patient makes it clear that money is an issue for him or her, you may be able to help or make an effort to help or ask one of your staff to help. When it comes to system costs, though, it’s not your concern because you have enough on your mind already trying to take care of patients’ medical needs. If I were in your shoes, I probably would view my job the same way you do, at least until new payment models and incentives reward doctors for helping both individual patients and the system at large to save money. Maybe ACO’s with shared savings rewards for doctors might offer some promise here.

Guest
Craig "Quack" Vickstrom, M.D.
Aug 17, 2011

“If I were in your shoes, I probably would view my job the same way you do, at least until new payment models and incentives reward doctors for helping both individual patients and the system at large to save money. Maybe ACO’s with shared savings rewards for doctors might offer some promise here.”

No. This is what I have social workers for. I really don’t have the time to sit and do financial counseling. Heck, I don’t even have enough time to do all the medical counseling I need to do.

Guest
Aug 17, 2011

Graig, you’re right. I’ve never taken care of patients as a care provider. But I’ve been a patient and I’ve taken care of sick kids and sick parents. I’ve also worked with businesses in a great many industries. And trust me, the issues and complexities in healthcare, while obviously not identical at the micro level, often are similar to those in other industries at the macro level.

Any responsible professional worries about his clients, employees, shareholders and communities in which they operate – even when “at home relaxing” just as you do. Their welfare, success and livelihood often rest in his/her hands. These are serious concerns that they lose sleep over, just as you do regarding your patients. And they don’t get paid for it any more than you do. It comes with the territory.

You mistakenly equate “objective” with irrational. When a patient comes to you with a complaint and their TV-or-otherwise-inspired diagnosis, that’s very rational. It may be wrong, but they have drawn on what little information they have to try to diagnose their illness. Not too different from what a first year med student does, is it? But this has nothing to do with objectivity! They can be both rational and very upset.

I sense you think I am dismissive of the pressures and responsibilities doctors feel and, therefore, are defensive when you see me lumping doctors in with lawyers, Indian chiefs and even business executives. If so, you are very wrong. I have great respect for care providers at all levels and often wonder how they tolerate the misery they confront – whether in an OR or a nursing home. However, they aren’t God and the general nature of the problems they confront in their work aren’t dramatically different from other fields and occupations of responsibility – which I also respect.

Guest
Craig "Quack" Vickstrom, M.D.
Aug 17, 2011

Mr. Bushkin,

“You mistakenly equate “objective” with irrational.”

Um, no. I don’t. You don’t understand the mentality of sick people. In extremis, the two are not so clearly separable.

“I sense you think I am dismissive of the pressures and responsibilities doctors feel and, therefore, are defensive when you see me lumping doctors in with lawyers, Indian chiefs and even business executives. If so, you are very wrong. I have great respect for care providers at all levels and often wonder how they tolerate the misery they confront – whether in an OR or a nursing home. However, they aren’t God and the general nature of the problems they confront in their work aren’t dramatically different from other fields and occupations of responsibility – which I also respect.”

You contradict yourself, sir.

Interesting. If you really believe there is no fundamental difference between practicing medicine and say, being a hedge fund manager or a social secretary, then there really is no more to say. I’m not responsible for people’s financial lives or their social lives, I’m responsible for their *lives.* And a great and weighty responsibility it is. The doc bashers on this board may hate us for our pride, but they still show up at our doorstep in extremis.

Guest
Aug 17, 2011

Margalit and Craig, I’m amazed that you accept any part of JD’s perverted perception of the world! Healthcare ISN’T different from other industries. Saying it is, doesn’t make it so. It only blinds you to solving its problems.

JD, since when is an industry defined in terms of it’s consumers rather than it’s providers? The auto, entertainment, utility, electronics, computer, construction, food, aerospace, retailing, financial services and other industries all must satisfy their customers in order to survive and prosper but their “most important participants” are NOT their customers — they are the companies or organizations, and their people, that comprise the industry. They develop and provide the services or products to meet the needs of their customers and, thereby, determine their success. So do healthcare providers.

Since when is a sick person seeking care “irrational?” In your eyes maybe, but not in theirs. They act very rationally. They want to be treated, if not cured. And they expect their insurer to pay whatever it takes — that’s precisely why they have insurance. Is that irrational? Not at all. The tragedy in our system is that these rational patients can’t access information about the doctors or hospitals to identify who might provide the best care! Neither can they find out their options, or how much their care will cost if they are so inclined to ask.

Since when is healthcare unique because third party insurers pay for services? Insurers protect virtually every industry against the risk of loss whether it be from fire, illness, maiming, property damage, liability, or simply the loss of a package by the post office. That’s what insurance is all about.

The truth is that healthcare IS similar to other industries. Its consumers — people who are sick and want care from responsible, trained providers — are no different from consumers of goods and services in other industries. Only neither they nor their providers have the information they need to make informed, rational decisions.

Instead of throwing up our hands, blaming patients for the industry’s problems and calling them “irrational,” we should look within the industry and fix it’s problems!

Guest
Craig "Quack" Vickstrom, M.D.
Aug 17, 2011

Mr. Bushkin,

You misunderstand me. Taking care of a patient can never be “just a business.” You do what is best for them, not what is best for you. This often involves doing things for free. It involves worrying about them even when you are at home “relaxing.” It involves getting up in the middle of the night to see them, often for inconsequential things. You can’t monetize that.

Since when is a sick person seeking care “irrational?” Since all the time. They come with their diagnosis and treatment plan that would be all wrong for them and possibly kill them. You have a fiduciary duty to tell them “no” and then order what is right for them. It’s really hard for anybody to be objective when it is their butt that is on fire. That’s why you have a second set of eyes and brains to look at you.

I’m sure you’re great at business and customer service and all that. But you obviously have no clue what it is like to take care of real patients. They are not patrons at Burger King ordering Whoppers. They are sick people who often have no clue what is wrong with them or how to fix it. This is why we have doctors.

Guest
Aug 16, 2011

Health care is the only major industry in which its most important participants – those with major illnesses or injuries – are not consumers so much as “victims” of the disease or injury. Victims are not rational consumers, and they do not make rational marketplace choices. And those trying to care for them – while trying to survive and thrive economically – believe themselves victims by proxy, which feeds into the vicious cycle of fraud, mistrust, micromanagement, and excessive cost, waste and bureaucracy that defines the third-party payment system. Health care is not just different; the unique nature of what the health care system promises and tries to deliver (survival, reproduction, healing, happiness, and hope) actually inverts the most fundamental economic laws that bear on all other industries.

Guest
Aug 16, 2011

Holy cow, JD! I never thought about it this way. So true!

Guest
Craig "Quack" Vickstrom, M.D.
Aug 17, 2011

Mr. Kleinke,

That is a very interesting perspective. I confess I had never thought of it that way. You have a valid point. I do not, however, consider myself a victim of my patients. I would say I am put upon by outside individuals who are weak, stupid, incompetent and evil. They are parasites who make the job of practicing medicine harder.

I agree with your idea that being a victim of disease or injury does not make you a rational consumer, such as someone going to the store to buy a TV. Attempts to apply that premise to patients are ultimately flawed. That is a very good observation. And so follows the cry of the free market robots…

Guest
Aug 16, 2011

If everyone subscribed to your perverted view of healthcare, they’d be incapable of improving it. Fortunately, most don’t!