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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76 Responses for “Healthcare is Different”

  1. Hi John. In my experience, virtually everyone considers their business/profession “different” and incomparable to others. And, indeed, most are different at the micro level. In a forest, each tree is different from every other, but a forest is a forest and what’s required to manage one isn’t dramatically different from managing others!

    Likewise healthcare. If you focus at the micro level, all you’ll see are differences and you’ll have great difficulty bringing healthcare IT and administration into the computer age. On the other hand, if you look at healthcare in a broader context, simple solutions jump out at you.

    None of the seven issues you cite as making healthcare different are unique in a macro sense. They are similar to those found in most other activities, and they shouldn’t be permitted to confuse and complicate solutions in healthcare.

    1 Most businesses and professions are paid by some form of intermediary, whether it be a bank processing a check or a credit card company; and most have elaborate “back-office” departments to be sure they are paid in a reasonable time and correctly.

    2 Hiring and training is difficult in every field. And many professionals and service people work in someone else’s facility, whether they be attorneys trying a case in a courthouse, a college professor giving a lecture, an electrician wiring someone’s building, or a tenor singing at The Met.

    3 Most businesses and professionals don’t control the prices they charge. Competition often forces them to compete on price. Where price is agreed upon contractually, the purchaser usually forces adherence to the price even if it means you lose money. And most artists and performers rarely are able to dictate their fees.

    4 Doctors referring patients to other doctors are no different than attorneys or accountants referring clients to other professionals. Yes, some industries pay referral fees but a great many, if not most, do not.

    5 It is difficult for most service people to standardize their service. The facts and circumstances of most cases are different for attorneys. The wiring and plumbing in every building are different for electricians and plumbers. And contractors renovating a building usually don’t know what they will encounter when they open a wall.

    6 Short of the ED, most healthcare professionals can choose their patients, just like other professionals do. And when other professionals do pro bono work, they must serve whoever comes along – just like doctors in EDs.

    7 Virtually every enterprise has some form of compliance requirements. Many industries are carefully regulated; all are subject to IRS and State tax regulations.

    In short, healthcare isn’t so different that I’m willing to make or accept excuses for its slow adoption of new administrative technologies. It’s bad enough that healthcare IT and administrative practices are so far behind, but continuing to make and tolerate excuses is unacceptable. How many people will die or be made sick unnecessarily between now and 2015 while we dawdle? And how many billions of dollars — that we can’t afford – will we waste? We should get on with it now!

    • Craig "Quack" Vickstrom, M.D. says:

      And how many ppl will die b/c we adopt these new IT and admin practices? At this stage EMRs do more harm than good.

      • PaloAltoDoc says:

        100,000 currently die in hospitals each year. Are you suggesting that the death rate is higher in those hospitals that have already implemented an EHR (soley as a result of that )? Great to have at least a few luddites around though.. I am guessing you also believe you are better then average and that it is someone else who isn’t providing the standard of care? Oh wait your retired? Ahh..

    • Health care administrative practices have been computerized a long time ago. This is not about tabulating numbers and indexing content. This is about computerizing and standardizing the thought process, the professional portion, in the practice of medicine.
      This is about computerizing a non repeatable process which is not fully understood by anybody, including those who practice everyday.

      Neither the tenor’s work nor the attorney’s work are anywhere near to being computerized. Nobody’s even trying.
      Health care IT is blazing the trail. There is no comparable effort out there. And if we’re not careful, Dr. Vickstrom’s question will become very pertinent.

    • Zandrea says:

      I agree with the above poster! We, the USA spends more money on healthcare then any other country. Yet we are number 36. If your state football team spent more money on training & promotions then anyother team wouldnt you expect them to be the best? We should expect more from our healthcare system and make it a HEALTH CARE System not a SICK CARE system. People need to be more responsible for theirself too. Dont just go to the doctor and say fix me becuase guess what they go out and Google your symptoms just like you can do at home.

  2. James S. Walker says:

    Merle is correct. There is no good reason for delaying an outright deliberate effort to develop some form of advanced standardization of the delivery system. The status quo is unhealthy for none of the affected parties, and the airline industry’s platinum safety record is proof that an optimized system is plausible; we are morally obligated to move this forward right now.

    • pcp says:

      “Air France says the plane overwhelmed properly trained pilots with a blizzard of confusing signals and misled them because of a “trap” caused by erratic warnings.”

      AF 447 crashed into the Atlantic, killing everyone aboard.

      • fid says:

        And yet if you look at the airline industry as a whole, it has a much better safety record than the health care industry.

  3. Craig, as a practicing physician you know better than I if EMRs “do more harm than good” but it is clear that most doctors don’t like or want the EMR systems that are out there. They simply don’t work for them – and subsidizing their adoption doesn’t make them more acceptable. We should be encouraging the development of more functional and useful EMR systems rather than forcing the adoption of what’s available today. Similarly, patients don’t want their records accessible via Internet-linked servers yet we continue to promote and fund the development of such networks. Why? So we can have an unwieldy, very expensive system by 2015 that nether providers nor patients want?

    Margalit, I think we’ve had this conversation before. Ultimately, this may be “about computerizing and standardizing the thought process, the professional portion, in the practice of medicine.” But that’s many, many years away. Today, doctors can’t even do the basics. They can’t exchange patient medical records or access a patient’s records that were created by the patient’s other providers! They can’t coordinate care. They don’t have access to results of tests ordered by other providers, etc. IMO, this IS about content and the mechanics of getting a patient’s complete medical record in the hands of the doctor who is treating them — so shouldn’t we start there? That’s all John is referring to when he says that “By 2015 we will be there. . . . “ I agree with James Walker: “we are morally obligated to move this forward right now” and we can!

    • pcp says:

      “So we can have an unwieldy, very expensive system by 2015 that nether providers nor patients want?”

      I think all the evidence indicates that that is the goal.

      • BobbyG says:

        Care to cite for us any empirical evidence that such is the case? WHOSE “goal”?

        • pcp says:

          Valid point. I was using the word “evidence” in an informal sense.

          But I think that if one looks critically at current EHRs, including what they can do, what they are required by law to do, and what they can’t do, that it is very reasonable to conclude that we are creating an enormous and expensive system that serves government and insurer needs at the expense of physicians and patients.

    • PaloAltoDoc says:

      Wrong 100% of all docs at the VA (vs DOD) use and have used an EMR for the past 20 years.. The result? The hightest quality care in the country. Vets clamoring to get their care there and 1/4 of all residents in the US trained on their systems.

      • There’s no question that the VA’s system works beautifully– up to a point. That “point” is that it does not contain the warrior’s pre-enlistment medical records, neither does it contain any records of care received outside the VA system. Similarly, for active military personnel and their dependents, none of the systems used by the different branches can exchange information, neither can they share or receive records with civilian care providers. And moving outside the military it is worse. Virtually none of our legacy EMR vendor’s systems can share simple patient records such as progress notes, and most cannot even generate an electronic copy of their electronic progress notes — they have to print them out! Last point, none can integrate copies of a patient’s paper records into their system — a rather serious shortcoming since 75% to 80% of our physicians keep paper charts.

  4. Merle, I don’t see why we need to create yet another huge emergency.

    Doctors can and do coordinate care. They can and do exchange medical records. They don’t use computers to do that. They use other means, such as fax, telephone, and yes, paper records. Could we make these exchanges faster with computers? Yes. Can we make these exchanges better with computers? Perhaps, but I am not certain.

    If you think that standardizing the thought process is a futuristic thing, think again. All EHRs must (by government ruling) contain clinical decision support, reminders, alerts, encouragement to use this or that medication (per PBM wishes), and this type of assistance is increasing to standard definition of care plans, team members, recording/reporting therapeutic practices that are “wasteful”, required questioning of patients and required counseling, to just name a few.

    There is more to this debacle than doctors being technology averse, or technology being immature.

  5. MD as HELL says:

    Once you standardize the care you get a standard outcome. Will that be good enough?

    • BobbyG says:

      Axiomatic to QI is variability reduction — “standardize.” Reducing variability improves “expected values” — “outcomes.”

      Don’t take my Great Unwashed word for it. Contact my old QI mentor, Brent James, MD, MStat (IHC)

      • Craig "Quack" Vickstrom, M.D. says:

        Good luck with “reducing variability” in what walks thru the door, BobbyG. Good luck “standardizing” what patients will and won’t cooperate with.

        It really is interesting, how clueless you academic dilettantes really are. You really think the practice of medicine can be reduced to a care plan. This would be funny if it weren’t so pathetic. I am, however, thankful you don’t take care of patients.

        • BobbyG says:

          Right. “Academic dilettante.” Nice. I am not in academia. I work with providers. You have no clue as to who I am. Ask Brent James if I’m a “dilettante.”

          You clowns and your “perfectionism fallacies” crack me up. What JD Klienke calls reflexive “policy tear-down artists.”

          So, because it’s gonna be difficult, we simply shouldn’t even try. And “No One But MDs Need Apply.” Right. Spare me your condescension.

          ‘Good luck with “reducing variability” in what walks thru the door’

          See “The Hot Spotters.”

          • Craig "Quack" Vickstrom, M.D. says:

            O no! You are trying right now. I have work with foul fruits of your standardization labor every day in the clinic now. Lots more time spend documenting things on the computer (when it works). Lots less time spent fixing problems. I don’t partake in the “perfectionism fallacy,” as IT and admin practices that are competent would be acceptable to me. I have never asked for nor expected perfection.

            As long as you expect the practice of medicine to be confined to a standardized care plan on a computer, you deserve nothing but my condescension.

      • MD as HELL says:

        The patient brings the variables. As I have said before, give doctors smarter patients and they will give you better outcomes

        • BobbyG says:

          So, add a Weschler score entry in the Demographics template (or, would it go under Vitals)? Or, have a Weschler inventory template within the NEURO section of ROS?

          Impractical? Perhaps data entry cells for education level and GPAs might serve as correlative proxies, ‘eh?

          /s

  6. BobbyG says:

    “As long as you expect the practice of medicine to be confined to a standardized care plan on a computer, you deserve nothing but my condescension.”
    ___

    Go right ahead. Simplistically misrepresent my views. Enjoy yourself.

    I am an open book. You are not. Telling, that.

    “you expect the practice of medicine to be confined to a standardized care plan on a computer”

    No, “You get what you INspect, not what you EXpect.” – James W. Dillard, PhD, my original professional mentor in the 1980′s.

    http://www.bgladd.com/papers/ITORL1.PDF

  7. Craig "Quack" Vickstrom, M.D. says:

    My apologies to all, especially BobbyG, if I have been a bit uncivil. But in my rather short medical career, I’ve heard so many promises of streamlined processes, EMRs and QA programmes that would supposedly make my patients better and my job easier. They have not been kept. Not a one. So, I’m a bit suspicious and a bit nasty when confronted with more of them. I do beg your pardon.

    • BobbyG says:

      No harm, no foul. We all need to pull together. And, yes, dissent is part of the scientific method.

      As should be obvious from my REC blog work to date, I am no reflexive apologist for HIT.

  8. “See “The Hot Spotters.””

    Let’s do that Bobby. Where in our mighty IT solution do we find the part about sitting in a hospital room with a “hopeless” patient for hours trying to understand what makes him tick (or not tick)? Or visiting him at home and noticing things? Or organizing and participating in tenants meetings? And that was the doctor doing these things, not a high school educated serial case manager.

    Sure, we can standardize treatment for sinus infection, headache and strep throat. But are we having huge problems in treating these things now? Are people dying from lack of standards in treating trivial concerns? Are we spending fortunes on these problems? If not, what is the ROI in tinkering with these things?
    And what is the ROI in spending billions of dollars to make sure that the use case of someone showing up naked, unconscious and alone in the ER is satisfied, and all the data about that person is available at the click of a button (or two, or three)?

    I may be misreading the “Hot Spotters”, but my takeaway was that in order to fix the big problems we need anything but a standard approach to each and single one. Yes, IT can help with identifying the people, tracking and measuring improvements (savings), but it was high-touch non-standard human intervention and just plain caring that made a difference.

    Perhaps that’s what we need to standardize – that each patient will be treated as a unique individual, with unique problems and unique circumstances and be provided with as much time and effort as necessary to allow for a unique solution. Some refer to this as patient-centered care, and strangely enough it is cheaper than the cattle herding model we now use, and it is rather different than data-centered care.

    Sorry for the rant. It’s not aimed at you Bobby…. :-)

    • BobbyG says:

      “I may be misreading the “Hot Spotters”, but my takeaway was that in order to fix the big problems we need anything but a standard approach to each and single one. Yes, IT can help with identifying the people, tracking and measuring improvements (savings), but it was high-touch non-standard human intervention and just plain caring that made a difference.”
      ___

      That suffices for me, Margalit (you, for whom I have the greatest respect). I wrestle with these issues every day. Every day. I could not be more sensitive to the problematic ongoing loose coupling of cause and effect in medicine.

      Recall when I wrote the year before my daughter died (1997′ish):

      “…First, the many physicians I have come to know in the past few years are in the main acutely sensitive to the problems of clinical conceit and “paradigm blinders.” Indeed, the Utah pediatrician’s”$100 bill” wisecrack was offered to an audience of doctors and their allied health personnel during quality improvement training. Second, the body of peer-reviewed medical literature does not constitute a clinical cookbook; even “proven” therapies– particularly those employed against cancers– are generally incremental in effect and sometimes maddeningly transitory in nature. The sheer numbers of often fleeting causal variables to be accounted for in bioscience make the applied Newtonian physics that safely lifts and lands the 747 and the space shuttle seem child’s play by comparison. Astute clinical intuition is a necessary component of a medical art that must, after all, act and act quickly– so often in the face of indeterminate, inapplicable, or contradictory research findings…”

      http://www.bgladd.com/1in3/

      I’m no newcomer to this party. And, again, no reflexive apologist.

    • BobbyG says:

      “it was high-touch non-standard human intervention and just plain caring that made a difference.”
      ___

      I should add that when I was undergoing the IHC Brent James CQI training in 1994 he made the pointed observation during the Plenary that medicine was both “high-tech and high-touch,” with the latter being more important overall in terms of resolution/patient acceptance irrespective of clinical outcomes.

      • You know, on a more materialistic level, I sometimes wonder if the increasingly disappearing high-touch from medical care is not largely responsible for both the malpractice suits epidemic and the futile care demand increase, which goes to the patient acceptance you are mentioning… It’s hard to accept anything from a drive-by stranger, even if he/she has a computer on hand.

        • BobbyG says:

          The long answer, IMO, is “yes.”

          • pcp says:

            See my reference above to Air France Fligth 447. The systems didn’t allow the pilots to do what they had been trained to do.

        • BobbyG says:

          I had my daughter referred to as “the Hepatoma in 7B.” I personally observed Rounds at UCLA neurosurgery after her brain met hemo blowup, wherein Attendings, residents, and med students discussed “the case” in the 3rd person IN her presence around her bed, like she wasn’t even there.

          Imagine.

  9. steve says:

    You guys should not necessarily extrapolate from university care. In private practice, the personal touch is still valued quite a bit. The problem for private guys is high touch while keeping costs down. You cannot spend an hour with every patient answering every question (studies show patients forget anyway) and have lower costs.

    You also touch upon a basic conundrum in medical care. Most docs are geeks. If you want touchy feely, you can have docs who dont understand the tech they use. It is hard to have it both ways. WHat should I do with my docs who rated in the 99th percentile for national quality of care measures, but ranked in the bottom 25th percentile on their Press-Gainey scores? Should I hire less competent, but nicer people?

    Steve

    • BobbyG says:

      Totally agree about the time billability constraints of private practice. You also make a good point about the difference between tech/analytic chops and personality.

      “Should I hire less competent, but nicer people?”

      You need BOTH “competencies” overall wherever you can get them.

      And, “pcp,” it’s a blinding glimpse of the obvious that sometimes complex systems will fail, occasionally with catastrophic upshot. Not sure I get your point.

      • pcp says:

        My point is that the crucial component of the system is the properly trained individual, be she pilot or physician.

        If the system is not designed to support her functioning at the highest possible level of excellence (which critically includes the freedom to go against all protocols when appropriate), we get disasters.

        There is much in the direction in which health care is headed that works for insurers and government agencies, but is directly hostile to excellence in physician performance.

        • BobbyG says:

          Again, I agree with your final point (and I would add the HIT vendors to the list). Just not that the Air France tragedy is an appropriate analogy.

  10. Barry Carol says:

    Steve –

    From a patient’s perspective, if I had a rare condition or something that was difficult to treat, I would be willing to tolerate a certain amount of arrogance or less than stellar bedside manner in order to access the doc’s clinical expertise. For most circumstances, though, I think a doc who ranks as the financial equivalent of investment grade or at least B+ in academic terms clinically with respectable (at least middle of the pack) Press-Gainey scores would be preferable to the doc who ranks at the top clinically but poorly on Press-Gainey. That’s just my opinion, of course. Others may feel very differently

  11. Steve,

    High-touch does not necessarily translate to touchy-feely. For example, as Barry noted, for a highly skilled acute intervention, you should be there before, during and after. You may come across as arrogant, down to earth or whatever, but you should be there and that one patient should be your sole concern during the time that you are there. I would suspect that your stellar docs fall into this category, no matter what the patients’ perceptions are, because I don’t think you can do a good job otherwise (in any profession).

    Even for PCPs, I’m not sure that touchy-feely is the real requirement. It may be for some people in some cases. I think high-touch encompasses thoroughness and a genuine commitment to the individual patient’s best interest. And yes, time is a big problem created by our penny wise and pound foolish payers (public and private alike).

  12. steve says:

    First, we are an acute care trauma center and a tertiary care facility. Much of what we do is high risk. How much competence do you want me to sacrifice? How do I quantify that? When the 17 y/o trauma patient or the 80 y/o AVR dies, do I tell the family it is ok, because the doc I hired was nice to them before the patient died?

    ” I think high-touch encompasses thoroughness and a genuine commitment to the individual patient’s best interest.”

    Hence, our 99th percentile on performance measures. To do well on Press Gainey scores, you need to go beyond competency to real touchy feely.

    Now, here is the other side of the equation. From the business side, I have every motivation to hire touchy feely. As long as our outcomes are above average, as long as we do not care about trying to provide the best possible care, we can make a lot more money. Touchy feely gets you the cushy, high paying surgicenter jobs. It makes patients come back. Administrators love it. While it would be nice to have docs who are good at both, people just are not hard wired that way.

    Steve

  13. Barry Carol says:

    Steve –

    Again from a patient’s perspective, I think there is a big difference between surgeons and other doctors. If I need surgery such as a CABG or a hip replacement, I want to know that the surgeon has done a lot of the procedure that I need, has been practicing for quite some time, is board certified and generally well regarded in his field. I don’t care nearly as much about his personality, especially since my interaction with him will probably be limited to the surgery itself during which time I’ll be under anesthesia anyway and a follow-up visit or two to ensure that things are healing and progressing as they are supposed to. For PCP’s and non-surgical specialists with whom I am likely to have an ongoing and long term relationship, personality and the personal chemistry between the two of us is much more important though I still care a lot about competence as well. I recognize that some specialists like urologists, gastroenterologists, etc. also do surgery but most of the patient’s encounters with them over time will be for non-surgical checkups and monitoring.

    Do you make a distinction in your hiring process between surgeons and non-surgeons? Also, how do you evaluate competence before you hire them? Presumably, they also need to be a good cultural fit with your group and your hospital.

  14. steve says:

    Barry- I am an anesthesiologist. We have about 45 providers now. I am corporate president. I look for clinical excellence first. I have recently hired some CT fellows, bringing in candidates from Cleveland Clinic, Penn, Duke and Texas Heart. I rely upon evals from program directors and only hire people when we can get recommendations from people we know.

    personality issues have become more important as we need outgoing, friendly types if we want the better paying work at surgicenters. Hospitals have also been pushing Press Gainey scores. We spend a lot of time interviewing, since we start way ahead. I tell people they will work a little harder and make a bit less than the national average. I also tell them the hospital is supportive of our efforts to practice quality medicine. So far, it has enabled me to recruit clinically solid folks. We dont rank in the 99th percentile every year, but we are always in the upper percentiles. Yet, we are in the middle or low middle Press Gaineys. Should I change? Why?

    Steve

  15. Barry Carol says:

    “Should I change? Why? “

    Steve –

    Absolutely not! It sounds like you and your people are doing a great job and providing great care. Middle of the pack on Press Gainey should be adequate for surgeons and anesthesiologists. For the latter, most patients don’t know them and have no role in choosing them anyway. I’ve had four surgeries, including a CABG that required an anesthesiologist. I had no role in choosing any of them and it didn’t bother me. I found the surgeons through referring doctors that I trusted.

    Surgeries lend themselves better than most care to outcomes measurement, including complication and readmission rates, though the risk adjustment process is less than perfect, I’m sure. I would think your group’s reputation for clinical excellence should generate positive word of mouth among both patients and referring docs throughout your region.

  16. Doctor Halamka has neatly summed up obstacles to automated IT reform of health care processes. After 7 years of government promotion of EHRs, backed by $27 billion in federal funds, only 2% of hospitals and doctors have fully functioning EHRs.

    The Obama administration may look upon IT as the Holy Grail, but hospitals and doctors do not. I am reminded of lyrics of a popular country western song, “Mother’s not dead. She is only asleeping, patiently waiting for Jesus to come.” For more on the near death of the IT Holy Grail, read my book The Health Reform Maze (Greenbranch Publishing), now on the market.

  17. You say:

    ” Important members of the workforce, the physicians delivering care, are seldom employed by the hospital.”

    This is incorrect. For the first time in US history, more doctors are employees of large hospital and health care systems than they are independent practices (See MGMA’s website). The unintended consequence of this action is that doctors are now bound to place their employer first before their needs of their patients. We see this as doctors are required to refer to their new employers, rather than skilled specialists that might be housed at a competing hosptial system. Futher, doctors are increasingly muzzled by corporate policy in regards to use of the internet.

    Patients need to take heed, since monetary interests will conflict directly with what the doctor perceives as the best medical curse of action. The challenges for doctors going forward in our new era of health care reform will be to consider ways to counter this inevitable ethical dilemma.

  18. Lisa Suennen says:

    Interesting post, but I think one other key issue was missed: a large number of hospitals and healthcare organizations function as not-for-profits and do not conduct themselves with the same financial rigor and drive for productive efficiency as other businesses. When businesses are financially rewarded for efficiency and productivity, they use IT to optimize their position. When they are not, they don’t. I realize that some people think that all healthcare should be not-for-profit, but I think that removes a great deal of the incentive to create a well-oiled machine. When you dig into the for-profit hospitals (or the few not-for-profits that act like they are), you see a much greater uptake of IT, by and large.

    Nevertheless, healthcare IT is definitely blossoming right now. Read more on this at http://www.venturevalkyrie.com/2011/07/26/the-second-coming-of-healthcare-it/2468

    • I don’t know about that, Lisa. All the top IT players I can think of are “non-profit” – Kaiser, Mayo, Geissinger, Intermountain, Mercy, Advocate, BIDMC, etc……

      What for-profits do you have in mind?

  19. steve says:

    “When you dig into the for-profit hospitals (or the few not-for-profits that act like they are), you see a much greater uptake of IT, by and large.”

    To find creative ways to bill for more. Talk with docs who work at those places.

    Steve

  20. tim says:

    “…a large number of hospitals and healthcare organizations function as not-for-profits and do not conduct themselves with the same financial rigor and drive for productive efficiency as other businesses. ”

    Nonsense. There is no functional difference between a “for-profit” and a “not for profit” hospital system as long as the senior managers are compensated based on the financial performance of the system. The “not for profits” simply call it “surplus”.

  21. The uniqueness of Healthcare as an industry in one of the assumptions underlying HealthStream”s business model. From e-Learning to talent management, we believe that a sector whose operations are largely determined by government regulation as well as the urgency of saving lives cannot be served by generic business applications. Only healthcare-specific solutions make sense when lives hang in the balance.

  22. J.D. Kleinke says:

    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.

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

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

      • Craig "Quack" Vickstrom, M.D. says:

        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…

  23. 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!

    • Craig "Quack" Vickstrom, M.D. says:

      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.

  24. 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.

    • Craig "Quack" Vickstrom, M.D. says:

      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.

  25. Barry Carol says:

    “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.

    • Craig "Quack" Vickstrom, M.D. says:

      “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.

  26. 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.

    • Craig "Quack" Vickstrom, M.D. says:

      “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.

  27. 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!

    • Craig "Quack" Vickstrom, M.D. says:

      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.

  28. Barry Carol says:

    “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.

    • pcp says:

      ” 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.

  29. “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.

    • Craig "Quack" Vickstrom, M.D. says:

      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.

  30. Barry Carol says:

    “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.

  31. pcp says:

    “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.

  32. claire says:

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

    Claire
    diabetesshield.com

  33. 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

  34. santosh says:

    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)

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