The Business of Health Care

The Business of Health Care

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Or…it’s complicated.flying cadeucii

The New York Times today published a story titled, “No, Giving More People Health Insurance Doesn’t Save Money.” A piece of the argument is, as the author Margo Sanger-Katz puts it, “Almost all preventive health care costs more than it saves.”

What do you think? What’s the evidence? Leave aside, for the moment, the “big duh” fact that at least in the long term saving people’s lives in any way will cost more, because we are all going to die of something, and will use a lot of healthcare on the way. Leave aside as well the other “big duh” argument: It may cost money, but that money is worth it to save lives and relieve suffering. Leave that argument aside as well. The question here is: Does getting people more preventive care actually lower healthcare costs for whoever is paying them?

My thoughts? #1: No consultant worth his or her salt trying to help people who are actually running healthcare systems would take such a blanket, simple answer as a steering guide. Many people running healthcare systems across the country are seriously trying to drop real costs, and how you do that through preventive care is a live, complex and difficult conversation all across healthcare.

3

ROBERT M. ROWLEY

Health care in the U.S. is on the threshold of fundamental change. Powered by advances in federal policy, the underlying way in which we pay for health care is moving from the traditional fee-for-service, pay-for-volume historic approach to one that pays for demonstrated value. The way in which value is measured is still evolving, but risk-sharing, measuring the health status of populations, and coordinating care in order to improve effectiveness and reduce the total cost of care are the basic planks upon which this new environment is being built.

This next chapter of U.S. health care will require changes on several levels. For starters, the way physicians are organized is changing. Though still prominent elements of the landscape, small and solo practices are fading – sometimes by going out of business, sometimes by retirement, sometimes by being bought by health systems. What are growing are organized health delivery networks, either in consolidated centers or distributed in local practices in the community (but owned by, or affiliated with, larger, recognized institutions). The capital needs and staffing reconfiguration are things that are generally beyond the reach of smaller practices. Bringing on other care team members, beyond just the doctors – case managers, care coordinators, health educators, and numerous other new roles that have yet to fully emerge – generally just doesn’t work in smaller practices. This is particularly true in a fee-for-service environment, where the only way to get paid is to have face-to-face contact with doctors. In that setting, everything else is overhead .In a value-based setting, all that changes.

1

Optimized-pronovostWhen you are a patient at a hospital, you want to know that the executives who run that facility put the safety and quality of care above all other concerns. Encouragingly, more of them are saying that safety is indeed their number-one priority—a fitting answer given that preventable patient harm may claim more than 400,000 lives a year in the United States.

Yet when you look at the way that most hospitals and corporate health systems are organized, weak infrastructure exists to support that priority. True, some hospital boards of trustees have made safety and quality their first order of business. At meetings, they might hear directly from a patient who suffered a medical error, sit through a case study of a unit that reduced complications, or get an overview of various efforts to boost the patient experience and improve outcomes.

Stories can inspire culture change. Sustained improvements, however, require health care organizations to institute top-to-bottom accountability for performance.

What would it look like if safety and quality truly were addressed this way? It might be something like how most hospitals’ finances are managed, from the board level to the smallest unit.

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Screen Shot 2015-03-21 at 4.26.26 PMRecently I wrote about the problems with Maintenance of Certification requirements.  One of the phrases I read repeatedly when I was researching the piece was “the patient as customer.”  Here’s a quote from the online journal produced by Accenture, the management consulting company:

Patients are less forgiving of poor service than they once were, and the bar keeps being raised higher because of the continually improving service quality offered by other kinds of companies with whom patients interact—overnight delivery services, online retailers, luxury auto dealerships and more. With these kinds of cross-sector comparisons now the norm, hospitals will have to venture beyond the traditional realm of merely providing world-class medical care. They must put in place the operations and processes to satisfy patients through differentiated experiences that engender greater loyalty. The key is to approach patients as customers, and to design the end-to-end patient experience accordingly.

Except for one thing.  Patients are NOT customers.

The definition of a “customer” is a person or entity that obtains a service or product from another person or entity in exchange for money.  Customers can buy either goods or services.  Health care is classified by the government as a service industry because it provides an intangible thing rather than an actual thing.  If you buy a good, like a car, you voluntarily decide to shop around and get the best car you can for the price.  Even a vacation, especially a vacation package or a cruise, is a good.  A nice dinner, while a good in the sense of the food, is also a service.  You buy the services of the cook and servers.

Here is why the patient shouldn’t be considered a customer, at least not in the business sense.

1. Patients are not on vacation.  They are not in the mindset that they are sitting in the doctors office or the hospital to have a good time.  They are not relaxed, they have not left their troubles temporarily behind them.  They have not bought room service and a massage. They are not in the mood to be happy.  They would rather not be requiring the service they are requesting.  Which leads to number 2:

2. Patients have not chosen to buy the service.  Patients have been forced to seek the service, in most cases.

3. Patients are not paying for the service.  At least not directly.  And they have no idea what the price is anyway.

4. Patients are not buying a product from which they can demand a positive outcome.  Sometimes the result of the service is still illness and/or death.  This does not mean the service provided was not a good one.

5. The patient is not always right.  A patient cannot, or should not, go to a doctor demanding certain things.  They should demand good care, but that care might mean denying the patient what the patient thinks he or she needs.  The doctor is not a servant; she does not have to do everything the patient wants.  She is obligated to do everything the patient needs.

6. Patient satisfaction does not always correlate with the quality of the product.A patient who is given antibiotics for a cold is very satisfied but has gotten poor quality care.  A patient who gets a knee scope for knee pain might also be very satisfied, despite the fact that such surgery has been shown to have little actual benefit in many types of knee pain.

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Betsy Lehman

Twenty years ago this month, the Boston Globe disclosed that health columnist Betsy Lehman, a 39-year-old mother of two, had been killed by a drug overdose during treatment for breast cancer at Dana-Farber Cancer Center. In laying out a grim trail of preventable mistakes at a renowned institution, the Globe prompted local soul searching and a new focus on patient safety nationally.

Although I didn’t know Betsy personally, we were about the same age, had two kids about the same ages and were in the same profession. (I, too, was a health care journalist.) That’s why I was particularly disappointed by a recent conference celebrating the reopening of the Betsy Lehman Center for Patient Safety and Medical Error Reduction. It was heavy on statistics and poll results; e.g., one in four Massachusetts adults say they’ve seen an error in their own care or the care of someone close to them.

While it’s true that Boston is the epicenter of thinking, writing and speaking about patient safety, words do not always translate into deeds.

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Jack CochranRecently we wrote a blog post promoting the benefits of shifting from fee-for-service to value-based payments. We praised the recent decision by leaders at the U.S. Department of Health and Human Services (HHS) to accelerate that shift, and we were then and remain convinced this shift paves the way for better, more affordable care.

There were some strong reactions to the post.

Some people think capitated payments have been discredited, others believe the change from fee-for-service will change little. One physician told John Irvine, editor at The Health Care Blog, that he got the impression from our post that we were saying value-based payments would make physicians lives easier. “Really?” Irvine’s doctor friend said. “You’re making my life easier? Prove it.”

How Will the Practice of Medicine Change?

We didn’t actually use the word easier in the post though we did say that “increasingly, physicians seek liberation from the constraints of fee-for-service in order to focus on the overall health of their patients. Value-based payments allow doctors to do exactly that.” So we definitely hear what Irvine’s friend is saying — and we understand his frustration. Has there ever been a time when so many physicians have been worn thin — angry with the direction of our health care system?

Irvine invited us to respond to his friend and we thought we would do so by soliciting the thoughts of Scott Young, MD, executive director of Kaiser Permanente’s Care Management Institute and associate executive director for Clinical Care and Innovation at The Permanente Federation.

“Easier?” said Dr. Young. “No, value-based payments don’t make doctors’ lives easier. But I think it does make the practice of medicine more rewarding and fulfilling.”

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flying cadeuciiIn recent weeks, the market has reacted to a few noteworthy headlines, all involved with or touching upon value-based discretionary actions, and many with the not-so-hidden question: What’s In It for Me or WIIFM?

  • CMS announced that by 2016 30% of fees in health care should be paid for through a value-based system, moving away from fee-for-service.
  • ACO results have shown ambivalent outcomes.
  • Outcomes-based contracts have permeated the Hepatitis C cost-nado (that’s a cost sharknado, the kind that fiercely defies cost controls and takes over all noise about payment reform and patient preferences).
  • Reference-based pricing is a good/bad troublemaker in the middle of the value-based travails.

The latest rampages have appeared on two national and highly-regarded blogs: The Health Care Blog [Value-Based Reform] and The Health Affairs Blog [Go Slow on Reference Pricing].

As one of the loudest proponents on value-based designs, I lift the curtain again to show the thinking behind the movement from fee for service to value-based designs. All of these items above discuss the message of payment reform, or system alignment, but they are intensely linked to the patient-consumer ability to make the right choices, choose the right sites for care, and pay the right amount for services rendered to achieve health security.

This last—health security—should be at the heart of the US health system.

▪      It’s the place where patient competency is built and tested over time, as the patient becomes aware of health risks and chooses to modify behaviors to lower the risk.
▪      It’s the place where, when there are acute or emergent symptoms, there is no question but that the patient will be able to access the appropriate and affordable care in the safest possible setting, hopefully receiving care that delivers the patient back to functional health.
▪      It’s the place where caregivers and administrators are paid a competitive wage for serving the needs of the patient and getting the patient back to the best health possible.

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flying cadeucii“Where in the Affordable Care Act (ACA) does it mandate that every health insurance policy must include a free annual checkup?”

I posed this question to Al Lewis and Vik Khanna in the comments of their recent post entitled: The High Cost of Free Checkups, where they argue against the Affordable Care Act (ACA) provision that requires “free checkups for everyone.” They cite a recent New York Times Op-ed authored by ACA co-architect, Dr. Ezekiel Emanuel, that essentially debunks the link between annual checkups and overall health outcomes.  For Lewis and Khanna the solution is simple, we need to “remove the ACA provision that makes annual checkups automatically immune from deductibles and copays.” But for me there’s an enormous problem with their argument: The ACA doesn’t actually have any such provision.

After raising the issue in the comments section of the post, Mr. Lewis responded informing me that: “It’s definitely there” and “You’ll have to find it on your own, though — I unfortunately have to get back to my day job.” What Mr. Lewis doesn’t consider with his quick dismissal, is that I have already looked.  I’ve combed through the law and other policy guidance, rules and regs; searching for any mention of this required annual wellness exam, physical, visit, or any other linguistic derivative.  It doesn’t exist.

It turns out that while the law does require that an annual wellness visit be covered (sec. 4103. “Medicare coverage of annual wellness visit providing a personalized prevention plan”), this requirement is specific to Medicare beneficiaries and does not apply to individual or group plans. Beyond this particular section you won’t find any mention of a requirement within the ACA.

So what gives?  Lewis and Khanna aren’t the only ones who’ve mentioned this “free” Obamacare benefit. Even when researching this piece I had to engage in a lengthy discussion with a friend who is a healthcare policy advisor, unexpectedly defending my position. This claim has to be coming from somewhere, surely people smarter than me have gotten it right?

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SCOTUS ROBERTS

By now, every reader of THCB must be aware the Supreme Court is hearing arguments this week in a case that could undermine much of Obamacare. Simplifying somewhat, the plaintiffs in King versus Burwell argue that the phrase “exchange established by the state” in the Affordable Care Act’s section 1311 dealing with tax subsidies precludes making such subsidies available to those who enroll through the federal exchange(s).  The government argues (a) that other sections of the law make it apparent that all exchange enrollees are potentially eligible for subsidies, and (b) that language in section 1321 providing that HHS shall “establish and operate such exchange within the state,” where a state is unable or unwilling to create their own exchange, essentially establishes a state exchange.

As many media articles have commented, the implications of a SCOTUS ruling for the plaintiffs are huge. Some five to eight million enrollees in the 34 federal exchange states would lose their subsidies, making insurance unaffordable for many of them, and premiums in these states would skyrocket—all while leaving the existing tax fines for being uninsured in place.

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flying cadeuciiAmerican anesthesiology reached a significant milestone last year, though many of us probably missed it at the time.

In February, 2014, the number of nurse anesthetists in the United States for the first time exceeded the number of physician anesthesiologists. Not only are there more nurses than physicians in the field of anesthesia today, the number of nurses entering the field is growing at a faster rate than the number of physicians. Since December, 2012, the number of nurse anesthetists has grown by 12.1 percent compared to 5.8 percent for physician anesthesiologists.

The numbers—about 46,600 nurse anesthetists and 45,700 physician anesthesiologists—reported in the National Provider Identifier (NPI) dataset for January, 2015, probably understate the growing disparity. Today, more and more physicians are leaving the front lines of medicine, many obtaining additional qualifications such as MBA degrees and embarking on new careers in hospital administration or business.

Physician anesthesiologists can expect that fewer of us every year will continue to work in the model of personally providing anesthesia care to individual patients. Clinical practice is likely to skew even more toward the anesthesia care team model, already dominant in every part of the US except the west coast, with supervision of nurse anesthetists and anesthesiologist assistants.