By Jaan Sidorov, MD

Investors just ponied up well over $100 billion for a piece of the social media giant Facebook. While Mr. Zuckerberg and his co-founders deserve a hearty congratulations, I find some eerie parallels between Facebook and accountable care organizations.  The similarity does not bode well for either business model.

1. The users are not the customers: Facebook sells its users to marketeers.  ACOs sells its patients’ health care utilization to insurers.

2. It’s the data and it’s not yours: Facebook’s targeted ads are constructed off of prior usage patterns. ACO’s shared savings calculations are built off off actuarially determined health care utilization patterns.

3. Sovereign hostility: Washington DC views information technology and health care as distractions from the true task at hand: restoring the U.S. manufacturing base.

4. Do you care, really? Now that the wunderkids in charge of Facebook have made their millions, it remains to be seen if they’ll work as hard in delivering value to its users.  Ditto for all the salaried docs working for ACOs, who no longer have to arrive early, skip lunch and stay late.

5. The long term: Yahoo once was the darling of internet investors.  Even if ACOs have initial success, is a better care model being developed as you are reading this?

Continue reading “The Facebook-ACO-Military-Industrial Complex”

By Michael Millenson

There I was, going one-by-one through a list of doctor and hospital groups that had volunteered to be one of the “accountable care organizations” authorized by health care reform, when I inexplicably found myself breaking into song. I know: it’s a really strange way to react to ACOs, but bear with me.

You remember, “This Land is Your Land,” don’t you? Written by Woody Guthrie in 1940, it caught the folk music wave of the 1950s, and has been sung ever since by performers ranging from Pete Seeger to Johnny Cash. Odds are you at least know the first verse:

This land is your land, this land is my land

From California to the New York Island

From the Redwood Forest to the Gulf Stream waters

This land was made for you and me.

ACOs are not obviously song-worthy, although they are significant. One of the Affordable Care Act’s signature initiatives, they initially drew bipartisan support as far back as…well, 2010. In April, the government announced that thousands of doctors serving more than 1.1 million Medicare beneficiaries had voluntarily joined ACOs, giving up fee-for-service reimbursement for some patients in exchange for a paycheck that’s based on measurable standards related to high-quality, cost-effective care. They’ve made the switch because it’s the right thing to do and because they’re getting ready for a day when Medicare’s fee-for-service money dries up.

Continue reading “Pete Seeger’s Blues”

By Wil Yu

In just about a month, the third Annual Health Datapalooza will take place in Washington, DC – a celebration of data-driven healthcare innovation (tax-payer funded data, by the way).  The part of the program that I’m personally looking forward to is the Apps Expo of about a hundred or so health apps that will be showcased throughout the event.  While there will be center stage presentations by a cavalcade of inspiring leaders (including Thomas Geotz and Bob Kocher), what is noteworthy is that there will be the opportunity to participate in roundtable discussions and deep dive sessions on top-of-mind areas of development such as big data, ACOs, and consumer data liberation. (liberacion!)

But what is the value in attendance? Better question, why has the event attracted more and more new attendees recently?

I’ve spent the last few years supporting private-sector healthcare innovation – especially around health IT.  What I’ve come to appreciate from those dedicated to the space – whether a two person startup or a carve-out within a large technology prime – is that success at every stage of innovative development is predicated on how quickly one can create value based on the expectations of the relevant stakeholders at that stage.

Continue reading “Breaking Down the Process of Innovation: The Value of Community”

By Jeff Goldsmith

A recent spate of commentaries on the continuing health spending moderation raise an important policy question:  If the cost curve is well and truly bent, why are we investing so much of our policy energy on bending it further, when the more pressing problem is the declining percentage of Americans that can afford our health system’s astronomical costs?

Health spending the past two reported years (2009 and 2010) have grown in the high 3 percent range, the lowest growth rates since Dwight Eisenhower’s last year in office (1960), five years before Medicare. Medicare’s actuaries have pointed to the recession as a root cause.  Yet even Medicare spending growth has subsided to about 5 percent in 2010, a development hard to attribute to recession since so few Medicare patients have first-dollar cost exposure. This analyst’s extensive industry contacts suggest no spending rebound in 2011 and 2012, despite an aging population and fee-for-service’s pernicious volume-increasing incentives in full force.

Pharmaceutical spending. The two most explosive cost problems of the 1980’s and 1990’s, pharmaceutical spending and imaging — which together now represent about 20 percent of total health spending — are now seeing low single digit growth, and seem likely to remain quiescent.  In the pharma case, the main contributor is the ruinous outflow of branded drugs from patent protection, and the failure to replace them with new protected drugs.  This outflow continues unabated until 2018.  Branded drug prescriptions are shrinking by 5 percent per year, and the only things preventing pharmaceutical sales from actually declining are brand price increases and growth in generics, which now represent almost 80 percent of prescriptions, according to IMS Health.  While specialty drugs (biologicals) remain a concern, those too begin losing patent protection in earnest in the next few years.

Continue reading “Barking Up The Wrong Tree: Affordability, Not Cost Growth, Is The Policy Challenge”

By John Goodman

On the eve of the release of this year’s Medicare Trustees report, the Obama administration released its own version of it. In the administration’s telling:

• Health reform (ObamaCare) will save taxpayers $200 billion in the Medicare program through 2016.
• About 90% of these savings will be produced by lowering “excessive payments” to Medicare Advantage plans, lower payments to doctors, hospitals and other providers to reflect their “improved productivity,” and through efficiencies gained by what is learned from “demonstration projects.”
• The demonstration projects include pay for performance, bundling, Accountable Care Organizations, and other frequently discussed ideas.

But whereas the Trustees report is expected to be a serious document, reflecting accepted accounting principles, the administration’s document was clearly a piece of political propaganda — one that stretched the truth so much that the word “spin” would be a charitable description. For example, the administration’s document failed to mention that:

• The Congressional Budget Office has studied the demonstration projects on three separate occasions (here, here and here) and each time has concluded that they are producing no serious savings and are unlikely to do so in the future.
• Medicare’s Actuary has determined that reductions in payments to Medicare Advantage plans will not only result in lower benefits for the one in four seniors who are in these plans, but that about 7 ½ million enrollees will actually lose their coverage and have to seek more expensive Medigap insurance elsewhere.

Continue reading “Bernie Madoff Accounting for Medicare”

By Vince Kuraitis

I’m surprised and intrigued by Medicare’s announcement of 27 new Shared Savings model ACOs.

Surprised

I had been anticipating this announcement as a defining moment for Medicare’s thrust into accountable care. My expectations had been that we would see either:

Boom — a big splash of new Medicare shared savings ACOs announced, including big name hospitals and medical groups that were starting large scale ACOs, perhaps with hundreds of thousands of patients.

Bust — no one showed up at the party. Providers would have concluded that Medicare ACOs were too risky, bureaucratic, and high effort.

Intrigued

What we got is something in the middle:

• Very small ACOs. Many only meet Medicare’s minimum of 5K patients; most are in the 8 to 25K range; and the largest ACO anticipates 70K patients. Collectively these 27 ACOs plan to serve 375K patients, less than 1% of the entire Medicare population.
• 13 are smaller, physician led
• Only 10 hospitals are involved across the 27 ACOs
• Very few household names

Continue reading “Medicare Announces 27 ACOs. A New Species?”

By JD Kleinke

“The only constant in health care is change.”

It’s one of those clichés peddled at health care industry conferences by consultants who charge by the hour for helping attendees brace their organizations for all those terrifying changes just over the horizon. Not only is this cliche not true, but it is exactly untrue. The only constant in health care is gnawing anxiety about change that never actually occurs.

The Obama Administration’s health care reform plan – we can all call it “ObamaCare” now that the Administration finally owns the label it should have from the outset – is the motherlode of anxiety over change about to storm through the health care system. That is, unless you happen to cover your ears and block out all the partisan screaming, along with the political ideology dressed as legal arguments in the Supreme Court this week, and look at the actual plan and its numbers.

Yes, ObamaCare is expected to cram 30 million uninsured people into the current non-system. Complementary elements of the law make it illegal for health insurers to kick any of us out if we get too sick or stop paying our bills if we get too expensive. And if an insurer makes too much money in the process, it needs to refund a portion. Aside from these four economically intertwined health insurance market reforms, most everything else about ObamaCare is business as usual.

To wit: access to commercial health insurance for most of us will still run through the workplace; our employers will still, for better or worse, be charged with money-managing the system they love to hate, a messy, intrusive, difficult role foisted on them as an accident of history in the 1940s and enshrined in the tax code ever since. Health insurers will continue to operate half their book of business on a state-by-state basis, and the other half nationwide for self-insured employers, thus maximizing complexity, confusion and administrative cost for everyone involved.

There will be no new public health care plan for hard-pressed households – just a huge expansion of the nation’s 50 broke and broken Medicaid plans, plus subsidized coverage for the luckier among the working poor to purchase (at the fountain-pen gunpoint of the IRS) a plan from commercial health insurers. Those insurers will continue to design and sell their plans based on the crazy-quilt of local standards and state benefit mandates, along with a few new federal mandates for preventive services – including things like the economically trivial but culturally explosive birth control pill.
Continue reading “ObamaCare and the End of Nothing”

By JOHN HALAMKA, MD

What is a payer/insurer?

Typically, payer organizations collect premiums from employers and individuals, process claims, and engage in a variety of case management/disease management activities to encourage the appropriate use of medical resources.   If they collect more premiums than claims paid,  their medical loss ratio is less than 100% and they earn a profit.

In a world of accountable care organizations and healthcare reform, new reimbursement methods will include global payments to providers, which implies the risk of loss will shift from the payer to hospitals and clinicians.   Payers will no longer need their large claims processing staff, nor create complex actuarial models.   They’ll become very different organizations.

How different?

My prediction is that payers will become the health information exchange and analytics organizations that help hospitals and clinicians manage risk in a world of capitation.

I’ve said before that ACO=HIE+Analytics.

The payers are already making strategic acquisitions to build these new business models

Aetna acquired Medicity to gain expertise in healthcare information exchange.  Aetna had already acquired Active Health to gain access to its CareEngine analytics platform.

Continue reading “Will Payers be the Business Intelligence Services of the Future?”

By Fred Trotter

Yesterday, one of the founders of Twitter, Biz Stone, gave the opening keynote at HIMSS.

This is probably going to be the best keynote at HIMSS, followed by a speech from Dr. Farzad Mostashari, which will also be excellent. It goes downhill after that: there will be a talk about politics and another talk from an “explorer.” I am sure those will be great talks, but when I go to HIMSS, I want to hear about health information technology. Want to know what @biz actually said? As usual, Twitter itself provides an instant summary.

HIMSS stands for Healthcare Information and Management Systems Society. The annual HIMSS conference is the largest Health IT gathering on the planet. Almost 40,000 people will show up to discuss healthcare information systems. Many of them will be individuals sent by their hospitals to try and find out what solutions they will need to purchase in order to meet meaningful use requirements. But many of the attendees are old school health IT experts, many of whom have spent entire careers trying to bring technology into a healthcare system that has resisted computerization tooth and nail. This year will likely break all kind of attendance records for HIMSS. Rightly so: The value of connecting thousands of health IT experts with tens of thousands who are seeking health IT experts has never been higher.

It is ironic that Biz Stone is keynoting this year’s talk, because Twitter has changed the health IT game so substantially. I say Twitter specifically, and not “social media” generally. I do not think Facebook or Google+ or your social media of choice has had nearly the impact that Twitter has had on healthcare communications.

HIMSS, and in many cases traditional health IT along with it, is experiencing something of a whirlwind. One force adding wind has been the fact that President Obama has funded EHR systems with meaningful use, and made it clear that the future of healthcare funding will take place at Accountable Care Organizations (ACO) that are paid to keep people healthy rather than to cover procedures when they are sick. It is hard to understate the importance of this. Meaningful Use and ACOs will do more to computerize medicine in five years than the previous 50 years without these incentive changes. Continue reading “Who Is Biz Stone and What Is Twitter?”

By John Halamka, MD

I support over 3000 clinicians in heterogeneous sites of care – solo practitioners, small offices, multi-specialty facilities, community hospitals, academic medical centers, and large group practices.

In every location there is some level of dissatisfaction with their EHR.   Complaints about usability, speed of documentation, training, performance, and personalization limitations are typical.   Most interesting is that users believe the grass will be greener by selecting another EHR.

I’ve heard from GE users who want Allscripts, eClinicalworks users who want Epic, Allscripts users who want AthenaHealth, and NextGen users who want eClinicalWorks.

The bottom line from every product I’ve used and everyone I’ve spoken with is that there is no current “perfect” EHR.   We’re still very early in the EHR maturity lifecycle.

What is the perfect EHR?   I’ve written about my best thinking, which has been incorporated into the BIDMC home built record, webOMR.   (and has dissatisfied users too)

However, after listening to many “grass is greener” stories, I believe that what a provider perceives as a better EHR often represents trade offs in functionality.  One EHR may have better prescribing functionality while another has better letters, another is more integrated and another has better support.  The “best” EHRs, according to providers, varies by what is most important to that individual provider/practice, which may not be consistent with enterprise goals or the needs of an Accountable Care Organization.

Continue reading “The Perfect EHR”