Healthcare costs far too much. We can do it better for half the cost. But if we did cut the cost in half, we would cut the jobs in half, wipe out 9% of the economy and plunge the country into a depression.
Really? It’s that simple? Half the cost equals half the jobs? So we’re doomed either way?
Actually, no. It’s not that simple. We cannot of course forecast with any precision the economic consequences of doing healthcare for less. But a close examination of exactly how we get to a leaner, more effective healthcare system reveals a far more intricate and interrelated economic landscape.
In a leaner healthcare, some types of tasks will disappear, diminish, or become less profitable. That’s what “leaner” means. But other tasks will have to expand. Those most likely to wane or go “poof” are different from those that will grow. At the same time, a sizable percentage of the money that we waste in healthcare is not money that funds healthcare jobs, it is simply profit being sucked into the Schwab accounts and ski boats of high income individuals and the shareholders of profitable corporations.
Let’s take a moment to walk through this: how we get to half, what disappears, what grows and what that might mean for jobs in healthcare.
Getting to half
How would this leaner Next Healthcare be different from today’s?
Waste disappears: Studies agree that some one third of all healthcare is simple waste. We do these unnecessary procedures and tests largely because in a fee-for-service system we can get paid to do them. If we pay for healthcare differently, this waste will tend to disappear.
Prices rationalize: As healthcare becomes something more like an actual market with real buyers and real prices, prices will rationalize close to today’s 25th percentile. The lowest prices in any given market are likely to rise somewhat, while the high-side outliers will drop like iron kites.
Internal costs drop: Under these pressures, healthcare providers will engage in serious, continual cost accounting and “lean manufacturing” protocols to get their internal costs down.
The gold mine in chronic: There is a gold mine at the center of healthcare in the prevention and control of chronic disease, getting acute costs down through close, trusted relationships between patients, caregivers, and clinicians.
Tech: Using “big data” internally to drive performance and cost control; externally to segment the market and target “super users;” as well as using widgets, dongles, and apps to maintain that key trusted relationship between the clinician and the patient/consumer/caregiver.
Consolidation: Real competition on price and quality, plus the difficulty of managing hybrid risk/fee-for-service systems, means that we will see wide variations in the market success of providers. Many will stumble or fail. This will drive continued consolidation in the industry, creating large regional and national networks of healthcare providers capable of driving cost efficiency and risk efficiency through the whole organization.
Continue reading “Half the Cost. Half the Jobs?”
Filed Under: Economics, THCB
Tagged: Automation, Big Data, Consolidation, Health Care Costs, jobs, Joe Flower, Waste
Jul 25, 2014
European health care systems are already awash in “big data.” The United States is rushing to catch up, although clumsily thanks to the need to corral a century’s worth of heterogeneity. To avoid confounding the chaos further, the United States is postponing the adoption of the ICD-10 classification system. Hence, it will be some time before American “big data” can be put to the task of defining accuracy, costs and effectiveness of individual tests and treatments with the exquisite analytics that are already being employed in Europe. From my perspective as a clinician and clinical educator, of all the many failings of the American “health care” system, the ability to massage “big data” in this fashion is least pressing. I am no Luddite – but I am cautious if not skeptical when “big data” intrudes into the patient-doctor relationship.
The driver for all this is the notion that “health care” can be brought to heel with a “systems approach.”
This was first advocated by Lucien Leape in the context of patient safety and reiterated in “To Err is Human,” the influential document published by the National Academies Press in 2000. This is an approach that borrows heavily from the work of W. Edwards Deming and later Bill Smith. Deming (1900-1993) was an engineer who earned a PhD in physics at Yale. The aftermath of World War II found him on General Douglas MacArthur’s staff offering lessons in statistical process control to Japanese business leaders. He continued to do so as a consultant for much of his later life and is considered the genius behind the Japanese industrial resurgence. The principal underlying Deming’s approach is that focusing on quality increases productivity and thereby reduces cost; focusing on cost does the opposite. Bill Smith was also an engineer who honed this approach for Motorola Corporation with a methodology he introduced in 1987. The principal of Smith’s “six sigma” approach is that all aspects of production, even output, could be reduced to quantifiable data allowing the manufacturer to have complete control of the process. Such control allows for collective effort and teamwork to achieve the quality goals. These landmark achievements in industrial engineering have been widely adopted in industry having been championed by giants such as Jack Welch of GE. No doubt they can result in improvement in the quality and profitability of myriad products from jet engines to cell phones. Every product is the same, every product well designed and built, and every product profitable.
Continue reading “Missing the Forest For the Granularity”
Filed Under: OP-ED, THCB
Tagged: Big Data, Epic, ICD-10, Lucian Leape, Quality, Six Sigma, Systems Approach
Jul 11, 2014
An organization’s “business model” means: How does it make a living? What revenue streams sustain it? How it does that makes all the difference in the world.
Saturday, Natasha Singer wrote in the New York Times about health plans and healthcare providers using “big data,” including your shopping patterns, car ownership and Internet usage, to segment their markets.
The beginning of the article featured the University of Pittsburgh Medical Center (UPMC) using “predictive health analytics” to target people who would benefit the most from intervention so that they would not need expensive emergency services and surgery. The later part of the article mentioned organizations that used big data to find their best customers among the worried well and get them in for more tests and procedures. The article quoted experts fretting that this would just lead to more unnecessary and unhelpful care just to fatten the providers’ bottom lines.
The article missed the real news here: Why is one organization (UPMC) using big data so that people end up using fewer expensive healthcare resources, while others use it to get people to use more healthcare, even if they don’t really need it?
Because they are paid differently. They have different business models.
UPMC is an integrated system with its own insurance arm covering 2.4 million people. As a system it has largely found a way out of the fee-for-service model. It has a healthier bottom line if its customers are healthier and so need fewer acute and emergency services. The other organizations are fee-for-service. Getting people in for more tests and biopsies is a revenue stream. For UPMC it would just be a cost.
The evil here is not using predictive modeling to segment the market. The evil here is the fee-for-service system that rewards waste and profiteering in medicine.
Filed Under: Tech, THCB
Tagged: Big Data, Business model, Fee-for-service, Predictive analytics, UPMC
Jul 1, 2014
At the first White House public workshop on Big Data, Latanya Sweeney, a leading privacy researcher at Carnegie Mellon and Harvard who is now the chief technologist for the Federal Trade Commission, was quoted as asking about privacy and big data, “computer science got us into this mess; can computer science get us out of it?”
There is a lot computer science and other technology can do to help consumers in this area. Some examples:
• The same predictive analytics and machine learning used to understand and manage preferences for products or content and improve user experience can be applied to privacy preferences. This would take some of the burden off individuals to manage their privacy preferences actively and enable providers to adjust disclosures and consent for differing contexts that raise different privacy sensitivities.
Computer science has done a lot to improve user interfaces and user experience by making them context-sensitive, and the same can be done to improve users’ privacy experience.
• Tagging and tracking privacy metadata would strengthen accountability by making it easier to ensure that use, retention, and sharing of data is consistent with expectations when the data was first provided.
• Developing features and platforms that enable consumers to see what data is collected about them, employ visualizations to increase interpretability of data, and make data about consumers more available to them in ways that will allow consumers to get more of the benefit of data that they themselves generate would provide much more dynamic and meaningful transparency than static privacy policies that few consumers read and only experts can interpret usefully.
In a recent speech to MIT’s industrial partners, I presented examples of research on privacy-protecting technologies.
Continue reading “Using Technology to Better Inform Consumers about Privacy Decisions”
Filed Under: Uncategorized
Tagged: Apps, Big Data, Brookings Institution, Cameron Kerry, Consumer Protection, Design, Privacy
Apr 30, 2014
Human beings are big data. We aren’t just 175 pounds of meat and bone. We aren’t just piles of hydrogen and carbon and oxygen. What makes us all different is how it’s all organized and that is information.
We can no longer treat people based on simple numbers like weight, pulse, blood pressure, and temperature. What makes us different is much more complicated than that.
We’ve known for decades that we are all slightly different genetically, but now we can increasingly see those differences. The Hippocratic oath will require doctors to take this genetic variability into account.
I’m not saying there isn’t a place for hands-on medicine, empathy, psychology and moral support. But the personalized handling of each patient is becoming much more complicated. The more data we can gather, the more each individual is different from others.
In our genome, we have approximately 3 billion base pairs in each of our trillions of cells. We have more than 25,000 genes in that genome, sometimes called the exome. Each gene contains instructions on how to make a useful protein. And then there are long stretches of our genomes that regulate those protein-manufacturing genes.
In the early days, some researchers called this “junk DNA” because they didn’t know what it did. But this was foolish because why would evolution conserve these DNA sequences between genes if they did nothing? Now we know they too do things that make us unique.
Continue reading “Is Medicine a Big Data Problem?”
Filed Under: Uncategorized
Tagged: Big Data, genomics, Personalized Medicine, Ted Driscoll
Mar 29, 2014
In their best-selling 2013 book Big Data: A Revolution That Will Transform How We Live, Work and Think, authors Viktor Mayer-Schönberger and Kenneth Cukier selected Google Flu Trends (GFT) as the lede of chapter one.
They explained how Google’s algorithm mined five years of web logs, containing hundreds of billions of searches, and created a predictive model utilizing 45 search terms that “proved to be a more useful and timely indicator [of flu] than government statistics with their natural reporting lags.”
Unfortunately, no. The first sign of trouble emerged in 2009, shortly after GFT launched, when it completely missed the swine flu pandemic. Last year, Nature reported that Flu Trends overestimated by 50% the peak Christmas season flu of 2012. Last week came the most damning evaluation yet.
In Science, a team of Harvard-affiliated researchers published their findings that GFT has over-estimated the prevalence of flu for 100 out of the last 108 weeks; it’s been wrong since August 2011.
The Science article further points out that a simplistic forecasting model—a model as basic as one that predicts the temperature by looking at recent-past temperatures—would have forecasted flu better than GFT.
In short, you wouldn’t have needed big data at all to do better than Google Flu Trends. Ouch.
In fact, GFT’s poor track record is hardly a secret to big data and GFT followers like me, and it points to a little bit of a big problem in the big data business that many of us have been discussing: Data validity is being consistently overstated.
As the Harvard researchers warn: “The core challenge is that most big data that have received popular attention are not the output of instruments designed to produce valid and reliable data amenable for scientific analysis.”
The amount of data still tends to dominate discussion of big data’s value. But more data in itself does not lead to better analysis, as amply demonstrated with Flu Trends. Large datasets don’t guarantee valid datasets. That’s a bad assumption, but one that’s used all the time to justify the use of and results from big data projects.
Continue reading “Google Flu Trends Shows Good Data > Big Data”
Filed Under: Tech
Tagged: Big Data, flu, Google Flu Trends, Kaiser Fung, OCCAM framework, public health, statistics
Mar 26, 2014
The field of analytics has fallen into a few big holes lately that represent both its promise and its peril. These holes pertain to privacy, policy, and predictions.
Policy. 2.2/7. The biggest analytics project in recent history is the $6 billion federal investment in the health exchanges. The goals of the health exchanges are to enroll people in the health insurance plans of their choice, determine insurance subsidies for individuals, and inform insurance companies so that they could issue policies and bills.
The project touches on all the requisites of analytics including big data collection, multiple sources, integration, embedded algorithms, real time reporting, and state of the art software and hardware. As everyone knows, the implementation was a terrible failure.
The CBO’s conservative estimate was that 7 million individuals would enroll in the exchanges. Only 2.2 million did so by the end of 2013. (This does not include Medicaid enrollment which had its own projections.) The big federal vendor, CGI, is being blamed for the mess.
Note that CGI was also the vendor for the Commonwealth of Massachusetts which had the worst performance of all states in meeting enrollment numbers despite its long head start as the Romney reform state and its groundbreaking exchange called the Connector. New analytics vendors, including Accenture and Optum, have been brought in for the rescue.
Was it really a result of bad software, hardware, and coding? Was it that the design to enroll and determine subsidies had “complexity built-in” because of the legislation that cobbled together existing cumbersome systems, e.g. private health insurance systems? Was it because of the incessant politics of repeal that distracted policy implementation? Yes, all of the above.
The big “hole”, in my view, was the lack of communications between the policy makers (the business) and the technology people. The technologists complained that the business could not make decisions and provide clear guidance. The business expected the technology companies to know all about the complicated analytics and get the job done, on time.
This ensuing rift where each group did not know how to talk with the other is recognized as a critical failure point. In fact, those who are stepping into the rescue role have emphasized that there will be management status checks daily “at 9 AM and 5 PM” to bring people together, know the plan, manage the project, stay focused, and solve problems.
Walking around the hole will require a better understanding as to why the business and the technology folks do not communicate well and to recognize that soft people skills can avert hard technical catastrophes.
Continue reading “Very Big Data”
Filed Under: THCB
Tagged: analytics, Big Data, CGI, Dwight McNeill, Healthcare.gov, Predictive analytics, Privacy, Target
Mar 19, 2014
Startup Mojo from Rhode Island writes:
Hey there, maybe THCB readers can weigh in on this one. I work at a healthcare startup. Somebody I know who works in medical billing told me that several big name insurers they know of are using analytics to adjust reimbursement rates for medical billing codes on an almost daily and even hourly basis (a bit like the travel sites and airlines do to adjust for supply and demand) and encourage/discourage certain codes. If that’s true, its certainly fascinating and pretty predictable, I guess.
I’m not sure how I feel about this. It sounds draconian. On the other hand, it also sounds cool. Everybody else is doing the same sort of stuff with analytics: why not insurers? Information on this practice would obviously be useful for providers submitting claims, who might theoretically be able to game the system by timing when and how they submit. Is there any data out there on this?
Is this b.s. or not?
Lost in the health care maze? Having trouble with your health Insurance? Confused about your treatment options? Email your questions to THCB’s editors. We’ll run the good ones as posts.
Filed Under: ACA Database, THCB
Tagged: ACA Database, analytics, Big Data, Billing Codes, Insurers, THCBist
Feb 24, 2014
Today, academic medicine and health policy research resemble the automobile industry of the early 20th century — a large number of small shops developing unique products at high cost with no one achieving significant economies of scale or scope.
Academics, medical centers, and innovators often work independently or in small groups, with unconnected health datasets that provide incomplete pictures of the health statuses and health care practices of Americans.
Health care data needs a “Henry Ford” moment to move from a realm of unconnected and unwieldy data to a world of connected and matched data with a common support for licensing, legal, and computing infrastructure. Physicians, researchers, and policymakers should be able to access linked databases of medical records, claims, vital statistics, surveys, and other demographic data.
To do this, the health care community must bring disparate health data together, maintaining the highest standards of security to protect confidential and sensitive data, and deal with the myriad legal issues associated with data acquisition, licensing, record matching, and the Health Insurance Portability and Accountability Act of 1996 (HIPAA).
Just as the Model-T revolutionized car production and, by extension, transit, the creation of smart health data enclaves will revolutionize care delivery, health policy, and health care research. We propose to facilitate these enclaves through a governance structure know as a digital rights manager (DRM).
The concept of a DRM is common in the entertainment (The American Society of Composers, Authors and Publishers or ASCAP would be an example) and legal industries. If successful, DRMs would be a vital component of a data-enhanced health care industry.
Giving birth to change. The data enhanced health care industry is coming, but it needs a midwife.There has been explosive growth in the use of electronic medical records, electronic prescribing, and digital imaging by health care providers. Outside the physician’s office, disease registries, medical associations, insurers, government agencies, and laboratories have also been gathering digital pieces of information on the health status, care regimes, and health care costs of Americans.
However, little to none of these data have been integrated, and most remain siloed within provider groups, health plans, or government offices.
Continue reading “Could Digital Rights Management Solve Healthcare’s Data Crisis?”
Filed Under: Tech, THCB
Tagged: Amanda Frost, Big Data, Carolina Herrera, data enclaves, David Newman, digital rights manager (DRM), EHRs, HIPAA, HIT, Stephen Parente
Jan 27, 2014
Thanks to the flood of new data expected to enter the health field from all angles–patient sensors, public health requirements in Meaningful Use, records on providers released by the US government, previously suppressed clinical research to be published by pharmaceutical companies–the health field faces a fork in the road, one direction headed toward chaos and the other toward order.
The road toward chaos is forged by the providers’ and insurers’ appetites for categorizing us, marketing to us, and controlling our use of the health care system, abetted by lax regulation. The alternative road is toward a healthy data order where privacy is protected, records contain more reliable information, and research is supported or even initiated by cooperating patients.
This was my main take-away from a day of meetings and a panel held recently by Patient Privacy Rights, a non-profit for whom I have volunteered during the past three years. The organization itself has evolved greatly during that time, tempering much of the negativity in which it began and producing a stream of productive proposals for improving the collection and reuse of health data. One recent contribution consists of measuring and grading how closely technology systems, websites, and applications meet patients’ expectations to control and understand personal health data flows.
With sponsorship by Microsoft at their Innovation and Policy Center in Washington, DC, PPR offered a public panel on privacy–which was attended by 25 guests, a very good turnout for something publicized very modestly–to capitalize on current public discussions about government data collection, and (without taking a stand on what the NSA does) to alert people to the many “little NSAs” trying to get their hands on our personal health data.
It was a privilege and an eye-opener to be part of Friday’s panel, which was moderated by noted privacy expert Daniel Weitzner and included Dr. Deborah Peel (founder of PPR), Dr. Adrian Gropper (CTO of PPR), Latanya Sweeney of Harvard and MIT, journalist Sydney Brownstone of Fast Company, and me. Although this article incorporates much that I heard from the participants, it consists largely of my own opinions and observations.
Continue reading “Chaos and Order: An Update From Patient Privacy Rights”
Filed Under: Uncategorized
Tagged: Adrian Gropper, Andy Oram, Big Data, HIEs, HIPAA, Hospitals, Meaningful Consent, Patient privacy, Patient Privacy Rights
Oct 16, 2013