health economics

Screen Shot 2014-06-24 at 6.09.38 AMThere’s a growing view in U.S. healthcare circles that the industry is on the cusp of remarkable – perhaps even revolutionary – transformation. At a recent summit sponsored by the Altarum Institute’s Center for Sustainable Health Spending, speaker after speaker returned to the theme that we are slowly but surely moving from a volume-based system (paying for stuff) to a value-based model (paying for results).

The health sector is moving toward the traditional economic principles of other industries.  Revenues flow to businesses that are high quality, efficient and knowledgeable about customer desires. In other words, high performers reap the financial rewards, not those that are simply doing more. We at PwC describe this future state as the New Health Economy.

Several stars have aligned to make this shift possible. Cost pressures have turned attention to getting our money’s worth in healthcare. Technological advances such as cloud storage, mobile devices and data analytics provide the tools to deliver the right care to the right patient at the right time. And consumers today have both the freedom and responsibility that come with making more decisions and spending their own money.

What was striking at the Altarum summit was the widespread agreement on where American healthcare is headed. Speakers referenced the rise of myriad alternative payment programs, including overall spending growth limits in Massachusetts, site agnostic payments for specialty care such as oncology and provider bonuses tied to patient satisfaction.

Continue reading “The Next Health Economy”

Share on Twitter

A THCB reader in Virginia writes:

“As a small business owner, I’ve been following the arguments about Obamacare with a mixture of amusement and total horror. Just when you thought Washington couldn’t screw things up any worse, they find new and creative ways to do exactly that.

My question concerns the phenomenon of the “death spiral” the terrifying sounding scenario that observers predict will occur if not enough people buy insurance. According to this theory, if not enough people buy health insurance, insurers will be forced to abandon unprofitable markets.  As a business owner myself, this argument resonates. But I still don’t get it. This seems like common sense.

It is certainly true that if nobody buys my goods and services, my business will go into a “death spiral.” I will no longer be able to make a living selling my widgets. I will be forced to invent a new widget. Or go get a new job. This is like my kid saying if he doesn’t to play more Call of Duty IV he will go into an “entertainment death spiral” and be unable to do his homework ever again or be a productive member of society.

Or McDonalds warning that if too many people take up vegetarianism, its business will go into a horrible “hamburger death spiral.” So what evidence do we have? I need documentation. Like, let’s say, a picture. Or a YouTube clip.

Seriously, when has this happened? Otherwise, the death spiral thing sounds like really good economic spin to me …”

Share on Twitter

There’s been a great deal of discussion about health care payment reform. Prominent in this discussion is “Pay for Performance” (P4P). The idea is simple — rather than pay providers based on volume of care (fee-for-service) or number of patients (capitation), tie their payment to a measure(s) of performance. There has been substantial concern about the quality of care delivered to patients, so pay for performance appears to make a lot of sense. Don’t we want to reward providers for good performance? Shouldn’t this encourage them to provide high quality care?

Unfortunately, this is not as straightforward as it might appear. While the idea of pay for performance is very appealing and intuitive, there are some major pitfalls in implementation.

Continue reading “The Promises and Pitfalls of Pay for Performance”

Share on Twitter

A recent article in Time magazine by Steven Brill, “Bitter Pill: Why Medical Bills Are Killing Us,” is a brilliantly written expose of the excesses and outrages of health care pricing. In reaction to the story, some have suggested the price controls are the appropriate (or the only) way to rectify the situation. A recent story in the Washington Post’s Wonkblog, “Steven Brill’s 26,000-word health-care story, in one sentence,” suggests that US health care costs and cost growth are so high because we do not use rate setting, i.e., price controls.

In fact, I think it’s not easy to establish whether that is indeed the case. We don’t get to use randomized controlled trials for health policies or systems, so it’s difficult to figure out how effective a policy like rate setting is. Let me start with some simple examinations of patterns in data to see if something jumps out that strongly supports (or contradicts) the assertion that price controls reduce health care costs.

Continue reading “Are Price Controls the Answer?”

Share on Twitter

As the New Year begins, I look forward to reading and commenting on the latest developments in health economics. I thought I would start by making a few predictions:

1) With the economy on a slow but steady road to recovery, Republicans will resurrect health reform as a key issue in the fall election. They run a controversial ad showing a patient named Debbie getting diagnosed by her iPhone’s Siri. In response, Democrats show Debbie filing for bankruptcy because her insurance refused to pay for Siri’s consultation fee.

2) The Supreme Court will uphold the purchase mandate in the Affordable Care Act. Lobbyists for every major industry flood Congress with requests for more purchase mandates.

3) Healthcare continues to be a bright spot in a sluggish labor market. As a way to simultaneously address persistent unemployment and the growing needs of the elderly, Nancy Pelosi proposes a new law mandating that all baby boomers purchase a caregiver for their parents.

4) CMS will release new revised rules for ACOs. The new rules discourage ACOs from only covering patients in good health by reducing reimbursements for patients who are able to lift the new 1200 page ACO rulebook.

Continue reading “New Year’s Predictions: More Mandates (Maybe), House Rules at CMS”

Share on Twitter

THCB BLOGGERS

FROM THE VAULT

The Power of Small Why Doctors Shouldn't Be Healers Big Data in Healthcare. Good or Evil? Depends on the Dollars. California's Proposition 46 Narrow Networking
MASTHEAD STUFF

MATTHEW HOLT
Founder & Publisher

JOHN IRVINE
Executive Editor

JONATHAN HALVORSON
Editor

JOE FLOWER
Contributing Editor

MICHAEL MILLENSON
Contributing Editor

ALEX EPSTEIN
Director of Digital Media

MICHELLE NOTEBOOM Business Development

MUNIA MITRA, MD
Clinical Medicine

Vikram Khanna
Editor-At-Large, Wellness

THCB FROM A-Z

FOLLOW US ON TWITTER
@THCBStaff

WHERE IN THE WORLD WE ARE

The Health Care Blog (THCB) is based in San Francisco. We were founded in 2004 by Matthew Holt and John Irvine.

MEDIA REQUESTS

Interview Requests + Bookings. We like to talk. E-mail us.

BLOGGING
Yes. We're looking for bloggers. Send us your posts.

STORY TIPS
Breaking health care story? Drop us an e-mail.

CROSSPOSTS

We frequently accept crossposts from smaller blogs and major U.S. and International publications. You'll need syndication rights. Email a link to your submission.

WHAT WE'RE LOOKING FOR

Op-eds. Crossposts. Columns. Great ideas for improving the health care system. Pitches for healthcare-focused startups and business.Write ups of original research. Reviews of new healthcare products and startups. Data-driven analysis of health care trends. Policy proposals. E-mail us a copy of your piece in the body of your email or as a Google Doc. No phone calls please!

THCB PRESS

Healthcare focused e-books and videos for distribution via THCB and other channels like Amazon and Smashwords. Want to get involved? Send us a note telling us what you have in mind. Proposals should be no more than one page in length.

HEALTH SYSTEM $#@!!!
If you've healthcare professional or consumer and have had a recent experience with the U.S. health care system, either for good or bad, that you want the world to know about, tell us about it. Have a good health care story you think we should know about? Send story ideas and tips to editor@thehealthcareblog.com.

REPRINTS Questions on reprints, permissions and syndication to ad_sales@thehealthcareblog.com.

WHAT WE COVER

HEALTHCARE, GENERAL

Affordable Care Act
Business of Health Care
National health policy
Life on the front lines
Practice management
Hospital managment
Health plans
Prevention
Specialty practice
Oncology
Cardiology
Geriatrics
ENT
Emergency Medicine
Radiology
Nursing
Quality, Costs
Residency
Research
Medical education
Med School
CMS
CDC
HHS
FDA
Public Health
Wellness

HIT TOPICS
Apple
Analytics
athenahealth
Electronic medical records
EPIC
Design
Accountable care organizations
Meaningful use
Interoperability
Online Communities
Open Source
Privacy
Usability
Samsung
Social media
Tips and Tricks
Wearables
Workflow
Exchanges

EVENTS

TedMed
HIMSS South x South West
Health 2.0
WHCC
AHIP
AHIMA
Log in - Powered by WordPress.