Four Big Trends – Brian Klepper

BrianSeveral events and trends emerged over the last year that will reverberate throughout the health care
marketplace in 2008 and going forward. While none of these dominated the trade press like some other issues – electronic and personal health records, RHIOs, the evolving labor shortage, pay-for-performance reimbursement – these manifestations of change are occurring in the marketplace as well as through policy, and are moving health care forward in fundamentally positive and far-reaching ways.

Health 2.0The most significant for the long term in terms of its capacity to change how health care works is the Health 2.0 movement, which Matthew Holt and Indu Sabaiya have played a central role in facilitating and explaining. In some ways, Health 2.0 is simply a continuation of what has come before: companies creating new value through information and connecting with customers over the Web. Health 2.0 takes this approach into every area of health care data, often driven by companies outside of or at the margins of health care, who have no financial stake in perpetuating inappropriateness and waste, and who see an opportunity to make money by rationalizing the system.

We’ve already seen big, established IT companies like Microsoft and
Google announce forays into this space, as well as a slew of
startups, most of whom have staked out interesting niches. But there
are other players who haven’t made themselves known yet: health IT
companies who are positioned to aggregate data and feed it back to
their clients; companies who already have established health care data
streams and have large repositories; analytics firms; organizations
from financial services and other areas that see an opportunity to
leverage their own data strengths and expand into health care; and
established health care organizations that, as the competitive market
intensifies in health care, will use their strength to enter the data
space and use it to advantage.

In the process, health care data will move beyond simple
transparency – public availability of pricing and performance
information, which is often inscrutable, especially
to consumers – to decision support. The creation of
easy-to-use data-driven decision assistance tools that can help
consumers, clinicians, designers and purchasers of all kinds will
change everything.

My bet is that business and the health care sector, more than
consumers, will first fully take advantage of offerings that will
gradually come online, and use this new information to make better
clinical decisions, to better purchasing decisions and to understand their own performance relative
to the market. Ultimately, as payments are tied to results, this
information will constitute incentives for performance and
disincentives for waste.

Consumer Checkbook v HHSLast August 22, the consumer advocacy organization Consumers’ Checkbook won a Freedom of Information lawsuit against the US Department of Health and Human Services (HHS). As a result, CMS was ordered to release Medicare physician data for 4 states and DC.

HHS had argued that physicians are entitled to a right of privacy, a particularly curious position given this Administration’s generally progressive stance on health care pricing/performance transparency and keeping in mind the fact that physicians paid by Medicare are vendors taking public dollars. On October 19th, HHS filed an appeal, indicating they would fight to keep the data secret. The case is still unresolved. Even so, Checkbook has filed suit for the release of Medicare physician data in all other states.

As I noted in writing about this previously, the AMA’s fingerprints seemed to be all over this, but I had no direct knowledge that this was so. Then, a December 10th the AMA publication American Medical News article reported, "The Association is pleased that HHS is taking its advice, said AMA Board of Trustees Chair Edward L. Langston, MD." I’ll bet it is.

The Checkbook case is a watershed moment for physician transparency. Until now, despite all the calls from supposed "market-advocates" for informed consumerism in health care, the public has had no way to really tell how a doctor compares to his/her peers in terms of resource consumption or results. If the data were released, evaluated and publicly reported, one important part of health care could begin working like a competitive market. Whatever the outcome of this case, kudos to Consumers’ Checkbook for taking the initiative and, in the process, betraying the lie of those who call for consumerism but, to protect their current market advantages, want to hold back the information that makes markets work.

Stopping the Payments for Hospitals’ MistakesAugust must have been a big month, because that was also when CMS threw down the gauntlet and announced that, starting October 1, 2008, it would no longer pay for preventable errors. Until this change, hospitals were paid for the mistake and for the care of rectifying it, a no-lose proposition.

As Medicare goes, so go the commercial payers, so this is momentous. Come October for Medicare but sooner for private health plans, hospitals will be on the financial hook for making sure they get it right the first time, a significant change from the past and potentially damaging when they fail, especially for organizations that have had average margins nationally of only five percent.

In a sense, this event is less important than the important quality and safety work underway at health systems around the country. (For a wonderful 5 minute articulation of the value of these efforts, see this short interview with Gary Kaplan MD, the CEO of Seattle’s Virginia Mason Health System, recorded in April 2007.) But for those who are not yet focused on getting quality under control, CMS’ action leads the marketplace and constitutes a major incentive.

Moving Toward A National Center for Comparative Effectiveness and National EBM GuidelinesAmerican medicine is gradually, grudgingly acknowledging that using evidence to identify best practice, and then applying that best practice, typically results in improved outcomes and reductions in variation. The refinement process is unending, of course, and the number of different clinical approaches that must be evaluated vast.

In November 2006, economist and former HCFA (now CMS) Secretary Gail Wilensky published a Health Affairs paper that described the background and laid out the arguments for the establishment of a national agency that would sift available data to support better clinical decision-making. Another long-overdue idea that has private sector precedents in efforts like the Blue Cross and Blue Shield Association’s Technology Evaluation Center (TEC), the concept of a national Comparative Effectiveness Center is finally beginning to get traction.

In September, when Senator Clinton released her proposed health plan, a Comparative Effectiveness Center was featured prominently as a key element of her policy reforms. More recently, in December, the Congressional Budget Office published a paper called "Research on the Comparative Effectiveness of Medical Treatments," that argues for the value of a governmental role in identifying best practice, the need for tying identified best practice to financial incentives in the marketplace, and the difficulties of creating these changes in a policy environment so highly susceptible to private interest influence.

It is hard to accept how long it takes to effect changes that the system desperately needs. Each of the trends I’ve described will take years to actually impact the ways that care supplied, delivered and financed, but they’re moving us in the right direction. Equally important, change is accelerating and spreading to more areas in health care, primarily because technology continues to create opportunities that the marketplace can leverage. To those of us consigned to take the long view, this is great news and important perspective while we’re also focused on health care’s persistent, moment-to-moment problems.

9 replies »

  1. As a nurse found this to be very useful article but have wondered about ebm and the conflict between the art and science of healing?

  2. RE: Brian Klepper,
    Nice job with the trends; not sure about the EBMs, however.
    Nevertheless, did you know that a new heuristic study by the Institute of Medical Business Advisors Inc.,
    http://www.MedicalBusinessAdvisors.com and http://www.HealthcareFinancials.com
    suggests that the New Year 2008 could be a big one for the healthcare industrial complex – with these dozen economic observations and postulated structural changes that could profoundly affect the industry – listed in no particular order of importance?
    Full Report Link:
    “Live passionately – practice well – exceed expectations – never yield!”
    And, keep up the good THCB work.
    Dr. David Edward Marcinko; MBA
    Editor and Chief
    Hope Rachel Hetico; RN, MHA
    Managing Editor
    Atlanta, Georgia USA

  3. It is the “chronic condition/normal function” and “stable/significant disability” group where the problem is. They account for over half of all health costs, according to Maggie’s list, and I am certain that most of the abuses (poorly co-ordinated, multiple consultants, care of questionable value takes place) that Jack Wennberg and others have documented take place here. If there is not substantial and lucrative provider discretion in treating these conditions, you would not see the huge and inexcusable regional variations in treatment costs and incidence that Wennberg and others have long documented, which frequently diminish the patient’s quality of life and expose them to needless risk.
    I disagree with many consumer advocates in believing the current payment system incentives to “mine the chronically ill” will not be overcome by rich consumer information and transparency. Providers need to weigh the risks and benefits of overtreatment, instead of being rewarded, as they are now, by waiting until a controllable chronic condition becomes acute and then piling on the tests and intervention. Patients cannot change our present health system’s “bottom of the cliff” bias themselves.
    But to pretend that all these patients (and, importantly their families, who play a larger role as disability progresses) are simply helpless children is paternalistic nonsense. Patients and families demand intervention where frequently it is of no benefit, and sue doctors who do not give it to them. This isn’t about “shopping”, it is about vigilance and reasonable, thoughtful use of a very expensive social resource. The argument about whether we are overtreating those who are on the “long dwindling course”, where acute intervention does not improve the quality of the patient’s life should be the subject of a separate post.

  4. Maggie,
    Thanks for the data on the breakdown of healthcare costs. I’ve never seen it presented that way before.
    While I agree with you that most individuals will either not want to do healthcare provider price and quality research even if they are in a position to, it could be a very useful tool for PCP’s and other referring doctors. To be able to identify where an MRI can be done for the best price, which is the most effective drug for the money to treat a given condition and how various doctors and hospitals stack up on both price and quality could go a long way toward driving patients toward the most cost-effective providers and forcing the others to either improve or go out of business.
    IT driven decision support tools could also enhance the role of nurse practitioners in the future while reducing the shortage of PCP’s and cutting unnecessary ER visits. Interoperable electronic records should reduce duplicate testing and adverse drug interactions, especially in hospitals. In short, I’m optimistic about the potential of IT to make a very significant contribution toward reducing the growth of healthcare costs over the intermediate to longer term. If IT lives up to its potential, it will have indeed made healthcare function more (but not completely) like other markets in our economy.

  5. Barry–
    We need healthcare IT but it will never make healthcare “function like other markets.”
    The notion that healthcare is a market like any other is something that only people at the Harvard Business School believe.
    In the healthcare market the consumer doesn’t have the same power to insist on higher quality at lower prices because:
    a) he usually cannot “wait until prices come down”
    b) when it comes to important purchases he is not in
    a good position to compare quality–no matter
    how much info you put online. He didn’t spend 7
    or 8 years in med school, and it’s too late to
    catch up when you’re sick.
    c) He’s not bargain-hunting. When making an important
    health care purchase he’s not going to say,
    “second-best will be good enough for me.” hey want
    “the best” and most people are easiy persuaded
    that “the most expensive” is “the best” (at least
    when making decisions for themselves or their
    Finally, and this is terribly important, most of our health care dollars are spend when we are VERY SICK They are in no condition bargain, to do extensive online research, etc–
    This chart from IHI’s Don Berwick (originally produced by Straube, et.al. in teh Milbank Quarterly) shows that only 6.5% of our healthcare dollars are spent by “healthy people.” Roughly 75% fall into one of these categories: “Acutely Ill” “Near Death” enduring a “long dwindling course” as they approach death” suffering “organ system failure,” or suffering a chronic condition. The top 5 chronic conditions are , congestive heart failure, depression coronary artery disease, asthma and diabetes.
    Many of the people suffering from congestive heart failure are too old and too weak to do the kind of comparative shopping you envision; those who are depressed are, by and large, too depressed. Some of the people suffering from the other 3 diseases could do the research; some couldn’t.
    Finally, another 15% suffer from a significant disabllity. In many cases (for instance if they are blind) this also means that they can’t do online research.
    Population Segment % of health care costs
    Healthy People 6.5%
    Maternity & Infant 3%
    Acutely Ill (Mostly curable) 15%
    Chronic Condition Normal Function 40%
    Stable, Significant Disability 14.5%
    Short Period of Decline Near Death 2.5%
    Organ System Failure 5%
    Long Dwindling Course 13%

  6. Great post Brian.
    I agree that evolving IT has the potential to make healthcare function more like other markets. In some respects, we may already even be farther along than we think. CMS data published in the most recent issue of Health Affairs shows that while total healthcare spending increased from 13.8% of GDP to 15.8% from 2000-2003, the increase between 2003-2006 was only 0.2% to 16.0%, an encouraging slowing in the growth rate relative to the economy. Moreover, for the first quarter (ended 12/31) of the federal government’s fiscal 2008, total spending on the Medicare program was essentially flat vs the prior year period. Perhaps something good is already happening here.

  7. Agree, Jeff. Add to this the increasing financial pressure on small physician practices to become part of larger groups (and specifically, group practices without walls). And the likely disruption of traditional HC business practices at every level of the system that will cascade from what we’ve already described.

  8. Interesting list, Brian. I think the EBM and Health 2.0 things will unfold, as you suggest, over a decade or more. Several others are happening now and likely to accelerate in 2008- the spreading recession in the pharmaceutical and biotech industry and the spreading damage to physician owned enterprises from DRA are likely to extend the slowdown in health cost growth we saw in 2005-2007, and force significant restructuring of both sectors. Both will have a larger immediate impact than anything on your list- layoffs, leadership changes, and a refocusing on consumer needs.
    Health 2.0 is still too vaporous for me to feel confident of its impact. Several breakthrough companies in this space, however, Sermo and AthenaHealth, are likely to spawn a wave of imitation. Sermo is the most revolutionary, and signals a generational shift in medical practice to younger physicians for whom peer-to-peer networking is countering the isolation they have found in their practice settings. Peer-to-peer professional knowledge sharing could supplant the drug detail person as the primary vehicle for knowledge transmission in clinical practice, a development invisible to consumers but most heartening.