Month: October 2011

Who Should Pay for EHRs?

Oct 4, 2011• 33

By MARGALIT GUR-ARIE

During the 2008 Presidential campaign, Candidate Obama promised an EHR for every American by 2014. The goal was to improve quality of care, reduce disparities and contain costs of health care. When the HITECH act became law in 2009, physicians found themselves under increased pressure to purchase an EHR. Many took action, went out and bought an EHR for their practice, and these are now well positioned to collect the financial incentives put forward by the HITECH act. Many more did not. EHRs are by and large a complex and expensive proposition and the HITECH incentives are not covering the average cost of purchasing and maintaining an EHR. In survey after survey, physicians consistently rank cost associated with EHRs as their top concern when considering transition from paper charts to electronic medical records. This is a bit disconcerting, since physicians have no problem buying other expensive tools and paying for human resources in their practices. How are EHRs any different?

There are three primary stakeholders in health care: those who receive care, those who provide care and those who manage the financial aspects of health care, and no, we are not getting into the quintessential argument of whether there should be only two primary stakeholders. There are several secondary stakeholders as well: those who manufacture medical goods, those who provide ancillary services and those engaged in medical research.

Should Hospital Boards Embed Generative Thinking into Their Agenda?

Oct 4, 2011

By Kent Bottles, MD

Hospital systems and physician groups are faced with unprecedented change demanding decreased per-capita cost and increased quality in American health care. Boards of directors are underutilized resources that must be tapped more effectively in order for such organizations to survive in a time of industry consolidation. Generative thinking is a tool that can help organizations innovate in order to improve patient care and the financial bottom line.

Generative thinking is when a board becomes involved early on with management in trying to make sense of the current environment. For example, any US hospital must figure out strategies and tactics to deal with Medicare cuts, demands for higher quality, and migration away from fee for service to global payments in both the PPACA and the federal budget ceiling compromise that will result in at least $1.5 trillion or $1.2 trillion federal budget cuts staring in January 2012. Local events in each market will be different in each region. Western Pennsylvania hospitals, for example, must effectively respond to the Highmark purchase of West Penn Allegheny and the continuing tensions between Highmark and UPMC.

One way to encourage generative thinking in this setting is to make sure the board is present when a problem is defined because such a definition will affect strategies, policies, decisions, and actions to respond to the above described environment. Boards should help management decide what problems to pay attention to and not just respond to management’s understanding of the environment. Generative thinking has been described as getting to the question before the question and is about values, beliefs, assumptions, and organizational culture that will affect what problems we pay attention to and what strategies and tactics we choose.

The importance of framing the problem correctly was demonstrated by Clayton Christensen in The Innovator’s Prescription when he described the unsuccessful attempts by a company to increase milkshake sales. As Peter Drucker once wisely wrote: “The customer rarely buys what the company thinks it is selling him.” It turns out that 40% of milkshakes are purchased in the morning by long distance commuters who like the fact that it takes a long time to drink and that you can still drive with one hand on the wheel. By defining the job that the milkshake was being asked to accomplish, the fast food company was able to increase sales by making the shakes thicker so it would take more time to drink them on the long commute.

Generative thinking is not the only function of a board of directors. The three different modes of governance are fiduciary, strategic, and generative. The first two are self-explanatory, but the last mode is the least understood and the most neglected by non-profit boards.

Generative thinking requires a greater comfort with conflict and disagreement than is usually present on nonprofit boards. Because generative thinking is about deciding what the real problem the hospital faces in a confusing, unpredictable, and rapidly changing external environment, there needs to be conflicting viewpoints.

Alfred Sloan, GM chairman from 1923 to 1956, once stated: “Gentlemen, I take it that we are in complete agreement on the decision here. Then I propose we postpone further discussion to give ourselves time to develop disagreement and perhaps gain some understanding of what the decision is all about.” John Wooden, the most successful basket coach in history advised, “Whatever you do in life surround yourself with smart people who’ll argue with you.” He won his first NCAA championship in his 16th year of coaching at UCLA when he stopped hiring yes men and instead chose Jerry Norman as an assistant coach who installed the zone press Wooden detested.

A hospital board needs to understand generative thinking and decide if it wants to be involved upstream in discussions about how the hospital should respond to the environment. If there is agreement about the need to improve this mode of governance, then different methods can be tried to embed the concept into the work of the Board.

References:

Richard P. Chait, William P. Ryan, Barbara E. Taylor, Governance as Leadership: Reframing the Work of Nonprofit Boards. Hoboken, New Jersey: John Wiley & Sons, Inc., 2005.

Manda Salls, Why Nonprofits Have a Board Problem, Harvard Business School Working Knowledge for Business Leaders, 4/4/2005.

Michael A. Roberto, Why Great Leaders Don’t Take Yes for an Answer: Managing for Conflict & Consensus. Upper Saddle River, NJ: Prentice Hall, 2005.

Clayton M. Christensen, Jerome H. Grossman, MD, and Jason Hwang, MD, The Innovator’s Prescription: A Disruptive Solution for Health Care. New York: McGraw Hill, 2009.

Peter Drucker, Managing for Results, London: Heinemann, 1964.

Kent Bottles, MD, is past-Vice President and Chief Medical Officer of Iowa Health System (a $2 billion health care organization with 23 hospitals). He was responsible for the day-to-day operations of a large education and research organization in Michigan prior to his work with in Iowa with IHS. Kent posts frequently at his new blog, Kent Bottles Private Views.

Testing, Testing – Do We Test Interventions Sufficiently?

Oct 3, 2011• 5

By TIMOTHY WILSON

Are Americans becoming more skeptical of scientific inquiry? Some are, according to the pundits. See, for example, Chystia Freeland’s article in the New York Times, “A Deep Faith in What’s Been Proved,” and Paul Krugman’s article in the same paper, “Republicans Against Science.”

Although there does appear to be a growing skepticism about the value of science to address problems such as global warming, there has long been a neglect of social science when it comes to evaluating programs designed to change people’s behavior in beneficial ways, such as those that try to get kids to avoid drugs and alcohol, teach parenting skills, and prevent adolescent behavior problems. Myriad programs that receive federal and state funding have never been adequately tested to see if they work. When they are tested, they are often found to be ineffective or even to do harm.

Consider the D.A.R.E. drug abuse resistance program, which is used in 75% of school districts in the United States and in more than 40 countries. D.A.R.E. lists among its sponsors the U. S. Drug Enforcement Administration, the U. S. Food and Drug Administration, the U. S. Department of State, all five branches of the U. S. military, and the White House Office of National Drug Control Policy. President Obama, like his predecessors, designated a day in April as National D.A.R.E. Day to commemorate the program.

There is only one problem: D.A.R.E. doesn’t work. Studies have repeatedly shown that kids who take part in the program are no less likely to smoke, drink, or abuse drugs than kids who do not. To their credit, D.A.R.E. officials revamped the program in 2009, and maybe this new version will do some good (it is currently being tested). But doesn’t it seem like putting the cart before the horse to sink millions of dollars into a program and implement it in 75% of our schools before we know whether it works?

Decentralization and Mining Geodata: Thoughts from Health 2.0

Oct 3, 2011• 18

By JOE FLOWER

People have been talking for decades about decentralizing much of healthcare away from massive Big Bricks on the Hill — for lots of good, sound reasons revolving around the efficacy of convenient primary care and home care, and the improvement in communications. It hasn’t happened much because these are all “should” reasons, not “have you by the throat” reasons.

The HYBTT reason is arriving: In the approaching liquefaction of healthcare, provider organizations (today’s institutions or others that will arise to compete with them) increasingly will be identifying particular populations in their service area whose primary care (or chronic conditions) they can manage under risk contracts. They will be doing this so that they can give these people earlier, smarter, resource rich care, and profit from driving the cost of care down and the effectiveness up. To serve these populations, providers will locate wherever is most convenient to that population, because especially in chronic and primary care, convenience is clinical. It makes a big difference if the people you are serving can get care downstairs, down the hall, or down the block, instead of across town, down the freeway, at the end of three bus transfers. So we will see a lot of “forward stationed” clinics in workplaces, union halls, schools, convalescent homes, neighborhoods, wherever the risk-contracted population hangs out.

This drives the second strategic observation: Geographic datamining. Providers are not doing this yet very much, but when they come to be at risk for the health costs of populations they will be all over it like your favorite metaphor. It is now becoming trivially easy to mine your records and discover where your patients come from — not just to the zipcode level, or even the block, but to the level of the individual address (HIPAA compliant, as dots on a map).

The Ryan Health Care Proposal, Part II

Oct 3, 2011• 3

By ROBERT LASZEWSKI

In a speech at the Hoover Institution today, Representative Paul Ryan (R-WI) argued again that his proposal to reform Medicare, and now his tax credit proposal for replacing the Democratic health care law for those under-age 65, would guarantee to citizens “options like the ones members of Congress enjoy.”

His proposals would not give people the guarantees members of Congress, and all other federal employees for that matter, now enjoy.

This is not a small point.

Previously on this blog, I have argued that many of the defined contribution reform proposals, Ryan’s included, should be faulted for putting all of the future risk of health care costs on beneficiaries.

Ryan’s Medicare plan would create a premium support system for seniors. The premium support amount would increase each year by the rate of basic inflation, even though health care costs have historically increased much faster. Seniors would then take this premium support payment to the market and buy their own private health insurance policy. Another recent Medicare reform proposal by the health care industry would increase a similar health care premium support payment each year by the rate of increase in the gross domestic product (GDP) +1%.

In both cases, neither insurers nor health care providers would have any of the risk, and therefore responsibility, for keeping costs under control. The entire burden for the adequacy of these premium support payments would be with the beneficiary. If health care costs rose faster than these premium supports, tied to these indexes that have always trailed health care inflation, too bad for the beneficiary. Any excess cost is borne by the individual.

Don’t dump on the Brits’ Health IT program — they’re way ahead

Oct 3, 2011

Last week the Brits canceled their troubled NPfIT program, which lead to lots of crowing over here about our Meaningful Use program and how it’s better. But that crowing reveals two major ignorances. First, most of the money that was spent in the UK was spent on hospital IT systems, especially PACS. It wasn’t necessarily wasted, and it was not comparable to the ONC program — none of which goes to PACS. Second and more importantly, before NPfIT, EMR use among British primary care docs was ALREADY at more or less 100% and had been for the better part of a decade. (Part of) the NPfIT program was about connecting primary care practices together and with hospitals. (One reason it ran into trouble was because it wanted to replace those existing primary care systems with different ones). Over here about 10% of physicians are using EMRs, and if we’re very lucky we’ll get to about 2/3rds of where the Brits were BEFORE the NPfIT. For sure the Brits have problems, but ours are way worse and we’re starting from much further back.

Do Hospitals Cost-Shift?

Oct 3, 2011• 18

By DAVID DRANOVE

This blog continues my exploration of the great mysteries of health economics.

Northwestern University is one of Blue Cross of Illinois’ largest customers. Suppose that premiums for all BC plans are expected to increase by 10 percent, but NU is able to force Blue Cross to accept a 5 percent increase. Would you expect Blue Cross stick McDonalds with a 15 percent increase in order to cover the shortfall from NU?

I wouldn’t, for two reasons. First, McDonalds would probably threaten to take its insurance business elsewhere. Second, the scenario I have described is inconsistent with profit maximization by Blue Cross. After all, BC’s ability to stick McDonalds with a 15 percent increase surely does not depend on the price paid by NU. Any negotiator whose willingness to stick it to McDonalds is conditional on the price charged to NU is leaving money on the table and probably would have been fired a long time ago.

We might never expect BC to raise prices to some customers to make up for shortfalls from others, so why do we believe that hospitals do this all the time? It is impossible to discuss Medicare and Medicaid payments without someone invoking the mantra of cost-shifting. The theory of cost-shifting is deeply ingrained in the minds of healthcare decision makers and the policy implications of the theory are profound. Consider that if hospitals cost shift, then the burden of Medicaid cutbacks falls on privately insured patients, not on Medicaid patients and the hospitals that serve them. This calls into question whether the cutbacks will result in any savings for taxpayers and cause any harm to Medicaid beneficiaries. It also makes you wonder why hospitals that serve low income communities struggle to survive. Couldn’t they just cost-shift their way out of financial difficulty? A cost-shifting zealot would conclude that the managers of these hospitals are incompetent.Continue reading…

The Massachusetts Numbers

Oct 2, 2011• 10

By Trudy Lieberman

Last week the Census Bureau released new numbers showing that 5.6 percent of the population in Massachusetts remained without health insurance coverage. That’s a 42 percent drop in the number of the state’s uninsured since the law took effect in 2006. A new study by the Cambridge Health Alliance, one of the state’s safety net providers, showed who was left out, putting a human face on those without insurance. The findings are illuminating given that the Bay State’s health law is the model for the national law, which takes full effect in 2014, and the Romney-Perry feud often flares up around the topic of health reform in the state.

The local press, primarily the Boston Globe and WBUR, covered the story; the national media whiffed on its implications for federal reform. If reform in Massachusetts cut the number of uninsured roughly in half, the same is likely to happen nationally, according to government data. The latest Census Bureau numbers show that nearly fifty million people have no health coverage; the Congressional Budget Office estimates about twenty-three million will be still be uninsured later in the decade. It was as if the national media has forgotten that Massachusetts is a harbinger of what will happen nationally. Or perhaps it’s easier for the national media to cover the he said/he said back and forth between Perry and Romney.

Writing on WBUR’s CommonHealth blog, Carey Goldberg started with an intriguing lead that showed she could sniff out a story—and showed why others should, too.

Continue reading…

Trickle Down Health

Oct 2, 2011• 2

By JOHN MOORE

Another year, another Health 2.0 under the belt. This being the fourth time attending it is interesting to see how this event and its participants have evolved. Like many things in life, some things at Health 2.0 have changed, some have not, most for the better, but there remain some troubling aspects to this event that cannot be ignored.

When thinking back on the demos of countless vendors of years’ past, this year’s Health 2.0 had two distinguishing characteristics:

Demos are cleaner, with better user interfaces (UI).

The companies demoing at Health 2.0 are spending a lot more time and resources on creating inviting, clean and engaging interfaces that are a welcome change from the cluttered messes of demos past.

As with Mark Twain’s famous quote: “I would have written you a shorter letter if I had the time.” reducing an application to its core elements takes time. Clearly, the majority of Health 2.0 vendors this year have spent the time and resources necessary to create a simple and engaging environment for the end user.

Business models are more sophisticated.

At the first Health 2.0 event, just about every single vendor there stated that their business model was going to be based on some mix of Freemium and advertising revenue. Needless to say, just about every Health 2.0 start-up from that conference has either gone out of business, is among the walking dead (takes a lot to completely kill a company – trust me, I’ve been there) or has changed their model to survive. This year, the business models presented are more creative and for some, likely to see success in the market.

The contributing factor to these two changes is the amount of money now flowing into the health IT sector. Investors smell opportunity and are placing some pretty big bets as represented by the investments in Castlight (~$80M), ZocDoc ($50M) and CareCloud, who announced a $20M round at the event. That’s some serious cash and with all the investors that were present at this event, quite sure there are more investments in the wings.