The Business of Health Care

Dispatch from Washington

In its wisdom, the Supreme Court of the United States may decide to overturn the Obama administration’s health reform legislation.

The Supreme Court of the United States may decide not to.

Mitt Romney may unseat Barrack Obama and wrest the Presidency away from the Democrats. Or he may not.

In a way, these things may not actually matter.

There may be uncertainty on Wall Street and in the media about the fate of the Affordable Care Act (ACA) and the upcoming presidential election, but the mood in the crowd gathered at the 9th session of the World Health Care Congress last week in Washington was  curiously upbeat.

There was a sense that health care is making progress.

And that is a good thing.

Innovations like accountable care organizations (ACOs), scientific management principles like cost containment and quality improvement and the movement for better health information technology will make their presence felt, regardless of what happens in the courts and on Election Day.

Unlike TEDMED, which brought together official Washington, the tech industry, entertainment and medicine — at the Kennedy Center last week, the World Health Care Congress is a meeting pretty much limited to health care industry insiders at larger firms.

As is generally the case, the speakers list read like a who’s who of very important healthcare names. Kaiser Permanente CEO George Halvorson, Intermountain CEO Charles Sorensen, Aetna CEO Mark Bertolini, Economists Ezekiel Emanuel and Jonathan Gruber, former OMB Director Peter Orzag, TEDMED curator (Priceline.com) Jay Walker talked about the power of the Internet to fundamentally rewire the way people think. Verizon CEO and NantWorks Founder Patrick Soon-Shiong were on hand to talk up a new collaboration. Xerox CEO Ursula Barnes introed the tech giant’s push into healthcare. Journos like Health Affairs Editor Susan Dentzer and NBC correspondent Nancy Snyderman provided media star power.

Health Plan Outlook

According to the conventional wisdom, health plans are considered potentially the biggest losers if the Affordable Care Act goes away. But even if things do go south, it seems unlikely that the changes of the last two years will be abandoned. Most have looked at the potential challenge to their business models as an opportunity to reinvent themselves.

Aetna CEO Mark Bertolini, who has publicly declared that companies like his must evolve or face extinction, told the story of a shopping trip he took into Manhattan not long ago in search of a coveted sweater for his daughter. Bertolini experienced a defining moment. Frustrated, he pulled out his smart phone and typed in the name of the hard-to-find designer. With three fast clicks he found what he was looking for. (1). With the first he pinpointed himself on Google Maps. (2). With the second he had a list of nearby stores carrying the sweater and the prices at each. (3). With a third he had directions. Ten minutes later he had his daughter’s sweater and a big grin on his face. The next day he was in the office asking, “Hey, why aren’t we doing this?”

On the one hand, on the other hand

In an era where economists and policy wonks are health care rocks stars, there were plenty on hand to talk about the implications of the upcoming SCOTUS decision, the election and to argue about what it all means.

The man widely considered the intellectual architect of the Obama Administration’s reforms, MIT economist Jonathan Gruber, pointed to recent numbers that suggest that the administration’s cost-containment effort is paying off, at least in the early going. Another key takeaway: the much discussed death of the employer-based system may turn out to be a bit of an exaggeration. In Massachusetts, the number of employers offering health insurance to employees has not fallen, despite the individual mandate – but rather has slightly risen.

Former Obama Administration policy advisor Zeke Emanuel talked about the good that sound economic policy could bring to the developing world. Meanwhile, Alan Weil of the National Academy For State Health Policy explained what’s happening on the state level, where most of the action is going to be if the federal law is overturned.

Will states leap into the action and come up with their own solutions if Washington suffers a setback? Maybe so, in many cases not. It’s a little early to know with any certainty — for the time being, the answer appears to be a predictable split along political lines.

Health Care Rock Stars

On Tuesday, Kaiser Permanente CEO George Halvorson, on a star-studded panel featuring CTO Todd Park and Tech industry oligarch Tim O’Reilly (O’Reilly Media) made the case for reform.  The Kaiser-Intermountain-Geisinger model is a close relative to ACA. And there is no better company to look at than Kaiser if you want to understand the changes that are coming in healthcare – and what critics fear about them. Halvorson describes the changes that are coming “as an industrial revolution for care,” which pretty much nails it.

Market Forces

Investors fearing a big market blip as the political fight over reform plays out in Washington heard what sounds like good news. A session led by Chris Kersey of Camden Partners/Johns Hopkins, Citi Healthcare’s Raymond Cooper and former Forbes editor Carleen Hawn listened to a familiar story: M + A activity is likely to continue as big health systems continue to assimilate smaller ones.

Health IT will do well. Big pharma will probably do well also, despite the sector’s extended midlife crisis. Big device may do less well, given the cost-containment trend and generalized unhappiness with specialists.

While health plans may be in for a slightly bumpy ride (probably an understatement) given concerns about the individual mandate and the potential for unpopular premium increases, it will be a long time before anybody is going anywhere.

Those considering early exits from healthcare IT stocks (still a tiny, tiny, tiny piece of the market relative to larger healthcare players like pharma and health plans) given political conditions, may want to hold off for a minute before leaping. Even if electronic medical records aren’t quite where they need to be yet, there is no way in hell we’re going back where we came from. As is almost always the case in technology, the next generation will address many of the problems that seem glaring. Other areas of Health IT look equally promising.

Mash Ups

Bay Area Tech industry luminary Tim O’Reilly brought his personal gospel (data + web + entrepreneurship) to health reform discussion, talking about all of the cool things data can do if we’re smart enough to let it do its job. O’Reilly argues that technology may be able to accomplish what politicians have been unable to in healthcare, but only if government gets its act together and the private sector resists the temptation to silo data in ways that make it impossible to use.

Taking the mike for the administration, Chief Energizer Bunny Todd Park brought up an inconvenient truth that the Obama Administration’s critics tend to forget: the fact that Washington’s great leap forward has finally pushed Big Medicine into the 21st Century. (Park’s legitimate US government approved title is Chief Technology Officer, but his secret service code name is rumored to be “Energizer Bunny”, for his high-octane delivery style.  ) Pointing out that physician use of electronic medical records is at higher levels than ever before, Park said he is “more optimistic than ever before,” which is saying something if you’ve ever met the CEB.

The Social / Mobile Model

No conference or meeting would be complete without the requisite talk about how Facebook and Twitter have changed everything and are set to change it even more.

Mayo Clinic social media maven Farris Timimi talked about his own views, stressing that providers have an obligation to move their customers on the social web on both dominant social platforms like Facebook and Twitter and emerging ones like Pinterest. In the Facebook-Twitter-Zynga-YouTube-whatever-comes-next era, Timimi argues that far too many organizations are looking at social media only as a marketing opportunity and missing a much more significant, but harder to understand opportunity to use social media to make healthcare better.

Qualcomm mobile health evangelist Don Jones brought similar enthusiasm to the mobile health conversation  (perhaps not all that surprisingly, considering his company’s line of work), noting that smartphones and other mobile devices like the iPad look like they may be the technologies that finally push healthcare into the future and help us be smarter patients who ask smarter questions and remember to do the things they inevitably seem to forget to do (take their meds, schedule follow up appointments, take preventative steps to avoid easily avoidable problems, etc.)

There was a time not long ago when industry meetings had a decidedly hit or miss feel to them. Nobody in their right mind, except perhaps vendors, conference organizers and speakers, got excited about them. Given the national attention focused on health care in the reform era, that seems almost hard to believe these days. Expect next year’s World Health Care Congress, and the recently scheduled event later this summer, which will play out as things really heat up, to be as interesting or more so, as the details of the health reform story play out.

With the election ahead of us and the fate of the Affordable Care Act in its present shape and form awaiting the official verdict from SCOTUS, it’s too early to know how the fight to dominate health care will play out. But if you care about healthcare, it is an undeniably exciting time.

No matter what the outcome, there isn’t much doubt that by the end of the year we’ll have a good idea what the healthcare system will look like fifty years from now.

John Irvine is the executive editor of THCB. He is based in San Francisco. Coverage of World Health Care Congress is underwritten by Xerox corporation.

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Hm Adnan
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Great blog…i liked it..

CMG
Guest

Fantastic (and amazingly even-headed) post.. I was curious about Timimi’s comments re social media as a means of improving patient care. It’s certainly easy to see how mobile apps could be enhance doctor-patient communication and enable physicians themselves to remain more connected to their practices. But using Facebook and Twitter to improve healthcare is a little harder to wrap one’s head around. Aside from widespread educational campaigns, what exactly does he envision?

Anonymous
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Actually, the example Timimi gave was interesting. A woman had a rare condition and little research was being done. She then joined/started a Facebook group for the condition and connected with the few other women with the condition. They brought the issue to Mayo to ask if a small trial could be run or if they had any suggestions. A physician/researcher then got involved and requested a grant. When they needed more patients to run the trial, the first woman then went back to the fb group and recruited more women from around the world, thus allowing a trial to… Read more »

BobbyG
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Interesting post.

“Ten minutes later he had his daughter’s sweater and a big grin on his face. The next day he was in the office asking, “Hey, why aren’t we doing this?”

Because the myriad interlocking perverse incentives run in the other direction.

Maybe we can change that absent a full-blown crash.

I hope so.