THCB

Save the Country with Preventive Care

We are entering the season of presidential politics, of bunting and cries of “What about the children?” and star-spangled appeals to full-throated patriotism.

So here’s mine: Do you count yourself a patriot? Do you care about the future of this country? (And while we are at it, the future of your hospital.) If so, bend your efforts to find ways to care for the least cared for, the most difficult, the chronically complex poor and uninsured.

“But we can’t afford compassion!” Wrong, brothers and sisters, we cannot afford to do without compassion. “But why should we pay to take care of people who can’t take care of themselves?” Because we are (you are) already paying for them — so let’s find the way we can pay the least.

The problem of the overwhelming cost of the “frequent fliers,” people with multiple poorly tracked chronic conditions, has always been that the cost was an SEP — “somebody else’s problem.” Now, increasingly, hospitals and health systems are finding that they are unable to avoid the crushing costs of pretending it’s not their problem, are not being paid for re-admits, and are finding themselves in one way or another at risk for the health of whole populations. They’re also facing more stringent IRS 990 demands that they demonstrate a clear, accountable public benefit.

At the same time, employers and payers are realizing that they end up paying the costs of the uninsured as well as those of the insured who are over-using the system because they are not being tracked. These costs become part of the costs of the system, and the costs are (and must be) shifted to those who do pay. There is no magic money well under the hospital.

Wait, Wait — Save the Country?

Follow the bouncing ball of the logic here: We must do something about deficit spending, right? Austerity budgeting shafts the economy (as has been vividly demonstrated in Europe), so bringing down the deficit needs to be done gradually. But it needs to be done. Over time, the deficit must be brought down into line with the growing economy. With me so far?

Analysis shows that by far the biggest chunk of the deficit is the continuing and projected rise in health care costs. The rise is from the direct costs to the federal budget of Medicare, military, veterans and federal employee health care spending as well as the rising tax costs of private employers’ deductible health plans. Plus, the “health care tax” of putting 18 percent of everything toward medical cost puts a drag on the economy — and a dragging economy means lower tax revenues.

If we spent the same percentage of GDP on health care as Canada, the UK or Germany, we would have no deficit crisis. The deficit would disappear like frost on a sunlit morning. If we do not succeed in lowering health care costs significantly, no amount of cutting National Parks or NASA or education budgets will ever solve the deficit crisis, because those budgets are vastly smaller. It can’t be done. So lowering health care costs is a do-or-die national priority. The health care crisis and the deficit crisis are the same thing.

What are those costs and how do we cut them? Seventy percent to 75 percent arise from chronic conditions. The majority of those arise from behavior, and almost all of them could be better managed to make cases cheaper by making patients healthier.

Who is spending the money, using the health care resources? This follows a Pareto distribution: 20 percent of the people spend 80 percent of the money; 5 percent of the people spend half the money; 1 percent of the people spend 20 percent of the money.

Who are the 1 percent? Some just got prostate cancer or got hit by a bus. This is their year to be expensive. But a substantial portion of that 1 percent and that 5 percent stay in the same category year after year. So a small percentage of the people use a large percentage of the health care resources by crossing your threshold, showing up in the ED and the hospital over and over with the results of their untreated, unmanaged, untracked chronic disease, addictions and mental problems. And recent studies show that people who have health care coverage (and therefore a regular relationship with a primary care doctor and a health care system) cost the overall system half as much as people without coverage.

Bingo! There’s the treasure, because experience shows that getting aggressive with untreated chronic disease can substantially lower costs. Trying to ignore them is costing us dearly. It’s time to change course.

The Treasure Is There

When Rumi said, “Burn down this house! The treasure you seek is beneath the floor,” he presumably was speaking of spiritual treasure. Yet last year in the South Indian state of Kerala, some devotees sued the maharaja running a local temple, concerned that the temple’s treasury was being mismanaged and possibly looted. The Supreme Court of India dictated that the subterranean vaults of the temple, sealed for 125 years, be opened and an accounting made. The official party found gold and jewels in one vault alone valued at an estimated $22 billion — and a second vault has yet to be opened.

Health care’s treasure has been hidden not in some subterranean sealed vault but in plain sight: It is those thousands and millions of cases of poorly treated and untracked chronic disease that flood our EDs every day. We can mine those to reduce health care costs drastically, put our hospitals and health systems on a much more sound economic footing, make people much healthier and, by the way, save the country.

How? Six ways.

Coverage. Push to get everyone covered, one way or another, whether the Affordable Care Act survives or not, including even those whom the ACA does not cover, even the illegal aliens, the homeless and crazy and addicted people wandering the streets. Why? Because they end up in your ED. You’re the dumping ground for the problems society keeps trying to ignore. And this is not just about you getting compensated for your costs. To the extent possible, it should be about health coverage attached to the person. If they are covered, it is much easier to fashion preventive and outreach programs to keep them from your door.

This coverage has to be implemented at the state and local level, both directly through public programs and through “safety net” supplemental insurance programs subscribed by the health plan industry. Get everyone covered, and two things happen: The covered people cost the system less, and less of that cost is an unrecoverable cost to you.

This is a very difficult goal, because people do not understand that this is a way to spend less money not more, that covered people cost the system half as much — and it is the rest of us that end up paying those costs. Health systems must campaign for such truly total coverage at every political level, for their own survival and for the good of the country.

Shift in risk. Work with payers, governments and employers to shift the risk from the Standard Model (fee-for-service, with all financial risk in the payer) to various models in which the provider takes on some risks (as with bundles, warranties, capitation, mini-caps, alternative quality contracts and other models) and the patients take on some risk for making a good decision (going to a clinic or an urgent care provider instead of the ED with a minor matter). Pilots show that when poor people are given coverage in the form of an HSA with deductibles, and when they understand how it works, they treat the money as their own, and conserve it, even when all of it is given to them as a subsidy. So a carefully titrated level of risk works across the spectrum of class.

Incentivized wellness. Work with employers, health plans and public agencies to get as many people as possible into incentivized wellness programs, which give people financial rewards (such as lower premiums) when they participate and meet simple goals. Correctly done, these programs reduce the actual costs for covering the whole population (including those who do not participate) by 10 percent or more.

Targeting. Find and go after that 5 percent, that 1 percent who are costing the most money. Some of the cost will be recoverable, some will not, but go after them anyway, because the costs spiral out of control once they cross your threshold.

Let me teach a technical economic term, in case you don’t know it. The term is bupkis. It’s from Yiddish and means nothing, an inconsiderable sum. Or, as one health care CFO put it to me, “lost in the noise.” That’s what it costs to reach out to someone with some smart prevention, or to treat them in a clinic, rather than treating them when they are hauled in to the ED comatose with something that could have been prevented or caught in an earlier stage. That’s the cost, relatively. Crumbs. Footnotes. Bupkis.

You can target in a number of ways. You can forward-base free or sliding-scale clinics in the parts of town from which you get the most costly cases. You can find ways to help the Federally Qualified Health Centers that may already exist in those parts of town. You can subsidize independent free clinics that already exist.

You can use “big data” from geographic information systems such as Stratasan GIS, Explorys Population Explorer, the Healthy Communities Institute and the free, open-source Community Commons to “hotspot” your community — or you can do a first pass on it just by talking to the cops and EMTs that come into your ED. You can establish a crack Camden-style team to go after the 0.1 percent toughest and most expensive individuals.

Some systems, like Spectrum in southwest Michigan, are setting up special clinics to go after and treat anyone who has shown up in their ED 10 times in one year.

Some doctors will complain that you are stealing their business. By definition, if these people are showing up in your ED with untreated chronic disease, either they are not those doctors’ customers, or those docs are not doing their job. Steal away.

Many people, clinicians and citizens, will tell you that those folks are untreatable, because they are addicts, or you can’t affect their behavior, and this and that. True of some, but it’s a numbers game. When the Camden Coalition of Healthcare Providers began targeting the worst, most complex, most expensive cases, they were able to reduce hospitalization of those they took on by 56 percent. Any way you add it up, that’s a huge saving.

Public health. You must seek partners in all of this. Payers and employers are the best possible partners, since they shoulder a lot of the cost burden with you. But federal, state and local public health officials are equally important. In my years of talking to health care executives, I continue to be astonished at how many of them do not even know the names of local public health officials, much less collaborate with them on a regular basis.

Healthy Communities. Finally, at the furthest remove from your ED threshold is the Healthy Communities movement. There are local groups in most places across the country, supporting programs dealing with everything from effluents to traffic to education to AIDS awareness. The return on investment is always large because the investment is so small compared with the ED visits, surgeries, premature births, and NICU and ICU use that they eventually prevent.

We will save much more money, shore up our finances and help solve the deficit problem when we stop waiting passively for people to cross our threshold and begin aggressively exporting health to those who need it the most.

As a healthcare speaker, writer, and consultant, Joe Flower has explored the future of healthcare with clients ranging from the World Health Organization, the Global Business Network, and the U.K. National Health Service, to the majority of state hospital associations in the U.S. Joe writes at imaginewhatifThis article first appeared in H&HN (Hospitals and Health Networks) Daily.

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36 replies »

  1. Bob –

    There is a very interesting article in current issue of Health Affairs titled “In Japan, All-Payer Rate Setting Under Tight Government Control Has Proved To Be An Effective Approach To Containing Costs.”

    Japan currently spends only about 8.5% of GDP on healthcare while more than 22% of its population is 65 years old or older. The U.S. spends over 17% of GDP. Japan uses a fee for service payment model for doctors, drugs, imaging and other non-hospital providers while hospitals are paid on a per diem basis with the daily payment rate decreasing as the length of stay increases. The average hospital stay in Japan is 21 days by the way vs. less than 5 days in the U.S.! The Japanese also visit a doctor about three times as often each year on average as people in the U.S. There is one price schedule for the entire country from high cost Tokyo to less costly outlying areas. There are lots of reasons why their approach probably wouldn’t work in the U.S. but it’s an interesting read nonetheless.

    In the U.S., according to the Health Affairs article, Medicare Advantage plans pay providers roughly the same as FFS Medicare while managed Medicaid plans pay about in line with standard Medicaid in each state. For commercial insurers, though, there is a lot of variance with powerful hospitals, hospital systems and large physician groups commanding much higher reimbursement rates than their less powerful competitors. I think disclosure of actual contract reimbursement rates would shed a lot of light on this, especially for patients while regulators should make it illegal for powerful hospitals to refuse to sign contracts that place them in anything other than the most preferred tier in tiered network insurance plans. The Massachusetts legislature did actually this – made such a stance illegal.

    I think any attempt to set global budgets for a region with some regulatory body allocating the money to individual hospitals and providers would be driven more by politics than anything to do with medical needs or costs. It wouldn’t be a pretty sight and I wouldn’t want to go there.

  2. What Barry leaves out, which is understandable , is this:

    What if government and insurers set their capitation payments on a budget?

    and more or less ignored the hospitals’ costs…………..

    For once in health care we would be dealing with price based costing, vs. cost based pricing.

    For a simple example…………..

    The payer says that tax revenues will give me $5 billion to spend in Minneapolis..

    Step two, Minneapolis has 1 million residents.

    Steo three, the ACO’s in Minnesapolis are given $5000 for every resident they sign up.

    That’s it.

    No claims, no deductibles, no coinsurance.

    See you next year.

    If you have to cut salaries, go for it. Most of your employees and all of your doctors are overpaid (if we are talking about Massachusetts at least)

    If there is an epidemic or a natural disaster, everyone gets more.

    Otherwise, if you run out of money on December 10, you close down all wards but the ER to deal with traffic accidents.

    Is this a formula for superior medical care?

    Of course not.

    Is this what America has to do to balance its budgets?

    Yes.

    Is this the end of the world? It will still produce better care than Americans had through about 1985.

    Bob Hertz

  3. I love reading these posts and threads, everyone trumpeting how they know how to fix the system and everyone should get a fair chance at health care.

    As someone above said, “bupkes”. As long as everyone has to be saved, irregardless of what they brought into the picture to their health care problems, like smoking for instance, and we have to keep everyone alive at end of life matters, because, hey, grandmom or granddad can’t die, the hell with finite resources and monies!

    As yet someone else said, I think MDasHell, there is no truth as long as there is reelection to be done, the dumbed down and easily manipulated large percentage of Americans who buy the lies and half truths, nothing is going to change for sizeable better.

    If being a Social Darwinist is such a bad label, then explain to me the process of living in cultures that thrive, not just eke out existences with minimal real progress and scant promise. you know, sort of like living in America these past 10 or more years at least!

    Happy Memorial Day, and by the way, did you know that 6% of active soldiers are on antidepressants, not counting whatever other psychotropics they get forced on or manipulate for? Wow, there is progress in this society. Fight for country, then come home and fight to survive. How many politicians these days have served real military service for our country? My guess, 10%. A pathetic and ugly number!!!

  4. Joe –

    While I like the concepts of both bundled payments, especially for surgical procedures, and capitation, especially for primary care, better than the fee for service payment model in theory, the problem is that it’s no so easy for provider groups, including hospitals, to accurately estimate their costs from one year to the next. Indeed, the smaller the population being served and paid for, the higher the probability that a relatively small number of very expensive cases can blow up the providers’ budget. At the same time, if insurers set fixed payments at very high levels like Blue Cross of Massachusetts did with its early Alternative Quality Contracts, healthcare costs could wind up even higher than they would have been under fee for service.

    I do see potential to pay primary care doctors to oversee the care of complex patients and at least attempt to ensure that appropriate and necessary care is provided by the most cost-effective high quality providers while, with help from electronic records, duplicate testing and adverse drug interactions are minimized. Robust and user friendly price and quality transparency tools would be critical to this effort. While the PCP can’t control the care provided and ordered by specialists, he probably could and should have significant influence over the selection of specialists to whom the patient is referred.

    Meaningful savings may also be possible by paying PCP’s sufficiently to supervise care that takes place within skilled nursing facilities as lots of this care is often provided to drive revenue for the nursing home whether it benefits the patient or not. PCP’s could be eligible for meaningful bonuses if they do a good job but not have to absorb meaningful downside financial risk. Their downside risk for poor oversight should more appropriately be loss of the patients they oversee to other doctors who can do the care coordination and care management jobs better.

  5. Our country’s healthcare costs are out of control due to the politics of give-away government; the unconstitutional direct-to-the-voter provision of a piece of the Treasury. The Treasury is empty so they are borrowing and stealing to avoid telling the truth: Grandma aint getting her lift chair, scooter, feeding tube or futile dialysis.

    When they deal in the truth, they cannot be running for reelection.

  6. > … many of … the most expensive 1% and 5% of patients … are already covered by Medicare and/or Medicaid yet their care is unmanaged and uncoordinated … there is lots of potential to reduce costs with more intensive case management and better care coordination.

    Indeed. The question is why are we not doing that now? Largely because under a fee-for-service regime, the reduction in costs is reduction in income to the providers. We are not paying them to do this care coordination and intensive case management. Properly done, case management that actually is based on real trusted relationships with the patients and their doctors does actually save the system a lot of money. Under a shared-risk system, this is good for the provider. Under a fee-for-service regime, it is a cost.

  7. > I wonder if you and I are trapped in the American fixation on user fees … we pay hospitals one patient at a time

    Indeed. This is what I mentioned in my second point, “Shift In Risk.” It need not be global-budgeted public hospitals, but it does need to be a titrated and complex shift in risk from the payers to the providers and, to some extent, to the patients.

    Here’s the difference: When you just global-budget a few big public hospitals, two things happen. The public hospitals are perpetually strangled for funds, and have great difficulty giving adequate care to anyone. And they become the dumping ground for all the most complex and least profitable cases. The other hospitals feel that it’s not their job to take care of these cases — and with some justification, because the society is not paying them to do it. Instead, through spreading coverage more broadly and shifting some of the risk to the provider, it is in all providers’ best interests to take care of these folks in the most efficient, effective, preventive manner.

  8. Joe –

    I’m all for going after the most expensive 1% and 5% of patients. However, many of these are already covered by Medicare and/or Medicaid yet their care is unmanaged and uncoordinated. With respect to the dual eligible population in particular, I think there is lots of potential to reduce costs with more intensive case management and better care coordination. I’m skeptical that there are many among the uninsured that are “frequent fliers.”

    Regarding healthcare spending in the U.S. as a percentage of GDP vs. other developed countries, the impact on our competitiveness is somewhat overstated, I think. This is because the Western European countries in particular spend a far greater percentage of GDP on unemployment insurance than the U.S. does. In a couple of cases, it’s as much as 8% of GDP compared to about 2% or less in the U.S. I don’t think U.S. manufacturers are losing much market share to European competitors where manufacturing wages and taxes are higher than they are here.

    With respect to hospitals building huge unallocated costs into their prices, those costs have to be recovered somehow. I don’t think any hospital or any other organization for that matter could survive by basing prices on direct costs alone. My preference, though, would be for all hospitals to allocate indirect costs using an agreed upon standard methodology so differences in efficiency would be more apparent. I’ve also said numerous times that it would be interesting to see a comparison of the number of employees per licensed bed in U.S. academic medical centers and community hospitals vs. their counterparts in Canada, Western Europe, Japan and Australia.

  9. What Joe said, but I would modify it. We know what other countries pay for the same care. We can look at countries with similar quality and, adjusting for PPP, look at what they would cost here. If you go to the extreme and use the NHS as your starting point, you find that we are probably paying 2-3 times what would be paid compared with the lowest in the world. This is far from the 10 times suggested above. There are problems using the NHS, but this gives us an idea of what our lowest possible price would be.

    Steve

  10. all good points, Joe, but I wonder if you and I are trapped in the American fixation on user fees.

    If we pay hospitals one patient at a time, then a sorrowful drug addict who goes to the emergency room has a ‘cost’ we have to adjust for.

    That is not the way we pay the police or fire departments. We give them one check a year and ask them to rely on professional judgement. Virtrually o one knows or care how much the fire department spends on older homes etc.

    What I am getting at is that larger American cities should have true public hospitals. who got enough money on Jan 1at to cover their costs no matter who showed up. New York City had something like this, but that is about it.
    American health care is drastically over-individualized when it comes to funding.

  11. I wholeheartedly agree that U.S. citizens need to be more proactive when it comes to overall wellness and healthcare. Gaining an understanding of healthcare prevents you from becoming a victim to outrageous costs.

  12. Yeah, because I not only have logic and facts, I have an entourage!

    But seriously, I don’t look on these things as fights. I view these things as discussions. More like a graduate class than a talk show.

  13. Anyone looking to pick a logical and empirical fight with Joe Flower had better check their policies’ limits and deductibles first.

    Read his new book.

  14. > As long as health care providers charge $20,000 for a $2,000 procedure … what is the real cost … cut to the true cost ….

    This is part of the problem, but in a deeper way than you hint at. Roughly speaking, no one knows what the “true cost” of a test or procedure or device is. No one, not even those who provide them. Not only is the cost accounting of health systems wretched, not only do they include huge unallocated overhead costs, they also include the costs of the supplies, devices, and machines from companies that themselves operate in a vacuum of information about “true cost.” So health systems fix phantom prices that they do not expect anyone will actually pay solely as the basis for negotiations with insurance companies and CMS.

    The proper economic value of anything is what you could sell it for (or alternatively, what it would cost to replace it or duplicate it). Have you ever seen a plate of scrambled eggs or a new car advertised for sale for $1000? No, because market forces operate to keep such prices in a reasonable range of maybe $2-$10 for scrambled eggs, and $12,000 up for a new car in this country. Yet healthcare prices vary by factors of 10 or more all the time within the same local markets. You can be quoted prices for a cardiac stress test from $500 to $5000 in the same city. This is a clear sign of a dysfunctional economic system in which price has become completely disconnected from value.

    This will be fixed not by demanding that the sellers fix their prices, but by establishing more true buyers, that is, buyers who are hurt if they get the cost/benefit ratio wrong. In the traditional, buyers were only health plans. They did not decide on utilization, they just paid. If the price were too high, ultimately that did not hurt them, as they would pass the costs through in higher premiums. Competing with lower premiums bought only temporary market advantage, so was not a real factor. As more patients are covered by plans with deductibles (about 30% now, I believe) and as more employers get more directly involved in finding ways to circumvent the high costs of healthcare, now you have buyers who are true shoppers, looking carefully for the best quality at the lowest cost. Over time, that will force providers not only to come to a “true cost,” but to find ways to lower those costs drastically. They will have to, as their very survival depends on it.

  15. > That is just a huge distance from the estimate in the Health Affairs article that the uninsured cost the system $9,000 each.

    The HA article makes no such assertion. The study asserts that the people who received their health care from this clinic had cost the system on average almost $9000 each per year. The “uninsured” in this country include 10s of millions who in an average year use no healthcare at all — mostly the young, healthy and childless. Whereas those signed up for this program and using this clinic were likely in the 5% who use half of all healthcare resources, or the 1% who use 20% of all resources. That is likely exactly why they were targeted. Some similar programs around the country specifically go after and invite in anyone who shows up in an ER 10 times or more in one year. Which is entirely appropriate, because that’s exactly where you will find the big savings: People with multiple untreated chronic diseases, often complicated by behavioral issues and addictions.

    Covering everyone who is now uncovered would not halve the expenses for each individual. It would increase the expenses of those 10s of millions who see no doctor now, because now they would see a doctor occasionally. But the increases would be minor, a hew hundred dollars per year. Those increases would be more than offset by the drop in costs for the uninsured “frequent fliers” in the system.

  16. All these comments still assume that the dollar amounts you refer to are the real cost of providing healthcare. Whether it is $3000, $4500 or $9000, these are NOT the true cost of delivering health care to anyone. Cut to the true cost and these figures would be closer to $300, $450 or $900.

  17. Bob, I think the total bill for not having a system grounded on preventive care should not just calculate the direct costs of finally needing medical intervention but the costs to the economy of the side effects. Lost work days, low energy/low production days, errors, no motivation, mother needing to stay home to look after sick child, etc., etc.

    As well this strikes at the heart of the conservative mind set – it’s cheaper to have poor people with no health care and chronic conditions than to lift everyone up. It’s the old line, they know the cost of everything but the value of nothing.

  18. According to an article by Avik Roy, who is admittedly a right-winger, the total bill for uncompensated care in Massachusetts was $661 million.

    At that time Massachusetts had about 2% of the US population.

    So the extrapolated cost for the entire US of uncompensated care was $33 billion, i.e. exacdtly what I remembered from Holohan’s article.

    That is just a huge distance from the estimate in the Health Affairs article that the uninsured cost the system $9,000 each.

    Just to carry this further…….

    the cost to give Medicaid to all the uninsured would be at least $120 billion.
    (assuming a rock-bottom cost of $3,000 a person times 40 million.)

    Now I must say right away that I am not opposed to this! We could cut the defense budget and raise taxes on the rich and pay for all of this.

    What I am opposed to is the suggestion that covering the uninsured will pay for itself in lower ER costs.

    This is a shaky assertion, not least in its assumption that hospitals will lower their prices if they no longer have to deal with the uninsured. It will take more than that for hospitals to lower their prices.

    Covering the uninsured will take real taxes.

  19. Joe, thanks for the Health Affairs article on the uninsured costing less money
    after they were given coverage.

    The main article was gated, but the press release was interesting.

    The key point of the authors was that the uninsured were costing $9,000 each on average without coverage, but only $4500 each after three years of coverage.

    I will have to somehow get ahold of the full article, because at first glance I really struggle with the $9,000 figure.

    The numbers I remember from an article by John Holohan was that the 40+ million uninsured Americans run up uncompensated hospital care bills of $30 billion or so. That averages $750 apiece.

    Either I remember the article wrongly — which is very possible –or else the 26,000 uninsured persons in the Richmond study go into the hospital a lot more than the nationwide average.

    The income of the uninsured may have a big affect on the numbers.
    People who are uninsured and very poor will be subject to crime and domestic violence, and drug overdoses, etc quite a lot.

    Whereas my own contact with the uninsured is with middle income workers who wind up with company that offers no benefits. These people have terrible problems, they are the shame of America, but they do not live violent lives and I suspect their admission rate is low.

  20. “As for “investors,” I assume here you are addressing the employers.”

    No, actually I was thinking about the for profit hospitals investors. Employers will/may see the reduction/savings, but can they force this change at the hospital level for self insured employers and the insurance sector for those using insurance providers?

  21. As long as health care providers charge $20,000 for a $2,000 procedure and the insurance industry supports the larger figure in principle by setting percentile pricing at 60%-80%, we will never address the real issues. What is the REAL cost of health care. Preventative care isn’t going to change this either.

  22. > will they/can they act outside legislation/government control enough to make a difference? And how are they going to convince their investors that a whole community mind set will produce better returns without more government money?

    There is nothing about offering healthcare upstream, earlier, smarter, more connected, that is against the rules, the legislation, the CMS regs. There are in fact specific programs in the ACA that fund or facilitate such attempts.

    As for “investors,” I assume here you are addressing the employers. This is not a problem, since the return on investment for propagating health among their own employees is high, immediate, provable in prospect, and measurable in retrospect. Working with healthcare institutions to help provide care, preventive care, public health, and healthy communities work is low in cost, and can be show to reduce the institution’s cost, and therefore the employer’s costs in turn. The level of cost involved goes down drastically the further from the institution’s threshold. The levels of expenditure are well within the scale that for-profit corporations already spend on do-good community work just to improve their image.

  23. The Pareto risk stratification discussed has been a passion for me for many years, including mico-economics research of the phenomenon. First, there is a predictable and regular turnover in the 5% high risk population making the case for prevention even more compelling to reach individuals earler in a risk/cost episode. Second, the predictors of risk in the 5% certainly include chronic disease but even more important are benefits design and economic incentives as there is major disbility income use in the 5% where medicalization of job failure in the form of repetetive motion and musculoskeletal claims frequently with stress/depression/anxiety overlay is present. In our reserach 80% of the 5% high risk population have a narcotic pain prescrition and 40% have a psychotrophic drug in the mix. Thirdly, both of those risk factors are more prevelant in the hospital and healhcare employer marketplace making it less lekely they will get the prevention agenda right as this kind of disruptive innovation needs to start at home!

    Hank Gardner. M.D.

  24. “Go back up and read the fourth and fifth paragraph, starting at the phrase “frequent fliers.” I am describing something that is actually happening across healthcare.”

    “are not being paid for re-admits, and are finding themselves in one way or another at risk for the health of whole populations.”

    “At the same time, employers and payers are realizing that they end up paying the costs of the uninsured as well as those of the insured who are over-using the system because they are not being tracked.”

    Excellent points, and about time hospitals (and the rest of us) realize we’re all in the same health care boat, but will they/can they act outside legislation/government control enough to make a difference? And how are they going to convince their investors that a whole community mind set will produce better returns without more government money?

  25. Peter1 writes:

    > kinda like, “what we need is world peace”, now try to muster all the players together to get it done – without anyone loosing income and getting the “divide and conquer” politics to enact the policies.

    Actually, no. That’s the old way. I am talking about something distinctly different here, something so important that my new book, Healthcare Beyond Reform: Doing It Right For Half The Cost, is entirely based on it. It’s the titrated reallocation of risk across healthcare.

    I didn’t expand on the theme here, because I wanted to expand on the upstream consequences. But it’s there, in six sentences. Go back up and read the fourth and fifth paragraph, starting at the phrase “frequent fliers.” I am describing something that is actually happening across healthcare. It’s something I hear in a number of ways from healthcare executives, something you can see happening in articles like these:

    At-Risk Patients Gain Attention of Health Insurers
    http://www.nytimes.com/2012/02/28/health/at-risk-patients-gain-attention-of-health-insurers.html

    Small-Picture Approach Flips Medical Economics [in Chicago]
    http://www.nytimes.com/2012/03/13/health/policy/with-small-picture-approach-acos-gain-in-health-care.html

    To stay fiscally healthy, [California’s] hospitals want fewer patients
    http://www.latimes.com/health/la-me-hospital-changes-20120305%2c0%2c5184223.story

    Leading-edge health systems are pushing care for the least-cared-for beyond their thresholds, into the community, even into people’s homes, not just because it’s a nice thing to do, but because it makes economic sense for them to do that.

  26. > Say you took 1,000 Americans with first dollar health insurance, and 1,000 Americans with similar age and income but no insurance.
    >Joe, your point is that the latter group of uninsureds is costing all of us more money.
    >I am not sure that is true.

    Take a look at this, Bob. Here’s a study in Health Affairs:
    http://content.healthaffairs.org/content/31/2/350.full.html

    Here’s a press release about the study (in case you can’t get at the HA study): http://today.uci.edu/news/2012/02/nr_insurance_120209.php

    The study looks at people newly-enrolled in a primary care clinic program in Virginia. Roughly speaking, over a 3-year period, their total health care costs dropped by half. Yes, paying for people’s healthcare costs way less than pretending we are not paying for it.

  27. “Canada has in effect chosen to provide excellent and cheap preventive coverage. As a result, there is not enough money in the system to prevent every death from heart disease and cancer.”

    Bob, you might find this link adds some information about Canada.

    http://www.conferenceboard.ca/hcp/details/health/mortality-cancer.aspx

    Canada has chosen to view health care as a “cost” while the
    U.S. has chosen to view it as an “income generator”. Until that changes we will be the high price leader.

  28. Joe, let me be more specific on where i think your argument is vulnerable.

    A person without insurance will have untreated blood pressure, untreated diabetes, etc., and so they may have a heart attack in the next five years. If a hospital cares for them for next to nothing, then this person has ‘cost’ the systerm $25,000.

    (unless they die right away, which is not uncommon although a gruesome way to save money.)

    The person with Cadillac insurance may have had resting EKG’s, treadmill EKG/s, echocardiograms, catheterization, and even a bypass surgery or two. Could be more than $25,000.

    My point is that high-tech prevention costs a lot of money also.

    Say you took 1,000 Americans with first dollar health insurance, and 1,000 Americans with similar age and income but no insurance.

    Joe, your point is that the latter group of uninsureds is costing all of us more money.

    I am not sure that is true.

  29. Until the doctors are paid well to provide safe and efficacious care, the hospital administrators have their bloated compensation packages reduced and the truth outed about the premature deaths within their walls (mostly as a result of ill conceived HIT systems), you are whistlin Dixie.

  30. Joe– With over 20 years of experience in a system in South Florida that I believe can solve our problem, I like what you are saying. I myself am a student of this problem and out of my experience I have written a 50 page Whitepaper explaining my solution. Nor is this mere theory for it is based on those 20 years of trench warfare in internal medicine– 20 years in which the system has been refined and perfected. The system bases the practice of medicine on the prevention of events. Contract of Conscience is available on the above Website or view the video on YouTube.

  31. Joe you write with both intelligence and compassion. That is a great combination for making progress on health care reform.

    I would add however that “getting people covered” is only part of the story.
    I can get virtually everyone in America “covered” with a $25,000 deductible.
    That kind of health insurance would cost about $100 a month, maybe $200 a month if you had guaranteed issue.

    This sounds extreme, but in the rough individual/small group market where I sell insurance and buy my own coverage, that is the direction we are going.

    Millions of lower-paid workers and older pre-Medicare individuals already have high deductibles but their HSA accounts are worth ” bupkes.”

    My own situation at age 63 is to pay $500 a month for a $4000 deductible.
    That is grotesque. There is real premium compression between low-deductible ‘Cadillac’ plans and the Yugo-like high deductible policies.

    At some point the country will have to choose between good preventive coverage and good life-saving coverage. Canada has in effect chosen to provide excellent and cheap preventive coverage. As a result, there is not enough money in the system to prevent every death from heart disease and cancer.

    This is a defensible choice! But it will run against endless charges of ‘death panels.’ A friend of mine recently passed away after 5 years of aggressive cancer treatments. Blue Cross paid over $600,000, and now the premiums for his former company have skyrocketed. The surviving workers at his plant will not have five cents for HSA’s once they get done paying even a high-deductible premium.

    Yet had my friend been cut off from treatment, lawsuits may well have followed.

    My caution with your fine article is that I sense you are saying that we can have both kinds of coverage and it won’t cost us more. I wish you were right but I do not think you are.

    Bob Hertz, The Health Care Crusade

  32. Great comments Joe, kinda like, “what we need is world peace”, now try to muster all the players together to get it done – without anyone loosing income and getting the “divide and conquer” politics to enact the policies.

  33. well, the, people will die from something. What I see is many people more dying from the dangers of electronic medical records in hospital when the CPOE is broken. Even when it works, patients are neglected and die. The CDC must offer prevention from the CPOE diseases afflicting my patients. Deaths are common. No one is listening. All want data no matter how bad it is.

  34. I totally agree with the idea of wellness programs to help individuals stay healthy and avoid potential problems. Although, one of the problems I see is that questioning around why people are getting sick is not going past lifestyle. We need to start asking why people live unhealthy lifestyles and what led them to that point. I believe another treasury of preventative measures could be found when digging deeper into the reasons behind unhealthy living. Readers of this blog may find this link about corporate wellness interesting: http://bit.ly/KD5DLm

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