Tech

Will Tech Revolutionize Health Care This Time?

the scanadu
After decades of bravely keeping them at bay, health care is beginning to be overwhelmed by “fast, cheap, and out of control” new technologies, from BYOD (“bring your own device”) tablets in the operating room, to apps and dongles that turn your smart phone into a Star Trek Tricorder, to 3-D printed skulls. (No, not a souvenir of the Grateful Dead, a Harley decoration or a pastry for the Mexican Dia de Los Muertos, but an actual skullcap to repair someone’s head. Take measurements from a scan, set to work in a cad-cam program, press Cmd-P and boom! There you have it: new ear-to-ear skull top, ready for implant.)

Each new category, we are told, will Revolutionize Health Care, making it orders of magnitude better and far less expensive. Yet the experience of the last three decades is that each new technology only adds complexity and expense.

So what will it be? Will some of these new technologies actually transform health care? Which ones? How can we know?

There is an answer, but it does not lie in the technologies. It lies in the economics. It lies in the reason we have so much waste in health care. We have so much waste because we get paid for it.

Yes, it’s that simple. In an insurance-supported fee-for-service system, we don’t get paid to solve problems. We get paid to do stuff that might solve a problem. The more stuff we do, and the more complex the stuff we do, the more impressive the machines we use, the more we get paid.

A Tale of a Wasteful Technology

A few presidencies back, I was at a medical conference at a resort on a hilltop near San Diego. I was invited into a trailer to see a demo of a marvellous new technology — computer-aided mammography. I had never even taken a close look at a mammogram, so I was immediately impressed with how difficult it is to pick possible tumours out of the cloudy images. The computer could show you the possibilities, easy as pie, drawing little circles around each suspicious nodule.

But, I asked, will people trust a computer to do such an important job?

Oh, the computer is just helping, I was told. All the scans will be seen by a human radiologist. The computer just makes sure the radiologist does not miss any possibilities.

I thought, Hmmm, if you have a radiologist looking at every scan anyway, why bother with the computer program? Are skilled radiologists in the habit of missing a lot of possible tumors? From the sound of it, I thought what we would get is a lot of false positives, unnecessary call-backs and biopsies, and a lot of unnecessarily worried women. After all, if the computer says something might be a tumor, now the radiologist is put in the position of proving that it isn’t.

I didn’t see any reason that this technology would catch on. I didn’t see it because the reason was not in the technology, it was in the economics.

Years later, as we are trending toward standardizing on this technology across the industry, the results of various studies have shown exactly what I suspected they would: lots of false positives, call-backs and biopsies, and not one tumor that would not have been found without the computer. Not one. At an added cost trending toward half a billion dollars per year.

It caught on because it sounds good, sounds real high-tech, gives you bragging rights (“Come to MagnaGargantua Memorial, the Hospital of the Jetsons!”) — and because you can charge for the extra expense and complexity. There are codes for it. The unnecessary call-backs and biopsies are unfortunate, but they are also a revenue stream — which the customer is not paying for anyway. It’s nothing personal, it’s just business. Of course, by the time the results are in saying that they do no good at all, you’ve got all this sunk cost you have to amortize over the increased payments you can get. No way you’re going to put all that fancy equipment in the dumpster just because it fails to do what you bought it for.

Is this normal? Or an aberration? Neither. It certainly does not stand for all technological advances in health care. Many advances are not only highly effective, they are highly cost effective. Laparoscopic surgery is a great example — smaller wounds, quicker surgeries, lower infection rates, what’s not to like? But a shockingly large number of technological advances follow this pattern: unproven expensive technologies that seem like they might be helpful, or are helpful for special rare cases, adopted broadly across health care in a big-money trance dance with Death Star tech.

Cui Bono?

But that is in health-care-as-it-has-been, not in health-care-as-it-will be. How we think about the impact of new technologies is bound up with the changing economics of health care.

Under a fee-for-service system the questions about a new technology are, Is it plausible that it might be helpful? What are the startup costs in capital and in learning curve? And: Can we bill for it? Can we recoup the costs in added revenue?

In any payment regime that varies at all from strict fee for service (bundled payments, any kind of risk situation), whether we can bill for it becomes irrelevant. The focus will be much more on efficiency and effectiveness: Does it really work? Does it solve a problem? Whose problem?

Many times, extra complexity and waste are added to the system for the convenience and profit of practitioners, not for the good of patients. For example, why do gastroenterologists like to have anaesthesiologists assisting at colonoscopies, when the drugs used (Versed and fentanyl) do not provoke general anaesthesia and can be administered by any doctor? The reason is simple: It turns a 30-minute procedure into a 20-minute procedure. The gastroenterologist can do three per hour instead of two per hour. In the volume-based health care economy, they make more money. The use of the anaesthesiologist adds an average of $400 per procedure to the cost without adding any benefit, lowering the value to the patient. Altogether this one practice adds an estimated $1.1 billion of waste to the health care economy every year.

So in thinking about whether these new technologies will propagate across health care, we can ask how exactly they will fit into the ecology of health care, who will benefit from their use, and how that benefit will tie in to the micro economy of health care in that system, with those practitioners and those patients.

Change Is Systemic

A cardiologist in an examining room whips out his iPhone and snaps it into what looks like a special cover. He hands it to the patient, shows the patient where to place his fingers on the back of the cover, and in seconds the patient’s EKG appears on the screen. Dr. Eric Topol, speaking at last summer’s Health Forum Summit, performs a sonogram on himself on stage using a cheap handheld device. These things are easy to imagine in isolation, as something a single doctor or nurse might do with an individual patient.

In reality, in most of health care, the things we need to do to incorporate such technologies are systemic. To be secure, reliable, HIPAA-compliant and connected to the EMR, they can’t be used randomly by the clinicians who happen to like them. They must be tied into and supported by the IT infrastructure.

Similarly, in moving from “volume” to “value” we are talking about changes that don’t happen at the level of a single doctor or single patient. In most cases we cannot treat the patients for whom we are at risk differently from those we are treating on a fee-for-service basis. When you are paid differently, you are producing a new product. When you are producing a new product, you are a beginner. The shift from “volume” to “value” demands and dictates broad systemic changes in revenue streams, which dictate changes in business models, compensation regimes and governance structures. Getting good at these new businesses means changing practice patterns, collaboration models and cultures.

Hospitals, integrated health systems and medical groups face a stark choice: They can either abandon the growing part of the market that demands a “value” business arrangement and stick to the shrinking island represented by old-fashioned “volume” arrangements. Or they can transform their entire business.

The use and propagation of these new low-cost technologies are entirely wrapped up in that decision. In old-fashioned fee-for-service systems, they will be used only where their use can be billed for, or where they lower the internal costs of something that can be billed for. They will not be used to replace existing services that can be billed at higher rates.

“That’s a Lot of Money”

Dr. Topol in his talks likes to make the point that there are over 20 million echocardiograms done in the United States every year at an average billing of $800. As he puts it, “Twenty million times $800 — that’s a lot of money. And probably 70 to 80 percent of them will not need to be done, because they can be done as a regular part of the patient encounter.”

Precisely: That is a lot of money. In fact, it’s a big revenue stream. It’s difficult to imagine that fee-for-service systems for which various types of imaging, scanning and tests represent large revenue streams are going to be early adopters of such technologies that diminish the revenue streams to revenue trickles. When you are paid for waste, being inefficient is a business strategy.

In the “value” ecology of the Next Health Care, the questions are much more straightforward: Does it work? Does the technology make diagnosis and treatment faster, more effective, more efficient? Does it make it vastly cheaper?

Imagine replacement bones (and matrices for regrowing bones) 3-D printed to order. Imagine replacement knee joints, now sold at an average price of €7000 in Europe and $21,000 in the United States, 3-D printed to order. (Imagine how ferociously the legacy makers of implants will resist this change, and how disruptive it will be to that part of the industry.)

Imagine the relationship between the doctor, the nurse and the patient with multiple chronic conditions, now a matter of a visit every now and then, turned into a constant conversation through mobile monitoring.

Imagine a patient at risk for heart attack receiving a special message accompanied by a special ring tone on his cell phone — a message initiated by nano sensors in his bloodstream — warning him of an impending heart attack, giving him time to get to medical care.

Imagine all of this embedded in a system that is redesigned around multiple, distributed, inexpensive sensors, apps and communication devices all supporting strong, trusted relationships between clinicians and patients.

Imagine all this technological change supported with vigor and ferocity because the medical organizations are no longer paid for the volume they manage to push through the doors, butfor the extraordinary value they bring to the populations they serve.

That’s the connect-the-dots picture of a radically changed, mobile, tech-enabled, seamless health care that is not only seriously better but far cheaper than what we have today.

With nearly 30 years’ experience, Joe Flower has emerged as a premier observer on the deep forces changing healthcare in the United States and around the world. As a healthcare speaker, writer, and consultant, he 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.

You can find more of Joe’s work at his website, imaginewhatifThis article first published in Hospitals and Health Networks (H&HN) Daily 

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Steve O'juicer machinesRichard Bensonhttps://www.facebook.com/LeagueofAngelsHackCheatDenver Brown Recent comment authors
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juicer machines
Guest

This procedure involves the burning of the top layer of
skin to promote new collagen production. Ignoring some of these
rules will just make you look like a jerk and possibly leave you humiliated.
If you own a centrifugal juicer and are annoyed by the foaming and the clogging switch to a masticating juicer.

Richard Benson
Guest

This is indeed exciting. Was any attention given to standards for the data in the Health App, or will we have (like in every other platform) a cacophony of different data formats, ontologies, etc.?

Steve O'
Guest
Steve O'

Beware the MIPS.

https://www.facebook.com/LeagueofAngelsHackCheat
Guest

Its such as you read my mind! You appear to grasp so much approximately this,
like you wrote the guide in it or something.
I believe that you can do with some p.c. to pressure the message home a little bit,
but other than that, this is fantastic blog. A fantastic read.
I will definitely be back.

William Palmer MD
Guest
William Palmer MD

@Steveofcaley
B’WA’ANA will so instruct his fellow witch doctors that they must deliver a mathematical fraction to his tribe. Not health or medicine, but a fraction. This fraction is outcome/cost. The outcome can go to hell as long as the costs decrease a little faster. If this happens the fraction will be increasingly positive and value will increase. Who cares if the outcomes go into the toilet? We want value.

” Our tribe has terrible outcomes but high value because we are cheap…are we ever”. We are called the VALUE tribe of the Au Courant Nation.

Steve O'
Guest
Steve O'

Brilliant, brilliant. Have you been to Wizard School? A proliferation of valueless opportunities – that’s what makes America what it is today (a loser in three-card-monte with China.)

Denver Brown
Guest
Denver Brown

Is it possible these innovations have revolutionized medicine in huge ways by some standards, but that we are not as easily impressed as we once were? I remember when the first iPhone was released and how impressive it was. Now when processor is x8 faster or a battery lasts 80% longer, it is nice, but not seen as much of an advance. Equally, when someone comes up with amazing new technology that affects the medical system in huge ways, I feel we are underwhelmed because our expectations have become reflective of constant improvement

Perry
Guest
Perry
William Palmer MD
Guest
William Palmer MD

If we are really talking about outcomes/costs as equal to value [V=outcomes/costs] and if we are actually going to try to do this, then volumes are going to increase willy nilly. There is no way not to increase volumes. First of all, all we have to do is to lower costs and do nothing to outcomes. This will increase value. But it is also going to increase demand. This will increase volume. Secondly, lets try to improve outcomes and increase the numerator of the equation. There are two outcomes that count and are prime in medicine. We increase the accuracy… Read more »

SteveofCaley
Guest

“This, of course, is economic nonsense unless you want magic or slavery in the input factors of your health system.” You pass by a long history of human civilization where magic AND slavery were operative elements for societal functioning. The tradition of the IDOL is worth considering. Ever since mankind fired and turned clay into hard ceramic, we have had IDOLS. The gods are commanded and worshiped to deliver bounty to the people, to give crops and rain; and when the crops fail and the rain does not come, the IDOLS are desecrated, buried in dung and chastised, and other… Read more »

Perry
Guest
Perry

I guess it would be interesting to compare the costs of chronic treatment vs Solvadi. The problem with Hep C is that it can evolve into hepatic carcinoma which is an even more devastating problem to treat.

Barry Carol
Guest
Barry Carol

There are “only” about 6,000 liver transplants each year in the U.S. at a cost of $150,000 to $200,000 each. It would only take about 12,000 people to be treated with Sovaldi to spend approximately the same amount of money and, as noted previously, there are 3 million people with the condition in the U.S. alone and 150 million worldwide.

Perry
Guest
Perry

“Gilead Sciences has the gall to price it at $84,000 in the U.S. for a 12 week course of treatment”

I like the pun, Barry. But what’s even more galling is the fact that most Hep C sufferers can barelyafford to pay for any treatment, much less this type of cost. Who does the drug company think will pay for this medication?

allan
Guest
allan

Why do you think the investors put so much money into a risky investment? I too think the price kind of steep, but if they had lost their money would you be chipping in to reduce their losses? If the investors were not permitted to earn a return on their investment to their satisfaction do you think they would continue to invest in producing this type of drug? They could have invested the money in Apple and gotten very good returns without having so much of the downside. My question is what are government’s or other third parties doing that… Read more »

Barry Carol
Guest
Barry Carol

allan, A unique aspect of healthcare services, tests, procedures, drugs and devices is that we buy them because we have to and not because we want to. It’s different from TV’s, computers, cars, etc. and all those other products have a wide range of choices that can fit most budgets. Regarding investment returns, the long term total return from publicly traded stocks is about 9% a year of which 6% is real and 3% compensates for average inflation over the period. Higher risk alternatives like hedge funds, private equity and venture capital strive to produce about 300-400 basis points more… Read more »

allan
Guest
allan

Barry, the vast majority of pharmaceutical usage has alternatives, yet we still want the newest and the ‘best’ that happens to be the most expensive. That desire is mostly realized because we have a third party payer system that is willing to pay for such luxury. If there were no third party payer such drugs would either not be produced or would be produced with a high price that quickly fell since greater numbers can make up for the reduced price. Third party payers that are willing to pay the high price can keep the price higher longer. High priced… Read more »

Barry Carol
Guest
Barry Carol

“With little knowledge or personal risk you seem to be willing to tell these investors what makes a good risk. Don’t you think those people that are investing huge sums of capital know a bit more than you about risks and rates of return?” allan, I had a 40 year career in the money management business as a securities analyst and portfolio manager. For the last 18 years before I retired, I worked for a large corporate pension fund with $10 billion in assets of which about 60% was invested in equities and alternative investments. I covered many different industries… Read more »

allan
Guest
allan

“I had a 40 year career…” Really? Barry, that doesn’t make you the expert that is entitled to spend or invest another person’s money. All things being equal when you were acting as an agent investing money for others you got the best return possible and didn’t take a lower return to be charitable. If you did tell me and I will pass it on and watch the sharks feed. Thalidomide: Terrible tragedy, but how many people have suffered similar tragedy and death because of FDA delays in part due to thalidomide? “new drugs are indeed expensive to develop and… Read more »

Barry Carol
Guest
Barry Carol

Perry, Gilead expects insurance companies to pay for Sovaldi. It remains to be seen how the various states will handle payment for Medicaid patients. For those with managed care contracts, 2014 terms were set before Sovaldi hit the market and are working it out with insurers on an ad hoc basis. For Medicare patients that have Part D drug plans with private insurers, Medicare will wind up paying most of the cost of the drug under the risk corridor provisions of Part D if overall drug spending exceeds premiums collected from Medicare and members themselves. For the commercially insured population,… Read more »

Peter1
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Peter1

“Imagine” technology bringing the prices down. Unfortunately it’s just in our imagination – not in the the reality of protected billings.

Barry Carol
Guest
Barry Carol

I had a colonoscopy about a month ago. It was my 8th one overall. This time, I received Propofol instead of Versed, which I had in the past, and it was the easiest procedure ever except for the preparation. There was also an anesthesiologist during the procedure for the first time. The procedure took place at my nearby local community hospital which I noticed was considerably less busy than in the past. When I asked about this, I was told that the doctors moved more of their patients to ASC’s which they often had a financial interest in. I know… Read more »

allan
Guest
allan

B. Carrol: “In every other field that I can think of, technology drives prices down and functionality up. In the case of prescription drugs, innovation seems to drive costs up often for marginal benefit” You are right Barry, costs are driven up, but the prices of excellent older drugs fall. When that large LCD was produced you probably bought the older smaller one at a discount so both the price and the cost fell. In the case of pharmaceuticals when new drugs come out frequently you purchase the newer drug not taking advantage of the discounted price of the older… Read more »

Barry Carol
Guest
Barry Carol

allan, I know generic drugs save a lot of money as I take six of them myself. The last one of my brand name drugs to go off patent was Plavix. When it did, the cost of a 90 day supply fell from $546 to $24 overnight, a 96% reduction! While generics now account for about 80% of all prescriptions filled in the U.S., they account for only 15%-20% of the dollars spent on prescription drugs. Moreover, unlike brand name drugs, generics are actually cheaper in the U.S. than in other countries because multiple manufacturers competing for share of a… Read more »

allan
Guest
allan

Barry, you realize that there were drugs used for the same condition before Plavix was released, right? Even the super rich used those drugs. You realize those drugs were much less expensive, but Plavix had advantages like the 30 inch plasma screen over the tube set. Now Plavix is off patent and you can get it for a lot less money just like you can get the 30 inch plasma since the 60 inch LED is the screen most coveted. Yes certain drugs we have today that appeal to smaller audiences carry a higher price. That occurs everywhere so don’t… Read more »

Legacyflyer
Guest
Legacyflyer

I am going to add something here which may help to explain why anaesthesiologists are used during endoscopy. First my qualifications: I did Invasive Radiology procedures for many years. Some of these procedures were more painful and dangerous than colonoscopy. I used conscious sedation – in the latter years with Fentanyl and Versed. These procedures were all monitored by a nurse and me. With a good nurse, there was little extra effort needed on my part. I don’t think these procedures would have been faster with an anaesthesiologist helping. As a 60 year old, I have had a number of… Read more »

Joe Flower
Guest

Thanks for the perspective, Legacyflyer.

Joe Flower
Guest

You are correct that fear of litigation drives the extra biopsies after computer-aided mammogram readings. As I said in the article, the computer puts the radiologist in the position of proving that a circled cloud is _not_ a tumor. But the case of the GI doc on the stand is different, in that having the endoscopy team administer the anesthetics is a well-established and widely-used medical practice. Using an anesthesiologist is only considered medically necessary for high-risk patients who require intensive monitoring. The waste that I am speaking of is all on low-risk patients. Please see the articles I cited… Read more »

allan
Guest
allan

Joe, you are an intelligent individual educated in health care affairs so that is what you think. What does the jury think? They do not have your level of understanding. What does the attorney think? Juries make lousy decisions so let’s settle. Settling will give the attorney his ~30% so the value of a trial for ~10% more frequently isn’t worth his time. The defense attorney realizes that crazy juries can award crazy awards so let us settle. The fear of the physician is not just loosing a case. Being unfairly sued and running the risk of loss of reputation… Read more »

Joe Flower
Guest

Maybe. But at least in this case not so much that many GIs do not use anesthesiologists in colonoscopies with low-risk patients. And whatever the tort risk, it is always going to be a better argument for your defense attorney to make if you can establish that your actions conformed to the medical norm, or were explicitly sanctioned by the guidelines of your profession.

allan
Guest
allan

Joe, you are making me wonder how many colonoscopies are performed without any anesthesiologist present. Many colonoscopies are performed in hospitals and anesthesiologists would likely be somewhere in the vicinity. Wouldn’t you think that centers where there are multiple procedures going on use at least one anesthesiologist? What does that leave us with? The private doctor doing a colonoscopy in his own office. Now we have to add up the numbers. I don’t have the answer, but it is an interesting question. As to you last point one can sue a doctor for a bruised tomato. Ridiculous cases create a… Read more »

SteveofCaley
Guest

This is the hard part, Joe. It’s not the nuts and bolts of healthcare – it’s simply the questions Who will make the final decision? and Will anyone back them if questioned?” I know how juries should work; but there’s been so much vilification of doctors, juries will go with the plaintiff. You and I can reason about long complicated sentences like “only considered medically necessary for high-risk patients who require intensive monitoring.” Any decent trial lawyer can turn red in the face and yell “Greed! Death!” enough times to sway any jury. Any bad outcome is now called malpractice,… Read more »

Perry
Guest
Perry

The breakdown of basic clinical skills and judgment is only going to lead to more inappropriate use of technology, not less.” This, then is what we will be left with if not careful. We also want to be careful that innovation is not squelched. Unfortunately, it takes money to research and develop technologies, so we can’t expect them to be necessarily cheaper. Regarding the digital mammography and the anesthesiologists in GI procedures, I introduce another twist: “But doctor, you saw that the computer said there were suspicious nodules in the plaintiff’s breast, but you did not think it wise to… Read more »

Granpappy Yokum
Guest
Granpappy Yokum

“Our belief in technology as the sine qua non of transformation in healthcare is a misplaced extension of our retail experience with technology elsewhere in our lives. The fact that Android and iOS phones and tablets make many lives easier and more productive (and make it easier to shop 24/7) does not logically lead one to the conclusion that the layering of more technology into healthcare environments, where, apparently, clinicians can no longer do effective histories and physicals, is going to fix what ails the system”

And what a great paragraph!