Economics

Half the Cost. Half the Jobs?

flying cadeuciiHealthcare costs far too much. We can do it better for half the cost. But if we did cut the cost in half, we would cut the jobs in half, wipe out 9% of the economy and plunge the country into a depression.

Really? It’s that simple? Half the cost equals half the jobs? So we’re doomed either way?

Actually, no. It’s not that simple. We cannot of course forecast with any precision the economic consequences of doing healthcare for less. But a close examination of exactly how we get to a leaner, more effective healthcare system reveals a far more intricate and interrelated economic landscape.

In a leaner healthcare, some types of tasks will disappear, diminish, or become less profitable. That’s what “leaner” means. But other tasks will have to expand. Those most likely to wane or go “poof” are different from those that will grow. At the same time, a sizable percentage of the money that we waste in healthcare is not money that funds healthcare jobs, it is simply profit being sucked into the Schwab accounts and ski boats of high income individuals and the shareholders of profitable corporations.

Let’s take a moment to walk through this: how we get to half, what disappears, what grows and what that might mean for jobs in healthcare.

Getting to half

How would this leaner Next Healthcare be different from today’s?

Waste disappears: Studies agree that some one third of all healthcare is simple waste. We do these unnecessary procedures and tests largely because in a fee-for-service system we can get paid to do them. If we pay for healthcare differently, this waste will tend to disappear.

Prices rationalize: As healthcare becomes something more like an actual market with real buyers and real prices, prices will rationalize close to today’s 25th percentile. The lowest prices in any given market are likely to rise somewhat, while the high-side outliers will drop like iron kites.

Internal costs drop: Under these pressures, healthcare providers will engage in serious, continual cost accounting and “lean manufacturing” protocols to get their internal costs down.

The gold mine in chronic: There is a gold mine at the center of healthcare in the prevention and control of chronic disease, getting acute costs down through close, trusted relationships between patients, caregivers, and clinicians.

Tech: Using “big data” internally to drive performance and cost control; externally to segment the market and target “super users;” as well as using widgets, dongles, and apps to maintain that key trusted relationship between the clinician and the patient/consumer/caregiver.

Consolidation: Real competition on price and quality, plus the difficulty of managing hybrid risk/fee-for-service systems, means that we will see wide variations in the market success of providers. Many will stumble or fail. This will drive continued consolidation in the industry, creating large regional and national networks of healthcare providers capable of driving cost efficiency and risk efficiency through the whole organization.

What’s the frequency?

So what’s the background against which this has to take place? What’s going to affect healthcare from the outside? Mainly three broad trends:

The economics of yawns: We can expect more of the same, with continued inequality, most economic gains going to the top 1%, and continued deprecation of the middle and working classes. This will express itself in an ever mounting need and demand to bring people greater access to healthcare, which includes bringing the actual costs to the consumer/patient/voter down.

Boomers again: Boomers will continue bulking up the Medicare demographic. The current trends will become even more stark: costs per beneficiary down, overall costs up. Just pre-retirement Boomers were the group hit hardest by the great sucking sound of 2008 which magically disappeared massive amounts of equity in home values, IRAs and 401Ks. The effects span generations: Not only are the Boomers struggling themselves, they have far fewer resources available to give help when their children and grandchildren sink into a health crisis.

Political momentum: The relative success of the ACA in getting people covered  gives the political momentum to expanding coverage further, such as through expansion of Medicaid in states that have not accepted it. It will especially add oomph to any political or market attempt to lower the actual cost of healthcare for the patient/consumer/voter.

Political momentum: The relative success of the ACA in getting people covered  gives the political momentum to expanding coverage further, such as through expansion of Medicaid in states that have not accepted it. It will especially add oomph to any political or market attempt to lower the actual cost of healthcare for the patient/consumer/voter.

What will grow anyway?

However successful we are or are not at making healthcare leaner, one thing the next few years will not be is business as usual. The current trend toward massive regulatory complexity will most likely continue. There are no forces or mechanisms emerging yet that would change that trend. At the same time, the economics of running a healthcare organization will get much more complex, which means so will strategic planning, capital planning, and every other top management task.

So we can expect growth in the regulatory compliance sector of healthcare employment. At the same time, healthcare planning, forecasting, financing, and strategy skills need to put on muscle, whether in-house or through consultants.

How will parts of healthcare get lean, trim down, atrophy?

Waste: Any payment system that gets around fee-for-service and puts the healthcare provider at some risk for good outcomes will push healthcare providers to compete to give the best possible outcome at the best available price. Any such competition will tend to drive wasteful, unnecessary, and unhelpful practices out of the market — you’re not going to do it if you can’t get paid for it. These include such common practices as complex back fusion surgery for simple back pain, computer analysis of mammograms, the use of anesthesiologists in routine colonoscopies, the routine use of colonoscopies for mass screening, some two thirds of all cesarean sections, over $1 billion worth of unnecessary cardiovascular stents done every year, and on and on. If your business model or your career depends on a technique that honestly doesn’t score all that well on a cost/benefit scale, this would be a good time to rethink your business model or career.

Prices: With growing price transparency and a growing willingness of buyers to go far afield if need be to find the right deal, it will become increasingly difficult for manufacturers of devices, implants, pharmaceuticals — indeed, any supplier to healthcare – to continue to insist on outsize profit-driven prices. It will be hard to charge $21,000 for a knee implant when the exact same device can be bought in Belgium for $7000. Similarly, with reference pricing and comparison shopping becoming more common, it will be very difficult for your hospital to get business if you insist on charging over $100,000 for a new knee.

Automation: Many job categories across healthcare, from messengers and janitors to neurosurgeons and oncologists will be supplemented or in some cases entirely replaced by robots and software.  We are already seeing widespread automation of  labs and pharmacies. HVAC systems are auto controlled and remotely monitored. Security is enhanced with surveillance cameras, robotic patrols, and position sensitive ID badges. But automation will move much higher up the skill scale, as DNA analysis and volumetric CT and MRI scans replace much of the work of many oncologists, and next-generation scan-driven high precision proton beams replace neurosurgeons at some of their most delicate tasks — even as new custom-built DNA-based personal pharmaceuticals may obviate any need for surgical removal of tumors at all.

Automation of various kinds will show up increasingly in every task category throughout healthcare, extending individual’s powers, raising productivity, and increasing the team’s capacity while eliminating jobs.

Cost Accounting And Lean: Under a fee-for-service system, in which you can charge for each item, inefficiency is a business model. If you’re getting paid a bundled price or a per-patient per-month stipend, suddenly inefficiency is a drain on the bottom line. You simply must recognize your true costs and use strong “lean manufacturing” protocols to get them down. In the organizations that get this right we can expect large increases in productivity, which will mean both increases in capacity and loss of some jobs, either in the organization that is succeeding or the organizations that it is competing against.

What will grow?

In a healthcare economy that is moving toward “leaner and better,” which categories would increase?

A leaner and better healthcare will have to do far more in preventing and managing chronic disease. We are losing rather than gaining the extra primary care physicians that we need to lead that charge. The most successful disease prevention and management programs are based on team care. The most efficient and effective way to influence behavior, especially of “super users,” is through trusted lines of communication with real clinicians — being efficient requires putting a crew on it, increasing rather than decreasing the people who have actual patient contact. So we can expect strong growth in any category that could add to that crew, such as:

“Complementary and alternative” practitioners: When you get paid to do medical stuff to people, why give any business to rival modes? But when you get paid to help people be healthier, why not throw into the mix modalities such as chiropratic, acupuncture, and others which can often show strong results at a fraction of the cost? Why not try them first?

Physical therapy: Remember those Boomers massed at the gates? Many of the aches and pains of aging are better served by cortisone, ibuprofen and yoga than by back fusion surgery and new hips. Physical therapists, like chiropractors and acupuncturists, can be a first line of defense against higher medical costs.

Home health: Vulnerable populations (such as pregnant women, newborns, people with multiple chronic conditions, and the frail elderly) can often be cared for in the home for far less cost than any acute care that can be avoided. New communication technologies can make home health care cheaper, more constant, more data-driven, and more effective.

Enhanced medical home: The Vermont Blueprint and other programs have shown the efficiency and effectiveness of expanding the “medical home” home concept into teams staffed by physician assistants, nurse practitioners, community health specialists, behavioral health specialists, indeed any category of helper that can strengthen and deepen the bond with the family caregiver or the patient.

Behavioral health and addiction: In a fee-for-service world, the behavioral practices have been given short shrift. Considering how much illness and accident is driven in one way or another by addictions and other behavioral problems, any healthcare system run by “value” rather than “volume” is going to hire a lot more psychologists and family counselors.

IT support: The Next Healthcare will be modulated not only through docs’ BYO devices, but through multiple types of cheap sensors, gadgets, dongles, and apps. In order for them to be medically useful, they must be integrated into the system’s IT and EMRs. The need for integration and support of the device swarm will grow rapidly.

Tech industry: We can expect that creating such devices and software, especially those connecting the patient and caregiver to the clinic and clinician, will be a big growth area in the tech industry.

What’s the trend?

The shift can’t be captured in one Big Trend That Devours Everything. But there is this: Most of the things we will doing less are the kinds of things that have made a lot of the “procedure guys” rich over the last few decades, unnecessary procedures and tests that use lots of big machines, expensive implants and other hardware. Most of the parts that will grow emphasize real patient contact, though often at a lower skill and expense level. “Fewer back surgeons and implants, more physical therapists and exercise classes” could stand as a metaphor for the shift.

So while “healthcare at half the cost” would definitely mean fewer jobs in healthcare, it would not mean half the jobs. It would mean more jobs in direct patient handling, especially in primary care, while allowing less profit for suppliers and providers and high-end procedure specialists doing unnecessary work as well as charging unsupportably high prices. And that, my friends, would be a success.

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anesbillingbridgeJoe FlowerErika RegulskyDennis ByronArt Fougner MD Recent comment authors
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Joe Flower
Guest

Allan, I am underwhelmed both by your graciousness and by your discussion skills. You have simply re-asserted and re-assumed everything that you asserted and assumed before. You have failed the Turing test. Carefully looking over the nine pages of Pica type in my voluminous contract, I failed to find any clause that mandates that I respond to bots. Any future comments addressed to me will go unread.

allan
Guest
allan

@Joe: “Allan, I am underwhelmed both by your graciousness and by your discussion skills.” Joe, you are so easily underwhelmed. I merely commented on your op-ed with a different point of view so any repetition of certain concepts only meant that your op-ed hadn’t changed much. I don’t know why you are so upset at me. If my skills are so devoid of useful content you should have been able to decimate any of my criticisms. That you haven’t simply means that you were unable and that what was criticized was justly criticized. That doesn’t mean that some of your… Read more »

Peter1
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Peter1

“On one hand, on can certainly see markets whose economics are driven by heavy consolidation leading to rise in both utilization and prices, such as Idaho and southwest Georgia.” And my local area in Durham/Chapel Hill NC. Duke and UNC are dominate monopolies who drive prices up and buy small lower price clinics. As well we have a well compensated work force in education, research and tech that, like in real estate, drives prices up for the low(er) wage support people. “Cleveland Clinics, Mayo, and Johns Hopkins are reaching into regional markets across the country and siphoning off many of… Read more »

Barry Carol
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Barry Carol

Peter1, Famous medical centers like the Cleveland Clinic are offering employers, including Boeing and Lowe’s, very competitive bundled prices for profitable procedures like heart surgery. Pricing includes transportation for the employee / patient plus transportation and lodging for a spouse / companion. The employee can probably get better care than he might at his local hospital, even if it’s an academic medical center. The pricing may not be as low as marginal cost but it’s probably considerably lower than what it commands from insurers on behalf of patients in its local market. Since they presumably have some excess capacity, the… Read more »

Peter1
Guest
Peter1

Barry, it’s only a game changer if they can handle a large enough volume to affect local high priced markets – I don’t see that happening. It probably will have more of an effect on their local markets if other hospitals can’t get that contract business. It also appears it is only to fill in otherwise surgery down time and for large employer contracts. The long suffering individual market is still out of luck.

Joe Flower
Guest

“Medical tourism” of this sort is not a “game-changer” on its own. But it is part of a pattern of strategies that employers are beginning to use more widely that will tend to rationalize prices, including bundling in general, and “centers of excellence” (much like the medical tourism strategy, but without the travel) and reference pricing (paying everything if it’s below a reference price, and making anything above the reference price a co-pay). All of these have been strategies for large employers who have the mass and resources to devote to making these large deals across markets. But as the… Read more »

Joe Flower
Guest

> Consolidation I believe it was Peter1 who pointed out the difficulty that consolidation poses for any attempt to drive down prices and costs in healthcare. Keep in mind that this article assumes that attempt will work, and tries to explore what shape it will take. The actual effect of consolidations is more complex, and the evidence available does not easily line up on one side or the other. On one hand, on can certainly see markets whose economics are driven by heavy consolidation leading to rise in both utilization and prices, such as Idaho and southwest Georgia. On the… Read more »

Joe Flower
Guest

Third: Here as in many other places, by Allan and by tediously numerous and repetitive throngs of posters elsewhere, my arguments are tortured and re-molded and beaten until they can attacked as being arguments for “more government” and against the “free market.” They are not. The interactions between governments at all levels and the healthcare marketplace are irreducibly complex. Arguments about the effectiveness of various incentive models on health outcomes and cost simply cannot be squeezed into the “more government” versus “more free market” mold without doing such fundamental violence to the discussion as to render it dead on arrival.

allan
Guest
allan

You have things all wrong here at least where I am concerned. I am not squeezing everything into more marketplace vs more government. The same incentives of denial to treat can exist under total government control or in a free market. To clear up what I believe you misunderstood was that in an HMO the bad portion of the incentive not to treat might be improved by a marketplace because in a marketplace people vote with their dollars on a continuous basis.

Joe Flower
Guest

Hmmm. How does one respond to such a long set of ideologically driven posts that disregard the scientific literature as well as the actual arguments I am making while attacking my intellectual integrity? Lightly, I would guess. I am on a summer writing retreat in the Midlands of the UK, and don’t intend to spend all of it arguing online. But I will address a few points. First: This article is not about whether various risk-based models, wisely executed, can powerfully reduce costs. My arguments on that are elsewhere. This article says, if we assume that it is possible to… Read more »

allan
Guest
allan

Joe, you use the term ideologically driven, but doesn’t that apply what you have written? In my opinion, absolutely …And no, the real science is not on your side though you will find some studies that are closer to op eds agreeing with you. Generalizations can be suductive when one offers what the reader wants to hear, but then proving those generalizations becomes very difficult when getting down to the nitty gritty where your arguments seem to fail. “Almost none of these 40 posts address the argument I am actually making.” First one has to get through the generalizations before… Read more »

Erika Regulsky
Guest

Cut costs not Jobs!

Recently we signed a Revenue Cycle Management project with a Texas based hospital. There were only 3 billers processing entire claims. Hence, the hospital was losing revenue, since only 3 in-house staff were transferring claims of 17 physicians. The Hospital management contacted us and we’ve helped them reduce their workload and increase their billing efficiency. The management has retained their in-house billers and now they enjoy working with us too

anesbillingbridge
Member

I am an anesthesia medical billing service provider.I handled the same problem. cost is not a job. it’s very very true And Contact Any Details for Medical billing and coding service Related of problem. https://www.anesthesiabillingbridge.com/

Art Fougner MD
Guest
Art Fougner MD

You know who else is rooting for this “leaner healthcare?”
These guys do.
http://drwhitecoat.com/a-medical-malpractice-attorney-tells-it-like-it-is/

Peter1
Guest
Peter1

@ allan,

“Why not? You will still have the uninsured and there is a good chance there will be more of them. You will also have more patients on Medicare many that formerly had better insurance that paid more. Therefore, the hospital will likely be being paid less.”

allan, from the hospitals point it means less uncompensated care. For Medicare If you mean we have an aging population, that would be correct. An aging population on Medicare is a market that hospitals will have to deal with. You seem to want higher compensation for Medicare, how will that drive down costs?

allan
Guest
allan

Peter1 you have to move up the blog until you see the first reply above the comment you are replying to. There isn’t less compensated care as likely we will have more people uninsured this year than previously. Additionally many of the so called new insured previously had better insurance that paid more. They will now be on Medicaid which pays less. “You seem to want higher compensation for Medicare, how will that drive down costs?” I didn’t say anything of the sort recently. However, some sorts of improved compensation would help drive costs down based upon the knowledge that… Read more »

Peter1
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Peter1

“There isn’t less compensated care as likely we will have more people uninsured this year than previously.”

Really? Where did you get that prediction from?

“Additionally many of the so called new insured previously had better insurance that paid more. They will now be on Medicaid which pays less.”

Medicaid eligibility has nothing to do with the ACA, it’s income and asset based – the poorest of the poor, especially in states that refused FED paid expansion.

allan
Guest
allan

More or less compensated care: “Where did you get that prediction from?” As you say, it is my prediction. There are plenty of good researchers that have added up the numbers and believe that will be the result. You are entitled to your own predictions. I should have said privately insured (not on Medicaid) though even with Medicaid that statement might turn out to be correct. Be careful in your calculations. Being uninsured before didn’t mean Medicaid wouldn’t pay the Medicaid rate for a person. Quite frequently people in the hospital are enrolled in Medicaid when they qualify so the… Read more »

Peter1
Guest
Peter1

allan, you’re rambling nonsense.

allan
Guest
allan

@ Peter1: “rambling nonsense”? One has to question your knowledge and comprehension on this subject.

OK here it is. Based upon your most recent statement you foolishly believe:

Medicaid pays better than private health insurance. Let’s all give you a big laugh.

Many people with good insurance lost their insurance and now are on Medicaid. You don’t believe that. Let’s laugh again.

A person might enter a hospital with no insurance and leave with Medicaid. You don’t know that? What do you know?

I’ll stop here because I am laughing so hard that I am pe-ing in my pants.

allan
Guest
allan

@Joe: “Internal costs drop: Under these pressures, healthcare providers will engage in serious, continual cost accounting and “lean manufacturing” protocols to get their internal costs down.” That is exactly what the marketplace does. The problem is that we have a third party payer system so the party receiving care is not the one paying for it. That means cost control is out the window unless a better mechanism is used. If the individual had the same tax deduction as he would as an employee and could purchase insurance he would be purchasing insurance that was cost effective and able to… Read more »

Peter1
Guest
Peter1

“The lowest prices in any given market are likely to rise somewhat, while the high-side outliers will drop like iron kites.”

Only if you believe consolidation is not a factor in your perfect marketplace mindset.

allan
Guest
allan

Peter1, you responded to me, but that quote was from Joe Flower.

You are absolutely right. Monopolies are anti-competitive and inhibit the marketplace. They are not considered desirable. However, on the other side of the table, governments like to deal with large entities rather than multiple smaller ones. The ACA promotes large entities over smaller entities and new entrees that might be more innovative.

Peter1
Guest
Peter1

But monopolies, or at least reduced competition, are a creation of a “free” market you embrace. Do you want government to determine that private companies cannot be sold a bought? Here in NC the two largest hospitals in the region have formed alliances or outright purchased smaller hospitals. They have also bought formally small affordable clinics and applied hospital price gouging to the operation of services – all within a free market. How does the ACA promote or not promote large entities? Health care is a very complex industry requiring large investments and insurance will not survive without a critical… Read more »

allan
Guest
allan

Monopolies can always occur and we always hear claims that monopolies exist. It is not something the free market desires. But, what happens when a monopoly occurs? If the monopoly causes prices to fall I doubt you would be worried so one can only guess that you are worried that with a monopoly we will have higher prices. Monopolies without government involvement have limited life spans for when they raise prices that incentivizes other companies to enter the sector and compete. We heard a lot of complaints about the IBM monopoly. Where is that monopoly today? The reason we see… Read more »

Peter1
Guest
Peter1

“Monopolies without government involvement have limited life spans for when they raise prices that incentivizes other companies to enter the sector and compete.” Limited life spans can mean decades. The investment (and rational) in breaking a hospital monopoly where lower prices with an already captured cliental would be very hard to justify to investors. Not one hospital system here (or anywhere else I doubt) advertises lower prices. We have a power monopoly here already with a single provider. However it has oversight from a utilities commission (although weak) that must approve rate increases. Are you saying that government oversight should… Read more »

allan
Guest
allan

Peter1, the healthcare monopolies you are talking about are government created. I provided you with one of the best examples of monopoly, IBM accused of such by the US government and European governments. Multiple suits. In the end their monopoly if it ever existed wasn’t broken by government. It was broken by the competitive marketplace. Utilities can be looked at in numerous ways, so one might make an argument that they are a true government good that individuals could not adequately provide while at the same time protect from bystanders. However, their monopoly is also based upon government control. Am… Read more »

Peter1
Guest
Peter1

allan, investor hospitals are not created to lower costs. They do however provide grander and grander more expensive high overhead and high cost facilities to “sell” to prospective patients. Those marble entrance ways don’t provide health care, just costs.

Hospitals should be considered utilities with controls that reflect community goals not investor goals.

“yet the federal government is trying to reduce the number of outpatient facilities.”

Show me how? Every time a health care facility is created a billing machine is also created. Maybe lower costs, but maybe not reduced billing volume.

allan
Guest
allan

@Peter1: ” investor hospitals are not created to lower costs.” Of course not. They are there to make a profit. In the end everything else being the same the hospital that can do its business for a lower cost is the survivor. That expensive hospital would never have been built if the investors didn’t see a need. If there turns out to not be a need the investors are out of money, no one else. I have been in public hospitals and under most circumstances I would choose a newer privately owned hospital that has new equipment. I’ll set you… Read more »

Barry Carol
Guest
Barry Carol

allan and Peter1, I’m not sure I understand how the government is preventing new surgical centers from opening or how widespread it is. Assuming the project can get zoning and permit approval from the town where it is to be built, what is the government entity that has the power to say no and how widespread is that practice across the country? Unlike electric and gas utilities, which are natural monopolies and are regulated by government as to the rates they can charge, hospitals are not natural monopolies. Hospitals have been closing for decades. Shortly after World War II, the… Read more »

allan
Guest
allan

Barry, my computer is on the blitz so I will make this short. Pardon any errors. In answer to your question: There are many ways this can happen. Medicare has to authorize payment and the number to each facility so they have control. The CON. PPACA Section 6001 Different agencies exert control in different ways. In sum total These and other things lead to a diminution of Independent outpatient clinics. With regards to costs that you mentioned, try looking at what differentiates the healthcare sector from other sectors of the economy. In those sectors who is responsible for paying the… Read more »

Peter1
Guest
Peter1

@ Barry, “In the inner cities, the biggest financial problem faced by the safety net hospitals is a poor payer mix. For New York City’s Health and Hospital Corporation’s 11 hospital system, for example, 35% of its patients are uninsured and another 30% are on Medicaid which pays well below costs.” Barry, somethings wrong when we want lower hospital costs but say they cannot exist without charging more than Medicaid/Medicare will pay. After ACA the uninsured should not be the problem. Profits need costs to justify, I doubt a hospital’s costing system as it seems internally generated bunk – hence… Read more »

allan
Guest
allan

@Peter1: “After ACA the uninsured should not be the problem.”

Why not? You will still have the uninsured and there is a good chance there will be more of them. You will also have more patients on Medicare many that formerly had better insurance that paid more. Therefore, the hospital will likely be being paid less.

allan
Guest
allan

@Joe: “Prices rationalize: As healthcare becomes something more like an actual market with real buyers and real prices, prices will rationalize close to today’s 25th percentile. The lowest prices in any given market are likely to rise somewhat, while the high-side outliers will drop like iron kites.” Joe, I am glad to see that you are looking towards a free market. What doesn’t exist in a free market: 1)coercion 2)third party payer 3)mandatory insurance 4)monopolies or near monopolies All of these are features of the ACA except the ACA strangely enough moves slightly away from third party payer, but not… Read more »

Barry Carol
Guest
Barry Carol

Peter1, A fairly significant percentage of uninsured patients treated at NYC’s Health and Hospitals Corporation safety net hospitals are undocumented immigrants and thus not eligible for subsidized health insurance under the ACA. So, that problem will persist. Also, Medicaid reimbursement rates are considerably below Medicare rates and most hospitals claim that Medicare rates don’t cover their full costs, especially for outpatient care. Medicare does pay quite well for some procedures, notably surgeries, but not for others. I think most hospitals have at least a rudimentary sense for what their costs are by department. Chargemaster rates have nothing to do with… Read more »

Not a provider
Guest
Not a provider

Please post a rationale for your assertions. “I was at a dinner party and we solved the healthcare problem.” Is not a credible discussion for this forum.

Not a provider
Guest
Not a provider

Drivel. Hey why don’t we cut healthcare in half by uh uh oh cutting healthcare in half.

Bill Springer
Guest
Bill Springer

Part of this paradigm shift is that savvy health care organizations may try to attract better “risks’, e.g., those patients who are more likely to be compliant with treatment and to have better results. It remains to be seen if risk adjustment is truly aggressive enough to fully offset the cost differences. Very solid piece!

allan
Guest
allan

The Ware study holds today especially since it is dealing with incentives that remain unchanged. There is no credible study to refute the Ware study. This study can be used today and anytime one makes ridiculous claims. “Ware also showed that non-elderly and non-poor patients did better under the HMO even then.” Show us. Quote the data. Take note that in the conclusion “During the study period, elderly and poor chronically ill patients had worse physical health outcomes in HMOs than in FFS systems” there was no mention of what you say and for good reason. “how many were spared… Read more »

allan
Guest
allan

How does one respond to such a long ideologically driven posting that disregards the scientific literature? One takes it piece by piece: @Joe: WASTE: “Waste: Any payment system that gets around fee-for-service and puts the healthcare provider at some risk for good outcomes will push healthcare providers to compete to give the best possible outcome at the best available price. ” Is that true? No. This has been proven in the past and proven again and again. I provided Joe with one of the best studies ever done by Ware. It compared HMO to FFS/PPO. What they actually were comparing… Read more »

Barry Carol
Guest
Barry Carol

allan, Wasn’t that Ware study you keep citing from the mid-1980’s and hasn’t the medical world changed a lot since then? Data is better. Technology is better. There is greater ability to do more for the patient in the home and monitor progress remotely. Ware also showed that non-elderly and non-poor patients did better under the HMO even then. If the elderly population died sooner under HMO care, how many were spared costly and possibly painful treatments that merely prolonged the dying process rather than improved their lives? How hard should we try to keep an 85 or 90 year… Read more »

@BobbyGvegas
Guest

Where’s the dad-gumbed “Like” button.

Granpappy Yokum
Guest
Granpappy Yokum

What does it mean for a provider organization to “keep you healthy?”

What does it mean to keep an obese diabetic patient with hypertension, coronary disease, COPD, and depression healthy?

I honestly don’t know if doctors have the ability to keep their patients healthy.

Barry Carol
Guest
Barry Carol

In the context of patients with a chronic disease or condition, “keeping them healthy” really means managing their care as efficiently as possible in order to minimize ER visits and hospital admissions. This can include closely monitoring weight and blood pressure with the patient reporting results daily. It could mean being accessible via phone or e-mail to answer questions and concerns on a timely basis. Such communications are not generally billable under a fee for service payment model. As Joe’s essay noted, the super utilizers need a lot of attention and since the most expensive 1% of patients account for… Read more »

allan
Guest
allan

Barry, I note you never responded to my request for proof of your statement on Ware. Perhaps you missed the post below. If you don’t answer the question then I will assume that what you say is faith based, like religion, something we don’t like to question. But then don’t act as if your comments represent science. Act as if they were religious. You said: “Ware also showed that non-elderly and non-poor patients did better under the HMO even then.” Show me. I want to learn. I read the study and never saw that conclusion though I did see: “During… Read more »

Barry Carol
Guest
Barry Carol

allan, In the 5th paragraph on the first page of the summary labeled results, the last sentence reads as follows: “For patients differing in poverty status, opposite patterns of physical health and for mental health outcomes were observed across systems; outcomes favored FFS over HMO’s for the poverty group and favored HMO’s over FFS for the non-poverty group.” Even if your original assertion is correct, I dispute your contention that the results hold today solely because of the payment incentives. While I’m the first to argue that incentives matter, we have care management tools today that we didn’t have in… Read more »

allan
Guest
allan

Barry, yes, your quote is correct, but how significant is that finding not mentioned in the conclusions and why could that finding be possible? (quotes within my response are from the body of the actual study) Studies did not note appreciable differences after 1 year. “Were these studies too brief to draw conclusions about health outcomes? Supporting this explanation, significant differences in health outcomes observed between the FFS and HMO systems after 4 years of follow-up in the MOS were not statistically significant after 1 year. The importance of a longer follow-up is underscored by the observation that the 4-year… Read more »

allan
Guest
allan

Dealing with the changes in healthcare that you mentioned: You have some good points, but we have to deal with the limitations we have. Medical care has that very problem, but nonetheless decisions regarding treatment have to be made despite conflicting studies and things that weren’t studied in the recent time frame. You like the idea of the HMO so it appears you wish to put aside all the things known about them. For you the HMO may be the best thing, but for others it may not be. That is why I believe that all types of plans should… Read more »

Barry Carol
Guest
Barry Carol

The reason I think price transparency is important is that it would make it a lot easier for referring doctors to identify the most cost-effective high quality providers in real time and send their patients to them. If the docs are part of an ACO or participate in a shared risk / shared savings insurance contract, they can benefit financially by keeping costs below a targeted level just by sending patients to less expensive facilities as opposed to withholding care altogether. For care that can be scheduled in advance, giving patients the ability to price shop would be helpful but… Read more »

allan
Guest
allan

“I’ve said all I’m going to say on the Ware study.” Barry, you need not say more for I quoted from the body of the study and provided more than enough evidence that what I have said is valid and should be widely recognized. We both agree that price transparency is important, but it doesn’t become important to the individual when he doesn’t have control over the dollar. If patients don’t care about prices neither does the physician treating them. Patients, for the most part, are not directly involved when a third party payer system exists. ACO’s may try to… Read more »

Dennis Byron
Guest

Mr. Carroll says: “I don’t know about how supplemental plans work in Massachusetts as Dennis Bryon described or even what supplemental plans up there look like. The standardized supplemental plans with 10 different specific benefit packages to choose from are subject to medical underwriting as I described earlier unless you get one as soon as you’re eligible or after losing employer coverage. Also, Medicare has an open enrollment period that starts in October each year for a reason. You can’t switch plans at will outside of the annual open enrollment period unless you qualify under one of their life changing… Read more »

Barry Carol
Guest
Barry Carol

allan, Private exchanges are comparatively new and are starting to gain traction with employers. The early interest is in providing retirees with health insurance options on a defined contribution basis but I believe Walgreen is implementing the approach for active employees as well. The private exchanges are run by the large benefits consulting firms including Towers Watson, Hewitt Associates and Mercer. The advantage for insurers is that they get access to hundreds and sometimes thousands of employees at a time which saves money on marketing and administrative costs as well as brokerage commissions which allow them to offer premiums that… Read more »

allan
Guest
allan

OK Barry, I think we are on the same page. You really are talking about private exchanges both ACA and non-ACA types. Exchanges have been around for quite awhile. They are essentially middlemen that don’t actually carry the risk of the insurer. I remember the IMX exchange and a few others I think from the 1980’s, but we are still here today debating healthcare reform and how to fix all the problems. I think IMX is gone. To be honest at this point of the discussion it doesn’t matter to me what type of marketing or middlemen are used to… Read more »

Barry Carol
Guest
Barry Carol

My bottom line on Medicare Advantage is that once CMS completes its phase-in of payment reductions in 2016 or 2017, it will remain a very viable and growing business, at least for the larger insurers in the market. Medicaid, for its part, also continues to grow as more states move beneficiaries into managed Medicaid from unmanaged Medicaid and are saving money in the process. On the employer side, fully insured risk business continues to decline as more employers shift to (administrative) fee based self-funding. It’s also interesting to note that 2014 is the 5th straight year that overall Medicare spending… Read more »

allan
Guest
allan

Barry: “once CMS completes its phase-in of payment reductions in 2016 or 2017, it will remain a very viable and growing business” What you say may or may not occur. A lot depends upon how the government manages healthcare affairs. The experts have been predicting all sorts of things for about 50 years and for the most part those that thought they had a good plan were wrong. I don’t make such predictions. I look at the incentives, economic principles and and the money trail. As they change my opinion changes. You are looking at it from the profit point… Read more »

@BobbyGvegas
Guest

“Healthcare costs far too much. We can do it better for half the cost. But if we did cut the cost in half, we would cut the jobs in half, wipe out 9% of the economy and plunge the country into a depression.” __ We could expand better access to better care to more people. There will never be a shortage of need, particularly with an aging population. I know you know this. Your opening scenario was rhetorical, obviously. Health IT just had it best VC quarter ever. Medical real estate leasing is going gangbusters. Not exactly leading indicators of… Read more »