Author Archives

Christina Liu

The Opportunity in Disruption, Part 4: Success Strategies for Provider and Payer CFOs

Sep 30, 2019

By JOE FLOWER

The system is unstable. We are already seeing the precursor waves of massive and multiple disturbances to come. Disruption at key leverage points, new entrants, shifting public awareness and serious political competition cast omens and signs of a highly changed future.

So what’s the frequency? What are the smart bets for a strategic chief financial officer at a payer or provider facing such a bumpy ride? They are radically different from today’s dominant consensus strategies. In this five-part series, Joe Flower lays out the argument, the nature of the instability, and the best-bet strategies.

Providers:

Cost. Get serious control of your costs. Most providers I talk to are dismissive. “Yeah, yeah, you’ve been saying that for 10 years. We’re on it, believe me.” But I don’t believe them. Observation of the industry makes it clear that most healthcare providers have not gone after costs with nearly the ferocity of other industries. Some providers that I have worked with and interviewed over recent years have gotten their full cost of ownership down to a level where they can survive on Medicaid rates (that’s not a typo, I mean Medicaid) and build bigger, stronger systems at the same time. They have proven it can be done. But this is far from the industry norm.
In the new competition, getting your costs seriously down is not the way to win. It’s just the price of admission. In the new competition, any entity that can deliver any particular service at a lower price will steal that business from you. You need to be that entity.
Overtreatment and waste. Do a deep and honest analysis of how much of your book of business is actually not effective, not necessary, does not deliver value or satisfaction to the customer—because that book of business is likely to wither away under alternative financing arrangements. Keep in mind that among various studies, the low estimate of how much of healthcare delivers no real value to the customer (an estimate by doctors about their own specialties) is 20%. The high end (in a PricewaterhouseCoopers study) is 54.5%. Most studies and estimates cluster around 35%.
Abandon monopolistic practices. An “all system” fee-for-service contract hidden from public scrutiny is smart, but not wise. It may help this year, maybe next year, but in the longer run it creates vulnerability to political attack, legislation, and lawsuits, and also to shifts in the market. A semi-monopoly position allows you to charge a premium for your products, but it locks you into that ability to charge a premium. As the market shifts and finds ways around paying high prices, you will find that you will be forced to compete at the lower prices, but you will not have developed the partnerships, the strategies, and the product lines to do that. If there is no competition in your area, then compete with yourself to forestall lower-cost competition developing.
Birth your competition. The growth area in the new healthcare competition will be: “How to cut into the hospital’s bottom line by keeping people out of the hospital.” The most competitive business models in healthcare will be in the business of cutting off hospitals’ revenue streams upstream.
Get into this business model, even if you are a hospital. Especially if you are a hospital. Get into this business and get better at it than any potential competition. Create high-performance bundled programs with deeply managed costs well below the industry median. Get into contracts with large buyers for particular niches in which you give financial and quality performance guarantees. If you can’t guarantee that you can drop the cost and improve the quality, you will lose that business to someone else who can show that track record and give that guarantee.

Put yourself into all the business models that are disrupting you, such as outpatient clinics, community clinics, mobile vans, mini-hospitals, stand-alone emergency departments, onsite clinics, personalized management of complex cases, direct-pay primary care and others. Make these businesses able to compete for market share by unshackling them from hospital pricing and facilities fees.

Risky? Sure, but you do not want to end up being just the super-expensive job shop at the end of the line that every single customer and buyer is making every effort to avoid.

AI competitions don’t produce useful models

Sep 27, 2019

By LUKE OAKDEN-RAYNER

A huge new CT brain dataset was released the other day, with the goal of training models to detect intracranial haemorrhage. So far, it looks pretty good, although I haven’t dug into it in detail yet (and the devil is often in the detail).

The dataset has been released for a competition, which obviously lead to the usual friendly rivalry on Twitter:

Of course, this lead to cynicism from the usual suspects as well.

And the conversation continued from there, with thoughts ranging from “but since there is a hold out test set, how can you overfit?” to “the proposed solutions are never intended to be applied directly” (the latter from a previous competition winner).

As the discussion progressed, I realised that while we “all know” that competition results are more than a bit dubious in a clinical sense, I’ve never really seen a compelling explanation for why this is so.

Hopefully that is what this post is, an explanation for why competitions are not really about building useful AI systems.

Ordering Tests Without Using Words: Are ICD-10 and CPT Codes Bringing Precision or Dumbing Us Down?

Sep 26, 2019• 2

By HANS DUVEFELT, MD

The chest CT report was a bit worrisome. Henry had “pleural based masses” that had grown since his previous scan, which had been ordered by another doctor for unrelated reasons. But as Henry’s PCP, it had become my job to follow up on an emergency room doctor’s incidental finding. The radiologist recommended a PET scan to see if there was increased metabolic activity, which would mean the spots were likely cancerous.

So the head of radiology says this is needed. But I am the treating physician, so I have to put the order in. In my clunky EMR I search for an appropriate diagnostic code in situations like this. This software (Greenway) is not like Google; if you don’t search for exactly what the bureaucratic term is, but use clinical terms instead, it doesn’t suggest alternatives (unrelated everyday example – what a doctor calls a laceration is “open wound” in insurance speak but the computer doesn’t know they’re the same thing).

So here I am, trying to find the appropriate ICD-10 code to buy Henry a PET scan. Why can’t I find the diagnosis code I used to get the recent CT order in when I placed it, months ago? I cruise down the list of diagnoses in his EMR “chart”. There, I find every diagnosis that was ever entered. They are not listed alphabetically or chronologically. The list appears totally random, although perhaps the list is organized alphanumerically by ICD-10, although they are not not displayed in my search box, but that wouldn’t do me any good anyway since I don’t have more than five ICD-10 codes memorized.

The Most Expensive Data in the US & Why we’re NOT Using It | Atul Butte, UC Health

Sep 26, 2019

By JESSICA DAMASSA, WTF HEALTH

When you ask the ‘big data guy’ at a massive health system what’s wrong with EMRs, it’s surprising to hear that his problem is NOT with the EMRs themselves but with the fact that health systems are just not using the data they’re collecting in any meaningful way. Atul Butte, Chief Data Scientist for University of California Health System says interoperability is not the big issue! Instead, he says it’s the fact that health systems are not using some of the most expensive data in the country (we are using doctors to data entry it…) to draw big, game-changing conclusions about the way we practice medicine and deliver care. Listen in to find out why Atul thinks that the business incentives are misaligned for a data revolution and what we need to do to help.

Filmed at Health Datapalooza in Washington DC, March 2019.

Jessica DaMassa is the host of the WTF Health show & stars in Health in 2 Point 00 with Matthew Holt.

Get a glimpse of the future of healthcare by meeting the people who are going to change it. Find more WTF Health interviews here or check out www.wtf.health.

Indigenous Medicine– From Illegal to Integral

Sep 25, 2019• 4

By PHUOC LE, MD and BROOKE WARREN

In the 2020 Summer Olympics, we will undoubtedly see large, red circles down the arms and backs of many Olympians. These spots are a side-effect of cupping, a treatment originating from traditional Chinese medicine (TCM) to reduce pain. TCM is a globally used Complementary and Alternative Medicine (CAM), but it still battles its critics who think it is only a belief system, rather than a legitimate medical practice. Even so, the usage of TCM continues to grow. This led the National Institute of Health (NIH) to sponsor a meeting in 1997 to determine the efficacy of acupuncture, paving the way in CAM research. Today, there are now over 50 schools dedicated to teaching Chinese acupuncture in the US under the Accreditation Commission for Acupuncture & Oriental Medicine.

Image of Michael Phelps swimming in 2016 Rio Olympics after using TCM cupping. (Al Bello/Getty Images)

While TCM has seen immense growth and integration around the globe throughout the last twenty years, other forms of CAM continue to struggle for acceptance in the U.S. In this article we will focus on Native American/Indigenous traditional medical practices. Indigenous and non-Indigenous patients should not have to choose between traditional and allopathic medicine, but rather have them working harmoniously from prevention to diagnosis to treatment plan.

It was not until August of 1978 that federally recognized tribal members were officially able to openly practice their Indigenous traditional medicine (the knowledge and practices of Indigenous people that prevent or eliminate physical, mental and social diseases) when the American Indian Religious Freedom Act (AIRFA) was passed. Prior to 1978, the federal government’s Department of Interior could convict a medicine man to a minimum of 10 days in prison if he encouraged others to follow traditional practices.

It is difficult to comprehend that tribes throughout the U.S. were only given the ability to openly exercise their medicinal practices 41 years ago when the “healing traditions of indigenous Native Americans have been practiced on this continent for 12,000 years ago and possibly for more than 40,000 years.”[1]

Since the passage of AIRFA, many tribally run clinics and hospitals are finding ways to incorporate Indigenous traditional healing into their treatment plans, when requested by patients.

Announcing Winners for the RWJF Innovation Challenges

Sep 25, 2019• 1

The Opportunity in Disruption, Part 3: The Shape of Things to Come

Sep 24, 2019

By JOE FLOWER

Picture, if you will, a healthcare sector that costs less, whose share of the national economy is more like it is in other advanced economies—let’s imagine 9% or 10% rather than 18% or 19%.

A big part of this drop is a vast reduction in overtreatment because non-fee-for-service payment systems are far less likely to pay for things that don’t help the patient. Another part of this drop is the greater efficiency of every procedure and process as providers get better at knowing their true costs and cutting out waste. The third major factor is that new payment systems and business models actually drive toward true value for the buyers and healthcare consumers. This includes giving a return on the investment for prevention, population health management, and building healthier communities. This incentive would reduce the large percentage of healthcare costs due to preventable and manageable diseases, trauma, and addictions.

Picture, if you will, a healthcare sector in which prices are real, known, and reliable. Price outliers that today may be two, three, five times the industry median have rapidly disappeared. Prices for comparable procedures have normalized in a narrower range well below today’s median prices. Most prices are bundled, a single price for an entire procedure or process, in ways that can be compared across the entire industry. Prices are guaranteed. There are no circumstances under which a healthcare provider can decide after the fact how much to charge, or a health insurer can decide after the fact that the procedure was not covered, or that the unconscious heart attack victim should have been taken to a different emergency department farther away.

Picture a well-informed, savvy healthcare consumer, with active support and incentives from their employers and payors, who is far more willing and eager to find out what their choices are and exercise that choice. They want the same level of service, quality, and financial choices they get from almost every other industry. And as their financial burden increases, so do their demands.

Picture a reversing of consolidation, ending a providers’ ability to demand full-network contracting with opaque price agreements—and encouraging new market entrants capable of facilitating a yeasty market for competition. Picture growing disintermediation and decentralization of healthcare, with buyers increasingly able to act like real customers, picking and choosing particular services based on price and quality.

Picture an industry whose processes are as revolutionized by new technologies as the news industry has been, or gaming, or energy. Picture a healthcare industry in which you simply cannot compete using yesterday’s technologies—not just clinical technologies but data, communications, and transaction technologies.

WTF are Digital Therapeutics? | Digital Therapeutics Alliance Executive Director, Megan Coder

Sep 24, 2019

By JESSICA DaMASSA, WTF HEALTH

Digital therapeutics has exploded as the new hot buzzword in digital health. But how are digital therapeutics different from digital health applications, applied health signals, or m-health technologies? The Digital Therapeutics Alliance was formed to answer that exact question. DTA Executive Director Megan Coder sets the record straight, hint: it involves software algorithms.

Filmed at JP Morgan Healthcare in San Francisco, CA, January 2019.

Jessica DaMassa is the host of the WTF Health show & stars in Health in 2 Point 00 with Matthew Holt.

Get a glimpse of the future of healthcare by meeting the people who are going to change it. Find more WTF Health interviews here or check out www.wtf.health.

How Are Hospitals Supposed to Reduce Readmissions? | Part I

Sep 24, 2019• 4

By KIP SULLIVAN

The notion that hospital readmission rates are a “quality” measure reached the status of conventional wisdom by the late 2000s. In their 2007 and 2008 reports to Congress, the Medicare Payment Advisory Commission (MedPAC) recommended that Congress authorize a program that would punish hospitals for “excess readmissions” of Medicare fee-for-service (FFS) enrollees. In 2010, Congress accepted MedPAC’s recommendation and, in Section 3025 of the Affordable Care Act (ACA) (p. 328), ordered the Centers for Medicare and Medicaid Services (CMS) to start the Hospital Readmissions Reduction Program (HRRP). Section 3025 instructed CMS to target heart failure (HF) and other diseases MedPAC listed in their 2007 report. [1] State Medicaid programs and the insurance industry followed suit.

Today, twelve years after MedPAC recommended the HRRP and seven years after CMS implemented it, it is still not clear how hospitals are supposed to reduce the readmissions targeted by the HRRP, which are all unplanned readmissions that follow discharges within 30 days of patients diagnosed with HF and five other conditions. It is not even clear that hospitals have reduced return visits to hospitals within 30 days of discharge. The ten highly respected organizations that participated in CMS’s first “accountable care organization” (ACO) demonstration, the Physician Group Practice (PGP) Demonstration (which ran from 2005 to 2010), were unable to reduce readmissions (see Table 9.3 p. 147 of the final evaluation) The research consistently shows, however, that at some point in the 2000s many hospitals began to cut 30-day readmissions of Medicare FFS patients. But research also suggests that this decline in readmissions was achieved in part by diverting patients to emergency rooms and observation units, and that the rising rate of ER visits and observation stays may be putting sicker patients at risk [2] Responses like this to incentives imposed by regulators, employers, etc. are often called “unintended consequences” and “gaming.”

To determine whether hospitals are gaming the HRRP, it would help to know, first of all, whether it’s possible for hospitals to reduce readmissions, as the HRRP defines them, without gaming. If there are few or no proven methods of reducing readmissions by improving quality of care (as opposed to gaming), it is reasonable to assume the HRRP has induced gaming. If, on the other hand, (a) proven interventions exist that reduce readmissions as the HRRP defines them, and (b) those interventions cost less than, or no more than, the savings hospitals would reap from the intervention (in the form of avoided penalties or shared savings), then we should expect much less gaming. (As long as risk-adjustment of readmission rates remains crude, we cannot expect gaming to disappear completely even if both conditions are met.)