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Lessons Learned from China

On Sunday I returned from a week in Shanghai and Hangzhou.   A remarkable trip that included daily meetings with government, academic, and clinical leaders.   What did I learn?

In China, about 5% of the GDP is spent on healthcare per year compared to 16% in the US.    Although there is wide variation in lifespan and other population health measures between rural and urban settings, there are few interesting observations about Chinese healthcare:

*It’s a single payer, publicly funded system that provides universal healthcare via a 14% payroll tax.

*There is a single national set of regulations and policies applied to all hospitals, clinics, and doctors

*There is a single set of national privacy laws

*Immunization is mandatory for the entire population

*There’s a single national healthcare identifier

EHRs are widely used in China, however they are optimized for episodes of care, using templates for capture of selected data elements specific to a disease i.e. hypertension, hepatitis, diabetes.    The volume of patients is overwhelming – in one hospital I visited (Huashan), the  dermatology clinic sees 4000 patients per day.    The Chinese EHR enables clinics to document the basics of a problem specific encounter, facilitating extremely fast throughput.   The downside of this is that there is not a longitudinal problem list, medication reconciliation, or coordination of care to avoid repeat testing.

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Capital Markets and Development Prospects are Bright Spots for 2012; Aging Facilities Pose Challenges

Healthcare reform is creating a growing sense of uncertainty that will build in 2012. This will have an increasingly significant impact on strategic business plans for healthcare systems. It will spill over into portfolio and cost rationalization activities and the allocation of capital at hospitals across the country.

Certain areas of the industry are in fact harnessing that uncertainty. They are planning medical office and outpatient facilities that foster physician alignment demanded by reform.  Planning will progress steadily forward over the course of 2012, moving from “talk” to action, at levels not witnessed in 2011.  Health systems with the capacity and resources see this in two ways:

  • a necessary action to adapt to healthcare reform
  • a competitive advantage acting as a first mover.

M&A Activity Plays into the Hands of Investor Appetite

Hospital merger and acquisition activity will be a major theme in healthcare in 2012. This activity involves hospital to hospital combinations as well as highly prized physician practice groups.  But with M&A activity comes with a lot of real estate baggage.

In completing a merger, the healthcare organizations will look for ways to

  • create operational efficiencies and
  • rationalize their footprint to best serve their mission.

All of this is done while reducing the annual capital spend.  The net result is realigning their real estate portfolios. That takes planning as systems carefully evaluate how they are aligned with their business and operational strategies.

This will lead to strong levels of activity in the areas of

  • dispositions,
  • monetizations and
  • sale-leasebacks

The good news is there continues to be strong investor demand for healthcare related real estate, and we expect the product sector to remain much in demand in 2012 as the broader economy continues to struggle to re-energize itself. The proven track record of healthcare real estate through downturns and the compelling demographics of the sector will keep propelling activity and pricing levels throughout 2012.

While no asset class can be considered recession-proof, based on past performance and future projections, healthcare real estate is be about as ‘recession-resistant’ as possible which makes it a preferred class today.

Outpatient Care Opportunities are Areas for Optimism

In planning for accountable care, the industry continues to experience ongoing evolution. It is moving away from the planning and development of in-patient facilities to outpatient and ambulatory care settings that offer greater community access and lower capital and operating cost.

Healthcare reform keeps uncertainty a constant theme. The industry is responding to that uncertainty. Very few systems, or developers, are prepared to go full bore with plans. The pipeline of new projects is more limited than before. The planning and financing processes take a great deal of time, so other than obvious requirements, the activity may be muted for some time.

There is a bright spot:  outpatient facilities. Hospitals and healthcare systems remain committed to expanding their footprints outside of their main structures and into the communities they serve.

That market is coming back, and the design and funding of these facilities is evolving:

  • Gone are the 40,000-square-foot “doc in the box” facilities that used to be the industry model.
  • Now, it is not unusual as you aggregate services from larger employed physician models, to see facilities designed and developed that are in the 100,000-square-foot to 200,000-square-foot and up range.  This design and scale is more apt to attract capital and at lower cost levels than smaller and less creditworthy projects.”

Future planning for new medical office buildings will remain the busiest area of the business as hospitals and health systems look ahead, strategically, to have plans in place for when they can pull the trigger on a new project.

Planning and Performance are Critical

As hospitals and health systems look to expand into the communities they serve, enhance operational efficiencies and ultimately improve the bottom line,

The connection between real estate and operations will intensify, and planning will be even more critical to success.

Hospitals need to perform better and increase throughput. They need to do that without expanding capacity. That means a challenge: do more with less.

But with all that challenges healthcare, chief among the questions healthcare executives are asking is, “For which future should we prepare?”

Deferred Investments Loom Large: Aging Facilities Face Operational Challenges

Executives face considerable investment-related decisions related directly and indirectly to the physical plant.  The industry’s physical plant continues to deteriorate. Many hospitals and systems across the country have had to defer maintenance issues or initiate short term fixes to delay the inevitable. Why? Because of:

  • the financial struggles caused by reimbursement cycles,
  • the cost of funds and
  • other financial and operational factors

Average age of plant (an accounting measure relating accumulated depreciation to depreciation expense) tells the tale. It is the metric which best predicts the health of our facilities. By investing more into the plant, even at incremental levels, an institution can buy down the age.

Therein lies the problem … the average age of plant has risen nationally all but one year in the last decade.

Many institutions have had to ask―and will continue to have to evaluate―whether they are investing enough to at least maintain the average age. Unfortunately, in most cases, the answer is no. This has created a looming overhang.

We had hoped that with the investments of the last decade these problems would mitigate. But the steep decline in investment the last three years has us right back where we were 10 years ago. Further, the issue is not going away.

Whose Voice Is Missing in the Health Reform Debate?

According to an article in the current Journal of Health Politics, Policy, and Law, public opinion polls on health reform are at best incomplete and at worst misleading due to a systematic bias in non-responses. [1] Authors Berinsky and Margolis argue that, in the context of the healthcare debate at least, non-responses (e.g., answers like “Don’t know”) are more likely to come from individuals of lower socioeconomic status, and that “these same individuals who are victims of resource inequalities are natural supporters of the welfare state and, therefore, are more likely to back health care reform.”

The authors write that, to ensure full representation of views, nonresponses should not be ignored. Instead, the analysis “should incorporate information from respondents’ answers to other questions on the survey to understand what they might have said had they answered the question.”

Imputing the views and attitudes of non-respondents is a generally acceptable method for removing bias, provided it is done carefully using suitable assumptions. Berinsky and Margolis use income as the predictive variable. According to their analysis, for example, people making less than $30,000 annually are more likely to support health reform than those making more than $100,000.

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The Democratization of Health Care: The IPAB

You probably missed this one, but this bit of legislation will have profound implications not only for your health, but the health of our economy. A provision of the Patient Protection and Affordable Care Act (PPACA) created a 15-member Independent Payment Advisory Board (IPAB), delegating to it the responsibility to develop specific proposals to contain the growth rate of Medicare spending if it is projected to exceed targets also established by the law. These proposals are transmitted to Congress in the form of legislative proposals that must be enacted or substituted on a legislatively mandated basis.

Once it is in place, IPAB can be discontinued only by a joint resolution that must be introduced in January 2017. Since IPAB is not a government agency, and is not promulgating regulations, it is subject neither to open meetings or public comment requirements. There are no options for appealing the IPAB recommendations. The provisions for judicial review appear to be limited to the recommendations issued by IPAB based upon deliberations that are not open to the public. Judicial or administrative review of the Secretary’s implementation of those recommendations is prohibited. The clear intent of the law is to insulate the board and its decision from the full range of traditional democratic processes.

The IPAB approach to problem solving in a democracy is unwarranted under all but the most dire of circumstances. Moreover, if enabled, an approach such as IPAB should have a reasonable chance of solving the stated problem. It does not. The dire circumstance of “unsustainable” health care expenditures that IPAB is built to help resolve is truly a manufactured crisis. That statement may resonate as heresy to established dogma to many readers, but the facts support the statement.

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Hey CEOs, Want to $ave Cash? Here’s What Few See

In my last post, I described the nightmare that CEOs in America face when dealing with employee health costs, which have become the third-largest expense in business. I also promised to outline the simple steps that CEOs can take to rein in these spiraling health costs.

My first suggestion is to employ a tried and true management technique that every CEO learned in business school — one that gets economic incentives working for you rather than against you. I’m referring to the old adage: If you want to achieve a business objective — be it launching a new product or reducing employee health costs — you need to incentivize your managers to help you succeed.

Yet, I doubt there’s a CEO in America who offers bonuses or other incentive pay to the HR and benefits managers who can most effectively reduce these crippling employee health costs.

Why not? Isn’t that just basic Management 101?

Ironically, incentivizing your HR and benefits managers doesn’t cost you any money, it doesn’t require an outside consultant, and it can happen in a matter of minutes regardless of the size of your company. Just tell your HR and benefits managers that if they manage to reduce employee claims costs or the cost of your company health plan (but not its benefits), you’ll give them a financial reward.

Giving a piece of any savings in health costs to the people who can make it happen is just common sense — no different in essence from paying a higher commission to your best salespeople.

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Living for Today with Cancer

To have cancer is to change forever.  It is a devastating declaration.  Each of us copes with the diagnosis differently.   How people adjust and move on with their lives are lessons in humanity.

I take care of a patient who explained to me how he deals with incurable cancer.  Stan is active and able to enjoy grandchildren, friends and hobbies. He describes himself as happy, despite his terminal diagnosis.  The key was both difficult and simple.  He said, “that in order to survive with cancer, you need to accept that you are going to die.”

For Stan the obstacle was his struggle against the unstoppable.  When diagnosed he responded by attacking the disease. He demanded extra tests, multiple second opinions and became obsessed with an investigation of treatment choices.  He threw himself into conventional and alternative therapies.  He filled binders with data, radiology reports, tumor markers and medical articles.  He cataloged every event.  Stan was absorbed in the disease process every moment of every day and with every ounce of his being.

Wherever Stan turned, he found that his cancer was indeed incurable.  No matter what he did, he would eventually die.  Frustration overwhelmed him. The more time he spent with the disease, the more he became lonely and frightened.  He was the prototypic cancer patient…sick, exhausted, isolated and buried in medical care.  He fell away from life and started to die.

According to Stan, the answer came as a revelation.  In a particularly depressed and forlorn moment, a realization saved him. Stan did not have to fight an opponent he could not defeat.  There is no shame in mortal limits.  If he stepped back and accepted there were things he could not change, he would be alright.  Stan discovered that to be set free, he needed to drop the burden of struggle.

With his family and doctors, Stan put together a basic medical plan.  It consists of chemotherapy, nutritional support and exercise.  He has set terminal limits.  Most importantly, Stan carved out large blocks of time to be away from “health care” and return to his life.

Stan spends most of the days enjoying his family.  He has done a little bit of traveling. He has been reading and learning. He is looking forward to spring garden planting.  Stan hugs all his grandchildren every single day.  He is happy.

Each person needs to find their own way through the challenges of life and those caused by illness.  For this man the formula is difficult and simple.  Accept what he cannot change and hold on tight to the things he loves.  Seize life today, for that may be all there is…but sometimes that is enough.

James C. Salwitz, MD is a Medical Oncologist in private practice for 25 years, and a Clinical Professor at Robert Wood Johnson Medical School. He frequently lectures at the Medical School and in the community on topics related to cancer care, Hospice and Palliative Medicine. Dr. Salwitz blogs at Sunrise Rounds in order to help provide an understanding of cancer.


As I have said many times before, I am no Luddite. I neither hate nor fear technology. My longstanding aversion to the adoption of an electronic medical record was entirely rational, based on the reality that an EMR is a tool. Until I had need for it (at a price I was willing to pay), I had no reason to go electronic.

Circumstances have changed, as they are wont to do, and I have changed along with them. My office now sports an electronic medical record, internet-based practice management system, and document scanners. I continue to make do with my positively antediluvian two-year-old iPod touch and my dumb phone, but have made impressive headway against the paper tide.

One feature of my EMR is a secure patient portal, which enables patients to access portions of their medical record online. Everyone who signs up for it loves it. The enrollment process is electronic, of course, except for one last piece of paper: after the system sends the patient an email with instructions on how to log in, the patient is supposed to enter a unique temporary PIN code that I’ve generated for him in the office. This produces a document. Usually I print it out and hand it to the patient, acutely cognizant of the irony of creating paper to enable paperlessness. At times, I’ve been known to jot it down on a note pad or sticky note, at least cutting down the size of the paper involved. Once or twice, patients have asked me to print the document as a PDF and attach it to an email. I’m happy to do that, but I think part of the idea is to have verification separate from the email.

Last week, though, I came face-to-face with the face of the Uber-Tech.

A tech-savvy patient eagerly agreed to enroll in the portal. The system generated the PIN document as usual, complete with the little rectangular “Print” button sitting patiently there in the upper right hand corner of the screen.

“How would you like me to print this out for you?” I asked my patient.

“Oh, don’t bother,” he replied.

He got up, took his (smart) phone out of his pocket, turned it on, stepped over next to me, and used it to take a picture of the section of my computer screen that contained the required information.


Dinosaur, MD (aka, Lucy E. Hornstein, MD) is a solo-practitioner in Family Medicine. She is also a book author (Declarations of a Dinosaur) and posts frequently at her blog, Musings of a Dinosaur, where this post first appeared.

The Politics of DS

Of all the misconceived DSM 5 suggestions, the one touching the rawest public nerve is the proposed medicalization of normal grief into a mental disorder. Fierce opposition has provoked two editorials in Lancet, a front page New York Times story, and incredulous articles in more than 100 journals around the world.

And now, during just the past four days, there has been the kind of online miracle that is possible only on the internet. Joanne Cacciatore wrote a moving blog that rapidly made its viral way across the world and into the hearts of the bereaved. An astounding 65,000 people have already viewed her piece and then passed it on to friends and families. You can join them at:

Dr Cacciatore is a researcher at Arizona State University and the founder of the MISS Foundation- a nonprofit organization providing services to grieving families whose children have died or are dying. The MISS Foundation has 77 chapters around the world and website that gets more than one million hits per month.

Dr Cacciatore writes:

“Across all cultures, the death of children is a particularly traumatic blow. Most people quaver at the thought of losing a child- for millions around the world this feared tragedy is reality.”

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Crowd-Funding for Research Dollars: A Cure for Science’s Ills?

Science in crisis

Scientists – and science generally – are in a moment of crisis on multiple fronts. The gap between science and society has grown to a chasm, with disastrous consequences for issue after issue. For example, just last month, Tennessee passed legislation permitting creation “science” into classrooms. On another front, the concern of Americans about global warming has dramatically declined over the past decade, despite the scientific consensus on the clear and present danger caused by climate change.

But science illiteracy in the general public isn’t the only crisis in science. Funding for research is becoming increasingly unattainable, with funding rates at their lowest levels in a decade at the National Science Foundation (NSF) and the National Institutes of Health (NIH), the two most important American science agencies (see here and here for details). The situation in many other nations is no better. In Spain, for example, science spending by the central government has fallen by 20% since 2009. Even worse, research funding from traditional sources will likely be even harder to come by in the years to come due to ongoing economic instability around the world.

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Kids Today Are Not Inattentive

There’s no evidence that children today are less attentive or more distractible than kids in the past, according to research just published by a team of Pennsylvania psychologists: Long-Term Temporal Stability of Measured Inattention and Impulsivity in Typical and Referred Children.

The study gave a large sample of kids the “Gordon Diagnostic System” GDS test of sustained concentration ability. This dates to the 80s and it consists of a box, with a button, and a display with three digits. There are three different tasks but the main one is a sustained attention test. The goal is to watch a series of numbers and quickly press the button whenever a “1” is followed by a “9”. Easy… but it takes concentration to do well.

Over the period of 2000-2006, the researchers gave the GDS to 445 healthy American kids, not diagnosed with any learning or behavioural disorder and not taking medication. They compared their scores to the standardized norms – which were based on a sample of American kids back in 1983.

The results showed that today’s kids scored pretty much the same, on average, as the 1983 kids. The average age-standardized scores were extremely close to the 1983 means, across the board. Children diagnosed with ADHD, as expected, scored much worse. Oddly, kids with an Autism Spectrum Disorder did just as badly as the ADHD ones.

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