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Five Lessons in Transparency from Cleveland Clinic CEO Toby Cosgrove

Cleveland Clinic is the health care industry trailblazer when it comes to publishing its clinical outcomes. As discussed in this earlier story (“How To Report Quality To The Public”), the Ohio hospital system annually publishes Outcomes Books that detail the clinical performance of each of its departments.

If you doubt this is radical, go to your local hospital’s Web site. See if it publishes how many patients died during heart surgery last year.

At Cleveland Clinic that number is easy to find. The hospital performed 459 bypass surgeries and only three patients died in the hospital. That is about a third the rate of deaths recorded at other hospitals for the same procedure.

Yet Cleveland Clinic does not only publish data that casts itself in a favorable light. In the third quarter of last year, 3% of bypass patients had strokes after their operations, when that number should have been around 1%.

I called the hospital’s corporate office to find out more about the history of the Outcomes books, how they affect hospital operations, and if there were lessons to share. I asked to speak to the de facto “Chief Transparency Office” and assumed I’d be directed to a middle manager working in the office of public affairs or marketing.

Instead, I soon found myself on the phone with the CEO. It turns out that Delos “Toby” Cosgrove, who runs the $6 billion health system, is also the organization’s unofficial transparency officer. He was the guy who developed the Outcomes Book concept in the first place.

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The Independent Payment Advisory Board: Why It Is So Difficult to Kill the Death Panel Myth

In August of 2009, Sarah Palin claimed that the health legislation being crafted by Democrats at the time would create a “death panel,” in which government bureaucrats would decide whether disabled and elderly patients are “worthy of healthcare.”  Despite being debunked by fact-checkers and mainstream media outlets, this myth has persisted, with almost half of Americans stating recently that they believe the Affordable Care Act (ACA) creates such a panel.

The death panel myth killed neither the ACA nor Obama’s reelection bid.  But persistence of this myth could threaten the Obama administration’s efforts to implement the law, because many of its most controversial features are scheduled to be implemented over the next few years. Why is the death panel myth so hard to shake and why is its persistence relevant to the unfolding of Obamacare?

In part, the myth is hard to shake because most people have a very poor understanding of the complex law.  The ACA tries to increase access to health insurance through a bewildering combination of Medicaid expansions, private insurance subsidies, health insurance exchanges, and the infamous health insurance mandate.  It attempts to improve healthcare quality through things such as reimbursement reforms and promotion of electronic medical records.  And it encourages the formation of more efficient healthcare organizations, with inscrutable names like “accountable care organizations” and “medical homes”.

The myth is also likely to persist because the law calls for the establishment of a 15 person committee– the independent payment advisory board (or IPAB)–which is given the job of recommending cost-saving measures to the Secretary of Health and Human Services if Medicare expenses rise too quickly.  The IPAB will consist of independent healthcare experts who are forbidden, by law, from proposing changes that will affect Medicare coverage or quality.

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From ZPICS to RADVS: The Alphabet Soup of Patient Charts and Payment Tracking

We’ve written about the Recovery Audit Contracts (RAC) program previously and thought it would be worthwhile to check back in on recent news in this space.  According to CMS, in FY 2012, RAC auditors collected $2.29B in 2012, nearly three times the amount recouped in 2011.

What’s apparent from this data is that a large step up in audit activity is obviously occurring, which will only accelerate in 2013 as auditors begin looking at evaluation and management (E&M) CPT codes commonly used by family physicians outside of the hospital setting.  In fact, when we match this CMS data against the latest results from the American Hospital Association’s RACTrac survey of 2,260 hospitals, it’s even more obvious that the level of activity around responding to requests for patient charts and managing the audit process is growing at an extremely rapid pace.

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2012 Digital Health Investment Activity: The View From the Valley

Rock Health recently released a decidedly mixed report on the current state of Digital Health investing, as the data suggest many investors continue to tentatively explore the sector, but most have yet to make a serious commitment.

Overall, VC funding for digital health increased significantly over the past year, from just under $1B in 2011 to about $1.4B in 2012; 20% of this total was associated with just five deals: two raises for transparency companies, Castlight (targeting employees with high deductible plans looking to manage their costs) and GoHealth (targeting consumers contemplating purchase of health insurance); two raises for referral companies, Care.com (helps consumers find the right caregiver – defined broadly, as needs addressed include eldercare, child tutoring, babysitting, and pet care) and BestDoctors (helps employees find the right doctor), and one deal for 23andMe (a pioneering consumer genetics company).

Not surprisingly, the largest thematic area of investment ($237M) was “health consumer engagement,” comprised of companies that – like the first four above – help consumers or employees with healthcare purchases.   “Personal health tools and tracking,” the second leading category, captured $143M in funding last year.  “EMR/EHR” ($108M) and “hospital administration” ($78M) rounded out the list; the last two numbers seem shockingly low given the apparent size of these markets, and suggest both areas may be perceived as  firmly owned by incumbent players, and prohibitively difficult for new participants to enter.

Athenahealth’s just-announced acquisition of Epocrates highlights the competitive pressures even existing EMR companies face as they struggle for traction in an environment that seems to be increasingly dominated by a few large players, most notably Epic. “Our biggest obstacle,” Athenahealth CEO Jonathan Bush told Bloomberg Businessweek, “is that 70% of doctors don’t even know we exist.”  In contrast, I’ve suggested that a category I’d broadly define as EMR adjacencies may be primed for growth, as VC’s Stephen Kraus and Ambar Bhattacharyya have also discussed recently in this intelligent post.  The related area of care transitions is also attracting considerable entrepreneurial interest, including current Rock Health portfolio companies WellFrame and OpenPlacement, and TechStars alum Careport; it remains to be seen whether a robust business model will emerge here.

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Unscience

According to a widely circulated op-ed in the New York Times by Paul Campos, a law professor at the University of Colorado with whom I don’t believe I have ever managed to agree on anything, our “fear” of fat — namely, epidemic obesity — is, in a word, absurd. Prof. Campos is the author of a book entitled The Obesity Myth, and has established something of a cottage industry for some time contending that the fuss we make about epidemic obesity is all some government-manufactured conspiracy theory, or a confabulation serving the interests of the weight-loss-pharmaceutical complex.

In this instance, the op-ed was reacting to a meta-analysis, published last week in JAMA, and itself the subject of extensive media attention, indicating that mortality rates go up as obesity gets severe, but that mild obesity and overweight are actually associated with lower overall mortality than so-called “healthy” weight. This study — debunked for important deficiencies by many leading scientists around the country, and with important limitations acknowledged by its own authors — was treated by Prof. Campos as if a third tablet on the summit of Mount Sinai.

We’ll get into the details of the meta-anlysis shortly, but first I’d like to say: Treating science like a ping-pong ball is what’s absurd, and what scares the hell out of me. Treating any one study as if its findings annihilate the gradual, hard-earned accumulation of evidence over decades is absurd, and scares the hell out of me. Iconoclasts who get lots of attention just by refuting the conventional wisdom, and who are occasionally and importantly right, but far more often wrong — are often rather absurd, and scare the hell out of me.

And so does the obesity epidemic.

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Alice in Healthcareland

Alice: Cheshire-Puss, would you tell me, please, which way I ought to go from here?

Cheshire Cat: That depends a good deal on where you want to get to.

Alice: I don’t much care where.

Cheshire Cat: Then it doesn’t matter which way you go.

Alice: —So long as I get somewhere.

Cheshire Cat: Oh you’re sure to do that if you only walk long enough.

Lewis Carroll, The Adventures of Alice in Wonderland

2013 has arrived and employers now find themselves on the other side of a looking glass facing the surreal world of healthcare reform and a confusion of regulations promulgated by The Accountable Care Act (ACA) and its Queen of Hearts, HHS Secretary Sebelius. Many HR professionals delayed strategic planning for reform until there was absolute certainty arising out of the SCOTUS constitutionality ruling and the subsequent 2012 Presidential election. They are now waking up in ACA Wonderland with little time remaining to digest and react to the changes being imposed. A handful of proactive employers have begun, in earnest, to conduct reform risk assessments and financial modeling to understand the impacts and opportunities presented by reform. Others remain confused on which direction to take – uncertain how coverage and affordability guidelines might impact their costs.

If reform is indeed a thousand mile journey, many remain at the bottom of the rabbit hole – wondering whether 2013 will mark the beginning of the end for employer sponsored healthcare or the dawning of an era of meaningful market based reform in the US. HR and benefit professionals face a confusion of questions from their companions — CFO’s, CEOs, shareholders and analysts.

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The Fix that Failed

The new “fiscal cliff” legislation hailed by some as a “one-year doc fix” of the scheduled 26.5% sustainable growth rate (SGR) cut that was scheduled to take effect on 1 January 2013, has passed the Senate and House as part of the American Taxpayer Relief Act ( HR 8 ) goes to President Obama for his likely signature.

But was this “one-year doc fix” really a fix?

Not at all.

In fact, once again Congress has failed to resolve the ever-present sustainable growth rate cuts that repetitively surface year after year by kicking the proverbial can down the road another year.

The cost of the one year patch will be $25.1 billion dollars over 10 years and will be paid for almost entirely by health care cuts in other areas.

  • Hospitals (increasingly doctor-employers now, remember?) will see audits of their billings increase as efforts to recoup some $10.5 billion of “overcoding” charges are seen as the largest source of revenue for the one-year “fix.”
  • Hospitals will also see an extension of lower Medicaid payments to hospitals that treat a high number of uninsured or low-income beneficiaries, known as “disproportionate share hospitals” to find savings of about $4.2 billion.
  • Another $4.9 billion offset will be applied to the lowered bundled payments given for patients with end-stage renal disease – some of the sickest people receiving services from Medicare.

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Health Reform: The Political Storms Are Far from Over

The history of president Obama’s health reform bears an uncanny and disturbing similarity to the life cycle of a hurricane. With Sandy fresh in our memory, the similarity is not comforting.

Hurricanes have three phases. The front wall of the storm brings high winds, lightening, and rain. Next, at the hurricane’s center, or eye, the wind drops and the air warms. If one is at sea, the water may turn calm and warm, bringing the illusion that the storm has ended. As the storm moves on, wind and rain return, often with increased force. Those fooled by the calm who leave safe havens may be destroyed by what follows.

The life cycle of a hurricane will bear an eerie similarity to that of health reform. Nearly four years elapsed between president Obama’s initial call for national health reform until the bill became law and the Supreme Court ruled on its constitutionality. The political and legal turmoil was intense and continuous. The process was rancorous and the outcome in doubt from start to finish. It took a bitterly fought presidential election to put an end to this phase of the struggle.

Now, we are in a period of relative calm. The 2012 election settled the immediate fate of the Affordable Care Act (ACA). The candidate who swore to repeal it lost. The ACA was the major domestic legislative achievement of the victorious incumbent president who won reelection. Now, eighteen states are in process of designing rules for health insurance exchanges — the administrative entities that will manage implementation of the new law, the most important provisions of which will take effect one year hence. The other states will either leave implementation entirely to the federal government or share administrative responsibilities with federal agencies.

A huge amount of work remains to be done by October 1, 2013 when people can begin enrolling for insurance coverage in the new exchanges.

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What Does the Dartmouth Atlas Have to Say About the Politics of the ACA?

Healthcare reform was a frontline topic during the recent presidential elections. The political warfare and misleading information around the Patient Protection and Affordable Care Act (PPACA), also known as Obamacare, has prevented the public from understanding its intended purpose, and has left many skeptical about its benefits. It is safe to say the general public has little to no idea about the quality of healthcare delivery in their respective regions.

In fact, it is not a far cry to claim that even healthcare professionals might not truly understand the issues facing American healthcare. Thus, most of the public is generally uninformed or misinformed about the population level problems facing the healthcare system. Therefore, it is quite simple for political parties to misguide the public and capitalize on their uninformed perceptions. If the public knew more about the flaws present in the healthcare system, perhaps they would better realize the PPACA is a reasonable start at addressing the failings of our system.

The Dartmouth Atlas Project is an online database which collects Medicare spending and utilization data from around the country. Information gathered from the database has shown immense variation in the way medical resources are utilized by even similar regions, communities, and health care organization. Evidence has repeatedly shown that, from a population perspective, areas that spend more on medical care do not consistently benefit from increased quality of care or patient wellbeing. Variation in the type of care delivered can be attributed to diverse incidence and prevalence of disease severity or the type of care a well- informed patient chooses. Variation in health care delivery is thus omnipresent and expected, because every patient is unique and medical innovation presents a growing number of care options to choose from.

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Is Russia ready for Health 2.0?

The Wikipedia article about health care in Russia starts like this: “Russia has more physicians, hospitals, and health care workers than almost any other country in the world on a per capita basis. However, since the collapse of the Soviet Union, the health of the Russian population has declined considerably as a result of social, economic, and lifestyle changes.”

The Russian health care system has been going through major changes to improve access and quality of delivery. Currently, health care expenditures account for roughly 4% of the GDP (vs. 15.2% in the US) and this number is projected to grow to 10-14% over the next few years. The reform that started in 2009 will continue through 2015. It is expected that about 40% of resources allocated to health care restructuring will be spend on improving infrastructures, including information technology.

Recently I was invited to be part of the conference “Health Plus Technology: Russia and Global Outlook,” jointly sponsored by the Skolkovo Foundation, Life Sciences Angel Network and viamedix. I was part of the opening panel on ‘Technology Intervention to Healthcare,’ which was trying to answer to the following questions: What is fueling the Health 2.0 movement — in the US and globally? What countries/regions are leading the way? And what are the factors and conditions of the industry’s acceleration? The Russian health care system could use a shot of Health 2.0, and so the underlying question was: Is Russia ready for a paradigm shift from top down to bottom up health care innovation? Is Russia ready for Health 2.0?

At the same time, answering a request to produce a Health 2.0 Russia CIS, I took this speaking engagement as an opportunity to meet a few important stakeholders and potential partners. The question ‘Is Russia for Health 2.0?’ took another meaning for me.

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