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Artificial Intelligence & How Doctors Think: An Interview with Thomas Jefferson’s Stephen Klasko

As I walk into the building, the sheer grandiosity of the room is one to withhold — it’s as if I’m walking into Grand Central station. There’s a small army of people, all busy at their desks, working to carry out the next wave of innovations helping more than a million lives within the Greater Philadelphia region. However, I’m not here to catch a train or enjoy the sights. I’m at the office of the President and CEO of Thomas Jefferson University, Dr. Stephen Klasko, currently at the helm of one of the largest healthcare systems in the U.S.

Let me backup a little.

The theme of nearly every conversation about the future of technology now revolves around Artificial Intelligence (AI). Much weight is placed on the potential capacity of AI to disrupt industries and change them to the very core. This pressure has been felt to a large extent within nearly every aspect of healthcare where AI has been projected to improve patient care delivery while saving billions of dollars.

Unfortunately, most discussions exploring the implications of AI only superficially look at either the product or the algorithm that powers these products. The short-sightedness of this approach is not an easy one to fix. Yes, clinical studies validating AI backed products are vital but AI cannot be viewed just like any other drug or a medical device. There’s much more to be considered when we examine the broader role of this technology, because this technology can shape the entire healthcare system. To place the impact of a far reaching technology, you need an even longer sighted vision. It’s a rare breed of people that have experienced the tumultuous history of change within medicine but can still call upon the lessons learned to execute innovations and bring meaningful results.

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Why Raising Hospital Prices is a Zero Sum Game

In the early 1960s, President John F. Kennedy said, “The time to repair the roof is when the sun is shining.” It was a clarion call, a full-throated warning against national complacency in an era of great prosperity.

It was during this same period that community hospitals stood as the dominant force in American healthcare. By the mid-20th century, some 6,000 inpatient facilities had spread throughout the country, often serving as the financial glue of their respective communities. With well-paying jobs and boards made up of dignitaries, local hospitals aroused a great chorus of civic pride.

But in recent times, the proverbial roof over America’s hospitals has fallen into disrepair. Thanks to operational inefficiencies and declining utilization, more and more hospitals are experiencing financial problems and waning influence.

As health plans, pharmaceutical companies and new care-delivery entrants gain market clout at the expense of the hospital industry, panic is starting to set in. These developments have spurred a recent uptick in hospital mergers, which look more like deals of desperation than long-term growth strategies.

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The Doctor and the CFO

When my classmates and I returned to Boston to continue our first year of medical school early last month, we returned to a very different type of course, called “Essentials of the Profession.” In it, we explored health policy, social medicine, ethics, and other topics outside the realm of traditional physiology and disease but just as important to our roles as physicians. In the health policy class, we learned about escalating healthcare costs and how the landscape of American healthcare is changing. While the inclusion of these topics in our curriculum reflects a significant advance in medical education, our health policy teachings also exposed a critical gap in our training – one that will leave us ill-prepared to meet our future obligations as physicians.

Healthcare providers, we learned, are increasingly expected to consider the cost of clinical care, and the costs of care we deliver will influence how much we’ll be paid. Medicare is increasingly tying physician payment to spending benchmarks such that wasteful healthcare services will be punished with lower reimbursements. Further, providers are being pressured by public and private payers to enter into alternative payment models that force physicians to bear financial risk. This means that doctors may lose money if they spend more on patient care than government-set benchmarks. The goal is to incentivize cost-effective care and penalize inefficiency, in stark contrast to the traditional fee-for-service scheme, which encourages overutilization and contributes to cost growth.

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The Skeptical Oncologist

Why conduct post approval studies at all?

Atezolizumab previously received accelerated approval in second-line metastatic or advanced urothelial cancer based on response rates from a single arm trial. The results of post approval confirmatory phase 3 are now published and demonstrate that atezolizumab did not improve survival versus chemotherapy (11.1 v 10.6 months, HR 0.87, p = 0.41). The concept of accelerated approval is to grant early and conditional approval and access to drugs in diseases of unmet need, and that the decision to fully approve or revoke be made based on results of confirmatory phase 3 trials. That means, if the confirmatory larger phase 3 trial shows that the assumed benefit with the drug didn’t exist, the approval be revoked. Naturally, the FDA has decided to revoke the approval. No, I am joking. The post approval studies don’t seem to matter at all. You can improve response rate in a single arm trial, gain an expedited approval and your approval will always remain. Previously, we also saw that a drug that was given accelerated approval based on response rates in a phase 2 received full approval after it failed to improve survival in a subsequent confirmatory phase 3.  Why bother conducting confirmatory studies at all?

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Sexism in Healthcare Reporting

NBC should consider re-branding as the “anti-woman” network.  Our culture needs to change so women feel valued and respected, comfortable and safe in the workplace, and are provided ample opportunities for leadership and growth.  NBC actions show they care little about gender equality in the workplace, prioritizing the comfort of males over that of females.  During a recent interview, former “Today Show” anchor Anne Curry asked a poignant question after “not being surprised by the allegations” against “golden boy” Matt Lauer.  “What are we gonna do to make sure these women work and are not sidelined and prevented from contributing to the greater good?”  My answer is we must continue to call attention when major networks push women aside. 

Morgan Radford is an NBC correspondent who reported on parents who were concerned about their children playing football due to risks of long-term neurologic damage.  She interviewed two physicians for her segment — a pediatrician by the name of Dyan Hes, MD and Lee Goldstein, MD, PhD, an internal medicine physician.  One would think both physicians were interviewed as experts in their fields; however, at some networks there appears to be “a power imbalance where women are not valued as much as men” according to Anne Curry.  Dr. Hes is a physician and a mother to a teenage son, whom she understandably, will not allow to play football.  Dr. Goldstein is a researcher and recently completed a study about the risk of brain injury resulting from even mild head trauma. 

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Global Risk Report: Davos, Trump and Climate Change

During the recent World Economic Forum in Davos, Switzerland, President Trump once again noted his objection to the Paris climate accord.  In an interview with Piers Morgan, Trump again called it a “horrible deal” because, as has been widely reported, climate change or global warming is, per the president, a “hoax” perpetrated by the Chinese.  “There is cooling and there’s a heating – I mean look,” Trump explained to Morgan, “it use to not be climate change.  It used to be global warming.  That wasn’t working too well because it was getting too cold all over the place.  The ice caps were going to melt.  They were going to be gone by now, but now they’re setting records, okay?” 

Trump was asked about climate change because the topic was on the Forum’s agenda.  Not surprisingly, in the days leading up to the confab, climate scientists once again found the proceeding calendar year one of the warmest on record.  NASA ranked 2017 the second warmest since 1880 (or since reliable record keeping began), or after 2016.  NOAA, using a slightly different methodology, ranked it the third warmest after 2016 and 2015 respectively.  Not only were the last three years the warmest on record, the five warmest years on record have occurred since 2010, 17 of the 18 warmest since 2001 and last year marked the 21st consecutive year the contiguous United States had above average temperatures.  Record 2017 temperatures were somewhat unanticipated however because of the lack of an El Niño (or Pacific trade wind), effect that is associated with increased global temperatures.  Because air temperatures are largely determined by ocean temperatures, also not surprisingly the five warmest ocean temperature years recorder have been 2017, 2015, 2016, 2014 and 2013 respectively.  Ocean temperatures in 2017 were exceptionally warm.  Measured as heat energy in Joules, 2017 ocean temperatures exceeded 2015 by 1.51 x 10^22 Joules, or the amount of electrical energy China produces annually.

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Will Amazon Eat the Market?

Last Tuesday, a trio of corporate heavy weights announced they were joining forces to fix the U.S. healthcare system. The CEOs of the three—Jeff Bezos of Amazon, Warren Buffet of Berkshire Hathaway, and Jamie Dimon of JP Morgan, vowed to create “an independent company that is free from profit-making incentives and constraints..to provide simplified, high-quality and transparent healthcare at a reasonable cost.”

Details about the proposed venture are limited but it nonetheless sent shock waves across the industry. Stocks for industry mainstays like United Health, CVS, Express Scripts, Mylan and others plummeted. And, on the heals of mega-deals like CVS’ $69 billion acquisition of Aetna two months ago, speculators theorized it might be Armageddon for healthcare as we have known it in the U.S.

First, what we know for sure:

The new venture will focus on the collective buying power as employers of healthcare for the 1.15 million employees in their organizations. Their approach features five strategies widely. widely used by large self-insured employers to contain their employee health costs. This one is expected to leverage technology in a unique way:

  • Primary care gatekeepers: Large employers vest considerable responsibility in primary care services that appropriate preventive health, manage chronic populations and control referrals to specialists and hospitals. Promotion of healthiness and wellbeing, the integration of physical and behavioral health and alternatives therapies that reduce dependence on unnecessary access prescription drugs are mainstays of the primary care gatekeeping model.
  • Narrow networks: The networks of hospitals, allied health professionals, hospitals and others will be tight. Those providing high quality, low cost services will be contracted, and employees will be empowered with data to monitor their performance.
  • Supply chain management: Every line item fixed and direct cost will be lean. Prescription drug use, for instance, will be accessed through a restrictive formulary, and so on. Amazon is known to be hyper-efficient in its operating budget: employees are expected to fly economy class and office opulence is a no no.
  • Employee choice & risk sharing: A key to the venture’s uniqueness will be the tools and responsibility given employees to select plan options that align with their needs and preferences. High deductible plans will be options, but technologies that equip them to make informed choices of doctors, treatments, hospitals, drugs and others will be a central feature.
  • Technology: Technologies that allow employees to own their medical records, interact with Alexa for information and counsel, integrate smart devices and engage with their providers are the backbone of the venture. Knowing treatment options, their costs and where the highest and best value is accessible in the employee’s provider network is central to the venture’s success.

None of these five is new, but together, they’re powerful IF implemented aggressively and at scale.

Let’s face it. Healthcare’s ripe for disruption: we cost too much, hide prices that bear faint resemblance to their underlying costs, avoid accountability for outcomes, complain we’re underpaid and over-regulated, protect our silo’s so each gets a piece of the pie, mark everything up and pass-it-through and declare we’re the best system in the world.

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It’s (Still) the Prices, Stupid

Inefficient markets create price differentials for identical goods. These price differentials frequently occur among markets dominated by oligopolies. Taking advantage of market pricing inefficiencies is known as arbitrage. Commodity traders frequently arbitrage by buying low and selling high. In inefficient markets for perishable goods, such as airline tickets, hotel rooms, or medical imaging, there is no opportunity to re-sell these goods. Thus consumers of these goods, such as health insurance companies, will attempt to buy at the lowest possible price to maximize value. Today we see many apps and websites, such as Expedia, that engage in improving these markets in airline and hotel industries. Stroll Health is one company attempting to scale this behavior to medicine.

Our current Hospital Outpatient Department (HOPD) payment schedule is one example of an inefficient market where identical CPT codes are priced very differently based on whether they are provided in a grandfathered hospital outpatient department or a freestanding outpatient medical center. Hospital accountants will justify this higher payment schedule by attributing social expenses such as police and training programs. Other HOPD supporters will claim they deliver relative value through higher quality (outcomes) that justifies (often disproportionally) higher prices. Yet increasingly “illusions about value: that we know what it means and can measure it, that the same things matter to all patients” are being voiced.

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Medicine Is a Profession That is Rapidly Losing Control of Its Tools.

Artificial Intelligence hype and reality are everywhere. However, the last month or two has seen some thoughtful reflection. HHS / ONC announced “Hype to Reality: How Artificial Intelligence (AI) Can Transform Health and Healthcare” referencing a major JASON report “Artificial Intelligence for Health and Health Care [PDF -817 KB],”. From a legal and ethical perspective, we have a new multinational program: “PMAIL will provide a comparative analysis of the law and ethics of black-box personalized medicine,…”. Another Harvard affiliate writes “Optimization over Explanation” subtitled “Maximizing the benefits of machine learning without sacrificing its intelligence”. Meanwhile, an investigative journalism report from the UK “Google DeepMind and healthcare in an age of algorithms”, “…draws a number of lessons on the transfer of population-derived datasets to large private prospectors, identifying critical questions for policy-makers, industry and individuals as healthcare moves into an algorithmic age.”

What sets these major papers apart from the constant AI and Big Data science or hype is that they are not particularly technical. Although long, they are accessible to pretty much anyone including physicians and patients. What shocks me, as a career medical technology engineer also trained as a physician, is how passive physicians and patients seem as medicine shifts from open public science to secret corporate black boxes.

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What Kmart’s Settlement Says About Health Care Fraud

Perhaps because its size was so small—“only” $59 million—the press paid little attention to Kmart’s recent settlement of False Claims Act (FCA) litigation in which it was accused of overcharging Medicare, Medicaid, Tricare, and private insurers for generic drugs.

But it is worth discussing both the conduct that got Kmart in trouble and the way that conduct came to light.  The former shows how dysfunctional the market for pharmaceuticals is and the latter nicely demonstrates the severe limits on the government’s ability to police fraud and abuse.

The nub of Kmart’s scheme was that it sold generic drugs to cash-paying customers at very low prices while charging governmental payers vastly more.  For example, Kmart sold a 30-day supply of a generic version of a prescription drug for $5 to cash customers, but then billed Medicare $152 for that same drug.  Because pharmacies can only bill the government for their “usual and customary charges,” Kmart was pocketing millions of dollars that it was not entitled to.

When it announced the settlement, the DOJ said, as it always does, that “[t]he government’s resolution of this matter illustrates the government’s emphasis on combating health care fraud.”  In truth, both the success of Kmart’s scheme and the settlement show exactly the opposite: The government can neither prevent nor police even the most obvious forms of health care fraud.  We make this point at length in our forthcoming book, Overcharged: Why Americans Pay Too Much For Health Care.

Consider a few facts.  While public payers were happily paying Kmart’s inflated bills, they were also receiving bills from Walmart that accurately stated the far lower market price for the very same drugs.  When James Garbe, the pharmacist who discovered what Kmart was doing, had a prescription for 90 days of blood pressure medication (Lisinopril/HCTZ) filled at Walmart, it billed the government $2—the difference between his copay ($10) and Walmart’s cash price ($12).  When he had the exact same prescription filled at Kmart, it billed the government $50.84, even though the charge should only have been $5 because Kmart’s cash price was $15.  No one in the government (or at the private carrier that administered the part D program for Medicare) wondered why Kmart’s charge was 25 times as much as Walmart’s, even though the two stores compete directly with one another.

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