This is the dumbest idea I’ve heard since “I’m going to invest all my money in Facebook’s IPO and get rich!”
Here are six reasons why:
1) You’re too late. Health insurance was an attractive and profitable business in the 00s, but after passage of the Accountable Care Act it’s been commoditized.
First, the health plan business model of the past decade is dead. That model was — “Avoid and shed risk” — or more simply, avoid insuring people who are already sick (preexisting conditions) and get rid of people who become sick (rescissions). Under the ACA, health insurers must take all comers and they can rescind policies only for fraud or intentional misrepresentation.
Second, the ACA institutes medical loss ratio restrictions on health insurers. Depending the the type of plan, insurers now must spend at least 80-85% of premium dollars on paying medical claims; if they spend less, they must return these “excess profits” as rebates to customers. As a result, health insurance has become a highly regulated quasi public utility.
This is why you see health plan CEOs like Mark Bertolini of Aetna declaring “Health insurers face extinction”. The old health insurance model is on a burning platform, and health plans are reformulating themselves as companies involved in health IT, analytics, data mining, etc.
2) You have bigger fish to fry. Focus on developing accountable care capabilities. The AHA estimated that hospitals will need to spend $11-25 million to develop an ACO. Get going. Continue reading…
In 1932, the Committee on the Cost of Medical Care identified rising medical costs as a threat to the financial security of millions of Americans. In a series of studies that created the field of health services research, the Committee recommended several strategies for cost containment that reads like a blueprint for today’s cost containment efforts: prevention, price controls, capitation, elimination of unnecessary care, and integration. If it sounds like a précis of my previous two blogs – cut prices and cut quantities – it should. We have known for a long time that those are the only ways to cut spending. And yet here we are, 80 years later, facing a spending crisis that threatens to take down the entire economy.
In my lifetime, we have been subjected to a steady drumbeat of rising medical costs. There have been respites – for a couple of years after Medicare introduced DRGs and for about five years in the 1990s during the heyday of HMOs. While DRGs and HMOs shifted costs down, they did not seem to reverse underlying growth trends, although HMOs did not thrive for long enough to be certain.
Not for lack of trying have medical costs continued to increase. We promote prevention, regulate prices, capitate providers, and review utilization to eliminate wasteful spending. We have seen horizontal integration that led to market power and higher costs, and vertical integration that more often than not created unmanageable bureaucracies. Most of today’s proposals for cost containment can be encapsulated by two words: “Try harder.” The Affordable Care Act gives us free preventive care, stricter price controls, ACOs, and the Comparative Effectiveness Institute. We need radical change but all we get is creeping incrementalism. I will take creeping incrementalism over the do-nothing approach of the previous decade, if only because we could use another respite. But the ACA is no permanent fix.
Several years ago I had dinner with a woman who had served in the late 1990s as the national Chief Medical Officer of a major health plan. At the time, she said, she had developed a strategic initiative that called for abandoning the plan’s utilization review and medical management efforts, which had produced heartburn and a backlash among both physicians and patients. Instead, the idea was to retrospectively analyze utilization to identify unnecessary care.
This was at the height of anti-managed care fervor. A popular movie at the time, As Good As It Gets, cast Helen Hunt as the mother of a sick kid. When someone mentioned an HMO, Ms. Hunt’s character let fly a flurry of expletives. America’s theater audiences exploded in applause.
Apparently, the health plan’s senior management team bought into cutting back on medical management but saw no need for retrospective review. After all, if the health plan abandoned actions against inappropriate services, utilization and cost would explode. Fully insured health plans make a percentage of total expenditures, so more services, appropriate or not, meant the plan’s profits would increase.
And that’s how it played out. Virtually all health plans followed suit, dismantling the aggressive medical management that had been managed care’s core mechanism in driving appropriateness. In the years following 1998, health plan premium inflation grew significantly, for a short period reaching 5.5 times general inflation, but averaging 4 times general inflation through today. Medical management became all but a lost, or at least a scarce, discipline in American health care, which is its status now. Continue reading…
Hours after the SCOTUS verdict and about the same time as a feisty (and not too productive) shouting match on the NY Times site between Maggie Mahar & Michael Cannon with commentary from Bob Reich and “expert” Grace Marie Turner, a real health care expert dissected the future of health care.
Here’s Jeff Goldmsith‘s talk (done for Eliza with Queen Bee/Chairman & Chief Visionary Officer Alexandra Drane refereeing). And it’s excellent. (It also has a tad of rambling from me at the very end….). I suggest you spend a chunk of your Saturday morning listening to Jeff tell you more.
The Federal government will push forward to establish health insurance exchanges regardless of how the Supreme Court rules on the Affordable Care Act in the weeks to come, argues THCB contributor Maggie Mahar. The only sensible conclusion? The states should accept Washington’s help and open up the market for insurance online.
The Affordable Care Act (ACA) calls on the states to create health insurance exchanges – marketplaces where individuals and small businesses can shop for and compare health insurance plans. Beginning in 2014, insurers peddling policies on an exchange will have to meet the ACA’s standards by covering “essential benefits,” capping out-of-pocket expenses for individuals, and offering more transparent information about costs and benefits.
Best of all, insurers will not be able to turn down customers suffering from chronic diseases, or charge them higher premiums.
As the next act of the Massachusetts health care drama plays out on Beacon Hill, the same characters return to the stage with a tired script. The ostensible hero of the production, the patient, is left to watch the tragedy from the back row.
Legislation being debated on Beacon Hill ignores patient-centered health plans and health savings accounts, or HSAs, which are lower-premium insurance plans that direct pre-tax dollars into a bank account to cover an individual’s current health care and save money for future medical expenses. An HSA is the most direct way to engage patients in the health system. They cover out-of-pocket medical, dental, and vision expenses, are fully portable, and owned by individuals for their entire lives.
Unlike the self-interested solutions of insurers, providers, and government, HSAs are a proven way to contain the cost of care.
Nationwide, 11.4 million people of all ages and income levels purchase patient-centered plans, up over 250 percent from 2006, when they were created. Among HSA account holders, fully half earn less than $60,000; almost three-quarters have children; and about half are over 40.
Safeway, one of America’s largest supermarket chains, rolled out a patient-centered plan in 2006; per capita health care spending shrank 13 percent, and costs remained flat for four consecutive years.
Safeway’s plans have reduced employee obesity and smoking rates to roughly 30 percent below national averages. This health dividend is priceless as 70 percent of health care costs are directly related to lifestyle decisions.
Health plans seem to be following along the lines of other big, bureaucratic organizations that cause customers a lot of frustration through poor customer service. Here’s an example of a Twitter exchange between Humana and a customer:
Sept. 23, 2010 @MrAndrewDykstra: Dear Humana, you’ve ruined my day. Worse, my wife’s day. Way to CYA. I’m paying you to cover mine. #NotHappy
Sept. 24, 2010 @HumanaHelp: @MrAndrewDykstra I’m sorry to hear about your frustration, is there anything I can do to help out?
@MrAndrewDykstra: @HumanaHelp You were kind and didn’t give my wife the run around, I appreciate that. 3/3.
Sept. 27, 2010 @HumanaHelp: @MrAndrewDykstra Thank you, let me know if you need any customer care.
Imagine that an innovative health plan – aware that half or more of health care cost is waste and that physician costs to obtain the identical outcome can vary by as much as eight fold – hopes to sweep market share by producing better quality health care for a dramatically lower cost. So it begins to evaluate its vast data stores. It’s goal is to identify the specialists, outpatient services and hospitals within each market that, for episodes of specific high-frequency or high value conditions, consistently produce the best outcomes at the lowest cost. Imagine that, because higher quality is typically produced at lower costs – there are generally fewer complications and lower incidences of revisiting treatment – the health plan will pay high performers more than low performers. Just as importantly, it will limit the network, steering more patients to high performers and away from low performers.
Suddenly, it will become very important for physicians and other providers to understand, in detail, how they compare to their peers within specialty, and how to provide the best care possible. And if they find the results aren’t so positive, they may want to figure out where their deficiencies lie, and how they can improve.
Now imagine that clinicians could easily view data about their patients and themselves.
Basic demographics: e.g. age, gender, length of time since last visit.
A problem list based on diagnoses within the past year.
A list of medications prescribed, including ordering physician, dates and fulfillment information.
A list of lab tests ordered, by physician and date.
A list of immunizations.
Suppose the clinician could review, revise or copy this information to create a lasting “patient profile,” saving it online and retrieving it for use at each subsequent visit as appropriate.
DAVE DRANOVE No one who sees this headline should read any further. There is no news here. So why is everyone getting lathered up about it? Let me explain.
Healthcare reform becomes official this week, as many of the provisions of the legislation kick in. One provision requires insurers to accept children with preexisting conditions while capping what they can charge, undoing a standard industry practice. Several insurers have indicated that they will stop selling child-only policies. Industry officials are having a field day criticizing insurance industry greed.
Maybe these officials haven’t noticed, but insurers are greedy and there is nothing anyone in the Obama administration can do about it. Maybe it needs repeating. Insurers are greedy, have always been greedy, and always will be greedy. So are all investor-owned companies. People don’t invest in health insurance companies (or any other investor-owned companies) for charity. They invest in them to make money. (Investors tend to be greedy too, and that includes the pension funds that most working Americans rely upon for their comfortable retirements.)Continue reading…
As a consultant to the Physician Foundation, a not-for-profit 501 C-3 Organization representing physicians in state medical societies, as a sometime futurist, and as someone who has written extensively about innovation in Innovation-Driven Health Care (Jones and Bartlett, 2007) and in 1475 blogs in Medinnovation, I have been asked: What is the next big thing for doctors, and how should they react to it?
The next big thing for physicians will be Medicare fee cuts in the neighborhood of 50% by 2020 as mandated by the Affordable Care Act, and the next big clinical innovative response for doctors will be encouraging patients enter their own data, their own chief complaint, and their own medical histories before seeing the doctor to compensate for fee reductions.
Ceding a Traditional Physician Function to Survive Economically
Doctors will have to cede a traditional function – taking a history – to patients to become more efficient to survive. Payers – including Medicare, Medicaid, and private health plans- will demand standardization and restructuring of the medical history to achieve consistency in medical records. Patient-entered information may be disruptive. Doctors will have to change practice flow patterns to adjust to reality of lower pay. The need for greater productivity will drive this change.