A few weeks ago, I had the opportunity to talk with an innovative company about a new product. I make it a policy not to endorse any particular company or product on this blog, so this is not an endorsement. Rather it is a fascinating story that tells us lots about human nature and gives us clues on how we should design healthcare programs, apps, etc. as we move into the world of patient engagement and accountability. And we are moving there. Whether your focus is achieving meaningful use of your EMR (increasingly we’re going to be graded on how we engage our patients in this regard), the journey to becoming an Accountable Care Organization (as we enter an environment where we’re compensated for quality and efficiency, patient engagement becomes key) or simply that you realize that we don’t have enough healthcare providers to take care of all those folks who need it (in this case, patient engagement becomes a tool to give patients the opportunity to be their own providers, taking work off of our beleaguered primary care workforce), patient engagement is all the rage.
Right out of the gate, we health care providers have a big hill to climb. We are the ones who remind you that you are sick. Who wants to be engaged with that? Once patients get into the mindset of being sick, the context becomes pain, suffering, inconvenience, depression, time out of work, rehabilitation, and on and on. It’s no wonder that patients don’t engage much (other than the occasional masochist among us). And the conversation immediately gravitates to whether insurance will pay or not. We’ve observed patients in our connected health programs who are happy to go to the sporting goods store to fork over their own money for a heart rate monitor so they can watch their heart rate during a work out, but baulk at paying for a blood pressure monitor to be part of a hypertension program. After all, fitness is your own business, but when we’re talking about sickness your insurer owes you ….
In my career, there have been a few perfect storms, defined as “a confluence, resulting in an event of unusual magnitude”.
When I was an undergraduate at Stanford University in 1980, two geeky guys named Jobs and Wozniak dropped by the Homebrew Computer Club to demonstrate a kit designed in their garage. IBM introduced the Personal Computer and MSDOS 1.0. I purchased an early copy of Microsoft Basic and began creating software in my dorm room including early versions of tax calculation software, an econometric modeling language, and electronic data interchange tools. Every day brought a new opportunity. The energies of hundreds of entrepreneurs created an industry in a few intensely creative months that laid the foundation for the architecture and tools still in use today. A guy named Gates offered me a job and I decided to stay in school instead.
In 2001 when I was first hired at Harvard, a visionary Dean for Medical Education, a supportive Dean of the Medical School, talented new development staff, and a sleepless MD/Phd student came together to create one of the first Learning Management Systems in the country, Mycourses. Robust web technologies, voice recognition, search engines, early mobile devices, and new multi-media streaming standards coincided with resources, strong governance, and a sense of urgency. Magic happened and in a matter of months, an entire platform was created that is still powering the medical school today.
Forget Washington and the political debate over Obamacare. The real battle for the future of health care is being fought in the world of business, where tens of thousands of companies have seen their financial well-being undermined by skyrocketing employee health costs.
Although few people realize it, employee health costs have now become the third-largest expenditure for U.S. businesses today, constituting a whopping 8 percent of total compensation. And they are rising fast, more than doubling in just the last decade to more than $15,000 a year for family coverage. Of that cost, 73 percent is paid by the employer.
Yet most chief executive officers are curiously passive, failing to employ even the most basic management tools and market incentives to deal with the problem. Employees and employers alike — but first and foremost the boss — need to be held accountable for reducing the cost burden that is damaging so many companies’ bottom lines.
Here are seven things that CEOs can do:
No. 1: Give incentives to insurance brokers.
Most employers buy their health insurance through brokers who make more money when the plan costs more. Not exactly a smart way to get market forces working in your favor. Better to pay brokers on a fee-for-service basis. Better still to offer them a bonus tied to the amount by which they can reduce a plan’s costs, not a plan’s benefits.
No. 2: Give incentives to your managers.
Every CEO learned in business school that if you want to achieve a key business objective — be it launching a new product or reducing company health costs — you need to provide incentives to managers to help you succeed. Yet rare is the boss who offers bonuses to human-resources and benefits managers who reduce claims costs for the company. It’s long past the time for CEOs to get the incentives working in the right direction inside their companies, as well.
In the next 10 years, data and the ability to analyze the data will do for the doctor’s mind what x-ray and medical imaging have done for their vision. How? By turning data into actionable information.
For instance, take Watson, IBM’s intelligent supercomputer. Watson can analyze the meaning and context of human language, and quickly process vast amounts of information. With this information, it can suggest options targeted to a patient’s circumstances. This is an example of technology that can help physicians and nurses identify the most effective courses of treatment for their patients. And fast: in less than 3 seconds Watson can sift through the equivalent of about 200 million pages, evaluate the information, and provide precise responses. With medical information doubling every 5 years, advanced health analytic systems technologies can help improve patient care through the delivery of up- to-date, evidence-based health care.
Perhaps Newt Gingrich’s book Saving Lives & Saving Money has been quietly redacted of a few lines since its original 2003 printing, because otherwise a simple read of the copies now in circulation would find a blueprint for Obamacare just like the first printing did. I dusted off my old, autographed, copy and re-read it, and am providing some highlights for THCB readers.
Much of the book does propose market-based solutions, such as the use of disease management programs to “dramatically improve outcomes.” However, the book also calls for bigger government, in the form of (1) drug coverage for seniors (since passed) and (2) a “tripling” of the National Science Foundation budget.
In addition to those two specific calls for increased government spending, the first printing contains language that might comfort Don Berwick more than Fox News, and not just because Dr. Berwick gets favorably mentioned twice.
P. 31: “The number of uninsured in America is a threat to our civilization.”
P. 54 “Don Berwick[has] pioneered the translation of the teachings of quality experts such as Edwards Deming and Joseph Juran to the healthcare profession.”
P 59 “It is justified to mandate the use of electronic systems to drag the medical system into the 21st century.”
I will suggest that most of us believe the way to control health care costs, and at the same time maintain or improve quality, is to both use the managed care tools we have developed over the years, and perhaps more importantly, change the payment incentives so that both cost control and quality are upper most in the minds of providers and payers.
The Congressional Budget Office (CBO) has just released an important review of Medicare’s results in testing those ideas. The news is not good.
In the past two decades, Medicare’s administrators have conducted demonstrations to test two broad approaches to enhancing the quality of health care and improving the efficiency of health care delivery in Medicare’s fee-for-service program. Disease management and care coordination demonstrations have sought to improve the quality of care of beneficiaries with chronic illnesses and those whose health care is expected to be particularly costly. Value-based payment demonstrations have given health care providers financial incentives to improve the quality and efficiency of care rather than payments based strictly on the volume and intensity of services delivered.
In an issue brief released today, CBO reviewed the outcomes of 10 major demonstrations—6 in the first category and 4 in the second—that have been evaluated by independent researchers. CBO finds that most programs tested in those demonstrations have not reduced federal spending on Medicare.
The legendary bank robber Willie Sutton, when asked, gave this straightforward response explaining his motivation. A similar motivation may be ascribed to the early adopters among health care providers who have established beachheads on various social media properties on line. Why be active in on line social networks? That’s where the people are: patients, caregivers, potential collaborators and referral sources, like many, many other people, are using social media more and more. Facebook has become nearly ubiquitous, and its user base is growing not only among the younger set, but also among the older set, who are signing up so they can see pictures of their grandkids. In today’s wired society, on line social networking is the new word of mouth. Word-of-mouth referrals, personal recommendations, have always been prized; we have simply moved many of those conversations on line.
Over half of Americans rely on the internet when looking for health care information. Many on line searches are conducted on behalf of another person. Most people expect their health care providers to be on line, providing trustworthy information – and the day of the static website has passed. In addition, a growing subset of the population is comprised of “e-patients” – the “e” stands for educated, engaged and empowered – who seek out health care providers prepared to engage with them both in person and on line.
In a prior post, I provocatively suggested that providers, hospital boards and policymakers should hedge their bets and prepare for the possibility of a “post-ACO world.” If the Group Practice Demo’s disappointing results are any guide, the likelihood of a happy ending for accountable care organizations is on numerical par with Congress’ approval rating. While I like the mutual “win-win” theoretical construct that underlies ACO gain sharing, it also recalls a life-lesson: want you want and what you get are usually two different things.
So, if the Feds have to eventually retreat on the non-success of ACOs, what will be left in its wake? More on that in future posts.
And while the uncertainty surrounding ACOs isn’t bad enough, I have also been astonished by the battered Euro, the appearance of hospital-employed cardiologists and the absence of a Lady Gaga Christmas album. Accordingly, I have learned my lesson and assume nothing.
Accountable Care Organizations (ACOs) have been likened to:
A unicorn — a fantastic creature that is vested with mythical powers. But no one has actually seen one.
A camel — a horse designed by a committee, one that already has its nose in the tent
With this background, you can begin to appreciate the difficulty of conducting an accurate census of ACO animals in the wilderness. Yet, this is exactly the task undertaken in the excellent Leavitt Partners report measuring ACO activity in the US.
As I will explain, the Leavitt report has the potential both to overestimate and underestimate ACO and accountable care-like activities. In my judgment, however, it’s far more likely to be understating just how much accountable care activity actually is going on.
Findings in the Leavitt Report
The Leavitt researchers “identified ACOs from news releases, media reports, trade groups, collaborations and interviews through the beginning of September 2011. Also included were entities that either self-identified as being an ACOs or specifically adopted the tenets of accountable care.”
The report counts 164 ACOs — 99 that are primarily sponsored by hospital systems, 38 by physician groups, and 27 by insurers.