When the Cleveland Clinic announced job and expense reductions of 6% in 2013, the healthcare sector took notice.
Did the world-renowned hospital and healthcare research center, with 40,000 employees and a $6 billion budget, really believe it did not possess the heft to take on the increasingly turbulent sea changes in American healthcare? Or was this yet another stakeholder using Obamacare as cover to drive draconian change?
Both sides of the political aisle were quick to make hay of the announcement, with conservatives blaming reform for eliminating jobs while liberals questioned the timing of the cuts when the Cleveland Clinic was posting positive growth. The answer from Eileen Sheil, corporate communications director, was apolitically straightforward: “We know we are going to be reimbursed less.” Period.
The question of reimbursement reform and the unintended consequences of the Affordable Care Act are weighing on the minds of hospital executives nationwide as independent, regional and national healthcare systems grapple with a post-reform marketplace. The inevitable conclusion that the unsustainable trend in American healthcare consumption is now at its nadir seems to have finally hit home.
These days, America’s hospitals are scrambling to anticipate and organize around several unanswered questions:
- How adversely will Medicaid and Medicare reimbursement cuts affect us over the next five years?
- Can we continue to maintain our brand and the perception that any employer’s PPO network would be incomplete without our participation?
- Can we become a risk-bearing institution?
- Can we survive if we choose not to become an accountable care organization (ACO)?
- Will the ACO model, by definition, cannibalize our traditional inpatient revenues?
- Can we finance and service a hard turn into integrated healthcare by acquiring physician and specialty practices?
Go It Alone or Join a Convoy?
Mergers and acquisitions remain in high gear in the hospital industry—“the frothiest market we have seen in a decade,” according to one Wall Street analyst. “Doing nothing is tantamount to signing your own death certificate.”
Many insiders believe consolidation and price deflation is inevitable in healthcare. Consolidation, however, means scarcity of competition. If we operate under the assumption that scarcity drives costs higher, we may not necessarily feel good about consolidation leading to lower costs unless mergers are accompanied by expense cuts that seek to improve processes, eliminate redundancies and transform into a sleeker, more profitable version of one’s former self.
Bigger may not always be better, but bigger seems to have benefited a select group for the last decade.
There is a saying that “culture eats strategy for lunch.” Never has this been truer than when looking at primary care or physician group delivery system innovation. Health care industry leaders must invest more time creating and scaling the right culture as they innovate.
There has been a great deal of controversy on the ability of the Primary Care Medical Home (PCMH) to impact total medical costs. Critics have noted that PCMH is adding additional costs to the structure without systematically demonstrating improvement in total costs and quality.
A great deal of time has been spent debating the proper structures, processes and financial incentives that are necessary to create value in physician-led-risk or shared-savings models. However, I suspect the real issue is that culture is a major driver of performance, and it has not been systematically measured or managed.
At ChenMed, we have developed a primary-care-led model focused on the care of seniors with multiple and chronic health conditions. Funded through full-risk arrangements with Medicare Advantage plans, we outlined an overview of the original Miami-based model in Health Affairs last year .
Over the last three years, we have scaled the model from five centers in Miami to 36 centers in eight markets in the Southeast and Midwest. This has required us to adjust our model in ways that allow it to readily scale. We have been able to make the fundamental economics work while rapidly scaling the medical practice, and are actively working on innovations to improve value every day.
One of the foundations of our strategy is getting the physician culture right. This is not easy to measure from a health services and policy research perspective.Yet, it matters a great deal from a practical and business perspective. McKinsey and Company has developed an influence model on how organizations create the right behavior and mindset shifts, which we have found useful .
Writing in the Wall Street Journal (WSJ) Dr. Daniel F. Craviotto Jr. an orthopedist, made a plea to physicians to declare independence from third parties and emancipate themselves from servitude to payers, mandates and electronic health records (EHR).
As rants go, this was a first class rant. But its effect was that of a Charles de Gaulle’s whisper to Vichy France rather than a Churchillian oratory at the finest hour.
The article went viral (it has been tweeted nearly 3000 times), though with little virulence. And it is not WSJ’s paywall to blame.
The author might have assumed that most the healthcare community in general and physicians in particular wish to be free from regulations. I have serious doubts that this assumption is correct in the aggregate. The relationship between regulators and physicians is more complex and symbiotic than it first appears.
Some physicians believe in bureaucracy. Rationalism will march us out of our healthcare wilderness. This belief in scientific managerialism, faith in technocracy, is the new theism. The rationale of the new theists is that regulations fail not because they are inherently useless but because there are so few of them, and even fewer that are actually smart.
Like the first religions started with polytheism, the new believers want more agencies, more alphabet soups, more gods.
On April 29, Dr. Daniel Croviotto published an editorial in the Wall Street Journal, “A Doctor’s Declaration of Independence,” in which he argued that it is time to “defy healthcare mandates issued by bureaucrats not in the healing profession.”
Dr. Croviotto does a good job of articulating his frustration with the increasingly burdensome bureaucracy and regulations placed on care. Many physicians and nurses share his frustration. I once did, until I saw a way out of the cynicism and frustration – a way that can improve the quality and lower the cost of care for all Americans.
No matter how misguided we think the federal government is in its electronic health record mandate or other requirements, simply defying mandates as Dr. Croviotto proposes is not likely to accomplish much. Those who signed the Declaration of Independence knew it was only an initial step toward ridding the country of tyranny. They had to create a new vision for a better, more effective government.
Similarly, the medical profession needs to move beyond cynicism to create a vision for a better, more effective healthcare system.
When I recently returned home after a two-week speaking tour of Canada and began catching up on news about Obamacare, I was angry and upset, and not just at politicians and special interests that benefit from deception-based PR tactics.
I was — and still am — mostly angry and upset with myself. And I know I always will be.
Over the course of a two-decade career as a health insurance executive, I spent hours and hours implementing my industry’s ongoing propaganda campaign to mislead people about the Canadian health care system.
We spread horror stories about “rationed care” and long waiting times for medically necessary care. Our anecdotes were not at all representative of most Canadians’ experiences, but we spent millions of dollars to persuade Americans that they were.
At every stop between Halifax and Vancouver last month, I explained how the United States had achieved the dubious distinction of having both the most expensive health care system on the planet and also one of the most inequitable.
While Canadian lawmakers in the 1960s were implementing a partnership between the federal and provincial governments to create the country’s publicly funded universal health insurance system — known as Medicare — our lawmakers in Washington were establishing America’s own single-payer Medicare program, but only for folks 65 and older and some younger disabled people.
Congress also created the federal and state-administered Medicaid program for the nation’s poor.
Ever since, most of the rest of us have had to deal with private insurance companies and pay whatever they felt like charging us for coverage.
As health care reform rolls out, there is a growing focus on restructuring the health service delivery system in the hope of improving health care quality and “bending the cost curve.”
A key part of this focus has been on physician organization and, in particular, moving toward large, multispecialty physician groups or hospital-physician systems that can provide integrated, coordinated patient care (e.g., through “Accountable Care Organizations”).
In a recent chapter in Advances in Health Care Management’s Annual Review of Health Care Management, however, we and our co-author Jeff Goldsmith find that there is little evidence for the superiority of these integrated models in terms of patient care quality or cost-savings, and that the trends toward physician consolidation has been much less dramatic than is often thought.
Using data from a variety of sources, we find there are two separate phenomena at work in physician organization. At one end of the spectrum (bottom tail of the size distribution of physician groups), the majority of physicians continue to practice in small groups, although there has been some movement from really small practices (one to three or four physicians) to slightly larger groups (five to nine physicians).
Still, nearly two-thirds of office-based physicians continue to practice in solo settings, two-person partnerships, and small (usually single specialty) groups with five or fewer physicians.
At the other end of the spectrum (upper tail of the distribution), however, is a smaller number of very large and rapidly growing multispecialty physician groups, which are often owned by hospitals, health plans, private equity firms, or other non-physician sponsors.
These two stories of what is happening in the distribution of physician group size are described as “a tale of two tails.”
“Not everything that counts can be counted, and not everything that can be counted counts.”
This aphorism has been deliciously, but, alas, incorrectly attributed to Albert Einstein (the saying actually has mixed origins, but credit properly might be given to sociologist William Bruce Cameron, writing in 1963).
But, whatever its provenance, the saying is particularly appropriate in describing the woeful lack of attention paid to the long-standing problem of diagnosis errors in the provision of health care services.
Last week academic researchers from Baylor and the University of Texas published important research estimating that one in 20 adults in the U.S., or roughly 12 million people every year, receive an error of diagnosis—a wrong, missed or delayed diagnosis—in ambulatory care.
This likely represents a conservative estimate of the incidence of such errors in ambulatory care and does not attempt to include inpatient hospital care or care provided in nursing homes and post-acute care facilities, such as rehab hospitals.
The news media correctly decided that this peer-reviewed finding deserved prominent attention—it was a lead story on “NBC Nightly News” and other national news programs.
It seems that attaching a large number to the prevalence of such errors provided the needed news hook to give the problem the attention it has long deserved. Surveys reveal that the public is worried as much about a misdiagnosis or missed diagnosis as any other quality and safety issue in health care.
Autopsy studies performed over time find that unacceptably high rates of diagnosis errors persist; similarly, diagnosis errors continue to represent a leading cause of medical malpractice suits.
But even without newsworthy body counts, the problem of diagnosis errors has been known to clinicians for decades, if largely ignored by stakeholders and policy-makers as a major quality and safety problem.
Je n’ai fait celle-ci plus longue que parce que je n’ai pas eu le loisir de la faire plus courte. —Blaise Pascal
Translation: I have made this longer than usual because I have not had time to make it shorter.
As Appley as it gets.
A while ago I was challenged to write about what an Apple-like approach to healthcare might look like.
That challenge has been weighing on me.
For starters, we’re all over Appled aren’t we? Maligned anecdotes about Steve Jobs and the iPhone make their way into almost every presentation remotely related to innovation or technology. Triteness aside, I’ve been stalled because Apple is really a philosophy, not a series of steps or lessons learned. (Although, they are nonetheless methodical.)
Instead, what I’ve been kicking around in the ole noggin are three notional predictions, which I’ll assert are inevitabilities which will fundamentally disrupt healthcare delivery as we know it today.
What follows is about as Appley as I’m likely to get. Despite big-bang product launches, Apple actually plays the long game. They introduce small features into products to affect user behavior years before a flagship product takes advantage of those reprogramed behaviors.
That’s how they disrupt.
I believe there are three meaningful, unstoppable trends, in our current world which will significantly alter healthcare. The steps taken towards these inevitabilities, along the way, are what will define the innovators and leaders. They are the ones who see this future and know how to drive towards it.
The three trends are:
- Tools and culture which favor individual empowerment
- The commoditization and automation of diagnosis
- Accelerated globalization of treatment options
But wait, there’s Moore.
Don’t worry, I’m not going to leave you hanging. I’ll attempt to rationalize each of these points and explain why, particularly when considered as a bundle, they are a powerful force for disruption. And to prime that pump, we have to talk about Gordon Moore.
I was reading a medical home advocacy group’s upbeat approach to a recent JAMA study that had found scant benefit in the concept when, suddenly, we tumbled into Alice in Wonderland territory.
The press release from the leadership of the Patient-Centered Primary Care Collaborative (PCPCC) started out reasonably enough. The three-year study of medical practices had concluded that the patient-centered medical home (PCMH) contributed little to better quality of care, lower cost and reduced utilization. This was an “important contribution,” said the PCPCC, because it showed “refinement” of the concept that was still necessary.
That was just the set up, though, to this challenge from Marci Nielsen, chief executive officer of the group. “It is fair,” said Nielsen, “to question whether these pilot practices (studied) had yet transformed to be true medical homes.”
Where might one find these true medical homes? The answer turns out to be as elusive as a white rabbit. Formal recognition as a medical home via accreditation “can help serve as an important roadmap for practices to transform.” However, accreditation as a PCMH “is not necessarily synonymous with being one.” Conversely, you can be a “true PCMH” without having received any recognition at all!
But maybe the true medical home does not yet exist, since, “the evidence base” for the model “is still being developed.”
In Through the Looking Glass, Humpty Dumpty scornfully informs Alice: “When I use a word, it means just what I choose it to mean – neither more nor less.” And so we learn that a true medical home means just what the PCPCC says it does.
It’s confusing. If the truly transformational medical home lies in the future, why does the PCPCC chide the JAMA researchers in this “otherwise well-conducted study” for failing to “reference the recent PCPCC annual report which analyzed 13 peer-reviewed and 7 industry studies and found cost savings and utilization reductions in over 60 percent of the evaluations”?
Since CMS’s Center for Medicare and Medicaid Innovation launched three years ago, its staff have been frequently hailed for undertaking an ambitious research agenda.
But a New York Times story this week was eye-catching for a different reason: author Gina Kolata mostly assailed Medicare’s researchers for how they’re choosing to do that research.
“Experts say the center is now squandering a crucial opportunity,” Kolata wrote in a front-page article. “Many researchers and economists are disturbed that [CMMI] is not using randomized clinical trials, the rigorous method that is widely considered the gold standard in medical and social science research.”
But many researchers and economists that I talked to at this week’s Academy Health conference say that’s not the case at all. (And some were disturbed to learn that they were supposed to be disturbed.)
“RCTs are helpful in answering narrowly tailored questions,” Harvard’s Ashish Jha told me. “Something like—does aspirin reduce 30-day mortality rates for heart attack patients.”
“However, for many interventions, RCTs may be either not feasible or practical.”
“While RCTs may be the gold standard for testing some hypotheses, it is not necessarily the most effective or desirable model for testing all hypotheses,” agrees Piper Su, the Advisory Board’s vice president of health policy.
CMMI’s ambitious goals
On its surface, Kolata’s article is built around a reasonable conclusion: RCTs offer plenty of value in health care, and we’d benefit from more of them.
- As Jha alludes to, think of a double-blinded pharmaceutical study where half the participants randomly get a new drug and the other half get a placebo; that’s an RCT.
- The famous RAND study that found having health insurance changes patients’ behavior: An RCT.
- The ongoing Oregon Health Insurance Experiment: Also, an RCT.
And it’s fair to examine how CMMI is pursuing its research, too.