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Tag: Joe Flower

“Winning” by Defeating the Triple Aim

Joe-FlowerYou follow movies? That is, not just watching them but thinking about how they are built, looking at the structure? In classic movie structure there is a moment near the end of the first act. We’ve established the situation, met our hero, witnessed some good action where he or she can display amazing talents but also what may be a fatal weakness.

Then comes the moment: Some grizzled veteran or stern authority brings the hero up short. Think of Casino Royale, that scene where Daniel Craig’s Bond (after those brutal opening scenes) is back in London and is confronted by Judy Dench’s M. Or Obi Wan Kenobi challenging Luke: “You must learn the Force.” Or that moment in the classic Westerns when the tired, angry old sheriff rips off his badge and throws it on the desk, leaving the whole problem to the young upstart deputy. But before he stomps out the door he turns and says to the young upstart, “You know what your problem is, kid?”

And then he tells him what the problem is: not just the kid’s problem, but the problem at the core of the whole movie. He just lays it out, plain as day.

In healthcare, this is that moment. We are near the end of the first act of whatever you want to calloutthis vast change we are going through.

And where are we? Across America, the cry of the age is “Volume to value.” At conferences we all stand hand over heart and pledge allegiance to the Institute of Health Improvement’s Triple Aim of providing a better care experience, improving the health of populations, and reducing per capita costs of health care.

But in each market, some major players are throwing their muscle into winning against the competition by defeating the Triple Aim, by increasing their volume, raising their prices, doing more wasteful overtreatment, and taking on little or no risk for the health of populations. At least in the short term, the predatory strategies of these players are making it more difficult for the rest of us to survive and serve.

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Does Prevention Save Money? ____ Yes ____ No

Or…it’s complicated.flying cadeucii

The New York Times today published a story titled, “No, Giving More People Health Insurance Doesn’t Save Money.” A piece of the argument is, as the author Margo Sanger-Katz puts it, “Almost all preventive health care costs more than it saves.”

What do you think? What’s the evidence? Leave aside, for the moment, the “big duh” fact that at least in the long term saving people’s lives in any way will cost more, because we are all going to die of something, and will use a lot of healthcare on the way. Leave aside as well the other “big duh” argument: It may cost money, but that money is worth it to save lives and relieve suffering. Leave that argument aside as well. The question here is: Does getting people more preventive care actually lower healthcare costs for whoever is paying them?

My thoughts? #1: No consultant worth his or her salt trying to help people who are actually running healthcare systems would take such a blanket, simple answer as a steering guide. Many people running healthcare systems across the country are seriously trying to drop real costs, and how you do that through preventive care is a live, complex and difficult conversation all across healthcare.

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GOP Has the Fear: King vs. Burwell

Republicans have raged against Obamacare for six years now. But do they really want to see it crash?

We are rapidly approaching the day when the Supreme Court announces its decision in King v. Burwell. The case found a four-word phrase in the 900-page law that says that the tax subsidies are available to people who get insurance through exchanges “established by the state.” Both Republicans and Democrats who actually put the law together, as well as their staffs, say that was a mistake, that no one meant to exclude people on the federal exchange, it is just an artifact of the drafting process that contravenes the whole sense of the law.

The result, if the course found for the plaintiffs, could be rapid and dire: Some 7.5 million would suddenly be paying full freight for healthcare insurance, most would probably stop paying and be force off the plans, and both healthcare and the insurance industry would face a sudden large drop in the revenue streams they need to stay afloat.

But what do Republicans really think?

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Half the Cost. Half the Jobs?

flying cadeuciiHealthcare costs far too much. We can do it better for half the cost. But if we did cut the cost in half, we would cut the jobs in half, wipe out 9% of the economy and plunge the country into a depression.

Really? It’s that simple? Half the cost equals half the jobs? So we’re doomed either way?

Actually, no. It’s not that simple. We cannot of course forecast with any precision the economic consequences of doing healthcare for less. But a close examination of exactly how we get to a leaner, more effective healthcare system reveals a far more intricate and interrelated economic landscape.

In a leaner healthcare, some types of tasks will disappear, diminish, or become less profitable. That’s what “leaner” means. But other tasks will have to expand. Those most likely to wane or go “poof” are different from those that will grow. At the same time, a sizable percentage of the money that we waste in healthcare is not money that funds healthcare jobs, it is simply profit being sucked into the Schwab accounts and ski boats of high income individuals and the shareholders of profitable corporations.

Let’s take a moment to walk through this: how we get to half, what disappears, what grows and what that might mean for jobs in healthcare.

Getting to half

How would this leaner Next Healthcare be different from today’s?

Waste disappears: Studies agree that some one third of all healthcare is simple waste. We do these unnecessary procedures and tests largely because in a fee-for-service system we can get paid to do them. If we pay for healthcare differently, this waste will tend to disappear.

Prices rationalize: As healthcare becomes something more like an actual market with real buyers and real prices, prices will rationalize close to today’s 25th percentile. The lowest prices in any given market are likely to rise somewhat, while the high-side outliers will drop like iron kites.

Internal costs drop: Under these pressures, healthcare providers will engage in serious, continual cost accounting and “lean manufacturing” protocols to get their internal costs down.

The gold mine in chronic: There is a gold mine at the center of healthcare in the prevention and control of chronic disease, getting acute costs down through close, trusted relationships between patients, caregivers, and clinicians.

Tech: Using “big data” internally to drive performance and cost control; externally to segment the market and target “super users;” as well as using widgets, dongles, and apps to maintain that key trusted relationship between the clinician and the patient/consumer/caregiver.

Consolidation: Real competition on price and quality, plus the difficulty of managing hybrid risk/fee-for-service systems, means that we will see wide variations in the market success of providers. Many will stumble or fail. This will drive continued consolidation in the industry, creating large regional and national networks of healthcare providers capable of driving cost efficiency and risk efficiency through the whole organization.

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Will Tech Revolutionize Health Care This Time?

the scanadu
After decades of bravely keeping them at bay, health care is beginning to be overwhelmed by “fast, cheap, and out of control” new technologies, from BYOD (“bring your own device”) tablets in the operating room, to apps and dongles that turn your smart phone into a Star Trek Tricorder, to 3-D printed skulls. (No, not a souvenir of the Grateful Dead, a Harley decoration or a pastry for the Mexican Dia de Los Muertos, but an actual skullcap to repair someone’s head. Take measurements from a scan, set to work in a cad-cam program, press Cmd-P and boom! There you have it: new ear-to-ear skull top, ready for implant.)

Each new category, we are told, will Revolutionize Health Care, making it orders of magnitude better and far less expensive. Yet the experience of the last three decades is that each new technology only adds complexity and expense.

So what will it be? Will some of these new technologies actually transform health care? Which ones? How can we know?

There is an answer, but it does not lie in the technologies. It lies in the economics. It lies in the reason we have so much waste in health care. We have so much waste because we get paid for it.

Yes, it’s that simple. In an insurance-supported fee-for-service system, we don’t get paid to solve problems. We get paid to do stuff that might solve a problem. The more stuff we do, and the more complex the stuff we do, the more impressive the machines we use, the more we get paid.

A Tale of a Wasteful Technology

A few presidencies back, I was at a medical conference at a resort on a hilltop near San Diego. I was invited into a trailer to see a demo of a marvellous new technology — computer-aided mammography. I had never even taken a close look at a mammogram, so I was immediately impressed with how difficult it is to pick possible tumours out of the cloudy images. The computer could show you the possibilities, easy as pie, drawing little circles around each suspicious nodule.

But, I asked, will people trust a computer to do such an important job?

Oh, the computer is just helping, I was told. All the scans will be seen by a human radiologist. The computer just makes sure the radiologist does not miss any possibilities.

I thought, Hmmm, if you have a radiologist looking at every scan anyway, why bother with the computer program? Are skilled radiologists in the habit of missing a lot of possible tumors? From the sound of it, I thought what we would get is a lot of false positives, unnecessary call-backs and biopsies, and a lot of unnecessarily worried women. After all, if the computer says something might be a tumor, now the radiologist is put in the position of proving that it isn’t.

I didn’t see any reason that this technology would catch on. I didn’t see it because the reason was not in the technology, it was in the economics.

Years later, as we are trending toward standardizing on this technology across the industry, the results of various studies have shown exactly what I suspected they would: lots of false positives, call-backs and biopsies, and not one tumor that would not have been found without the computer. Not one. At an added cost trending toward half a billion dollars per year.

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For Hospitals and Health Systems: Strategies for Doing More with Less

The conversation has changed.

The old conversation: “You cost too much.”

“But we have these sunk costs, patients who can’t pay … ”

“OK, how about a little less then?”

The new conversation: “You cost too much. We will pay half, or a third, of what you are asking. Or we will take our business elsewhere. Starting now.”

“But … but … how?”

Exactly: How will you survive on a lot less money? What are the strategies that turn “impossible” to “not impossible”?

New Strategies
The old conversation arises from the classic U.S. health care model: a fully insured fee-for-service system with zero price transparency, where the true costs of any particular service are unknown even to the provider. The overwhelmingly massive congeries of disjointed pieces that we absurdly call our health care “system” rides on only the loosest general relationship between costs and reimbursements.

It’s a messy system littered with black boxes labeled “Something Happens Here,” full of little hand waves and “These are not the droids you’re looking for.”

With bundling, medical tourism, mandated transparency, consumer price shopping, and reference pricing by employers and health plans, we increasingly are being forced to name a price and compete on it. Suddenly, we must be orders of magnitude more precise about where our money comes from and where it goes: revenues and costs.

We must find ways to discover how each part of the strategy affects others. And we need some ability to forecast how outside forces (new competition, new payment strategies by employers and health plans, new customer handling technologies) will affect our strategy.

Key Strategy Questions
For decades, whenever some path to profit in health care has arisen (in vitro fertilization, urgent care, retail, wellness and the others) most hospitals have said as if by ritual, “That is not the business we are in.” As long as we got paid for waste, few health care organizations got serious about rooting it out.

And most have seemed content with business structures that put many costs and many sources of revenue beyond their control.

In the Next Health Care, the key strategy questions become:

Why Healthcare Should Be Worried About the Target Cyber Attacks

If you are a CEO or COO of a health care organization, and your IT people have been trying to get your attention, it’s time to have a serious sit-down with them.

If they haven’t been trying to get your attention, it’s time to have an more serious sit-down with them, complete with charts and graphs and arrows on fip charts.

Here’s why: Remember in November it was revealed that the Target retail chain’s computer systems were compromised? Some 70 million names, home addresses and phone numbers were stolen (pretty good raw material for identity theft) and 40 million credit card numbers.

It has turned out since then that some two dozen other companies, including Neiman-Marcus, the Michael’s arts-and-crafts chain and the White Lodging Services hotel management firm, have been hacked in similar ways, with the attackers software sitting in the companies’ servers, credit card machines and cash registers often for months before they were detected, sucking down every transaction, every bit of data moved about.

Hey wait, you say, I have every confidence in our computer security. Why we passed a security audit just recently.

Heh. So did Target — just before they discovered the break-in. They got a clean bill of health, and the auditors failed to find the malware installed on every server, every credit card terminal, every cash register.

Why? Because the attackers have gotten way more sophisticated, and they used new techniques and methods of entry. You can now buy ready-made hacking software designed to do this on the Internet for less than $1000.

Here’s the kicker: Target has security guards at the doors, it has those beeper tags on small high-value items so you can’t sneak them out without paying for them, it has burglar alarms — but the perps in the biggest heist in the company’s history entered through the thermostat.

Got that? The thermostat.

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How to Fail at the Next Health Care

The Next Health Care calls for very different strategies and tool sets. Many systems are acting as if they read a manual on how to do it wrong. How many of these critical strategic and tactical mistakes is your system making?

So I was beta testing FutureSearch, this cool new Google add-on app I’m writing with a coder, and I found an article that I wrote in 2025. My first thought was, “Cool! It works!” My second thought was, “I’m still working at the age of 75?” It was only then that I focused on the title of the article: “Fail: The 16 Steps by Which Hospitals Failed in the Post-ACA Risk Environment — An Analysis.”

The article detailed a dispiriting history from 2013 to 2020. More important, it listed the 16 most common mistakes that hospitals and health systems made while trying to navigate the new risk environment of the Next Health Care.

I found this interesting because of course right at this moment much of the health care industry, in many different ways, is trying to move away from the traditional fee-for-service payment system, which has given the whole industry adverse incentives, leading to much higher costs, poorer quality and restricted access. The rubric of the day is “volume to value.” And I see many different institutions and systems across the country making exactly these mistakes already in 2013.

Step-by-Step Instructions

As you read this list, ask yourself in what way you and your institution might be making the wrong decisions, and ask yourself what they will look like looking back from 2025.

Stick with fee-for-service. Though they included various incentives and kickbacks, most accountable care organizations and ACO-like structures built in the 2012–2014 period were based on a payment system that remained stubbornly fee-for-service. Systems continued to make more money if they checked off more items on the list (and more complex items), rather than solving their customers’ problems as well and as efficiently as possible.

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The Ghost of Steve Jobs and Your Bottom Line

The progeny of the iPhone and the iPad will change the shape of your institution — and your balance sheet.

One of the more striking images, to me, out of the online spew in the last few months was from the inauguration. It was a wide view of an inaugural ball. There was the president waltzing with the first lady, and a crowd of several hundred watching them. What was striking about that image was that the several hundred people held several hundred small glowing rectangles in their hands. Practically every member of the crowd was carrying a smartphone and was photographing or videotaping the moment.

The scene was commonplace in its moment, remarkable only in the perspective of history — but such a short history. We could not have imagined so many people carrying smartphones at Obama’s first inaugural only four years ago. Four years before that, we could not have imagined any. The iPhone had not been invented.

There had been attempts at smartphones before the iPhone, and devices like tablets before the iPad. But the rampant success of iOS devices did far more than establish two profitable niche. It changed our relationship with the world.

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Divided Health Care Nation

Rapid change is engulfing health care across the United States, but the strategic responses of organizations to these changes are sharply divided. In the shift that has been broadly shorthanded “from volume to value,” many organizations across the country are deeply engaged in moving toward “value” by building new partnerships, affiliations, capacities and economic structures, striving to bring better health and health care to more people for less money.

At the same time, some organizations are using the chaos and fluidity of the moment to double down on the old way, aggressively seeking greater volume reimbursed at higher rates. For now, within their regions, some of these organizations appear to be “winning” at the game, building greater market share and margin and increasing their budgets. But is this in fact the wisest strategy to follow in the long run, not only for their institutions but for the good of their missions and the people they serve?

Moving toward Value

Virtually all serious attempts to answer the question, “Why do we pay so much more for health care in the United States?” have pointed to the competition for reimbursements under a commodified, insurance-supported fee-for-service system. If what you pay for is items off of a list, what you will get is lots of items, especially the more profitable ones. That’s how we end up with a system in which waste (stuff we could simply do without) is pegged by repeated studies at one-third or higher.

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