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.
Outcomes-based healthcare is a popular topic of conversation in healthcare today. But despite its popularity, there isn’t a standard outcomes-based healthcare definition. One possible explanation is outcomes-based healthcare’s scope; it encompasses a vast spectrum of strategies used to transition from fee-for-service (FFS) to value-based care.
Although the industry lacks a standard, industry-accepted outcomes-based healthcare definition, there is something healthcare leaders can agree on: health systems need to embrace outcomes-based healthcare in order to survive the transition to value-based care. But healthcare organizations are up against seemingly endless challenges as they attempt to make the switch to this new, value-based approach to care delivery. While many of these organizations are slowly but surely (and successfully) making the transition, just as many feel overwhelmed by the inevitable challenges associated with changing the way they do business.
This article takes a closer look at outcomes-based healthcare and what it really entails. It describes the importance of making the transition, three challenges health systems are up against, and key success factors when it comes to moving away from an FFS model. A Texas Children’s Hospital success story shows these success factors in action and proves that making the transition, although difficult, is not only achievable, but also an absolute necessity.
“Lawyers aren’t graded.”
“CEOs aren’t graded”
“How would you feel if I tracked every e-mail you sent and tracked how many people responded to them? You wouldn’t like that very much would you?”
“The people who make EMRs. Why aren’t they graded?”
If there’s one negative I hear time and time again from doctors when the subject of quality measurement comes up, it’s this one near-universal complaint. The world is unfair, the cards are stacked against us.
As a specialist at a busy urban medical center I hear the complaints almost every day from colleagues and peers at other hospitals. We’re being singled out for unfair treatment: They’re out to get us. It’s the world against the doctors.
Many of the so-called experts I’ve talked to at meetings around the country express disdain when the topic of physician resistance to quality improvement programs comes up.
But it shouldn’t be terribly surprising that the idea that one’s performance is being tracked can be seen as intrusive and threatening. The reaction is in many ways completely predictable.
As a CEO of a company in a competitive industry, I cross my fingers that my competitors will implement wellness programs.
Indeed, the more comprehensive their programs, the better it is for me. Those competitors will suffer increased healthcare costs, compounded by declines in productivity. Best of all, these programs’ negative morale impact may lead some employees to quit, thus facilitating our own recruiting efforts. (This is especially true for overweight employees, whom wellness vendors really seem to dislike. We, on the other hand, find employee weight makes no difference in either productivity or health spending.)
So hopefully my competitors will disregard the rest of this posting.
As background for those readers who are mercifully still unfamiliar with workplace wellness programs, they generally consist of four components (called “pry, poke, prod and punish” programs as shorthand):
1. A “health risk assessment,” or HRA, that pries into your employees’ personal lives, often asking about their drinking habits, marriage etc.
2. A “biometric screen” where technicians in white coats come to your workplace and poke your employees with needles to test them for diseases that in many cases, the government’s clinical guidelines say they shouldn’t be tested for. A small but increasing number of programs demand employee DNA, which isn’t in any clinical guideline.
In recent weeks, the market has reacted to a few noteworthy headlines, all involved with or touching upon value-based discretionary actions, and many with the not-so-hidden question: What’s In It for Me or WIIFM?
- CMS announced that by 2016 30% of fees in health care should be paid for through a value-based system, moving away from fee-for-service.
- ACO results have shown ambivalent outcomes.
- Outcomes-based contracts have permeated the Hepatitis C cost-nado (that’s a cost sharknado, the kind that fiercely defies cost controls and takes over all noise about payment reform and patient preferences).
- Reference-based pricing is a good/bad troublemaker in the middle of the value-based travails.
The latest rampages have appeared on two national and highly-regarded blogs: The Health Care Blog [Value-Based Reform] and The Health Affairs Blog [Go Slow on Reference Pricing].
As one of the loudest proponents on value-based designs, I lift the curtain again to show the thinking behind the movement from fee for service to value-based designs. All of these items above discuss the message of payment reform, or system alignment, but they are intensely linked to the patient-consumer ability to make the right choices, choose the right sites for care, and pay the right amount for services rendered to achieve health security.
This last—health security—should be at the heart of the US health system.
▪ It’s the place where patient competency is built and tested over time, as the patient becomes aware of health risks and chooses to modify behaviors to lower the risk.
▪ It’s the place where, when there are acute or emergent symptoms, there is no question but that the patient will be able to access the appropriate and affordable care in the safest possible setting, hopefully receiving care that delivers the patient back to functional health.
▪ It’s the place where caregivers and administrators are paid a competitive wage for serving the needs of the patient and getting the patient back to the best health possible.
During a move necessitated 20+ years ago by my change from a “private practice of medicine” life to a “back to school” life, I decided to undertake the move on my own using a rented van. I also had to affix a small trailer packed with furniture to the van. As I lifted the not so heavy trailer to the hitch, one of my children ran toward the trailer. I stopped my child’s progress with a holler and an out-stretched hand. As I did that, a disc in my back popped and dropped me to the ground. I have had back pain every day since. I have managed my back pain on my own. But, I now think it is time to start using my medical insurance to pay for the care of my back pain. So, fellow insured, you owe me a BMW.
Yes, a BMW. I know that my back pain is a subjective complaint and you can’t prove or disprove that I have it. I also know that there is no measure of my back pain; I can grade it on a scale from 0-10, as some do, but that is such a difficult task that I can’t internally come up with a number. I am sure, though, that the number changes daily. Even if I could assign a number to my pain, there is no guarantee that you would assign the same number should you suffer the exact pain as me, or that you could assign a number to my complaint better than I could. The pain is there, though. I feel it and alter my activities to not exacerbate.
Recently, a friend gave me a ride in his BMW. The seats fit my back to a t and as I sat there, my pain abated. I asked him to turn on the heated seats. Even more remarkable pain relief followed. In fact, after the ride in his car, I had no back pain for over 3 weeks, the first 3-week, pain-free stretch of time in over 20 years. So, since insurance plans often pay for some types of interventions such as heaters, buzzers, or needles, as examples, to help people with their back pain, so, then, shouldn’t insurance pay for a BMW for me? I think so.
Your correspondent is avidly learning about health apps for patients.
As described here, half of U.S adults now own a smartphone, half of them use them to obtain health information and approximately a fifth have at least one health app loaded on their device.
Regular readers are well aware of the potential for health apps, including lay-person education, the promotion of consumer behavior change, increased consumer-provider connectivity with greater access to care, better medication compliance as well as medication reconciliation, increased self-care, greater quality and lower costs.
But as this author’s e-health experience grows, he has encountered two under-recognized features of apps that – in his opinion – are sure to also drive their adoption:
1. The Provider App Arms Race: As competition for loyal patients grows, health systems, care organizations, insurers, buyers and provider networks are going to expect their apps to create greater consumer “stickiness.” For example, offering a tablet with a pre-configured app may enable hospitals to not only reduce readmissions, but enhance their brand recognition.
2. The App Is the Outcome: It will take years for science to prove that apps cause better outcomes. While lingering skepticism will prove to be another bonanza for outfits like this, the luster of smart-device gadgetry will be too much to resist. As a result, it’s only a matter of time until Boards and their CEOs pressure their management teams to launch their own app. While the electronic record and big data are important advances, let’s face it: they’re in the background. There’s nothing like a patient-facing app to remind customers, families and providers of the organization’s health tech chops.
Jaan Sidorov, MD, is a primary care internist and former Medical Director at Geisinger Health Plan with over 20 years experience in primary care, disease management and population-based care coordination. He shares his knowledge and insights at Disease Management Care Blog, where an earlier version of this post first appeared.
Accountable care demands that the system sync with the preferences and choices of the consumer purchasing the services. In order to get to real health value, consumer-patients must make the health care decisions that improve personal health and do not derail personal bank accounts. It was hard to piece these together for the last 15 years. Now, with high deductible plans, more transparency for costs, and on-time digital connectivity, there is less difficulty.
Information technology can deliver the needed information to the patient and the physician to improve not only the likelihood of improved care but also the time-to-achieve the outcomes. Most patients want and need to be involved in their care. There is evidence that giving patients access to their information results in higher levels of engagement and adherence to recommendations. In fact, the latest evidence shows that patients have been signing up for access to their health system portals at a rate of 1% per month for over 30 months.
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.