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US Rumor and Hospital Report

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By PAUL LEVY

It has been almost four years since I commented on the annual hospital ranking prepared by US News and World Report.  I have to confess now that I was relatively gentle on the magazine back then.  After all, when you run a hospital, there is little be gained by critiquing someone who publishes a ranking that is read by millions.  But now it is time to take off the gloves.

All I can say is, are you guys serious?  Let’s look at the methodology used for the 2011-12 rankings:

In 12 of the 16 [specialty] areas, whether and how high a hospital is ranked depended largely on hard data, much of which comes from the federal government. Many categories of data went into the rankings. Some are self-evident, such as death rates. Others, such as the number of patients and the balance of nurses and patients, are less obvious. A survey of physicians, who are asked to name hospitals they consider tops in their specialty, produces a reputation score that is also factored in.

Here are the details:

Survival score (32.5 percent). A hospital’s success at keeping patients alive was judged by comparing the number of Medicare inpatients with certain conditions who died within 30 days of admission in 2007, 2008, and 2009 with the number expected to die given the severity of illness. Hospitals were scored from 1 to 10, with 10 indicating the highest survival rate relative to other hospitals and 1 the lowest rate. Medicare Severity Grouper, a software program from 3M Health Information Systems used by many researchers in the field, made adjustments to take each patient’s condition into account.

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Off-base Optimism

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By PAUL LEVY

I like to view myself as an optimist, but two recent reports demonstrate the danger of misplaced or premature optimism.  I fear that they are influenced by what the authors hope will be the case rather than what has proven to be the case.  I find this generally to be the situation in the health care arena, where public policy is often based on shallow interpretations of data and on people’s political wishes rather than rigorous analysis.

The first comes from Karen Davis at the Commonwealth Fund, in a blog post entitled, “Health Spending Continues to Moderate, Cost of Reform Overestimated.”  We should know from the title alone that the conclusions cannot be accurate:  It is just too soon to reach them.  It would be like drawing a picture of climate change from one year of data about temperatures.

Here’s an excerpt:

A recent report from the Centers for Medicare and Medicaid Services (CMS) shows that national health spending grew at a historically low rate of 3.9 percent in 2010, almost paralleling the 3.8 percent increase in our gross domestic product (GDP) last year. This is . . . good news for the federal government as the slowdown indicates that the cost of health reform has been overestimated.

Now, let’s look at the possible reasons:

First . . . continuing declines in employment and private health insurance coverage have contributed to fewer people receiving both essential and nonessential treatment. [F]ewer people have received needed preventive and acute care. And people have increasingly gone without prescriptions, tests, and elective procedures.

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When Will UPMC Explain the Whole Story?

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By PAUL LEVY

The UPMC kidney transplant story continues to develop.  This was the one where a doctor and nurse were disciplined in a matter that clearly reflected some systemic problems, more than personnel problems regarding those two people.

Now UPI reports:

A report by a federal agency on a kidney transplant at the University of Pittsburgh Medical Center suggests more problems than the hospital has acknowledged.

The Centers for Medicare and Medicaid Services said its investigation found the nephrologist should have been aware the kidney donor was infected with hepatitis C, the Pittsburgh Post-Gazette reported Tuesday. The hospital has suspended the lead surgeon and the transplant coordinator.

The CMS report said the test results were available for two months in the donor’s medical record. But none of the doctors and nurses apparently reviewed the record, and the kidney was transplanted into a man who was not infected with the virus.

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Personal Liberties Versus Public Harm

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By PAUL LEVY

David Ropeik, about whose excellent work on risk perception I have written before, recently offered some additional perspectives on the issue of vaccinations — making us think about the cost of personal liberties to public harm. He wrote this Op-Ed, entitled, “Public health: Not vaccinated? Not acceptable,” in theLos Angeles Times. The subheading is: “What should we do about people who decline vaccination for themselves or their children and put the public at risk by fueling the resurgence of nearly eradicated diseases?”

Here are some excerpts:

What does society do when one person’s behavior puts the greater community at risk? We make them stop. We pass laws, or impose economic rules or find some other way to discourage individual behaviors that threaten the greater common good. You don’t get to drive drunk. You don’t get to smoke in public places. You don’t even get to leave your house if you catch some particularly infectious disease.

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Rads are Good For You. Take Twice as Many.

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By PAUL LEVY

Dear Mrs. Smith, I am writing to inform you that we exposed your body to an unnecessary level of radiation during your visit to our hospital. Oh, by the way, that was two years ago. We don’t intend to do anything about this for you. Also, we have known about this problem for a long time, and we don’t expect to change our procedures for future patients. Just wanted you to know. Yours in delivering the best health care in the world, Chief of Radiology and CEO. (Jointly signed.)

That’s the essence of this article by Walt Bogdanich and Jo Craven McGinty in the New York Times. Here are excerpts:

Long after questions were first raised about the overuse of powerful CT scans, hundreds of hospitals across the country needlessly exposed patients to radiation by scanning their chests twice on the same day, according to federal records and interviews with researchers.

Double scans expose patients to extra radiation while heaping millions of dollars in extra costs on an already overburdened Medicare program. A single CT scan of the chest is equal to about 350 standard chest X-rays, so two scans are twice that amount.

 

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Economists Gone Wild

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By PAUL LEVY


Economists are so embedded in their training with the concept of ceteris paribus — “all other things held equal” — that their policy prescriptions often go awry. Here are two recent examples:

First, in the March 10, 2011 issue of the New England Journal of Medicine, David Cutler and Leemore Dafney argue against transparency of pricing in the health care sector.

The rationale for price transparency is compelling. Without it, how can consumers choose the most efficient providers of care? But though textbook economics argues for access to meaningful information, it does not argue for access to all information. In particular, the wrong kind of transparency could actually harm patients, rather than help them.

Applying the sunshine rule in the provider–payer context, however, could have the opposite of the intended effect: it could actually raise prices charged to patients.

[T]he sunshine policy would create a perverse incentive for the hospital to raise prices (on average), and as a result its rivals could do the same. This adverse effect of price transparency would arise only in cases in which the buyer or supplier in question had some leverage (market power), but such leverage is fairly common in health care settings, including many local hospital markets.

What’s the flaw here? In markets like Eastern Massachusetts, there is a dominant provider which uses its market power to garner above average prices from the insurance companies in its service area. That provider, in turn, can use those revenues to offer higher salaries than its competitors, drawing doctors into its orbit. It also has more resources to expand its ambulatory care facilities. Both steps serve to further expand its market power.

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“But they are different.” Not!

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By PAUL LEVY

Whenever I talk about the spectacular work Brent James and his colleagues have done with process improvement at Intermountain Health, someone says, “But they are different.” These comments are often based on prejudice. It reminds me of the folks in the US automobile industry who initially said of Toyota’s use of Lean principles, “It will never work in America. Those Japanese are different. They are so much more compliant than Americans.” Then, those competitors discovered that Toyota factories in the US, with American workers, also effectively used Lean. And ate their lunch.

What do they say about IH? They talk about the homogeneity of the population in Utah, meaning that there is a predominantly Mormon population. They subtly suggest that Mormons are somehow more complaint with regard to health care treatment, have fewer health problems, or that the doctors are more likely to follow orders, or something equally foolish. Here’s the more accurate description:

The IH network of twenty-three hospitals and 160 clinics provides more than half of all health care delivered in the region. Intermountain’s hospitals range from critical-access facilities in rural areas to large, urban teaching hospitals. Although Intermountain has an employed physician group and a health insurance plan, the majority of its care is performed by independent, community-based physicians and is paid for by government and commercial payers.

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Some of My Best Friends are in Private Equity

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By PAUL LEVY

Like moths to a flame, private equity investors are quick to pounce on those sectors of the economy that have the potential for higher than average returns. Such investors also have an appetite for the higher risk that accompanies those sectors. In this manner, private equity can serve a useful role in capital formation for the economy. It also helps money managers who want a portion of their portfolio to be in that part of the risk-reward spectrum.

Health care is a fertile field for private equity. You might not think so because of concern about rising costs, but as someone once said, “One person’s costs are another person’s income.” Let’s look at it this way. First, more people will have access to insurance to pay for diagnosis and treatment because they will be newly eligible for private insurance under the national health care reform law. Second, demographic changes in society are producing an ever-increasing demand for health care services. Longer lifespans and the aging population offer a growing number of people with cancer and the other diseases that are more likely to occur with age. The number of Medicare beneficiaries is projected to rise from 46.6 million today to 78 million in 2030. (It was 40 million in the year 2000.)

It is with this background that we should consider the growing interest by private equity in proton beam facilities. You have heard before about my real concern about the cost impact of rapid expansion of the number of such facilities.

I want to expand on that today and give you a sense of how the dollars work in this kind of investment. I have pointed out how the Medicare rate-setting process contributes to its profitability. Let’s look at this in very rough form.Continue reading…

Getting Transparency Right

By PAUL LEVY

This is about transparency, when it is useful and when it is not. The term is now an established part of the health care lexicon, but there is little substantive discussion about how it is being used.

As I said in an article in Business Week over three years ago:

There are often misconceptions as people talk about “transparency” in the health-care field. They say the main societal value is to provide information so patients can make decisions about which hospital to visit for a given diagnosis or treatment. As for hospitals, people believe the main strategic value of transparency is to create a competitive advantage vis-à-vis other hospitals in the same city or region. Both these impressions are misguided.

Transparency’s major societal and strategic imperative is to provide creative tension within hospitals so that they hold themselves accountable. This accountability is what will drive doctors, nurses, and administrators to seek constant improvements in the quality and safety of patient care.

Now, there rises an additional misconception. The perversion of the transparency concept that has evolved rides on the desire of CMS and private insurance companies to use publicly published outcome data to financially reward or penalize hospitals. As expected, this is raising hackles. The complaints often heard from hospitals are ones we have discussed before: “The data are wrong.” “Our patients are sicker.”Continue reading…

The Fall and Rise of Asynchronicity

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By PAUL LEVY

The daughter of a friend was bemoaning poor connectivity of the internet at a university in Europe. She said, “It’s vital since I don’t have any other method of communication.”My friend noted, “I was telling her how we only had letters and occasional long distance phone calls in college….”

One of my most widely read blog posts was entitled, “Blackberry Cold Turkey,” in December of 2006. The impetus was when my telecom provider wrote in November to tell me that my bare bones wireless data service was going to be discontinued, but that I could “upgrade” to one with a higher price with more functionality, if I also bought a new device. I decided it was time for a life-changing experience and tossed my Blackberry in the trash. This reminded me of a major functionality of email.

The most important attribute of email is the asynchronicity of the medium: The sender and the receiver do not have to be in contact at the same moment. This enables efficient communication. You can integrate emails into the fabric of your life. You originate a message when you want, and you reply to another’s when you want.

Until the “revenge effect” occurs! How does this work? Email was invented. Then Blackberries were invented so we could be sure, when we are away from our computer, to receive emails as soon as they are sent and reply to them immediately. In fact, we feel compelled to read and respond in real time. Asynchronicity disappears.Continue reading…

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