A little
more than thirty days ago, a statistician at the Palm Beach Department of
Health accidentally sent out an internal email containing a list with the names
of more than 6,000 local residents with HIV and AIDS. Officials immediately shut down and scrubbed
the county network. Relieved supervisors
praised the rapid response of the county IT department, which
was able to eliminate all of the offending emails within 10 minutes. A lot of
people – including me – wondered how they could be so sure the problem had been
solved that easily. 

A month
later it looks as though somebody has gotten their hands on the list.  One by one,  mysterious letters have begun turning up at
the homes of people with HIV/AIDS across Florida. Not surprisingly, many of those people are
upset and quite understandably concerned that the  information could travel further.
The director of the Palm Beach County health department calls the
incident “medical terrorism” and says the letters remind her of the 2001 anthrax
attacks.  That may well be a little
strong.   

Like the
Kaiser Permanente story, the Palm Beach debacle has been
largely ignored by the media in the early going.  The issues the incident raises, however, are very
similar. How safe are patient  medical records, really?  What use are expensive network security
systems when human error can easily bypass their defenses?  If recent trends are any indication, these
cases are only the tip of the iceberg.  That
should be very worrying.

HIPAA was designed, at least in part, to prevent this kind of problem. The real
question at this point seems to be how effective is it really going to be at doing its job?  A little over a month from now, we’ll have a
very good idea.

County health officials in Palm Beach are arguing – in
the way officials often do – that last month’s email incident and this latest
problem are a complete coincidence.  That
boggles the imagination. Such coincidences just don’t happen. The
story itself
is made a little more interesting by the fact that the letters do not
appear to
be at all threatening. The problem is that they reveal information they
shouldn’t. Whoever is sending them appears to be motivated by a desire
to reach to the HIV/AIDS community and to simply have not thought
through his or her plan
very well.  This is one to follow.

The major outlets of the SCLM (so called liberal media) tend to give lots of column inches to conservatives like William Safire, Debra Saunders, and now Tucker Carlson on NPR and you don’t see the reciprocal placing of Michael Moore on Fox News or the Wall Street Journal. This week’s wingnut is Jeff Jacoby writing in the Boston Globe about how single payer would suck.  There may be a valid conversation about the merits of single payer, but this ain’t it. If the only people Jacoby can quote in his favor are the CDHP flacks at the NCPA and the appallingly biased Fraser Institute, he really needs to get a real education in this subject before he starts wasting column inches in a great newspaper.

Did he bother talking with anyone who knows something just across the Charles from Boston, like Bob Blendon or Marc Roberts at Harvard, both of whom are able to give an unbiased overview of the issues.  Did he even get America’s leading single payer advocate Steffi Woolhandler to tell her side of the story? It was all a cab ride away.  Even Bill O’Reilly’s had her on.

And he brought out a laundry list of where health care systems abroad are in trouble, and are resorting to rationing. No shit.  I can find him a much much longer list of bad things going on here, but why bother when the Wall Street Journal ran a whole series on rationing in the US in 2003.  Wasn’t Jacoby reading his fellow travelers’ stuff?  He never bothers to mention that the universal health care nations pay far less for their health care and get better population outcomes. Did he even know that?

This is a complex and difficult argument, but any rational analysis (like my rather good one about Canada!) shows that our system has at least as many problems as those abroad, and considerably more than those countries with a sensible public/private mix like France and Germany.

I’ve been in a healthy dialog with Brian Klepper and Pat Salber from the Center for Practical Health Reform in the last few weeks.  While I don’t agree with everything in their analysis, we have huge areas of common ground, and one part of that is in their view of Michael Porter’s thesis.  I wrote about this in THCB last year.  Here’s Brian Klepper’s response to Porter’s article.

A colleague recently commented on the similarities between CPHR’s work, and
Michael Porter’s and Elizabeth Teisberg’s recent Harvard Business Review article
on health care market competition. That led to the question of whether I had
contributed to their article. The question was passed to me, along with an
invitation to comment.
I rarely pass up such juicy invitations. Here’s
the short answer.

I did not contribute to the Porter/Teisberg piece. Michael
Porter is a well-established and highly respected thinker on markets. I have a
presentation with similar content he made a couple years ago; it’s clear he’s
been working on these health care concepts for a while.
But there’s more. When I read this new piece a few weeks ago, I had two thoughts.

One was that the article is a well thought through and accurate description of health
care’s two deepest problems: high fragmentation and a lack of systemic
management capability. In Porter’s and Teisberg’s zero-sum competition
framework, financial success is achieved more often through cost-shifting or
service reductions than efficiencies, and while organizations may benefit, the
larger enterprise rarely saves. In my work, I have described the same
circumstances, noting that in the highly fragmented HC marketplace, literally
thousands of organizations and millions of professionals pursue their
self-interests independent of their impacts on the whole. Fragmentation also
produces political gridlock that blocks change, because every potentially
positive reform gores somebody’s ox, and many groups have the power to kill any
proposal.

In the same vein, Porter/Teisberg talk in depth about the lack of the right
information in the right hands at the right time, and how that hinders the
ability of the health care marketplace to work properly and in everyone’s
interest. This, of course, restates the classic point made by the famous
economist Adam Smith, who said that markets can not work without perfect
information. CPHR has also relied on that point in its call for "standardized
management capability" in 4 areas: 1)universally compatible IT (which is the
predicate for systemic efficiencies), 2) standards (in the forms of
evidence-based medicine and management), 3) accountability/transparency at every
level of the system, and 4) technology assessment before innovations reach the
market and we begin to pay for them.

In
other words, my first thought was that Porter/Teisberg offer an insightful
explication of the system’s structural flaws. While they don’t really talk in
depth about current impacts, those flaws now appear to be effecting a
contraction in the health care economy that is unrelated to normal business
cycles.

But I differ with Drs. Porter and Teisberg on how we can effect
the changes that are so essential to improving competitiveness and fortifying
market stability. They offer a range of solutions, some of which mirror the
ideas our group has settled on (e.g., Transparency, A Minimum List of Coverage
Benefits), and others that are far more specific to certain industry sectors
(e.g., Simplified Billing, Non-Discriminatory Insurance Underwriting). In any
case, the authors appear to believe that once market players recognize the harm
caused by current dynamics, they will migrate to their solutions (or variations
on them). This, in turn, will improve competitiveness and bring the system back
to homeostasis. To me, this betrays two basic misunderstandings: one relates to
the trajectory of the current crisis, and the other to how power
works.

As a practical matter, we have come to believe that corporations
are the primary influencers of change in 21st Century America, and that health
care’s solutions lie at the convergence of the special and public interests. As
long as the system remains "normal" and unchanged, the traditional reform ideals
that Drs. Porter and Teisberg call for will be systematically blocked. For
example, employers will likely not buy into universal coverage if they believe
they’ll have to pay for it and if the cost continues to spiral up at seven times
general inflation. Health plans, physicians and hospitals will not likely agree
to transparency and performance accountability, for good and not-so-good reasons
associated with liability, exposure and profitability.

So if we want overcome gridlock and galvanize disparate interests toward a common vision of
change, a common value proposition is necessary. We must find something that
everyone, independent of perspective or special interest, can agree on and buy
into. And that agreement must be on something so powerful (and almost certainly,
alarming), that organizations will be willing to compromise their current
circumstances to achieve it.

We believe that value proposition is this. We are now witnessing a series of linked, rapidly intensifying economic phenomena that threaten the industry and the national economy. Porter and
Teisberg’s zero sum competition has generated a cost explosion that has driven
premium, where all cost converges, beyond a threshold of affordability for an
increasing percentage of individual, corporate and governmental purchasers.
(There’s lots of very compelling evidence for this, which I’ll be glad to
forward if anyone’s interested.) The shrinking commitment to coverage has
translated to an erosion of premium (masked by premium inflation), which in turn
constitutes a reduction in the total funds available to buy health care products
and services. This economic contraction could ultimately result in market
instability, the most feared of all market states, because in an environment of
significantly reduced resources and increasing demand, commerce grinds to a
halt. And that’s the thing that nobody wants to happen. Nobody wants health care
and its associated commerce to become immobilized.

And if health care,
the economy’s largest sector with 1 dollar in 7 and 1 job in 11, is disrupted,
then the chaos will almost certainly cascade to the larger US economy.

In recent months, CPHR has had many discussions with influential organizations
throughout health care and the broader business sector that have become
increasingly aware of the threat to corporate interests represented by impending
health care market instability. They have bought into the common value
proposition that instability must be averted, and they have agreed that our (and
to a large degree, Porter’s and Teisberg’s) principle set – informed
decision-making, universal basic coverage, and health care liability reform –
represents a narrowly defined set of structural (rather than philosophical)
principles that everyone in the system can abide, if they recognize that the
alternative is market instability.

In other words, the impetus for health care reform, in our view, is common self-interested buy-in by the nation’s most influential groups to the very severe threat posed by the economic implications
of current system flaws. The task then becomes mobilizing and positioning to
effect optimally positive change at the moment when the environment becomes
receptive to it.

To me, understanding health care’s current problems and
identifying solutions is not the hard part of the problem. Lots of people
seasoned in the industry have done this: The Institute of Medicine, Paul
Ellwood’s Jackson Hole Group, Dr. George Lundberg, the National Coalition on
Health Care (in the report they released last week), and so on. The harder part
is effecting change in a highly fragmented environment dominated by opposing
powerful interests. In my view, Dr. Porter and Teisberg handled the first part
very well but glossed over the latter part. Once CPHR became convinced that its
principles for change were refined and correct, we focused hardest on the latter
part, because that is the key to effectiveness, to the translation from idea to
action.

One last point. Drs. Porter and Teisberg really call for reform
that is based entirely on market-based solutions. They don’t frame their
solutions in terms of regulatory changes that can guide accelerated solutions
toward, for example, national standards (e.g., for IT compatibility, publicly
available performance information, minimum coverage) or rules of redress (in the
case of medical malpractice). In other words, they believe that organizations
will, on their own, execute programming that will be sufficient to resolve our
current problems and save the system.

We are less optimistic. Our argument would be that, at its heart, public policy should serve two important
purposes. First, it should protect the public from the overreaching grasp of
special interests (e.g., Enron). Second, in times of crisis, it should
facilitate a course correction that can save the system. Left to its own
devices, there is little evidence that the health care marketplace has the
organizational capability to effect enterprise-wide change that can avert market
instability. While new programs and tools (e.g., Disease Management,
Claims-Based Population-Level Management Tools, Patient-Decision Support Tools)
have the capacity to vastly improve our operations and effect savings, the
adjustments necessary to save America’s market-based health system require rapid
and pervasive implementation. This is one of those cases when the market simply
can’t do the job by itself. We need policy adjustment too.

There’s a long and not too revealing article about Harvard health economist David Cutler in the NY Times magazine. It’s called the  The Quality Cure? and I will try to get to some comments on what’s wrong with it later today.  Meanwhile here’s what I said about it in my FierceHealthcare newsletter

Unlike most critics, Cutler doesn’t think high healthcare costs are necessarily a problem. After working on the failed Clinton effort, Cutler teamed up with another young economist named Mark McClellan to study the economic costs of heart disease. Their contrarian conclusion: Americans are getting their money’s worth when it comes to their healthcare costs, at least in cardiac care. The Times fails to note, however, that many of Cutler’s concepts are either not that new or are contradicted by several other leading health economists.

One of my favorite non-health care policy organizations, the Drug Policy Alliance, has a flash animation out about an insurance company that fired four smokers for possibly smoking in their free time. The company allegedly believes that it’s OK to fire smokers because their health care costs are likely to be higher than other peoples.  The Drug Policy Alliance folks’ sub-text is of course that what you do in the privacy of your own home away from the workplace is your business and not anyone else’s including your employer, so long as you do a good job in your workplace, and by that they mainly mean pot-smoking.  There was also a great study a while back that showed historically that companies that drug-test their employees do worse in terms of standard business measures like productivity and stock performance than those which don’t.  And of course no one is yet alcohol-testing employees, unless it concerns taking alcohol immediately before flying a plane or something similar which impairs the ability to do a good job.

But the key points in this "firing smokers" issue were drawn home to me while watching a Harris Interactive webinar yesterday. (The webinar will likely be up here sometime soon but doesn’t seem to be up yet.) They’ve done a lot of work about the obesity problem, and as their colleague Bill Rosenberg said it’s getting clearer that there’s little point in a company trying to do anything to reduce the obesity in its workforce  — there’s no ROI there.  So the next best option to reduce health care costs is of course to get rid of those who cost the most.  Once we’ve got rid of the smokers, drinkers, druggies and perverts, then who’s next?  The obvious answer is that it’s the fat and the sick, who of course tend to be lower paid than average, which in turn means that their health care costs are a higher proportion of their overall compensation.

I also had a recent meeting with Brian Klepper and Patricia Salber of the Center for Practical Health Reform.  They believe that employers are dropping out of offering benefits rather more rapidly than the overall figures suggest, and Brian points to a study showing that only 45% of jobs come with health insurance (as opposed to 62% of people getting their health insurance via someone’s insurance), and that the percentage of jobs offering insurance is going down by up to 5% a year. And of course the amount of coverage being offered in the brave new high-deductible world is at least somewhat (and maybe greatly) less than people were used to a few years ago. They believe that this is leading to a crisis of funding for the whole system, and have some interesting ideas about what to do.

But in the absence of reform (which will last at least another 4 years) there’s a very nasty scenario in all of this.  Employers may actively start looking at their workforce with an idea of who to keep in and who to kick out, based purely on their health status.  After all insurers have done this for years, to great effect on their bottom lines.  Now that many big employers really see health care as their biggest challenge, and small employers get the picture too, what’s to stop them really looking at the pre-cursors for health care costs and getting rid of people who smoke, look fat, or like a drink, or are getting old?  Nothing really, especially as a class-action lawyer won’t take on a small company because they haven’t enough money to be worth taking down. Particularly for a small employer, they don’t have to state anything in their policies about it, or even look into medical records, as those things are pretty self-evident.

And of course the costs of this end up on the individual and the taxpayer.

An internal review at the National Institutes of Health has
cleared many of the NIH researchers the agency had earlier accused of violating
conflict of interest rules, the Washington Post reports.
NIH director Elias Zerhouni asked for sweeping restrictions on outside
consulting after reports of widespread rule breaking. The Post notes:

"The finding that most of the allegations are false has
many scientists complaining that Zerhouri did not get a better measure of the
the problem before succumbing to pressure from congress and the government
ethics office to prohibit virtually every kind of outside collaboration and to
demand across the board divestitures."

The Los Angeles Times played a major role in bringing the consulting crisis to
a head with a series of front page stories
in December focused on prominent scientists at the NIH including cholesterol
researcher Dr. Bryan Brewer, a member of the team which developed the nation’s
new cholesterol guidelines two years ago and Dr. Harvey Klein, a leading expert
on blood transfusions.

Interestingly, the adversarial relationship between the paper and the NIH dates
back to at least to the late nineties, as this 2003 piece by Slate’s Jack Schafer
documents.

The Post has an editorial
today which agrees that changes were necessary  but argues the
proposed restrictions on consulting and stock ownership are far too
harsh.  As the paper notes, the findings of the internal review appear to
support the position that Zerhouni may
have seriously over reacted.  Of course, it remains to be seen if anybody
will be convinced by  an internal review.

There’s been quite a fuss about the recent study showing that bankruptcy is frequently caused by high health care bills, or at least by the inability of those who are sick to return to work and pay off those bills. THCB contributor Anonymous wrote about her tough experience accessing care last November.  Now the bills are due and she finds herself on just that slippery slope. Here’s Anonymous story:

I was seen at the Alta Bates ER twice within a week for the same problem. Both times I received a form for the charity program. No one explained anything to me about two separate billing systems or that the charity program wouldn’t apply to the physician part of the bill. I initially needed help providing the proof required by the charity program. Alta Bates ignored my first letter in this regard, and I went through phone tree, transfer, and wait time hell to get to the right department to help me with the problem. When I eventually ended up with a financial counsellor, who was very helpful. She told me she could use  my prior year bank statements, and the charity care program then covered me 100%. I thought everything was wrapped up at that point.
A couple months later, I started receiving threat letters and calls from a collections agency. I called the financial counsellor and asked why I was being billed after I had been covered by the charity care program. She told me that there was a separate physician’s bill not covered by the charity care program. She also told me I had another outstanding bill from 2001(!) The 2001 bill is from a time when I was covered by insurance: I didn’t find out about that until it went into collections, either. But at that point I called my insurer, Blue Cross, and they took care of it. I haven’t heard about it since. Now Alta Bates expects me to remember my insurance information from 2001 to fix it when they were the ones who made the mistake of only applying my insurance information to one of my bills. I’m just boggled by that. Anyway, the counselor told me she couldn’t help me further at that point, and she gave me no guidance on how to proceed.
I went through phone tree, transfer, and wait time hell again, and I ended up at Berkeley Medical Group. I explained to them that I had qualified for the charity care program, no one had explained the two-bill concept or provided me with any alternate charity forms in the ER, and that I had been unaware that I had an outstanding bill until it had gone into collections. I was given the address of somebody in Washington State to write if I want to dispute the bad debt from 2001.The Berkeley Medical Group representative told me that they have no charity program and the fine print of the third bill warns it would go into collections. She did not seem to get what was wrong with the fact no one in the ER explains the fact there are two separate billing systems or explains steps indigent patients should take beyond giving them the forms for the charity care program. I asked her how I should proceed. She told me I had to deal with the collections agency now, and there was nothing she could do for me. I pointed out that the only thing adding a bad debt to the credit record of a person with no income would do would be to make it even harder for them to recover financially and be insured and/or able to pay such bills in the future. She told me that all I could do was call the collections agency.So, here’s where things stand now. I’m not going to call the collections agency. I went through this with the same agency in 2001 to deal with Alta Bates’ billing mistake, and I know this particular agency, American Capital, has a bad business reputation. I will only be setting myself up for threats and harassment if I call them. One amusing aspect is that the collections agency has been leaving messages on my answering machine: they don’t say who they are, but they give the collections case number and expect me to call them long distance! Anyway, I’m not going to deal with them.
I’m considering filing for bankruptcy. Whether I do that depends on whether I can take care of my student loans at the same time. My student loans might be exempt from a bankruptcy claim because they can always be deferred, but if I can get the loans taken care of that means that bankruptcy for hospital bills has larger ramifications for the U.S. financial system as a whole. I’m sure anyone who has to file bankruptcy for a hospital bill will take care of their other bills while they are at it. The question for me at this point is whether it does more damage to my credit rating to file for bankruptcy or simply ignore the collections agency notices. Which will fall off my credit record faster?  I’m also amazed that Alta Bates has been continuing a practice that’s bound to confuse anyone who comes to their ER. Because of the 2001 billing problem, I know that problems like this have been going on at least that long. Surely I’m not the only person who has brought up that patients aren’t being given all the information in the ER. I’m wondering if there isn’t a Patient’s Bill of Rights violation in there somewhere. Even if there isn’t, Alta Bates and Berkeley Medical  Group end up paying extra administrative costs to hunt down people who were simply confused by their billing system.

This type of foul up is very common.  A friend of mine who was well insured was sent to collections by a local medical center for a bill he’d already paid and was dismayed to find it reported as an unpaid debt recently on his credit report when he wanted to get a mortgage. And I personally just finished getting an unnamed insurance company to pay my final provider bill because they had miscalculated my deductible for surgery I had back last April. The move to more HSAs and forcing more people into dealing with a system that can produce bills from 5-10 seperate providers from one procedure is not exactly going to simplify matters. Horror stories like that of Anonymous’ are going to multiply.