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The Rise of the Hospitalists

Good for Healthcare?

Sarah Jones was an anomaly in contemporary healthcare.  Despite shifting alliances between physicians, hospitals, and insurance companies, she had been under the care of the same physician for over 20 years.  Over this time, patient and physician had gotten to know each other well and had developed a fine relationship.  Mrs. Jones had always assumed that, should she ever need to be admitted to the hospital, this relationship would pay big dividends, ensuring that her medical decision making would be based on long acquaintance and strong mutual understanding.

When the dreaded day came that she finally needed inpatient care, however, her hopes were dashed.  Her physician explained to her that he no longer sees hospitalized patients.  Instead she would be under the care of a team of physicians known as hospitalists.  When she arrived, the hospitalist on duty introduced herself and told her that she would be the physician responsible for her care, while colleagues would be responsible during off hours.  Unlike her regular physician, who would have been on hand only once or perhaps twice per day, the hospitalists would always be in house and ready to address her needs.

Mrs. Jones was surprised and disappointed to discover that her primary physician would not be involved in her hospital care.  She had always assumed that she would be able to rely on their longstanding relationship for counsel and support.  She imagined that if she were facing some really important decision, such as whether or not to proceed with a risky operation or how to manage her own end-of-life care, it would make a huge difference to know that she could count on a physician she knew well.  Instead her hospital-based physician was a complete stranger.

Mrs. Jones’ experience is far from unique.  In the past 15 years or so, medicine has seen the birth of hospitalists, a new breed of physicians who care only for hospitalized patients.  There are now over 30,000 hospitalists in the US.  From a patient’s point of view, such physicians offer a number of advantages.  In many hospitals, a specialist in hospital medicine is always on duty, day or night.  Moreover, because such physicians work only in the hospital, they are often more familiar with the hospital’s standard procedures, information systems, and personnel.

It is not difficult to see why hospital medicine might be so attractive to young physicians.  For one thing, it provides them with a high degree of control over their working hours.  They come on and off shift at regular times, and do not bear patient care responsibilities outside these hours.  In addition, they are usually employed by the hospital, which means that they do not need to attend to a host of practice management issues that self-employed physicians confront.  They can also focus on acute-care, in-hospital medicine, avoiding the challenges associated with long-term care of chronic-disease patients.

Some non-hospitalist physicians also find the rise of hospital medicine attractive. They do not need to travel to one or more hospitals each day to see patients, which takes considerable time and generates little revenue.  They do not need to work so hard at staying abreast of changes in hospital procedures and technologies, which often vary from institution to institution, as do requirements for acquiring and maintaining hospital medical staff privileges.  And finally, they can focus their energies on outpatient care, avoiding the more acutely life-threatening and complex situations associated with hospitalization.

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The Great American Health Care Divide

In 1883, the authoritarian imperial government of Prince Otto von Bismarck – who famously declared, “It is not by speeches and majority votes that the great issues of our time will be decided…but by blood and iron” – established national health insurance for Germany.

The rationale for national health insurance is as clear now as it was to Bismarck 130 years ago. A country’s success – whether measured by the glory of its Kaiser, the expansion of its territory, the security of its borders, or the well-being of its population – rests on the health of its people.

Serious illness can strike anyone, and seriously ill people, as a rule, do not earn much money. The longer the seriously ill are untreated, the more costly their eventual treatment and maintenance become.

Private savings, as a rule, can pay the costs of treatment only for the thrifty and the well-off. So, unless we adopt the view that those without ample savings who fall seriously ill should quickly die (and so decrease the surplus population), a country with national health insurance will be a wealthier and more successful country. These arguments were entirely convincing to Bismarck. They are equally convincing today.

On January 1, 2014, the United States will partly implement a law – the Affordable Care Act (ACA) – that will not establish national health insurance, but that will, according to projections by the Congressional Budget Office, reduce by almost one-half the number of people in the US without health insurance. Back in 2009, President Barack Obama could have proposed a program as comprehensive as the one initiated by Bismarck. Such a program could have allowed, encouraged, and made it affordable for uninsured Americans to obtain health insurance similar to what members of Congress have; or it simply could have expanded the existing Medicare system for those over 65 to cover all Americans.

Instead, Obama put his weight behind the complicated ACA. The reason, as it was explained to me back in 2009, was that the core of the ACA was identical to the plan that former Massachusetts Governor Mitt Romney had proposed and signed into law in that state in 2006: “ObamaCare” would be “RomneyCare” with a new coat of paint. With Romney the Republican Party’s presumptive nominee for the 2012 presidential election, few Republicans would be able to vote against what was their candidate’s signature legislative initiative as governor.

Thus, the US Congress, it was supposed, would enact the ACA with healthy and bipartisan majorities, and Obama would demonstrate that he could transcend Washington’s partisan gridlock.

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UC Berkeley’s Jaspal Sandhu Personalizes Health Care with Health 2.0 EDU

Jaspal Sandhu has used his role as an Associate Professor at Berkeley School of Public Health as well as his position as the Co-Founder of Gobee to reach numerous populations in order to improve health through innovation- and he’s at it again with Health 2.0 EDU in October. Jaspal will be leading a joint course with Berkeley Haas School of Business and Health 2.0 EDU as part of a three-day executive education course on digital health, a unique experience even for this expert:

EDU: The courses you teach on design and innovation at UC Berkeley are unique in the field of public health to begin with. What are you teaching now, and how will the upcoming Health 2.0 EDU/Berkeley course differ from your other graduate courses?

JS: I teach design and innovation for public health, including health care. The focus of my teaching is less on the innovations that already exist and more on how to innovate. The main course that I teach is called “Designing Innovative Public Health Solutions.” It’s a graduate-level, interdisciplinary, project-based course that brings together students from public health, the business school, the policy school, and engineering – with a smattering of others at UCSF. Digital health projects that have emerged from that course include a social paging solution for medical centers in the US and a text-messaging emergency response system for Libya. In my on-campus courses, we are trying to create leaders who will facilitate innovation in their careers. At the upcoming Health 2.0-Berkeley course, we’re already dealing with leaders. What we want to do is give these executives the ability to take the innovation process back to their organizations and teams, to help them create better services and products more quickly and cost-effectively.

EDU: How do you get consumers and patients to engage with new technologies?

JS: The key is to tap into the needs and values of your users. You need to talk to the people who will be using your technology. You need to know what makes them tick. People will be willing to learn a new technology if there is a strong motivation to do so. Witness how many people in their 70’s figured out how to use Skype, and now FaceTime, to talk to their grandkids in another city: In 2012, MetLife found that 12% of American grandparents were using Skype to communicate with their grandkids. That’s just Skype and that’s now considered old data. There are plenty of people in this group of Skyping grandparents – here I’m just talking about those who would not consider themselves to be tech-literate – who can’t do much else with a computer. It’s not because they can’t learn, it’s because they don’t have reason to.

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Is Health Industry Price Inflation Really At a Historical Low?

One hesitates to make too much of a single report, but the Altarum Institute’s July Report, “Health Care Price Growth at 20+ Year Low,” certainly commands one’s attention.  According to Altarum’s analysis, the health sector pricing trend ran at a 1.0 percent annual rate in May 2013, lowest since January of 1990.  What is striking about Altarum’s health care pricing trendline is that it has declined for the last three years in spite of an alleged economic recovery.

It also runs parallel to a subsiding utilization trend, suggesting that the health sector has been unable to offset reduced utilization with price increases.  Since the beginning of the recession, pricing has subsided from double the rate of the GDP deflator to parity, and it has closely tracked the deflator with only two deviations for more than eight years. Clearly, something more than the recession is at work here.

These trendlines confirm what this observer sees from his contacts in multiple sectors of the health industry:  a widespread and durable “top line flu”.  The growth in enterprise revenue for most health providers and manufacturers has been static (e.g. very low single digits or actually declining) over the last two years.  Most investor-owned hospitals, pharmaceutical companies, device manufacturers, and physician practices (pretty much everyone except the consultants and IT vendors) have reported both revenue stasis and earnings compression.

My economist friends point to rising consumer copayments as inhibiting price increases.  The Kaiser Family Foundation has reported almost a quadrupling of the number of covered workers in high deductible health plans (from 5 percent to 19 percent) since the end of the recession.  It is also possible that a disinflationary mindset has inhibited providers and suppliers from seeking outsized price increases to compensate for lost sales volume.  For suppliers, the marked decline of “physician preference” marketing has also hurt both sales and margins.

Hospital pricing. Performance of hospital prices will provide more fodder for those concerned about hospital consolidation pushing prices up.  On the one hand, overall hospital prices rose an annualized 1.8 percent for May 2013, fractionally higher than the consumer price index (CPI) at 1.4 percent.  However, when one strips out the “administered price” portion (Medicaid and Medicare), hospital prices to privately insured patients rose 4.8 percent annualized in May, nearly five times rate of health prices as a whole.  Altarum suggests that cost shifting might explain this significant disparity.  However, even this increase to private patients was not enough to raise overall health costs significantly.

Government payment to hospitals has trended lower for multiple reasons.   Many state Medicaid plans have cut hospital rates in the past several years to help balance state budgets.  And in addition to the ACA’s mandated reductions in hospitals’ disproportionate share payments and DRG updates, the sequester took a significant further bite out of DRG payments during the winter.

Since most hospital contracts with private insurers are multi-year, it’s difficult to argue that compensating upward revisions in private health insurance contract rates would yet be reflected in national economic statistics.  Moreover, not all hospitals are part of systems capable of exerting pricing power on private health plans.  Have-not hospitals have had their prices constrained by payer contracts, compensating for the effect of leverage by market hegemons.  We’ll have more evidence in a year to confirm or disconfirm the cost shifting/pricing power hypothesis.

There’s another indicator of a tougher hospital pricing environment.  According to the Advisory Board’s Dan Diamond, hospital employment has actually contracted in one-quarter of the monthly jobs reports from the Bureau of Labor Statistics since January 2009, including a 6000 person force reduction in May, 2013.  On balance, hospital executives would much rather raise rates than lay off staff, so the fact that the nearly unbroken decades-long expansion of hospital headcounts is faltering suggests a very difficult pricing environment for hospital services.

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My Family’s Obamacare

How will the Affordable Care Act affect my family and me? The answer, like the law itself, is complicated. There will be as many stories about health reform as there are families. But I’m confident that most of these stories will be good.

I say this both as a health-policy wonk, with my own health policy consulting firm, and as a husband and father. My wife and I live in Sacramento, California, and we have a five-year-old son. My wife also happens to have a pre-existing health condition. It’s nothing life-threatening but it’s just serious enough that she has been turned down for regular health insurance coverage. Up to a third of Americans face a similar issue, according to the Government Accountability Office.

Finding affordable, high-quality health coverage for my family has been, even for me, an “expert” in the area of health insurance, very complicated and frustrating. So I work with a health insurance broker to understand my options.

Currently, we have “COBRA” coverage for my wife, a type of health insurance you can get for 18 months after you’ve left employer-sponsored health coverage and that is available regardless of health history. It is expensive, though, costing us $655 per month. Then, since I don’t have an employer to provide coverage, I buy a separate policy in the so-called “individual market” to cover my son and myself. That costs $482 per month.

So before we get to any out-of-pocket medical expenses, we’re shelling out $13,644 per year in health insurance premiums. That’s actually quite a bit less than the average premium cost of $18,430 for people with employer-sponsored insurance (as calculated in the Milliman Medical Index of 2013), but the difference is that people with employer-sponsored insurance don’t have to take out their checkbook and pay the entire bill, since their company covers part of it and takes the rest out of their pay.

Our coverage is good for what we pay, but not extraordinarily so. It’s a pair of similar PPO (Preferred Provider Organization) products through Blue Shield of California that have a fairly broad network of doctors and hospitals.

Will my life get less complicated and frustrating on January 1, 2014, the day that health reform coverage starts? I believe it will.

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Managing Physician Skepticism About the Affordable Care Act

Let’s play a game. Today we are going to pretend you are a Vice President for Medical Affairs, or a Chief of Staff, or a health system CEO about to announce a collaboration with a major health insurer like CMS or a regional Blues Plan. You’ve done your homework, read the journals, listened to the experts, anticipated the future and haven’t applied enough skepticism in reading all those pro-EHR and pro-bundled payment posts on THCB.  You really believe payment reform and the EHR are the way to go.

You’ve called a meeting of your organization’s physician staff – the professionals you are counting on, caring for all those patients – and your job is go to the front of the auditorium and convince them that the success of your new venture relies on lowering health care costs with new payment arrangements that align incentives, in tandem with the launch of a new EHR.

Armed with a 30-slide PowerPoint filled with the latest consultant nostrums, you launch into your presentation.  The physicians listen in respectful silence.  After a few easy questions, there’s always that one doc in the back of the room who uncomfortably points out that the evidence about the ability of payment reforms and the EHR ability to optimize costs is uneven and that organization is making a huge bet.  Many of the docs in the room nod in agreement.  That’s when you realize that the insights of all those economists, policymakers, politicians and bloggers mean nothing if you don’t have the physicians on board.

That’s the real message behind this telling survey that was just published in JAMA.  While the overwhelming majority of physicians agreed that they have responsibility for health care costs, higher percentages felt hospitals, health systems, insurers, pharma, medical device manufacturers and personal injury attorneys had a greater mandate.  In other words, everyone is responsible, but the physicians’ duty is superseded by their ethical obligation to advocate for their patients regardless of cost.  The survey also showed that not all physicians are convinced that the electronic health record (74%) is a cost-reducing panacea, while a minority felt readmission penalties (41%) and bundled payments (35%) were likely to lead to lower costs.

So what do you do? How do you convince physicians to get on board and make this thing work? What can you possibly tell them to convince them that they should set aside their preconceived notions about the grand adventure you are all about to engage on is a worthy one?

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Jennifer Chatman Helps Welcome Health 2.0 EDU to UC Berkeley

On October 3rd, Health 2.0 EDU will be co-hosting an innovative three-day executive education course on digital health with UC Berkeley. In preparation, Senior Director of Academic Programs, Robin Friedlander, interviews professor Jennifer Chatman, the Cortese Distinguished Professor of Management at Berkeley’s Haas School of Business, on what it takes to be a leader in health care today:

RF: Why is organizational leadership so important in developing the new health care landscape?

JC: Organizations cannot be effective without effective leadership. Achieving collective goals requires that leaders ensure that people are prioritizing things similarly.

RF: Your courses at UC Berkeley’s Haas School of Business focus on organizational and high performance cultures. Can you briefly explain what these are and how they develop?

JC: Culture is a leadership tool and, as such, has three criteria: first, the most effective cultures are strategically relevant; they foster the behaviors that will make it more likely that the organization will achieve its strategic aspirations. Second, the culture is strong; people agree, and care intensely, about upholding cultural norms. And third, the culture is adaptable over time.

RF: How do you expect your course on October 3rd with Health 2.0 EDU to differ from your management courses at UC Berkeley’s Haas School of Business?

JC: [The course] is meant for working executives in the health care field; real issues, real problems will be discussed based on participants’ experiences.

RF: Do you have a take home message for the health technology executives attending your upcoming UC Berkeley course with Health 2.0 EDU?

JC: That culture is deliberate, not something that simply happens to an organization.

Registration for the executive course ends September 1, 2013. The full agenda is available here.

The Critics Are Wrong About IPAB

For Medicare, this has been a summer of good and bad news. On one hand, the program’s costs continue to rise remarkably slowly. So far this fiscal year, they have gone up by only 2.7 percent in nominal terms, the Congressional Budget Office reports.

On the other hand, opposition to the Independent Payment Advisory Board — created as part of the Affordable Care Act — continues to mount. And opponents continue to mischaracterize the whole point of the board.

What they seem not to understand is that the board is needed mostly so that that Medicare can continue to encourage slower growth in costs.

One reason costs have been rising so slowly is that systems for paying hospitals and doctors are changing. We’re moving away from the old fee-for-service plan and toward paying for value in health care — and we’re making the shift more rapidly than expected.

Redesigning the payment system is a fundamentally different approach to containing costs. The old way was to simply slash the amounts that Medicare pays for services. And here is where the criticism of the Independent Payment Advisory Board becomes somewhat Orwellian.

The point of having such a board — and here I can perhaps speak with some authority, as I was present at the creation — is to create a process for tweaking our evolving payment system in response to incoming data and experience, a process that is more facile and dynamic than turning to Congress for legislation.

Medicare Experiments
In particular, as Medicare experiments with accountable care organizations, bundled payments and other new strategies, the agency will inevitably need to make adjustments. Questions will come up, such as: How should the payments to doctors, hospitals and other providers be changed to reflect what is learned about the quality of care they provide? How much should the penalties or bonuses be? Is it better to have hospitals face all the costs associated with patient (as in an accountable care organization) or only the costs incurred during a specific episode of care (as in bundled payments)?

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Health 2.0 2013 Fall Conference


Health 2.0’s 7th Annual Fall Conference is Sept. 29-Oct 2. That’s only eight weeks until the LARGEST showcase in new health care tech with over 150 demos and 200 speakers! More demos, more tightly curated panels, and more networking.

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Keynote addresses for this year’s conference: Lt. Governor of California Gavin Newsom and Bruce Broussard, CEO of Humana.

Other speakers include:

Neal Sofian – Premera  | Pete Hudson – iTriage

Christine Robin – BodyMedia  | Jeff Tangney – Doximity

Bill Davenhall – ESRI  |  Peter Lee – Covered California

Lloyd Dean – Dignity Health  |   Colin Hill – GNS Healthcare

Farzad Mostashari – ONC  | Joan Kennedy – CIGNA

Ram Gopalan – Argusoft  |   Susannah Fox – Pew Research Center

Sandy Smolan – Luminous Content  |   Peter Tippett – Verizon

Jane Sarasohn-Kahn – THINK-Health  | J.D. Kleinke – Medical Economist & Author

Technology demos from:
Lively | QMedic | Nuehealth |Passport Health Communications | PulsePoint | WelVU | Qpid.me | Nuance | Medicast |Health Recovery Solutions | VSee, Kinsa | Blue Marble Game Co. | Simplee | Medivizor | Zensorium | GoBlue Labs | GetHealth | Recovery Record | WellWithMe | LoseIt! | HeartMath | HopeLab | PatientsLikeMe | Omada Health | GoodChime | CogCubed | RetraceHealth | Big White Wall | Crescendo Bioscience | CyberDoctor | Amplify Health | Caresync | Syapse | AbiogeniX | Argusoft | HopeLab and more (to be annouced soon).

To allow for more demos, we’re also offering an extra demo stage –new to this year’s conference- in the Exhibit Hall.

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Why a New Healthcare Technology Designed to Cut Costs and Increase Efficiency Probably Won’t Put Anesthesiologists Out of Work

The Wall Street Journal recently contacted me regarding an upcoming article on Sedasys, the new gadget that is supposed to be able to infuse propofol by computer while monitoring vital signs.

If you’ve read anything I’ve written previously, you’ll know that I am NOT a big proponent of technology as a means of “improving” patient care. To me, the more technology you put between the patient and the caregiver, the less medicine you’re practicing, and the more data-entry and computer programming you’re doing.

Sedasys is designed specifically to administer propofol.  Propofol is a milk-like substance that produces a range of effects from sedation to general anesthesia.  For sedation you just use less,  for general anesthesia you use more.  Its very quick onset and very quick recovery make it great for outpatient sedation.  It has to be given in a continuous drip because its effect goes away so fast.  GI docs love it because its so effective.  I suspect they also love it because propofol comes with an anesthesiologist to give it.

The only problem is the one Michael Jackson encountered: it has this pesky side effect of causing you to stop breathing.  And you can’t tell by looking at a person how much will sedate them and how much will make them stop breathing.

A little old lady with a million health problems might sedate at, say, 40 mg and stop breathing at 60 mg, while an 19-year-old could probably take 150 mg and still be fighting you.  It’s not necessarily weight-based.

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