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What Is Sustainable Health Spending?

Dec 29, 2011

By Charles Roehrig, Ph.D.

There is broad agreement that historical rates of increase in health spending are “unsustainable”, and we must therefore find ways to bend the health care cost curve. However, there is surprisingly little consensus – and not even much being written – about what growth rate would be “sustainable”? Defining sustainable growth and establishing a credible target is one of the top research priorities of our Center. We have put a lot of energy into providing more timely estimates of health spending and having a target for comparison is a key next step.

In this blog, the first in a planned series, I lay the groundwork needed to estimate sustainable health spending growth rates. I begin with a definition of sustainable health spending that I hope you will find intuitively appealing, even if it does not match your own perspective. I then identify key stakeholders affected by health spending increases and who, in the absence of the Affordable Care Act (ACA), would have their own particular sustainability thresholds. Next, I argue that under ACA, the federal government blunts the impact of health spending growth on most other stakeholders and, in so doing, focuses the sustainability question more fully on its ability to raise the tax dollars required to meet its ACA commitments.

Defining “sustainable” health spending

I consider the nation to have achieved sustainable health spending when the projected growth path of spending is within what the nation is willing and able to pay. Note that this definition introduces elements of choice into the determination of sustainability. If there is an absence of willingness to pay, the spending will be unsustainable even if there is ability to pay.

What the Healthcare Industry Can Learn From Technology Start-Ups

Dec 29, 2011• 8

By David Shaywitz

A few months ago, I heard a young design entrepreneur named Aza Raskin talk about his idea for a consumer health company, MassiveHealth, built around the concept of providing rapid feedback. For example, if you had a skin dye that faded a certain amount each time you took a dose of your antibiotic, you would be more likely to complete the full course.

Skip ahead not very far. Recently, MassiveHealth launched its first, free app (dubbed an experiment), called the Eatery. The idea is that you take a picture of your meal and rate its healthiness, which is then shared with other users. You benefit, as I understand it, by thinking more about your food and by getting input on your food from other users. What the company itself gets is not yet clear. They’ve shared some pretty maps of San Francisco and New York City showing where people are eating more vs. less healthy foods, and they’ve drawn some fairly general conclusions about how the supposed healthiness of our food changes during the day (good at breakfast, bad during the day, partial recovery at dinner).

At least as important, I’d imagine, they have an engaged group of users who seem (at least at this early stage) to be interested in interacting with the platform, and thus contributing to the development of the emerging data set; after only a week, more than one million food ratings were reportedly received.

The Boy Who Lived

Dec 28, 2011• 44

[youtube width=”475″ height=”300″]http://www.youtube.com/watch?v=tmlTHfVaU9o[/youtube]

YouTube: Hundreds of thousands of Internet users downloaded a shockingly powerful viral YouTube clip made by an Austin teenager shortly before his death. Eighteen year old Ben Breedlove, who suffered from hypertrophic cardiomyopathy, died on Christmas day.

See Also: This Is My Story (Part 2) The second part of Ben’s story.

And: Los Angeles Times story on Breedlove, refutes charges video is a hoax.

San Francisco’s Universal Health Plan Reaches Tens of Thousands, but Rests on Unstable Funding

Dec 28, 2011• 4

By Barbara Grady

Four years ago, San Francisco launched a grand experiment, becoming the first city in the nation to offer comprehensive health care to its growing ranks of uninsured.

Stitching together two-dozen neighborhood health clinics and an array of hospitals, the city bet that two reforms — emphasis on primary care and a common electronic enrollment system — could improve outcomes and buffer the city against soaring health care costs.Continue reading…

New Models for Market Access

Dec 27, 2011• 2

By Ulf Staginnus

I cannot resist writing one more time about the entire market access discussion currently ongoing everywhere, as I believe many of those numerous articles and reports are missing the point.

It is amusing, at least to me, to see the continued flood of articles, consultant presentations, blogs, congress announcements, workshops, summits, reorganizations, speeches, etc. all over the place, basically suggesting how the industry just needs to throw a few more people with fancy titles here and there, coupled with slight organizational changes, onto the problem and involve stakeholders and—guess what?!—actually talk to patients and perhaps even payers and all of a sudden, like Alice in Wonderland, everything will be good, after all.

The uncomfortable truth is, it won’t be. All this “noise” is only good for one thing, paying the bills of the consultants, which is fine, too, as I have been one myself so I can understand. But it will not address the problem the research-based pharmaceutical industry and its employees are facing. Without a substantial increase in R&D productivity, the pharmaceutical industry’s survival (let alone its continued growth prospects), at least in its current form, is in great jeopardy.

Digitizing Human Beings

Dec 26, 2011• 12

By Eric J. Topol, MD

Our day-to-day lives were reformatted when the consumer mobile wireless device era, beyond cell phones, was ushered in by iPods in 2001 and followed in short order by Blackberries, smartphones, e-readers, and tablets. Nurturing our peripatetic existence, we could immediately and virtually anywhere download music, books, videos, periodical, games and movies. Television is soon to follow. But these forms of digital communication and entertainment are a far cry from digitizing people.

This decade will be marked by the intersection of the digital world with the medical cocoon, which until now have been largely circulating in separate orbits. The remarkable digital infrastructure that has been built—which includes broadband Internet, cloud and supercomputing, pluripotent mobile devices and social networking― is ripe to provide the framework for a most extraordinary upgrade and rebooting of medicine.

When I was finishing my internal medicine training in 1982 the term “digital” in medicine referred exclusively to the rectal examination. Now, 3 decades later, there are 4 domains of what comprises digital medicine―genomics, wireless sensors and devices, imaging and health information systems. Each of these digital medical technologies are on exceptionally accelerated growth curves. In 2012, complete DNA sequencing of all 6 billion bases of a diploid human genome will be accomplished in 2 hours at a price well under $4000. Already DNA sequencing is having an impact in medicine for specific gene-drug interactions, targeting of cancer therapy by defining tumor driver mutations (comparing somatic versus germ-line DNA), and demystifying life-threatening idiopathic diseases. Just a few years ago wireless sensors got their start for consumers in the health and fitness space, with wearable accelerometers in running shoes, bracelets, necklaces or clips. Now a brain wave sensor can be used to continuously monitor one’s phases of sleep and wakefulness.Continue reading…

There Is an Incubator Bubble. And It Will Pop.

Dec 26, 2011• 6

By WADE ROUSH

In any market where the number of new businesses triples in the course of two years, you know that something unusual is going on. (And make no mistake—most venture incubators are businesses, founded and funded by people hoping for real returns, whether social, financial, or both.) You naturally begin to wonder whether a bubble is forming, in the classic sense of an episode of vertiginous growth disconnected from economic fundamentals such as market demand. And since bubbles are, by definition, unsustainable, you wonder what’s going to happen when they pop.

If you ask me, there is clearly an incubator bubble. Whatever your opinion about the existence of a bubble in the larger world of Internet startups—Sarah Lacy and Dan Primack offered interesting, opposing views on that this week—it’s hard to imagine that today’s tepid consumer and business markets have room to absorb all of the products and services offered by the hundreds of new startups that the incubators are now churning out each year.

It’s a given that only a few of the startups going through the incubators will strike it rich while the rest languish or die—that’s the nature of the startup game. What I’m saying is that without higher-than-normal success rates, many of the incubators themselves could find it difficult to stay in business.

Here’s why. Most of these operations are organized along the Y Combinator model: they provide startups with $15,000 to $25,000 in seed funding and about 12 weeks of mentorship and product development assistance, and in return they take an equity stake, usually around 6 percent. They profit when incubated startups get big and successful enough to be acquired. (As far as I know there isn’t a single example of an incubated company going public.) Doing the math, let’s say you’re the founder of an incubator and you fund 20 companies a year at $25,000 each, in return for a 6 percent stake. To achieve respectable returns on that $500,000 you laid out—let’s say a 3x return, not even figuring in your operating costs and the value of the time you put into mentoring the companies—you need one of your alumni companies each year to achieve an exit in the $25 million range (or two at half that, and so on). And that’s assuming your stake isn’t diluted by later funding rounds. It’s quite a gamble, and I just can’t see the economics being very compelling for any but the largest, best-funded, most prestigious incubators—i.e., Y Combinator and TechStars.

Uwe on premium support and vouchers

Dec 24, 2011

There’s a great post on the NY Time Economix blog from Uwe Reinhardt explaining the theoretical difference between premium support and voucher systems (and you thought they were the same thing!). Unfortunately it skirts the real problem that those of us playing along at home know too well. Either a well constructed premium support (Ryan done right), or a well constructed voucher/managed competition (Enthoven) system, a mixed public/private system (Germany, Starr, Reinhardt) or even a decent Medicare for all /Single payer system (PNHP, McCanne) needs to be designed holistically to have a chance of working–especially to ensure that all people are in plans that treat them all equally.Continue reading…

Mind the Gap

Dec 23, 2011• 22

By Stephen J. Downs

It’s a simple idea – show patients the notes that doctors write about them– but it’s also a dangerous idea … in the best sense of the word. It’s dangerous because the very idea forces a conversation and in the course of that conversation, some uncomfortable tensions surface. Jan Walker and Tom Delbanco, co-directors of OpenNotes, a project supported by the Robert Wood Johnson Foundation’s Pioneer Portfolio that enables patients to see their doctors’ notes via secure e-mail after a visit, published a preliminary set of results from their first study. Actually, it’s just a pre-study: they surveyed doctors and patients about their expectations of how the OpenNotes idea would play out. And what they found is fascinating – and uncomfortable.

Doctors and patients are clearly divided about the expected benefits and consequences of the OpenNotes intervention. On a wide range of possible benefits, ranging from a greater sense of control to increased medication adherence, doctors are more skeptical than patients. But what really jumps out are the responses to questions of whether patients would find the notes more confusing than useful, and whether the notes would make them worry more. The gap is dramatic. In each case, most doctors said “yes” while less than one in six patients agreed. Ouch. That’s a big gap and my sense is that we should be talking about what it means. From my perspective, it appears that many doctors are underestimating their patients and that this underestimation could lead to less patient engagement and ultimately poorer care. Call it a hunch.