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Hospital Price Dispersion

A study by the Center for Studying Health System Change that will be released today shows that hospitals receive different prices for treating the same diseases. Center President Paul Ginsburg says this about the findings:

“The variation in hospital prices found in this study are (sic) inconsistent with highly competitive markets—at least for markets outside of health care,” said HSC President Paul B. Ginsburg, Ph.D.,

Hospital markets may not be highly competitive, but this argument is silly. One might as well say “The variation in automobile prices is (not “are”) inconsistent with highly competitive markets.” But one would be wrong in either case.

Vertical quality differentiation (i.e., some sellers are better than others) generates price dispersion in competitive markets. It is only in the most basic treatment of competition — in the first week of an intro economics course — that vertical differentiation is ignored. Observed price dispersion is not incompatible with competition.Continue reading…

Rating the Raters: Physician Compare

Let’s say you’ve enrolled in a new health insurance plan and need to find an internist who participates. How do you decide which doctor to choose? My (long deceased) grandmother made her choices by using the following criteria: She looked for a male doctor with a Jewish-sounding last name who graduated from an American medical school—preferably one located in New York City. Nowadays her narrow (and culturally biased) criteria would have excluded some of the most esteemed practitioners around.

If you are like most people, you don’t depend on your grandmother’s advice to find a physician, but rather ask friends, colleagues or other doctors for recommendations. But taking one person’s experience with an internist or surgeon as a signal that he or she is “really good” is still far from the optimal way to choose a practitioner.

Over the years, several commercial websites like HealthGrades and Angie’s List have cropped up that provide such consumer-friendly information as the distance a doctor’s office is from the patient, and whether foreign languages are spoken there. They usually include ratings that reflect consumers’ personal experiences with the practitioner. For people who want to dig deeper, most state medical boards collect data that can be searched to find out where your doctor went to medical school, where he did his residency and what board certifications she has. In some states you can also search to see if the doctor in question has received disciplinary action or been sued for malpractice.

This is a lot of on-line legwork for the average person—a task that even professionals can find difficult. Chip Amoe, assistant director for federal affairs at the American Society of Anesthesiologists told a group recently, “When I tried to go find a primary care physician, I couldn’t. You know, it was very difficult. I had to go on several different Web sites to be able to find [one].”

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Cousin Jimmy Syndrome

I have great respect for my colleagues in the IT industry.   It’s a challenging profession that requires a mixture of technical knowledge, people skills, and the emotional stability to deal with customer dissatisfaction when technology fails.

However, there’s a downside to being an IT professional.  No matter how much expertise you have or what your reputation may be, many customers will not be able to distinguish between a polished industry expert and a self-promoting IT groupie.

I call this the “Cousin Jimmy Syndrome”.

Here’s how it happens.  You join a meeting to discuss a major IT project.  You talk about issues such as security, disaster recovery, change management, training, and support.

Then someone says, “Oh yeah, we’ve got ‘Cousin Jimmy’ doing that.”   Or Bob who lives in his parents’ basement.   Or Carol who knows how to use Excel and serves as the go to technology guru.

Unfortunately, when Jimmy, Bob, or Carol have an opinion, their colleagues trust them over you, since professional IT organizations may appear less nimble, less focused, and less accommodating than dedicated local experts.

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Antibiotic Resistant Bacteria in Hospitals: A Time for Action

Every few years there are reports of antibiotic resistant microbes that prompt a series of predictions about “the end of antibiotics.”  It happened in the 90s with multi-drug resistant tuberculosis and then again earlier this decade with methicillin-resistant Staphylococcus aureus or MRSA.  It’s happening again with carbapenem-resistant Enterobacteriaceae or CRE. Predictably, over time these bacteria have become resistant to more and more antibiotics.  Almost just as predictably, they could be treated by a category of powerful antibiotics known as carbapenems – until now.

Today, 35 states have reported cases of CRE infection to the Centers for Disease Control and Prevention in Atlanta. And they are dangerous. In a recent study of almost 100 cases, more than a third of the patients died from the infection.  The concern over these bacteria is compounded by the fact that there are no new antibiotics to treat them coming anytime soon.  Most experts agree that even in the most optimistic scenario it will likely be about 10 years before effective new drugs are developed.  A variety of efforts are being debated to speed the development of new antibiotics, but these discussions often overlook one critically important issue.  One of the reasons our current antibiotics are losing their effectiveness is because we don’t use them properly.  Studies have shown, repeatedly, that up to 50% of antibiotic prescriptions are either unnecessary or inappropriate – a statistic that is disappointingly consistent across both in-patient hospitals and out-patient clinics.  Not only does this overuse reduce the effectiveness of our current antibiotics, it threatens the utility of any new antibiotics that come along in the future.

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S.M.A.R.T. Objectives: An Essential Step in Strategy Formulation

We are often asked to weigh in on organizational strategy when the proverbial “house is on fire” and a client’s business is experiencing challenges. Our first question to the CEO and his/her staff once we begin our consulting journey is simply, “what is your objective?” Many times there is uncomfortable silence, or clients offer admirable and ambitious objectives that are not quantifiable. Things like “we want to be the high quality provider” or “we want to delight our customers.” In one instance a CFO told us “I’ll worry about the financial objective later, I want to talk strategy!”

Aspirational and inspirational rhetoric is valuable in many contexts. Leadership arouses energy and enthusiasm with aspirational declarations from the podium. And Mission and Vision statements are appropriately fraught with statements that reflect aspirations and commitments to what we want our organization to “do and be.” That’s fine. What’s not fine is when we confuse these things with business performance objectives.

Needless to say, with no clear objective, there can be no clear strategy. When there is no clear S.M.A.R.T. objective, an organization has difficulty deciding how to align activities and resources in ways that will result in achievement of that objective. For example, “to be the Quality Provider” is much less clear than saying “by December 31, 2011, we will be in the top 15% of VHA Hospitals in Employee Satisfaction Scores.”

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Health Reform Won’t Fix the Real Problem: Unemployment

While the effects of persistently high unemployment have surfaced in the shape of reduced consumer spending, shrunken tax rolls and a host of social problems, there is yet another harsh reality lurking in the shadows. Hospitals, already in precarious financial positions, are seeing their most profitable source of revenue fade away. Should the situation continue, even darker days for hospitals will surely be in store.

More than 150 million people in the U.S. rely on employer-sponsored health insurance to pay for the bulk of their medical costs. One of the more credible criticisms of health reform is the potential backlash against the employer pay-or-play provisions in the legislation, which could throw millions of today’s insured off their employer plans and into the streets with the chronically uninsured. Even if this did not occur, or at least not to a market-moving degree, it would be small recompense, literally, for hospitals relative to the boogeyman that no political party can legislate or filibuster in or out of existence at will: unemployment. Hospitals in our country rely on the privately insured and better-paying patients for approximately 35 percent of net revenue. Given the already compressed profit margins in the hospital industry, any deterioration in the supply of its best customers could seriously threaten the financial solvency and operational viability of many hospitals across the country. Health reform will not prevent this from happening. Reform targets the un- and under-insured and provides only a base level of coverage (Medicaid), coverage that traditionally add nothing to hospital margins and in many cases erode them.

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HUB’s List

1). CELL PHONES DON’T CAUSE CANCER

Despite ample scientific evidence to the contrary much buzz continues about cell phone usage causing brain cancer. Why is that ? A recent review in Scientific American magazine points out how hard it is to prove a negative. I am reminded about the story of the English farmer spreading purple dust over his fields last year. When asked why he did that he replied “To keep the lions away”.  The questioner pointed out that there had been no lions in England for at least four centuries. “Works pretty well doesn’t it,” was the proud rejoinder.

A $24 million study (2) of 12,000 regular cell phone users, half of whom already had brain cancer, found no correlation between cell phone use and the two most common brain tumors. A recent article in Skeptic magazine stated that the non-correlation was because,  as my oldest son the engineer often says to me, “It’s just physics.” X-rays and gamma rays can cause cancer because their radiation energy can disrupt chemical bonds inside cells, about 480 kilojoules per mole (it’s just a physics energy term). A cell phone generates radiation of less than 0.001 kilojoules per mole. Whatever kilojoules per mole are, it is clear that cell phones don’t generate very much of them; no where near enough to disrupt chemical bonds. The article’s author notes that probably the only way to hurt someone’s brain with a cell phone is to throw it at his/her head. I would add that since HPV (a virus) is associated with cervical cancer and is more apt to be present in sexually active women, I guess you could cause cancer with a cell phone by sexting!

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Hospital Discharge Without a Net

By the time I reached the sixth day of my hospitalization for stomach cancer surgery, I was antsy to go home and I quizzed each nurse and physician who came into my room about what must happen for me to be liberated the following day. Their responses were consistent: my surgeon would visit in the morning and write orders for my release.  Then I would have a comprehensive discussion with my nurse about my discharge plan, after which I could leave.

I was pretty curious about getting that discharge plan.  The Patient Protection and Affordable Care Act raised the stakes for hospitals to reduce high readmission rates and new data on those rates are available.  The rates and approaches to reduce them through improved discharge planning are the subject of news reports, journal articles and conferences. And I, a patient in a modern, quality-conscious hospital, was going to experience this process myself!

Here’s a rough transcript of my discharge discussion:

Nurse: Good news!  The orders came through!  You can go home.

Me: (in the corner untangling wires from my cell phone and iPod chargers) Wonderful.  What do I need to know?

Nurse: Here are a couple prescriptions for pain medication.  Don’t drive if you take it.  Call your surgeon if you have a temperature or are worried about anything.  Go see your doctor in two weeks.  Do you want a flu shot? I can give you one before you leave.  If you need a wheel chair to take you to the door, I’ll call for one.  If not, you can go home.  Take care of yourself.  You are going to do great!

That was it: 8:45 a.m. and I could leave.

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EHRs in Surgical Practices

I was recently asked to offer advice about implementing EHRs in surgical practices.   Here are the lessons learned from our Massachusetts EHR rollout experts.

1) . Surgical practices are challenging in general because they frequently use dictation and the most obvious benefits of EHRs do not apply to them.  They do not have substantial amounts of structured data to enter and they do not have a high fraction of recurring patients so a large fraction of records are “new” records. The highest benefit areas for them require interoperability, which takes time to accomplish. A significant fraction of the information they need for documentation comes from hospital operative notes, referrals/consults are the biggest element of workflow, and they rely on electronic lab and imaging test results.

2) . The most successful workflow change approach requires shifting more responsibility to mid-levels so that basic structured data entry (like vitals, history, etc) and billing related entry do not fall on surgeons who can be resistant to doing that type of documentation.  Unfortunately shifting practice roles/responsibilities is not easy.

3) . Working with the practice to build structured procedure templates in advance of go-live and setting up voice-recognition to allow surgeons to continue to dictate are key workflow/adoption steps.

4). Some EHRs such as eClinicalWorks have templates for Operative Notes as well as SOAP notes, which are key to EHR adoption.

5). Interoperability should be implemented as quickly as possible:  diagnostic results delivery (especially imaging results) and hospital document push (operative notes, discharge summaries) should be  integrated into workflow during implementation.

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