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Above the Fold

ACOs and the Looming Antitrust Crisis

Oct 14, 2010• 2

By DAVID DRANOVE

The Federal Trade Commission recently held a day-long workshop focusing on Accountable Care Organizations. ACOs will vertically integrate hospitals and doctors and, in the process, achieve what previous incarnations of vertical integration could not. Let’s forget about whether ACOs will actually fulfill the dream of efficient healthcare delivery and focus on the FTC angle – will the creation of ACOs require the creation of provider market power and should he FTC therefore look the other way?

Many health economists have documented the perils of provider market power. Some of my own research has been instrumental in turning the tide against providers, whose monopolizing tendencies used to get a free pass from the courts. But as policy makers move ACOs to the fore, providers are hoping to sweep antitrust under the rug.

The latest salvo comes from the AHA, which last week released a study challenging two recent studies of hospital market power and then strains to connect their findings to ACOs. The AHA report goes a bit overboard in its criticism of these studies. One study consists of little more than anecdotes and should not be criticized for being anything else. The other study is more complex and the criticism is equally complex, mostly along the lines of “if you had measured things slightly differently, your results would have been slightly different.” The AHA report would have readers believe that these two studies represent the entire body of knowledge about hospital mergers. Having summarily dismissed them, the argument against FTC enforcement would seem complete.

The True Health 2.0 Unmentionables

Oct 14, 2010• 3

By MICHAEL MILLENSON

At the recent Health 2.0 Conference, an unusual session highlighted the health importance of such “unmentionables” as job stress, marital worries and sexual dysfunction. However, despite the moderator’s inexplicable pride in a panelist’s mention of “vagina” – a topic certainly not lacking for Internet attention, albeit under more colloquial synonyms – the truly unmentionable subject was not sex, but the link between social class and health.

Unlike sex, talking openly about age and class distinctions makes most Americans squirm uncomfortably. Still, a number of speakers showed they understood that one of Health 2.0’s biggest challenges is proving itself useful to the population most in need of its help.

To start with, that means the elderly. Age brings an increased susceptibility to disease: half of Medicare beneficiaries are receiving care for one of six chronic conditions. Similarly, income is one of the most powerful predictors of health status. Those in the bottom 80 percent of adult income earners have an adjusted life expectancy almost 6 years shorter than those in the top 20 percent.

From that population perspective, two presentations stood out. The first was the partnership between Geisinger Health System and dLife. The second, for very different reasons, was the unveiling of Sharecare.

Republican Economics as Social Darwinism

Oct 14, 2010• 27

By ROBERT REICH

John Boehner, the Republican House leader who will become Speaker if Democrats lose control of the House in the upcoming midterms, recently offered his solution to the current economic crisis: “Liquidate labor, liquidate stocks, liquidate the farmer, liquidate real estate. It will purge the rottenness out of the system. People will work harder, lead a more moral life.”

Actually, those weren’t Boehner’s words. They were uttered by Herbert Hoover’s treasury secretary, millionaire industrialist Andrew Mellon, after the Great Crash of 1929.

But they might as well have been Boehner’s because Hoover’s and Mellon’s means of purging the rottenness was by doing exactly what Boehner and his colleagues are now calling for: shrink government, cut the federal deficit, reduce the national debt, and balance the budget.

And we all know what happened after 1929, at least until FDR reversed course.

San Francisco 2010: First Life Research at Health 2.0

Oct 14, 2010• 1

By Bianca Grogan

In the coming days and weeks we’re going to start rolling out a lot of video from last week’s Health 2.0 Conference held in San Francisco, CA on October 7-8, 2010. There is a ton of material to show you. But we’re going to start with one of the more remarkable demos at the conference. This is Gideon Mantel, Co-Founder and Chairman of First Life Research showing his company’s search capabilities which are able to comb millions of user-generated posts and comments to spot emergent trends in health experiences. His two examples are early detection of side effects in pharmaceuticals, but when you understand what they are doing, you’ll be amazed not only at the technology but also at the potential for converting messy narrative into actionable information.

Tugging on Superman’s Cape

Oct 12, 2010• 6

By BOB WACHTER, MD

Several years ago, I spoke at Baylor College of Medicine in Houston, where Michael DeBakey, the legendary heart surgeon, was master of the universe for nearly half a century. I heard lots of DeBakey stories during my visit, but one in particular really stuck with me. “A few years back,” someone told me in a voice of hushed reverence usually reserved for descriptions of flawless beach days and single malt scotch, “he performed 16 open heart operations in a single day.” This was clearly intended to impress, but all I could think was, “Boy, I wouldn’t want to be patient #16.”

Lacking any information to help us understand when fatigue trumps even legendary prowess, such monumental tales of endurance can take on Man of Steel proportions. But a recent study in the Journal of the American College of Radiology may be the start of efforts to trim Superman’s cape.

Researchers from the Universities of Arizona and Iowa observed radiologists as they reviewed a handpicked set of 60 bone x-rays, half with fractures and half without. As their eight-hour workdays wore on, the radiologists’ accuracy fell by an average of 4%, with equal drops in sensitivity (missing a true fracture) and specificity (incorrectly calling a fracture when there was none). The degradation in performance was statistically significant.

First Bend in the Health Care Cost Curve

Oct 12, 2010• 14

By PAUL LEVY

Recent trends in radiology imaging portend a dramatic and rapid reduction in this segment of a hospital’s business plan. Even before capitated (or global) payments have come into full play, there has been a large reduction in the number of some types of imaging studies in hospitals.

Our Chief of Radiology summarizes our experience — common to other hospitals as well — and provides some of the reasons.

The biggest hit has been in CT, the modality we are most dependent on for revenue. We are about 10% down in CT cases from last year, due to a combination of patient and physician fears about radiation exposure, more prudent ordering of studies by physicians, leakage out of the medical center, and the introduction of physician incentive programs (to minimize the amount of imaging) by some insurers.

Also, and very surprising, we have not seen an upswing in ultrasound or MRI to match the CT volume drop. We have, however, seen an increase in the number of patients arriving with their scans on CD ROMS having been imaged at other lower priced vendors. We don’t bill for these interpretations even though we are frequently asked to reinterpret the studies for our clinicians, and BIDMC is paying to store these images on our PACS systems.

By the way, this occurred while our overall patient volume increased during the same period.

The result of these trends will be to reduce the number of radiologists working in hospitals, and there will also probably result in a reduction of salaries for this physician specialty.

Paul Levy is the President and CEO of Beth Israel Deaconess Medical Center in Boston. Paul recently became the focus of much media attention when he decided to publish infection rates at his hospital, despite the fact that under Massachusetts law he is not yet required to do so. For the past three years he has blogged about his experiences in an online journal, Running a Hospital, one of the few blogs we know of maintained by a senior hospital executive.

Northwestern Memorial Hospital Faces a Brave New World

Oct 11, 2010• 19

By David Dranove

If you have read my earlier blogs, you know that I am writing a book about the organization of healthcare delivery. A recent story in the Chicago Tribune reminds me that I need to keep my nose to the grindstone. The article told of changes underway at Northwestern Memorial Hospital. In order to prepare for new payment models, the medical staff and hospital want to create something along the lines of an Accountable Care Organization. The ACO will accept an “all-in” fee for treatment of specific conditions. The ACO makes money if it can keep costs under the fee and receives bonuses if quality objectives are met. The ACO model, or versions of it, have floated around for some time, and prepayment is certainly not new. What is new is that payers will now prepay for all costs associated with episodes of care, as opposed to prepaying hospitals for inpatient stays, or prepaying primary care physicians for a year of primary care.

The ACO model tries to better align the payment modality with the “product” that patients would naturally purchase. This should, in theory, lead to a matching of incentives with production. Hospital prepayment leads to a shift to outpatient care. Primary care physician prepayment leads to too much hospital care. Episode of illness prepayment should eliminate these gaming incentives.

Northwestern Memorial and its medical staff still face a dilemma. Should they create a new third legal entity to accept the prepayment, or should the prepayment go directly to the hospital or medical foundation? More importantly, should the hospital and medical foundation become partners in the new venture, or, more radically, unite into a single entity without creating the new entity? Healthcare executives have not always approached this question in the most thoughtful manner, as this short film painfully shows. (Painfully funny if you approach it with the right mindset.)

Integration has many positive connotations, and executives who create new integrated organizations can usually keep their boards at bay. This may explain why so many executives are eager to integrate. But integration comes with numerous challenges. It will take an entire book to make this argument clear, but consider the following two questions. First, what happens when physicians switch from being entrepreneurs to being employees? Second, accepting all-in capitated payments turns the ACO into a de facto insurance company. Will the ACO have the capabilities to be an effective insurer? I hope that Northwestern Memorial does not face the future with its eyes wide shut. Many hospitals have fared quite poorly by jumping on the integration bandwagon without understanding the risks.

David Dranove is the Walter McNerney Distinguished Professor of Health Industry Management at Northwestern University's Kellogg Graduate School of Management, where he is also Professor of Management and Strategy and Director of the Health Enterprise Management Program. He has published over 80 research articles and book chapters and written five books, including "The Economic Evolution of American Healthcare and Code Red". He has a Ph.D. in Economics from Stanford University.

The Massachusetts Connector: Success or Just a PR Coup?

Oct 11, 2010• 13

By ROGER COLLIER

With the passage of insurance exchange legislation in California, and the release of a template for state exchange statutes by the National Association of Insurance Commissioners, many state eyes are turning towards the only existing exchange comparable to that required by PPACA: Massachusetts’ Connector.

The Connector, which offers Commonwealth Care subsidized coverage for those with incomes below 300 percent of FPL but not eligible for Medicaid, and Commonwealth Choice private plans for other families and individuals and small employer groups, has been touted as a major success by current and former Commonwealth officials and many national reform advocates.

But, after four years of operation, just how successful has the Connector really been? Has it simplified health plan choice and enrollment, increased the number of insured, reduced marketing costs, created competition, or driven down premiums? It turns out that the answers are far less positive than the Connector’s boosters have admitted.

HAS THE CONNECTOR SIMPLIFIED PLAN SELECTION AND ENROLLMENT?

For some, at least.

For the 33,000-enrollee unsubsidized CommChoice program the answer is yes. Health plan selection and enrollment for the seven plans (with six levels of benefits each) is directly available via the Connector website, with simple well-designed screens and navigation, and easy comparison of alternatives. Even so, only half of thepost-reform non-subsidized insured have chosen coverage via CommChoice.

Letting the Data Flow, Part One

Oct 11, 2010• 3

By JOHN MOORE

Making clinical data liquid permeated a series of events I attended last week during Health Innovation Week in San Francisco. Monday and Tuesday found me at the HIE/REC conference. Wednesday was HealthCamp at Kaiser-Permanente’s Garfield Research Center (KP was extremely gracious in hosting this event and the opportunity to get a tour of the facilities prior to event kick-off was great). The week concluded with the annual and well-orchestrated Health 2.0 conference.

This first post will focus on the HIE/REC event as it was quite distinct from the other events: smaller audience, more staid, dominated by government officials and tied at the hip, for good and bad, to the existing healthcare system infrastructure.

The HIE/REC conference was an odd event with attendance hovering around 200 or so attendees. The event was focused almost entirely on what the States are doing with the federal funds coming their way to establish Regional Extension Centers (RECs) whose main objective is to get priority primary care physicians (PPCPs) to adopt and meaningfully use a certified EHR. Now, having been to this event and heard many of the State REC initiatives that are now underway via this program, sad to say that my original opinion has not changed. Rather than picking preferred EHRs and assisting with deployment, these RECs may be better off just helping to these PPCPs understand exactly what the HITECH Act is, what are their options, what questions to ask of a vendor or service provider and leave it to EHR consultants and vendors to take it from there.

Physician Report Cards: Don’t Shoot the Messenger

Oct 11, 2010• 6

By JOHN R. MORROW

There is a BIG difference between the popular consumer/physician matching Websites such as: Vitals.com, RateMDs, Angies List, Healthgrades, Zagat and UCompareHealthcare (a NYTimes property), and the other initiatives in place to monitor physician performance as driven by hospitals, government and other payers and health plans. Soon, these differences will be merging with the more complex score cards from hospitals joining forces with the consumer tools.

OPPE (Ongoing Practice Performance Evaluation) and FPPE (focused Practice Performance Evaluation) are initiatives set in place by The Joint Commission (TJC), an arm of the American Hospital Association that accredits health care organizations. These initiatives are coming main stream to provide structured and frequent review of a hospital’s physician personnel. There is nothing new about these initiatives, (TJC has always been a follower in health care business intelligence), but soon ongoing reporting will be required by all and supplied by a variety of experienced commercial firms.

Private enterprise has been helping hospitals benchmark, profile and rate physicians on a broad spectrum of metrics relevant to specific acute service lines for decades. Of course mortality, length of stay, risk-adjusted complications rates, patient safety events and indicators, patient satisfaction, and a long list of Core Process Measures have all been part of that analysis. Progressive hospitals have been sharing this information with physicians, and for the most part physicians have accepted that the profiling analytics have done a good job of educating them on their performance. Medical Evaluation Committees have their hands full with information to help credential and reappoint physicians to hospital privileges, and a more informed dialog has been fostered.