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Why “free market competition” fails in health care

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In trying to think about the future of health care, thoughtful, intelligent people often ask, “Why can’t we just let the free market operate in health care? That would drive down costs and drive up quality.” They point to the successes of competition in other industries. But their faith is misplaced, for economic reasons that are peculiar to health care.

More “free market” competition could definitely improve the future of health care in certain areas. But the problems of the sector as a whole will not yield to “free market” ideas – never will, never can – for reasons that are ineluctable, that derive from the core nature of the market. We might parse them out into three:

  1. True medical demand is wildly variable, random, and absolute. Some people get cancer, others don’t. Some keel over from a heart attack, get shot, or fall off a cliff, others are in and out of hospitals for years before they die. Aggregate risk varies by socioeconomic class and age – the older you are, the more likely you are to need medical attention; poor and uneducated people are more likely to get diabetes. Individual risk varies somewhat by lifestyle – people who eat better and exercise have lower risk of some diseases; people who sky dive, ski, or hang out in certain bars have higher risk of trauma. But crucially, risk has no relation to ability to pay. A poor person does not suddenly discover an absolute need to buy a new Jaguar, but may well suddenly discover an absolute need for the services of a neurosurgeon, an oncologist, a cancer center, and everything that goes with it. And the need is truly absolute. The demand is literally, “You obtain this or you die.” Continue reading…

Back to Basics: Toward a Core Set of Relevant and Portable Personal Health Information

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By DAVID KIBBE

In the cacophony of health IT issues, products, and goals that compete every day for our attention, it is easy to lose sight of the profound value that could come from the universal availability of a simple core set of relevant and portable personal health information in digital format.

If everyone in the country who wanted one, and if every doctor or nurse taking care of a patient needing one, had access to a digitally formatted set of current health data about the person in question, we as a country would benefit at many levels.  I am talking about basic information — such as demographics, a problem and diagnosis list, a list of medications, allergies, recent vital signs (blood pressure, weight, etc.), and information about the most recent health care encounters. Individuals would get more continuous care and better coordinated care decisions.  Payers would pay for fewer duplicated or unnecessary tests and procedures.  Doctors would face less risk of error when making decisions in the ER.  Researchers would give us better feedback on populations of patients, e.g. those with diabetes, to improve care and care processes.  And the whole of society would benefit from a real-time, steadily enhanced knowledge database about what works to promote wellness, health, and to lower health care costs.Continue reading…

Health 2.0 and AccessDNA

Each year at Health 2.0, we present Launch!, a debut of new products and services to the Health 2.0 community.
This year we were able to hear from many great companies, including AccessDNA, a new site that generates personalized genetics reports that help you identify which genetic tests could be right for you. I had the opportunity to chat with Jordanna Joaquina, Director of Genetics and Co-Founder, about the site and genetic counseling. 

Here's the interview.

For an introduction to AccessDNA, check out Lee Essner's demo at Health 2.0:  

Spotlight on Health 2.0: Launch! from SF 2009

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health 2.0 tvEvery week we’ll be bringing you a new video from Health 2.0! This week we’re featuring Launch!, an introduction of new tools and services to the Health 2.0 community.

To see more videos from past Health 2.0 conferences, or to purchase the entire conference DVD sets click here.

A “Third School” of Cost Containment?

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By Bill Kramer

Is there a “Third School” of reformers that could help Bill Kramerus resolve the long debate about how to contain health care spending?  Drew Altman’s recent column describes the history of the debate between the “Regulators” and the “Marketeers”, and he suggests that a new school of thought – the “System Reformers” – is in the ascendance.  According to Altman:

The Systems Reformers believe that the best way to bend the cost curve is not through external market incentives or regulatory controls, but from the inside out, by creating a smarter health care system with the information base, new delivery models and payment incentives that will improve quality and lower costs. . . .

The Systems Reformers’ paradigm is reflected in the “bending the curve” elements of the health reform legislation currently in Congress, which mostly come in the form of pilot projects and experiments. These include tests of ideas like Accountable Care Organizations, “pay for performance” and “bundled payments,” as well as efforts to create a smarter, evidence-based health delivery system through comparative effectiveness research.

He describes the Systems Reformers’ approach as a  “third leg of the stool of cost containment strategies.”

While Altman is right about the importance of the Systems Reformers’ ideas, I don’t consider this to be a new paradigm.

Continue reading…

Conspiracy theory Friday (FDA & CCHIT related)

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By Matthew Holt

 

Two fun things—First, Mark Leavitt says he’s quitting CCHIT in March. He says that he’ll be 60 then and wants to go do other stuff. Of course the cynics among you will say that he’s had enough of being beaten up by David Kibbe and Brian Klepper, and that CCHIT’s role as arbiter of meaningful use has been downgraded by David Blumenthal. Leavitt says in his outgoing email (not on any website I can find but I have a copy)

“Given the current high-strung health IT news environment, the media may seek to conjure up some sensation-worthy driver of this decision, but the fact is that I am simply keeping a promise I made to my family and myself to retire from full-time work within a certain window of time”

It also happens that this announcement comes the day after Blumenthal sends out an email to the Health IT world that Vince Kuraitis (at the very least) sees as a direct shot at large health IT vendors whose products don’t play nice with others (i.e. aren’t too interoperable) yet are already CCHIT certified. Here’s Vince’s take on who should have got that email.

Second, the twittersphere has been abuzz with a series of hearings where the FDA has been taking opinions on how and why they should regulate Pharma advertising in social media. this is a non-trivial issue for both sides. Pharma wants to reach patients, patients want those social media players to exist, and the sites need money (which will have to come from Pharma, unless something changes in the space time continuum). I don’t pretend to know the outcome except to remind you all (via Bill Silberg) that a similar meeting was held more than a decade ago and the result was….nothing. no guidance, no policy.

Spotlight on Health 2.0: In The Doctors Office, from SF 2009

health 2.0 tvEvery week we bring you a new video from Health 2.0! This week we’re featuring Health 2.0 In the Doctors Office, a special showcase featuring physician-facing tools and services from the recent Fall conference in San Francisco.

To see more videos from past Health 2.0 conferences, or to purchase the entire conference DVD sets from ’07 & ’08 click here. 2009 DVD sets will be available shortly, please check back for updates.

Time to put aside the intellectual disputes for now

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By Matthew Holt

It’s always fun to see my friends beating each other up in public….and if you read down in the comments on the post published yesterday you’ll see a significant dispute between Maggie Mahar and the Klepper/Kibbe/Lazsweski/Enthoven team (who I’m calling the Four Horsemen from now on). But I think that right now we need to change what we’re talking about.

I’m with Maggie in that there is potentially more in terms of changing the payment system in the current bills than nothing, but it’s not that much more than nothing. However, pressure from the the Four Horsemen and their fellow travelers on payment reform may increase that section of the bill as it gets worked out on the floor and in the Congress conference committee. Their pressure will also serve notice that aware, sensible people are looking at the issues of payment and delivery reform.

And at the least, the proposals in the bill don’t make the current delivery system any worse (other than the exemption from taxes for self-insured groups which clearly discriminates against integrated systems and must go).

Continue reading…