Health 2.0’s NYC chapter is having a meeting this Thursday 4/2–-around 50 people are due to attend and it’s set to be a great session.
There is one minor problem though. Due to a last minute cancellation by the existing conference room sponsor the meeting needs a new venue. Please contact eugeneATnyhto.org if you can fit ~40-50 people for tomorrow evening from 6.30pm on.
(Eugene does have a back up, but it’s not ideal! And no this is not an April Fool’s joke)
e-Patient Dave on the real world issues of moving data around in health care. The punchline—claims-based data without dates is not very useful, which requires those using the aggregators (Google health et al) to do a whole lot more work.
A really, really important article. Go read.
The emperor we call American healthcare is wearing no clothes—or perhaps too many clothes. The United States spends too much on healthcare. More than 25% of our healthcare dollars are wasted on unnecessary utilization. With this in mind, we recently completed research that identifies where that waste resides. Our analysis offers a target for how far the country might go in weeding out waste. We used the top-performing health systems as a basis, employing actuarial models to extrapolate results for the entire country. Our “16 to 12” model is a standard you can use to measure healthcare reform proposals. It can help you quickly identify defenders of different pieces of the status quo—and defenders of the absurd. In the few weeks since “16 to 12” came out, we’ve heard an almost universal reaction: “Of course you’re right, but [fill in special interests] won’t let it happen.” That’s amazingly positive—maybe we can actually reach consensus on fixing the system.
Framing the vision
In 2006, approximately 16% of the gross domestic product was spent on healthcare. Even if the United States were to reduce its healthcare expenditures to 12% of GDP, we would still spend far more than any other country. Is this possible? Our reduction is less than many estimates of healthcare waste. It’s also more than the annual spending on motor vehicles—4% of GDP could power a new American century.
Numbers for a growing consensus
Opposition to waste seems universal, from President Obama to Senator Max Baucus. They join a chorus of other voices, from CEOs and medical trade organizations to employer groups. Let’s take them all up on this point by quantifying opportunities for reductions in waste.
The table below offers a detailed inventory of efficiencies by service category, for one year’s costs. For example, inpatient services in 2008 cost an estimated $500 billion. Our working efficiency model reduced that by 38% to $311 billion.
These reductions are based on evidence-based best practices, including reducing unnecessary imaging and surgeries, better managing inpatient admissions, increased reliance on generic drugs, embracing primary care and certain electronic transactions, and other 20th-century (not even 21st-century!) management practices.
We’re proposing that healthcare payers (governments, employers, and individuals) could reallocate more than half a trillion dollars each year to other priorities.
The saved money could be used in other sectors, such as increased wages and infrastructure investment initiatives, and possibly even toward deficit reduction, reduced taxes, funding Medicare, etc.
The money saved could also stimulate the economy. And even though we’re working with 12% as the target model, we think it can get even lower than that.
Economic stimulus programs will likely increase healthcare spending, especially by federal and state governments. The 12% target may have to fight that surge, but we’re not talking about speculative long-terms gains, such as getting all Americans to exercise and reach a healthy weight.
What will the new system look like?
Although the healthcare system is typically divided into three categories—physicians/healthcare professionals, hospitals, and prescription drugs—our vision directly benefits patients.
We point to patients consistently receiving attention and care, according to treatment plans based on evidence-based medicine. All patients’ interactions will be streamlined through administrative systems, along with expanded hours via e-mail and phone access. We also suggest that the average patient will be more informed about choosing the appropriate care due to the reduction in costs; in turn, fewer medical errors should occur.
Another big change in the desired model is the re-engineering of hospital care.
Hospitals would operate on a 12/7 (12 hours a day, seven days a week) or 24/7 basis. While many hospitals currently don’t provide diagnostic treatment services on weekends or after standard business hours, that would change under this vision.
We believe hospitals can do a much better job lowering their readmissions. A separate report estimates that 18% of Medicare hospitalizations result in readmission within 30 days. A majority of those are potentially avoidable.
Our report didn’t delve deep into prescription drugs, but we suggest that there are efficiencies to be found in improvements to the FDA approval process and in a more widespread embrace of generic drugs.
It’s important to point out that we can become even more efficient than this vision. For example, we can dramatically improve end-of-life care, fix medical malpractice, and reduce administrative costs on better than a pro-rata-with-claims basis—all things that could push healthcare spending below 12% and improve the patient experience.
Winners and losers
Given this demanding vision, hospitals and other providers who don’t adapt to an efficiency- and quality-driven system will lose out.
For the nation, this vision offers more winners than losers. Patients and consumers would be the biggest winner and the U.S. economy overall would benefit. Employers would minimize the yoke of expensive benefits that has made it difficult to compete with leaner companies in other countries.
Proposals for healthcare reform now have the glamour of springtime fashions. Our 16% to 12% vision measures what’s under these emperors’ new clothes.
Pyenson, Fitch, Goldberg, Imagining 16% to 12%. 2009. Available online at http://www.milliman.com/expertise/healthcare/publications/rr/pdfs/imagining-16-12-RR02-01-09.pdf
Lead author Bruce Pyenson, FSA MAAA, is a Principal and Consulting Actuary with Milliman, an actuarial and consulting firm with offices worldwide. Kate Finch RN serves as a Principal and Management Consultant with Milliman. Sara Goldberg, FSA, MAAA serves as Consulting Actuary with the firm.
The Ingenix mess apparently won’t go away. Sen. Jay Rockefeller is now going after the health plans for using Ingenix’ database. Ingenix and some of its customer health plans have already settled with several states, but apparently it’s not enough. Now Rockefeller is after them. And the words are tough. “Fraud”, for one.
Now, health plans don’t exactly have much credibility. And when the politicos find out that Ingenix a) sells tools to help health plans cram down the amount they pay providers, b) sells tools to providers to extract more money from health plans, and c) is owned by the biggest (and not too long ago) baddest insurer on the block, this may get a little more interesting. After all, it’s kind of an arms dealer arming both sides.
But there is one thing that troubles me. I’m quite prepared to believe that Ingenix’s view about what was UCR was different from the local medical society’s view of what was UCR, and therefore that the plans were “under-paying” the consumers and the doctors who serve them.
But let’s remember what Usual, customary and reasonable fees are.
America’s health plans are floundering. If their job has been to provide the nation’s mainstream families
with access to affordable care (let’s leave quality out of it for the moment), they have failed miserably, though they were very profitable along the way, at least until Q1 2008. In 2008, the Milliman Medical Index – an estimate of the total cost for health coverage premium and out-of-pocket costs for a family of four – was $15,609. Now it is almost certainly above $17,000, more than the total income of more than one-third of American households.
To many health plan execs, these are simply market dynamics that must be accommodated through new product and service designs. I just attended a health plan conference where the overarching themes were the transition away from group to individual coverage, and the use of incentives and touch points like texting, email, and ergonomic Web interfaces to cultivate member competency, loyalty and retention.
There are important steps forward but, to me, the discussion tiptoed
around the more glaring problem – costs this high have exhausted many
purchasers’ ability to pay, and are rapidly shrinking health plans’ commercial market and profitability.
Last week Senate Majority Leader Harry Reid was quoted as raising the possibility
we could take the $600 billion in new revenue projected from a
"cap-and-trade" plan to cut green house-gas emissions and use some or
all of it to help pay the estimated $1.5 trillion cost for
comprehensive health care reform.
Energy and climate change issues aside that would be a bad idea–a really bad idea.
The biggest health care challenge we face in America is the cost of health care. To really reform the system we have to bring its costs under control. The only way we can achieve sustainable health care reform
is to pay for most of the cost of any reform plan out of the savings we
achieve fixing the system and its perverse incentives to spend more
without regard to what we receive.
Please don’t turn Natasha Richardson’s tragic death into a symbol for why Canadian-style universal health care is bad and the United States is better.
In the last six hours, I’ve seen articles from at least a dozen media outlets asking whether Natasha Richardson would have lived, had her skiing accident occurred in the United States instead of Canada, where the quoted commentators say universal health care means insufficient access to high-tech scans and helicopters.
I’m not advocating for or defending Canada’s single-payer health system. Merely, I ask that journalists considering doing this story ask deeper questions that get beyond the anecdote. Consider asking about the trade-offs that go along with providing seemingly unlimited CT scans and helicopters. Ask what would happen if she were an uninsured U.S. resident.
Richardson’s tragedy may represent a larger problem, but those statistics need to accompany the punditry. While not diminishing the tragedy of Richardson’s untimely death, a sample of one is not a good measure of how well a state or nation’s health system performs.
Anecdotes make great stories and can put a face on a problem, but policy should be based on scientific research that reveals truths about the entire population.
Steven M. Parker of Levelwing was among those who weighed in on the volatile comment thread on Rick Scott's Friday post. ("Patient-based Health Reform or Fannie Med?") Steve had this response to critics who attacked the CPR founder over his record as CEO of Columbia/HCA in the nineties …
"..one thing all of you need to consider is that you continually point
fingers at Rick for having run a company fraught with Medicare
inconsistency, overbilling and defrauding the government. However, you
lack the details on the actual investigation and from where issues
stemmed. Many of the allegations came from hospitals owned by
Columbia/HCA at the time (yes) – but there are many instances that
originated at points prior to Columbia/HCA purchasing or operating
those facilities. The local levels were ultimately at fault in this
situation. Also as an FYI – Columbia/HCA had better patient
satisfaction than most medical facilities in the country during Rick's
helm. There are many details perhaps you should consider, including the
fact that during this same time period a majority of hospitals in this
country were under investigation for the same issues."
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On April 22–23 in Boston, two ideas are going to come together. Health 2.0 has been defined in different ways, but is most often considered to be the use of lightweight online technologies which allow consumers to access and exchange health information via the now familiar search, communities and tools. Information therapy (Ix or information prescriptions) involves the proactive delivery of the right information to the right person at the right time, usually as part of the care delivery process.
However, while both Health 2.0 and Ix are focused on improving patients’ participation in care, they tend to come from different backgrounds. Ix tends to be “prescribed” to the patient, often by a clinician (although system-triggered Ix and consumer-prescribed — either “self-prescribed” or recommended by a peer, caregiver, etc. is also part of the definition). Ix innovations have had the greatest penetration in organized systems of care with robust provider and patient HIT applications like Kaiser Permanente and Group Health Cooperative in Seattle.
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