All Things to All People Isn't Working

By Kim Bellard, July 18, 2014

When it comes to hospitals, we may need to paraphrase Lincoln: they can treat all of the people some of the time, and some of the people all the time, but they can't -- or, rather, they shouldn't -- try to treat all of the people all of the time.

US News & World Report just released their annual "Best Hospitals" rankings.  They evaluated nearly 5,000 hospitals against a detailed methodology

What struck me was that, out of those nearly 5,000 hospitals, only 144 scored a national ranking in even one specialty.  None -- I repeat that, none -- ranked in all 16 specialties.  Only Boston, Los Angeles, and New York had more than one Honor Roll hospital.  Several states have no hospital with a national ranking in any specialty.

There's a lesson there.

A few days ago Clayton Christensen, the Harvard-based guru of "disruptive innovation," told Forbes that the U.S. health industry is "sick and getting sicker."  He offered several suggestions for what he thinks need to change, but I want to pick one in particular, his emphasis on cutting administrative waste.  

It is not unusual to cite administrative waste as a problem in our health care system, but Christensen comes at it from a different angle.  As he said:

An increasing proportion of [health care] cost is spent on administrative and overhead activities that are not productive in any way.  They exist because we assume every hospital should be able to do everything for everybody. But that’s not possible if we want quality and efficiency. Overhead creep is the result.

Toby Cosgrove, the CEO of The Cleveland Clinic, gets it as well (or at least, says the right things).  As he recently said at the Aspen Ideas Festival: "What we need to understand is that not all hospitals can be all things to all people."

Cosgrove noted The Cleveland Clinic's expertise in cardiothoracic surgery, done on a scale that he believes results in care that is cost-effective and of high quality.  They draw patients for these services not just from their metro area, their region, or even just the U.S., but also internationally.  He wants to see a future where we get patients to the right physicians, rather than trying to have expertise available everywhere.

Given the solid data on the importance of volume/experience, then, why are each of my local hospitals trying to make themselves the leader in, say, open heart surgery?  Or in cancer, neurology, or sports medicine for that matter? 

Somehow it is hard for me to believe they've got my interests -- the patient's interests -- as their top priority.  

Becker's Hospital Review recently hosted an Executive Roundtable on affiliation, and I was struck by a comment one of the hospital CEOs made:

There are too many tertiary facilities' values are not aligned with rural hospitals' values: Their goal is to pull patients out of smaller communities, which is not what smaller communities are looking for in an affiliation. Keeping patients close to home is what's important.

Wouldn't you like to think that doing what is best for the patient is what's important? 

The point is, most of us don't live in places where we should be expecting that we're going to get the best care for every condition locally.  Nor should we expect that even the "best" hospital/health system for some conditions are best for other conditions as well.  Who is treating you where for what matters.

This post is an abridged version of the posting in Kim Bellard’s blogsite. Click here to read the full posting

May I Speak to the Doctor's Computer?

By Kim Bellard, June 25, 2014

There's a new provocative study in Computers in Human Behavior that suggests we may be more likely to tell the truth about personal matters, such as health problems or medical history, when talking to a virtual human instead of to an actual human.  I'm not sure if these findings threaten to set back the patient-physician relationship 10,000 years, or promise to advance it fifty years.

The article -- It's Only a Computer, by Lucas, Gratch, King, and Morency -- tested participants' willingness to disclose information to a "virtual human" on a computer screen.  When the participants believed the virtual human was fully automated instead of being controlled by a human, they reported lower fear of self-disclosure, were less likely to shade the truth in order to create a good impression ("impression management"), and were rated as being more willing to disclose information.  The key to the behavior was their belief that no human was involved, whether or not a human was actually acting behind the scenes.

The virtual human idea is not pie-in-the-sky, good only for research studies.  Versions of it are already being tested, such as by Sense.ly, whose digital health avatar was profiled by MIT Technology Review a year ago.  It captures patient information via an avatar, which can respond to patient statements or data and can even answer questions.  

Clearly, we're entering a new world.

The kind of artificial intelligence that might power these avatars/virtual humans can also be used to assist physicians instead of competing with them.  IBM, of course, has been touting Watson in health care for several years now.  As Wired recently reported, there are a number of AI efforts out there to assist physicians. 

Wired also notes that companies are trying to keep their products viewed as offering recommendations instead of making decisions, which would push them over into FDA approval and regulation.  We probably will get there, but that step will be a big gulp.

Some experts believe people will improve their health behaviors -- e.g., get more exercise or lose more weight -- if they know they are being monitored.  Others fear people will end up forgetting about their trackers and will slide back to their previous behaviors. 

The plethora of tracking devices poses issues not only with the sheer volume of data generated, but also with integrating the disparate data from multiple operating systems into a unified record. 

The idea that health information is only collected at a medical office or lab, and that patients should wait to act on it until a human can talk to them, is simply no longer viable.  The data are increasingly going to be available 24/7, and when it means something important there have to be mechanisms to act upon it in real-time.   Maybe that is through alerts to physicians, who then initiate contact with patients, or maybe the wearable ecosystem can trigger its own alerts and advise the user what is going on using avatars and other automated mechanisms.

A recent op-ed by Dominic Basulto in The Washington Post stated that "Google and Apple want to be your doctor, and that's a good thing."  Mr. Basulto concluded:

Companies like Apple and Google can help to break down the notion that health has to be something offered by a monolithic company with a confusing set of rules and terms. It might just be the case that mobile health care facilitated by wearable tech will turn out to be better than traditional doctors.

I think it is a stretch to say that mobile health will be "better" than traditional doctors, but I think these and other technological options can certainly radically change when, why and where people need to see physicians or other health care professionals.  And that's good.

This post is an abridged version of the posting in Kim Bellard’s blogsite. Click here to read the full posting

The Myth of the Sovereign Consumer

By Kim Bellard, May 22, 2014

The title of this post comes from a provocative article by Bruce Vladeck in a recent Health Affairs Web First edition focused on provider consolidation.  I'll get back to Dr. Vladeck, but anyone who has been following my posts knows that provider consolidation has been a source of much concern to me, so the four articles in this HA edition were of much interest.

Paul Ginsburg and Gregory Pawlson's article takes it as a given that providers have been consolidating, are going to consolidate, and that, left unchecked, this would tend to raise prices.  They outline a fairly comprehensive list of potential strategies to deal with this impact. 

Another article, from economist Martin Gaynor, reviews the issue of consolidation, some of the research on it, and the various ways that competition is regulated. 

A third article, from MD/JD Professor William Sage, suggests that the problem is not so much provider consolidation as it is "getting the product right."  He argues that much of our health care system isn't as competitive as it could be because a "..long history of regulation and subsidy has distorted prices, quality, and innovation." 

The fourth, and most fun, article was from Dr. Vladeck.  He doesn't seem as worried about either provider consolidation or the ultimate need for government rate setting (although he acknowledges it is not politically likely).  He views the Sage and Ginsburg/Pawlson articles as being based too much on what he calls a "fundamentally obsolete conceptual model": the myth of the sovereign consumer. 

Dr. Vladeck seems skeptical of Sage's proposals to redefine the product, and sees consumers as being clearly worse off than twenty years ago, especially since:

...consumers are regularly inundated with self-serving or downright erroneous information from health insurers, providers, and entrepreneurs alike about health care services and their use that carries the implicit message that any illness or financial difficulty is essentially the fault of the consumer.

Huh?

Dr. Vladeck concludes that large payors, including the government, may be the best bet to control prices, but concludes that "instead of continuing to try to impose axiomatic and solipsistic theories on a reality to which they increasingly fail to apply, we need to figure out what kind of health care system we really want and how much we are prepared to pay for it."

I don't disagree with his conclusion, just most of what preceded it.

Chip Kahn, President of the Federation of American Hospitals, used the HA edition to post his thoughts on consolidation.  Not surprisingly, he's all for it, citing what he sees as the more ominous consolidation on the health plan side. 

Neither Mr. Kahn nor Dr. Vladeck seem to credit a slowdown in the rate of increases to the last recession, or to changing consumer behavior due to increased cost-sharing and less confidence in their economic prospects. 

Which leads back to Dr. Vladeck's "myth of the sovereign consumer."  Yeah, I'd have to agree that the record is pretty poor about consumers taking good care of their own health.  I'd also have to agree that the full impact of increased cost-sharing is, as yet, unclear. 

At the end of the day, though, given a choice between having responsibility for my health or abdicating it to someone else, I'd rather have it, and I think most people would agree.  It's not that the "sovereign consumer" is a myth, it's that we haven't ever really tried it. 

Frankly, in many ways, it is pointless to decry provider consolidation, because it is going to happen, just as it is happening in virtually every other sector of the economy.  

The Commonwealth Fund is "searching for the next breakthrough in health care, by which they mean "an idea, a paradigm, a strategy that positively and profoundly disrupts the status quo."  Finding ways to truly empower consumers -- not just paying lip service to it -- may just be such an idea.

This post is an abridged version of the posting in Kim Bellard’s blogsite. Click here to read the full posting

Hacking a Better Health System

By Kim Bellard, April 9, 2014

Who knew hacking might help us reinvent our health care system?

I must be old-fashioned, or at least not a true techie, because I still thought of hacking as a bad thing.I was thus surprised to read in The Wall Street Journal that “hackathons” are a trend for the good in health care. 

For others who are also behind this particular curve, hackathons are intense, all-night (or more) sessions when a small groups of programmers band together to attack tough specific problems with concentrated coding efforts.

The Journal article highlighted MIT’s Hacking Medicine’s Grand Hackfest, which is part of MIT’s Hacking Medicine initiative.  MIT has been at this since 2011, seeking synergies between MIT’s technical expertise and the vaunted Boston-area medical community.  They believe hackers can help health care with: Scaling Medicine, Accelerating Data, Identifying and Tackling Big Opportunities, Hacking Ethos for Lean Medical Innovation, and Infecting Non-Life-Scientists with the Mission. 

Pretty lofty list of goals.

Health 2.0 has their own version, which they call Code-a-thons.  They offer some $6.5m in prizes in their developer challenge, and have several events and challenges scheduled in the next few months.

Goodness knows that health IT has never been known for being either nimble or on the cutting edge, so some fresh blood with new perspectives certainly seems like a good idea, right?  As one clinician whose mobile app benefited from solutions suggested at the MIT hackathon said, "Sometimes when you are too close to something, you stop seeing solutions, you only see problems.  I needed to step outside my own silo.''

Not to be outdone by Boston, New York-Presbyterian Hospital recently held what they claim was the first Hackathon for New York Hospitals, which the specific aim of helping them improve myNYP, their patient portal. Out on the other coast, UCLA-Berkeley has had three iterations of their own version, Hacking Health. 

Just to rub us oldsters’ noses in it, there’s an organization called YTH (youth + tech + health) that believes the “#selfie generation” can do better. They just hosted their own Health Hackathon in conjunction with their YTH Live 2014 conference.     

The trend is not limited to the United States.  The British National Health Service has NHS Hack Days, in Canada there is Hacking Health, and in Europe there’s CPH Health Connect HackDay in Copenhagen and Hacking Health Stockholm.

Looking back at last fall’s healthcare.gov debacle, or more recent reports of similar issues with various state exchanges, one has to wonder if they just should have held a hackathon.

PwC’s 6^th Annual Digital IQ Survey found that healthcare CEOs were far ahead of other industries in championing information technology as an integral part of their strategy.  I rather doubt that many health systems or payors are using hackathons for their big mainframe-based systems – like eligibility, billing, claims payment, or (most) EHRs – but mobile efforts are natural targets for this kind of approach. 

There’s no shortage of targets.  Payors are finding ways to use mobile technology to cut administrative costs, engage members, and manage patients’ care. Still, in a recent Robert Half Technology survey of CIOs, health care led the pack in lacking a mobile strategy.

No wonder they might be looking for hackers.  

It’s great to bring in new ways of attacking the many problems of health care, but I do worry what happens when they hit the may brick walls health care has.  I’ve been seen several instances where non-health care companies – especially financial services firms -- dipped in to health care, thinking they could bring their expertise to bear, only to be shocked at how messy much of the data is. 

What I like best about the hacking in health movement is twofold – bringing in new kinds of expertise and an attitude that problems can be solved.  Those have been sorely missing in health care.  Or, as Mark Twain once put it, “all you need in this life is ignorance and confidence, then success is sure.” 

Hack away!

This post is an abridged version of the posting in Kim Bellard’s blogsite. Click here to read the full posting

That's Not the Way I Always Heard It Should Be

by Kim Bellard, March 11, 2014

Now that the initial open enrollment period under ACA is drawing to a close, we’re starting to hear more about how the enrollment is going, and the news is not encouraging.

The Administration has touted that 4 million have gotten coverage through the exchanges – still several million short of their goals – but they claim to not know much about whether ACA’s impact on the uninsured rate.  Fortunately, outside organizations are helping to fill in some of the gaps. 

The McKinsey Center for U.S. Health System Reform released the results of their individual market enrollment survey, with results from February 2014.  Only 27% of those who had obtained new coverage in 2014 reported having been previously uninsured.  Even more discouraging, only 10% percent of all previously uninsured now reported having coverage.  The faint sign of hope in the numbers is that both numbers are up sharply from previous surveys – 11% and 3%, respectively – but I doubt anyone who supported ACA’s passage thought they were signing up for only helping 10% of the uninsured.

Adding insult to injury, only three-quarters of those with new coverage reported actually having paid their premium, confirming reports that health insurers had warned about.  And that percentage was only 53% among the previously uninsured, which does not inspire much confidence that they will remain insured for very long.

Perceived affordability remains the key barrier to buying coverage, even though 80% of those citing it were actually eligible for subsides, a crucial fact that two-thirds were unaware of.

One glimmer of good news is that Gallup reports that the uninsured rate has, in fact, dropped, down to 15.9% (versus 17.1% in 4Q 2013).  To be fair, though, their results showed spikes in late 2013, and the 1Q 2014 results are on par with 1Q 2013 and 1Q 2011.  Coverage through an employer dropped two percentage points from 4Q 2013, while both individual coverage and coverage through Medicaid were up by slightly under 1%.  

The Urban Institute released their own survey results on ACA enrollment, conducted in December 2013.  Among all adults 18-64, 12% reported having looked for information on health plans in the marketplace (Orwellian for “exchanges”), with another 17% planning to do so.  More significantly, among the uninsured still only 19% had looked, another 33% thought they would look – and 23% had not heard about the marketplaces.  The comparable numbers for those below 138% of the federal poverty level were 13%, 25%, and 27%, respectively, highlighting that the most vulnerable groups are not getting the message.

The picture isn’t really rosy anywhere.  The people who were already in the individual market continue to be buffeted by changes in the rules of the road.  For example, there is Administration’s executive decision to allow subsidies for policies purchased outside the marketplaces, in recognition that some consumers may have been too frustrated by the marketplace websites to buy from them. 

Then there is the “bare bones plans” mess.  After the uproar last fall about people having to lose their health plans because they didn’t meet ACA minimum standards, the Administration belated announced a one year delay in the enforcement of those standards, and has just extended that delay for yet another year, potentially meaning they won’t apply until 2016.   

It’s anyone’s guess about what has happened with premiums in the individual market.  A recent analysis by the Robert Wood Johnson Foundation in selected states found (with the exception of Alabama) more competitive markets and premiums, while a report from the Manhattan Institute last fall found an average increase of 41% (much due to benefit changes), and a study by the presumably objective Society of Actuaries last spring also expected significant increases, especially for younger consumers.

Any employer with a health plan or 401k plan – or any state Medicaid director – could have warned us that voluntary enrollment typically leaves lots of eligible people not taking action..  We should have taken the approach many 401k plans have adopted – “automatic enrollment.” Driven by disappointing participation in 401k plans, the federal law was changed to allow employers to automatically enroll employees in their 401k plan, with a default contribution rate.  Employees could still opt-out, or change the default contribution level, but employers have found that participation rates are higher and average contribution rates are higher under this approach.  What’s not to like?

This post is an abridged version of the posting in Kim Bellard’s blogsite. Click here to read the full posting

I'll Take My Care To Go

By Kim Bellard, February 17, 2014

I have to admit that when fast food restaurants first got into drive-throughs, I didn’t really see the point.  Well, I missed that one: they now do 60-70% of their business via the drive-through, changing the architecture, menu, and consumer expectations of the fast food industry along the way.  Aside from pharmacies, I haven’t seen drive-throughs impact health care yet, but one doesn’t have to be much of a seer to recognize that that the need to actually visit providers’ offices for health care is quickly being whittled away.

Let’s start with kiosks, which are increasingly providing quick alternatives for some services that used to require consumers to visit their doctor.  For example, in the news recently was a deal higi did with Rite Aid, which will put higi’s kiosks in some 4,000 Rite-Aid stores.  higi already has kiosks in Publix and Whole Foods.  Their approach features kiosks that allow consumers to measure and track their vitals, while gamifying that mundane process.  They combine all the measures into a single “higiscore” that consumers can easily track, and also offer some community features.

higi is not alone in the kiosk business.  There’s SoloHealth, which claims 40m annual user engagements, driven in large part due to its deals with Walmart/Sam’s Club and Safeway, as well as some deals with health insurers, such as Wellpoint and HCSC.        

Not unlike higi, SoloHealth offers quick self-service screening options, but the deals with insurers have them offering information on health plan options as well, a move that is not without critics due to the perceived privacy concerns. 

HealthSpot goes the other screening kiosks one better by also offering video visits with board-certified physicians.  They’ve been doing deals with provider organizations.  HealthSpot also recently teamed up with telepharmacy – there’s another wrinkle! – vendor MedAvail Technologies to create an all-in-one Redbox-type system. 

Of course, non-office visit alternatives are broader than kiosks, especially “virtual visits” offered via phone or computer.  Parks Associates recently found over 25% of American households have used some kind of virtual care, and predict that will grow to 65% by 2018. 

Examples of virtual visit vendors include TeleDoc, American Well, and MDLive.  TeleDoc has been offering a telephone-based physician consult service for years, and now also offers a video consult service. 

American Well started with email physician consults, added video consults, and recently went beyond its traditional payor partners to offer a direct-to-consumer option at $49/visit.  American Well notes that its services are available via web, kiosk, and mobile – and, in fact, says that 60% of its video visits are from mobile devices.  MDLive is the most recent newcomer of the bunch, but has a wide range of tele-services and some serious backers, including Sutter Health and John Sculley.  

Kiosks themselves may end up being a niche offering along the continuum of points-of-care, as the video consults are already available on computers and mobile devices and as more and more biometric measures can be done via remote monitoring and apps – why drive to a kiosk when you get do the same things at home or on your phone?  After all, health related apps are booming, and include screening and diagnostic tools.  The stethoscope app, for example, has been around for several years and has proved popular with both consumers and – surprisingly -- physicians. 

So we’ve got sophisticated bio-metric screenings at your convenience in a wide number of retail settings and, increasingly, via mobile devices, plus we’ve got physicians available literally in the palm of your hand.  That’s not all.  IBM’s Watson is teaming up with “social health management” vendor Welltok to help answer consumers’ health and wellness questions without the assistance of a physician – or any live person. 

All these new options for receiving care and medical advice remind me again about how much behind the curve traditional health insurance and health providers are. 

This post is an abridged version of the posting in Kim Bellard’s blogsite. Click here to read the full posting

A Stitch In Time…Will Cost A Lot of Money

By Kim Bellard, December 5, 2013

It almost seems like piling on to pick on hospital pricing anymore, following such incisive articles already this year such as Steven Brill’s Time article “Bitter Pill” or Elizabeth Rosenthal’s “The $2.7 Trillion Medical Bill” in the New York Times, but there just continue to be more examples of how irrational health care charges are in the U.S. health care system. 

Jillian and Joseph Bernstein just published a study in JAMA Internal Medicine, focusing on the difficulty in getting hospitals’ prices for electrocardiograms (ECGs) – and comparing that with the ease of obtaining those same hospitals’ prices for parking.  This followed a study published earlier this year that looked at the difficulty of getting hospitals to quote prices for hip replacement.  The Bernsteins were testing the hypothesis that perhaps hip replacements included too many variables, thus making quoting prices difficult, and so chose the more standardized ECGs. 

The results will probably not surprise anyone.  They contacted twenty Philadelphia area hospitals to ask for the two kinds of prices.  Nineteen of the hospitals were easily able to provide the cost for parking, but only three could come up with a price for the ECG (and don’t you want to know what hospital couldn’t even quote its own prices for parking?).  It’s also interesting to note that the three ECG prices they got ranged from $137 to $1200, almost a tenfold difference.

The authors conclude that “hospitals seem able to provide prices when they want to; yet for even basic medical services, prices remain opaque.”

Meanwhile, Ms. Rosenthal of The Times was at it again, this time in “As Hospital Prices Soar, a Stitch Tops $500.  The article points out not only simple stitches that cost $500 in ERs but also IV bags that cost under $1 but for which hospitals charge $137, or $20 neck braces for which that hospitals want $154.  And these are not the most egregious examples cited. 

Few people pay full charges, of course – except for the people without insurance, who are probably least able to pay them – but the hospitals build their charge structures due to what one physician told The Times was the Saudi sheikh problem: “you don’t really want to change your charges if you have a Saudi sheikh come in with a suitcase full of cash who’s going to pay full charges.”  That’s what passes for pricing strategy in U.S. hospitals?

The Times attributes the seemingly unfettered hospital pricing to increasing market dominance, using Sutter Health in California as a prime example.  Indeed, a recent study in JAMA found that price increases – not increased demand or aging of the population – accounted for 91% of the increases in overall health care costs since 2000, with market consolidation blamed as one of the key drivers of these price increases. 

We’ve been waiting for patients to care about prices for some time, especially with the advent of high deductible plans, and there is some evidence perhaps that is starting.  A survey by TransUnion Healthcare found that 55% of insured consumers have started to pay more attention to their medical bills in the past year, and that 67% claim they want to know not just how much services cost them directly but also how much their insurance is paying on their behalf. 

The TransUnion survey also found that, when it comes to choosing providers, consumers rated “makes it easy to see the cost of services” right below “world class specialists and technology,” and – amazingly -- above high quality scores or proximity to home.  Even more interesting was that the survey found some correlation between consumers’ perception of quality of care with their satisfaction with the billing experience, a fact to which one hopes providers are paying close attention. 

Ironically, health plans now are expressing some concern over exactly what type of transparency they support.  AHIP, their trade association, indicated that calls for an all-payer claims database, which would facilitate comparisons between providers and across payors, could backfire, raising the spectre of lower paid providers demanding higher reimbursements once they started seeing what other providers were being paid.  Having once led transparency efforts for a large health plan, I can affirm that this concern is very much on the minds of provider contracting staff.

At the same time, many physician specialty organizations, including the AMA, continue to balk at many forms of transparency.  Lately they have questioned the wisdom of a proposal to make public the Medicare payments to physicians, something the Wall Street Journal, among other organizations, has long been pushing for.  They worry that the data could be confusing or misleading to consumers, although it’s hard to see what could be more confusing or misleading to what we’re doing now.

Still, not everyone is a fan of transparency, at least not as it has been attempted so far.  The ever-quotable, always insightful Uwe Reinhardt, writing recently in JAMA, throws cold water on many previous efforts.  In his words, “[T]he idea that American patients should 'shop around for cost-effective health care' so far has been about as sensible as blindfolding shoppers entering a department store in the hope that inside they can and will shop smartly for the merchandise they seek,  In practice, this idea has been as silly as it has been cruel." 

Reinhardt does think that health IT can change the game by more easily making pricing available to consumers, citing such innovators as Healthcare Blue Book and Castlight Health.  He likes the reference pricing approach (which I discussed recently), which involves setting a uniform payment limit and making providers compete for anything they want to try to charge above those limits. 

Of course, simply disclosing costs is only a necessary, but not sufficient, change to bring about true competitive pressures for pricing.  We’re moving to ICD-10 codes, and a cottage industry has emerged to find the funniest examples.  For example, there are separate codes for being struck by a turtle, orca, or duck, not to mention for walking into a lamppost.  You know that in back offices of provider organizations and health plans, diligent bean counters are coming up with prices for each of these. 

If we merely made visible the existing pricing structures, which are built for billing and diagnostic accuracy rather than for consumer understanding, it’d be liking going to Dr. Reinhardt’s metaphorical department store and finding that each item showed the cost of every party involved in the manufacture, marketing, and distribution of the item, plus costs for a variety of additional variables based on the consumer’s needs.  No exactly an Amazon one-click kind of experience.

Despite the big challenges ahead for it, I do believe that, whether it is AHIP, AMA, AHA, or any other providers making a living in the current arcane system, there is a danger that if they don’t get on the transparency bus, they may get run over by it.  The Saudi sheikh strategy can’t last.

It’s a Narrow World After All

By Kim Bellard, November 6, 2013

The promise of the Affordable Care Act is that everyone can obtain affordable coverage (this is not to be confused with the promise that if you like your plan or your doctor, you can keep them, which, as is becoming more widely known, is not and never was quite true).  Buried in that promise is the fact that choices – of health plans and of providers in those health plans – are going to be more restricted than most people expected.

This fact was crystalized in a recent op-ed in The Wall Street Journal by Edie Littlefield Sundby.  Ms. Sundby has been fighting stage 4 gallbladder cancer for seven years, costing her insurer – United HealthCare – over $1 million.  She has nothing but praise for United, except that the insurer is pulling out of the individual market where Ms. Sundby lives, thus forcing her to obtain new coverage through the exchange.  The problem is that none of her choices in the exchange would allow her to keep her existing provider relationships.

Tone-deaf once again, the White House blamed everyone but themselves, or the regulatory structure set up by Obamacare, for the situation. 

Let’s face it: the “new normal” for health plans may be narrower networks.  An analysis of the exchange filings by McKinsey & Co. found that 47% of the plans offered were HMO or other closed network plans, compared to less than 14% of enrollment in such plans for employer plans (according to the most recent Kaiser Family Foundation/HRET survey).  Moreover, the providers in the exchange networks may not include some of the most respected ones. 

For example, Watchdog.org compared the US News & World Report’s list of top ranked hospitals, and found many were opting out or were just participating with a small number of the plans in the exchanges.  CNN, PWC, The Wall Street Journal,  The New York Times, the Los Angeles Times, to name a few, have all come to the same conclusion. 

To add insult to injury, the provider finder search tools on most of the state run exchanges appear to leave something to be desired, making it hard for consumers like Ms. Sundby to figure out how to decide which plan might be best -- or the least worse -- for their situation.  I doubt many expect that healthcare.gov is likely to be any better.

At least there’s more choice of health plans, right?  Not so fast.  It’s true that if you live in an urban area, you’ll probably have multiple plans from multiple carriers to choose from, but if you live in a rural area, maybe not so much.  An analysis by The New York Times found that in 58% of the 2,500 counties served by the federal exchange only one or two carriers were available, with only one carrier as an option in about 20% of those counties.  Granted, these rural counties may not have had many choices before ACA, but this barren marketplace is not quite what President Obama presumably envisioned.   

Not everyone thinks the reduced choice is a bad thing, especially in regards to choice of providers.  Avik Roy proposes that the narrower networks will force providers to compete on price, and concludes that “[T]his is, in general, a good thing.”  Let’s hope so.

Booz & Company researchers Sanjay Saxena and Nate Holobinko, reach similar conclusions.  Their conjoint analysis of interviews with 20,000 consumers led them to conclude that health care consumers are, in fact, highly price sensitive.  Contrary to conventional wisdom, consumers valued lower price over broad networks, and inclusion of high quality health systems was more important than having their own PCP in-network.  Consumers also don’t necessarily view the most well-known hospitals – e.g., academic medical centers or other flagship institutions – as “must have” providers; other respected local health systems could also suffice (although consumers like the aforementioned Ms. Sundby might disagree). 

Of course, responding to a survey is not quite the same as acting in real life, conjoint analyses notwithstanding.

The trend towards narrower networks is part of, although not synonymous with, a move towards paying providers more for how well they provide care rather than simply how much care they provide.  This is variously called pay-for-performance, value-based purchasing, or outcomes-based payment.  McKinsey & Co. believes such approaches can save over $1 trillion over the next decade, although they acknowledge the magnitude of the transition required to achieve those savings. 

Some might object that many of these payment approaches leave the consumer out of the equation, as they can result in ever-more arcane cost/quality/outcome contractual arrangements between insurers and providers, making price transparency more difficult.  One alternative approach is “reference pricing,” under which the payor sets fixed payment levels for drugs, procedures, or bundles of services, and encourages consumers to shop.  If they find providers who can deliver at the set price, fine, but if they choose a more expensive provider, they pay the difference between the reference price and that provider’s price.  That tends to get their attention.

CalPERS has been testing the approach for several years, and reports some striking results.  The number of enrollees using lower-priced hospitals for orthopedic procedures increased 21% in the first year, and those using high priced facilities fell by 34%.  Better yet, many hospitals saw the writing on the wall, and dropped their prices to get closer to the reference pricing.  CalPERS claims $6 million in savings for the first 2 years. 

Of course, the approach relies on having a choice of providers, adequate price transparency for the impacted services, and engaged consumers.  Failure in any of those components is likely to lead to failure to change behavior – and some deeply disgruntled consumers.   Let’s not forget that, according to Gallup, 20% of the uninsured still don’t know about the mandate, 27% don’t know about the exchanges, and 25% still don’t intend to buy coverage, so expecting them to know the prices for, say, hip surgery is perhaps optimistic.

Reference pricing will require a lot of work to make it successful on a broad scale and is itself likely only an interim step, but between it and narrow networks as a strategy, I’ll take reference pricing.

While I understand the rationale for the narrow networks, I think they will prove to be a dead end, for two reasons.  The first is that, as we should have learned from the 1990’s, ultimately consumers will balk at the restrictions.  The second is that market consolidation, which I’ve written about previously, will make such narrowing difficult in many markets. 

In the more perfect health care system to which we should be aspiring, we should be encouraging consumers to find the best providers, as long as that “best” is based on value.  It’s hard to argue that this choice should be geographically limited, and I think it will become increasingly hard to argue that having a contract with a specific carrier should be a limiting factor in choice of the best provider either -- as long as the provider actually offers the best value. 

Still, whether it is narrow networks, value-based pricing, PCMH, ACOs, or any of the myriad of other experiments being tried, whenever people start talking about the potential savings offered by various approaches, the elephant in the room (or maybe the ox in the room, as I discussed in Gore Someone Else’s Ox, Please) is from which providers the money is going to come.  Public officials in general, and Congress in particular, appear helpless against the forces of lobbyists and/or the fear of lost jobs in their district.  We need only look at the history of Medicare’s “sustainable growth rate” mechanism, or, in another context, weapons systems that even the Pentagon doesn’t want but which represent defense contractor jobs, to illustrate this type of lack of will.  Screams of pain from health care providers will be hard for them to ignore, especially when they start trotting out potentially impacted employees and, more powerfully, patients.

We need to be tougher but also smarter and more targeted.  When it’s the demonstrably poorer performing providers which start losing significant revenue, or even start going out of business, that’s the kind of narrowing of networks I can buy into.

To Delay or Not to Delay

By Kim Bellard, October 15, 2013

It’s fair to say that the implementation of the Affordable Care Act – ACA or, as it is most commonly come to be called, Obamacare -- has not gone exactly smoothly. 

The Administration had weathered several earlier storms as it moved forwards with various aspects of implementation – e.g., coverage for contraception, the delay in options through the exchanges for employees of small businesses, and the delay in the employer mandate, to name a few -- and I’ve touched upon some of these previously (see, for example, Sebelius Says or Tell Me the Good News Again from earlier this year).  The recent snafus with healthcare.gov, the consumer portal for the 36 state exchanges run by the federal government, may prove to be the proverbial straw that breaks the camel’s back.

The portal went live October 1, as planned, but that was pretty much all that went according to plan (see Clive Riddle’s earlier post).  Consumers complained – and continue to complain -- about long waits, pages not loading, inability to create accounts, and even numerous typos or grammatical errors.  User-interface experts were baffled at the portal’s requirement that users create accounts before being able to research their health insurance options, especially since the account creation process proved to be one of the most problematic. 

Some reports indicate that the federal government spent over $600m on the site – over 6 times the budgeted amount – and other reports fault HHS for their late start, reliance on multiple vendors, and lack of effective oversight over the huge IT project.  One IT company which did not work on the portal but which does claim to focus on building software for government blames the healthcare.gov mess on the federal procurement process, which they say rewards companies who are good at the procurement process rather than at the desired task itself.  They may have something there.

Coming as it did just as the federal government shut down due to Congress and the President not able to agree on spending limits, to many the portal fiasco symbolized the federal government’s inability to do anything right.  It shouldn’t surprise anyone that recent polls suggest only 5% of the American public approve of the job the government is doing.   All this distrust has given new ammunition to critics of Obamacare.  House Republicans were already waging a battle to “defund” Obamacare, and the problem with healthgov.gov was like throwing them red meat. 

The defund battle seems to have quieted -- for the moment -- but this notion of delaying the individual mandate has gained some currency.  CNN anchor Wolf Blitzer, who is generally seen as keeping a neutral perspective, surprised many observers by saying the problems with healthcare.gov supported the Republicans’ desire to delay the law for another year.  After all, CBO estimated that such a delay would save the federal government some $36b between 2014 and 2018, due to fewer people covered through Medicaid/CHIP and to lower expenditures on subsidies. 

I even saw Jon Stewart skewer Secretary Sebelius on The Daily Show about the topic.   Despite declaring herself a “recovering Insurance Commissioner,” Sebelius seemed totally unable to articulate why delaying the individual mandate wasn’t the same as delaying the employer mandate. 

Normally I think Mr. Stewart is smart, as well as extremely funny, but this is a case where he misses the point (as Stephen Stromberg has ably pointed out in The Washington Post).  I’m already dubious that the penalties for not buying coverage are strong enough to overcome fiscal and other inertia from most of the uninsured – especially the highly desired young and healthy ones – but delaying the mandate begs the question.  The mandate itself is not the point: assuring access to coverage is. 

Let’s say we delay the mandate, but keep the requirements that insurance companies must accept all comers, regardless of health condition.  We can ask people in New York or New Jersey what to expect, as those states required guaranteed issue with no mandate in the individual markets many years ago, only to see a virtual collapse in their individual markets, with limited options and the most expensive coverage in the nation.  Replicating that nationally would be a disaster.

Or we could delay both the mandate and the guaranteed issue provisions, continuing the nation disgrace of millions of Americans not able to qualify for or afford coverage.  After all, the supposed interim step offered by Obamacare – high risk pools – have long ago run out of money.  All those millions of Americans who want coverage, and who are among those overloading healthcare.gov, would have to wait at least another year for an opportunity to get coverage, continuing to hope that they won’t be hit with significant medical expenses and fearing that such a delay would prove to be indefinite.

The many critics of Obamacare must forget that addressing the very real need of those uninsured Americans is the main purpose behind ACA. 

In case anyone is worried I’m too sympathetic to the Administration, let me repeat that I think ACA is a badly designed, poorly written, and fiscally scary pierce of partisan legislation.  The problems with it are more than just the “glitches” the Administration would have us believe, although they may not (yet) quite qualify as the “train wreck” that critics are so fond of characterizing it as. 

ACA doesn’t address costs or structural reform in any meaningful way, it has (inadvertently, due to the Supreme Court ruling on state flexibility) perpetuated or even accentuated the uneven access to coverage for our poorest citizens (e.g., see a recent New York Times analysis), and it will be the death of employer-based coverage.  That latter may not be a bad thing, long term, but whose bright idea was it to apply the health insurance tax to only to insured plans, thus further spurring the shift to self-insurance or to dropping coverage?  That “recovering” Insurance Commission doesn’t seem to have learned much from her stint.

Much as I hate to admit it, I think the critics who fear that once consumers start getting subsidies there will be no going back have a valid point.  I’m just not convinced that is an excuse to wreck the law.  Instead of debating whether we should delay or defund, shouldn’t we be trying to fix and improve ACA?  Those millions of Americans without coverage deserve at least that.

Frankly, I don’t understand why more of the people who are desperately waiting to obtain affordable coverage aren’t beseeching their Congressmen not to screw up what they were hoping was going to be their big chance.  Maybe they can’t get through to them because they’re still stuck at healthcare.gov, or maybe no one is answering the phones or emails in Congress because the staff has all been furloughed.  Surely it’s not that Congress doesn’t care about them…is it?

“Health Care Productivity” is an Oxymoron

By Kim Bellard, September 26, 2013

It has long baffled me when politicians and others trumpet job growth in the health care sector, while at the same time bemoaning rising health costs, as if there was no connection. Some Rust Belt cities like Pittsburgh and Cleveland have bet a large portion of their economic future on their growing health care industries, and some economists attribute much of the nation’s recent economic revival on the growth in the health care sector. But job growth in itself is not always a good sign. An insightful piece by Robert Kocher suggests that the situation is even worse than I already suspected.

Kocher concluded that productivity is actually dropping in health care, with hiring outstripping output. He figures that the health care workforce has increased 75% since 1990, with almost all of the growth coming from non-doctor workers. There are 16 non-doctor workers for every doctor, and only 6 of those have a clinical role. As Kocher says, “[T]he problem with all of the non-doctor labor is that most of it is not primarily associated with delivering better patient outcomes or lowering costs.” So what the heck are they doing?

Health care professionals would be quick to note that there are ever-more administrative demands, driven by the multiplicity of payors, health care plan designs, and the number of hoops through which they are expected to jump in order to justify payment. Fair enough; it is hard to think of many other industries in which there is so little standardization. Payors want more standardization from providers in how the deliver care, providers want more uniformity from payors in coverage and requirements, and patients are stuck in the middle with neither side listening to them very well.

The latter, at least, may be starting to change. Hospitals are now facing big Medicare penalties for poor scores on HCAHPS, and physicians have to be looking forward to that future. There are some signs that hospitals are paying more attention, such as reported for California hospitals. One of the initiatives mentioned was simply to ensure patient rooms are cleaner. It’s sad that in 2013 it takes the threat of penalties to make this a focus.

Providers may be going overboard on trying to improve patient satisfaction by focusing on amenities. The New York Times’ recent article “Is this a Hospital or a Hotel?” discussed this issue, and included a series of photos that dare the reader to determine which is which. I know I had a hard time distinguishing them. Is this really where our health care spending should be going, and is this improving productivity – or patient care?

Perhaps this kind of focus on amenities partially explains both our high costs and the productivity issues. Ironically, it’s not at all clear that patient satisfaction is directly tied to quality. A recent study found statistically significant correlations between the two, but with only a weak association. Another study from Johns Hopkins similarly found that patient satisfaction does not necessarily reflect the quality of surgical care patients receive.

Moral of the story: patient satisfaction is important, but we shouldn’t let it be a substitute for better empirical measures of quality and outcomes.

A crucial component of improved standardization – and, with it, increased productivity -- is with the data. HITECH is most commonly known for being the stimulus for EHR adoption, but it also spurred the development of health information exchanges (HIEs), which are critical for the sharing of all that desired electronic information. Progress certainly has been made, with HIEs now funded in every state, but a recent report by HIMSS Analytics reminds us that the war is not yet won. Although 73% of surveyed hospital IT executives indicated they participated in an HIE, only 20% indicated that it had improved patient safety, and only 12% believed it saved time for clinicians. The biggest challenge, voiced by 49%, was that other organizations were not sharing data robustly; 64% admit to still relying on faxing to get around this problem.

It is typical health care: spend lots of money – billions in this case – but do not use it to drive ruthlessly towards improving care or cutting costs. To make things worse, providers aren’t able to eliminate the old, paper-based processes, which means work flows can’t become more uniform, and all those new costs become additive.

I have a hard time believing Walmart, Apple, or GE have this much trouble transmitting and using data across their supply chains.

Indeed, David Cutler – former health aide to President Obama – argues that health care will be much more like Walmart once the effects of the information technology “revolution” is more fully realized. He likens health care to the retail industry of the early 1980’s, full of solo practitioners and lacking useful information technology. As companies like Walmart and Amazon have demonstrated, he sees the future as being made up of larger, more integrated institutions, and able to drastically cut administrative expenses through more effective information technology.

Cutler also believes the patient has to become more central -- connected to the most appropriate health resources and providers via technology and finally becoming a more equal contributor in his or her own care.

The lack of a patient-centered system is one of the key barriers Michael Porter names in a recent blog (and article). As he and co-author Thomas Lee say, “[P]roviders are organized and reimbursed around what they do, rather than what patients need.” This is not exactly news to anyone, but it is nonetheless a profound insight. The seemingly haphazard, provider-centric structure of our health care system goes a long way towards explaining both our high costs and the difficulty in improving productivity.

Porter’s solution is that health care must focus on value; again, hardly a unique proposal, but one that is hard to argue with. Porter outlines the barriers he believes is preventing our system from improving value. In addition to the previously mentioned provider-centric structure, he also cites the following barriers:

• Free-agent physicians operate independently, rather than as part of an integrated team.
• Patient volume is fragmented, making every patient a special case.
• Massive cross-subsidies in reimbursement for individual services have distorted care and stalled care integration.
• No participant in the system has good information about patient outcomes and the cost of care.
• Information technology has often made care integration and value improvement harder, rather than enabling it.

Today’s health care “system” simply has too many entities pursing too many distinct goals, and limited ability to measure what is happening. None of these entities is particularly happy with the current situation, and most would agree that there’s too much waste in the system. Porter believes we can get to a value-based system, but it will take some radical changes in delivery systems, payment, and measurement. His article even includes a nifty infographic to illustrate. I hope I live long enough to see that future realized.

Cutler compared health care to 1980’s retail, and I would extend this to say that the productivity gap in health care is akin to what happened when personal computers became more widespread in offices in the 1980’s and 1990’s. Economists kept wondering where the productivity gains were. It wasn’t enough to simply add computers to existing business practices; business had to truly re-engineer their processes to take advantage of the new capabilities in order for productivity to soar, as it started to do in the late 1990s. Health care is not there yet.

Maybe the problem with productivity in health care – or even measuring its productivity – is that we’re too vague about exactly what we want to have happen. Process measures and patient satisfaction measures are all well and good, but what matters is what actually happens with the patient. When we can track that more effectively, maybe we can finally start identifying and attacking productivity more effectively.

Canaries in the Coal Mine for Employer Coverage

Kim Bellard, September 10, 2013

Many of you have probably heard about the old practice of putting canaries in coal mines as an early detection measure for lethal gases.  If the birds started dying, it was time to get the miners out.  We may be nearing that point with employer health coverage.

Within the past few weeks, several large companies have made some interesting announcements about their health plans.  IBM and Time Warner announced that they were moving their retiree coverage to private exchanges, and in the process essentially changing their plans from a defined benefit approach to defined contribution.  They join other major corporations like GE, Caterpillar, and Dupont in such an approach. 

Retiree health coverage is a dinosaur of employee benefits, a hold-over from a time when employers could afford to be more paternalistic – partly because health coverage was far cheaper and partly because people didn’t live as long.  Among the large employers most likely to offer such retiree coverage, its prevalence has dropped from 66% to 28% over the past 25 years, according to the latest Kaiser/HRET survey.  It’s only going to decline further, faster.

The recent rise in these private exchanges offer a new way out for employers, letting them more gracefully take a step back from their provision of health benefits, and not just for retirees.  That same Kaiser/HRET survey found that, among all large employers (200+ employees), only 9% were considering offering their employee health coverage through a private exchange.  However, the number was 29% among the largest employers, those with 5,000 or more, and they tend to be the first-movers. 

Clive Riddle recently reported on the Towers Watson/NBGH annual survey, and mentioned the interest in private exchanges.   Drilling down a little more into those results, only 28% of these large employers thought it likely that employers would move to a defined contribution approach over the next five years, and only 24% expected employers to put their coverage in a private exchange in that same time period – but the plurality were neutral in their responses.  Only 24% and 30%, respectively, thought it unlikely that they’d try these approaches.  Employers were significantly less likely to say they’d take these actions with their own health plans, which may just indicate they’re simply waiting to see what other employers do, but even so 15% were considering private exchanges for 2014.

Most chilling, only 26% are very confident they’ll be offering health benefits in ten years; in 2007 the comparable number was 72%.   

The TW/NBGH survey also reported that 42% had already increased contributions for dependents relative to single coverage (with another 19% planning to do so in 2014), and 20% had implemented spousal surcharges for spouses not taking coverage from their own employers.  Another 13% had this planned for 2014.  A recent survey from Mercer reported that 6% of firms with 500 or more employees imposed such surcharges on such spouses, while another 6% took more drastic measures, excluding spouses who could obtain coverage through their own employer.

U.P.S. is an example of this strategy.  Last month it announced that it was dropping spousal coverage for its white collar workers whose spouses have an option of coverage through their own employer.  U.P.S. isn’t the first company to take this action, nor will they be the last (The University of Virginia made a similar announcement; in fact, on the same day as U.P.S. did), but they are one of the largest to go public with this action. 

Large employers have complained for decades that they shouldn’t have to subsidize other employers by covering those employers’ employees who happen to be married to one of their own employees, and that is a valid complaint.  If more large employers follow U.P.S.’s approach, as I would expect, it would shift more of the burden on smaller employers, and on the public exchanges. 

Another vulnerable target is part-time employees.  Wegman’s grocery chain recently made news by cutting back its health coverage for part time employees.  Not many firms choose to coverage part-time employees (according to the Kaiser/HRET survey, only 25%, and that was when part-time meant less than 40 hours per week, not ACA’s 30 hours).  Ever since ACA passed there has been persistent suspicion that employers would cut back employees’ hours to get them below that 30 hour per week mandate requirement to offer coverage (see some pro versus con opinions), so we’ll have to see how quickly that 25% statistic drops.  

Health Affairs’ most recent issue focuses on the implementation of ACA, under the theme “Navigating the Thorns that Await the ACA.”  It had two articles on what will happen with employer coverage under ACA.  One study, by Thomas Buchmueller and colleagues, looked at whether employers would drop health coverage.   Their conclusion was probably not to any large degree, at least in the aggregate – their predictions ranged from a decline of 1.8% to an increase of 2.9%. 

Meanwhile, a second analysis, by Daniel Austin and colleagues, analyzed the impact of increases in employer premiums would have on employer coverage and on exchange participation, and concluded that even contribution increases of as little as $100 could cause 2.25 million to switch from employer coverage to the exchanges – and cost the federal government $6.7b in increased subsidies. 

No disrespect to Dr. Buchmueller, but I’d have to lean more towards Dr. Austin’s results, and suspect that they will be, if anything, understated.

The success of employment-based health insurance has been due, in large part, to its tax preference, which allowed employers to seemingly “pay” for most of the cost of the coverage and thus assure a risk pool with a cross-section of ages, genders, and health status.  Public subsidies that will be available through the public exchanges will lessen the tax preference advantage, and the guaranteed issue of health insurance will also chip away at the “job lock” that has kept some employees in their employer plan. 

Still, it all boils down to risk pool; if there are not enough healthy people enrolled – be it through public exchanges, private exchanges, or employer plans – costs will skyrocket and the coverage will face the prospect of a death spiral. 

Employer coverage isn’t going to disappear overnight, and there may be a lengthy transition period when employers use private exchanges to distance themselves, to lock in their contribution levels, and to avoid mandate penalties.   Dependent coverage is most at risk, between the desire to not subsidize working spouses and the lack of meaningful affordability requirements for such coverage. 

Of course, ACA could be repealed or drastically revamped due to many implementation issues, but, failing that, I think employers are going to be watching each other closely in order to make sure they’re not going to be the last one to leave the party.

Gorillas in Our Midst

By Kim Bellard, August 13, 2013

There’s a well-known psychology experiment in which participants were asked to keep track of how many times a basketball was being passed in front of them, only to have a (fake) gorilla stroll in front of them.  Surprisingly, about half of the participants were so focused on their task that they were totally oblivious to the gorilla’s presence.  Researchers call this “inattentional blindness,” and we now have some evidence that it happens even to trained health care professionals as well.

Researcher Trafton Drew recently published results of a study in which he and his colleagues placed an image of a gorilla – I swear, I am not making this up! -- in one of a series of slides radiologists were reviewing for cancer nodules.  Amazingly, 83% of the radiologists failed to detect the image, even though it was 48 times larger than the typical nodule they were looking for and eye tracking indicated the radiologists had looked directly at the image.  They weren’t looking for gorillas and, as a result, did not see them. 

“Inattentional blindness” seems to me an apt description of how those of us in the health care field tend to look at health care.  It’s the old “if the only tool you have is a hammer, then everything looks like a nail” syndrome and it may help account for why our health system is so dysfunctional.  Health care has a lot of hammers and we sure do like to use them.

Take health insurance.  Health insurers are notoriously low rated when it comes to consumer trust, and it’s no wonder: consumers don’t understand their product.  Recent research by George Lowenstein of CMU indicate that only 14% of consumers understand four basic terms – deductible, copay, coinsurance, and out-of-pocket maximum – and only 11% could estimate their cost for a hospital stay given all the applicable data. 

I worked a long time in the health insurance industry and like to think I’d do well on Dr. Lowenstein’s tests, but when it comes down to reading all the fine print from different companies I suspect I’d not know how to evaluate them either.  We’ve simply made coverage too complicated, and if anyone thinks the new health insurance marketplaces will solve this problem, then I suggest they think again. 

It’s all well and good that ACA dictates which preventive services are covered at 100%, what “essential benefits” are, and how much different levels of plans must pay out, but none of that is making health insurance understandable to the average consumer.  We’re so busy debating things like high deductible plans versus first dollar plans, single payor versus competing private plans that we ignore the real problem: not only don’t consumers understand the product but, even worse, the product fails to help them be healthy.

Or take hospitals.  Let’s say you were very sick but had no idea what a hospital was.  Your friend tells you they are where sick people go to get better.  As a result, they’re full of sick people; in fact, it’s more likely than not that you’ll have to share a room with some sick stranger.  All those sick people means lots of germs; the official statistic is that one in 20 patients will pick up an infection during their stay (which is almost certainly understated) and that about 100,000 will die from those each year (which hopefully is overstated).  Part of the problem is that hospitals can’t even do a good job of getting their employees to do simple hygiene tasks like washing their hands. 

When you arrive, you’ll have to fill out lots of forms, giving them information that you no doubt have already given to other health care professionals.  The hospital will expect you to wear a flimsy gown that affords no dignity, and stick a wristband on you like you are a piece of merchandise, which is supposed to lessen the chance that they’ll, say, remove one of your limbs or a kidney by mistake.  An array of different hospital personnel will keep interrupting you for a variety of tests, procedures, and other tasks, virtually none of which you’ll have much advance warning of when to expect and which will make sleeping or resting very difficult.  You’ll spend most of your time in the hospital waiting around, but don’t expect much in the way of good distractions: the food is bland at best and terrible at worst, and the entertainment options on the television might have been state-of-the-art for 1970’s cable. 

Don’t bother trying to find out what anything is going to cost; no one can tell you until long after the fact, and then you’ll be shocked at how expensive everything is – at prices that would make even the most hardened Pentagon procurement officer blanch.  Oh, and there’s a one in five chance that you’ll have to be readmitted within 30 days, either because you didn’t really get better during your stay or because something else bad happened to you when you were there. 

If you learned all this for the first time, you might think twice about being admitted.

Hospitals have been around in some form for centuries, but they didn’t really start turning into these impersonal behemoths until federal money started pouring in after World War II, first with Hill-Burton funds and then with the introduction of Medicare and Medicaid.  The trend has accelerated in recent years.  Hospital buildings have often grown very complex due to repeated expansion and renovation, to the point that visitors need color coded maps just to try to get around.  The equipment in the hospitals, down to the beds themselves, has grown equally complex – and expensive.   Hospitals can certainly help patients in ways that would have been unimaginable even twenty or thirty years ago, but I doubt there are many people who could assert that the hospital experience has improved.

It’s not that smart people aren’t thinking about this.  Take, for example, Patient Room 2020, led by design firm NXT Health in conjunction with Clemson’s Healthcare + Architecture Program, and funded by the Department of Defense.  They’re reimagining what patient rooms should look like and work, and have come up with some cool design changes (see, for example, more pictures in Wired’s article).  As Wired said, it’s like the Apple Store meets Tron (although I think I’d have chosen a better sci-fi movie – or at least one that had a medical facility in it). 

The trouble is, they’re not seeing the metaphorical gorilla.  It’s the concept of the hospital that we’re not seeing properly.  It’s sort of like Windows 8 – some impressive engineering that provides expanded capabilities, but at the end of the day still a kludge trying to maintain an approach that is quickly becoming bypassed by newer ones. 

To carry the analogy further, hospitals and health insurers would surely be the mainframes of the health system, with outpatient clinics and surgical centers perhaps the desktops.  Physician offices and perhaps physical therapy offices might be considered the laptops.  In this analogy – where are the equivalents of tablets and smartphones, and where are the “apps” that make using the system easier?  Again, I mean these as an analogy, not literally, to illustrate that we’re just not doing a good job of rethinking the system.

Just look at all the artificial distinctions that have ossified in our health system: allopathic versus osteopathic (or chiropractic); “Western” versus alternative medicine; primary care versus specialty versus subspecialty; dental versus vision versus medical; workers compensation health coverage versus “commercial” health insurance; state by state licensing of health care professionals and insurance.  I could go on and on, but it’s clear that there are a lot of gorillas that we’re missing with our inattentional blindness. 

For example, a recent study found that one in ten Americans now take an antidepressant.  The problem is, nearly two-thirds of them don’t meet the criteria for depression and probably shouldn’t be taking the prescription.  Both the patients and the prescribing physicians are guilty of going for the medication fix because that’s what they’ve been conditioned to look for.

We need to go back to first principles.  What are the structures we need to encourage and incent consumers to focus more on good health?  What are the types of professionals and support systems that can assist them in that ongoing journey?  How do we better identify when health issues turn into medical problems, and apply the “least necessary” resources to them?  How do we keep the patient in the center even as care becomes more complex?  How much should consumers be expected to pay towards their own health, and how do we want to finance those costs?  Answering these questions from first principles would be monumentally hard, but right now there are not many people even trying.

We’re so busy seeing tests/procedures/pills/payment that we’re missing, not the gorilla, but the patient.

It Was Those Other Guys

Kim Bellard, July 26, 2013

A fascinating study in JAMA on physician’s attitudes towards controlling costs helps illustrate the bipolar attitudes our health system tends to generate.  The study found that physicians generally believe other players in the health system have the major responsibility for controlling costs – led by the popular culprits: trial lawyers (60%), insurance companies (59%), and pharmaceutical/device manufacturers (56%).  Patients were cited by 52%.

Only 36% of the physicians cited physicians as bearing a major responsibility for controlling costs.

When I saw the latter result, I initially assumed the respondents would simply plead ignorance about costs, or at least take the 5^th, but nope: 76% agreed that they were aware of the costs of services they recommend.  Even more surprising, 73% disagree that doctors are too busy to worry about costs of tests and procedures, and 75% agree that trying to contain costs was every physician’s responsibility.  There’s a certain cognitive dissonance here that is hard to understand.

As for cost containment strategies the physicians were enthusiastic about, mom-and-apple-pie approaches dominated: promoting continuity of care (75%), the ever-popular “rooting out fraud and abuse” (70%), and chronic disease care coordination (69%).  Only 7% were in favor of eliminating fee-for-service and only 6% liked the approach of bundled payments.  I guess they haven’t gotten the memo that FFS is supposedly dying.

I was particularly disappointed that the physicians were not more enthusiastic about more empirical approaches to controlling costs, with only 51% in support of expanding access to quality and safety data and only 50% supporting head-to-head trials of competing treatments. 

Support for head-to-head trials should be much higher, based on some findings recently released by the Mayo Clinic.  The researchers reviewed ten years of articles in a “high impact” medical journal, looking both at articles studying new medical practices and ones evaluating existing treatments.  The results are disturbing: 40% of the existing treatments reviewed were no better or worse than the prior standards of care; i.e., the results recommended reversing an existing practice that was considered the current standard of care.  Only 38% reaffirmed existing practices, with the rest inconclusive.  This is medicine by ready-shoot-aim.

New treatments fared better, with only 17% failing to improve upon existing practices.  I suppose I should be comforted by that result, but it just makes me wonder if the discredited practices ended up being used anyway (especially if they resulted in higher revenue).  

Another recent survey of physicians – this one by Wolters Kluwer Health – didn’t paint a better picture than the JAMA study.  For one thing, 34% reported that it was somewhat or very likely that they’d leave their practice in the near future.  The respondents found it challenging to manage shifting reimbursement models with payors (91%) as well as their practice’s financial management (90%); as a result, 88% reported it challenging to spend enough time with patients.  Improving patient care was seen as further down their list of challenges (78%, but with the lowest result for being seen as very challenging -- only 20%). 

These physicians do think that HIT is making progress in having an impact on ensuring patient safety and in improving quality of care (both 55%), but are more skeptical that it is making progress in improving ease of use (56% disagree) or managing costs (63%). 

In terms of areas of focus for the next 3-5 years, 48% listed improving practice efficiency, 34% planned to explore different business models, while only 14% were focused on public reporting of quality metrics and only 11% wanted to concentrate on patient safety.  To be fair, 31% did hope to adopt technology to improve clinical decision-making/evidence-based medicine. 

One likes to think that it truly isn’t all about the money, but it’s also easy to be cynical about this.  The Washington Post recently wrote about how an AMA committee is driving Medicare reimbursement decisions, using some questionable assumptions.  The Post asserts that some of the committee’s assumptions grossly exaggerate the time involved in procedures, such as for colonoscopies.   The assumptions can be as 100% higher than actual time and effort. 

The Post also notes that the committee is seven times more likely to raise time estimates than to lower them, in apparent contradiction to presumed technology and productivity advances.  Despite the billions of dollars at stake, CMS only uses “six to eight” people to review the recommendations, and none of them are devoted full-time, in contrast to the “hundreds” of people the AMA and specialty societies use to develop their recommendations.

Former Medicare chief Tom Scully is quoted as saying, “The concept of having the AMA run the process of fixing prices for Medicare was crazy from the beginning.  It was a fundamental mistake.”  The Harvard researcher who originally developed the RBRVS point system, William Hsiao, says, “The AMA fought very hard to take over this updating process.  I said this had to be done by an impartial group of people.  This is highly political.”

The AMA committee’s recommendations do not directly result in higher payments, nor is it likely that most individual physicians are aware of the assumptions embedded in their payment rates, but the process is another illustration at how no one is minding the store.

I would be remiss if I failed to mention the IOM’s new report “Variation in Health Care Spending: Target Decision Making, Not Geography.”  They were asked to investigate since Congress has been considering shifting money from high-cost areas of the country to lower cost ones.  Somewhat surprisingly, IOM did not support that tactic.  They reaffirmed that geographic spending differences do exist, for both Medicare and private insurance, and that there is essentially no correlation between quality and spending.  However, they did not support geography-based reimbursement models, finding that the geography is not the issue.

For Medicare, they found that higher spending differences were most associated with post-acute care, and to acute care only to a lesser extent; indeed, post-acute care differences accounted for 73% of Medicare’s geographic spending differences.  For private insurance, spending differences were due to price markups rather than utilization differences.

The IOM’s main conclusion is in the subhead of their report’s title: “Target Decision Making, Not Geography.”  Now if only we could figure out who is making the decisions.   The physicians don’t think it’s them; the government is delegating theirs to special interests and lobbyists; the payors can’t negotiate tough enough with the provider systems (especially now that those systems continue to consolidate); the provider systems – well, they’re terrified that the physicians will stop generating all that revenue for them. 

We can continue to pin the tail on new culprits, but we need to get past blame.  I’m naïve enough to think that there aren’t many villains here (although there are, allegedly, some), but it boils down to too many involved parties not being willing to be accountable for their actions.

When it comes to increasing value – not just controlling health care costs but also improving quality – in our health care system, I think of words of the always wise Benjamin Franklin: we must all hang together, or assuredly we shall all hang separately.

Hiding in Plain Sight

by Kim Bellard, June 18, 2013

I saw two recent articles in The New York Times recently that I thought merited further discussion.  One attracted a fair amount of attention, the second not quite as much.  They deal with the high prices in the U.S. health system and the trend towards provider consolidation, respectively.  Both problems are well known, yet they describe continue to get worse, not better.  

The first article – The $2.7 Trillion Medical Bill: How Colonoscopies Explain Why the U.S. Leads the World in Health Expenditures – focuses on the wacky world of charges and overuse of expensive procedures, especially as they relate to colonoscopies.  It will come as no surprise to anyone who has been paying attention, but their analysis indicated that charges for the procedure varied dramatically between providers, and were much higher than in other countries.  The U.S. also does them more commonly than many other countries, preferring the expensive surgical approach to other screening options.  

The boom in the number of colonoscopies has been great for gastroenterologists, anesthesiologists, and surgical centers; for patients, perhaps not so much.  The article’s discussion of how many gastroenterologists have invested in surgical centers to reap more of the profits from the procedure is disturbing, and they are far from the only specialty to have discovered this financial gimmick.  It’s part of what drives our health care bill.  

The article notes that insured patients typically shrug off the inflated charges, since their insurance has negotiated rates that are far lower, but, of course, uninsured patients get stuck with the full bill, kind of like having to pay those absurd prices on the back of hotel room doors.  Arbitrary and inconsistent as charges may seem, they’ve nonetheless helped lead to “allowed charges” that are still much higher than anywhere else in the world.  We all end up paying for the costs, of course, through higher insurance rates or as taxpayers.  

Meanwhile, the second article – Health Care’s Overlooked Cost Factor – centers on market consolidation, particularly through mergers of health systems.  It starts off with the FTC’s first successful antitrust case against a hospital merger since 1990 (!!), blocking the merger of two neighboring Chicago hospitals.  A victory of sorts, but the case was done post-merger and it is not at all clear that the ruling actually rolled back pricing with the payors to the levels they would have been sans merger.  

Earlier this year the FTC did move to block the acquisition of Idaho’s largest physician group by its largest hospital provider, so perhaps they’re starting to wake up to the problem.  With all the health system merger activity in the past 10-15 years, these isolated victories lead one to wonder why the FTC has been so asleep at the wheel. 

The article cites research by Gaynor and Town, done for the Robert Wood Johnson Foundation last year, which concluded that hospital consolidation generally raises prices, often dramatically, and that physician-hospital consolidation has not led to improved quality or reduced costs.  Their research is not the first to reach these conclusions, and of course the American Hospital Association has a different perspective.  Earlier this month they released a report that which indicated that only about 10% of hospitals have been involved in a merger in the past five years, that most mergers aren’t happening in concentrated markets, and don’t necessarily result in higher prices.  Uh-huh.  

AHIP was quick to rebut the recent study’s conclusions. 

These are well-known problems.  The insight on prices goes back at least ten years to Gerry Anderson’s Health Affairs famous article “It’s the Prices, Stupid.”  Steve Brill wrote a similar article in Time (“Why Medical Bills Are Killing Us”) earlier this year.  The state of California and the Commonwealth of Massachusetts have both publically been concerned about the consolidation issue, and there was the great quote from consultant Robert Murray: “Finally the evidence is catching up with the reality that we have a humongous monopoly problem in health care.”  Even I’ve previously written on both prices and market consolidation.  So, no, these shouldn’t catch anyone by surprise. 

Many experts cite greater transparency as an important way to attack prices, and there are numerous companies purporting to provide consumers transparency tools.  Indeed, a recent report from the Aite Group claims transparency itself will be a $3 billion industry by 2016 – up from $540 million in 2012.  Of course, someone – i.e., consumers – ultimately will pay for that increase.  Only in the American health care system does creating a business to provide information on prices lead to greater costs for the system, as to date the data is inconclusive at best that consumers will actually change their behavior based on transparency information.  And in a consolidated market they may find few options to price shop even if they want to. 

We need more competition, and we need it on the right things, like value.  I’m not sure any of the metrics we use now are going to get us there anytime soon.  Some claim that this is the era of “Big Data,” and its application in health care will provide revolutionary insights.  McKinsey & Company issued a report that says use of Big Data in health cae could save $450 billion a year.  Do a search on Big Data in health care and you’ll find a plethora of eager companies, from behemoths like IBM to upstarts that specialize in health care, like Explorys,  GNS Healthcare, or Health Catalyst, to name a few.  Hidden in the morass of health care data, it appears, are gems. 

Much has been made of the recent scandal over the NSA pulling unimaginable reams of data from telephone and internet records, and using their Big Data capabilities to mine it – hopefully only to detect terrorists.  Meanwhile, when I read articles like the one Bloomberg News recently reported about how one Chicago hospital has literally been cutting patients’ throats – e.g., performing tracheotomies -- unnecessarily to increase revenues, I kind of wish we did have some Big Brother looking at the data better.  

In a series of articles over two years ago the Wall Street Journal showed (see here or here) the kinds of fraud can be detected through proper analysis of the Medicare claims data – and it makes one wonder why CMS hasn’t done the same.  Perhaps now that the Wall Street Journal has forced CMS to release Medicare claims data on individual doctors someone else can detect this kind of abuse on an ongoing basis.  That data is still not freely available, but at least the door is open wider.  

Some say pricing can be addressed via greater transparency, others want more bundled payments, and yet others like reference pricing, which essentially limits payor liability to a fee schedule.  I’m old enough to remember when health insurance often had set fee schedules, with charges above those scheduled amounts the patient’s problem, and I don’t recall people being too crazy about them.  On the other hand, costs were a lot lower, so maybe there is something there, just as we’re also going back to the old idea of big upfront deductibles.  

Personally I think the source problem is that we’ve allowed our pricing structures to become so complex, so piecemeal, and so jargon-filled that no consumer – and few professionals – can really be expected to understand them, much less shop based on them.  Step one has to be to greatly, greatly simplify how we price health care services. 

One of my pet peeves in health care are those financial responsibility forms providers try to get everyone to sign upfront.  They say, essentially: we don’t know exactly what we’ll do to you, or how much it will cost, and we may get some other people to do some other things to you too, and we don’t know what that will cost either, but whatever is done to you and however much it costs, you are obligated to pay.  I’m no contract lawyer, but that sure doesn’t seem like an enforceable contact to me, given the vast asymmetries.  I’d sure love to see the ACLU or Public Citizen or maybe even AHIP take this on in court.  Pricing would get a whole lot more rational if there had to be more upfront disclosure and agreement. 

As for the market consolidation, if health systems are going to create monopolies or virtual monopolies, they may need to be treated more like public utilities, facing rate and spending review.  I’d hate for that to happen, and much prefer that we reimagine the role of these capital-intensive structures.  Why do these big buildings with all those beds and all that equipment still make sense in the 21^st century?  Can they be reinvented with something that allows more competition?  I offered one conceptual approach some time ago, but would welcome other proposals to address the issue. 

There is a lot of “reform” happening in health care these days, but if they just end up incorporating these two structural problems I doubt we’re going to actually see much real improvement to our health care system.

More Arrows Out of the Cost Management Quiver?

By Kim Bellard, May 31, 2013

Even as health costs seem to have dramatically slowed in recent years, some recent studies now question whether some commonly proposed methods of attacking those costs – reducing geographic practice variations, increasing patient shared-decision-making, and employee wellness programs -- actually have the potential that proponents have claimed. 

Let’s start with the geographic practice variations.  It’s been over thirty years since Jack Wennberg first mapped out the sometimes startling variations in health care costs and utilization.  The Dartmouth Atlas has continued and expanded on his work, and it has become almost dogma that such variations exist.  The belief has been that they could account for as much as 30% of care that is inefficient/unnecessary, which could be cut without harming patient safety.  Respected experts like Atul Gawande have written eloquently on these variations, and then-CBO head Peter Orszag popularized the idea to the extent that President Obama seized upon it in his campaign to pass the Affordable Care Act.  Turns out the conventional wisdom may be wrong.

New research from Jack Reschovshy and his colleagues indicates that health status, not geographic practice variations, drive 75-85% of apparent geographic cost variations.  They took a new approach to case mix adjustments and concluded that, for the most part, higher cost patients were, indeed, sicker.  The researchers took pains to note that their conclusion is not to suggest that significant waste and inefficiency do not exist in our health care system, but simply that those are not easily boiled down to geographic practice variations.

I’m not sure how this research squares with, say, the differences in hysterectomies or C-sections that have long been known, but, to be fair, the researchers did only focus on the Medicare population.

Then there is patient shared-decision-making.  This is at the heart of consumer-driven plans, with the belief that once patients are more involved in their care, and more exposed to the costs and trade-offs inherent in that care, they will become more prudent purchasers.  The latest issue of JAMA Internal Medicine included several studies and articles on this topic – one of which, a study by Tak and colleagues, throws cold water on the idea of SDM saving money.  They found that while over 70% of patients preferred to leave decision-making to their physician, patients who did actively participate in that decision-making had longer hospital lengths of stay and costs (the study only focused on hospital patients). 

One could easily see how more vocal patients might demand more care, or we can speculate that these patients became more involved in their decision-making because they were sicker.  Correlation is not, after all, causation.  We should also keep in mind that Tak’s results are somewhat at odds with recent research by Hibbert that suggested higher patient activation predicts lower costs.  As researchers always like to say, more research is needed. 

It’s not good days for SDM.  Another of the JAMA Internal Medicine studies, by Fowler et alia., was a nationwide survey of adults 40 years or older on their experiences with being involved in medical decision-making.  Patients reported more discussion of pros than cons, and more balanced discussion about surgeries than cancer screenings or medication treatment.  The authors conclude that “discussions about these common tests, medications, and procedures as reported by patients do not reflect a high level of shared decision making.”  A third study, by Wachterman and colleagues, found a lack of congruence between expectations of hemodialysis patients and their nephrologists, with the patients being much more optimistic about their prognosis, and conclude better communication is needed. 

A fourth study, by Krumholz, surveyed patients with Acute Myocardial Infarction, and found that over two-thirds wanted active involvement in decision-making, but the authors admit that “…shared decision-making is not yet integrated into routine medical care.” 

Face it: the winners in the health care system have been hospital systems and pharmaceutical companies.  These are important institutions, which employ many caring and well-intentioned people, but whose historical orientation is treating sick people – the sicker the better.  As comedian Chris Rock puts it, “Ain’t no money in the cure, money’s in the medicine.” 

Hospitals are consolidating and buying up physician practices at record rates in order to improve their clinical integration – or improve market clout – and the pharmaceutical industry has been off to the races ever since DTC advertising has been allowed.  As proof, consider the fact that Americans take, on average, 4 billion prescriptions per year.  That’s 13 prescriptions per year for each and every one of us, and many of those are for “lifestyle conditions” that arguably could largely be avoided if we simply ate better and got more exercise. The answer may be less in changing what we do to sick people than in simply having more healthy people. 

That is one reason why many employers have instituted employee wellness programs.  According to Aon Hewitt, 83% of large and mid-sized firms have some employee incentives in place to help them be more active in maintaining their health.  ACA not only permits such programs but expands how much they can incent employers.  Under new rules, employees will be able to reduce their health insurance contributions by up to 30% -- up to 50% if smoking cessation is included – by participating in such programs.   The oft-cited success story in employee wellness programs is that of J&J, which was so happy with its success that it turned the programs into a business line, part of the $6 billion wellness industry. 

However, even the success of wellness programs is not quite clear-cut.  Reuters reports that a recent report from RAND to DOL and HHS found at best only modest successes – and the report was mysteriously pulled from public availability within hours of its release.  Looks like some other people have some explaining to do…

Sometimes it seems like we really don’t know anything, or that the things we thought we knew aren’t true.  For example, for decades the gold standard for treatment of appendicitis was an appendectomy; now it appears that surgery may not be called for at all, with antibiotics doing the trick.  And doing even get me started on the controversies about cancer screenings, like PSA tests.

I wonder if years from now we’ll look back on this age of medicine much like we might regard medicine of the 19^th century: well-intentioned but almost comically primitive in its misguided notions about how to treat conditions.  E.g., maybe the future is in the microbiome rather than in our prescription medicines and surgical approaches.  No one can tell me that any clinical studies for a given drug are truly taking into account the other 12 prescriptions a user might also be taking, nor fully take into account what havoc the cocktail of prescription drugs will have on the body’s natural defenses. 

We are starting to realize the importance of our internal bacteria, but we still don’t really know exactly what they do or how we can take best advantage of them.  Then again, we’ve been studying geographic practice variations, shared-decision-making, and employee wellness programs for a long time, and we don’t seem to know as much about them as we thought we did either.  Based on these new studies, there are a lot of consultants, disease management companies, and wellness firms that may have a lot of explaining to do.  

When push comes to shove, I still believe that there are unnecessary practice variations, that getting patients more involved in decision-making is the right thing to do, and that efforts to focus on health rather than on illness are the way to go.  Whether we know how to do any of those correctly, though, is an open question.

Games (Some) People Play

By Kim Bellard, May 13, 2013

I have to admit that I am a child of the television age, with movies as a close second.  I never really got into video games, like PacMan, Tetris, Mario Brothers, Call of Duty, Grand Theft Auto or even Madden NFL, and am only now belatedly becoming addicted to Angry Birds.  As I suspect is true of many of us old health care pros, I am also late to the potential revolution that video games offer for health care.  I’m glad others in the field have been paying more attention.

The video game industry is not for teenagers, and its size is shocking – it dwarfs the music industry, and, depending on which source one uses, either has surpassed or soon will surpass the movie industry.  It’s helping to drive the chip, PC, and mobile phone industries; none can afford to fail to deliver the speed and video quality that modern gamers demand.  We’re talking about a soon-to-be $70 billion industry here; still only a fraction of the health care industry, but much bigger, for example, than spending on health IT. 

The video game industry itself faces its own challenges; for example, the era of game consoles may be ending, as more gaming is done on mobile devices and with other options for player control.  That’s not to say the era of video games is passing, but rather that it continues to change rapidly.  Hand-held games were revolutionary when first introduced, as were game consoles, PC-based games, the Wii controller, Kinect, to name a few.  Video game companies who do not innovate can find themselves quickly left behind.  This “evolve-or-die” mindset is one that I wish was more prevalent in health care, whose attitude is more often “we know best” and/or “not too fast!”

Always looking ahead, the Robert Wood Johnson Foundation started its Games for Health project back in 2004.  They have given grants of over $9 million, and have an active conference and information sharing presence in the health/gaming intersection.  They’re not just spurring development of games and games technology, but also funding research on the games’ effectiveness through their Health Games Research program. 

The research is showing some results.  There are many reports about the health benefits of video games, such as a recent study that found video games can slow or even reverse mental decay, and a broader list of positive impacts that include motion skills, stress reduction, pain relief, vision and decision-making skills.  Apparently, both seniors and kids can benefit. 

An example of how game principles can be applied in health care is Mango Health, which turns the problem of medication management into a game, complete with rewards that can be turned into gift cards or charitable donations.  It is not the first or only such example, but is illustrative of the potential games offer.

The Entertainment Software Association, perhaps sensitive about criticism that violent videogames can have adverse impacts, prominently touts video games’ role in health care (along with family life, art, the economy, education, social issues, and the workplace – boy, these guys really are defensive, aren’t they?).  Two of the key areas it cites are in rehabilitation and in training.  For example, USC’s Institute for Creative Technologies researchers developed Jewel Mine to provide customized rehabilitation to people with a variety of neurological and physical injuries.  Other efforts use out-of-the-box gaming systems, like Wii or Xbox, to make rehab more enjoyable.  And there is an organization, Games4Rehab, that tries to tie users, developers, clinicians, and researchers together in this area.

One of the innovators in training that ESA cites is the University of Maryland Medical Center’s Advanced Simulation, Training, Research, and Innovation Center (MASTRI).  MASTRI has been working for over six years now on high tech simulation and training for health care.  Even ONC is using video games for training, as is Darpa (in their case, mobile medical training for first responders). 

One recent study found that surgeons who used the Wii – not on any specific medical games but just using standard Wii games -- outperformed their peers in laparoscopic simulators, due to improved spatial attention and hand-eye coordination.  My favorite study, though, was the one that found gamers did better at simulated surgery than medical residents.  Maybe the wrong people are doing those kinds of surgeries.

Surprisingly, payors haven’t all been late to this particular game.  Humana, in particular, was a pioneer, focusing on video games as far back as 2007.  Aetna  and United have joined the movement, and last year the Wall Street Journal summarized various insurer efforts.  One senses they’re not quite sure what they should be doing, but don’t want to get left behind.

People have coined the term “gamification” to include game-like features into non-game pursuits.  Author Jane McGonigal wrote a fascinating book called Reality Is Broken, the subtitle of which is “Why Games Make Us Better and How They Can Change the World.”  She doesn’t confine herself to video games, nor does she talk much about their applications for health care, but the mind-set she describes -- which include overcoming obstacles, rewards, collaboration, interaction, voluntary participation, and feedback -- is very much something people in health care should be incorporating more. 

The health care system does often seem like a maze, but it’s not one that most people have any fun navigating, nor one where many people emerge thinking they are winners.  This is an industry where, for example, use of outdated communications technologies like pagers waste an estimated $8.3 billion annually.  This is an industry that demanded, and is getting, hundreds of billions of dollars from the federal government to bring their medical records into the 20th century (and I mean that), largely still in siloed, mainframe EHRs that can’t talk well with each other and whose requirements for “Meaningful Use” are being delayed again.  It is not, in short, an industry that would seem an early adaptor of the lessons video games can teach.

Video games are no panacea for health care.  Not everything is a game, not everything should be approached like a game, and not everyone likes games.  Still, there are a couple of important lessons we should draw from them:

• To each his own: for a not insignificant and growing portion of the population, games are a familiar and preferred medium.  If we want to educate, motivate, and influence behavior for that segment, game-like approaches are the way to go.  The likelihood of reaching serious gamers through, say, a telephonic disease management program would seem to be very low.  The point is not to use video games for everything for everyone, but to use the right media for the right populations.  We now have lots of options to reach people, including not just games but also social media, text, email, mobile.  The challenge to providers, health systems, and health plans is to figure out how to best use each tool for which portion(s) of the population.   
• Take advantage of the technology and design:  Video games are in an arms race for better experience, and, as with arms races, there can be spillover benefits to other sectors.  High quality simulated images (even 3-D), on-demand, motion-sensing, multimedia, multi-person, and, above all, relentlessly interactive – all describe modern game capabilities and should be describing applications for health care, even if not used for games themselves.  Maybe health care organizations should hire fewer mainframe programmers and more game designers to work on their B2C efforts. 

Excuse me, but I better go play some games…for my health, of course!

Sebelius Says

By Kim Bellard, April 16, 2013

If I was HHS Secretary Kathleen Sebelius, I think I’d be asking for a pay raise, or maybe a (verbal) flak jacket.  Of course, there’s probably no money for them.

Sebelius is front and center for any developments with ACA, and she has been a very visible spokesperson for the controversial legislation.  I don’t know whether she actually believes all the things she says, or is just a loyal soldier for the Obama Administration.  Either way, the news about ACA seems like a slow drip of continued bad news, and I fear that the news is going to keep getting worse before it gets better.

Latest up was the request, included in the Administration’s 2014 budget, for an additional $1.5 billion to run the health insurance exchanges for the 26 states who have opted to have the federal government run their exchanges, plus another seven that are to be jointly run.  That’s far more than had been originally expected, which means much more work for HHS.  Congress refused a similar request for just under $1 billion last year, and is likely to view this request equally skeptically.  

In testimony before the House Ways and Means Committee last Friday, Secretary Sebelius vowed that the exchanges will be up and running by the October 1 deadline, but admitted there’s no backup plan in case she’s wrong.  Presumably she’s lined up someone to blame in case she’s wrong.

Curiously, even though far fewer states are planning to run their own exchanges, HHS expects their grants to those states to be more than twice as much as they estimated last year – some $4.4 billion instead of the earlier $2 billion.  HHS doesn’t need to ask Congress for this money, but the increase certainly raises eyebrows.  Twice as much for half as many states?

The Washington Post recently pointed out that, even though ACA is arguably the signature accomplishment of the Obama Administration, the President’s recent budget proposal doesn’t do anything to spell out its expected costs.  They are spread out through the budget and not always cleared spelled out.  Cynics might argue that the budget deliberately obfuscates the costs to avoid drawing attention to how much they are.  CBO had recently estimated, for example, that the subsidies are now expected to be much more expensive than originally forecast.  Some of that is because health insurance premiums are expected to be higher than expected – the Administration had promised they would drop due to ACA, something Secretary Sebelius now acknowledges isn’t going to be the case.

The Administration has already started to cut corners on how the exchanges will operate.  They recently announced that employees of small employers who get coverage from the exchange will not initially get options of health plans; they will be limited to a single option.  I’ll be waiting for the other shoes to start dropping about what else they will be cutting back on.  Maybe they can start with their complicated application… 

Then there is Medicaid expansion, which is not going well at all.  I’d previously written on this, and the situation isn’t getting better.  The Arkansas approach, which relies on purchasing private insurance, was seen to be a potential solution for wavering states, but the Arkansas House recently failed to approve the approach.  Similarly, in Ohio, Gov. Kasich faces rebellion from his own party on his support for their version of expansion.  The number of states who have not opted to expand Medicaid should, ironically, hold down the projected federal spending, but it is not clear how the Administration is scoring the impact of those states’ reluctance.

ACA used employer coverage as a continued cornerstone for source of coverage – remember “if you like your health plan, you will be able to keep your health plan”? – but that cornerstone is weakening.  The Robert Wood Johnson Foundation recently detailed what has long been known: employer coverage has declined drastically over the past few years, dropping 10 percentage points nationwide from 1999/2000 to 2010/2011.   Some states saw even worse results, led by Michigan with a 15.2% decline.  And that was before ACA’s biggest impacts. 

Optimists are pointing out that there is no sign yet of employers planning to drop coverage or cutting back on full time hours to avoid their 2014 mandate requirements, but I think their optimism is premature.  Even if 70% of benefit professionals say their companies would “definitely will” keep health coverage, as cited by the International Foundation of Employee Benefit Plans survey, that number is still alarmingly low, and those same professionals are coming to be more pessimistic about how much ACA has been increasing their costs. 

Similarly, quoting the recent Minneapolis Federal Reserve survey results -- which indicated 89% of employers hadn’t shifted full-time employees to part-time – as good news seems slightly Orwellian.  Eleven percent is a lot for something that hasn’t happened yet, and the Fed notes that the 89% didn’t exactly say they wouldn’t in the future. 

When one adds up the various things that are becoming visible problems about ACA, the list starts to get long.  For example, the tax on employer plans, the medical device tax, and the affordability test for large employers’ contributions to dependent coverage have all come under fire in the past few months.  And let’s not forget that the Class Act was the first part of ACA to go, with Secretary Sebelius killing it back in fall of 2011. 

According to Kaiser Family Foundation’s latest survey, three years after the passage, over half of Americans report they don’t understand how ACA will impact them, and a plurality still oppose the law.  One wonders how many members of Congress who supported ACA originally would still vote for it if they had a second chance. 

One way or the other, we’re going to put putting increasing numbers of people in the exchanges in 2014 and beyond, which will increase the strain on them and will increase the cost of subsidies.  Maybe that’s not so bad, but we better go into 2014 with our eyes open about the difficulties the system may face.  No matter what Secretary Sebelius says.

If Kaiser Is Not the Answer, What Is the Question?

by Kim Bellard, March 28, 2013

The New York Times recently published an interesting article, “The Face of Future Health Care,” that raised questions about whether even a model like Kaiser is delivering what we need to reform our health care system.  It’s the old “be careful what you wish for…” dilemma.

After all, Kaiser could be considered a prototype for what ACA wanted when it created Accountable Care Organizations (ACOs).  It is a fully integrated hospital-physician organization, delivering care and managing risk with salaried physicians and other health care practitioners, and its own hospitals.  Hospitals all over the country are rushing to build their own versions, buying up physician practices at a record pace – one survey indicated that 52% would do so this year, while another predicted 75% of physicians would be so employed by 2014.

Kaiser may not have been the first integrated delivery system, nor are they the only one, but they certainly are the largest and have been around for decades.  With all those decades, though, one would expect they would be dramatically lower in cost, and that is not generally the case.  San Francisco public radio station KQED did a report “Why Isn’t Kaiser Less Expensive?” last spring.  In their report, critics accuse Kaiser of shadow-pricing, while Kaiser’s CEO George Halvorson insists they don’t and are usually at least 10% cheaper.  That’s nothing to brag about: with even 1% lower annual trend, they should have gotten 10% cheaper in these early years of the 21^st century alone.

All this is not to pick at Kaiser.  I have long admired models like Kaiser, Geisinger Health System, Group Health Cooperative of Puget Sound, Intermountain Healthcare, or The Mayo Clinic.  It just seems intuitively obvious that like an integrated system, without the same incentives to overtreat that are pervasive elsewhere, should produce better results.  Each of the systems has been fairly successful in their core markets, although less so the further away from home they get, yet none are delivering radically different cost or quality results than other providers.

And, really, why should they?  They only have to be a little better each year than their competition.  The new mantra in health care is “value-based purchasing,” but we’re a long way from there.  The Catalyst for Payment Reform reports that only 11% of payments to doctors and hospitals are based on performance, while the Commonwealth Fund reports that less than 1% of health insurance premiums was spent on quality improvement in 2011.  This is disappointing but hardly surprising.  Most purchasers are buying with essentially house money; that is, someone else’s money. 

The biggest sources of health coverage are Medicaid, Medicare, and employer-sponsored health insurance.  The persons covered under all of these are largely shielded from the true cost of that coverage.  Medicaid is funded entirely by taxes, Medicare is also largely tax-funded, even when considering beneficiaries’ lifetime contributions, and, of course, employer coverage has the tax preference.  The “tax expenditure” for employer health insurance is, by far, the largest such expenditure – more than twice as large as the mortgage deduction, for example.  It’s all just compensation to employers; money “contributed” to employee benefits is simply money not spent on employee wages.  The tax preference helps shield employees from how much is being spent on their behalf, and it creates a huge disparity with people buying individual coverage, who receive no tax break.

ACA doesn’t equalize the tax preference, but it does introduce a vast set of new subsidies for individual coverage.  The Society of Actuaries has recently reported that individual premiums may be 32% higher due to ACA, joining the chorus of warnings about what may start happening in 2014.  Even HHS Secretary Sebelius now acknowledges they may be higher, but notes that the new subsidies will offset much of these.  While I think it is good public policy for more people to be covered and for economically disadvantaged people to get assistance in making coverage affordable, I worry greatly about creating a large new class of people sheltered from the true cost of health insurance.  It’s making a bad situation much, much worse.

Steve Brill has gotten much deserved attention for his lengthy and insight Time article “Why Medical Bills Are Killing Us.”  Brill painstaking walks through the crazy world of health care prices, especially their inconsistency between payors.  Some have used his work to call for single payor or other rate-setting, while I would argue that the system is a symptom of what happens when no one is paying enough attention to prices.

Frankly, I question whether the ACO/integrated delivery system is going to be the solution to our health care mess.  Hospitals are like factories: full of capital-intensive equipment and expensive to operate unless run at capacity.  Yet they aren’t really run like modern factories in terms of management practices, as a recent study in JAMA pointed out.  Similarly, physicians and other health care providers have some definite income expectations and fixed overhead obligations. 

All too often, combining hospitals and other providers in integrated delivery systems may be more about consolidating market power or assuring current revenue levels than about improving the cost and quality of the care for patients.  One AEI scholar recently pointed to the “humongous monopoly problem in health care,” and that’s with ACOs still in an early stage.  AEI is not the first to cite this issue, as I’ve written about previously, but I still don’t think enough attention is being paid.

We’re moving quickly to a health care system that features geographic provider monopolies or cartels, consumers too shielded from costs, and a regulatory environment that creates larger barriers to entry for new competitors in either delivery or financing of care.  That’s the perfect storm for a disaster. 

For radically different results, we’ll need radically different approaches.  Clayton Christian wrote about disruptive innovation in health care over ten years ago, and yet we’re still waiting to see it.  It may mean breaking the health/medical connection that HMOs led us to try to integrate in health coverage, giving consumers more fiscal accountability for the former while still protecting them from catastrophic expenses that can result from intensive medical interventions.  It should mean putting more of the data and technology – like mobile apps -- in the consumers’ hands, as advocated by people like Eric Topl (The Creative Destruction of Medicine) or Joe Flowers, and using that data to measure performance and help prescribe treatment. 

We’ve had a very paternalistic health care system, with health care experts telling us what care we need and other experts choosing coverage for us.  Let’s hope we can change that.  We need consumers engaged, taking responsibility, and demanding accountability from providers.  We need new types of competitors, using 21^st century technology and science, to help consumers manage and finance their health needs.

We have to make sure that legislation and regulations focus on what’s best for the patient, not necessarily for existing health system entities, in order to help ensure we don’t stifle innovation (e.g., FDA regulation of mHealth).  The facts that traditional Medicare benefit design is still largely based on 1960’s Blue Cross Blue Shield designs, or that, generally speaking, you can’t use telemedicine to consult with an expert physician in a different state due to licensing or coverage restrictions, amply illustrate the problem. 

Whatever the future health system looks like, it won’t look like what we have today.  Dinosaurs were remarkable effective for hundreds of millions of years, but the environment dramatically changed and they became extinct.  A lot of the dinosaurs that have historically been the basis for our health care system will become extinct in the new health care environment, or evolve beyond recognition.  As with evolution, it will be messy, proceed with many false starts, and produce unexpected winners.

Personally, I can’t wait to see what the future looks like.

Involved But Not Committed

By Kim Bellard, February 28, 2013

There’s an old joke about the difference between bacon and eggs: the chicken is involved, but the pig is committed.  Perhaps the problem in health care is that when it comes to being engaged in our own health, most of us are chicken.  Maybe the wrong people have been cooking.

Patient engagement -- along with its many synonyms, such as shared decision-making or consumer-directed care – continues to be a favorite strategy for many health pundits.  I am biased towards it myself, although exactly what it means, or will mean in the future, is not entirely clear.

The prestigious journal Health Affairs recently devoted an entire issue to the topic.  In one study, Judith Hibbert and colleagues reported that patient activation scores help predict costs: lower activation levels were tied to higher costs, even after adjusting for risk.  A separate study, also by Hibbert, reviewed the literature and concluded that patients with higher activation levels had better health outcomes and care experiences, although the evidence was more inconclusive about the effect on costs. 

The trick, of course, is how to “activate” patients – is it all self-motivation, or can providers and other third parties (such as employers) encourage it?

One common method to influence patient engagement is an employer wellness program.  A recent National Business Group on Health survey reports that almost 90% of employers offer wellness-based incentives, spending an average of over $500 per employee on the programs.  Employers are getting tough too: 15% directly tie health plan eligibility to a health activity such as taking a risk assessment or biometric screening.  Almost two-thirds already tie employee contributions to completing such activities.  And 41% include, or plan to include, outcomes-based measures (e.g., lowering blood pressure) as part of the program.

Another strategy employers are using is increased employee cost-sharing, such as in consumer-directed health plans (CDHPs).  Critics accuse them of simply shifting costs to employees, but there are plenty of studies that indicate they may actually change employee behavior and help control costs.  For example, Cigna recently claimed that their CDHP members improved their health risk profile 12% while their health cost trend was 13% lower than traditional members.  Cigna CDHP members were also more likely to take health risk assessments, to use cost and quality tools, to choose generic drugs, and to seek preventive care. 

Consumers may be starting to take cost into account, but they don’t like it.  A study by Sommers, et. alia, reported on focus groups of insured patients.  The focus groups indicated that patients don’t like cost considerations to be part of health care decisions, and revealed that several stereotypes remain all-too-common, including that more expensive care is better care, and choosing more expensive care is some sort of victory over insurance companies (not realizing that, in the end, they and other insureds pay for that care).  Patients still don’t really know how to weigh risk versus cost. 

We treat health care costs much like we treat the deficit: costs come from other people, cuts should come from other people, other people should pay, and, oh-by-the-way, let’s think about it tomorrow.  That has to change. 

One thing that offers new hope for patient engagement is that the options for it have never been broader or more robust – mobile, electronic records, telemedicine, and social media, to name a few.

There are estimated 40,000 mobile health apps.  It seems you can get an app to do just about anything you can think of, plus many things you probably hadn’t.  The health apps vary widely not only in purpose but also in audience and quality.  A company called Happtique has just introduced a certification for health apps that will hopefully give consumers a better comfort about which apps to use, or for physicians to know which to recommend to patients.  They see the program not as a rating mechanism but as kind of like a Good Housekeeping seal of approval, assuring that at least a set of minimum standards have been met.  This could spur adoption.

It does appear that physicians are joining the mobile revolution, according to CompTIA.  Their recent survey indicated that one in five physicians is using a medical or health-related app daily, and 62% expect to be regular users with a year.  The trick will be how they incorporate them into their practice, for patient care and/or patient engagement.

EHR/PHRs provide yet another option to engage consumers.  To date, consumer adoption of PHRs have been disappointing, to say the least – even when they are available.  A recent study by Ritu Agarwal and colleagues, aptly titled “If We Offer it, Will They Accept?”, explores this issue and concludes that use depends on a number of factors – not just existing consumer preferences but also satisfaction with the patient-provider relationship, provider support for patient use of the PHR, and specific communication strategies to encourage use.  HITECH funding and “meaningful use” requirements may drive availability of patient EHRs, but persuading patients to use them will require some effort.

Telemedicine seems be exploding, both in terms of easing of regulation and in terms of payor coverage, so it is not surprising that there are a plethora of companies making their mark in this space.  These include American Well, Cardiocom, HealthSpot, NowClinic, or Virtuwell, to name just a few.  These may not provide your personal physician, but they offer physician expertise at your convenience – 24/7, from your house or even mobile device, not restricted to a physician’s hours.  That’s got to help improve patient engagement.

The IOM just hosted a workshop on partnering with patients, and one of the conclusions was that physicians and health systems need help in developing those skills, plus they may need additional incentives to engage in the kind of dialogue patient engagement requires (why am I not surprised?).  When you think about it, though, relying on physicians, or even nurses, to drive patient engagement doesn’t seem realistic.  We can spend time and resources on training them, but we still face the barrier of the projected shortages in both professions (physician, nurse), especially with the baby boomers just starting to crash the Medicare barrier.  Primary care providers may just be too scarce, especially in rural and other already underserved areas.  Not everyone agrees with these dire forecasts, but the point remains, though: the health professional to patient ratio doesn’t scale well into an era of higher patient engagement.

And maybe it doesn’t need to.  Maybe it really is up to us as patients to take responsibility.  Fortunately, we still don’t have to go it alone.

Social media, for example, may not even rely on a provider-patient model.  Health care providers are still trying to figure out social media.  An infographic by Demi & Cooper advertising/DC Interactive Group suggests that only 26% of hospitals use social media (most commonly Facebook), while over 80% of individuals 18-24, and 45% of those 45-54, would share health information via social media.  Meanwhile, Patientslikeme has been breaking new ground for social media use in health care for many years now, using patient-to-patient expertise and experience.  We’re only begun to scratch the surface of what patient engagement looks like in a social media world.

Artificial intelligence could be the real game changer in patient engagement.  IBM has made a big bet on AI in health care via Watson, and a recent study from Indiana University reaffirms that use of AI has the potential to both improve outcomes and lower costs.  Widely available health content on the Internet started this ball rolling, but health care professionals start to look like just another option – a preferred option, to be sure, but no longer the only option – to getting health information, advice, perhaps even diagnoses.  And I’ll have to save discussion of robotic surgery for another blog…

We’re already got a mobile stethoscope app, remote monitoring options for conditions like diabetes or blood pressure, medication and other reminder apps, and increasing ability for AI to evaluate and diagnose.  Who needs health coaches or even physicians to drive patient engagement?  Maybe in the not-too-distant future the model for patient engagement will increasing look like patients simply using their mobile devices: i.e., when Siri marries Watson.

At the end of the day, the person who has to be committed to patient engagement has to be the patient.

Tell Me the Good News Again

By Kim Bellard, February 13, 2013

This just in from CBO: federal health care spending has slowed dramatically, easing its impact on the federal deficit.  They are now projecting federal Medicare and Medicaid spending will be $200 billion lower in 2020 than they did three years ago.  And it is not just federal health spending:  according to CMS, 2011 marked the third consecutive year of relatively slow grow, increasing by 3.9%, which is modest for health care. 

Should we be breaking out the champagne to toast the victory?  Maybe not just yet. 

Economists aren’t sure if structural changes are finally taking place, or if much of the slowdown can be attributed to the recession and to consumers being more reluctant to spend any discretionary cash on health care.  There are some signs that the slowdown started before the recession, but there are conflicting signs that some portions of health spending are accelerating. 

For example, the CMS report cited increases in out-of-pocket payments as an area where spending was rising faster, but the Washington Post notes a contrary analysis by NPR’s Planet Money which suggests that the share of spending from consumer out-of-pocket payments is actually decreasing, dropping by nearly half over the last forty years.  Of course, that share is of a much large dollar amount, so the lower percentage may be of scant comfort.  Consumers probably don’t have the perception that their share is getting smaller, not with rise of high deductible plans, and some researchers, like Deloitte, would argue that the official numbers understate direct consumer spending by a wide margin.  So we don’t really know.

What everyone is waiting to see is what 2014 brings us, as several of the most significant ACA provisions – Medicaid expansion, health insurance exchanges, guaranteed issue health coverage, essential benefits, and federal subsidies for health insurance, to name a few – kick in.  None is without its problems. 

Medicaid expansion seemed like a no-brainer.  It promised to make eligibility for Medicaid much more uniform across states and between different pockets of the population, and it minimized the fiscal impact on states by the federal government picking up all the costs of the expansion in the first few years.  Some states are skeptical that the federal government is a reliable partner, and others oppose ACA on general principle, with the net effect that we still don’t have even a majority of states who have agreed to the expansion.  Without the expansion, some people won’t qualify for either Medicaid or subsidized coverage through the exchanges.  In other words, if you are the wrong kind of poor person, you may still be out of luck.

As for the exchanges (excuse me – “marketplaces,” as newly rebranded by HHS), according to Kaiser Family Foundation, as of February 12, only 18 states are planning to run their own exchange, another 6 are planning to run one in partnership with the federal government, and the remaining 27 are defaulting to a federally-run exchange.  Whether state, federal, or jointly run, if they are not already deep in the planning/building process, it’s worrisome as to whether they will be able to start online shopping for all those consumers beginning this October.  I’m not betting on a wonderful, Amazon-like experience come October.

The biggest problem with guaranteed issue and essential benefits is not the much debated controversy over contraception coverage, with its weird proposed compromise for “contraception-only” coverage, but rather is the concern that premiums could skyrocket, especially for younger people.  The combination of generally richer coverage and inclusion of people who previously could not obtain insurance, along with tighter age rating bands, may lead to doubling or even tripling of premiums for some consumers, report Politico and The Wall Street Journal.  Supporters of ACA note that the subsidies will largely offset most or even all of these increases, but disguising the true cost of things from consumers is a big part of the reason our health care system is in the mess it is in.  We should be aiming to bring down the cost of health care and health insurance, not simply offset it with other federal spending.

Last but not least, there are the subsidies themselves, which are the key to success in improving the number of people with coverage (not, as many think, the infamous mandate, which is probably too weak to force people to buy coverage they don’t want or don’t think they can afford).  The subsidies are already running into problems.  Unions fear that their health plans may become disadvantaged relative to subsidized coverage in the exchanges, and have asked the Administration to be eligible for similar subsidies, thus reopening the spending spigot.  Of course, there are a number of employer plans who could make the same request, although their political clout may not be as great as the unions. 

Employer plans face enough problems as it is, and the recent IRS rules that base “affordability under ACA guidelines solely on the cost for single coverage, not family coverage, are likely to complicate things further.  The IRS ruling spares employers from the nightmare of having to guess at a worker’s total family income, but also opens the door to employers contributing ever smaller portions towards family coverage.  We could end up with a Catch-22: rapidly shrinking employer contributions for dependent coverage make that coverage too expensive for many families, yet those same families would not be not eligible for the subsidies in the exchanges because of their eligibility for employer coverage.  I can already see the tear-jerking stories in Congressional hearings, although I’m not sure who Congress will try to pin the blame on.  Not themselves, of course.

And, of course, the sheer size of the subsidies – over $1 trillion through 2022 -- will become a tempting target for budget cuts should Congress and the Administration ever get serious about the deficit.  At the same time CBO delivered the good news about lower Medicare/Medicaid spending, they also disclosed that they were raising the estimates of the cost of the subsidy by over $200 billion over 10 years.  They also estimated that twice as many people – 7 million – will move from employer coverage to individual coverage through the exchanges.  Oh, and they also think fewer people will gain coverage through ACA at all, reducing their estimate to 27 million from their initial estimate of 32 to 34 million.  So there.

We have a long way to go before we can feel comfortable about how the health care system is changing.  The disturbing but, sadly, not surprising results of the recent study by Jaime Rosenthal and Peter Cram on the inability of consumers to obtain prices of hip replacement illustrate both the difficulty of obtaining prices for even a common surgical procedure, as well as the shockingly wide range of the prices they might be able to find.  If anyone thinks ACOs will make this better, I suggest they think again – assuming consumers will be able even find multiple ACOs near them from whom to seek competing prices, due to increasing provider consolidation.

And meanwhile we face the spectre of an explosion of health spending as baby boomers begin hitting peak health expense years, especially since they are already in worse health than their parent were at the same age, according to a recent study.  Living longer but in worse health and more demanding – not exactly a recipe for reduced health care spending in the years ahead.

I’ll go back to something I wrote a couple years ago: all health care spending ends up as revenue for someone.  Even care we might categorize as waste, unnecessary, or inappropriate counts towards some entity’s revenue.  We can make the health care system more efficient, more transparent, and more patient-centered, but at the end of the day controlling spending will mean controlling providers’ income.  To do that, one of three things has to happen: all providers end up getting less, some categories of providers fare worse than others (e.g., hospitals gain while nursing homes lose), or we start paying specific providers drastically less, or not at all. 

Personally, I think the fairest – although not the easiest -- way to control spending, and to improve the quality of care for patients, is to weed out underperforming providers, those who are delivering sub-par care (and we’re kidding ourselves if we think they don’t exist).  When we get serious about that, then maybe it will be time to start the celebration.