Investing in an Index Fund tied to the Milliman Medical Index instead of the Dow Jones Industrial Average

By Clive Riddle, May 18, 2017

Milliman has just released their 2017 Milliman Medical Index, which measures the cost of healthcare for a typical American family of four receiving employer PPO coverage. The total family bill is $26,944 compared to $4,518 in 2001. I want to invest in an index fund tied the Milliman Medical Index. The annual rate of return since 2001 would be 11.805%, compared to 3.874% for the Dow Jones Industrial Average during that same time (Dow Jones May 16 2001: 11,215.92; Dow Jones May 16 2017: 20,606.93). Our Milliman Medical Index fund would outperform the Dow index fund by three times.

But since the Milliman index fund only exists in some alternate universe for now, we might as well dive into some of findings Milliman shares in their 12-page report on this year’s index: 

Pharmacy share of costs have increased during this this time (from 13% to 17%) as have Outpatient (from 14% to 19%) while Professional services decreased (from 40% to 30%) and Inpatient remained about the same (from 30% to 31%).

Here verbatim are Milliman’s three key findings:

1. The MMI’s annual rate of increase is 4.3%. This is the lowest rate since we began tracking the MMI in 2001. Yet the total dollar amount is still bracingly high. Of the $26,944 spent by the MMI’s family of four, $11,685 is paid by the employee, through a combination of $7,151 in payroll deductions for premium, and $4,534 in out-of-pocket costs incurred at time of care.

2. Prescription drug trends are lower, but still high. For the first time since 2013 and 2014, the family of four’s prescription drug trends have decreased in two consecutive years. Still, the 2017 prescription drug cost increase of 8% is more than double the medical increase of 3.6%.

3. Employees pay a bigger piece of the healthcare cost pie. Through their payroll deductions and through out-of-pocket expenses incurred when care is received, employees now pay for about 43% of expenses and employers pay the other 57%. The difference between these two shares has gradually narrowed since 2001, when employees contributed 39% and employers contributed 61%. High growth in per-employee healthcare expenditures have pushed employers to limit their contribution increases to amounts below the rate of healthcare inflation.

An Interview With Kaiser’s Robert Pearl, MD on Mistreated Patients and the American Health Care System

By Clive Riddle, May 10, 2017 Doctor Robert Pearl, certainly a prominent figure in American healthcare today, agreed to sit down and expand upon his thoughts on the American health care system in 2017 and its impact upon patients. His new book, Mistreated - Why We Think We're Getting Good Health Care and Why We're Usually Wrong has just been released this month by Public Affairs, and we hoped he would elaborate on some of the questions that come to mind from issues raised in Mistreated, and in his public speaking appearances. Robert Pearl, MD, is executive director and CEO of The Permanente Medical Group, responsible for the health care of 3.8 million Kaiser Permanente members, and he is the president and CEO of the Mid-Atlantic Permanente Medical Group. He is on faculty at Stanford and has taught at Duke, UC Berkeley, and Harvard. His column on Forbes.com addresses the business and culture of health care, and he has been featured in national media including Time, ABC News, USA Today, and NPR. So here’s what Doctor Pearl shared with us in response to our half dozen questions: Q. You have been an influential healthcare stakeholder and thought leader for some time. American healthcare has been problematic for even longer. What confluence of events influenced you to write this book at this juncture? Doctor Pearl: The American health care system is walking towards a cliff, and if nothing is done to change course, we will step over the edge and crash to the ground below. We spend almost 50% more than any other country in the world and our outcomes are in the lower half of industrialized nations. Hundreds of thousands of people die each year from failures in prevention and medical error, including my dad. Our system most closely resembles a 19th century cottage industry. It is fragmented, with doctors scattered across the community and hospitals in every town, piece meal, what we call fee-for-service and using information technology from the last century. The cost is rising faster than our ability to pay. The government is spending 40% of tax revenues on health care today, and with 10,000 people becoming eligible for Medicare every day, that will rise rapidly in the future. And businesses are implementing high deductible insurance products, with patients increasingly unable to pay the out of pocket expense. In other words, the "patient" is becoming critical. I wrote Mistreated for two reasons. The first was my career long desire to make American health care better. And the second to prevent other people from losing their parent prematurely. For both reasons, all profits from the book will be given to charity to provide care to patients unable to access it today. Q. You have written about how healthcare organizations should be less, and not more, regulated in some respects - for example reducing regulation in order to facilitate workflows that would allow hospital patients to get more uninterrupted sleep during the night. You also have written that a single payer system is not the answer for American healthcare. What legislative changes do you advocate in your book? Doctor Pearl: I believe that change can best happen through transparent and fair competition. Making it possible for insurance companies, ACOs and large, multi-specialty medical groups to offer products that patients can understand, compare and choose among would be valuable. I have confidence in the wisdom of people and businesses to make the best selection, once they have broad choice and sufficient information. I also believe that the government needs to address the egregious pricing by many drug companies. The patent laws were written for the greater good of all. They were designed to encourage R&D and focus drug companies on solving the most important clinical problems that exist. They never were designed to allow manufacturers to buy the rights to long standing, inexpensive drugs and raise their prices 500% - 5000 %. Q. You cite three technologies as being key to transforming American health care: Video and digital photography; Data analytics; and EHR. These are not exotic items. So what are some primary factors in 2017 that are still holding us back from deploying these three items at optimal levels? Doctor Pearl: There are three reasons I believe these technologies are not more broadly used. The first is that to use them effectively requires an integrated delivery system that is prepaid with effective physician leadership. Without all three pillars, the information in the EHR will be incomplete, the data analytics difficult to apply, and applications like video economically problematic.  The second reason is physician inertia. According to the Rand Corporation, it takes 17 years for a great idea to become common practice. Finally, when it comes to video and digital, the problem with these technologies is that they are inexpensive. As such, there is no manufacturer or device company that wants to invest the dollars needed to encourage and train physicians to embrace these patient conveniences. And without this level of support change is slow to happen. Q. Speaking of exotic technologies, you are not necessarily the biggest fan of focusing on all things new and shiny, and have cited the challenges in overcoming behavioral biases in that direction. What are some significant examples of technologies that have at this point benefited from undeserved demand from consumers or providers? Doctor Pearl: As you note, as a nation we are attracted to the new and the hyped. A variety of expensive medications fit this description. Often they have minimal improvements over what was previously available, or extend life by a few weeks for most patients.  Another example is Artificial Intelligence. It sounds great, but most of the systems are really just fancy computers with physician developed algorithms, not real self-learning applications. Similarly, expensive fitness trackers are minimally better than the free application on your smart phone. And medical wearable devices can transmit hundreds of heart rhythm tracings, but doctors don't want them cluttering up their EHRs, and rarely do they add value for someone without a known cardiac arrhythmia. Q. You are a strong advocate for clinical integration. What in 2017 are the biggest impediments in urban markets that lack adequate clinical integration? And how do we bring greater clinical integration to rural America? Doctor Pearl: In urban areas, the limitations are the associated changes that need to happen. For integration to add value, you need to create a structure with the right number of physicians from each specialty. Often there are too many or too few in a typical community. For the new structure to add major value, reimbursement needs to change, rewarding prevention and avoidance of medical error as highly as intervention. And altering how doctors are paid is always contentious. The computer systems need to connect, and that is difficult to accomplish today. Finally, physician leadership is essential, and that requires investments in training and a willingness of all to relinquish autonomy. In some ways the rural areas could be easier. In this case I believe the structure can be virtual, with specialists in more urban areas linked to primary care in the rural location. We are already using this type of approach in our on-site clinics located in large businesses. Here specialists whose offices may be in a hospital miles away can consult on a employee needing specialty expertise without having to ask the patient to drive to the physicians' location and miss a day of work. Over half of the time, this solves the patient's problem. Q. In what ways do you hope consumers will change their actions or thought processes as a result of reading your book? And in what ways do you hope other healthcare stakeholders will be influenced? Doctor Pearl: I wrote Mistreated for the patient in all of us. My father was a professional with well trained doctors, and yet, he experienced a medical error from the lack of a comprehensive electronic health record and inability of his doctors to communicate effectively.  The first step to transforming American health care is to help people see what they are missing and why. Having done so, I would hope they would begin to make different choices in the health plan and delivery system they select. Information can be difficult to obtain, but increasingly it is available. Choose a five star program in Medicare or on the health care exchanges. Check to see if there is reported data on outcomes for various procedures like heart surgery, and go to the programs with the best results. Ask physicians before you have a procedure how many of these they did last year, and choose ones with the highest volume. And when you are in a hospital or doctor's office, and anyone fails to wash their hands before examining you, speak up. Specific to the medical profession, my hope is that change will happen soon, rather than waiting for the predictible crisis. The current system isn't working for clinicians any more than patients. The fragmentation that exists today leads to isolation. Fee-for-service makes doctors feel like they are having to run faster and faster, and convince patients they need things done that often add little value. The lack of technology and medical information leads to errors. And the lack of leadership reduces coordination of care and produces growing frustrations in the practice of medicine.  Change always is difficult and scary, but it can happen. And when it does, I believe both patients and physicians will benefit immensely. The current system is broken. I am optimistic that when large numbers of people from diverse backgrounds come together to talk about their experiences and recommendations, that we can improve health care delivery in the future. That is my hope in writing the book. The path I describe is the one I believe best for the nation, but I look forward to learning from others. If Mistreated stimulates discussion, debate and improvement, and as a result tens of thousands of lives are saved each year, then my father's death will have served a purpose.

Clicks-and-Mortar: Health Care's Future

By Kim Bellard, April 27, 2017 The woes of the retail industry are well known, and are usually blamed on the impact of the Internet.  Credit Suisse projects that 8,600 brick-and-mortar stores will close in 2017, which would beat the record set in 2008, at the height of the last recession.   And then there's health care, where the retail business is booming. In a recent Wall Street Journal article, Christopher Mims set forth Three Hard Lessons the Internet is Teaching Traditional Stores.  The lessons are: 1.             Data is King 2.             Personalization + Automation = Profits 3.             Legacy Tech Won't Cut It It's easy to see how all those also apply to health care. But health care is different, right?  Patients want to see their physician.  That physical touch, that personal interaction, is a key part of the process.  It's not something that can be replicated over a computer screen.   Yeah, well, the retail industry has been through all that.  Retail once primarily meant local mom-and-pop stores.  They knew their customers and made choices on their behalf.  But it was all very personal. Still, though, when Amazon came along, booksellers were adamant: no one wants to buy books sight unseen!  When that truism was proven false, other sectors of retail had their turn in the Internet spotlight, and the last twenty years of results haven't been pretty for them.   It turns out that the personal touch isn't quite as important as retailers liked to think. So why hasn't health care been more disrupted by the Internet?  Well, for one thing, when you buy a book online, your state doesn't require that you buy it from a bookstore that is licensed by its not-so-friendly licensing board, as is true with seeing doctors over the internet.   Strike one for disruption. For another thing, we (usually) trust our doctors.  Then again, we used to trust recommendations from bookstore staff too.  That is, when they had time for us, if they seemed knowledgeable, and if they were making recommendations that fit us rather than just their own preferences. Think the same thing won't happen when AI gets better at diagnoses?  Let's go back to Mr. Mims three lessons and see how they apply to health care: ·         Data is King: Health care collects a lot of data, and will get even more with all the new sensors.  The big tech companies know their customers very well and tailor interactions accordingly; health care must as well. ·         Personalization + Automation = Profits:, We're stuck in waiting rooms, filling out forms we've already filled out elsewhere. That is not a personal experience that can survive in the 21st century.  It has to be smoother, faster, and friction-less.   ·         Legacy Tech Won't Cut It: EHRs that no one likes.  Claims systems that take weeks to process a claim.  Billing processes that produce bills no one can understand.   The list could go on almost indefinitely.  All too often, health care's tech is not ready for prime time.   The question is, are health care's leaders learning these lessons? The future of retail appears to be in "clicks-and-mortar" (or "bricks-and-clicks").   Health care can act like B Dalton or Borders, assuming until it is too late that their consumers will visit them in person, because they always had.  Or it can act now to jump to the data-driven "clicks-and-mortar" approach that other retail businesses are moving to.   Health care organizations which get that right will be the one to survive.   This post is an abridged version of the posting in Kim Bellard’s blogsite. Click here to read the full posting

How Do You Build a Culture of Innovation at a Healthcare Organization?

By Clive Riddle, April 21, 2017 Now that we’re thirty days in the Spring of 2017, nurturing seedlings with hopes of taking deeper root should be on the mind of every healthcare gardener. Along these lines, the current issue of Healthcare Innovation News asks their panel the question, “How Do You Build a Culture of Innovation Within Your Organization?” Here’s some excerpts from what these sowers of innovation seeds had to say: David R. Strand, Chief Executive Officer of Life Cross Training, based in Chicago, says in part, “We often point to technology advances as “innovation” in healthcare. Yet, the next real innovation in healthcare will come from our investments in human capital—investments in the people we count on to deliver high-quality care and a great patient experience.  Addressing this problem requires comprehensive, innovative solutions focused in three distinct areas: (1) Improving the practice environment. Systematically identifying and eliminating hassles from technology to process to organizational design and identifying and accentuating those things that bring joy to clinical practice; (2) Aligning teams around common values and shared goals. Establishing guiding principles for interactions with one another and with patients and building cultures that support the well-being of both patients and clinicians; (3) Providing clinicians with evidence-based skills driving individual well-being. Ensuring that clinicians are better equipped to handle the intrinsic stress associated with their work and busy lives. James Polfreman, CEO and President of Solis Mammography based in Addison, Texas echoes the theme that technology is not enough, sharing that  “In the field of women’s breast health, innovation is not only measured in terms of technology and clinical accuracy, but also in areas of patient service, convenience and care to ensure annual compliance and repeat business.” He advises that “to foster innovation, an environment must be actively cultivated to promote openness and collaboration in order to tap into the natural passion of employees. This type of environment benefits the entire team and translates into superior patient care Well-informed teams are vital. Communication of a crystal-clear vision and mission is fundamental……When new ideas are implemented, having clear processes in place from training to implementation is key…..Consistently challenging the status quo motivates initiative….. Finally, a culture of innovation is maintained through leadership by example, repetition and affirmation of a job well done. This influences how you attract, recruit, retain, train and reward teams.” Joanna Engelke, Managing Director at Halloran Consulting Group in Boston counsels in part that “there are numerous best practices cited to support an innovative culture: (A) Enabling employees to spend 5% to 10% of their time on freethinking and creating “skunkworks” projects—those dedicated solely to radical innovation; (B) Creating office designs that encourage “bumping into each other” with lots of light, mobile whiteboards, huddle rooms, collaboration centers and games; (C) Investing in an internal, venture capital-like fund with all the trappings of pitches, business plans, proof of concept and funding milestones that are outside a regular product development arena; (D) Sponsoring crowd-sourced, problem-solving fairs for internal and external participation; (E) Surveying employees to gain an understanding of internal practices that block or prevent innovation; (F)                 Rewarding innovation in each department of an organization.” But Joanna reminds us, “the real secret sauce to an innovative culture is very basic: Management must pay attention.” Finally, Summerpal Kahlon, M.D., Director of Care Innovation at Oracle Health Sciences, based in Satellite Beach, Florida, says we need to listen. “Listening is a key skill in healthcare.” In particular he advocates listening to data through analytics. He cites these as examples that can drive innovation – “There are a few high-value, rich sources of information that can provide interesting lifestyle insight: Demographic information, including occupation, income and family/social environment; Environmental data, including census, local crime statistics and accessible parks/recreation; and Retail data, particularly for grocery and drugstores.”

Driving Consumer Engagement with Powerful Provider Directories

By Claire Thayer, March 30, 2017 First impressions really do matter, especially with the millennial generation. A recent article published by Modern Healthcare tells is that “millennials are more than twice as likely as older patients to research providers on websites such as Yelp, Consumer Reports and Angie's List. A third of millennials said they have switched providers when dissatisfied, 12 percentage points higher than that of other generations.” The provider directory is often the vehicle for the patients’ first impressions on the scope of the provider health care network and related facilities.  Additionally, Medicare providers are putting revenue at risk when not getting first impressions right, with quality scoring now being tied to overall patient satisfaction. This week, a special edition of the MCOL Infographic, co-sponsored by LexisNexis Health Care, highlights the role of the provider directory and its importance in overall consumer engagement:

2017 Employer Health Care Strategies and Trends

By Clive Riddle, March 3, 2017

DirectPath and CEB have just released their 2017 Medical Plan Trends and Observations Report, “which analyzed more than 975 employee benefit health plans, highlights the top ten trends in employers’ 2017 health care strategies across three categories – plan design, cost savings mechanisms and care options.”

The 11-page report tells us that “employers are incorporating solutions like health savings accounts (HSAs), wellness incentives, price transparency tools and alternative care options to reduce costs.”

The ten trends they discuss include:

1.     Annual Deductibles Leveling Out

2.     Marginal Change in Prevalence of HDHPs

3.     HSAs Continue to Remain Popular

4.     Specialty Medication to Become More Expensive

5.     Contribution Surcharge Amounts Vary

6.     Wellness Incentives Continue to Increase in Prevalence and Amounts

7.     Plan Comparison Tools Lead to More Savings

8.     Alternative Care Options Remain Affordable

9.     Barriers to Employee Use of Telemedicine

10.  Focus on Higher Quality Health Care

Major findings from their surveys cited in the report include:

·         51 percent of employers offer a price transparency tool to help employees choose the service or product best for them, and 18 percent plan to add such tools in the next three years

·         In a review of price comparison requests, these services resulted in an average employee savings of $173 per procedure and average employer savings of $409 per procedure.

·         While the percentage of organizations with spousal employee contribution surcharges remained static (26 percent in 2017, as compared to 27 percent in 2016), average total surcharge amounts increased dramatically to $152 per month, a more than 40 percent increase from 2016.

·         More than a third of organizations offer telemedicine, but over 55 percent of employees in these companies are not aware of telemedicine availability, and nearly 60 percent of employees who have telemedicine programs do not feel they are easy to access, according to a separate survey recently conducted by CEB.

·         The average cost of specialty drugs that treat rare and complex conditions increased by more than 30 percent for employers surveyed.

·         67 percent of employers surveyed offer HSAs, compared to 15% offering Health Reimbursement Arrangements (HRAs). Employer contributions to HSAs increased almost 10 percent.

·         58 percent of 2017 employer plans offer some type of wellness incentives, up from 50 percent in 2016.

While we’re on the subject of wellness incentives, Humana just released their 2017 Humana Wellness Trends Report, a 20-page document that discusses five trends:

1.     The “connected experience 2.0” revolutionizing wellness strategies: “…As wellness programs begin to integrate these devices and employers gain access to the data, employers will gain insight into what’s driving organizational health costs and how to resolve them.”

2.     Older workforce leads to health, caregiving burdens: “…The U.S. workforce is getting older and retiring later due to the stress of financial burdens, caring for older loved ones and increasing health care costs.”

3.     Financial stress affects productivity: “….Americans identify money as their top stressor, which can reduce employee productivity and contribute to absenteeism, presenteeism and poor health. Research states 37 percent of full-time employees deal with financial issues while working.

4.     Poor sleep leading to errors, low morale: “…Among workers age 30 and older, 74 percent say lack of sleep affects their work performance.”

5.     Workers benefit from mindfulness techniques: “…Research has found a mindful approach may help ease the “effects of stress, anxiety and other negative emotions.”

The Scourge of Healthcare Ransomware to Loom Larger in 2017

By Clive Riddle, February 17, 2017

CynergisTek has just released Redspin’s annual cybersecurity Breach Report:  2016: Protected Health Information (PHI). Their 21-page seventh annual report “provides in-depth analysis of the causes of PHI breaches reported to the Department of Health and Human Services and the overall state of cybersecurity in healthcare.”

 

The report cites that in 2016 there were:

• ·         325 large breaches of PHI, compromising 16,612,985 individual patient records
• ·         3,620,000 breached patient records in the year’s single largest incident
• ·         40 percent of large breach incidents involved unauthorized access/disclosure
• ·         over a dozen providers reported in media as having been victims of ransomware attacks with PHI breaches

The report lists the largest 2016 hacking attack on providers as affecting Banner Health with 3.62 million patient records breached, followed by 21st Century Oncology with 2.2 million records breached. Of large breaches, they state 78% involved providers, 16% health plans and 6% healthcare vendors.

The report makes particular note of “the scourge of Ransomware” and cite that in 2016 there was $1 billion overall in ransomware payments worldwide impacting all types of businesses and consumers The report cautions this will get worse in 2017, as “late last year, disturbing reports surfaced regarding the rise of ‘ransomware as a service’ (RaaS) – a business model in which malware authors enlist ‘distributors’ to launch the initial attacks (likely weaponized phishing emails) and then share in any profits. The potential accomplices do not need much technical expertise or capital to get started. Some ransomware kits cost as little as $100 dollars.”

Becker's Health IT & CIO Review featured an article: Get ready for hospital ransomware attacks 2.0 also cautions about a growing ransomware threat this year, stating "here are three tactics we've seen in the wild that are likely to become more widespread in 2017. Beyond encryption: 3 ways criminals are making their attacks more disruptive," and they go on to list and describe:

1) Developing ransomware strains that spread like a virus

2) Creating new versions of ransomware that disable the victim systems

3) Turning ransomware attacks into data breach events

The Department of Health and Human Services has weighed in, offering an eight page FACT SHEET: Ransomware and HIPAA, in which they cite “a recent U.S. Government interagency report indicates that, on average, there have been 4,000 daily ransomware attacks since early 2016 (a 300% increase over the 1,000 daily ransomware attacks reported in 2015).

The healthcare ransomware threat certainly isn't focused just on the U.S., and is a global issue. New research based on a Freedom of Information (FOI) request has revealed that 34% of NHS trusts in the UK have suffered a ransomware attack in the last 18 months.

Living in a Retro Health Care System

by Kim Bellard, January 26, 2017

Living in the 21st century is cool, right?  We've got smartphones, ultra-thin tablets, the Internet, wearables, Uber, self-driving cars, virtual/augmented reality, drones, digital currency, and all the TV/movies/music you could want available for streaming anytime, anywhere.  It makes Back to the Future II's 2015 look drab by comparison (except maybe for the hoverboards!).   

So why does it seem like so many people are entranced with the 1980's?

Take, for example, the resurgence of vinyl. Vinyl is back, set to become a billion dollar industry (again).  

People are falling in love with cassette tapes again.  Their sales rose 74% in 2016. People are even inventing new ways to listen to old formats.  The Verge reports on Love, "the first intelligent turntable.”  

Retro isn't confined to music.  One of the hottest Christmas presents was the Nintendo NES Classic. Hey, we've got the Today show doing a 1970 retro show, the NFL going crazy with throwback uniforms, and the predicted reemergence of flip phones.  People even want retro computers.  

If any industry would keep its eye relentlessly on the future, you might expect it would be health care.  Few of us would want to go back to what health care was like in the 1980's, and none of us would accept the health care of the 1950's (except maybe those house calls).  

No, in health care we expect the kind of futuristic -- or, at least, modern -- experience that tech-based start-ups are promising.  If health care went retro, why, we'd usually make appointments to see our doctors in their offices instead of seeing them on-demand 24/7, wait long periods in their bland waiting rooms, fill out lots of paperwork, have our white-coated doctor listen to us with their stethoscope, have lots of unnecessary or even harmful tests and procedures, even have our information sent by fax.  No one would want to go back to all that.

Oh, wait -- that is our health care system, for the most part.  It hasn't gone retro because we haven't yet moved past retro.  

Get this: fax machines remain the predominant form of communication in health care, with fax volume hitting new records.  That's not retro, that is insanity.  

Get this: physicians hate their EHRs so much that they are cited as a leading reason for physician burnout, and in their frustration with them physicians are turning to medical scribes to do the inputting.  

Get this: after seeing a consumer revolt in the 1990's against managed care's capitation, small provider networks, and restrictive medical management, they're all back in vogue, in one form or another.

I get retro.  But I do not want to get care in a retro health care system.  

EHRs are a perfect example of how we took something that should revolutionize health care, and turned it into something that not only no one is happy with but that many feel often impedes care, to the point some want to go back to paper records.  We didn't do the wrong thing with EHRs, we just are doing it wrong.

We should be thinking big and bold about how we want our health care system to work in the 21st century.   We should be looking forward, not backward. We have all the technology we need to make our health care experience, well, if not like magic, then certainly more like a 21st century health care should seem.  Let's get there first -- then maybe we can think about how we can do some cute retro to it.  

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

The Similarities Between Health Plans and Subscription Television

By Clive Riddle, January 13, 2017

One can even directly impact if people live or die.  The other merely informs and entertains. Still, as I recently turned on the television to discover my favorite local station currently wasn’t available because of a contract dispute with my satellite television service, it occurred to me that there are significant parallels between health plans and subscription channel services.

I must digress to say it isn’t that easy finding the correct, simple mainstream term to refer to all that is subscription cable television, satellite television, and streaming internet services. With devices now delivering an increasing load of channel viewing, should we even use the term “television“ when referring to subscription services?  Wikipedia provides the term Multichannel video programming distributor (MVPD), which doesn’t exactly roll of the tongue.

Both health plans and subscription channel services, by their very nature, are based upon the volume of subscribers they amass, the monthly subscription revenue they receive, and the network of providers they contract with (be they health care or channels.) Both are significantly regulated. Both are now dominated by mega companies that emerged from acquisitions. Both now try to distinct themselves by offering enhanced engagement through customer portals. Both are evolving and experiencing disruptive innovations and change. Both are experiencing their providers becoming integrated delivery systems (such as ESPN or HBO.)

And both are plagued by contract disputes with their provider networks.

Just this month, Hearst Television local channels were pulled from DirectTV over a contract dispute affecting markets across the country including Sacramento, Kansas City and Pittsburgh. DishTV experienced headlines including Dish loses more subscribers and says there’s no deal yet to bring back Fox, NFL, and Tribune Stations Blacked Out On Dish Network In 33 Markets.  Cable fare no better than satellite on this front. Comcast/Xfinity earlier this year had headline including As Opening Day looms, Comcast-YES flap leaves many Yankees fans shut out and Verizon headlines included Verizon Dumps The Weather Channel in Favor of Looking out the Window.

Does this sound familiar for health plan subscribers? Consider these recent headlines: Blue Cross to drop Texas Health Resources from its network in 2017 after contract dispute; Humana, Tenet Cut Ties over Contract Dispute; Blue Cross, Fairview network spat could affect 170k patients (Minnesota); or NMHS prepares to drop United as negotiations stall (Mississippi).

Is it any wonder that after much ado has been made for health plans investing in “narrow networks”, DISH TV has just introduced its “Skinny Bundle”?

The point is, it can be instructive for health stakeholders to consider the experiences and lessons learned in the subscription channel service arena, and vice-versa.

But one could argue that a significant dissimilarity between health plans and subscription channel services is that while the uninsured rate was cut in half during the past decade, the trend towards “cord cutting” for subscription channel services is growing, with 21.9% of households having been projected to be cable or satellite free by the end of 2016, while the overall U.S. uninsured rate has dipped below 9%. On the other hand, a material portion of these “cord cutters” have recently ventured into internet subscription services offered via Hulu and others that are still under the radar when cable and satellite subscriptions are counted, and for health plans – it remains to be seen what the percentage of uninsured will look like after “repeal and replace” occurs.

But still, it can be interesting to observe the portion of “cord cutters” cobbling together their own network of integrated providers, bypassing an overall subscription service: assembling their own customized collection of HBONow, ESPN, Netflix, Amazon and other channels. Is there a parallel to emerge for the inevitable increased number of post-repeal and replace uninsured?

Magnificent Seven Healthcare Business Trends for 2017

By Clive Riddle, January 3, 2017

Here’s seven trends, in no particular order, that we see weighing heavily on the business of healthcare during 2017. If they all come to pass, of course you should marvel at the wisdom and insight emanating from this blog. If they are well off the mark, well, here’s hoping for short memories and I’ll search for the delete button on this post.

1. Inaction on Several Fronts While Waiting For Other Shoe to Drop

The individual health insurance markets will be in a holding pattern pending the outcome of sorting through the weeds of the Repeal and Replace activities in Congress and the Trump administration. Ditto for Medicaid initiatives. CMS innovations could even end up in a holding pattern.

2. A new Trigger for Prescription Drug Pricing Backlash?

Furor over Mylan EpiPen pricing and other prescription drug cost stories have subsided a little, and it remains to be seen how and if the Trump administration and Congress weigh in on this. But if a new major prescription drug pricing story erupts, and the odds are sooner or later one will, it should trigger a new groundswell of support for some public response.

3. Year of the MACRA

MACRA was separate from the ACA and is somewhat insulated from ACA dismantling. While the framework for Medicare Quality Payment Program MIPS and APMs are already in place, 2017 will witness widespread activity as physicians follow through on positioning themselves.

4. Private Sector Embrace Also Keeps Value Based Care Momentum Strong

Even if ACA repeal goes so far as tearing asunder Medicare ACO initiatives and other public value based purchasing innovations, the private sector’s embrace of all things value based care will ensure an onward march in this direction.

5. Consumer Driven Care Gains New Momentum

The Trump Administration and new Congress policy agenda would seem to favor increased emphasis on all things consumer driven.

6. Aftermath of Health Plan Mega Mergers

The ACA was credited with helping set the stage for mega health plan mergers. It is difficult to imagine further mega merger activity in the current environment. Cigna and Anthem will surely unwind their deal.  Trump administration emphasis on deregulation might cause the DOJ to take the foot off the gas on their opposition to the Aetna-Humana deal, or at least be more prone to negotiation.

7. Impact of New Technology and Innovation

We may not know what the next New Big Thing is, but we should know that there will be one, and then another. And that one or more of these next new big things will have a major impact on the business of healthcare. 

Touring Lists of Top Healthcare Trends and Issues for 2017

By Clive Riddle, December 21, 2016

It’s that time of year when healthcare prognosticators point out predictions, priorities, and progressions for the coming year. Here is a tour of some of what is being said about healthcare in the new year, starting with overall trends and then examining some specific topics:

PwC’s Health Research Institute releases an annual list that many stakeholders look to. Here is their Top health industry issues of 2017, which they label as “a year of uncertainty and opportunity.” PwC devides these trends into three components, stating “many of 2017’s Top issues highlight how this shift toward value is occurring, and how traditional health organizations and new entrants are responding to it. There are three main tactics that organizations will use to address this shift to value – they will adapt, they will innovate and they will build new programs and approaches to their work.”

Adapt for value

1.    Under a new administration, the fate of the ACA remains unclear
2.    Pharma’s new strategic partner? Patients
3.    Easing the training wheels off value-based payment
4.    Insert your card here for healthcare

Innovate for value

5.       Paging Dr. Drone: It’s time to prepare for emerging technologies
6.       The battle against infectious diseases sparks invention
7.       Rx cauliflower: Nutrition moves to population health

Build for value

8.       Putting the brakes – gently - on drug prices
9.       A year of new partnerships and collaborations
10.   Preparing medical students for work in a value-based world

Black Book’s year end C-suite polls produced a list of 9 Healthcare Tech Trends in The New Year of Uncertainty:
1.       Technology Budgets Stagnate, Purchases through Q2 largely will be based on current business need.
2.       Electronic Data Warehouses (EDW) move to the top of short term priorities.
3.       Renewed and upgraded Enterprise Resource Planning Systems (ERP) swings back into importance, now for Value Based Care Costing.
4.       Financially stable, regional IDNs are spending big dollars toward extended connectivity while the rest of the pack looks on.
5.       Providers keep watch and wait for Large Scale Healthcare Cyber Attacks before forming a Better Defense.
6.       Hype around the Cloud quiets down as it becomes the primary way to build enterprise architecture.
7.       Focus on Front End and Middle Office Business Office Functions & RCM Outsourcing intensifies.
8.       Skilled hospital tech staff recruitment is even more challenging.
9.       Interest in Precision Medicine initiatives continue but few have commitments to buy for first half of the New Year.

The Medical Futurist Newsletter shared these top technologies with the biggest promise for 2017:

1)      A new era in diabetes care

2)      Precision medicine in oncology

3)      Narrow artificial intelligence in US clinics

4)      Driverless trucks or cars will include health sensors

5)      New service in nutrigenomics

6)      SpaceX and NASA will realize they need a digital health masterplan to reach Mars

7)      The genome editing method CRISPR in clinical trials

8)      A big tech company will step into health

9)      An insurance company launches a wearable sensor package

10)   The surgical robot by Google and Johnson&Johnson will compete with daVinci

11)   Vocal biomarkers: the future of diagnostic medicine

12)   Pharma will start using massive AI in clinical trials and drug research

13)   A company will make the 3D printed cast a real choice

Also on the topic of technology, Becker's ASC Review features an article 5 healthcare technology trends taking center stage in 2017 summarizing a list of “San Mateo, Calif.-based PokitDok predicted technology trends that will impact the healthcare industry in 2017”:

1.       Healthcare will transition from theory to practice in the Blockchain world. The new year will see academic and theoretical discussions move forward into pilots and applications.
2.       Healthcare e-commerce will witness a boost in 2017, with more major health systems collaborating with technology companies for infrastructure with built-in cybersecurity and HIPAA compliance.
3.       Telehealth will no longer be on the outskirts, pushed into the mainstream with expanded reimbursement policies, usage and outreach programs.
4.       President-elect Donald Trump will likely not fulfill his promise to completely repeal the ACA, despite a Republican Party-dominant Congress and Tom Price, MD, (R-Ga.) leading the HHS.
5.       Auto-adjudication will drive providers to interact with EHRs, revenue cycle management and practice management vendors.

Shifting gears, the McKesson Pharmacy Optimization Team released Five Health System Pharmacy Trends to Watch in 2017:

1.       Continued Growth in Specialty Market
2.       Leveraging Pharmacy Analytics to Make Strategic Business Decisions
3.       Health System Pharmacy Seen as a Revenue and Margin Generator
4.       Centralizing Pharmacy Operations and Improving Clinical Services
5.       Future Directions for Reform and the Affordable Care Act (ACA)

Moving on to the employer healthcare world, MediaPlanet published these 6 Trends in Corporate Worksite Wellness for 2017, explaining that “here’s how corporations are using wellness programs (and this year’s lessons) to promote employee health in the coming year:”

1.       Place greater emphasis on sleep
2.       Continue to stay on top of wellness regulations
3.       Embrace new technologies
4.       Focus on total well-being, not just physical health
5.       Give back to the community
6.       Create a healthy work environment

And finally, also in the employer arena, Mercer shares this Top 10 Compliance Issues for 2017 Health Benefit Planning:

1.       Wellness Plans (podcast): More innovative designs make it critical to know the new rules that begin on January 1, 2017.
2.       Essential Health Benefits (podcast): Check those dollar limits and maximum out-of-pocket maximums against updated benchmark plans for 2017.
3.       Mental Health Parity (podcast): Make sure your benefits are aligned with current law and best practices.
4.       Employer Shared Responsibility: Affordability (podcast): Know the impact of opt-out cash and flex credits; 30-hour (podcast): Understand what payments must be converted to hours of service; ACA Reporting (podcast): Make sure it’s right – no more good faith standard and the old deadlines return for the 2016 reporting year.
5.       Preventive care: Modify benefit terms to reflect latest recommendations and guidance on preventive care.
6.       Summary of Benefits and Coverage (podcast): New model SBC must be used for open enrollments on and after April 1, 2017.
7.       FLSA overtime rules: It’s not just a compensation issue – don’t forget to consider the benefits implications.
8.       Expatriate group health plans: Position group health plans covering globally mobile employees to take advantage of ACA relief.
9.       HIPAA privacy, security, and electronic transactions: Revisit health plans’ privacy and security obligations.
10.   DOL fiduciary rule: Assess the impact on welfare plans with an investment component.

HHS-CMS Share Marketplace Projections and Nine Open Enrollment Strategies

By Clive Riddle, October 21, 2016

Earlier this Week, HHS Secretary Sylvia M. Burwell “announced that she expects 13.8 million individuals to sign up for coverage through the Marketplaces during the upcoming Open Enrollment.” In conjunction with her announcement, the HHS Office of the Assistant Secretary for Planning and Evaluation released a report detailing these 2017 enrollment projections for 2017, telling us:

• The projected enrollment of 13.8 million would represent an increase of 1.1 million from 12.7 million plan selections at the end of 2016’s Open Enrollment.
• They estimate this will net down to monthly effectuated enrollment averaging 11.4 million people during 2017.
• 10.7 million uninsured Americans are eligible for Marketplace coverage. Among them, 85% are potentially income eligible for financial assistance,  and 60% have incomes that would also qualify them for cost-sharing reductions in addition to tax credits
• 40% of the eligible uninsured are 18-34 years old
• 5.1 million eligible for the Marketplace currently purchase off-Marketplace coverage. Of this group, they estimates 2.5 million people could be eligible for financial assistance via Open Enrollment signups for Marketplace coverage

So how are they going to increase the open enrollment signups to 13.8 million? Last week, CMS shared their open enrollment marketing strategies, noting that “nearly half of uninsured adults are unaware of the financial assistance available to help pay for health insurance, even though about 85 percent of Marketplace-eligible uninsured Americans could qualify for financial help.” Their marketing plan includes:

1. Increasing direct mail pieces from 800,000 last year to 10 million this year, targeted to “people who were recently uninsured, recently lost coverage, or sought coverage in the past through HealthCare.gov or a state Medicaid program,” including “people who started to sign up at HealthCare.gov last year, but didn’t complete the process”; “consumers who lost eligibility for Medicaid or CHIP coverage last year, or who applied for Medicaid or CHIP but had incomes too high to qualify.”
2. The IRS “will conduct new outreach to uninsured people who paid the penalty or claimed an exemption, letting them know that tax credits are available for Marketplace coverage and providing information about their health coverage options.”
3. E-Mail marketing will be expanded, as “HealthCare.gov’s email list has grown by over 30 percent” to 20 million+ people
4. Healthcare.gov notes they “learned that simply reminding a consumer about their eligibility for financial assistance in an email increased enrollment rates by 17 percent compared to emails that did not include that information,” and that “emails informing returning consumers of increased costs in their current plan and encouraging them to review their options by shopping increased active renewal rates by 279 percent.”
5. Healthcare.gov also learned merely mentioning a deadline in an email increased enrollment by 14 percent compared to emails that did not mention deadlines.
6. HealthCare.gov will remind consumers about the a penalty for not having coverage, and cite a study in which “consumers who received an email with additional language referencing the penalty were 13 percent more likely to enroll,” and a test that “found that more prominently displaying penalty information with the deadline (for example, in the email subject line) produced a larger lift in enrollment, 97 percent,” and a “message that gave higher-income people information about the higher penalty levels likely to apply to them increased enrollment by 18 percent.”
7. Outreach is being expanded to mobile and streaming platforms, and gaming platforms in order to reach younger audiences. Healthcare.gov cites a partnership with gaming platform Twitch, and notes that they will run ads and sponsor content on YouTube, Instagram and Facebook
8. Healthcare.gov will emphasis optimized search efforts and cite that “CMS increased overall search conversion rates by 24 percent compared to the previous year.”
9. Healthcare.gov  will “double the number of impressions a consumer sees (“Gross Rating Points”) on TV in the week leading up to December 15th compared to the same week last year.”

Will Anyone Notice?

By Kim Bellard October 13, 2016

There's an interesting verbal battle going on between two prominent tech venture capitalists over the future of AI in health care. Marc Andreessen asserted that Vinod Khosla "has written all these stories about how doctors are going to go away...And I think he is completely wrong."  Mr. Khosla was quick to respond:  "Maybe Mr. Andreessen should read what I think before assuming what I said about doctors going away."

It turns out that Mr. Khosla believes that AI will take away 80% of physicians' work, but not necessarily 80% of their jobs, leaving them more time to focus on the "human aspects of medical practice such as empathy and ethical choices."  That is not necessarily much different than Mr. Andreessen's prediction that "the job of a doctor shifts and becomes a higher-level, more important job that pays better as the doctor becomes augmented by smarter computers."

When AIs start replacing physicians, will we notice -- or care?

Personally, I think it is naive to expect that only 20% of physicians' jobs are at risk from AI, or that AI will lead to physicians being paid even more.  The future may be closer than we realize, and "virtual visits" -- telehealth -- may illustrate why.

Recently, Fortune reported that over half of Kaiser Permanente's patient visits were done virtually, via smartphones, videoconferencing, kiosks, etc.  That's over 50 million such visits annually.  

Sherpaa, a health start-up that is trying to replace fee-for-service, in-person doctor visits with virtual visits.  Available with a $40 monthly membership fee, the visits are delivered via their app, tests or emails.  Their physicians can order lab work, prescribe, and make referrals if needed.

How many people would notice if virtual visits were with an AI, not an actual physician?  

Companies in every industry are racing to create chatbots, using AI to provide human-like interactions without humans.  And health care bots are on the way.

Not everyone is convinced we're there yet.  A new study did a direct comparison of human physicians versus 23 commonly used symptom checkers to test diagnostic accuracy, and found that the latter's performance was "clearly inferior."  The symptom checkers listed the correct diagnosis in their top 3 possibilities 51% of the time, versus 84% for humans.  

However, consider the symptom-checkers may be the most commonly used, but may not have been the most state-of-the-art.  And the real test is how the best of those trackers did against the average human physician. Humans still got the diagnosis wrong is at least 16% of the cases.  They're not likely to get much better (at least, not without AI assistance).  AIs, on the other hand, are only going to get better.  

It used to be that physicians were sure that their patients would always rather wait in order to see them in their offices, until retail clinics proved them wrong.  It used to be that physicians were sure patients would always rather see them in person rather than use a virtual visit (possibly with another physician), until telehealth proved them wrong.  And it still is true that most physicians are sure that patients prefer them to AI, but they may soon be proved wrong about that too.

AI is going to play a major role in health care.  Rather using physicians to focus more on empathy and ethical issues, as Mr.  Khosla suggested (or paying them more for it, as Mr. Andreessen suggested), we might be better off using nurses and ethicists, respectively, for those purposes.  So what will physicians do?

The hardest part of using AI in health care may not be developing the AI, but in figuring out what the uniquely human role in providing health care is.

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

Uber, Lyft and Healthcare

By Clive Riddle, September 9, 2016

Bruce Japson, in his Forbes article earlier this summer - On-Demand Health's Growth Second Only To Uber And Lyft, that "investment in on-demand health services is projected to reach $1 billion in 2017 with Teladoc and rival telehealth firm American Well joining the likes of Uber and Lyft in the top 10 most funded on-demand companies, according to the most recent tally by consulting giant Accenture ACN -1.02%. Investment in on-demand health was just $200 million in 2014."

While Bruce was talking about valuations of on demand companies, it is most interesting that on a different level, the paths of healthcare and on demand ride services are converging.

Just this week, CareMore Health System touted their recent collaboration with Lyft that “Improves Access to Care, Reduces Transportation Cost and Wait Times” according to results from a pilot study of their Medicare Advantage beneficiaries that was just published in the Journal of the American Medical Association (JAMA),  in the article, “Nonemergency Medical Transportation: Delivering Care in the Era of Lyft and Uber”

CareMore notes that “individuals using the service are now waiting an average of just nine minutes to be taken to or from their medical appointment” and that “average per-ride costs have been reduced by more than 30 percent (from $31.54 to $21.32). Satisfaction with the new program, which covers beneficiaries in selected areas of southern California, exceeded 80 percent.” CareMore plans to continue the program and potentially expand to markets beyond California.

Earlier this year, MedStar Health, the largest not-for-profit healthcare system in Maryland and the Washington, D.C., region, and Uber announced a collaboration “to give patients a new option for ensuring they can get to and from healthcare appointments. Patients who miss appointments or have to reschedule at the last minute frequently cite transportation as a factor.”

The Advisory Board, writing about in July, in their article “A surging trend: Uber, Lyft have hospitals rethinking patient access” reported that “other hospitals quickly became interested in MedStar's model, said Michael Ruiz, chief digital officer for MedStar. ‘We probably had 50 different systems across the country reach out to us and ask us 'How did you do it?’’ Several other hospitals have formed partnerships with Uber this year, including New Jersey-based Hackensack UMC and Florida-based Sarasota Memorial Hospital.”

How many years off are we from driverless Uber and Lyft cars picking us up for our healthcare visits?

Out With the Old...Wait, Not in Health Care

By Kim Bellard, August 16, 2016

The last company still manufacturing VCRs announced it has ceased their production.  VCRs had a good run, most households had one, but their time has passed.  Meanwhile, the stethoscope is celebrating its 200th birthday, and is still virtually the universal symbol for health care professionals.  

There has got to be a moral in there somewhere. VCRs are a classic example of how technology (usually) moves on.  Except in health care.

Like stethoscopes.  Digital advocate Dr. Eric Topol recently tweeted: "The stethoscope's 200th birthday should be its funeral. That's all well and good, but -- to paraphrase Mark Twain -- reports of its death are greatly exaggerated.

It's not like stethoscopes do all that good a job, or, perhaps, that physicians use them all that well.  A 2014 study found that participants only detected all tested sounds 69% of the time.  As the authors diplomatically concluded, "a clear opportunity for improving basic auscultations skills in our health care professionals continues to exist."   

Oh, and stethoscopes also help carry germs.

And it's not like there aren't alternatives.  As one might expect in the 21st century, there are electronic/digital stethoscopes.  There are also handheld ultrasounds that provide another strong alternative.

And now, of course, there are smartphone apps for stethoscopes.  Apple was claiming 3 million doctors had downloaded its $0.99 stethoscope app as long ago as 2010, with Android versions also available.  

And yet stethoscopes hang in there.  

We might like to think that physicians continue to use traditional stethoscopes because they are simply being thrifty, since electronic stethoscopes and handheld ultrasounds are much more expensive, but that seems a reach.  They've certainly not been reluctant to adapt other types of newer, more expensive technology -- at least, not as long as they can charge more for it.  

It is a conundrum that has bedeviled economists: why in health care does new technology almost always increase costs, unlike most other industries?  E.g., DVRs were much better than VCRs, but quickly became comparably priced.  Professor Kentaro Toyama cites what he calls technology's Law of Amplification: "Technology’s primary effect is to amplify, not necessarily to improve upon, underlying human inclinations."

And in health care, those underlying inclinations don't drive towards greater value.

When it comes to stethoscopes, it's not about the money.  Many physicians believe that the stethoscope helps foster the patient-physician relationship.  In a recent article in The Atlantic, Andrew Bomback admitted that, "Indeed, for many doctors (myself included), the stethoscope exam has become more ceremony than utility."  

Physician/engineer Elazer Edelman argues that a stethoscope exam can help to create a bond between patients and physicians.  He worries that technology may be fraying the "tether" between doctors and patients. Still, if the relationship depends on which device a physician uses to listen to our chest, that relationship is in bigger trouble than we think.

So, R.I.P. VCRs, and thanks for the memories.  As for stethoscopes, and for health care more generally, though, maybe the moral is that we should focus less on status symbols and more on what is best for patients.

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

Millennials Are (Not) So Different

By Kim Bellard, June 24, 2016

If we believe conventional wisdom about them, they like to live with their parents, at least until they can move into their urban-center condo.  They hate to drive.  They're maddening in the workplace, demanding lots of frills and constant praise yet returning little loyalty.  They're hyperconnected through their various digital devices.  And, when they deign to think about health care, which isn't often, they want all digital, all the time. 

There's some truth to the conventional wisdom, but not as much as you'd think.  A new study from Credit Karma flatly asserts that "everything you thought you knew about Millennials may be wrong," finding that they still have aspirations to much of the same "American Dream" as previous generations.   

The hyperconnected part is certainly true.  Millennials are much more likely to have a smartphone,  and -- jawdroppingly -- on an average day they interact with it much more than with anyone else, even their parents or significant other.  

Things get really interesting when it comes to health.  Millennials are often viewed as not very interested in health care, but it is the second most important social issue for them, right after education and ahead of the economy. 

A deep dive on millennials and health care by the Transamerica Center for Health Studies had some results that also don't necessarily fit the stereotypes. Taking care of their health was tied with getting/keeping a job as their top priority. 70% have been to a doctor's office within the last year, although for minor issues they're more likely to head to urgent care/a retail clinic. When it comes to getting health information, this supremely digital generation still relies most heavily on health care professionals and friends/family (especially their mothers!).

There has been a dramatic drop in being uninsured -- 11% versus 23% as recently as 2013 -- but millennials don't like much about health insurance.  They feel much more informed about their health and how to improve it than they do about how to find health care services or their health insurance options.  

Perhaps that is why two-thirds have never comparison shopped for health insurance.

Lastly, TCHS found that millennials rate affordability as the most important aspect of the health care system, but many don't find it affordable.  About 20% can't afford routine health expenses, even though millennials' median health expenses are under $100 per month.  Nearly half have skipped care to reduce their expenses. Similarly, most millennials view monthly premiums over $200 as unaffordable.

If there is a key difference with millennials' health care, it may be in their emphasis on technology.  A report from Salesforce.com found that 76% of millennials valued online reviews in choosing a doctor, and 73% want doctors to use mobile devices during appointments to share information. 60% are interested in telehealth options in lieu of office visits.

It is perhaps no wonder millennials are turning to technology when it comes to their health.  They highly value face time with their doctor, but they may not be getting it.  According to the Salesforce report, 40% of millennials don't think their primary care doctor would recognize them on the street. 

Many of us might suspect the same thing, and that should trouble us all.

When it comes to health care, as with many other aspects of life, it may be less that millennials are different in what they want as it is that they're quicker to adopt newer options for getting it.  The rest of us should learn from that, not shake our heads at it.

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

Hot Healthcare M&A Market Starting to Cool

By Clive Riddle, May 6, 2016

Irving Levin Associates reports that healthcare merger & acquisition activity, which has been relatively overheated, is starting to cool a little. Lisa E. Phillips, editor of Irving Levin’s Health Care M&A News tells us “the slowdown in deal volume in the first quarter of 2016 might simply be fatigue setting in after a record-setting year in 2015. Also, some buyers are still figuring out where the best opportunities are, as the shift to value-based reimbursements gains momentum.”

Health Care M&A News states that “health care merger and acquisition activity began to slow down in the first quarter of 2016. Compared with the fourth quarter of 2015, deal volume decreased 7%, to 351 transactions. Deal volume was also down 7% compared with the same quarter the year before. Combined spending in the first quarter reached $79.5 billion, an increase of 87% compared with the $42.5 billion spent in the previous quarter.”

Here’s a snapshot the publication provided of the quarter’s activity:

How big was 2015?  Bigger than 2014, which was also a huge year.  Irving Levin’s Lisa Phillips says “health care mergers and acquisitions posted record-breaking totals in 2015. The services side contributed 62% of 2015’s combined total of 1,503 deals, which is even higher than 2014, when services deals accounted for 58% of the deal total.” A separate Irving Levin publication, the Health Care Services Acquisition Report, cites that “deal volume for the health care services sectors rose 22%, to 936 transactions versus 765 in 2014. The dollar value of those deals grew 183%, to $175 billion, compared with $62 billion in 2014. Merger and acquisition activity in the following services sectors—Behavioral Health Care, Hospitals, Laboratories, MRI & Dialysis, Managed Care, Physician Medical Groups, Rehabilitation and Other Services—posted gains over their 2014 totals. The exception was the Home Health & Hospice sector, which declined 33% in year-over-year deal volume.”

In the hospital sector, for 2015, they report that “activity remained strong in 2015, up 3% to 102 transactions, compared with 99 transactions in 2014. An average of 2.6 hospitals were involved in each transaction, compared with an average of 1.8 in 2014 and 3.3 in 2013.” Philips noted that “several deals resulted from the mega-mergers of 2013,” and that “we’re seeing more sales resulting from bankruptcies, especially in states that have not expanded Medicaid coverage.”

Getting on the Blockchain Bandwagon

By Kim Bellard, April 28, 2016

Face it: health care IT infrastructure is a mess.  After spending tens of billions of dollars to "incent" providers to move to EHRs, they're using them but are not very happy with them. We now have millions of electronic records that are still way too siloed, and all too often incomplete.

Enter blockchain.

To the extent most people think of blockchain at all, it is in relation to one of its most prominent users, Bitcoin.  Bitcoin, which has its passionate advocates and equally passionate skeptics, is not synonymous with blockchain.  Blockchain is the technology that allows Bitcoin to operate, but they are no more one and the same than Salesforce.com and Oracle are.

In layman's terms -- and, trust me, when it comes to this I definitely am a layman -- blockchain is a set of distributed records, or databases, that are shared by multiple parties and which can only be updated by a majority of those parties.  There is no central authority, no central database.  It reminds me of the Internet's distributed networks, which help assure its robustness. 

Equally important, in blockchain once a record is stored (or "transcribed"), it can't be tampered with.  For better or for worse, Bitcoin has demonstrated that blockchain does, in fact, assure anonymity, privacy and security. 

Blockchain is starting to become more visible even outside of Bitcoin.  Businesses are being told they need a "blockchain czar.  Wall Street is starting to embrace it.  Britain looking into using it for manage the distribution of public money
 
Some people think it is the greatest thing since sliced bread -- or, in modern terms, since the Internet.  IBM's Jerry Cuomo says: "Blockchain has the potential to become the technological foundation for all electronic transactions conducted over the Internet."

If they are even remotely right, blockchain is something that we better be paying attention to, and what industry needs its advantages more than health care?

We're already beginning to see blockchain show up more in health care.  For example, Gem just announced Gem Health, As they say: "We need a modern infrastructure that unlocks new channels for services to connect, while balancing the need for strong data privacy and security.  Blockchain technology is that infrastructure."

Philips is onboard, with the Philips Blockchain Lab joining the Gem Health network.

It's not going to be easy.  Health care has had a hard time agreeing to things like ICD-10 or HL7, much less interoperability standards.  In CIO, Peter B. Nichol points out the need for foundational protocols, such as the Linux Foundation's Hyperledger project is working on  If we thought getting providers to use EHRs was hard, picture trying to get the health care industry onto a entirely new technology platform like blockchain. 

True to form, the "HIT standards mandarins" are already showing resistance to blockchain.

However, Mr. Nichol also enumerates a number of companies already jumping on the blockchain bandwagon for healthcare uses, including not just Gem but also Tierion, Factom, HealthNautica, and Guardtime.  It is something that any organization involved in health care can ignore only at their own risk.

Look, I'm no technology seer.  I don't know if blockchain is going to totally revamp how we store and update data, as its proponents claim.  What I do know is that, when it comes to health care, our current approaches are not getting us to the interoperability that we need, or are doing so only at glacial speeds, and that they allow our electronic data to be increasingly vulnerable.   

If not blockchain, what?

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

Identity Crisis: The Need for Improved Healthcare Identity Management

by Clive Riddle, April 8, 2016

This week, Kathy Bardeen from LexisNexis spoke in a HealthcareWebSummit webinar on Mastering Identity Management in Healthcare.  The issue with that inaccurate and missing demographic information and inadequate authentication systems and processes threaten business integrity and success, financial outcomes, and member engagement. On top of that, there is the looming specter and fear of hacking, healthcare identify theft and fraud.

Kathy cited recent medical identity theft breaches with OPM data, UCLA Health and Anthem, along with these concerns:

• Nearly 40% of consumers would abandon or hesitate using a health organization if it is hacked
• 50% if consumers agreed they would find another healthcare provider if their medical records were stolen
• Between 8-14% of medical records have erroneous information tied to an incorrect identity
• Only about ten percent of health insurers use two-factor authentication and encryption to protect data
• Individual can spend an average of $13,500 to resolve applicable medical identity fraud cases
• Insurers spend $2pmpm or more for multiple years of credit monitoring for members affected by data breaches

Kathy tells us healthcare organizations need to handle identities as a journey that starts with Identity Checks, progresses with Identity Management and then Identity Insights. Here’s her definitions:

• Identity Checks involve facilitating the authentication, verification and resolution of identities engaging with the organization, identifying possible fraud risks, and allowing for point of need identity information searches.
• Identity Management leverages a systematic approach to maintaining, enhancing and augmenting member identity profiles with current, correct and previously unavailable information.
• Identity Insights involves understanding individuals and their relationships within and outside of the healthcare ecosystem and gaining insight into socioeconomic factors impacting health outcomes, costs and overall risk.

Kathy shares these best practices in Risk Mitigation in Identity Checks, Identity Management and Identity Insights:

• Risk Mitigation in Identity Checks should involve: evaluating systems and process to minimize the transmission and storage of PHI/SPII data whenever possible; executing a robust algorithm for unique ID assignment that will maintain consistency and persistence over identity evolution; and deploying a multi-layered approach for identity management that grows with business objectives as well as an ever changing identity landscape.
• Identity Management should involve: implementing an ongoing maintenance program to ensure integrity of identity records as this data erodes; executing the identity management program with a frequency and focus that matches the business processes and programs leveraging this data; and leveraging an authoritative, reliable data source(s) to augment and update identity information.
• Identity Insights should drive analytics from identity insights to solve for large complex problems as well as target improvements to existing programs; and maximize the value of the identity management data asset across different areas of the business.

This webinar is now available for free on an on-demand basis for qualified applicants.

The Biosimilar Opportunity

By Clive Riddle, April 1, 2016

Biosimilars hold considerable future opportunity for helping address rapidly rising prescription costs. They also hold considerable opportunity for pharmaceutical companies seeking to offer them, as well as challenges for pharmaceutical holders of brand drugs that they would impact.

PwC listed Biosimilars as one of their top ten health industry issues of 2016. They stated that “Finally entering the US market, biosimilar drugs have the potential to be as disruptive as generic drugs following the Hatch-Waxman Act of 1984. The first US biosimilar - Sandoz’s Zarxio, which prevents infections in cancer patients – received FDA approval in 2015, and entered the market at a 15% discount. At least four biosimilar applications are pending FDA review in 2016, with another 50 in the FDA review process.”

PwC also another challenge in that U.S> consumers don’t know what the heck a Biosimilar is: citing a survey in which only 17% of consumers chose a correct definition of Biosimilar when offered multiple choice answers.

Biosimilars are of course much further along the path in Europe, but in addition to consumer confusion and provider and purchaser lack of familiarity as well, there is of course continued regulatory morass as well as lobbying from pharmaceutical companies trying to protect specific brand drug turf. The NCSL (National Conference of State Legislatures) has a page dedicated to the topic of State Laws and Legislation Related to Biologic Medications and Substitution of BioSimilars.

In addition to monitoring and summarizing this activity, NCSL provides easy to understand background information. They tell us “Biologic medicines are much more complex than traditional chemically synthesized drugs. Biologics are manufactured from living organisms by programming cell lines to produce the desired therapeutic substances and consist of large molecules….Regulating biologics raises new issues for both state and federal policymakers. Because of their complexity, biologic drugs are much more difficult to replicate than the chemically produced generics for other drugs. The cell lines used and modifications in the manufacturing process affect biologic medicines. As a result, truly identical “generic” versions are currently virtually impossible to produce. However, once patents expire for the existing brand-name biologic drugs, “biosimilar” medicines can be produced, which is an occurrence that raises regulatory issues in the states. Currently, there is concern that traditional statutes regulating ‘generic drugs’ may be misapplied to new products that are not identical. This has led to a recent move to amend older state laws to address the medical and chemical characteristics of these ‘biologics,’ as well as any future generic-style ‘follow-on biologics’ or ‘biosimilars.’ “

This week the IMS Institute for Healthcare Informatics released a 36 page report: Delivering on the Potential of Biosimilar Medicines -The Role of Functioning Competitive Markets, telling us that “Greater acceptance of biosimilar medicines in a growing number of therapy areas and an active pipeline of 56 new products in clinical development are expected to deliver total savings of as much as $110 billion to health systems across Europe and the U.S. through 2020.”

IMS offer considerable research into Biosimilar adoption and issues in Europe, and counsels that “As these medicines also become available in the U.S., stakeholder education and incentives will play a vital role in ensuring biosimilars deliver their full potential.” Their report finding include:

• Considerable variations across the EU in payer policy approaches are limiting the biosimilar opportunity.
• Biosimilars use in the EU and U.S. may yield total savings of $56-110 billion over the next five years.
• Patient access to biologic treatments has grown by as much as 100 percent following the availability of biosimilars.
• Intensifying competition and greater choice are expected as new biosimilars reach the market.
• Capturing the benefits of biosimilar medicines requires a balance between controlling price and ensuring a sustainable, competitive marketplace.

IMS emphasizes the need for education and incentivization in order for Biosimilars to fulfill their potential.  They tell us that “Payers need to ensure that they are keeping themselves informed. The variation in policies adopted, as well as in biosimilar prices and uptake, across the EU, suggests that some payers do not understand the potential offered by biosimilar medicines. Physicians need to trust that biosimilar medicines offer a safe and efficacious alternative to original biologics…..Patients are expected to accept new technologies, about which they may have only limited information….Payers need to ensure that doctors see a tangible benefit to prescribing biosimilar medicines. Physicians need to understand that prescribing biosimilar products delivers clinical benefits across the market as a whole, and that the cost-savings that result from biosimilar uptake enable more patients to access needed treatment.”