Tuesday, April 15, 2014

Always Fighting the Last War

There's an old military adage that generals always fight the last war.  I get that feeling a lot about the health care system, and that was illustrated this past week by the CMS release of Part B claims data.

For those who might have missed this, the AMA has been trying to block such a release since 1979, but a series of legal actions and analyses by The Wall Street Journal finally prevailed.  To no one's surprise, it revealed that a small percentage of doctors are getting paid a lot of money -- some 344 made over $3m and one earned just shy of $21m.  Ophthalmologists and oncologists topped the list, in large part because their practices pass through the costs of some very expensive drugs they administer.

The AMA, of course, wasn't happy.  On their website, they point out the "considerable limitations" of the data, such as the difference between practice revenue and personal income, and the fact that the data doesn't reflect quality or value.  Their official statement proclaims that they are committed to transparency, and seems to suggest that the public is somehow worse off because of the release.

I have a hard time feeling any sympathy for the AMA.  They've had six decades since the inception of Medicare to come up with better alternatives.  They can claim to be in favor of transparency all they want, but neither they nor the AHA -- or any of the various provider specialty organizations that I am aware of -- have exactly been leaders in finding ways to measure value or for the public to better evaluate the performance of their members.

Shame on them, and shame on us for not insisting.

The Part B data will no doubt end up being subject to a number of detailed analyses, and hopefully will work their way into some consumer- and purchaser-friendly ways to better judge performance and value, but I worry that some providers are looking at the big numbers in it and are simply thinking "hmm..."  

In his last speech as President, Eisenhower warned about the "unwarranted influence" of the military-industrial complex.  Had he been as prescient, President Johnson -- who initiated Medicare and Medicaid -- could have done the same with the medical-industrial complex.

We're now talking about $3 trillion in annual spending, or, as I prefer to think about it, revenues for someone.  We've gone from a world of local community non-profit hospitals, solo physicians, and relatively small medical device and pharmaceutical industries to a world where hospitals are merging, physicians are being acquired by those hospitals, and the medical device industry and pharma each generate over $300b in annual revenues.  And it's hard to find anyone who thinks that kind of market consolidation will do anything but increase costs.

As for the "unwarranted influence," well, estimates are that 2013 spending on lobbying for health interests was some $480m -- which was down from prior years.  The only industry spending more -- and only slightly more at that -- was financial services.  Did anyone ever expect health care to seek the same level of K Street influence that Wall Street has long had?  Add the fact that hospitals are now among the largest employers in many, if not most, communities, and the concern about influence becomes even clearer.

I suppose you'd have to say that the last war was between payors and providers, and that the providers emerged from the fiercest battles of the managed care era as the winners.  As those two sides continue to fire salvos at each other, you'd also have to say that the patients have been the innocent bystanders, and have often suffered the collateral damage.   That's the war that both sides are still fighting -- and it is the wrong war.

The war should be about improving people's health.  All the parties claim to have improving health as their goal, but it's getting harder to believe that (see, for example, Patients Come Second).  The U.S. continues to lag on most measures of its population's health.  We're getting fatter, sicker, and more medicated than ever, and yet paying more than ever for that dubious privilege.

We already have insurgents in our midst.  PwC just released a provocative report, Healthcare's new entrants: Who will be the industry's Amazon.com?  It cites of number of new entrants into the health space -- some of whom are already Fortune 50 companies -- and emphasizes that consumers are very open to getting care in new places and in new ways, such as retail clinics and using mobile apps. They see these new entrants taking some $64b of revenue away from "traditional" provider revenue -- small compared to overall health spending, but enough to get people's attention.

Their two pieces of advice for existing health care organizations: always put the consumer at the center, and figure out what matters most.

Simple as those sound, they are things that health care has historically not done well.  It's hard to claim that many health care organizations have truly been acting to put consumers in the center, or even know how to do so.  Health plans have primarily catered to employers, although that is starting to shift due to ACA and its exchanges.  Hospitals have catered to physicians, and physicians have answered to, well, I guess, God. 

Our existing health care system was built on the fundamental knowledge asymmetry between providers and patients.  It was compounded by a paternalistic system of health coverage provided by employers and the government.  That led to generations who did what they were told, were willing to submit to long waits and other indignities, rude attitudes, and incomprehensible bills and terminology.

That's not going to cut it with a new generation of Millennials who are used to technology, are masters of using social media to get recommendations, and are distrustful of institutions.

Physicians as the dispensers of all health wisdom and advice?  Not any more, not with the vast amount of information available online.  Hospitals as the model for where to put sick patients?  Forget about it -- try something like Hospital at Home.  Making patients drive someplace -- then wait -- to get tests?  Not as long as they've got a smartphone.  Secret schedules of hugely inflated charges and a myriad of "contractual allowances" for tens of thousands of potential procedures and evaluations?  Not for consumers expect to instantly compare options and prices.  Waiting for patients to have health problems and then trying to attack and manage those problems?  Outdated in a world of real-time monitoring and feedback

It's a whole new world.

The most charitable way we could describe the last war -- the existing war -- is that it was a war on illness, and we let ourselves we distracted by the power that gave health care organizations.  The new war -- the war for better health -- is going to be fought on new fronts, with higher consumer expectations, and by some entities who haven't been entrenched in the stodgy health care way of doing things.  When new entrant Apple comes calling on old entrants health plans to subsidize their new iWatch health platform, it will be interesting to see which is the most surprised by the other -- and which blinks first. 

Personally, I am skeptical that most of our existing health care organizations -- be they health plans, health systems, physician organizations, or whatever -- are going to lead the way into this new world.  That's not to say they won't play a part in it, but I think it is going to take some more consumer-focused organizations, with different attitudes about their health, to lead the way.  Maybe not Amazon (although I'd be interested to see how Jeff Bezos would approach it) but probably a combination of some already trusted brands (WalmartCVS?) and some daring new companies (ZocDocJawbone?).  And you know the current stakeholders are going to come out swinging to protect their turf -- and their revenues.

PwC's second piece of advice for the new health care world was to figure out what matters most.  I hope that will include a focus on making health care products and services "insanely great" (as Steve Jobs would have said), instead of just being insanely expensive.

Wayne Gretzky famously said he skated to where the puck was going to be, not where it is.  Health care organizations need to be thinking that way, and they better be thinking ten or twenty years out.

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