A Cloudy Future Is Actually Brighter

Last week there was an announcement that I found very exciting: Salesforce and Phillips announced a strategic alliance in health care.  Big deal?  I think so.

Their effort aims to deliver a cloud-based healthcare platform, connecting a variety of health-related devices and systems, including EHRs, wellness apps, and various monitoring systems.  Their target is chronically ill patients, as the relatively small percentage of these patients account for a disportionately large share of health care spending.

Their initial release, slated for this summer, includes two apps: Phillips eCareCompanion and Phillips eCareCoordinator.  The former will collect and monitor data from various home monitoring devices, and send alerts to caregivers if any indicators are out-of-line.  The latter will allow clinicians to monitor a large number of at-risk patients (such as in a population health management program), and take action when appropriate.

The apps are being piloted at Banner Health, a large health system headquartered in Arizona and a Pioneer Medicare ACO.   

Phillips -- Royal Phillips NV -- is well known in the health care world (and for light bulbs, oddly enough) -- but Salesforce perhaps not so much.  That's what made the announcement so interesting to me.

Salesforce has only been around since 1999, but in that time has blazed a leadership role in customer relationship management (CRM) software, based on a cloud platform.  They were using a cloud computing platform before that term entered the public discourse, competing against more traditional CRM systems.  Salesforce has worked in the health industry, especially on the sales and marketing side, but the alliance with Phillips takes their focus to a whole new level.

According to The New York Times, the initiative is part of a growth strategy that aims at solutions that target specific industries, rather than that span multiple industries (like sales contact management).  The architect of this strategy, Vivek Kundra, was the former CIO for the federal government in the Obama Administration.  Kundra told The Times that he hopes their new platform will "unleash a wave of innovation," especially since he believes we are "...moving into a post-EMR world."

I like the sounds of that: a post-EMR world.  It's about time.

Several weeks ago I wrote Always Fighting the Last War, in which I talked about the "medical-industrial complex" and its desire to keep the status quo.  I referenced a PwC report: Health's new entrants -- Who Will Be healthcare's Amazon.com?  Salesforce wasn't listed in that report, but they might as well have been.  It comes from a different background, in terms of technology and markets,  and -- most importantly --  it has a very customer-focused background.  As Judy Hanover, an IDC health care analyst, told The Wall Street Journal, "health care organizations have this blind spot when it comes to seeing the patient as a customer."

Salesforce won't have that blind spot.

I've long been an advocate for more use of CRM in health care (e.g., Should We Spell ACO CRM?), so that's one reason I think Salesforce can make a real impact, but I'm equally enamored by their commitment to a cloud platform.

It seems like everyone is jumping onto the (virtual, I assume) cloud bandwagon.  Like Salesforce, Amazon has been into cloud computing for a while, and its Amazon Web Services is estimated to use five times as much computing power as its five largest competitors combined.  Amazon's CEO Jeff Bezos thinks that AWS might end up generating more revenue than its retail business.

Google came late to the cloud game, but is furiously trying to catch up with Amazon.  They and Microsoft are both pushing hard in the cloud storage business,  In at least Google's case, though, the storage is a means to get access to more data they can analyze.  As Scott Johnson, Google product manager for their storage business told The New York Times,

"Cloud storage is a temporary market.  In the future it will be about elevating productivity: How do we look for patterns? What does it mean if a document is read by 10 percent of the company? What does it mean if you haven’t read it yet?

It doesn't take too much effort to connect these dots to health care.

Google, of course, is famous for its aborted Google Health service, but that doesn't mean they've given up, and they know the cloud is their route there.  Google Fit is their new approach for health, collecting and storing a wide set of health data from consumers, and it comes in the wake of similar moves from Apple and Samsung.  It's all about the data.

As Google CEO Larry Page also told The New York Times, "Right now we don’t data-mine health care data. If we did we’d probably save 100,000 lives next year." 

Maybe that's arrogant on their part -- but maybe not.

The cloud is nothing new in health care.  HIMSS reports that 83% of the institutions it surveyed  are already using some type of cloud services, which I have to admit surprised me.  They're using it to host applications (86%), disaster recovery/backup (79%), primary data storage (79%), and archived data 977%). 

To be sure, the largest EHR vendors -- by far -- are "traditional" solutions from Cerner, Epic, and Allscripts, but scrappy, cloud-based newcomers like athenahealth, eClinicalWorks and Practice Fusion have been shaking up that market.  Hospital-based systems such as Epic have been benefiting from the hospital acquisition of physician practices, but if one only looks at only physician office EHRs, the race is much closer. 

Connecting patient data from all the applicable silos created by traditional solutions has been problematic, as the eHealth Initiative 2013 Survey on Health Data Exchange highlighted.  A recent report found that only 30% of U.S. hospitals have engaged in health information exchange with unaffiliated providers.  Maybe that's why they're so busy trying to "affiliate" them.

Hopefully cloud platforms can help bridge these various silos.

To be sure, not all is sweetness and light in the cloud.  Security of the data is issue number one, and recent security breaches such as with Target illustrate how easy it is for malicious hackers to gain access to protected data.  Health care heightens these concerns even further; you can swap out credit cards if you've been hacked, but once your health history has been breached there's not much you can do about it.  Some pundits even point to health data privacy concerns as the heart of the recent Supreme Court ruling on cellphones.

Personally, if I have to decide who can better protect my data against hackers --my local hospital or a company like Google -- well, I've seen how my local hospital runs.  It's not a hard choice.

To be sure, many non-health care companies have dipped into health care, such as financial services companies, only to be stymied by the sheer complexity, messy data, and perverse incentives inherent in our health care system.  That's not going to change overnight, and Salesforce may be in for a rude awakening...but I don't think so.

CRM is coming to health care.  Some would say it is already here.  The New York Times reported on how UPMC and other health plans and providers are using a variety of non-traditional data sources -- catalog shopping? -- to profile, market and target consumers.  We were doing that at Highmark ten years ago, and I'm sure UPMC and others are much more evolved than those early efforts.  Still, the performance bar for CRM is probably pretty low within health care.

Salesforce is actually good at CRM -- not just good-for-a-health-care-company -- and doesn't have the mainframe/legacy systems burdens most health care companies do.  That's why their entry has the real potential to make things interesting.  This initial effort with Phillips isn't groundbreaking in itself, but I'm eager to see where it goes next -- and what it inspires from others.

Here's hoping Salesforce can help shake things up.

May I Speak to the Doctor's Computer?

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 authors note that, historically, computer or self-administered questions have lacked the critical sense of rapport that a personal interview can establish.  They argue that with the advent of virtual human programs similar levels of rapport can be established, while not losing the willingness to disclose more personal information without the fear of being judged or of creating a negative impression.  Their study focused on psychological rather than medical issues, but the authors believe it should be applicable in medical situations as well.

The results may not come as a surprise to anyone who remembers ELIZA, the computer program introduced in the early 1960s by Joseph Weizenbaum at MIT.  Eliza mimicked a therapist using a simple statement/response approach, and was so successful that many people using it were convinced they were dealing with a human -- or that the computer "understood" them (both of which horrified Weizenbaum!).  It was pretty amazing for its time, and you can still find numerous instances of it online.

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.  The Wall Street Journal showed an example of a virtual house call with a Sense.ly nurse avatar earlier this year, and it is pretty cool.  They are also testing a physical therapy avatar named Molly that can coach patients through their PT exercises.

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.  They warn that AI can work very well with structured data, but not so much with unstructured data, which might be contradictory or rely on nuances and require some inferences.  Still, making AI better at that is only a matter of time.

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.

One of the key places for virtual humans/avatars may be able to help is in managing the huge amount of data generated by wearable technology.  There is a lot of work being done trying to figure out how to monitor what kinds of health behaviors, and I'd say we're still primarily in the fitness monitoring stage but rapidly moving to health monitoring, such as with diabetes.

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.  I suspect we're going to see some of each, and that the key to success will be what kinds of feedback/re-enforcement users get.

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.  Apple, of course, wants to do everything within its own ecosystem, and is mapping out its mhealth strategy accordingly.  They are already working with Epic and the Mayo Clinic to integrate their data into EHRs via a cloud-based API called HealthKit.

Google is trying to keep their users within their Android platform as well, via their new Google Fit service, based on open APIs.  Their desire to make it accessible to all Android users is made somewhat more challenging due to Samsung's own mHealth platform, as Samsung is the biggest manufacturer using Android.

These three companies are not by any means the only ones working on wearables and other tracking devices, but it is going to be very important how all the options can get integrated into unified data records, including EHRs.  We haven't done too well on that front with EHRs themselves, after all.

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.

Author/physician Robin Cook, who has sold millions of techno-thriller books on medical technology themes, believes physician avatars are coming.   He may just be hyping his latest novel (Cell) which features such an avatar, but he sees various health apps aggregated to not just pull data but also "to sift through billions of studies and records to make a diagnosis and offer a solution."
What I like most about his thoughts are his thoughts that:

"It's going to democratize medicine. We have been held hostage by the stakeholders - the physicians, big pharma, device makers and medical labs. This is going to free us from that."

The democratization of medicine, or at least the reduction of the information asymmetry, is one of the key trends I keep coming back to.  Whether it is physician alternatives (Vive la Différence) or virtual/actual health assistants (Making Health Care More Personal (Again)), the physician is less likely to be the sole gateway to medical information and advice. 

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.

Who's In Charge Here?

After President Reagan was shot in 1981, Secretary of State Al Haig famous declared, "I'm in control here," although, of course, the Constitution didn't quite see it that way.  I have to say that I feel somewhat the same way about the AMA recently taking offense at the notion that anyone other than a physician could be in charge of patient-centered care teams. 

The AMA was taking the Joint Commission to task for suggesting that other health care professionals, such as nurse practitioners, could lead patient-centered medical homes.  As Forbes had previously reported, the AMA is coming around to the idea of "team-based care" -- as long as they are the "quarterback."  In their view, any teams need to be physician-led.

Not surprisingly, the American Association of Nurse Practitioners was quick to rebut, telling Forbes it disagreed with the:

...overarching premise that physicians are best suited to lead health care teams.  Instead, we believe that team-based care is best thought of as a multi-disciplinary, non-hierarchical collaborative centered around a patient’s needs.

I've written about these inter-profession squabbles previously (Vive la Différence) and I continue to worry that they are more about status -- and money -- than they are about patients.  As I've asserted numerous times before, I believe we, the patients, need to be in charge of our own health, although we sure as hell need some good coaches and teammates.

There is some actual news for patient-centered medical homes.  A new study, reported in the Annuals of Internal Medicine, found that patients in PCMH improved quality measures in 4 of 10 measures, relative to non-PCMH patients.  The study further looked at non-PCMH patients in practices with and without EHRs, and found only slightly better results for the patients with EHRs.  The conclusion is that improvements are more about changing the culture than simply introducing health information technology like EHRs, which makes sense.

I would note that even the authors say that the PCMH quality improvement was "modest," and that another study earlier this year in JAMA found improvement in only 1 of 10 quality measures, and no impact at all on costs or utilization.  There's a lot of hopeful thinking going on with PCMH, as there is with ACOs. 

I do wonder how much of the lack of noticeable impact of EHRs has to do with the EHR limitations, or how physicians are using them (I wrote about this previously in They Shoot EHRs, Don't They?).   A study in the Journal of the American Medical Information Association found a puzzlingly (if not comically) wide variability in what physicians were using their EHRs for.  Whether that speaks to practice variations, differences in capabilities between EHRs, or disparate physician understanding of what EHRs are capable of, I don't know.  But it suggests we still have a long way to go before we maximize their use.

It may also explain why there continues to be significant uneasiness about EHRs by health care professionals.  CareCloud's Second Annual Practice Profitability Index found that 13% of practices were already looking to replace an existing EHR, while 17% reported planning to install a new EHR.  Only half of physicians with EHRs know if their EHR is certified for Meaningful Use Stage 2, so if I were them I couldn't be getting used to those stimulus payments.

Even on the institutional side, there's no love lost for their EHRs.  According to Premier's Economic Outlook, Spring 2014, HIT continues to be the area with the most capital investment, but 41% of respondents are dissatisfied with or indifferent to their current EHR.  Not exactly a ringing endorsement.

One of the long sought after features of EHRs is interoperability, so that patient information in one EHR could be shared with another provider's EHR when treating the same patient.  It's hard to be effective as a PCMH if the various providers can't share patient information.

One of the key aspects of the HITECH Act was to improve such health information exchange, but over four years and many billions of dollars later we're not much further along.  The CommonWell Health Alliance, made up of a number of key EHR vendors, did just announce that they will start rolling out some interoperability on a pilot basis later this summer.  It will impact 10,000 patients using twelve hospitals in 3 states, which is not overwhelming.

What I find particularly noteworthy about CommonWell is that one of the leading EHR market leaders -- Epic -- is not participating (their rivals Cerner and McKesson, among others, are).  Instead, Epic has created another organization -- Carequality -- to accomplish the similar goals, enlisting organizations like CVS, Optum, and Walgreens.

It's pretty symptomatic of our health care system that we can't even settle on a single organization to advance the mom-and-apple-pie goal of interoperability.  I guess both Epic and Cerner want to be the quarterback too.

A study in the American Journal of Managed Care looked at the question of what might make PCMHs successful in another way, trying to understand the impact of various features associated with PCMHs.  For example, ease of contacting the primary source of care by telephone during business hours was associated with lower total and inpatient costs (but not, oddly, with outpatient or pharmacy).  On the other hand, accessibility at night and on weekends is associated with lower outpatient & ED expenses.

Disappointingly, involving the patient in treatment option decisions did not seem to impact costs.

Based on the study, though, it does sound like telemedicine -- in its various incarnations -- should play a crucial role in making PCMHs successful.  Telemedicine is getting a lot of support from multiple fronts lately.  CMS has been deluged with letters from ACOs, telehealth vendors, and other interest groups, requesting that CMS remove some of the current restrictions on telemedicine.

Even the AMA is getting on board, recently passing a policy supporting broader use of telemedicine.  Of course, they still are holding on to the primacy of face-to-face visits and current state licensure approaches, so they're still not quite out of the 1990s mentality, but one step at a time.

In any event, I don't think I'd be in any rush to claim that my profession was the quarterback of our current health system, because it's not like we've got a Super Bowl-caliber system.  According to a new report from The Commonwealth Fund, out of 11 countries studied, the U.S. health system ranks 11th overall, pulled down by the impacts our vastly higher per capita expenditures have on the ratings.  Still, there is no aspect where we score better than 3rd (effective care).  Amazingly, we managed to rate 4th in patient-centered care, which may illustrate how low that bar is everywhere.

When you think about it, though, asking which health care professionals should lead PCMHs is a trick question.  More than anything, it reveals that the meaning of "patient-centered" still hasn't quite sunk in.  If it's truly going to be patient-centered, then surely patients should decide who is on their team, how the team is structured, how they will interact with it, and who will lead it.  Moreover, those decision are likely to change over time, especially as the patient goes through changes in their health.

For those who would argue that patients don't have the knowledge to make those kinds of decisions, I'd reply: well, whose fault is that?


Indeed, the very notion of certifying physician practices as patient-centered is quaintly old-fashioned.  Can you imagine businesses in any other industry seeking external certification that they are customer-focused?  They either are, or they go out of business -- a reality that health care providers should get ready for.

Who's in charge here?  Each of us, and we better get used to it.

The New War on Drugs

No, I'm not talking about the illegal drug market, which "only" generates revenues of around $100b annually (although other estimates put it much higher).  I'm talking about prescription drugs, which account for about $300b of health care spending each year.  Concern about rising expenditures on prescription drugs is nothing new, of course, but recent blockbuster drugs have raised those concerns to new levels.

The flashpoint for the concern lately has been a drug called Sovaldi, manufactured by Gilead Sciences, which is used to treat Hepatitis C.  The good news is that Sovaldi is, by all accounts, remarkably effective, completely curing patients 90% of the time.  The bad news is that it costs an eye-popping $1,000 per pill -- and typically requires 84 pills per patient.  With some 3.2 million Americans diagnosed with Hepatitis C, giving them all Sovaldi could cost an astonishing $200b.

Gilead argues that these initial costs don't take into account savings from avoided treatment costs down the road, such as liver transplants.  That is a valid argument from a global, long-term perspective, but health plans and state Medicaid agencies are somewhat shell-shocked by these unexpected costs (and may no longer be covering the impacted patients if/when any saving accrue).  AHIP (indirectly) blasted Gilead, asking the rhetorical question: "But what happens when the innovators take advantage of the system to drive their prices to unsustainable levels?"

A recent post in Health Affairs by Tricia Newman, Jack Hoadley, and Juliette Cubanski estimated that Sovaldi alone could raise Part D premiums 2-8% -- and they warn that these estimates "might be conservative."

Merck apparently thinks so.  They are salivating so much about Gilead's success that they just agreed to buy a rival developer of Hepatitis C drugs (Idenix Pharmacuticals) for $3.85b -- over three times their market value just last week.  Idenix doesn't even have any products yet on the market, but is reputed to have several promising treatments for Hepatitis C.  Others are following.

Our health care system can survive Sovaldi, $1,000 a pill or not.  The trouble is, it's not the only expensive drug out there. 

Some cite the threat from a new class of cholesterol drugs called PCSK9 inhibitors.  These drugs could shift up to 20 million Americans from relatively low cost generics to these new drugs, which are expected to cost thousands of dollars a year.  And, unlike Sovaldi, they don't even cure the problem, so become an ongoing new cost.

Or take the Lucentis versus Avastin controversy.  Both drugs are manufactured by Genetech, both can be used to treat macular degeneration, but they have vastly different costs: $2,000 per dose for Lucentis versus $55 for Avastin.  Yet Genetech only sought FDA approval for Lucentis to be used for macular degeneration.  A new study in Health Affairs estimates Medicare could save $18b over the next ten years -- and consumers some $5b in copayments -- if Avastin was always used.  Cynics (and count me as one of them) believe that both Genetech and ophthalmologists prefer Lucentis because they make more off the more expensive drug, a suspicion that the recent CMS release of Part B data doesn't do much to refute.

Another specialty that the CMS release highlighted was oncology, where new drug treatments continue to increase life expectancy -- but at higher costs.  As The Economist reports, some experts worry about the affordability of the next generation of cancer drugs.  For example, a new cancer drug (ramucirumab) sold by Eli Lilly costs over $7,000 per injection, with injections needed every two weeks, for as long as the patients live.  That could make Sovaldi look like a bargain.

The Economist cites Express Scripts' annual Drug Trends Report, which shows the average cost for a cancer drug in 2013 was $4,023 -- 22 times more than in 1997.   I'm pretty sure that is more than CPI, even the medical portion.

Vanity Fair -- not your typical health care publication -- ran a provocative article last December The Drugs That Cost More Than Your House. They list five "orphan" drugs, used for rare diseases, that all cost over $300,000 per patient per year (making their title true, at least in my case).  The rationale for the high cost of orphan drugs is that otherwise the small potential market wouldn't justify the development costs, but you have to have some sympathy for the patient or patient's health plan that gets stuck with those bills.


I mean, let's face it, the pharmaceutical industry has been ahead of its health care brethren in many ways for a long time.  For one thing, they were for-profit, investor-owned and national (international) from the start, while most other players -- providers and health plans -- were still largely local non-profits or (very) small businesses.  They were using electronic eligibility, benefits, and claims decades ago, when everyone else was still paper-based.  They led the charge for direct-to-consumer advertising in health care, pouring money into it and reaping the benefits from increased consumer demand (on average, according to IMS Health, each American now fills an astonishing twelve prescriptions per year!).

While most other players in health care have become glumly used to fee schedules and/or per-case prices, and are moving towards global payments/capitation/risk-sharing, pharmaceutical manufacturers still mostly get discounts off of charges, using Average Wholesale Prices (AWP).  Even the pricing that consumers see -- and which their copayments/coinsurance are based on -- is misleading, due to the behind-the-scenes rebates that the large purchasers get.  Throw in formularies, tiered coinsurance, pre-authorization, and other innovative approaches health plans and PBMs have tried, and consumers' confusion is complete.


It's fairly well accepted that the U.S. has some of the highest prescription drug prices in the world (just as we do for most units of health services).  The drug manufacturers argue that their pricing reflects the arduous FDA approval process, that they have a short window before generic competitors offer "me-too" drugs, and that our prices have to fund the R&D that other countries' tougher negotiating on prices won't support (in contrast, Medicare is expressly prohibited from doing the same, a policy that costs taxpayers tens -- or perhaps hundreds -- of billions each year). 

Their arguments strike me a little like the schoolyard bully telling you he can't beat up the other kids, so he's going to need your lunch money.  Or, to paraphrase one of the candidates from the 2012 Presidential campaign, we need to borrow money from China to help pay for our high drug costs so that Chinese consumers don't have to pay higher prescription drug prices.

Something is wrong here.

Frankly, I am deeply suspicious of a pricing approach that is based on charges, mitigates those with up-front discounts and hidden after-the-fact rebates, yet still produces profit margins on the order of close to 20% , making the pharmaceutical industry one of the most profitable industries, according to Fortune.  That's all great for their investors but not, perhaps, for consumers.

I am not an advocate of government price-setting (if for no other reason than if those would-be federal negotiators were better than the pharmaceutical lobbyists, we won't have the Medicare prohibition in the first place).  But we don't have a good strategy on pharmaceuticals: compared to other countries we have more patients on more expensive drugs that offer less demonstrated value relative to other options.  Nor is that unique to prescription drugs; we could say the same or similar about other medical technology and treatments.

We certainly want strong R&D, and we want to protect consumers against catastrophic expenses, whether they are due to prescription drugs or any other medical.  But we got into this mess by having the pharmaceutical industry work with health plans behind consumers' backs to set prices, passing the costs along in the form of higher premiums/taxes. It's the medical-industrial complex I've referred to previously (Always Fighting the Last War), and it's led us to these absurd, Pentagon-like prices for things that should be less expensive. 

We have direct-to-consumer advertising but not direct-to-consumer pricing or purchasing.  Like a lot of other parts of the health care system, I'd start there.  

Mistaking Failure for Success

It would be easy to think of hospitals as the crown jewels of our health care system.  After all, they are the largest single component of health care spending, accounting for almost $1 trillion of our $3 trillion total.  They've outspent and outmaneuvered all the other players in vertical and horizontal consolidation.  And everywhere I go I see scaffolds up near hospitals, as they keep building additions and renovating existing facilities. 

Let's face it: hospitals are -- implausible as it may sound -- sexy.  You see a lot more television shows set in hospitals than you do set in, say, doctors' office or pharmacies (and certainly none are set in health plans!).  Local news programs love to feature the local hospital's latest piece of (expensive) technology.  They get the best, most expensive new technologies (although they aren't always so good about getting rid of older ones).  According to The New York Times, hospitals now pay their CEOs like rock stars -- making even more than surgeons.

Instead of seeing hospitals as our crown jewels, though, perhaps we should look at them as symbols of our failures.

Think about how we measure hospital performance: how many patients die or get an infection during their stay, or are readmitted soon after they leave.  Those are all measures of failure, not success.  Would Toyota compete on the basis that fewer of their cars catch on fire, or would Apple brag that only a third of their customers return their iPhones?

I don't think so.

Contrary to how hospitals measure it now, success isn't discharging a patient alive; success is keeping people from needing to be admitted in the first place. 

Oh, sure, we're starting to use patient satisfaction scores (HCAHPS) to measure hospitals but I'm not convinced that either clinicians or administrators view them as much more than part of a "value-based" payment/ penalty. Then, again, hospitals historically haven't liked to be measured at all, aside from their bond rating or stock price.

All this is supposed to change through the advent of value-based purchasing and patient-centered care, but somehow I don't think hospitals are going to change without a fight. 

I enjoy reading articles about futuristic hospitals and hospital rooms, like those envisioned by Kaiser Permante, Patient Room 2020 or Swisslog.   The buildings tend to look like luxury hotels, with snazzy yet welcoming decor and furnishings.  The rooms are upscale as well, with high-tech yet comfortable beds, wireless monitoring, and rich patient entertainment options.  Maybe some robots.  It's all very exciting, but I can't help but thinking all this redesign is going to make our already too-expensive hospitals even more expensive.

Health care futurist Joe Flowers recently wrote a great piece about tech in health care that I think applies well here.  Everyone seems to agree that there is too much waste in health care, but Flowers notes that: "we have so much waste because we get paid for it."  Even more than that:

In an insurance-supported, fee-for-service system, we don't get paid to solve problems. We get paid to do stuff that might solve a problem. The more stuff we do, and the more complex the stuff we do, the more impressive the machines we use, the more we get paid.

Nowhere does that apply more than in hospitals.
 
What I would like to see is for a health system to do sort of a mortality and morbidity review committee on steroids.  I'd have them go through every patient, every admission, and do a deep dive on why the patient ended up in the hospital -- and what could have been done to avoid it.  That doesn't mean just the most immediate cause, but tracking each patient's health problem(s) way upstream to determine what, if any, earlier interventions could have avoided the need for an admission.

It's like zero-based budgeting for admissions. 

Instead of investing in further new, expensive technologies in the hospital, I'd then want the hospital invest in the infrastructure that would have prevented those admissions, or most of them.  We should declare a halt to the hospital facilities arms race, or at least change it to one funding outpatient/at-home solutions.  Hospitals should have the mindset that, instead of reaping lots of money for each admission, they owe someone -- maybe even the patient -- money if a patient ends up in a hospital bed.

That would get administrators' attention real fast.

Some quick examples of the kinds of things that can allow admissions to be avoided:

• The FDA just approved a blood pressure monitor that allows remote monitoring of patients with congestive heart failure.  Its maker, CardioMEMS, thinks it could benefit as many as a million patients a year.  It is expensive to implant, but would pay for itself by avoiding a single admission.  
• The ClearCell^® FX System from Clearbridge BioMedics that can track circulating tumor cells from blood tests, allowing much more real-time monitoring of the progression of cancers and avoiding more invasive and expensive tests.
• Samsung beat Apple to the punch by unveiling their digital health products that focus on health tracking through a variety of health trackers and a "data broker" for all the data generated.
• Even stodgy Intel is getting in the game, announcing their "smart wearable shirt" to track vitals associated with exercise.  Intel expects it to be the first of many.wearable monitors. 

I won't belabor the point, but the folks at MobiHealthNews just did an in-depth discussion of how patient-generated care is going to change not just how, when and where care is delivered, but how we think about care.  It is a brave new world, and hospitals are old school.

I just worry that the cost of all these new technologies end up being additive, as we tend to do in health care (see MIT researcher Jonathon Skinner's fine analysis The Costly Paradox of Health-Care Technology).  If we have all these big hospitals with lots of patient beds waiting to be filled and lots of expensive equipment waiting to be used, there's still going to be pressure to use them.  Hospitals are not buying all those physician practices just because they like doctors.


Dr. Kenneth Davis, the CEO and President of Mt. Sinai Health System, recently wrote that what we think of as hospitals have to become integrated delivery systems, featuring pro-active, community-based care and focused on population health management.  As he says, "instead of measuring hospitals by the number of beds filled with patients being treated for illnesses, the hospital of tomorrow will be judged more by its ability to maintain a community’s health."

Or as health architect Robin Guenther told the Pittsburgh Post-Gazette, "the days of hospitals being seen as islands of disease in an otherwise healthy city are over." 

Bravo.

Certainly there will always be some patients who need the intensive care and services only hospitals currently provide, but I'll bet that number can -- and should -- be a lot less than it is now.  I think that only comes when we start accepting that we've failed (most) patients if their health gets to the point they need to go to a hospital.  

It's not just hospitals, of course.  Physicians and other health care professionals have to move away from a mindset of treating unhealthy people -- usually with some sort of acute incident or concern -- to truly managing the health of the people in the community.

One sign of success may be when we stop using the term "patients," with its connotations of illness and of literally being patient for whatever health care professionals decide to do to them.  Shouldn't we just think of them as people?

The Myth of the Sovereign Consumer

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 shortly, but anyone who has been following my posts knows that provider consolidation has been a source of much concern to me (such as in Not Choosing Very Wisely), so the four articles in this HA edition were of much interest.

PwC just reported that M&A deal activity in the U.S. health sector rose 152% in Q1 2014.  That's not a typo.  Growth in M&A deals continues in most sectors of the health sector, not just hospitals, so this special HA edition was quite timely.

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.  They confess it is not clear that market approaches will succeed, and may require more direct government involvement, including direct regulation of payment rates, which they confess may not be politically easy nor clear-cut as to how to make effective.

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.  My big takeway from his article was his point that:

There is no federal competition policy entity for the economy overall, let alone specific to health care...Competition policy in health care is made by many different actors, at both the federal and state levels, and effective policy requires harmonizing their actions.

That's not going to make it easy to ensure we're regulating this in a desirable manner, especially not with the existing health sector's lobbying power I mentioned in Not Choosing Very Wisely.

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."  He further posits that:

Because of regulations and subsidies, what pass for products in health care are often professional process steps that have uncertain value to patients. Instead, they serve the economic interests of physicians, hospitals, and other suppliers within an established administrative framework of health insurance.

Hard to argue. 

I love the phase "professional process steps" to describe what we are buying now.  Professor Sage notes, for example, that the entire CPT process is developed and owned by the AMA, illustrating that they have a certain vested interest in the status quo.  Rather than paying for these historically-based process steps, he urges development of more obvious competitive bundles that better reflect what consumers find valuable.  He doesn't spare health plans from his criticism either.    

I couldn't agree more that we've lost sight of the product in health care.  Furthermore, I suspect many health care professionals are aghast to think of health care as being a product of any sort.  Still, I'm not sure that even Dr. Sage is going deep enough in his proposed redefinition.

The fourth, and most fun, article was from Dr. Vladeck, who is always a good read.  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.  He points to what he calls the reality that proves consolidation is good: "price growth in health care generally, including hospitals, has been in a steady decline for years."

That's not that prices are going down, or that price growth for hospitals isn't happening, or isn't happening faster than in other parts of the economy -- just that they are not going up quite as fast as they once did.  The Milliman Medical Index just reported that it costs over $23,000 to cover a family of four in an average employer plan.  The rate of increase may be smaller, but the cost has doubled in the past ten years, and the rates of increase are still well above overall CPI. 

If this is victory, I don't think we can take too much more winning.



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.  In the health care world, people skipping or avoiding care is usually seen as a bad thing, even when many experts cite widespread unnecessary care.  They just want to be the ones deciding what is unnecessary, not the patients.

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, as witnessed by our declining exercise habits and increasing weight, both with the subsequent health consequences.  I'd also have to agree that the full impact of increased cost-sharing is, as yet, unclear -- it probably is causing consumers to seek less care, but it is uncertain about when that proves positive and when it proves short-sighted. 

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, not in our convoluted, paternalistic health care system.  We should give it a try; after all, it'd be hard to do much worse than we've been doing.

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.  I don't mind if provider systems are large or even vertically and horizontally integrated -- as long as I still have real choices, and those systems know consumers will avoid them if they don't focus on improving the quality of care and maintaining competitive prices. 

With evolving options like retail clinics, telemedicine or medical tourism, there's no reason consumers couldn't find great care outside the normal catchment areas, unless licensure restrictions or narrow networks doom us to settling for what happens to be close.  The FTC and other oversight bodies really need to be thinking outside the box about what is good for consumers.


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.

Breaking the Choice Habit?

Marcus Merz, the President and CEO of MN-based health plan PreferredOne, recently described his company's narrow network strategy to The New York Times by saying "we have to break people away from the choice habit that everyone has."

That may be the best quote I've read this week.  Maybe this month, or even this year.  By "best" I don't mean most insightful or most eloquent, but I do mean most memorable -- and maybe most misguided.

I have to wonder: if we're trying to make our health care system be more patient-centered, more consumer-driven, why in the world would we possibly want to break the choice habit?

I do not mean to pick on Mr. Mertz or on PreferredOne.  After all, they are hardly alone in pursuing a narrow network strategy, especially among exchange health plans.  And, hey, it worked for them, winning a larger-than-expected chunk of the Minnesota exchange market.  There has been extensive coverage of this trend over the past year, especially as it became clear that narrowing the networks was an integral part of health plans' exchange strategies, but the consumer and regulatory backlash is only beginning.

I mentioned narrow networks in my last post, and wrote a longer piece on it last fall (It's a Narrow World After All), and I didn't intend to revisit the topic quite so soon.  But, after all -- break people away from their choice habit?  That's hard to resist.

Last month CBO optimistically updated their ACA projections, citing in particular that "the plans being offered through the exchanges this year appear to have, in general, lower payment rates for providers, narrower networks of providers, and tighter management of their subscribers’ use of health care than employment-based plans do."  These restrictions helped lower their estimates of premiums for those plans.


Indeed, a Kaiser Family Foundation tracking poll found that, overall, consumers preferred higher premiums in return for broader access, but among the young, the lower income, and the previously uninsured, they were quite willing to give up such access.  Whether we like it or not, price can trump access, especially among people not getting much care already.

One way to think about narrow networks is to use the analogy of a restaurant which offers a buffet, and which decides to hold its prices by putting out fewer options.  If all you care about is getting some food, that might be all right.  If you are a gourmet and aren't worried about cost, you're probably not eating at the buffet anyway.  But if you are on a more restricted budget and have some critical food-related needs (perhaps peanut allergies, for example), then the restaurant cutting back on your options could have a big impact on your health.  It could mean life or death.

So it is with narrow networks.

Their advertising campaigns aside, no hospital is the best at everything.  No city -- or state, for that matter -- has all the best care.  So narrow networks are going to end up with some patients not being able to get the (in-network) care that is the best for their conditions.  Those patients might not have tried to find the best providers in any event, but for the ones who are that empowered, I hate that narrow networks make that decision more difficult.

Let's go back to the choice habit that Mr. Merz refers to.  The second part of his quote referred to consumers' "fixation on open access and broad networks."  That is, after all, the aftermath of the attempts in the 1990s to offer narrow, tightly managed networks (and, in the interest of full disclosure, I ran such a health plan at that time).  Big networks became virtually required for health plans, with few visible restrictions.  Mr. Merz is absolutely right in this regard.

But I think we're looking at the problem wrong if we think it is choice itself that is the problem.  The problem is lack of discerning choice.

According to Pew Research Center, only 17% of internet users consulted online reviews of physicians or other providers, and only 14% did so for hospitals.  The Altarum Institute similarly found that 27% used online quality ratings of physicians, but only 16% for cost information.

Many proponents claim that consumer-directed health plans will spur consumers to shop more effectively, but EBRI has found that people in CDHPs use quality information at about the same rate as those in other types of plans, and use cost information only slightly more.  Still, no more than one in three used this kind of objective data in their decisions, and usually not even that high.  They seem to be more likely to avoid care than to shop for it.

We've blundered our way into a system where we offer consumers broad networks, but with few incentives to pick the best or most cost-effective providers.  We've allowed consumers to think of health plan spending as OPM -- other people's money -- when, in fact, it is their own money and that of healthier people covered by the health plan.  We've persuaded consumers that they should pay as little as possible for their care, especially for preventive care. 

Yes, we've trained consumers to frequent in-network providers to an astonishing level -- often 90% or higher -- but have done a pitiful job of training them how to weigh potentially higher out-of-pocket costs against better health outcomes.  Even the many transparency solutions still focus mostly on differentiating in-network providers, not helping consumers search for the best match for them regardless of network participation status.

Now we're squeezing down the number of in-network options.  I suspect health plans and their regulators will work to ensure those networks provider adequate access, if access is measured by simple standards like distance to hospitals or to a certain number of physicians and other providers, but that's different from ensuring the highest quality providers are accessible.


Worse than that, consumers still often have no compelling reasons to question the value of some of the treatments they are receiving.  A new study in JAMA Internal Medicine found that up to 42% of Medicare beneficiaries may be getting services that they don't need.  The authors caution that these services only account for less than 3% of Medicare spending, but may also only be the tip of the iceberg.  And, of course, 3% of Medicare spending is still a lot of money. 

Think about a health plan that has identified a surgical practice and a health system that does, say, bypass surgery very cost-effectively.  They do enough procedures to have it all run very efficiently, and their outcomes are best-in-class.  The health plan negotiates a favorable bundled payment with them.  Now, why should they ever pay more to other surgeons or health systems? 

If it sounds like reference pricing, that's because it is.  EBRI recently did an analysis and concluded that we could save close to $10b by adopting reference pricing for just a handful of tests and procedures.  They refer to it as another form of defined contribution for health care, but at a more service-level approach than the movement by employers that puts workers in private exchanges which is also often considered defined contribution.

Reference pricing is still in an early stage of development and needs to have a lot of kinks worked out, not the least of which is getting consumers to approach it as empowering them rather than abandoning them.  Choice has consequences, including the possibility that some people will make bad choices or not want to have the responsibility.  Welcome to life.

I've written on the following idea before (20th Century Health Plans in the 21st Century), but I think we should scrape the idea of networks entirely -- and negotiated payment rates as well.  Health plans should be assisting consumers search for the best/most appropriate providers, and paying a market-based amount towards their care.  Consumers will have to make their own choices about out-of-pocket costs versus reputation, convenience or other factors. 

Narrow networks are a paternalistic approach to solving the wrong problem.  Instead of trying to manage costs by restricting consumers' access, let's instead open up that access and help them make smarter choices. 

It can't be any worse than what we've already tried.