What Is Amazon Up To?

Back in April, PwC and HRI issued a report that asked what new entrants might be healthcare's Amazon.com.  Now it appears that it might just be Amazon itself.

Modern Healthcare broke the story first: Amazon has met with the FDA.  MobiHealthNews and Forbes quickly seized on the story and added their own insights.    What we "know" is that unnamed "Amazon leadership" met in late July with Howard Sklamberg, FDA's deputy chief for global regulatory operations and policy, and other unnamed "various FDA leadership."

That's it; everything else is speculation.  Not much of a story perhaps, but, hey, without speculation there would be no point of blogs, and then I'd have to spend my time doing something else.

Still, the speculation is interesting, especially with a company like Amazon that has repeatedly demonstrated its ability to disrupt markets.  It initially seemed a folly when they started to compete against bricks and mortar booksellers, and now most of those are gone.  It seemed like hubris when they expanded into selling a broader range of goods, and now Amazon is the nation's leading e-tailer, with sales of electronics and other products far outpacing books.  They pretty much invented the e-books category, with the Kindle dominating that market.

They already outsource their cloud services (Amazon Web Services, or AWS), their distribution capabilities, and their payment systems, the latter now being expanded to in-store payments, going up against the likes of Visa and Mastercard.  In a smartphone world dominated by Apple, Samsung and other established manufacturers, they fearlessly have introduced their own version, the Fire.  I could go on in various other spheres, but the point is clear -- they're not afraid of anyone.

So now health care?

The various articles noted that Apple and Google have already met with the FDA, each with their own announced or highly rumored entries into health care as well.  The speculation on Amazon's intent has focused mostly around sales of FDA-regulated products, and Amazon's potential interest in wearables.  They might want to have their devices go into areas that the FDA would have a direct interest in, especially since, for example, AWS already works with cloud-based EHR vendors.

All of those would be well and good, but if that's as far as Amazon's interest goes, I'll be disappointed.

Here are three ways that I would love to see if Amazon could add value to health care:

Reviews: OK, all you Amazon shoppers -- and there are a lot of us -- how many of you buy a product (even if not on Amazon) without first checking out the Amazon reviews? Whether it is books, computers, shoes or any of the numerous other categories Amazon has, chances are that someone, and most likely a number of someones, has reviewed the product.

Sure, some of the reviews are angry or off-point, but generally the "wisdom of the crowd" seems to prevail and shoppers can get a pretty good sense of what they might be in for.

Their reviews already cover various medical supplies/devices sold on Amazon, but wouldn't you love it if those reviews applied to, say, physicians or hospitals?  After all, Zagats already broached health care, using their dining guide ratings system in conjunction with Wellpoint to rate in-network providers, and Angie's List also used its prized customer base to establish a reporting mechanism for health care providers.  So it wouldn't be unprecedented if Amazon applied customer reviews to health care providers.

I have to believe that if Amazon wanted to get into this business, they could quickly get to a credible number of reviews, and make life very interesting for providers.

Recommendations: Amazon is noted for their personalized shopping recommendations, based on user's shopping and purchase history on the site and a lot of Big Data collaborative filtering.  Whether it is a recommended item, the "also viewed" products, or the "frequently bought together" combo suggestions, the recommendations are pretty effective in helping boost Amazon's sales.

Imagine if Amazon applied this to health care products, services, and even providers, recommending ones that they believe might best fit you, and possibly helping map out the various steps of a treatment plan (as they are "frequently bought together").

Amazon would have to be careful to not go over the medical advice line, the recommendations might not look like recommendations for other products, and recommendations for services would be a very new step for Amazon, but one would be foolhardy to say Amazon couldn't make their mark.

Medical tourism:  No, I don't mean the out-of-country packages of lower-cost health care services often thought of as medical tourism (although I'm not excluding them).  I mean more broadly making services or packages of something that consumers actively shop for, and breaking the traditional pick-the-closest doctor/hospital mindset that most consumers have gotten used to.

For example, many lab or imaging tests are -- or should be -- commodities, and it is not too hard to picture vendors posting their prices and features.  Many health plans or self-funded employers already have a "centers of excellence" approach for specific major procedures -- open heart surgery or transplants come to mind -- and those kinds of packages of services would also seem to lend themselves to an Amazonian open competition.

I've talked about this kind of approach before (e.g., Exchanges for Everyone! and 20th Century Health Plans in a 21st Century), and in Provider Networks...How Quaint! I also mentioned a medical auction site called MediBid that uses an eBay-type approach to try to get providers to competitively bid on services.  We could use more -- a lot more -- of this kind of open competition, whether it is an eBay or an Amazon model.

It's fun to speculate what Amazon might do, but the real benefit of them coming into health care in a bigger way would be that they might do something truly unexpected and unique, without health care industry blinders limiting their creativity. 

They haven't asked for my advice -- and please feel free to get word to them that they should -- but what I'd urge Amazon is:

•  Keep it retail: Amazon made its reputation as a retail company, and yet health care has stubbornly resisted being truly retail -- even though almost nothing is more personal than your health, nor are many things done to you that are more "personal' than what commonly happens in health care.  If I see Amazon doing a deal with a big health plan or health system, I'll have a pretty good idea that they're simply going for their share rather than reshaping the market (as I talked about in Getting Our Piece of the Pie).  Remember your roots!
• Make people mad: I don't know enough about the current Amazon-Hachette fight over e-books to have an opinion.  I do know that Hachette, their authors, and many readers are pretty mad at Amazon, and I say -- I hope whatever Amazon does in health care makes lots of people mad too.  I hope the AMA, AHA, and the state medical boards are furious, that individual health systems and health care professionals are scared to death, and there generally is a lot of arm-waving and teeth gnashing.   If everyone is applauding, Amazon didn't go far enough.

If all Amazon wants to do in health care is to make it easier for us to buy even more of the things we already buy too much of, and pay too much for, I wouldn't be surprised, but I will be disappointed.  We have plenty of companies who can help us tinker around the edges of the status quo, but all too few companies who could perhaps disrupt that status quo.

I hope they will take Daniel Burnham's famous advice: "Make no little plans; they have no magic to stir men's blood...Make big plans, aim high in hope and work."

You're Supposed To!

There's been much going on that I wanted to comment on, but one Linkedin reader of Paying for Health Care with House Money suggested that I write about patient responsibility, so I want to start there.

I regularly bring up examples where the various parties involved in the business of our health care system are not performing as well as they should, and how we're paying for that with higher costs and lower quality.  Most of the time I also point out that we, as patients and as consumers, bear ultimate responsibility for allowing these parties to act as they do (e.g., waits for physician appointments).

Complaining about our health care system is a lot like complaining about Congress.   In both cases, the people and institutions we complain about work for us -- or, at least, we end up paying their salaries -- and they're only doing what we allow.  We allow it for lots of reasons -- for example, the difficulty in picturing how to change the status quo, and the big money spent lobbying to keep that status quo -- but it's hard to argue that we're powerless to make things change.

We have to take more responsibility for our own health, and our health care system.

Consider this: what if your doctor told you there was something you could do that would lead you to living three years longer, on average, if you did it as little as five minutes a day?  That's all: five minutes a day. That's like popping a pill or applying the kind of miracle cream you see advertised on late night TV.  Sounds like a no-brainer, doesn't it?

Well, it turns out that researchers have identified that something: running.  Amazing as it seems, their research suggests that running even as little as five minutes a day has that kind of effect.

Sounds almost too good to be true.

Or take an example with breast cancer.  Breast cancer is a source of much anxiety for many women; indeed, a recent study found that many women fear it so much that they actually get unnecessary prophylactic mastectomies.  Yet, according to another new study, as little as four hours a week of moderate exercise could cut the risk of breast cancer for post-menopausal women by ten percent.  Other estimates put the potential reduction from exercise as high as thirty to forty percent.  Hmm, mastectomy or walking -- again, it seems like a no-brainer.

I guess neither is actually a no-brainer: the CDC says 80% of Americans don't get enough exercise.

Obesity has become a huge issue, especially over the past twenty years.  New research by Ladabaum, et. alia puts most of the blame for the obesity epidemic on reduced exercise rather than overeating.  Of course, we don't think we're overweight.  A new Gallop poll found that 55% of Americans don't think they are overweight, even though actual data finds two-thirds of Americans actually are.  Then, again, two-thirds of Americans think they're doing pretty good with their health, although they don't think other people are doing so well with their health -- sort of like how we think more highly of our own Congressman than Congress in general.

Obesity is closely linked to a similar increase in Type 2 diabetes.  The CDC now estimates that 40% of Americans will develop diabetes over their lifetime, double the rate from thirty years ago.  Diabetes is not the only health issue blamed on increased obesity; another new study claims that obesity increases the odds of getting ten common cancers, including cancers of the uterus, gall bladder, and kidney.  Add heart disease and other conditions often associated with obesity and it's a grim picture.

We can blame the problem on lots of things.  The food industry, and how it has managed to pack more high-calorie food into our diets (see Salt Sugar Fat by Michael Moss), or not having enough time (although, according to BLS, most of us have plenty of spare time; we just tend to use it watching TV).  Some probably blame the pharmaceutical industry for not coming up with better prescription drugs to melt off the fat for us.

I think we should start closer to home.

The point of  Paying for Health Care with House Money was that we should think more clearly about what kinds of health care expenses we want to subsidize for what kind of situations for which people.  E.g., I'm in for helping low-income people get the care they need and for helping most people with catastrophic expenses, but I'm less eager to pay for predictable expenses that most people should be able to budget and pay for themselves.

The most difficult situation is in the area of chronic illnesses, where the expenses are not only recurring but also often tend to get higher over time.  With the CDC telling us that half of Americans have at least one chronic condition, deciding who should pay for that care becomes a crucial policy issue.

In that post I compared how we finance new cars (ourselves) versus how we finance health care (other people via health coverage).  To extend that comparison, I would not be very happy to find that my auto insurance subsidizes the accidents of someone with a history of reckless driving or DUIs.  I think they should have coverage -- to protect their victims -- but there's only so far I want to go to subsidize their bad behavior.

I don't ever want to go back to the days when people with chronic conditions can't get health insurance, or pay exorbitant premiums simply because they have a chronic condition, but I do have a similar issue with my premiums subsidizing the medical expenses of people who aren't at least trying to manage their health.

Addressing that problem is, essentially, the goal of wellness programs.  Buck Consultants just reported that 78% of employers worldwide are trying to create a culture of health, with 52% tying employee health contributions to participation in wellness programs.  ACA increased the financial rewards firms can offer for such participation, and the National Business Group on Health reports that 53% of U.S. large employers will be adding or increasing such incentives.

In an era of wearables, it's certainly easy to see an employer or health plan requiring employees/members to wear a tracking device that will monitor their exercise, eating, etc.  It's already happening.  Proponents compare these efforts to similar programs in auto insurance, such as Progressive's Snapshot program that electronically tracks driving habits.

Just because it's possible to do, though, doesn't make it a good idea.  I'm not keen on my employer, my spouse's employer, or my health plan knowing quite so much about my life.  Wellness programs strike me much the same as disease management and increased cost/quality transparency -- well-intended ideas that but still don't have much clear-cut, objective evidence that they work.

I'm not convinced that wellness programs are the solution.  For one thing, most Americans -- both the general public and those getting coverage from their employer -- don't think it is appropriate to tie their premiums to participation in or outcomes of such programs, according to a Kaiser Family Foundation survey.  For another thing, the actual impact of such programs is unclear, especially on costs, according to Rand and others.

Maybe a potential compromise is voluntary tracking, with reporting limited to some very summary reporting (yes/no?) to health plans for the purposes of determining level of effort.  E.g., I might not want Jawbone giving my health plan all my data, but I might not mind them reporting I've met my goals.

We're already seeing health plans being charged with discriminating against people with chronic conditions, not via the now-outlawed practices of medical underwriting or preexisting conditions exclusions but by limiting which providers or prescription drugs they allow coverage (or full coverage) for.  The line between discrimination and incentives to act responsibility is not as clean as we might like, and we have to be careful not to swing the pendulum too far.  There are tricky questions about the effect of genes, poverty, gender, and race on who gets which chronic conditions and how severely.  We don't want to penalize people simply for having a condition or for costing more, but we should expect them to be trying to manage their health.

We have to take all these factors into account in determining what responsibility people should have for their health -- but we shouldn't let them stop us from trying.

Whenever I get discouraged about our declining health indicators and what they bode for the future, I think of smoking.  Yes, it is dismaying that, despite the widespread and explicit warnings of the health risks, the various public/private prohibitions, and the heavy taxes, we still have about 20% of adult Americans smoking.  However, what is encouraging is that the 20% is half of what it was some 50 years ago.  Progress can be made -- it just may take a long time, require much effort, and still not eradicate the behavior.

The title for the piece comes from a hilarious yet typically insightful comedy bit by Chris Rock (I'd normally link to it, but I thought the language may be too explicit for sensitive readers - check it out on YouTube if interested).  He criticizes people who take credit for things like taking care of their kids or staying out of jail, noting that "you're supposed to!"  Well, when it comes to taking responsibility for our own health -- you're supposed to!

Provider Networks...How Quaint!

As the rest of the world is rushing towards narrow networks and ACOs, I'm going the other way.  I think provider networks are at best an anachronism and at worse are dangerous to consumers.

Networks have become the proverbial hammer to which every problem looks like a nail.

In a recent post (All Things to All People Isn't Working), I pointed out that it's extremely unlikely that the best care for all conditions will be found at any one hospital, and very unlikely that such care can all even be found in any one city.  Maybe your network will include some hospital in some city that has the best condition for what your particular need might be, but there's no assurance that it will, unless you happen to believe in the Lake Wobegon effect.

A recent study in Health Affairs, by Glance, et. alia, reiterated that care is not the same everywhere.  The authors found that major OB complications for C-sections varied nearly five-fold between low-performing and high performing hospitals, with double the risk for vaginal deliveries in low-performing hospitals as well.  You better hope the hospitals in your health plan network are high performing.

Networks implicitly assume that, for most people, access to OK care is good enough.  Maybe it is, but that kind of settling should be an explicit decision by the patients, not an implicit one by the health plan.

Let's say you are diagnosed with, say, cancer.  Being a diligent consumer, you do your research,  Miraculously, you're able to find not only mortality and complication rates, but also costs.  Although your local, in-network health system can certainly treat your condition, MD Anderson has the best outcomes and is the least expensive.  Unfortunately, though, MD Anderson is out-of-network for your health plan, so your plan would only pay 70% for them, versus 90% if you went to the local hospital -- even though it is more expensive.  If you want the best likelihood of surviving, it will cost you tens of thousands of dollars.
Do we really want to penalize consumers for making good choices?  I don't think so.

David Dranove and Craig Garthwaite recently wrote a thoughtful defense of narrow networks, noting: "Make no mistake, restrictive networks are essential to cost containment."  They see them as forcing needed competition, and are concerned that the backlash against narrow networks will lead to "any willing provider" requirements that could gut health plans' ability to negotiate with providers.  However, they also admit that "narrow network plans are only effective if there are multiple high quality providers offering services in an area," which may not always be true.

Dranove and Garthwaite don't see either high deductible or reference pricing in themselves as viable solutions, noting both cause issues for chronically ill patients.   I don't agree that reference pricing couldn't work for chronically ill patients, as I suspect some enterprising health systems (or disease management vendors) would find upfront fixed payment attractive.  I also don't think narrow networks are the only -- or the best -- way to make providers compete.

Arguing between narrow networks or all providers in a network is looking at the problem myopically.

Let's try to remember why we have provider networks.  Most people would probably speculate that it is so health plans can negotiate better prices with providers.  Consumers look at outlandish provider charges -- as Steve Brill skewered last year in Time -- and are glad they have the benefit of those discounts.  Of course, the only reason providers have such excessive charges is because no one (except unfortunate people without insurance) actually pays them.  If providers had to really compete on cost, it's a good bet those charges would be more reasonable.

One reason health plans have approached price transparency very cautiously is because they worry that lower paid providers will see what higher paid providers are getting, and demand increases.  I suspect that concern is valid, and it illustrates better than almost anything I can think of how these negotiated prices are ending up distorting market competition more than helping.

Let's think about other reasons why we have provider networks.

As HMOs -- which were then typically small network group models -- started to gain market share in the 1970's and early 1980's, two big selling points to employees were that they covered preventive care and that no claim forms were required.  These reasons will sound implausible to younger readers who have only had benefits in the past 20 years, but I can assure you that they were true (and helped persuade me to be an early HMO enrollee!).

Administrative features like dealing with claim filing, patient eligibility, and medical management rules all are examples of "advantages" that in-network providers have had over non-participating providers.  Well, the multiplicity of health plans and their varying administrative demands pose a huge administrative burden on providers. A 2009 study found that physicians reported spending 3 hours a week dealing with them, which researchers equated to as much as $31b in added costs annually. I doubt anyone would claim that the burden last decreased in the past 5 years.

For heaven's sake, the AMA actually calculates an annual Administrative Burden Index that scores how tough various payors are to deal with.

I would argue that we don't need networks for most, if any, of these administrative matters.  WEDI says that 85% of claims are submitted electronically, although various other administrative needs are under 50%.  With claims clearinghouses and sophisticated practice management systems, it's hard to see that a provider would actually have to be in-network to figure out eligibility, benefits, and where to send claims.

As for the medical management administrative burdens, I wonder if we're going the long way around the barn with all the pre-authorization and other requirements.  Wellpoint just published a study that found that by giving consumers comparative prices for MRI providers, they shopped effectively, leading not only to a significant reduction in costs but also causing higher cost MRI providers to lower their prices.

As Sam Nussbaum, Wellpoint's Chief Medical Officer, told The New York Times: "We acted as a concierge and engaged consumers giving them information about cost and quality."  I had suggested a similar concept in 20th Century Health Plans in a 21st Century, advocating that health plans transition from being network managers to being "provider brokers."  In that role, they would help consumers find the best providers, based on price, quality, and other consumer preferences.

That's got to be better than "mother-may-I?" approaches.

Sandra Boodman recently profiled an interesting company called MediBid, a so-called "medical auction site."  It allows consumers to request bids for specific health needs, and interested providers can respond with specific quotes.  I had called for similar provider-bidding "exchanges" in Exchanges for Everyone! earlier this year, and it is exciting to see a company is actually testing the concept.

Critics complain that the MediBid processes focuses too much on price and not enough on quality.  I agree that we need to do a much, much better job of defining and making available more quality measures (see What, Us Measure?), but it's hard to see that patients have any less information on MediBid than they would if they were trying to pick from a health plans' provider directory.

We just need more providers willing to compete on the basis of their cost and quality.  Unfortunately, that may be as much of a challenge as trying to persuade health plans to get rid of networks.

I'm not saying health plans should pay whatever any provider charges.  They should be able to set reasonable limits on payment, based on competitive bids and analysis (e.g., as in reference pricing).  But I don't think they should restrict as much to whom those payments can go.

We have to remember that networks evolved in an era when health plans and providers held information very closely, and connectivity was difficult.  Neither has to be true in the transparent, connected health system most of us say we want.  Give consumers more and better information, give them incentives to shop prudently, and force providers to compete.  But don't make consumers settle for mediocre providers simply because they happen to be in network.

We can figure out better solutions than provider networks.

Paying for Health Care with House Money

An article in The New York Times on the now-infamous $1,000-a-pill Sovaldi (which I wrote about in The New War on Drugs) made the cogent argument that the problem isn't the price of the drug, but rather in how we finance health care.  Sovaldi is just a vivid example.

Let's try a thought experiment:

You know you're going to have expenses of about $30,000 once every 6 years.  When they hit, the expenses could be as low as $10,000, or as high as $100,000, and they could come as often as every three years or as infrequently as every 10 years, but $30,000 every 6 years is a good estimate.

How do you prepare for these?

Well, if they're medical expenses, of course, chances are you're going to make sure you have health insurance.  You'll probably try to get a plan that gives you the best return, minimizing how much you'll have to pay in premiums and cost-sharing and maximizing how much of your expenses the health insurance pays.

On the other hand, if these are expenses for buying a new car, chances are you'll be paying them yourself.

Many of us regularly buy new cars, and the timing/order of magnitude of those purchases average about as I outlined.  We tend to save up for them, take out car loans, or perhaps consider a used car or a lease.  Certainly we carefully research the makes/models/features to find the car that best fits our needs -- and our budget.  But as far as I'm aware, no one offers insurance that helps spread the cost of those purchases over other people (although we may be getting there!).

I'm a thrifty guy; I drive a Subaru.  But if other people were helping me pay for my cars, I suspect I'd be driving a BMV.  The trouble is that so would they -- and what I paid for this car purchase insurance would skyrocket.

Sounds a lot like what has happened with health insurance.

Why do we think about financing the two kinds of expenses so differently?  Of course, there's a lot more uncertainty with medical expenses, both in terms of timing and cost.  They can easily end up much more than (almost) any car costs.  Then, again, that may be in large part because both consumers and their health care providers tend to treat costs as though they were concerns of some entirely unrelated people, and are only arrived at long after the "purchase" of the care.

Let's try another thought experiment.

There's no such thing as health insurance.  No private insurance, no Medicare, no Medicaid.  And hospitals aren't obligated to accept anyone, even in emergencies.  If you want care, it has to get paid for.

Fortunately you and I live in a progressive community, of about a million people, and we know that sometimes people need help paying for health expenses.  Being a tech-savvy community, we set up an online forum where people can explain their health care needs, and concerned residents can pitch in to help fund them.

Take, for example, a young couple whose baby was born prematurely due to some unforeseen complications.  It's going to cost a million dollars to care for the infant.  I suppose the couple could pay off such a debt over the course of their lifetime, but it would literally mortgage their future: they'd never be able to buy a house, send their kid to college, take vacations.  It's a grim future.

Personally, I'll contribute a dollar towards their expenses.  Heck, I'll contribute $2, recognizing that not all the other residents have an extra dollar, or maybe some of them are just more hardhearted than I am.  I don't think it's fair to wipe the young family out with such a large debt.

As a second example, also a couple with a million dollar baby, this one born with serious congenital defects.  The couple knew, based on their genetic risk factors, that a baby was likely to have defects, yet even paid for fertility treatments to maximize their chances of having a baby.  This couple is more prosperous than the first couple.  They may not have an extra million dollars just sitting around, but they are definitely have some assets and significant ongoing earnings.

In their case, I'm not going to be so quick to contribute my dollar.  Yes, I know -- a sick baby! A million dollar debt! -- but I'm not sure why I should subsidize their choices, especially not when they have some ability to pay themselves.

Or take an example of a woman in her late thirties, with a middle management job, who wants to get her annual gyn exam.  She argues persuasively to the forum that this is a good investment, as it should help detect issues much earlier. She wants help in paying the $100 or $200 cost of the exam.

She may be right about the importance of her exam (although maybe not), but I don't think I'm likely to contribute towards these expenses either.  They seem like budgetable expenses.  If something comes up in the exam and she suddenly needs something expensive like surgery or chemo, sure, let me know.  But otherwise I don't think she needs my money to pay for these expenses -- nor would I expect her to help pay for my preventive services.

On the other hand, if the same request came from, say, a minimum wage worker who is living paycheck to paycheck, yes -- I'd contribute my share.

All of this probably sounds familiar to advocates of health savings accounts/consumer-directed health plans.  They advocate using self-funded, tax-preferred accounts to pay for more routine expenses, with high deductible plans to help pay for larger expenses.

Of course, now these plans provide first dollar coverage for preventive care, due to ACA requirements and employee preferences.  It's also disappointing that the data shows CDHPs have at best only slightly moved the needle on getting people to be more responsible for their health decisions, although they do seem to save money.

Plus, even these plans don't do anything about equity between lower and higher income employees.  Having the CEO pay the same premiums and cost-sharing as lower paid workers fails on almost every level of social equity (not to mention that the tax preference for employer contributions disproportionately benefits higher paid employees).

CDHPs and HSAs may point in the right direction, but aren't in themselves "the" answer.

Frankly, health insurance is an ineffective mechanism for wealth transfers, and instead of using more effective mechanisms we end up with healthy lower-income people subsidizing sicker wealthier people via their health insurance.  It works the other way too, of course, but that's not the problem.

The point of all the preceding, of course, is that insurance is about spreading costs across some pool of people, but we don't think very carefully about where the money comes from or how we're distributing those costs.  The pool might be the employees of a specific company, or of a class of employers (e.g., by size or industry), or it might be based on individuals in a geographic area.  Whomever the pool includes, if you are a low cost person, as most people are, then you pay in more than you get back, in any given year and probably over the course of a lifetime, but if you are a high cost person then other people subsidize your expenses.

The question is, what kind of subsidy is reasonable to expect?

I fear that most people fail to recognize the subsidies inherent in health insurance, and only seek to maximize their own payback, as if the money was coming out of thin air instead of from other people.  They may think the insurance company has big pots of money that just happen to be there, or that the government will simply come up with the money, but that big pot of money has to come from other covered people and the government gets its money from us (or from loans from the Chinese government, but that's a whole different discussion).

This attitude that we're using house money - other people's money -- for our health care goes a long way to explaining why health care prices are so high, and why there is so much unnecessary or even unwanted care.

We should be thinking of health care expenses like we'd have to in my example of the online forum.  I.e., specifically when do I want my dollars to go to pay for what other expenses from which people?  I'd like to believe that most of us would choose to do right by poor people, but our experience with Medicaid hasn't suggested that to be the case.  I'd also like to believe that most of us would want to pitch in when catastrophic expenses happen to someone, but, again, our track record on this isn't too great either.  

We just pass off responsibility to these mythical "other people."

ACA -- ObamaCare to its critics -- took a lot of flak for being more about insurance reform than health reform, but even the insurance reform took on mostly only lower hanging fruit.  What we need are new mechanisms to encourage healthy behavior and more prudent purchasing of health care services, with more equitable financing for costs.

I've touched some suggestions in previous posts (e.g., I'll Take My Care To Go or 20th Century Health Plans in a 21st Century).  I'd love to hear some other ideas.

Where's the Beef?

There is some good news about EHRs: a new study, by Adler-Milstein and Jha and reported in Health Affairs, found that there is no evidence that hospitals are using their EHRs to increase their Medicare reimbursements.  Such up-coding had been feared as a potential pitfall of the introduction of EHRs.  True, the study showed Medicare billings did increase in the hospitals with EHRs, but at comparable levels to hospitals who did not adopt EHRs.

This is what passes for good news in the EHR world.

That doesn't seem like quite enough, does it?  After all, EHR adoption has skyrocketed since HITECH spurred the launch of the CMS incentive program -- and over 408,000 health care professionals have received some $26b in such incentives over the past three years.  "Not making things worse!" is a pretty low bar for success.

There's more not-so-good news.  A recent JAMA study, by Samal et. alia, looked at the impact of EHR meaningful use on quality of care, and found very mixed results -- marginally better quality results on 2 measures, worse on another 2 measures, and no impact on the remaining 3 measures.  The study raised questions about how "meaningful" meaningful use is, and how we best evaluate its impact and the impact of EHRs generally.

Another new report, by D'Amore and colleagues, in The Journal of Medical Informatics, found major problems with even MU Stage-2 certified EHRs being able to exchange and read so-called C-CDA (consolidated clinical document architecture), as required in Stage 2.   The study participants were pleased to find that they were able to identify common problems and offer specific solutions, but noted that "without timely policy to move these elements forward, semantically robust document exchange will not happen anytime soon."

That doesn't sound good.

On the other hand, in a piece in Healthcare IT News, Jack Beaudoin says that the debate about EHR effectiveness should be over.  He dismisses the Samal study for several technical reasons, and cites preliminary results from a study conducted by HIMSS Analytics and Healthgrades, covering all U.S. hospitals and with a more sophisticated measure of the level of EHR adoption in each hospital.

I've not been able to find any published version of the study, just a tweet from HIMSS, but Beaudoin reports that the study found that EHRs do have measurable, positive impact on the outcomes of care, as measured by mortality.  Both he and the tweet cite a heart attack mortality rate half as high for hospitals with high adoption rates compared to those with low EHR adoption rates.

Although not every patient cohort, service line, or diagnoses/procedures had positive results, "overall, all five service lines studied show statistically significant positive relationships to EMRAM scores for at least one group of diagnoses and procedures."  (EMRAM is their adoption model.)

I would like to believe Mr. Beaudoin is right, but I think the jury remains out.  For example, in a recent report, Rand was rather reserved about the impact of EHRs, citing mixed or modest results on clinical quality.  They specifically pointed out the issues of usability and lack of interoperability as major problems, noting that "HITECH promotes adoption of existing systems, not better ones," which I think hits the nail on the head.

Rand specifically called out market leader Epic for how its closed architecture makes interoperability a challenge.  They're far from alone in this criticism.  KLAS recently focused on Epic's ability (or reluctance) to share data.  I would summarize both reports as finding that Epic is fine with connecting with other Epic installations -- of which there are no shortage -- but, otherwise, good luck connecting with them.

A good illustration of this may be that, as I reported previously, Epic recently announced an interoperability consortium (Carequality), which pointedly does not include major competitors like Cerner, McKesson, or athenahealth, who have their own consortium, CommonWell Health Alliance.    It'd be funny if it wasn't so important.

As FierceEMR asked in their editorial on the D'Amore study, when it comes to interoperability, do we "fix the potholes, or find a new path?"

Congress may be reaching even its limits for incompetence with the Hatfield-McCoy feuds going on between EHR vendors.  Members of both parties are calling for an investigation into what they deem the "information blocking problem."  The Senate Appropriations Committee has asked ONC to report how many organizations are involved in the practice, and warned that "ONC should use its authority to certify only those products that…do not block health information exchange."

Rep. Phil Gingrey (R-GA) went a big step further at a House Energy & Commerce Committee subcommittee hearing, charging that:

We’ve spent tens of billions on non-interoperable products. It may be time for us to look closer at the activities of vendors in the space, given the possibility that fraud is being perpetrated on the American people.”

He also specifically singled out Epic, which, in response, claimed they actually have a "great reputation" for interoperability.  They must talk to different people.

Look, we know that in the future that health records will be digital, just like most other kinds of records already are.  We know that siloed records, even if digital, are not of much value; it is the sharing, the analytics, and the real time response capabilities that will drive the real value.  There's so much potential:

• A study of Medicare ACOs, with particular focus on those offered by academic medical centers, cited health IT as crucial for their success.  The authors note: "There has to be an electronic medical record system robust enough to analyze and assess quality and safety issues.  It’s important to quickly identify areas where changes are needed."  
• Another study predicts that analysis of EHR records is faster and more cost-effective than the current system of clinical trials.  The lead author concluded: "The use of electronic health records in simplifying clinical trials means that we no longer need to remain uncertain about which medicine offers the best health benefits for patients."
• Finally, Health Affairs focused a recent issue on how "big data" can be used to improve our health care system. For example, one study outlined six use cases for how big data can use EHR and other data to identify and manage high risk/high cost patients.

But, like FierceEMR, it is not clear to me if going a new path might not be better than trying to fix all the potholes in the existing path.

As the importance of "patient-generated data" gains in importance, with lots more options for such data, I think we're going to find that the traditional provider-oriented EHR is going to become even more problematic.  As John Halama, CIO of Beth Israel Deaconness Medical Center told MobiHealthNews, "what I, as a CIO, need to do is gather the data on your medical record, inpatient, outpatient, devices in your home, and understand what I can do to keep you well.”  Not everything important about a patient's health happens in a provider's office or facility.

As I've discussed before, I think the problem is that we approach electronic health records with the perspective that they are a provider's record about patients -- rather than patient records that various providers have specified levels of access to and input into.  That is a huge difference.

Yes, I know -- Goggle Health failed and Microsoft Health Vault is, well, doing whatever it is doing, but that doesn't mean the approach is inherently flawed (as Robert Szczerba recently wrote about in Forbes).

New studies indicate that, although they expect EHRs to be used, as many as 53% of consumers worry about the safety of their data in EHRs (Morning Consult), and as many as 13% have withheld personal data from providers due to concerns about privacy/security (Campos-Costillo/Anthony).  I wonder if people would trust them more if the records weren't "owned" and controlled by their providers instead of themselves.

I've taken my shots at EHRs before (They Shoot EHRs, Don't They?), but it's not because I don't support the concept -- it's because I am so disappointed we're not achieving more with them.  

Getting Our Piece of the Pie

In a Linkedin discussion about one of my prior posts, one reader asked what my thoughts were about mHealth bringing about much needed change to the industry.  My brief answer was, essentially -- gosh, I sure hope so, but I'm worried maybe not.  I'm going to use this post to expand on that answer, as well as broadening it to include other new entrants in health care.

It's no surprise that everyone wants to get into health care -- with the nation's tab at $3 trillion and counting, there's a lot of money up for grabs.  People from other industries see an opportunity to bring their expertise and new ideas to our admittedly creaky health care system, and get their piece of that $3 trillion.  My concern is that they'll end up with their own version of the Stockholm Syndrome, with health care's familiar players co-opting their efforts at innovation.

Whenever I talk to a company trying to get a foothold in health care, it seems they always want to target one or both of the payor/provider markets.  This shouldn't be much of a surprise -- as Willie Sutton once said about why he robbed banks, that's where the money is (include pharma as well).  Plus, it's a lot cheaper to do B2B sales than to establish a retail presence, especially in an industry whose consumers who aren't very used to B2C.  Payors and providers are natural targets for new entrants into health care. 

Certainly there is a lot of money flowing into health IT, which is expected to be a major source of innovation.  Mercer Capital Group reported that 2Q 2014 was healthcare IT's first $1b quarter for VC funding, almost hitting $2b for the quarter.  More has already been raised this year ($2.6b) than all of last year ($2.2b).  Mobile health -- mHealth -- is a particular favorite, attracting $400m in 2Q alone, with wearables and apps being the big favorites.

It's no wonder money is being invested: the wearable technology market is predicted to be a $50b industry within 5 years, according to ON World.  That compares to perhaps $5b in 2014 (both estimates seem generous to me).  This kind of technology not only has the potential to greatly enhance the ability to track consumer health, and to create actionable data in real-time, but also has consumers keen to use.  Slightly more than half of consumers in the Accenture Digital Consumer Tech Survey 2014  said they were interested in buying wearable technology (although, as fair warning, a new survey from IDC Health Insights found that one in three owners of a fitness or activity tracker stopped using them in the past 12 months). 

Still, as great a B2C market as wearables appears to potentially be, the companies in it are already working on B2B approaches with providers (such as health systems) and payors.  As Lynn Dubrack, a vice president at IDC Health noted: "To control escalating healthcare costs, especially for chronic conditions, healthcare organizations are evaluating a variety of options to engage consumers and encourage them to take a more active role in managing their health,"  High on the list of those options are mHealth solutions.

Take corporate wellness programs.  Although data on the their effect on health care costs remains mixed, they are a popular strategy for battling health care costs; some 60% of American workers have a corporate wellness program available to them.  Fitness trackers are a natural for such programs.  One company in San Francisco gave all its employees Fitbits, and saved almost $300,000 on its health insurance costs.

Indeed, Fitbit has an entire section of its website devoted to Corporate Wellness programs.  Some experts believe one key reason Jawbone acquired BodyMedia last year was to help it sell to health plans and self-funded employers.

Similarly, disease management and other firms that deal with chronically ill patients are very interested in mHealth.  They love being able to know what is happening at every moment with patients, and provide feedback to them.  Remote patient monitoring is predicted to be a $24b global market by 2019, and the data is starting to demonstrate that it can, indeed, save money.

Look at a company like Glooko, which is an mHealth leader in diabetes management.  Their website prominently targets payors and providers.  Pick your preferred remote monitoring or disease management company, and odds are they're tailoring much, if not all, of their services to payors and providers, not to consumers.

Or take an example outside mHealth -- retail clinics.  Ten years ago they were a virtually unknown quantity.  Walk in without an appointment and be seen quickly?  A price list for their services?  And very affordable prices at that, so consumers wouldn't mind paying directly?  Their business model was revolutionary.  Providers were scared to death of losing business to them, and payors didn't know what to do with them, especially without upsetting their existing provider networks.  It sure looked like a new kind of DTC approach for many kinds of patient care.

Fast forward to now.  Patients are indeed "flocking" to retail clinics, but now they're mainstream.  They're owned by pharmacy chains, grocery stores, even health plans.  Consumers can still pay directly, but, for the most part, the retail clinics are just another network option for consumers.

Top-down innovation isn't working, and won't.  HITECH was supposed to reap all sorts of benefits by getting EHRs in providers' offices.  It has accomplished many of its adoption goals, but it's hard to call it a success.  A recent blog in Health Affairs described how health IT is failing because all of the existing structures in which it is being used do not allow the kind of local innovation and creativity necessary to solve the underlying problems.

E.g., the "problem" is not lack of an EHR, so simply putting one in a provider's practice isn't going to automatically make things better.  Otherwise, more physicians wouldn't say EHRs make patient service worse than better, or worsen clinical operations more than help.  And physicians so dislike the Meaningful Use program -- despite its good intentions and financial incentives -- that 22% are opting out or disregarding, according to a new Medscape survey.

Selling innovative services to payors and providers is fine.  They can use all the help they can get.  These mHealth and other new entrants can help payors and providers control the rise of costs, while improving patient care and/or convenience.  That's all good.  But that may not be the way to radically reshape our health care system. 

I just don't see truly game changing innovations coming from "the usual suspects" of our health care system -- even when done in partnership with non-traditional organizations.  We need innovators who don't want a slice of the existing pie, but are willing to throw it away and make a new kind of pie.

When Napster started, it didn't go to the music labels and make deals.  It went to consumers, and it wrecked the traditional music market.  That was great if you liked to buy music, less great if you were the one owning or selling it.  I didn't like Napster's loose approach to intellectual property, and it took iTunes to salvage the music market, but you have to admit that market will never be the same.  I doubt many consumers would want to return to the old one.

Where are the Napsters (or, preferably, the iTunes) for our health care system?

All Things to All People Isn't Working

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

US News & World Report just released their annual "Best Hospitals" rankings.  They evaluated nearly 5,000 hospitals against a detailed methodology.  It's a fascinating report, although not without critics, and the results are widely used in marketing campaigns by hospitals that do well in it.

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

There's a lesson there.

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

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

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

His key diagnosis is the assumption about doing everything for everyone.  With more specialization, he sees significant reductions in overhead costs.  That's probably true, but I suspect costs generally could be lower, due to both improved efficiency and -- most important -- to better patient outcomes (e.g., shorter ALOS or reduced readmissions) that should come with such specialization.

It has become the conventional wisdom that increased volume results in better patient outcomes, particularly for surgeries, and there are data to support this belief.  For example, Birkmeyer (2002), Boudourakis (2009), Lau (2012), Sammon (2013), or The Advisory Board (2014).  Other studies support similar conclusions for medical courses of treatment as well, such as Coté (2013), Joynt (2013) or Hellinger (2008). 

Hmm, more specialization of services should lead to lower costs and better patient outcomes.  What's not to like?

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

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

Frankly, though, I'd have been more impressed if Cosgrove had cited the services that they stopped providing because other facilities were better at them.

Given the solid data on the importance of volume/experience, then, why are each of my local hospitals trying to make themselves the leader in, say, open heart surgery?  Or in cancer, neurology, or sports medicine for that matter?  They each still want to be all things to all people -- and there just aren't enough of us patients to ensure that they each get the volume that would result in the best patient outcomes.  And I don't think my market is unique in that standpoint..

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

There has been a tidal wave of hospital mergers and acquisitions in recent years.  Oft-cited reasons include to gain more negotiating leverage against ever-bigger payors, and ability to improve clinical integration, hopefully resulting in higher quality/lower costs.  Affiliations are seen as another way forward, and could, in theory, help address the specialization issue, with affiliated hospitals agreeing which types of care each would focus on. 

Unfortunately, that may not be their goal.  Becker's Hospital Review recently hosted an Executive Roundtable on affiliation, and I was struck by a comment one of the hospital CEOs made:

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

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

There's a calculation some health economist is going to do someday.  Illustratively, it might be something like this: in communities under 50,000 people, we can take care of 20% of the community's medical needs.  Between 50,000 and 250,000, 40%.  Between 250,000 - 1 million, maybe 60%.  Between 1 - 3 million, 75%.  And so on.

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

That's a very hard conceptual change -- for us as patients, and for health care professionals as well. 

I'd like to think that for serious conditions -- and I would hope that would be most things that would cause one to be hospitalized, other than emergencies -- people would be willing to travel further if they knew the outcomes were likely to be better and the costs comparable or lower. 

That is, after all, the rationale for medical tourism, whose annual market revenues have been estimated to be as high as $55b, with perhaps 1.2 million Americans going outside the U.S. each year.  We tend to use the term in the context of patients going overseas, but maybe we should rethink that.  With that many potential customers spending that much money, one would like to think we'd be able to get more inter-city, intra-state and inter-state medical tourism going, especially for high-cost, high value conditions/procedures where a small difference in outcomes can literally be life-changing.

What we need, of course, are institutions able to offer a compelling story -- not just fluffy marketing slogans and nicer rooms, but documented outcomes and clearly lower costs, neither of which many health care organizations have historically been able to produce, much less compete on.  But one can always hope.

In the meantime, it is up to us as consumers to seek out the best care, not just settle for the most convenient.

(For more thoughts on how we could change hospitals, check out A New Way of Looking at Hospitals)