Boards Behaving Badly

Rats!  I was all excited to write about virtual reality -- what with the long-anticipated release of the Oculus Rift -- or about how perhaps augmented reality is going to be the new reality, as some experts predict.  Then Consumer Reports came out with a report that I had to write about: What You Don't Know About Your Doctor Could Hurt You.

Long story short: chances are you don't know what you'd like to.

Consumer Reports did a deep dive on the actions of the California medical board, obtaining their entire database of doctors on probation.  They had to file a public records request to obtain it, since the medical board originally refused their request, claiming release of the information "...would put too much of a burden on doctors and damage the doctor-patient relationship."

Funny, you'd think truth would be good for a relationship, apparently not for the doctor-patient one.

The good news is that out of about 100,000 doctors in California, only 440 were on probation.  The bad news is two-fold: we don't know how many other doctors should on probation, and the case studies of the doctors practicing while on probation are pretty scary.  Here are a few of Consumer Reports' examples:

• An orthopedist whose "gross negligence" lead to incorrect treatment which ultimately required a patient's leg to be amputated.  The doctor received three years probation.
• A pediatrician who had at least 30 reported sexual misconduct situations with patients/parents within a 12 month period.  He got eight years probation.
• A gastroenterlogist who even the Board agreed was giving unnecessary endoscopies and substandard care.  He's on his third round of probation.  

The trouble is that ordinary citizens can't usually find this kind of information.  Consumer Reports rated all the state medical board websites, from bad to worse (ironically, California's was rated one of the "best").  At best the state boards don't make the information easy to find, and at worst don't make it available at all.  

Much of the information, as well as information on malpractice suits, is available on the National Practitioner Data Base (NPDB), but -- by law -- that information is only available at a practitioner level to health care organizations, like hospitals or health plans.  The public can access a Public Use Data File, which "...does not include any information that identifies individual practitioners or reporting entities. The file is designed to provide data for statistical reporting and analysis only."

Apparently we might care about physician bad behavior in aggregate but not about our own doctor. 

The AMA has always been against public access to NPDB, reiterating to Consumer Reports that it is "inherently flawed."  In true U.S. health care system fashion, rather than trying to fix those flaws they seem to prefer just not letting us even see the data, even though health care organizations use it.  

Consumer Reports' survey found that 82% of us want doctors to have to tell patients if they are on probation, and 66% don't think doctors should even see patients while they are on probation, so evidently we do care.  A lot.

Of course, this is the tip of the iceberg.  In California, Consumer Reports found that in the last year there were 8,267 official complaints to the medical board.  Of those, only 1,381 cases were opened.  That resulted in 45 license revocations, 85 "voluntary" surrenders of licenses, 136 probations, and 86 reprimands.   And I'll bet those reprimands were sternly worded too.

The question is, of course, what happens to all the complaints that didn't get a case opened, or to the cases that didn't result in a disciplinary action?  Maybe they were groundless, but a former head of the NPDB told Consumer Reports that boards are often reluctant to take action because: "They're run mostly by doctors, and they are often reluctant to take actions against physicians unless they get a lot of pressure, or if something comes out in the press."

Moreover, the state boards vary about as much as 4-to-1 in how often they discipline physicians, according to a new study by the University of Michigan Medical School.  On average, the study found, there were 3.75 actions each year for every 1000 practicing physicians, ranging from 7.93 in Delaware to 2.13 in Massachusetts.  "Serious" actions -- and I'd like to know what actions aren't "serious" -- average 1.15 per 1000 physicians, ranging from 2.71 in Delaware to 0.64 in New York.

I'm not sure if this suggests there are more bad doctors in Delaware, or if their medical board is just more on the ball.

The UM authors note that state boards have "wide discretion" in when and how to discipline, and ask: "Ultimately don't we want all doctors operating in the same ethical way, and being disciplined appropriately if they fail to do so?"  I know I do.     

Meanwhile, Public Citizen took their own crack at the NPDB, focusing on physicians with reported sexual misconduct.  They found that about 18% of physicians with a clinical privilege or malpractice report relating to sexual misconduct were not also disciplined by their state medical board, even though the information was available in NPDB.  One of the lead authors charged that: "It's clear that medical boards are allowing some doctors with evidence of sexual misconduct to continue endangering patients and staff."

Pretty harsh words, even for Public Citizen.

Look, I'm not casting aspersions on physicians generally.  Unlike more widespread questionable behavior like taking money from drug companies, the vast majority of physicians aren't doing things that should require action from their licensing board.  There is a small minority of people who happen to be physicians doing bad things -- just as there is in every profession -- and our challenge is to identify them and stop them from harming patients.

On the other hand, I do blame the medical boards and their trade associations, like the AMA.  I've written before about their cartel-like behavior, which suggests they are much more about protecting physicians' economic interests than patients.  Otherwise, why put up barriers to patients being able to find out whether their physician is on probation, and for what?  The odds are low that she/he will be, but isn't it better to know than not to know?

If having conversations about a disciplinary status would put a "burden" on physicians, well, maybe they'd try harder not to deserve it.    

Tell Me That Good News Again

Hey, there is some good news about hospitals' seemingly endless appetite for acquisitions/mergers/consolidation.  A new study suggests that physician practices acquired by hospitals increase their use of care management processes, which the authors say may improve those practices' ability to manage chronic disease and perhaps even to improve the quality of care.  That's good news, right?

No so fast.

For one thing, the results don't show that acquired practices actually use the care management processes (CMPs) more than physician-owned practices, only that their use of them increased post-acquisition.  For small and medium size practices, the use of CMPs rose at about the same rate regardless of ownership, with use in hospital-owned practices remaining slightly higher.

For large practices, the rate of use is around 40% for both hospital owned and physician owned practices.  That's right, no real difference.  The rates fell noticeably for the physician-owned practices (which seems very odd) and rose just as dramatically for the ones acquired by hospitals.  But they ended up at around the same rate.

Oh, and by the way: practices owned by hospitals didn't increase adoption use of health IT any faster than ones owned by physicians, as one might have expected.

In any event, the study doesn't show that hospital owned practices are likely to do a better job of chronic disease management.  At best, one can conclude that the care in those practices is finally up-to-par with physician-owned practices.   So, yes, while one can purport that hospital acquisition of physician practices may improve care, the study doesn't seem to support that such care is likely to be any better than care from physician-owned practices.

Let's look at another aspect of hospital consolidation.  There has been substantial evidence that intra-market consolidation causes hospital prices to increase.  Most recently, Gaynor, et. alia found that a triopoly raised prices around 5%, a duopoly raised them about 7%, and an actual monopoly caused prices to go up about 15%.  I know the AHA defends such consolidation (while, of course, decrying insurer consolidation), but if anyone who isn't being paid by hospitals agrees with this position, I feel bad for them.

Now there is new evidence that consolidations can raise prices even when they don't occur within the same market.  A new study looked at hospital mergers that occurred within the same state but not within the same market.  It found that prices went up 6-10% in those situations.

The price increases were most noticeable for mergers where the hospitals were within a 30-90 minute drive, but were still almost as significant when the hospitals were more than 90 minutes away.  That strengthens the hypothesis that these increases are not due to a common customer or insurance market, but due to exercising market dominance,

Curiously, mergers that crossed state lines did not show the same kinds of impacts.

Leemore Dafny, one of the lead authors, had (in Marketplace) these words of warning for hospitals thinking of such mergers: "If you are doing it because you think in the long run it will serve your community well, you should think twice."   Dr. Dafny's premise may be the flaw, because -- as I've written before -- I'm not sure community benefit is uppermost in the strategy of even non-profit hospitals.

Lest anyone think that Dr. Dafny has a bias against hospitals, she's also been critical of insurance market consolidation.

Hospitals aren't just buying up physicians and other hospitals.  For example, they're looking to get in the health plan business (which I've already expressed my doubts about), and The Wall Street Journal reports that they are now big in the urgent care business.  The Urgent Care Association of America estimates that 22% of urgent care centers are owned by hospitals and another 15% are in joint ventures with hospitals.

The argument for hospitals getting in the urgent care business is that urgent care centers can treat patients who might otherwise go to the ER, but at a lower cost and with a shorter waiting time.  It sounds like a win for consumers, but if it is, I'm not sure if that was the goal or a happy side effect.  Hospitals don't need to actually own/JV with urgent care centers for consumers to get those benefits, which make me a little skeptical that the hospitals' efforts are about the consumers, as opposed to their own bottom lines.

A new study in Health Affairs found that retail clinics actually raise spending, as there was less substitution of more expensive care and more treatment for low-acuity conditions that people might have simply not sought care for.  Retail clinics aren't urgent care centers, and the HA results aren't directly applicable, but I'll reserve judgment as to whether hospital-owned urgent care centers actually save any money, or if they are just another way to increase hospitals' hold over their markets.

Maybe consumers don't care.  We're increasingly in narrow networks anyway, so maybe choice of health systems seems obsolete.  Still, if consumers realized the impact on their costs of having limited provider choice, or if they truly understood how much variation in pricing there was between providers even in "competitive" markets (see Gaynor again), maybe it would be different.

Hospitals -- excuse me, health systems -- argue that their various strategies for consolidation are essential to their becoming integrated delivery systems/Accountable Care organizations/etc.   Through these new, broader, deeper arrangements, they supposedly can deliver higher quality care for less money.  It seems plausible, even logical, but so far the evidence is not very compelling.

Look, don't get me wrong: hospitals are essential to our health and in our health care system.  I just don't think they should be the centerpiece of either, not with their medical orientation and their big fixed costs.  It's like having manufacturers try to drive a service economy; both service and costs suffer.

In the meantime, I'm still waiting for that good news about hospital acquisitions.

Under the Influence

A new analysis by ProPublica found that doctors who receive money from drug companies do, in fact, tend to prescribe more brand name drugs, and that the more money they got, the more brand name prescribing they did.

I trust that no one is surprised by these results.

ProPublica looked at prescribing patterns from five specialties -- cardiovascular, family medicine, internal medicine, ophthalmology, and psychiatry -- with the restriction that individual physicians had to have had at least 1,000 Part D prescriptions in the study period (2014).  Overall, about three-fourths of physicians took some money from a drug company, although there was wide variation by specialty and geography -- e.g., nearly 9 of 10 cardiologists took payments, just as around 90% of physicians took such payments in Nevada, Kentucky, Alabama, and South Carolina.

Conversely, in Minnesota and Vermont the percentage was closer to 25%.

The amount of the payments appeared to have an impact.  Internists who received no payments had brand-name prescribing rates of about 20%, while those getting more than $5,000 had rates of around 30%.  For ophthalmologists, the corresponding rates were 46% versus 65%.

As usual, the defenses from physician organizations and the drug industry make for fun reading.  Dr. Richard Baron, the president and chief executive of the America Board of Internal Medicine, protested that doctors nowadays almost have to go out of their way to avoid taking these kinds of payments,  I can just picture the poor physicians telling their drug rep, "please don't make me take your money!"

The president of the American College of Cardiology suggested the patterns were re-enforcing; the more they learn about a drug, the more they tend to use it, and the more they use it, the more drug companies pay them to be speakers and consultants.  Dr. Baron had a similar theory: "If you are out there advocating for something, you are more likely to believe in it yourself and not to disbelieve it."

A spokesperson for The Pharmaceutical Research and Manufacturers of America noted that many factors influence prescribing patterns, and quoted results of a 2011 PRMA survey that found, not surprisingly, that 9 of 10 physicians felt that a "great deal of their prescribing was influenced by their clinical knowledge and experience,"

Seriously, these are their defenses?

HealthGrove conducted a similar analysis late last year, with similar results.  They found that the highest prescribing physicians, measured by number of prescriptions and by prescription costs per patient, were much more likely to receive payments from drug companies.  Both the median payment and the percent receiving payments went up as number of prescriptions went up.

Just to be sure, they also drilled down on the data and confirmed that the high prescribers of a specific drug were more likely to receive payments from the maker(s) of that drug.  Amazingly, it doesn't look like it takes much to influence physician behavior; physicians who prescribed over $500,000 of a drug had a median payment of only $137.

I don't know about you, but I would have hoped it would take a lot more than $137 to influence a physician's prescribing patterns.

HealthGrove did a separate analysis on how much drug companies spend on "food and beverage" payments to physicians, i.e., how much they spent literally wining and dining docs.  They profiled ten companies with the highest spending in this category.  AstraZeneca led the pack, with $17 million spent in this category, some 24% of their overall payments to physicians.  

As HealthGrove asked: "If you knew your doctor was prescribing a drug made by a pharmaceutical company that frequently took her out to expensive dinners, could you trust this was an unbiased choice?"

We've been learning a lot more about how pervasive industry payments -- not just pharmaceutical companies but also medical device and other heath care suppliers -- are since the advent of the Open Payments initiative, created as part of ACA.  We're talking about over $6.5b in payments in 2014, made to over 600,000 physicians and 1100 hospitals.  I wrote about this last summer, and the new ProPublica analysis certainly should rattle any remaining doubts anyone might have had about the potential impact of such payments.

True to form, last fall the AMA called for a ban on DTC advertising.   That's right, they don't seem disturbed about the $6.5b physicians are getting, but they think that the ads that we see are bad.  There's a certain logic to that; it has long been suspected that these ads help drive consumer demand.  That's why companies do advertising, after all.  

Austin Frakt, of The New York Times, recently challenged this conventional wisdom.  For one thing, he notes that while drug ads do cause an increase in sales for the advertised drug, they also increase sales of other drugs in the same class, using Prozac as an example.  Seeing drug ads may help "normalize" the condition being treated, making getting treatment for it more acceptable, and may also help encourage patients to continue with existing prescriptions.  We don't always blindly go for the brand-name drug being advertised either; he references research that shows we might demand a prescription but we still take into account our much cost-sharing for it would be.

Mr. Frakt points out that it is not only the drug companies who benefit from drug advertising, but also physicians.  Every $28 in drug advertising results in an additional doctor visit; someone has to do the prescribing, after all.  And, of course, the DTC spending is dwarfed by the direct-to-physician "promotions" -- Mr. Frakt estimates drug companies spend seven times more on these than on DTC advertising.

So we're back to the ProPublica analysis.

We all say we're appalled by the impact lobbyists and campaign contributions have on politicians.   As Bernie Sanders has charged, "If these contributions from Wall Street and other powerful special interests have no influence over the candidate, why are these special interests making huge campaign contributions?"

So it is with health care, and not just with contributions to politicians.  Drug companies and device manufacturers are lobbying physicians, not with campaign contributions but with the kinds of spending Open Payments attempts to at least report on.  It simply is not plausible to maintain that these efforts are not influencing physicians' decisions, and that they may not always be in the best interests of patients.  As Bloomberg put it last summer: the payments "seek to convince doctors that second choice is OK."
 
Well, I don't know about you, but that is not OK with me.

The Future Won't Be What You Think

Many of us are feeling pretty smug about our use of 21st century technology.   We love our laptops/tablets/smartphones, and have acquired an impressive collection of apps for them.  We use social media to stay in constant contact with our friends.  We stream TV shows and movies, maybe on our new Ultra HD TV.

It's a snazzy little picture, but we shouldn't assume it predicts as much about the future as we expect.

I'll start with apps.  I've previously expressed my skepticism about apps, but I still have plenty of them on my phone.  Most apps are free, but even the free ones often feature ads or in-app purchases (especially in games).  Every ecosystem has an app store -- iTunes, Google Play, Amazon Appstore, Microsoft Store, even BlackBerry World.  Well, Amazon is throwing a monkey wrench into things.

Wired reports how Amazon Underground is disrupting the "traditional" model for app purchases.  Launched last summer to little fanfare, Underground gives apps away, with no upfront fees and no in-app purchases.  Rather, Amazon pays developers a small amount per minute used on their apps.  They want your eyeballs, and they'll pay for them.

Underground's growth has been impressive: three times as many developers now as initially, royalties to those developers up 3600% since launch (and up 50% just from December to January), and customer base up 870%.  Granted, they started with small numbers, but you'd have to say they're doing better with this strategy than they did, say, with the Fire Phone.

The Fire tablet, on the other hand, not only has been surprising successful, attributed in large part to its $50 price, but it also is a natural target for all those eyeballs Amazon is paying app developers to keep engaged.  After all, Android-based device owners can get Underground, but it is not easy, while iOS aficionados can't get it at all.  Underground apps fuel sales of Fire tablets, and Fire tablets fuel use of Underground apps.  That's not a coincidence.

Amazon is not betting its future only on engaging apps and cheap tablets, or even cloud computing (although AWS continues to impress).  Farhad Manjoo, The New York Times tech guru, is gushing about another Amazon product, the Echo.  He thinks it could be the "Next Great Gadget," and says:

The longer I use it, the more regularly it inspires the same sense of promise I felt when I used the first iPhone — a sense this machine is opening up a vast new realm in personal computing, and gently expanding the role that computers will play in our future

Not exactly faint praise.

The Echo is a voice-activated device that allows Alexa -- Amazon's AI -- to perform various functions for you, with better voice recognition than similar AIs like Siri or Google Now.  At your command, Alexa can read recipes, play music, control your home thermostat -- or order something from Amazon.  Developers are rushing to develop apps for it, while car and appliance manufacturers are furiously trying to figure out how to use Alexa (or its competitors) in their products.

Amazon is looking to expand Alexa's reach, believing that touch screens and keyboards are nice but have their limits, especially at home.  They just introduced two other voice-activated devices, the Tap and the Dot.  The Tap is a portable Bluetooth speaker, and the Dot is a smaller version of the Echo.  The three devices don't yet integrate, but surely that has to be the vision.

Many people, myself included, may not be initially comfortable with having a microphone in their home that can listen to, understand, and act on what they are saying, but twenty years ago most people would have flatly rejected the notion of carrying around a device that tracks their exact location at every second.  Yet most of us now rely on our phone's GPS services (and that phone, by the way, not only has a microphone but also a camera).

If voice-activated services prove their utility, we're likely to give up yet another part of our privacy.

Meanwhile, soon we may be watching concerts and even the NFL on Facebook, as Variety reported, while getting our news from Twitter.  The live video broadcasts that Facebook has done found very high engagement -- just like Amazon, they lust after our eyeballs.  They've already changed how we watch television: Nielsen has just announced that it will factor Facebook use into how it evaluates television viewership, just as it did for Twitter in 2013.

Health care is a lot like Amazon and Facebook, in that health care providers are now all about engagement.  And, like Amazon, health care providers seek consumer engagement mainly to keep selling.  I thought about this last week when I wrote about the perverse incentives that pharmaceutical companies -- and most health care organizations -- have.  Costs in health care keep going up because that means more revenue for those organizations.

What would change health care is if its organizations saw keeping people healthy as their business.  You know, like HMOs were once supposed to do (it is "health maintenance organization," after all).  Most health care organizations mouth the words about keeping us healthy, but that is rarely how they get paid.

Maybe, much as Amazon is trying with Underground, games are the way forward, or at least gamification.  I wrote about it a few years ago, yet it is still mostly just a trend.  MobiHealthNews reported on a gamification session at HIMSS16, noting that the topic "...has a perennial presence at health tech conferences, but never seems to take central stage."

It is perhaps indicative that one of the speakers warned: "Please don’t do this flippantly, it won’t go well."  And, in fact, employers may be starting to take them seriously: a new NBGH/Xerox survey found that almost a third of employers are using gamification as one of their strategies.

You can bet Amazon takes games seriously.

If the above Amazon and Facebook examples tell us anything, it is that even wildly successful, cutting-edge technology companies aren't content with their existing business models.  They know they can't just keep doing more of the same.  Meanwhile, most of the business models in health care are flawed, neither keeping us nor our pocketbooks healthy.    

The difference is, I'm not sure most health care organizations realize the problem -- or that the future is going to catch them by surprise.

There They Go Again

I didn't want to write about pharmaceutical companies.  They get enough bad press, and adding to it almost seems like piling on.  If Valeant is the poster company for outrage about drug pricing, it's less because what they are doing is unusual than it is because we suspect they are the norm.

Honestly, I wanted to discuss McDonald's turning their Happy Meals boxes into VR headsets --I'm not making that up -- but, gosh darn it, it's almost like the pharmaceutical companies are daring me to talk about them.  So I will.

What got me going was an article in The New York Times on a BMJ study about cancer drugs.  According to the study, the U.S. wastes some $3b annually because drug companies distribute the drugs in vials that contain higher doses than most patients need.  Doctors and nurses carefully measure out the appropriate dose for a patient, then have to discard the remainder of the vial.

As Dr. Peter B. Bach, one of the co-authors, said: "Drug companies are quietly making billions forcing little old ladies to buy enough medicine to treat football players, and regulators totally missed it."

Only in America, right?

In fact, it does pretty much appear to be only in America.  The Times quoted a VP at Takeda who noted they'd worked closely with the FDA to establish their one-size vial of Velcade, even though in Europe Velcade is also available in a smaller size.  The researchers estimate that 30% of Velcade's annual sales end up being wasted.

The FDA says they only care about vial sizes if they are likely to lead to medication errors or "inappropriate dosing," but they apparently don't think up to half of a drug being thrown away is inappropriate.  Dr. Leonard Saltz, another of the study's co-authors, pointed out: "What's really interesting is that they're selling these drugs in smaller sizes in Europe, where regulators are clearly paying attention to this issue."

The researchers say that 18 of the top 20 cancer drugs in the U.S. are sold in only one or two sizes, leading to 10% being wasted on average.  And although they focused on cancer drugs, the researchers found that the problem applies to other drugs, such as J&J's arthritis drug Remicade.

Of course, we pay for all this waste, directly or indirectly.

Speaking of the FDA, drug companies often complain about how the FDA approval process is one of the longest and most expensive ones in the world, but they don't mention that as many as one-in-five prescriptions are for off-label uses. despite the fact that such use has been estimated to carry with it a 44% higher risk of an adverse event or side effect.  The drug companies like off-label use; not only does it increase a drug's revenue, but it does so without having to go through the same kind of FDA approval process as on-label use.

Dr. Walid Gellad, a RAND research and professor at the University of Pittsburgh, says: "Clinicians frequently prescribe drugs off-label without knowing how well they work.  Sometimes it’s clinicians’ fault for not knowing the research. But sometimes the research just isn’t there.”

Score another win for the drug companies.

The FDA does require that drugs all come with warnings about potentially dangerous interactions with other drugs, but those reported interactions only scratch the surface.  Something like one-in-five Americans take three or more drugs, and one-in-ten take five or more, not counting all those supplements we like to take, but drug companies' research can't test for all the various combinations.  Some creative researchers recently data-mined complaints sent to the FDA and found several common combinations that could cause fatal heart rhythms.

Shouldn't the FDA been doing that, if not the drug companies themselves?

It's bad enough that we may not have the right research to make the best choices about drug safety, but another article in The Times suggests that drug companies may not be playing quite straight with the research we do have.  A lawsuit filed against J&J and Bayer asserts that researchers who reported on anti-clotting drug Xarelto in NEJM didn't mention some important lab data, even though the drug companies were providing it to regulators in -- you guessed it -- Europe.

The researchers, the two drug companies, and even the NEJM  claim that the missing data wouldn't have changed the results of the analysis, but many find its omission troubling -- especially since at least one of the peer reviewers had explicitly asked about the existence of such lab data.  Dr. Lisa Schwartz, a professor at Dartmouth, told The Times: "It just feels like it’s a real ethical breach.  If you know the direct answer to this question, then how can you not provide it to be able to give insight?”

It makes you wonder what else drug companies aren't telling us.

Dave Chase, writing in Forbes, challenges the pharmaceutical industry to reinvent itself, like IBM did under CEO Lou Gerster, or risk looking like the smirking Martin Shkreli, who some feel epitomizes the approach of milking cash cow products for as much and as long as they can get away with it.  Gerster, Mr. Chase points out, transitioned IBM from a product company that was facing extinction to a customer and service-centered company that remains highly relevant.

He argues that pharma needs to move from selling products to selling outcomes of those products, such as by moving to population health management.  He isn't the first to call for this, and they are not the only health care industry that needs to move away from maximizing revenue on sick people.  But their huge profits and impressive revenue growth may make it harder for the pharmaceutical industry to upset their own apple cart.  

Drug companies are slow walking their way to value-based pricing, such as recent deals Novartis has done, but the pace is too slow and the scope is too small.  This is, after all, the industry whose economic model has made it much more attractive for them to work on drugs that mitigate existing conditions than ones that might prevent those problems.  If and when gene therapy, nanobots, or even simple exercise start replacing pharmaceuticals, the drug companies may be sorry about those smirks.

Maybe I should take a pill...or, better yet, go for a walk.

Et Tu, Oscar?

Things seem to be going well for Oscar Health, the health insurance start-up that has been wowing investors and the media since it was founded in 2012.  Forbes reports that Oscar just raised $400 million in an investment round led by Fidelity, which effectively values Oscar at about $2.7b.  Oscar has expanded from its New York/New Jersey roots to now also include Texas and California, and expects that its current member base of about 145,000 to reach 1 million, in 30 markets, within five years.

So why do I fear that perhaps they are taking the wrong path?

I've previously expressed my concern that Oscar and some of its fellow health insurance start-ups might be more about repackaging than reinventing.  I'm more concerned than ever after Bloomberg reported that Oscar is adopting a new network strategy: moving to "tight, exclusive networks with hospitals."  Oscar CEO Mario Schlosser said: "The bet we made in going deep with a couple of health systems, I love what we’re doing there. We’ve got a very good blueprint now to go into new markets."

There's no secret why Oscar is taking this approach.  It's about cost, with the expectations that narrower networks yield cost savings.  McKinsey reported that almost half of exchange plans in 2015 were narrow, with over 60% being narrow in larger cities where such narrow networks are more feasible.  The jury is still out, but so far research is encouraging that narrow networks can, in fact, save money -- without, so far, adverse effect on quality.

Closer relationships with providers and the ability to offer lower premiums without hurting quality.  If that's what Oscar is after with its new network strategy, what's not to like?

Well, plenty.  For one, with this strategy Oscar isn't innovating; it is buying into the strategy that most other health plans are trying to adopt.  That doesn't make it a bad strategy, but playing follow-the-leaders certainly doesn't fit the cool yet disruptive image that Oscar has so carefully cultivated.

More importantly, it is the wrong strategy.  For Oscar.  For any health plan.  It is a strategy rooted in the 1990's, if not earlier.  In fact, as I've argued before, the whole notion of using a provider network at all is outdated at best, and potentially dangerous to consumers.

The argument for networks, especially narrow networks, is that health plans can drive better bargains by promising more volume to specific providers.  For most of the 21st century health plans seemed to abandon this principle, beaten by "any willing provider" legislation and especially by consumer demand for wider networks.  Now narrow networks are reviving this argument.

I don't have a problem with health plans driving hard bargains with providers, especially if those bargains are performance-based.  What I do have a problem with is forcing consumers to use those, and only those, providers (or risk severe financial penalties).

Health insurers have often been criticized for their "mother-may-I?" approach to utilization management, forcing providers and consumers to defer to the health plans' judgement.  Provider networks are another example of this mentality, and that becomes more and more true as the network gets smaller.

In essence, health plans are telling consumers that they should trust that the health plan knows which providers are best.  Making matters worse, telling consumers that they should only go to certain providers suggests that those providers are best at everything, not just specific conditions, and that is something that is rarely, if ever, true.

Not exactly an empowered consumer or a consumer-directed message.

Maybe it is true.  Consumers have shown precious little interest in comparison shopping when it comes to providers, either for cost or quality (despite a veritable cottage industry of transparency vendors).  It doesn't seem likely that any particular consumer could negotiate as good a deal as a health plan can on behalf of its members.  Neither of those mean we shouldn't still try.

I think it is great when a health plan tries to find the highest quality providers, and to get a good deal with them.  What I wish they would do, though, is say, "here's the data that demonstrates their quality, and here's how much we're willing to pay them to take care of you.  If you can find providers that are better, that's great; go to them, and we'll still pay the same as we'd pay the providers we recommend.  No hard feelings."

In other words, let the health plan act as the concierge, not the gatekeeper.

If a consumer goes to providers who charge more than the health plan would pay their designated providers, well, there's a price for choice; consumers might have to pay extra.  On the flip side, maybe the consumer should pocket some of the savings if they manage to find less expensive providers.

I wouldn't have an issue with health plans saying they'd reduce the amount they pay if the consumer goes to providers who have objectively worse quality/outcomes results.  In fact, they should.  The health plan should make such quality/outcomes information easily available to consumers, both so the consumers can make good choices and to reduce any surprises about payment.  That information might tier providers into quartiles or quantiles to help simplify things.

This approach might sound like reference pricing, because reference pricing is a start to where I think we need to go.  Reference pricing is still in the rough stages -- e.g., not enough conditions, not enough bundled payment options, and still not very easy for consumers to shop.  It has to improve, but, fortunately, one can see that happening.

I'd rather we put more effort into that than in narrowing consumer's choices.  We should be encouraging and empowering consumers to make better, more informed health choices, not taking choices away from them.

Noah Lang, CEO of Stride Health, told Fast Company, "Oscar is primarily a consumer experience company."  I don't think restricting choice of providers is a very good consumer experience for any health plan, and especially not for one like Oscar who prides itself on its member experience.

Oscar thinks this new approach is their future.  If so, their future may be as just another health plan.  And that'd be too bad.

So That's What Bitcoin Is For

The tech, law enforcement, and privacy worlds are abuzz with the recent decision by Apple to refuse to help the FBI crack the security on an iPhone, even though the iPhone in question belonged to an alleged terrorist/mass murderer.  As fascinating and important as that story is, I was even more interested in another cybersecurity story, about a hospital paying ransom to hackers in order to regain access to its own computer systems.

This was not the first such occurrence, and it won't be the last.

In early February, Hollywood Presbyterian Medical Center found itself locked out of its computer and electronic communication systems, along with a demand for ransom.  The hackers apparently didn't steal anything, but, rather, encrypted the hospital's files so that they couldn't be accessed.

In the end, the hospital not only paid the random, but also publicly admitted what had happened.  A hospital spokesperson stressed that patient care had not been compromised, and that paying the ransom was "the quickest and most efficient way" to restore its systems.  A cybersecurity expert told US News & World Report: "From an economics perspective it was probably the best – or only thing to do,” while adding: “From a strategic perspective it is terrifying to me that most companies pay because the alternative is too painful."

This kind of blackmail is more common than we may realize. Symantec's 2015 Internet Security Threat Report estimated that 317 million new pieces of malware were created in 2014, with ransomware attacks up 113%.  "Crypto-ransom"attacks, like HPMC suffered, went up 4,000%.

According to NBC News, health care record hacking rose 11,000 percent last year alone, with as many as one-in-three Americans having had their health data compromised -- usually without them being aware.  In most of these cases, actual patient information was taken, as it can then be used to perpetuate fraud.  We've all read about these breaches, since HIPAA requires disclosure when patient information is compromised...assuming the organization is even aware of the breach.

Locking down hospital systems rather than simply stealing the data -- and, of course, there is no guarantee that the HPMC hackers didn't also steal patient data -- is a tactic that is less often reported.  As another security expert told CBS News: "Unfortunately, a lot of companies don't tell anybody if they had fallen victim to ransomware and especially if they have paid the criminals."

As with kidnapping (or terrorists), experts are split about whether to give in to ransom demands or not.  There are often ways to recover the data or restore control of systems without giving in to the demands.  In the case of HPMC, one expert told CBS News, "If they decided to pay the ransom, it probably means that they didn't have very good backups, they weren't able to recover the data, and that the data would have been lost if they didn't pay the ransom."

Two things about the HPMC situation especially struck me.  For one thing, the hackers only got $17,000.  I mean, HPMC is not a huge hospital, but it is not a small one either, and one would expect that access to their systems would be worth more than $17,000.  They probably would have paid their IT staff more than that in overtime to fix the problem, if they could have.

Maybe the hackers just needed some quick cash to buy a Yaris.

The second interesting thing was that the hackers demanded payment in Bitcoin.   I hadn't realized it, but Bitcoin apparently has become the preferred currency of ransoms, especially crypto-ransoms.  Being both virtual and not issued by a government or financial institution, it is much harder to trace, and it can be easily transformed into "real" money.  As one expert told The New York Times, "The criminal underground very much likes Bitcoin.  It’s enabled a greater sense of obfuscation.”

It probably took longer for HPMC to figure out how to pay in Bitcoin than whether to pay at all.  Other healthcare organizations may want to be brushing up on their Bitcoin expertise, just in case.

It seems likely that there will be more such attacks, especially now that the HPMC ransom payment became public.  As one expert told Newsweek,  "I think whenever a ransom demand is shown to work for the bad guys—meaning victims pay up—it is an incentive for criminals."  These kind of hackers are anything but stupid, and they will keep attacking until it is shown that their efforts no longer work.

Moving more data and more operating systems to the cloud is one strategy that has been touted as a way to counter cyberattacks, since the cloud vendors claim to have more robust defenses, but it becomes a risk/reward proposition.  A cloud computing vendor might have bigger and tougher walls, but, once penetrated, there would be "a fruit-bearing jackpot" for hackers.

The really scary thing about health care hacking may not be being locked out of computer systems or even loss of patient data.  It may be that any medical device that is connected to the Internet or WiFi could be hacked, even taken over.  As proof, a security researcher recently hacked into a hospital's MRI.  He noted, "In this case it was easy. Medical devices are still insecure, I can see it. Some manufacturers really secure them but some [developers] are thinking about internet security in second or third place."

The researcher was doing it as to make a point, but how much would someone pay to regain control of, say, their pacemaker?  How much business would an imaging center lose if it became known that hackers could digitally alter its scans?   Would you undergo a laser procedure or robotic surgery if you weren't 100% certain their software hadn't been hacked?  Would you trust a mobile app that might have been compromised?

The Internet of Things offers many exciting possibilities for "smart" devices and better tracking, but it also vastly expands the range of things that could be hacked.   This fear was a hot topic at this year's Consumer Electronics Show (CES), with no easy answers but with many pleas for developers to build in security as a foremost consideration as IoT is developed.

There aren't any easy answers.  Health care has never been known for its leading edge systems or programming expertise, but when it comes to combating cyberattacks, it needs to be in the forefront.