Healthcare Christmas List: Top 5 Wishes

December 18, 2009

If I could get Santa to grant me my wishes for meaningful healthcare reform, I would be opening the following gifts:

  1. Payment and Insurance Reform:  Combine Pay for Performance with Reforming Insurance to provide access for all.  We have to stop rationing healthcare based on wealth, but at the same time have to change reimbursement so it is for results, not procedures.
  2. Health Courts: Replace malpractice system with health courts, comparable to bankruptcy courts.  Have judges advised by medical experts and eliminate all the wasteful, unnecessary lawsuits and lawyers.  Docs need to have this eliminated to put an end to defensive medicine.
  3. Evidence-Based Medicine: The level of variation in medical practices across the country makes medicine seem more like art than science.  In order to reduce demand for services, we must hold physicians accountable for using the best proven practices for treatment.
  4. Best Practices/Metrics: This present involves eliminating all the waste in the healthcare system associated with serial, inefficient, and ineffective processes.  Requiring all hospitals to integrate best practices along with measuring their performance, tying performance to metrics with reimbursement will be true game changers.
  5. Wellness Initiatives: We have an epidemic of obesity that is placing an enormous burden on the system.  Making a radical impact on improving our nation’s health will be the single biggest lever to reduce the burden that 60 Million obese Americans place on the healthcare system.

That’s all I want for Christmas, Santa.  Is it too late to wrap these gifts and include them in the Healthcare Reform bill so that we see a reduction in healthcare costs in the next 10 years?  If not, the nation will look like Massachusetts.  Insurance for all but no primary care doctors to see them, resulting in zero benefit in terms of access and quality.  Just more dollars for the same ineffective healthcare system.

Please Santa.  No more ties.  Just these 5 gifts.


Outsourcing Healthcare?

August 24, 2009

Every day, we see the impact on the health of the US economy as a result of the shortsighted decisions to outsource America’s manufacturing industry overseas. Now, as a result of a perfect storm of three factors, we are fast approaching the point of having to outsource healthcare as well. These factors are:

1. Shortage of Primary Care Physicians – In a November 2008 American College of Physicians (ACP) white paper, the number of residents entering medical school in the U.S. and selecting Primary Care as a career path has dropped by 50% over the past 10 years. In addition, after five years in Primary Care 21% of doctors switch to a more lucrative specialty. As a result, the ACP predicts a shortage of up to 44,000 Primary Care physicians by 2025.

2. Increase Insured Patients – There are currently 47+Million uninsured people in the U.S. When the final Healthcare Reform legislation is passed, either a public option or a cooperative model will be passed, resulting in more than 50% of these patients adding to the roles of the insured. Add to this the projected population growth over the next 10 years, and the number of insured Americans will rise at least 10%. By 2025, the total US population is expected to rise by 18%. These patients will require healthcare – an even greater burden on an overburdened healthcare system.

3. Explosion of Elderly ‘Boomer’ Patients – Last year, the first Baby Boomer became eligible for Social Security payments. Today, there are an estimated 76 million baby boomers. Older Americans (65 and older) currently make up about 12 percent of the U.S. population. By 2030, once this group retires, the number of Americans aged 65 and older will more than double to 71 million older Americans. Older Americans will constitute roughly 20 percent of the U.S. population. This growth to the senior population will have a devastating impact on the consumption of healthcare services. In 1999, people over the age of 65 years experienced nearly three times as many hospital days per thousand than the general population. This ratio goes up to nearly four times for people over the age of 75.

The ACP paper demonstrates the value of Primary Care physicians in the overall cost of healthcare. An increase of 1 primary care physician per 10,000 population in a state was associated with a rise in that state’s quality rank by more than 10 places and a reduction in overall spending by $684 per Medicare beneficiary. By comparison, an increase of 1 specialist per 10,000 population was estimated to result in a drop in overall quality rank of nearly 9 places and increase overall spending by $526 per Medicare beneficiary. Primary Care physicians reduce the number of emergency room visits and increase preventative medicine. Seems great, right?

If the value of Primary Care is so high, then why do we put such a low financial value on this same care from a reimbursement standpoint? There is no doubt that moving to Pay For Performance and Patient-Centered Medical Home model would go a long way to rationalizing reimbursement based on value created. ‘Home’ refers to continuous, preventative care with expanded hours augmented by nurse practitioners and physician assistants. Instead we pay for procedures, so the more procedures performed, the higher the pay regardless of outcome.

So back to the original premise. At this rate, the bulk of primary care will be outsourced to foreign nationals educated and/or born outside the US. We will take that portion of our healthcare system that generates the most value and outsource it to people who are not Americans. Amazing that we would take a service that is so critical to the fight to reduce our healthcare expenditures and outsource it because it pays so badly in comparison to orthopedic surgery and cardiovascular surgery. What is better – preventing heart disease or conducting bypass surgery after damage is done?

I have nothing against importing labor that is necessary – the information technology industry is replete with examples where this has been valuable. But it strikes me as shortsighted that we have the capacity to train these critical physicians – we just set-up a reimbursement system that discourages it. I’ll discuss the options more but this fall, when you can’t get an appointment with your Primary Care physician as the H1N1 virus rages; remember that your future health will be based on how well we outsource the function and not on our ability as Americans to meet this critical need. This situation is so ridiculous that you would think that changing the reimbursement and medical tort systems would be more important than creating a new insurance mandate. What do you think the priorities of healthcare reform should be?

Medical Tort Reform – More Urgent than Ever

July 28, 2009

A 62-year old woman entered the emergency room of a hospital she worked at complaining of chest pains. After an exam and an EKG, she was diagnosed with gastrointestinal disorder and was sent home. During the night, she died of coronary artery disease, with arterial blockages of 100% and 95% discovered during her autopsy. Whether this is a case of malpractice is inconsequential. What is significant to the healthcare industry is that the hospital shut down in providing information over fear of a lawsuit. As a result, no meaningful analysis was conducted to prevent this from recurring in the future, no protocols were changed, and the physician involved is practicing the same medicine the same way.

The current form of regulating quality of care through threat of lawsuit is not effective today. The purpose of regulating quality is to identify procedural problems, make them visible, and punish the offender so that the faulty service is not repeated again. In the current system, however, that is not the case. Rather than exposing poor quality and driving root cause analysis, care givers hide problems and engage in unnecessary procedures to avoid potential negative occurrences. In world-class quality systems, every occurrence of quality variation and waste must be confronted, analyzed, and the source of the waste or variation eliminated through improved process design.

This is not the case in healthcare. If a care giver documents a mistake, they are immediately exposed to litigation. Obfuscation and secrecy become the standard practice when confronted with errors. Therefore, rather than making quality issues visible, knowledge is suppressed and mistakes will invariably be replicated. Not only is learning suppressed within one healthcare institutions, other hospitals do not benefit from the learning from other hospitals.

Since the tort system is not improving quality, it is only serving to provide monetary rewards for plaintiff’s attorneys and the patients who experienced this quality variation. In 2004, tort costs totaled $28.7B with no correlation to improved quality. While these awards have succeeded in providing Malpractice Attorneys with a lucrative living and victims of mistakes with some cash rewards, they have not made healthcare safer. A much more effective mechanism for overseeing quality is the use of Health Courts. They would be made up of peer reviews and independent analysis of procedural errors. Damages would be reasonable to the mistake and would differentiate between human error and negligence.

What is proposed in Health Courts: A Better Approach to Malpractice Reform, is a new system with trained judges who have expertise in healthcare. These judges would rely on neutral outside experts to help them make decisions about the standard of care in malpractice cases. Noneconomic damages would be awarded in accordance with a schedule of benefits that would provide for predetermined amounts for specific types of injuries.

The concept of having particular disputes resolved in special courts is not new. Special courts exist today for workers’ compensation, tax and patent disputes, vaccine liability, and in other areas where complex subject matter demands special expertise for dispute resolution. In addition, mental health courts have been established to improve the response of the criminal justice system to people with mental illness.

The critical issue in most medical malpractice cases is whether or not the doctor complied with the appropriate standard of care. Juries make these decisions in our existing system, even though they generally are poorly equipped for this responsibility since trial judges have little or no health care expertise to instruct them in their deliberations. As a consequence, it is hardly surprising that jurors often reach different decisions based on similar fact patterns. The unreliability of justice that this creates puts providers in the difficult position of not knowing what it will take to avoid a lawsuit.

In a health court system, judges would make rulings about the standard of care as a matter of law. Of course, determining the standard of care can be a complex undertaking, given that there may be several reasonable courses of treatment in a particular circumstance. To help health court judges reach consistent decisions from case to case, judges would consider clinical practice guidelines based on evidence-based practice standards.

The key advantage is, without the encumbrances of expensive lawsuits, the cost of insurance, lawsuits, and defensive medicine could be minimized. In 2005, the Medicare’s administrator testified to Congress that the current Tort system drives 9% of overall Healthcare cost. These costs have continued to rise over the past several years. Using conservative data, we have estimated that we could eliminate up to 15% of the total cost of healthcare today. At the same time, a reporting system would be put into place to make quality issues visible so they could be eliminated in the future. Therefore, based on 2005 spending data, this change would eliminate up to $300B of the cost of healthcare, while simultaneously improving the quality of care delivered.

The tort system as currently constructed is constricting the ability of the healthcare system to reform the fundamental drivers of cost, quality, and access through implementation of lessons learned, mandating of best physician practice patterns, and performance-based process improvement. Overhauling the tort system removes the single-largest barrier to making health care more standard and repeatable, which will reduce demand of unnecessary procedures and free caregivers and hospitals to provide better overall care at a lower cost with higher access.

The tort system is an impediment to preventative action; my mother’s death, the 62-year old woman cited at the beginning of this article, has benefited no one in the past 10 years. This is the tragic failing of the tort system. (Note: No lawsuit was filed or contemplated in this death). If we want to begin to make meaningful reductions in the cost of healthcare, it is critical that we start here.

Healthcare Reform Model That Works

July 23, 2009

 Healthcare Reform Model That Works

It’s clear that the administration is now focused on improving Access to healthcare, with this being the headliner in all discussions about reforming healthcare. Next, the discussion moves to how to pay for covering these 47 Million Americans without coverage. Taxing the rich, popular, but an unabashed move to have government redistribute wealth. Also, discussions around changing the mechanism for setting Medicare reimbursement levels are discussed. But essentially, that’s it for specifics. Everything else around making a meaningful change to the cost curve is vague. Vague won’t change a thing.

So here is the model that works.

Integrated Healthcare Reform Model

Now, this may appear to be a complicated model. But the beauty is in the simplicity of focusing key initiatives to make the system high-performing. Here is the overview:

Cost: Transform the Medical Malpractice system, using Health Courts. This will minimize the impact of defensive medicine, reduce liability costs, and make the error system more rational. Couple this with cost benchmarks for services/procedures to set a standard of financial performance to measure providers and facilities.

Quality: Evidence-Based Medicine is key to establishing a standard of medical performance. Making this a permanent institute will provide a vehicle for pharmaceutical and medical device firms to introduce innovations that make healthcare more cost-effective with better quality outcomes. With Medical Malpractice reformed, this effort will become practical and achievable.

Access: Provide a mandated Low/No Cost Insurance option for all Americans, but use a model that leverages the current private system networks, augmented with public funding, that meets government standards. This will create a rationalization and standard for reasonable levels of healthcare that will be leveraged for the vast majority of Americans. This will obviate the need to create a risky public option while moving most private plans to comparable levels of coverage.

These are the core foundation points. From here, the payment system can be replaced with a Pay for Performance model. Many of the trials of these systems have been successful. Also, creating a separate commission, similar to the Base Realignment and Closure Commission, made up of experts who can establish reimbursement levels for Medicare, is a great idea. This will take the politics out of Medicare, providing cover for Congress. While the desire to implement Electronic Medical Records sounds great in theory, the benefits will be minimal, at best, unless there are standards for data exchange and interoperability. Solving this problem needs to proceed a large-scale technology program. Lastly, creating funding mechanisms for the newly insured must be evaluated against the overall cost of healthcare. If the cost curve bends down, as it will using this model, then some additional government debt is acceptable when viewed against the cost of the whole system. Trying to balance the budget as a standalone measure is foolhardy and will only result in damaging additional taxes.

With all of this in place, we can start to tackle another of the biggest causes of our increasing cost curve: wellness and preventative care. If we don’t begin to make a concerted effort to reduce the health effects of lifestyle in the US, our demand for healthcare will continue at a staggering pace.

This is an overview of the changes necessary. I will discuss each of these steps in greater detail in the coming days. The question remains: When will the Administration and Congress describe their details for healthcare reform?

Oh that’s right. They have. Healthcare for All. Tax the Rich. This is reform? We can do better.

Access, Access Everywhere

June 5, 2009

The Obama Administration’s Healthcare plan touts 3 Goals:  Improve Access, Increase Quality, and Reduce Cost.  No doubt these are the right goals.  As far as I can see, the 95% focus today is on the first one only.  Every legislative discussion is about Providing and Requiring Insurance Coverage for all Americans.  No doubt that this is a great social initiative for an industrialized country.  The fact that we have so many uninsured citizens is an embarrassment.  Don’t forget, though, that many of the uninsured are also illegal residents of the US, but the remaining numbers of uninsured is still too high.

I was on a plane with Chris Matthews of MSNBC last week and when I mentioned my firm was heavily involved in Healthcare, his immediate comments were that he was hearing the coming legislation would require everyone to have insurance coverage and the administration was pushing the equivalent of an NGO:  Non-Government Organization that is not directly a part of a government organization and has private & public financing.  This NGO would provide a health insurance alternative to make insurance coverage affordable for all Americans and potentially provide price pressures on existing private insurance plans.  Notice how the immediate reaction to healthcare changes in the US are all around access, access, and more access.

Sounds noble but how does this support quality and cost?  As Michael Gerson notes in the Washington Post today, “the administration, it turns out, has no serious plan to control healthcare costs.”  Fundamentally, providing government benefits are expensive and require funding.  So some form of taxes will be required to provide this benefit.  After having taxpayers fund this healthcare insurance option, then what do we have?  More people getting more doctor visits, more tests, more hospitalization, and more pharmaceuticals.  No wonder big pharma is behind this – this will increase demand for their products from paying customers.

Don’t get me wrong.  I am not in favor of the Republican plan to make people better consumers of healthcare, somehow thinking that people with no medical understanding will shop for healthcare the way they shop for televisions and clothes.  Utter nonsense.  And, by the way, if they had the ability to make cost-based choices, the assumption that individuals would choose the cheapest alternative is also flawed logic.  When your health is involved, do you want the best or cheapest?

So I have a comprehensive plan to transform healthcare, which I will lay out over the coming weeks.  I believe the administration is not reaching far enough in its effort to transform healthcare.  If we are not bold, then we will be left with no other alternative but to ration healthcare for the elderly and chronically ill.  We already ration healthcare today:  its the poor and underinsured that are impacted the most.  So the administration, unwittingly, proposes to shift that rationing to the old and very sick.  I don’t like it one bit. 

Do you agree that this single-minded focus on access is flawed?  Do you want to really transform healthcare, not just play the shell game?


Changing Healthcare

May 27, 2009

We are at an historic point in the US when it comes to healthcare.  At the current pace, unabated, healthcare costs will double in the US in less than 10 years to $4 trillion.  This is unsustainable for our economy and is on pace to consume every dollar of GDP growth.  This might be understandable if the quality matched the cost.  Unfortunately, this is not the case.  Considering that over 47 million Americans are uninsured/underinsured and our metrics of mortality and quality outcomes reflect high levels of variation.

Due to reaching this Tipping Point, the American people, the government, and all major stakeholders in the healthcare system agree that change is necessary.  As expected, there is are many diverse, conflicting views about what needs to change and how far to go.  My fear today is not that the change goes to far but does not reach far enough to make a meaningful impact.  Any plans that compromise too much will water down the impacts and destroy the momentum behind this critical change activity.

I run a management consulting firm and we see every day the pressing need to transform the industry.  It is rare that I meet an industry player who thinks the healthcare system is efficient and effective.  I am very impressed on a daily basis with the level of dedication and passion I see from doctors, nurses, and administrators.  This commitment provides both a great resource for change while at the same time creating a natural barrier to doing things differently.

I recount the word of Donald M. Nelson, who was appointed by FDR in 1942 to take over War Production Board, which was a massive responsibility that involved radical changes.  “We must drop the idea that change comes slowly.  It does ordinarily – in part because we think it does.  Today changes must come fast; and we must adjust our mental habits, so that we can accept comfortably the idea of stopping one thing and beginning another overnight.  We must discard the idea that past routine, past ways of doing things, are probably the best ways.  On the contrary, we must assume that there is probably a better way to do almost everything.  We must stop assuming that a thing which has never been done before probably cannot be done at all.”

So moving forward, this blog will address the major facets of the healthcare system that need to be transformed and how we can reach 2010 with a cost effective, high quality, service-oriented healthcare system that is the envy of the rest of the world.  Come here to discover the pulse of the healthcare system.