Category Archives: Uncategorized

Envisioning new roles for the health system

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It’s obvious that if we’re going to make healthcare a sustainable proposition for the nation, we have to address the elephant in the room—inefficient, high-cost hospital systems that are built and incentivized to maximize reimbursement, not outcomes. One of our core beliefs is that we’re not going to fix that problem without engaging health systems in the work. The notion that we’re going to “disrupt” hospitals and make them “obsolete” is the worst kind of wishful thinking, a David-and-Goliath fantasy that doesn’t us any closer to a real solution. What’s needed are re-envisioned health systems that transform the way they organize and deliver care in a way that drives real value for consumers. Over the next several weeks in this space, we’re going to share one of our core frameworks for working with health systems to advance that goal. We’ll lay it out piece by piece, and then discuss some of the major implications for health system leaders.
 
We start with a conceptual depiction of the status quo. We describe today’s health system as “Event Health” because most providers are in the business of single-serve interactions with patients, paid on a fee-for-service basis. And indeed, many of the healthcare needs that consumers have present as “events”—acute episodes of illness that can be addressed with a one-time service interaction. For instance, I may have a sinus infection and need treatment, and a single visit to urgent care solves the problem. But across the stages of their lives, consumers have other kinds of health needs as well: some are episodic, with multiple events taking place over a defined time period (think pregnancy and childbirth, joint replacement, heart surgery). And some are just conditions that need to be managed over an extended period (diabetes, depression, cancer). But our health system is a hammer looking for nails—addressing health needs of every type with an event-driven model. Next week, we’ll begin to discuss alternative organizing principles for the health system that moves beyond this “Event Health” approach.

 

Take Two Carrots and Call Me in the Morning

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https://www.pewtrusts.org/en/research-and-analysis/blogs/stateline/2018/09/07/take-two-carrots-and-call-me-in-the-morning?utm_source=Sailthru&utm_medium=email&utm_campaign=Newsletter%20Weekly%20Roundup:%20Healthcare%20Dive%2009-08-2018&utm_term=Healthcare%20Dive%20Weekender

Stateline Sep7

The idea behind “food is medicine” is that if chronically ill people eat a nutritious diet, they’ll need fewer medications, emergency room visits and hospital readmissions.

Half a century after Americans began fighting hunger with monthly food stamps, the nation’s physicians and policymakers are focusing more than ever on what’s on each person’s plate.

In the 21st century, food is seen as medicine — and a tool to cut health care costs.

The “food is medicine” concept is simple: If chronically ill people eat a nutritious diet, they’ll need fewer medications, emergency room visits and hospital readmissions.

The food is medicine spectrum ranges from simply encouraging people to plant a garden and learn to cook healthfully, as state Sen. Judy Lee, a Republican, does in North Dakota — “We don’t do policies about gardening,” she said — to an intensive California pilot project that delivers two medically tailored meals plus snacks daily and offers three counseling sessions with a registered dietitian over 12 weeks.

The California Legislature last year became the first in the nation to fund a large-scale pilot project to test food is medicine. The three-year, $6 million project launched in April will serve about a thousand patients with congestive heart failure in seven counties.

“The state puts a huge amount of money into health care, and one of the biggest costs is medication,” Assemblyman Phil Ting, a Democrat and chairman of the Assembly Budget Committee, said in an interview. “So the hope is people will live longer and this project will also reduce the need for medication.”

The food is medicine concept has been around for a while. Since the 1980s, nonprofits such as Project Open Hand in San Francisco, Community Servings in Boston, God’s Love We Deliver in New York and MANNA or Metropolitan Area Neighborhood Nutrition Alliance in Philadelphia have provided medically tailored meals for patients with HIV, diabetes, cancer and heart disease. They are largely funded by donations and grants.

Seeing the programs’ successes, some states are taking a larger role. Massachusetts is developing a food is medicine plan with a goal of integrating programs scattered around the state so more residents can benefit. Legislative policy proposals are expected next spring.

Food is medicine goes beyond traditional advice to eat more fruits and vegetables. Projects pay for people to purchase produce and offer nutrition counseling and cooking classes, so they’ll know which foods to choose or avoid and how to prepare them. For example, watermelon is healthy for some, but not for a diabetic.

On the local level, a community garden managed by a teenager in Sylvester, Georgia, aims — with the help of the local hospital — to improve the health of the town in the nation’s “stroke belt.”

Physicians in a dozen states write “prescriptions” for fruits and vegetables at farmers markets and groceries — scripts that can be exchanged for tokens to buy produce.

“Food is medicine is an idea whose day has arrived,” said Robert Greenwald, faculty director of the Harvard Law School’s Center for Health Law and Policy Innovation, one of the experts who testified in January at the launch of the congressional Food is Medicine Working Group, part of the House Hunger Caucus.

The Senate version of the farm bill includes Harvesting Health, a pilot project to test fruit-and-vegetable prescriptions. It’s modeled on work by Wholesome Wave, a Bridgeport, Connecticut, nonprofit that works with health centers in a dozen states where doctors write prescriptions for produce.

If enacted, the federal government would spend $20 million over five years on grants to states or nonprofits to provide fruits and vegetables and nutrition education to low-income patients with diet-related conditions.

The Supplemental Nutrition Assistance Program, the food stamp program known as SNAP, helps reduce food insecurity for 39.6 million participants, but studies do not show SNAP improves nutrition. Instead, there seems to be a correlation between long-term food stamp participation and excess weight gain.

Poor diet was No. 1 of 17 leading risk factors for death in the United States in 2016 — a higher risk than smoking, drug use, lack of exercise and other factors, according to “The State of US Health,” a comprehensive report by a team of academics published in the Journal of the American Medical Association in April.

Dr. Kumara Sidhartha, an internal medicine specialist and medical director at Emerald Physicians on Cape Cod, Massachusetts, conducted a prescription study with Medicaid participants in 2016 and 2017. In his study, he wrote prescriptions or vouchers for one group to buy $30 in produce a week at the farmers market, and gave another $30 in gasoline vouchers a week — for 12 weeks. Both groups received cooking classes and nutrition counseling.

Twenty-four people completed the program, and those who received the fruit and vegetable prescriptions showed improvements in risk factors for chronic disease — better body mass index, total blood cholesterol, LDL cholesterol, blood glucose and hemoglobin A1c, Sidhartha said.

“Patients and physicians are so used to the physician writing prescriptions for procedures and pills,” he said. “This changes the health care culture of how the prescription is used.”  

Proponents of the California project hope it will demonstrate the cost-effectiveness of including medically tailored meals as an essential health benefit covered by Medi-Cal, California’s Medicaid program.

“This is potentially transformative because the health care system has been designed to cover acute services, and not many prevention programs are covered,” said Dr. Hilary Seligman, an associate professor at the University of California-San Francisco, one of two physician researchers who will evaluate the project by tracking participants’ medical records.

“For someone with congestive heart failure, their lives depend on their capacity to eat a lower salt diet,” Seligman said. “Making the food as appealing as possible is very important.”

Some legislators are skeptical about government moving into new food delivery systems.

“We need to feed the children who are hungry now. We need the backpack programs in school, the free and reduced-price breakfast and lunches to make sure that nobody is hungry today,” said North Dakota’s Lee, chairwoman of the state Senate Human Services Committee, at a food is medicine session at the National Conference of State Legislatures (NCSL) Hunger Partnership conference in July.

“But then we need to take those same children and help them learn how to do those things for themselves,” Lee said. “Let’s have a short-term solution: Let’s feed people. And then let’s have a longer-term solution: Help them feed themselves.”

Everyone in her state could have a garden, even apartment-dwellers, and they can learn to cook, she said, adding that cooking is a skill that’s been lost since schools there dropped home economics.

“Kids can learn and a parent can learn how to make a meal,” Lee said in an interview. “I’d rather figure out a way to give them cooking lessons with food. We’re not helping children become functional adults by giving them three meals a day.”

It’s not government’s job to provide every meal, she said, adding, “That’s the good news about North Dakota, compared with the Northeast and California.”

Georgia state Sen. Renee Unterman, a Republican and chairwoman of the state Senate Health and Human Services Committee and co-chairwoman of the NCSL hunger partnership, suggested at the food is medicine session that a community garden with a medical purpose in her state — and started by a child — could be a model.

Village Community Garden manager Janya Green was 12 when she started on the community garden as her 4-H Club project three years ago on 5 acres donated by the town of Sylvester, population 6,000, about 170 miles south of Atlanta. Anyone can pick free vegetables and fruit whenever they like. The garden features cabbage, carrots, kale, okra, bell peppers, squash, sweet potatoes, blackberries, blueberries, muscadine grapes and even bananas. Herbs are next.

A pond is stocked with fish, so residents can reel in healthy protein as well. A local county commissioner gave lumber for a 20- by 60-foot stage.

Phoebe Worth Medical Center installed an outdoor kitchen in the garden for chef-taught cooking classes. Darrell Sabbs, governmental affairs specialist at the medical center, hopes researchers from Emory University or the University of Georgia will study the health statistics of the neighborhood and gauge the garden’s health effects.

Dr. Marilyn Carter, an internal medicine physician who also trained as a pharmacist, lives in Sylvester and volunteers at the garden. She and a nutritionist wrote up health benefits of the produce for signs that will help people make smart choices.

“We’re in the stroke belt,” Carter pointed out, adding that many of her patients have heart disease and diabetes. People eat a typical Southern diet of fried foods and foods out of boxes that are high calorie and high fat, she said.

“I want people to know, ‘If I eat more kale and less white rice, my blood pressure will be better,’” she said. Her name for the garden: the Farmacy.

 

 

Montana health plan strikes victory over cost-sharing reduction payments

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https://www.healthcarefinancenews.com/news/montana-health-plan-strikes-victory-over-cost-sharing-reduction-payments?mkt_tok=eyJpIjoiTWpNM05qYzVPR1k0TldKbCIsInQiOiJTd2RzaU9sS1FuKzBOaVF3RXp5RkNqc3plbXp0NFlhdkk1MFlSNGY1NUJKa2NHd3IrXC9OdlJoSW1EQ2FIM3hkVkVzZ2FuaUhkcTNXcUtNczhNQWI2NFd1ckNCOHViSzdFbjRUS2xGMTdrXC90M1BjbCtRcVVnbkxweFwvdlY5VnZGViJ9

Montana Health Co-Op. Credit: Google Street View

The insurer says it is owed $5 million in payments mandated under the Affordable Care Act.

Health insurers in the Affordable Care Act market got a major win Tuesday when the Montana Health Co-op became the first plan to win its case for cost-sharing reduction payments.

Montana Health Co-op said it is owed an estimated $5 million in CSRs for 2017.

United States Court of Federal Claims Judge Elaine Kaplan said it didn’t matter that Congress never appropriated the funds, as argued by the Department of Justice. Kaplan sided with the Montana Health Co-op that said the Affordable Care Act created the mandatory obligation whether Congress approved the funds or not.

Judge Kaplan directed the parties to file a joint status report on or before October 4.

CSRs were set up under the ACA to allow insurers to pay the deductibles and other out-of-pocket costs for lower-income consumers.

The Department of Health and Human Services began making the CSR payments in 2014.

In that same year, Republicans in the House of Representatives sued the Obama Administration over the payments, saying they and others in Congress had never approved the funds. They won and an appeal was brought, but under President Donald Trump, the appeal became moot.

In 2017, Attorney General Jeff Sessions issued an opinion that the funds were never appropriated and the government stopped the payments.

While insurers no longer received the funds, they were still mandated under the ACA to offer to qualifying consumers the benefit of lower out-of-pocket costs.

Several insurers filed lawsuits, including Blue Cross Blue Shield of Vermont, Maine Community Health Options, LA Care Health Plan and Sanford Health Plan, according to Health Affairs. Common Ground Healthcare Cooperative led a class action lawsuit.

Insurers have also filed lawsuits to get payments promised through another ACA program, risk corridors. Under the three-year, budget neutral risk corridors program, the government was to take money from plans that had fewer higher risk beneficiaries and give the  funds to those that suffered losses in insuring higher risk consumers.

In making her decision Tuesday, Judge Kaplan cited a lawsuit brought by Moda Health Plan over risk corridor payments. In that case, the Federal Circuit Court said the government was obligated to make risk corridor payments to insurers.

But that case was overturned in mid-June, when a majority of a three-judge panel of the Court of Appeals for the Federal Circuit said the government did not have to pay health insurers the full amount owed to them in risk corridors payments.

 

 

That Booze News? Look Past the Headlines and Don’t Panic

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Healthcare Triage News: That Booze News? Look Past the Headlines and Don’t Panic

Image result for Healthcare Triage News: That Booze News? Look Past the Headlines and Don’t Panic

The recent alcohol study made a lot of breathless headlines along the lines of “no amount of alcohol is safe!” Well, it turns out, there’s some value to looking at the nuances of the study. Aaron Carroll takes a look at the details. Soak it in.

 

 

California’s Verity system files bankruptcy, faces $175M in annual losses

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https://www.healthcaredive.com/news/californias-verity-system-files-bankruptcy-faces-175m-in-annual-losses/531524/

Image result for hospital bankruptcies

Dive Brief:

California-based Verity Health System filed for Chapter 11 bankruptcy late last week. The nonprofit operator blamed ongoing losses and debt, along with aging infrastructure and an inability to renegotiate contracts, for its tenuous operating position. The system secured debtor financing of up to $185 million, and plans to keep its six hospitals open during the bankruptcy proceedings.

The Friday filing follows a statement in July noting that Verity was exploring different avenues to pull the system out of its slump, including the potential sale of some or all of its hospitals and other facilities.

Last year, billionaire investor and entrepreneur Patrick Soon-Shiong purchased Integrity Healthcare, the company that manages Verity, with the intent to revitalize the system and upgrade its technology while continuing to serve lower-income populations. Yet, “after years of investment to assist in improving cash flow and operations, Verity’s losses continue to amount to approximately $175 million annually on a cash flow basis,” and more than $1 billion overall, Verity CEO Richard Adcock said in the company’s bankruptcy announcement.

Dive Insight:

The company has been struggling for a while and can “no longer swim against the tide” of its operating reality, which includes a legacy burden of more than a billion dollars of bond debt and unfunded pension liabilities, an inability to renegotiate burdensome contracts, the continuing need for significant capital expenditures for seismic obligations and aging infrastructure,” Adcock said.

Verity’s problems come in an caustic environment for U.S. hospitals, many of which are suffering from costs that are rising faster than revenues. Credit rating agency Moody’s warned just last week that the nonprofit provider industry was on an “unsustainable path.”

A recent MorganStanley analysis found that about 18% of American hospitals were at risk of closure or performing weakly, a high figure in historical context. Only 2.5% of hospitals closed over the past five years, yet Moody’s estimated 8% of the 6,000 hospitals studied were apt to close their doors. Additionally, more nonprofit hospitals suffered credit downgrades in 2017, and Moody’s revised its outlook for the hospital sector from stable to negative.

But it’s not only industry pressure that’s causing Verity to fold. Another burden is the management of Soon-Shiong, who’s been hit with backlash for the way he runs his businesses and methods.

The South Africa-born surgeon and investor purchased the hospitals in July 2017, following a 2015 acquisition by New York hedge fund BlueMountain Capital Management. The system had struggled financially for years and needed the influx of cash both buys gave it.

“There’s going to be a huge capital need,” Soon-Shiong said at the time. “There’s been little investment because these hospitals could not afford it.” He said he planned to bring in new equipment and technology, along with expanded oncology, transplant, cardiology and orthopaedic services. Through his company NantWorks, Soon-Shiong funneled more than $300 million into the system within the year, but Verity’s losses continued to mount.

At the time of the acquisition, Soon-Shiong, who has founded and sold multiple biotech companies and now owns a stake in the Los Angeles Times and L.A. Lakers, heralded the charity work done by the hospital, but said the restructuring was “inevitable” due to years of underinvestment.
Touted plans to revitalize the flagging hospital system didn’t pan out, and some of Soon-Shiong’s critics say it was intentional.

“It has become crystal clear by the bankruptcy announcement that he virtually had no intention of keeping these hospitals open and to continue to serve the poor,” San Mateo County Supervisor David Canepa told news outlets following the announcement.

Labor unions are similarly displeased. SEIU-UHW representative David Miller reportedly said “there were other paths out of this” and that it’s a “very destructive approach,” as the bankruptcy filing could put employee pensions at risk.

But in the press release, Adcock said the bankruptcy filing was the best thing for all involved, and told Reuters that the 1,650-bed, 6,000-employee company has already received interest from more than 100 parties. Potential suitors include large national operators. Any sales will now be supervised by the bankruptcy court and approved by regulators

 

 

Hospitals eye making generics for 20 drugs that they say are overpriced or in short supply

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https://www.cnbc.com/2018/01/18/hospitals-plan-to-create-their-own-generic-drug-company.html?__source=sharebar|facebook&par=sharebar

Image result for Hospitals eye making generics for 20 drugs that they say are overpriced or in short supply

Several hundred hospitals that plan to form their own generic drug company are eyeing making “about 20” pharmaceutical products whose existing versions either cost too much or are in short supply for no good reason, the CEO of one of those hospitals said Thursday.

Dr. Marc Harrison, chief of Utah-based Intermountain Healthcare, during an interview on CNBC’s “Closing Bell,” would not identify the existing drugs that the new company wants to replicate on its own, or have done on a contract basis.

Harrison said, “We think it will be early ’19 before our first drugs come to market.”

And he said the group also is hoping to possibly get additional financing from “philanthropists who are sick of this activity” by drug companies that is “creating shortages and driving prices in an irrational fashion.”

Intermountain is leading the collaboration with several other large hospital groups, Ascension, SSM Health and Trinity Health, in consultation with the U.S. Department of Veterans Affairs, to form a not-for-profit drug company. The groups together represent more than 450 U.S. hospitals.

Harrison said on “Closing Bell” that the project was spurred by feedback by patients who at times were saying “they can’t get ahold of drugs or they’re way too expensive.”

“We’re experiencing that in the hospital as well, and we’ve been thinking about this for a couple of years now,” Harrison said.
“We worked hard to come up with a plan … now is the time to get to work.”

He said that one of the big problems in the pharmaceuticals market today is that some “individuals and groups have gone ahead and gotten sole control over a given drug.”

“They create shortages and drive the prices up, and our patients can’t get ahold of the drugs we need,” Harrison said.

“We as a team will do the opposite,” he said. “We’ll make sure drugs are available in good quantities and reasonable prices.”
Harrison said the members of the consortium will contribute funds to finance the new drug company.

“Over time, the business plan says we’ll get our money back,” he said.

Harrison also said that he expects the new firm to provide just a small fraction of pharmaceutical products that the hospitals have to purchase.

“We expect that the vast majority of drugs we buy will still come in the same channels we have always gotten them,” he said. “We think most pharmacies are doing a great job and drug manufacturers are doing a great job.”

“We’re only interested in those organizations that are creating shortages and driving drug prices up in an irrational fashion,” Harrison said.

 

 

 

 

Bon Secours finalizes merger with Mercy Health

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https://www.fiercehealthcare.com/hospitals-health-systems/bon-secours-finalizes-merger-mercy-health?mkt_tok=eyJpIjoiWTJSa1kyWTVPR1F6T1dZNSIsInQiOiJGTjlCOStnaytPRkNHZ3pZM3ZwRzczWm1KUVZ4ZHV2TU1VenV4b1VFelNFM3pXcloySWxnSmFHcEdqamUzXC9TUVBEckNIaE01cFhEcG5JNTVwMFpsZUptRTBtQ2k2eFR0YmllQVB4cnU4S2E0dUtTbm54SEdLZ3FiNE5Od29FVmIifQ%3D%3D&mrkid=959610

handshake / shaking hands

Bon Secours Health System and Mercy Health finalized their merger on Wednesday, creating the fifth largest Catholic health system in the U.S.

The new leadership team, to be led by President and CEO John M. Starcher Jr., former chief of Mercy, took effect immediately upon the announcement, officials said.  The merger comes about six months after the organizations first announced plans to integrate.

Officials said the combined nonprofit health system will provide nearly $640 million annually in charity care and community benefit programs.

In February, it was first announced Bon Secours—a not-for-profit Catholic health system with operations in Maryland, Virginia, South Carolina, Kentucky, Florida and New York—intended to merge with Mercy Health, a Catholic health ministry in Ohio and Kentucky.

The two organizations represented $8 billion in net operating revenue and $293 million in operating income, according to an announcement about the merger. The combined systems will include 57,000 associates and more than 2,100 employed physicians and advanced practice clinicians.

The new system will have more than 10 million patient encounters across seven states, with 43 hospitals, more than 1,000 care sites and more than 50 home health agencies, hospice agencies, and skilled nursing and assisted living facilities.

Officials said they were able to finalize the deal so quickly because of “early alignment of similar cultures and grounding in mission-based” care. They also said no outside resources were used to organize the agreement between the two organizations, but Deloitte Consulting was hired to assist with operational integration.

Leaders of the newly formed health system include Chief Operating Officer Brian Smith, Chief Clinical Officer Wael Haidar and Chief Financial Officer Debbie Bloomfield.

The C-suite also includes Chief Administrative Officer Mark Nantz, Chief Enterprise Risk Officer Jeff Oak, Chief Legal Officer Michael Bezney, Chief Community Health Officer Sam Ross and Chief Sponsorship and Mission Officer Sr. Ann Lutz.

The merger is part of ongoing consolidation across the industry including a planned merger between Dignity Health and Catholic Health Initiatives as well as a merger between Partners HealthCare in Massachusetts and Care New England Health System in Rhode Island.

 

 

 

 

Creating Effective Health Care Markets

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https://www.commonwealthfund.org/blog/2018/creating-effective-health-care-markets?omnicid=EALERT1469225&mid=henrykotula@yahoo.com

Building a health care market

Disagreement about the role of markets lies at the root of many of our fiercest health care controversies. One side believes that unleashing market forces will rescue our health care system. From this viewpoint, government involvement is inherently destructive, except in rare circumstances. Many opponents of the Affordable Care Act share this opinion.

The other side believes that health care markets are deeply flawed and that government must play a major role in achieving a higher-performing health system. These people point out that markets make no claim to ensuring equity in the use of health care resources, only improved efficiency. Supporters of the ACA tend to hold this view.

Given this fundamental divide, it’s worth considering the conditions underlying the effective functioning of market economies, whether those conditions currently prevail in health care and, if not, what changes would be required to establish them.

Students learn in Economics 101 that several assumptions must hold for free markets to achieve their potential:

  • First, consumers and suppliers of goods and services have perfect — or at least sufficient — information. They know or can find out the price and quality of available products.
  • Second, consumers and producers are rational. They make reasoned decisions about what to purchase and supply. These decisions maximize their welfare as consumers and their profits as businesses.
  • Third, it is easy for producers to enter markets, thus assuring that monopolies don’t form, and that increased competition occurs where prices are excessive, reducing prices to efficient levels.
  • Fourth, in any market, there are large numbers of firms selling a homogeneous product.
  • Fifth, individual firms cannot affect market prices.

Practically speaking, these conditions rarely exist in pure form anywhere in our economy. In the case of health care, there are a variety of different types of markets. For example, employers purchase insurance, large hospital systems purchase medical supplies, and individuals purchase insurance plans. These markets may embody these conditions to varying degrees, but the most basic health care markets, in which consumers or patients directly buy health care services, depart from this ideal dramatically, as the following examples illustrate.

To begin with, health care consumers not only lack perfect information, but often any information at all.   At present, prices in the U.S. health care market are virtually unknowable. Quality data are scant, imperfect, and often confound even experts.  Further, medicine is a complex science-based service: even highly trained health professionals struggle to stay current. As a result of social media and the internet, consumers are better informed than ever before, but most depend on advice from health professionals to make informed health care purchases. This kind of imperfect information may help explain why consumers in high-deductible health plans are equally likely to reduce their use of high-value or low-value health care services. They are just as likely to forgo their blood pressure treatments as unnecessary back surgery.

Health care consumers also face unusual challenges to making rational decisions. In medicine there is a saying that any doctor who treats herself has a fool for a patient. Even the most informed individual can have difficulty acting rationally when confronting the emotional turmoil that accompanies their own illness or that of a loved one. Beyond this, there are clear situations where patients’ cognitive abilities are compromised, for example, in cases of stroke, dementia, intoxication, loss of consciousness, delirium, or mental illness.

Competent patients have the inherent right to make their own medical decisions, and many do so wisely and well. But market advocates also must recognize the special obstacles to rational decision-making that face health care consumers.

Consolidation among insurers and health care organizations has radically reduced the number of providers selling health care and health insurance in many U.S. health care markets. Recent work shows that providers in 90 percent of U.S. markets are highly or “super” concentrated.

This consolidation and resulting lack of competition has enabled individual providers to charge excessive prices in many markets. Similarly, government-granted patents create monopolies that enable drug manufacturers to set astounding prices for new drugs and raise them almost at will.

These and other departures from the conditions necessary for effective market functioning suggest the dangers of uncritical reliance on free markets to improve our health care system. At a minimum, advocates of market solutions would be wise to consider three interventions that could increase the probability that markets will function as desired.

  1. Develop better information on prices and quality. Consumers need information to make informed decisions. Publishing raw data on the prices of care — often referred to as price transparency — is insufficient because it rarely reflects the actual cost consumers face during an episode of care. The price of a chest x-ray that diagnoses pneumonia, for instance, is a poor indicator of the costs of a subsequent hospitalization, not to mention the downstream costs for any previously undetected lung disease. To make health care markets work, advocates must develop approaches to price transparency and quality measurement that are meaningful and understandable to consumers.
  2. Foster markets for health services that pose the smallest challenges to rational decision-making. Certain health services — often referred to as “shoppable” — involve tests or treatments that are either elective, relatively simple to understand, or nonurgent, which allows patients time to learn and think about them. Examples include screening tests for generally healthy individuals (e.g., colonoscopies, mammograms), elective surgeries (e.g., hip and knee replacement), or necessary but nonemergent care (e.g.,whether to add insulin to a diabetic regimen). Fostering competitive forces in these areas could improve the functioning of the health care market overall. But reformers should be aware that these services are likely to account for a minority of health care activities and, frequently, are not the most expensive ones.
  3. Promote competition. Unless government finds ways to restore competition among providers where it no longer exists, markets can’t succeed. This is true both for health care services generally and pharmaceuticals in particular.

Given our desperate need for health care reform, the appeal of market solutions is understandable. But it is naïve to assume that they will work in health care just like they do in other sectors. It is time for a frank, open, and nonideological discussion of the problems markets can address in health care and how we can create conditions that will enable markets to function as intended.