Advocating for evolution, not disruption, in healthcare

https://medcitynews.com/2019/04/advocating-for-evolution-not-disruption-in-healthcare/?utm_campaign=MCN%20Daily%20Top%20Stories&utm_source=hs_email&utm_medium=email&utm_content=71446469&_hsenc=p2ANqtz–34bi05gJtda54hwonqyCB9rxFgJoCujD6XqJVlAXN-4zFSD8Z-UjONzK_dzDDHx1pG_jCZPZSiwrDtx_-6cOwrzj3_Q&_hsmi=71446469

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Healthcare doesn’t shatter and reanimate as the terms “disruption” and “disruptive innovation” suggest. It evolves. Even groundbreaking technologies in history show the transformation happening over time and with continuous building upon prior advances.

Late last year, the Christensen Institute’s Rebecca Fogg wrote about disruption accelerating in healthcare, priming of the pump for new capitated health plans and new delivery models. It is certain that leading consultancies have expressed a surging desire to disrupt in their business intelligence work and their analysis holds some insight for business leaders. But the truth about what our healthcare system will look like over the next 20 years is far from determined — and “disruption” will certainly not be the optimal path.

Disruption is, well, disruptive. It leaves in its wake complicating debris that trend towards more disorder. Consider that disruption’s synonyms include breakdown, collapse, disarrangement, disturbance, havoc, upset,… Is this what we actually want or need? Healthcare doesn’t shatter and reanimate, it evolves. Over 200 years ago, for example, the invention of the stethoscope ushered in a series of generational discoveries that transformed public health, general health, and overall life expectancy through the enhancement of insight into pathophysiology underlying human symptoms.  The new technology was groundbreaking, but the transformation happened over time and with continuous building upon prior advances. This evolutionary system works remarkably well. To disrupt it, to disarrange it, does not make sense.

At the center of Fogg’s argument is interest in different models that seem to be on the increase. The data does not fully support this view or serve as evidence of a pending wave of disruption. What we see instead are repeated ripples.

Take the “wave” of HMOs initiated in the 1970s. The ramp was supposed to be significant — combining financing and care delivery would be genuinely transformative. And yet the model’s penetration over 20 years only reached about 15 percent nationwide, and even now (data as of 2016) has only increased to 31.6 percent.

Further, in 2014 and again in 2018, Rand Corporation explored health payment constructs. Its most recent report on this work is a great representation of both our progress and stagnation: Findings suggest that in the window between initial engagement around alternative payment models (such as value-based care in 2014) and follow up (in 2018) little in the way of significant change has occurred. While we have seen plenty of perceived “disruptive models” emerge, we’ve also witnessed models championed as “disruptive” fall away.

The rise, plateau, and sometimes decline of various broad modernization initiatives is common and should be expected. The whole effort is hard.  We do not have any magical ability to foretell the future.  And we do a poor job of grasping the evolutionary nature of healthcare and the timelines of its change. Sure, we see pockets of capitated plan models that work, locations where the ACO makes sense, incidences where bundles show promise. But we are not primed for disruption that will change everything, or even most things, tomorrow. Rather, we are primed for a series of experiments, discoveries, and adaptive evolution. This is OK.

Three points stand out significantly in charting the realistic course of healthcare change moving forward:.

  1. The road is long.
    Understanding that healthcare evolution is a journey and not a rapid-shift prospect is important. There are a variety of considerations, one of which is contemplating the measures of success in the future state. Part of the failure of using payment models as a measurement for transformation is rooted to how blunt a tool payment structures are in producing desired outcomes. Consider recent disruption in payment models on the music industry. Whether you pay per song or via subscription has little bearing on the quality or appeal of the music itself. And with music, we can at least gauge direct feedback from users of the delivery systems to determine perceived value, effectiveness, and overall adoption. The feedback loops for what is working in healthcare are more complicated and difficult to master, and a great challenge to the value-based care revolution has been a lack of good measures. This is due, in part, to the framing of systematic structural levers as the core issue. That we cannot measure what holds value has little to do with whether a service is paid for through a capitated structure or through FFS. That’s not to say that payment structures do not alter incentives and change care behaviors, but whether one option is better than another is not the right question. This shouldn’t be discouraging. Evolution requires contemplation and development and new measures addressing different disease needs, delivery models, and technological capabilities. But all this takes time. It’s no use oversimplifying the nature of the beast.
  2. The substrate matters.
    It is essential to consider what is working and where. Solution sets for physicians and individuals, as well as the healthcare system as a whole, must be a mix of scaled capabilities and regional deployments. The recent study by Jha, et. al. in JAMA showed how breaking down traditional arguments about our health system is important to ensure we are understanding its problems and potential precisely. Among other things, the study shed light on the point that we have 50 different systems within our system from which to learn. The sheer variety state to state — not only in demographic and disease needs, but also in how treatment and services are paid for — enables enormous opportunity for innovation and testing. A relatively untapped resource lies in exploring what is working and why within these individual substrates. Breaking down the national system to a function of its parts would be a productive exercise for creating an adaptive mechanism for a “learning” healthcare system that evolves and advances more productively.
  3. The status quo is a threat to be managed.
    If healthcare innovators want to be “disruptive,” they need to take on the entirety of a complex, multi-faceted, multi-trillion-dollar industry. Clay Christenson writes of the velocity of history in his Innovators Dilemma. Being caught unawares is a great risk, akin to missing the new train when it leaves the station and you stuck on your old platform. That’s a powerful motivator. But in healthcare, the profits (and there are significant profits) create a ruthless resistance to any alteration of the status quo. So new trains don’t get to run on the current system’s tracks, rendering them irrelevant. Or they seem impactful, but run on the same schedule and under the same power, making them more or less lipstick on the proverbial pig. The introduction of change to the system must aim to be holistic, and include the critical voices of all stakeholders — predominant businesses, physicians, patients, investors, government and upstarts alike.

Amid the flurry of articles and analysis expounding the grandiosity of ever-imminent healthcare disruption (just around the corner), a nod to Darwin and the observable nature of our actual healthcare system and a scientifically based understanding of evolution seems appropriate.

 

 

 

Segment 5 – Why Is U.S. Healthcare So Expensive?

Segment 5 – Why Is U.S. Healthcare So Expensive?

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This segment reviews the “Perfect Storm” of reasons for unrestrained increase of healthcare spending in the U.S.

In Episode 4, we zeroed in on what I call the Real Problem with healthcare — relentlessly rising costs.

In this Episode, we will look at why the US spends so much on healthcare. As you can imagine, there are many reasons, not just one. In fact, it’s a perfect storm of bad reasons. We will also look whether we are getting our money’s worth.

Here’s the list. Part 1 & Part 2.

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We will go through each one.

Natural Spending Drivers

Let’s start with some natural drivers of health spending, which are understandable and expected. First, as the population grows, so will health spending. Likewise, as the proportion of older people increases, so will spending. We also expect health spending to increase slowly with inflation. New technologies and medicines increase cost, but we hope will give dramatic benefits. For example, during my 40-year practice lifetime I have seen the introduction of new drugs for diabetes, blood pressure, and virus infections including HIV and flu. I have seen new ultrasound, CT and MRI diagnostics. I have seen cardiac caths, by-passes and joint replacements. These new things are expensive but well worth the cost.

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But health spending grows from 1-1/2 to 4 times the rate of inflation, much more than would be explained by natural drivers, as we saw previously.

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Fee for Service Payments

So, let’s look at the other reasons. First and foremost, to my way of thinking, is fee-for-service. Doctors in the US – unlike other countries where they are salaried – get paid for piecework. If a surgeon doesn’t operate, he doesn’t get paid. If a specialist doesn’t have a patient scheduled, HE doesn’t get paid. Money is a powerful incentive. So we should not be surprised if doctors increase their own volume of services, many times unconsciously.

Health Insurance Hides Cost

The next big reason is our health insurance. Until recently premiums were paid by the employer and out-of-pocket copays were minimal. Healthcare felt free to most of us. Most of us had no idea what our care was costing the system, and cared little. Talk about a perfect storm!

Imperfect Market 

Why didn’t market forces keep down costs and spending. Many politicians and reformers think competition as the simple solution to the healthcare cost problem. But economists will tell you that healthcare is not a pure market;  they refer to it as “imperfect.” The reasons are first that no one knows the true price of anything. Have you ever tried to sort out a hospital bill? Ridiculous!

Second, markets rely on buyer and seller having equal footing to negotiate, but most patients dare not quibble with their doctor. Doctors get their feathers ruffled when patients challenge their advice. Third, to make matters worse, patients are a “captive market” – they are often suffering, frightened for their life, and desperate for immediate relief, not exactly a strong bargaining position. Fourth, doctors can control demand. There’s an old joke about the level of eyesight loss that needs a cataract operation – if there’s one doctor in town it’s 20/100, if two doctors it’s 20/80 and if three doctors in town it’s only 20/60.

Administrative Costs

Next is administrative costs. Some economists estimate that up to ¼ of all health spending is for administration, not actual care. This is not surprising knowing how complicated we make our delivery system and financing system. Other countries have one delivery system and one payment system. US has 600,000 separate doctors, 5,500 separate hospitals, and 35 different insurance companies, not counting Medicare and Medicaid. Doctors used to drown in papers; now we spend up to 2 hours doing computer work for every hour of patient care. Don’t you love it?

For comparison, Medicare reports only 2% administrative costs (but some other costs are hidden elsewhere in government).

Inefficiency & Waste

Some other spending drivers include inefficiency. I include in this category unnecessary tests and treatments, as well as wasted effort due to incompatible computerized record systems – there are 632 separate electronics vendors in the US. If airports ran this way, each airline at each airport would have its own unique air traffic control computer that did not connect with each other. All in the name of free market.

Regards unnecessary treatments and procedures, a doctor at Dartmouth named John Wennberg pioneered using Big Data in the 1980s to look at numbers of prostate operations in each individual ZIP code, and found that surgeons in some regions were operating 13 times for often in highest areas than the lowest. Since prostate disease is relatively constant everywhere, this can only mean that doctors practice varies widely – the highest utilizers are doing too many operations.

Monopolies

Next is monopolies. Many small- and medium-sized towns and rural areas can only support one hospital. This creates monopolies with no market forces whatsoever to hold down charges.

Cost Shifting

Cost-shifting means that uninsured patients come to the ER for care. Since the ER doesn’t get paid, the ER shifts the Uninsured cost into the bill for INSURED and Medicare patients. The cost-shifting itself doesn’t increase the costs, but getting care in an ER instead of doctor’s office is the most expensive possible place for care.

New-Technology Policy

The FDA new-technology policy means that FDA rules say that it will approve any new drug or treatment if it shows even the slightest statistical benefit, no matter how small. Some cancer drugs are approved that extend life by only a few weeks. Some medicines are approved, even if the number needed to treat is 100. For example, for some new cholesterol medications, 100 patients need to be treated for 5 years before we see even 1 heart attack prevented. That’s a lot of patients, and a lot of doses, and a lot of dollars. By comparison, since half of appendicitis patients die without treatment, and almost all with appendectomy surgery survive and live happily ever after, the calculated number-needed-to-treat is only 2. So appendectomies are a good valued, but cholesterol medication (for otherwise healthy people) is questionable value.

Non-Costworthy Marginal Benefit

Here is another way of looking at value. As we go from left to right in this graph, we are spending more and more on health care. The more we spend, the higher the cumulative health benefit, at least to start. The first section (Roman number I) are very high value interventions like public health, sanitation, immunizations. The next section (Roman number II) are good value routine health treatments, including kidney dialysis and first-line chemotherapy for treatable cancers. But when we reach the third section (Roman number III), the benefits level off. Bypass surgery is less effective for older patients (and more risky); dying patients don’t survive in intensive care units and are miserable with tubes and futile breathing machines. If we spend even more we reach section Roman numeral IV in which no additional benefit is gained, just a lot of extra testing, treatments or drugs – these are wasted dollars. And if we keep spending more yet, we actually do more harm than good, and can even have deaths on the operating table or reactions to too many drugs. The US is well into section IV and in some cases section V. A lot of other richer countries think that they have already reached the point where spending more will give no benefit or possibly do more harm than good, even though they spend less than the US.

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In the next episode we will look at the ramifications of so much health spending on the US economy, politics and society. We will look at some potential threats if we do not start to control costs better.

I’ll see your then.

 

Top Six Healthcare Executive Challenges in 2019

http://www.managedhealthcareexecutive.com/executive-express/top-six-healthcare-executive-challenges-2019

The pace of change in healthcare is not slowing down; in fact, it is accelerating. Healthcare organizations that are most successful in 2019 will know what challenges and changes are coming down the pipeline, and they will prepare accordingly.

To help ensure you don’t get left behind, we’ve assembled the top six challenges the industry will face in 2019.

1. Shifting the focus from payment reform to delivery reform. For the past few years, C-suite leaders at healthcare organizations have been focused on navigating healthcare payment reform—attempting to preserve, improve, and maintain revenue. Amidst those efforts, delivery reform has sometimes taken a back seat.

That will need to change in 2019. Organizations that are the most successful will focus more on patient care than revenue, and they will see improved outcomes and reduced costs as a result.

Many organizations are already exploring delivery reform with initiatives that focus on:

  • Remote health monitoring and telemedicine;
  • Population health management;
  • Patient engagement;
  • Social determinants of health; and
  • Primary care.

In 2019, however, they will need to bring all of these initiatives together to implement sustainable improvements in how healthcare is delivered.

An added bonus? Organizations that accomplish this will see enhanced revenue streams as value-based reimbursement accelerates.

2. Wrestling with the evolving healthcare consumer. Healthcare consumers are demanding more convenient and more affordable care options. They expect the same level of customer service they receive from other retailers—from cost-estimation tools and online appointment booking to personalized interactions and fast and easy communication options such as text messaging and live chats.

Organizations that don’t deliver on these expectations will have a difficult time retaining patients and attracting new ones.

That’s not the only consumer-related challenge healthcare organizations will face. In 2019, millennials (between the ages of 23 and 38), will make up nearly a quarter of the U.S. population.

This generation doesn’t value physician-patient relationships as highly as previous generations. In fact, nearly half of them  do not have a personal relationship with their physician, according to a 2015 report by Salesforce.

Finding ways to maintain or increase the level of humanity and interaction with millennials will be a key challenge in 2019. Patient navigator solutions and other engagement tools will be critical to an organization’s success.

3. Clinician shortages. Physician and nurse shortages will continue to intensify in 2019, creating significant operational and financial challenges for healthcare organizations.

The most recent numbers from the Association of American Medical Colleges predict a shortage of up to 120,000 physicians by 2030. On the nursing side, the Bureau of Labor Statistics projects a need for 649,100 replacement nurses by 2024.

The implications of the shortages, combined with the fact that healthcare organizations face a number of new challenges in the coming years, are many. Fewer clinicians can lead to burnout, medical errors, poorer quality, and lower patient satisfaction.

Healthcare organizations that thrive amidst the shortages will find new ways to scale and leverage technology to streamline work flows and improve efficiencies.

4. Living with EHR choices. Despite the hype and hopes surrounding EHRs, many organizations have found that they are failing to deliver on their expectations.

recent Sage Growth Partners survey found that 64 percent of healthcare executives say EHRs have failed to deliver better population health management tools, and a large majority of providers are seeking third-party solutions outside their EHR for value-based care.

The survey of 100 executives also found that less than 25% believe their EHRs can deliver on core KLAS criteria for value.

As we recently told Managed Healthcare Executive, that statistic is striking, considering how important value-based care is and will continue to be to the industry.

Despite the dissatisfaction surrounding EHRs, switching EHRs may be a big mistake for healthcare organizations. A recent Black Book survey found 47% of all health systems who replaced their EHRs are in the red over their replacements. A whopping 95% said they regret the decision to change systems.

Hospitals and physician may not be entirely happy with their EHR choices, but the best course may be to stick with their system. Highly successful hospitals and health systems will find ways to optimize workflow and patient care which may involve additional IT investments and best of breed investment approaches, rather than keeping all of the proverbial eggs in the EHR basket.

5. Dealing with nontraditional entrants and disruptors. In 2018, several new entrants entered and/or broadened their reach into healthcare.

Amazon acquired online pharmacy retailer PillPack, and partnered with JPMorgan Chase and Berkshire Hathaway to create a new healthcare partnership for their employees. Early in 2018, Apple announced it was integrating EHRs onto the iPhone and Apple watch, and recently, Google hired Geisinger Health CEO David Feinberg for a newly created role, head of the company’s many healthcare initiatives.

New partnerships have also arisen between traditional healthcare entities that could result in significant healthcare delivery changes. Cigna and Express Scripts received the go-ahead from the DOJ for their merger in September, and CVS and Aetna formally announced the completion of their $70 billion merger November 28.

Read more about the top two ways the CVS-Aetna merger could change healthcare.

All of these new industry disruptors and mergers will impact healthcare organizations, likely creating new competition, disrupting traditional healthcare delivery mechanisms, creating price transparency and pressures, and fostering higher expectations from consumers in 2019. Keeping an eye on these potential disrupters will be important to ensuring sustained success in the long term.

6. Turning innovation into an opportunity. From new diagnostic tests and machines to new devices and drug therapies—the past few years in healthcare have seen exciting and lifesaving developments for many patients. But these new devices and treatment approaches come with a cost.

One of biggest 2018 developments that best exemplifies the challenge between innovation and cost is CAR T-cell therapy. This new cancer treatment is already saving lives, but it racks up to between $373,000 and $475,000 per treatment. When potential side effects and adverse events are accounted for, costs can reach more than $1 million per patient.

Finding the best way to incorporate new treatments like this one, while balancing outcomes, cost, and healthcare consumer demands, will be a top challenge for healthcare organizations in 2019.

 

 

 

The state of our health care system is …

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The state of our health care system is …
Trump didn’t have much to say about health policy during SOTU last night. But we’re definitely at a health care crossroads right now. So I asked a handful of the smartest policy experts for their assessments.

What they’re saying: The state of the health care system is…

  • Mixed and murky … The ACA marketplace gets all the attention, and while enrollment has been stronger than expected and insurers are now profitable, the future is uncertain … Looking at the bigger picture, we in the U.S. spend far more on health care than any other wealthy country, and what we get for it is worse outcomes and shorter life expectancy.” — Larry Levitt, Kaiser Family Foundation
  • Exciting … There is a tremendous space for innovation and experimentation … The challenge now is for the states to find ways to craft programs that fit local circumstances and values.” — David Anderson, Duke University
  • Complicated, and things will get more complex before they get easier … It will be a time period of trade-offs, where attempts to gain savings will require that some people won’t get access to low-value care that they desire, while others will hopefully get the care that they need.” — Craig Garthwaite, Northwestern University
  • “Better than we expected a year ago, but still greatly uncertain … The irony of the past year is President Trump and Republicans have ratified the public consensus around the ACA, and maybe something more radical.” — Harold Pollack, University of Chicago

The bottom line: We’re in a period of intense change, both politically and practically.