Archive for Health Plan/Payer CEOs
by Lola Butcher
April 21, 2008 at 9:51 am · Filed under Insurance, Health Plan/Payer CEOs, Policy Makers
If you like health savings accounts, you are going to love “Putting Our House in Order: A Guide to Social Security and Health Care Reform,” the new book by former Secretary of State George Schultz and Dr. John B. Shoven, director of the Stanford Institute for Economic Policy Research.
I missed the press conference at which the book was unveiled this morning, but attendees received advance copies at home and copies of the book are on every table at this conference. Its authors are keen on getting wide attention to their ideas so I share their summary of the health initiatives needed to put the house in order, Schultz-Shoven style:
Private system
- Encourage national, rather than state, markets in health insurance, thereby promoting competition, putting downward pressure on costs, and providing reasonable choices of covered services.
- Promote enhanced consumer information about health service prices and quality. Medicare records on the quality of hospitals and health service providers and the effectiveness of alternative treatments should be made public while the privacy of individuals is protected.
- Strengthen the incentives for company-sponored HSAs and accompanying catastrophic insurance by making them portable across employers and permitting tax-deductible health spending for those who have fully participated in an HSA program.
- Make tax-advantaged HSAs and relative low-cost catastrophic insurance available to all those who do not have employer-sponsored plans.
Medicare
- Offer consumer choice among plans (Kaiser-style HMO plans, high-deductible catastrophic insurance plus HSAs, and traditional Blue Cross-type plans.)
- Use smart means testing: Value of vouchers would depend on lifetime labor earnings.
- Ensure gradual transition: Existing Medicare participants would be allowed to stay with traditional coverage.
- Finance with dedicated taxes, thereby promoting cost effectiveness.
Medicaid
- Provide risk-adjusted vouchers.
- Continue to allow states to experiment with structure.
- Offer consumers choices, including HSAs with catastrophic insurance.
- Provide increased coverage: Replace eligibility notch with phased reduction of the value of vouchers.
- Finance federal support with dedicated taxes, thereby promoting cost-effectiveness.
by Lola Butcher
April 21, 2008 at 9:33 am · Filed under Insurance, Health Plan/Payer CEOs, Business of Health
I had promised to attend the press conference at which former Secretary of State George P. Schultz released his new book, “Putting Our House in Order: A Guide to Social Security and Health Care Reform.” But when I realized I would have to miss a presentation, “A Practical Model to Achieve Health Reform,” by George C. Halvorson, chairman and CEO, Kaiser Foundation Health Plans and Hospitals, it became clear that I value decades of health care management experience more than Schultz’s long government career and his Medal of Freedom.
My decision permitted me to hear a rare truth-teller in health care today.
Halvorson said what everybody knows but most hand-wringers refuse to acknowledge: “Smart people do not kill the geese who lay lots of golden eggs.”
- Health care delivery is the fastest growing and most profitable segment of the whole US economy.
- Health care is winning. It is taking everyone’s money with an amazing low level of accountability.
- The people who depend on a cash flow of fees to stay in business will not walk away from those fees voluntarily.
This is why health care reform has not happened and will not happen voluntarily.
Health care reform, Halvorson said, needs to be a “product” that is purchased and paid for by high leverage buyers. He challenged purchasers to take advantage of an evolving market.
While buyers think they have a relatively small amount of leverage, Halvorson pointed out they actually hold the power in today’s marketplace because of several converging factors:
- Because of consolidation, there are only a few major plans left.
- Buyers are doing total replacements.
- Total market is shrinking.
- Most plans are for profit and need growth to fuel stock value.
He calls for financing reform and care delivery reform, working together. Read more about this here later.
In the meantime, think about this question: Can health care providers be trusted to lead health care reform?
Halvorson offers a clue: “In today’s world, more efficient and effective caregivers simply deprive themselves of income.”
by Scott MacStravic
April 4, 2008 at 1:21 pm · Filed under Health Plan/Payer CEOs, Business of Health, Retail healthcare, Health Management
Just last week, I described the many developments that, together, may comprise a “tipping point” in the movement toward proactive health management (PHM) as a complement to and means of reducing the need, demand, and expenditures for sickness care. Today, two news stories have described further developments in the same direction.
In the U.K., employers are already ahead of their U.S. counterparts in the use of health management for their employees. Since the government covers employee health care costs through the National Health Service, employers are focusing on even broader ranges of financial advantages from improving employee health. These include: reduced turnover from family or employee health causes as well as improved morale and satisfaction; often dramatically reduced absences; improved customer satisfaction and loyalty; and even new business that results from retained employees and improved service.
And now, the range of providers being enlisted to support the U.K.’s overall health management is being greatly expanded by including pharmacists in such efforts. The Health Minister there is pushing for the inclusion of pharmacists as providers of screening tests and vaccinations, even prescribing some drugs in particular cases. [J. Goldstein “In the U.K., a Push for Primary Care from Pharmacists” Wall Street Journal Health Blog Apr 4, 2008 (blogs.wsj.com/health)] In this, they would be emulating the many examples of pharmacist-based PHM for chronic disease patients, such as the Asheville, North Carolina project that has been successfully doing so for diabetics for years.
Meanwhile, there is another story about the development, in the U.S., of a retail clinic specifically and uniquely for healthy people, where most are intended for those with minor sickness problems. The clinic, called WellnessMart and based in California, describes itself as “The New Way to Healthcare”, and offers health services, health education, and health insurance, as well as health products onsite.
It is owned by physicians, including Richard McCauley, MD, and recently moved from the hallway of a health club to a strip mall in Thousand Oaks, according to this article from the Wall Street Journal Blog: “A Retail Clinic for Healthy People”. It claims to be “…revolutionizing the way America accesses care by making preventive services available through convenient retail stores. These stores are designed to provide healthy people the quick, easy, understandable tools and information they can use to make sure they avoid disease.”
This is in contrast to reliance on physicians’ offices. “Until now, the basic tools that healthy people need to prevent disease have been confined to the doctor’s office, a place designed for sick people.” The “mart” offers free workshops throughout the day to help people understand their body and how it works, to ensure people know not merely what to do in order to be healthy, but why. It offers clients a $100 “Wellness Bucks” reward for every year they renew their health insurance through WellnessMart.
Of course, all retail clinics offer some preventive services, such as brief physical exams for school, common immunizations for flu and pneumonia, for example. The RediClinic chain offers a wide range of “Stay Well” services to complement its “Get Well” services. But the Wellness Mart seems to be the first to focus entirely and exclusively on promoting health and preventing sickness.
It will be interesting to watch the Wellness Mart to learn if this business model works, at least in the California locations where it is offered. The idea of offering a different place for wellness vs. sickness care may be appealing to consumers, or physicians and retail clinics may be able to combine them in a logical and complementary way that works even better. But clearly, the movement toward wellness is growing.
by Scott MacStravic
March 26, 2008 at 10:59 am · Filed under Health Plan/Payer CEOs, Hospital and Health System CEOs, Business of Health, Marketing
When I began my career in healthcare marketing in the mid 1970s, I thought I was making a significant positive difference to the inaccurately labeled “health care system”. Back then, essentially nobody did, wrote, or even said much about things like patient satisfaction, patient-centered care, etc. nor spent anything remotely resembling the kind of current marketing budgets. In essence, there were no marketing budgets, no marketers, and no marketing in healthcare at all.
I was lucky enough to get in on the early wave of its development and implementation, with two books and a host of articles, as well as some delightful consulting engagement. With nobody else marketing, it was a simple matter to achieve dramatic improvements in market share, revenue, and profits for my clients, simply by doing pretty basic marketing stuff, like devising more convenient and satisfying patients experiences, and doing the same for physicians where referrals were needed.
To describe the prevailing situation back then would make it sound like the Dark Ages, compared to the emphasis on patient and physician experience management, direct-to-consumer (DTC) advertising, the thousands of people now engaged in marketing efforts, and the awareness among executives of the necessity for significant spending thereon. We have come a long way, though I confess, not necessarily in the direction I had anticipated back then.
My original aim was to combine doing a better job of identifying and meeting patients’ and physicians’ needs, wants, and expectations as a way to achieve a truly WIN/WIN result for the healthcare organizations who did so earliest and best. My first consulting engagement in 1974 or thereabouts turned around a failing hospital-sponsored primary care center into what became a highly successful “chain” of such centers and a major boost to the fortunes of the hospital involved. But this was due to making the product, place and price elements of what the clinics offered dramatically better and more attractive/satisfying for patients, not through expensive advertising, which did not even exist at that time.
Since then, marketing has taken off dramatically in health care, and hardly any provider can afford to ignore it. I made an excellent living at it, and have been able to retire in comfort to a life of “freelance scholarship”, with a lot of research and writing, and frequent enough consulting engagements to keep up with its present developments. But it is clear that marketing in health care has had a lot of unfortunate effects that I never considered or anticipated, and we are all suffering from them.
As is pointed out concisely and persuasively in another blog, ”Health Status Is Not the Only Predictor of Medical Costs”. I recall reading about this back in graduate school before the marketing idea emerged, thinking it was an interesting factoid, but not really connecting it to an opportunity that marketing can address. But it is clear that the natural drive for healthcare providers, drug manufacturers, and other purveyors to succeed, has led them to exploit this potential, and not entirely to the benefit of patients.
The blog reminds us that only about 20% of healthcare use is explained solely by health status, though the correlation between status and use is strong, particularly at extreme levels of good or bad health. But people with similar levels of health/illness overall do not use the same levels of care. Their use, the other 80% at least, is more reflective of individual attitudes and preferences, insurance coverage, provider (“supply-based) effects, and economic incentives that apply to remaining at work vs. taking time off. [W. Lynch & H. Gardner “If We Only Consider One Possible Cause, We Will Be Left with Only One Type of Solution” Health as Human Capital, Mar 2, 2008]
Numerous studies have shown that economic incentives and geographic variations in the supply and care philosophy of physicians have yielded enormous variations in how a given patient with a given condition will be treated. Such variations come with very little evidence that more treatment is better, and a lot of evidence that over-treatment makes the patient worse, to say nothing of the added costs that all of us end up bearing, one way or another. And marketing clearly has a lot to do with promoting over-treatment.
It is easy to put a lot of blame on pharmaceutical advertising, which has promoted widespread perceptions in new “diseases” such as “restless leg syndrome” as well as new ways of dealing with old problems, such as “erectile dysfunction”. When I began my career, the only intent in marketing was to win more patients to the providers I worked with, not to drive up demand as a whole.
But to a great extent, it is impossible to separate the two. If healthcare becomes more attractive and satisfying for patients and physicians, it is bound to be used more. And all providers can benefit when a “rising tide” of increased demand “raises all boats” among providers of care. After many years of promoting the ER as a source of convenient care, with guarantees that patients will be seen within 30 minutes, for example, we now have a serious problem of overuse of ERs.
There is a “marketing” solution to this problem, of course, and many hospitals as well as the natural workings of the market have resulted in some significant “solutions”. Hospitals, themselves, along with insurers and employers, have “de-marketed” ER use with information campaigns, (“de-advertising?”), and the creation or support of alternatives, such as “fast-track” options to ERs on hospital campuses, “retail clinics”, and “urgent care centers”, though these often have trouble competing with the overwhelming market advantage that ERs have for patients of not being able to turn away non-paying patients.
The authors of the blog piece noted that they had used regression analysis to “predict” or account for medical costs in a large population, based on age, gender and general health ratings of its members. This combination of demographic and health factors achieved an R2 predictive success of only 11%, meaning that 89% of variations in use were due to other factors. It also predicted the differences in medical costs for employers with two different sets of incentive dynamics, but similar populations and illness. The expected costs of one, based on high-deductible health insurance and a consumer-directed health account, a culture of communicating the costs to employees of their employee benefits, and shared responsibility for time away from work, were over $2000 less per employee per year than costs for the other.
Perhaps more important, even when the second firm has a more educated workforce and more wellness programs, the differences in costs persist, because of the strong impact of the economic incentives on employees’ behaviors. While wellness programs and other efforts to improve employee health have been shown to save significantly through improved productivity and performance, apparently economic incentives can counter or at least reduce their effects.
To the extent that marketing promotes positive attitudes toward health care use over self-management of health and prudent management of one’s healthcare use, along with making one provider more preferred than another, it is part of the problem. But it is likely that altering economic incentives, along with the effective marketing of health and good self-health-management, will be necessary to “solve” the health care cost crisis. Efforts to make health insurance coverage universally available will not solve, but exacerbate this crisis, unless they are accompanied by ways to “de-market” unnecessary and avoidable health care use and expense.
by Scott MacStravic
March 26, 2008 at 1:24 am · Filed under Health Plan/Payer CEOs, Business of Health, Population health management
For many years, the news on “retail clinics” consisted almost entirely of stories of new ones opening everywhere. But recently, we have seen a series of stories of existing clinics closing, in a wide variety of places for a variety of reasons. It may be that, like so many innovations, retail clinics will follow the same kind of boom and bust history that has affected others, due to the fallacy of composition.
While there are many versions of this logical fallacy, its application in this case is the expectation that since the first examples of retail clinics are successful, all subsequent examples will be, also. Such optimism has affected investors in automobiles, where in the early part of the last century, literally hundreds of different companies emerged making cars, with only the “big three” having survived till the present, and their future not guaranteed. While retail clinics started slowly, they have burst into the hundreds with predictions of thousands in recent years.
There had been an earlier “boomlet” in retail clinics starting in the 1970s and 80s, when “urgent care” clinics, staffed by physicians, and operating primarily on evenings and weekends, emerged in many large cities. These served much the same market as current retail clinics, and there has been a resurgence in this kind of retail clinic, along with the ones staffed by nurse practitioners or physicians assistants. Indeed, the most recent example of the Medical Mart’s demise, closing over a dozen clinics in retail outlets if Illinois. Missouri, Utah and Virginia, was a physician-staffed model. [B. Japson “Medical Mart Clinics Close in Suburbs” Chicago Tribune, Mar 12, 2008]
Physician-staffed models have avoided the criticism by physician associations that has affected the NP/PA-staffed versions, since they have physicians present at all times, who can therefore treat all the illnesses they are likely to see, while NP/PA versions have been criticized for their limited capabilities. The trouble is, of course, that physician-staffed models tend to have far more staff on hand at each, often a couple of physicians along with support staff, so they are far more expensive to operate, and therefore far more at risk if they do not attract enough patient volume.
The Medical Mart clinics, for example, had four staff on hand, two physicians supported by two medical assistants or licensed practical nurses. This meant they automatically had over four times as much staff costs, along with larger space they were paying for. Moreover, they typically have the kinds of equipment that physicians want in diagnosing and treating patients, adding still further to their operating costs. Without perhaps five times more patients being seen than needed for NP/PA-staffed clinics, they could not survive.
There has always been a complementary function that retail clinics could serve, one that could offer many more reasons for patients to visit many more times each per year. That is the proactive health management (PHM) function, which consumers are increasingly being expected as well as “incentivized” to adopt. Both the cost shifting by employers and the move toward “consumer-directed health plans”, with their high deductibles and consumer-owned health savings accounts, provide significant motivation for consumers to do more about protecting their health and preventing disease and injury where possible.
While all retail clinics may offer minimal preventive care, including annual check-ups, flu shots and other immunizations, for example, there is already a model for significantly more comprehensive continuous PHM services that has grown almost as fast as retail clinics. So-called “concierge medical practices” most of which include a major PHM component as justification for charging a thousand dollars or more in annual “retainers”, have grown to include over 600 physicians, by my count.
In addition, there is at least one retail clinic chain, the RediClinic examples, that combines what it deems “Get Well” reactive sickness care with “Stay Well” PHM services. Having convenient locations in popular retail superstores and pharmacies, with onsite free parking, as well as something else to do while waiting, when necessary, to see the practitioner, are at least as valuable features for PHM as for routine sickness care. And for patients who really need the coaching of a professional, in person, whom they know and trust, the retail clinic can generate perhaps a dozen or so PHM visits each year per patient, at modest fees, to supplement sickness care visits.
Moreover, in my experience, and as strongly suggested by research, NPs and Pas may be better at delivering PHM services than are physicians, trained as the latter are in the challenging diagnosis and treatment of illness. And they certainly will not need to charge as high fees as are needed to support physicians.
Retail PHM-including clinics can easily combine their PHM services with sickness visits, using these as added opportunities to ask patients how they are doing with their PHM goals, even checking their weight, blood pressure, cholesterol, blood sugar, and similar common biometrics as commonly involved in PHM efforts. Until physicians work out their own competing versions of a “medical home” that can combine reactive and proactive services while generating enough income to support such a model, retail clinics may be in the best position to do so for patients unwilling or unable to pay for the concierge medicine model.
In any case, the success of onsite medical clinics, also staffed by either physicians or NP/PAs, or a combination of the two, in meeting the PHM as well as sickness care needs of employee populations, is a clear indication of the potential. The first “customers” for this combination in currently sickness-focused retail clinics may well be the employees of the superstores where the clinics are located. After all, they are already onsite medical clinics for such employees, and if their employer wishes to contract for free or subsidized PHM services along with sickness care, that will generate a substantial patient volume, by itself.
While the fallacy of composition will still threaten or at least limit the extent to which retail clinics can expand before closures become even more frequent, the option of combining PHM with sickness care should offer another avenue to support as many and even more such clinics as sickness care alone would be able to. The combination may not suit all or even a majority of consumers or employers, but it represents a proven model in its existing forms, and should be at least worth considering where sickness care alone doesn’t provide sufficient success and survival.
by Scott MacStravic
March 26, 2008 at 1:22 am · Filed under Health Plan/Payer CEOs, Policy Makers, Population health management
Despite the continuing pressure on physicians to invest in electronic medical records, only about one-quarter have done so, and usually in large medical groups. There are numerous quality and efficiency of care reasons for making the investment, but these often fail to persuade physicians, who tend to feel that others gain most of the benefits while they suffer all of the costs.
Recently, BlueCross Blue Shield of Massachusetts came out on the physicans’ side on this issue, indicating its belief that the return on investment to physicians would not justify the expense, based on its current bonus program. Its own analysis indicated that physicians gain only 11% of the money saved through EMRs, and that isn’t enough to cover costs what physicians in that state gain under its bonus program. Henceforth, it will not require physicians to have EMRs in order to qualify for bonuses. [PL Dolan “Insurer Finds EMRs Won’t Pay Off for Its Doctors” amednews.com, Mar 10, 2008]
In many, probably most small physician practices, available bonuses and financial/efficiency gains from EMR investments tend to be far greater per patient served than is the case for larger groups. And there simply is no current way to recover the investment costs, even if physicians could afford to spend or borrow the money required. But there may be a way to do so through the growing movement toward “medical homes” and proactive health management (PHM), at least for primary specialty physicians and secondary specialties that are willing to move into PHM for their chronic disease patients.
One of the elements of PHM as practiced by physicians is the need for frequent contact with patients, through individual or group visits, phone consultations, outbound e-mails and other methods used for monitoring and motivating patient adherence to medications and lifestyle change “prescriptions”. Moreover, while EMRs are used mainly as background information in sickness care, they are close to essential for patients and physicians to monitor and make adjustments on an ongoing basis for PHM goals and processes.
EMRs become “personal health records” routinely and easily accessible to both patient and physician, as well as to other practice staff involved in patients’ PHM efforts. They can be the basis for reminding patients when regular measures of their behavior change commitments, when it is time to make a measurement of progress in losing weight, blood pressure/sugar/cholesterol levels, calorie intake, physical activity, etc. They also serve by providing objective data, often including graphic displays, of patients’ overall progress, and can be used by patients involved in employer-based PHM efforts to validate their eligibility for incentive payments.
The MDVIP organization, with over 200 physician practices in 19 states, for example, offers EMRs and patient web pages that are used to track and record patient progress toward whatever personal health goals each is working on. The records, themselves, serve as a reminder of how far each patient has come since initiating each’s health improvement effort, as well as how far each has left to go. They also serve to remind physicians to consider congratulating patients on progress, or adjusting the patient’s support program if progress is slow or non-existent.
MDVIP patients also receive a mini-CD that they can use in their own computers or carry with them when they go to physicians or other providers that are not in the MDVIP system. They have their own web page for their records and MDVIP’s electronic access to health information they might be looking for. In spite of the fact that MDVIP physicians have no more than 600 patients each, this is enough to make having EMRs worthwhile for their PHM-focused practices.
Given the significant value of sharable EMRs in PHM, together with the greater simplicity of the records and applications required therein, before primary physicians make decisions on EMR investments, it might be wise for them to confer with peers who have adopted truly PHM-focused medical home models, such as MDVIP physicians, to get a more complete idea of the advantages vs. costs involved. The investment may not be justified under traditional payment systems, but may be sensible, necessary, and affordable in PHM-focused practice.
by Scott MacStravic
March 10, 2008 at 8:58 am · Filed under Insurance, Health Plan/Payer CEOs, Policy Makers, Health Management
At first glance, health insurance plans ought to be major supporters of proactive health management (PHM) for their member populations, at least to the extent that this reduces members’ use of sickness care. Most health plans do offer some kinds of PHM services, and many are into it in a big way, with large plans such as CIGNA and Aetna offering PHM to employers who are not even their health insurance clients.
But the first glance may be too simplistic. Consider the full “systems dynamics” effects of engaging in PHM. True, when done effectively, PHM can significantly, often dramatically reduce healthcare costs for populations affected. But this also reduces the “loss ratios” for the plans, and can threaten their overall profits, since to maintain the same percentage of profits with lower premiums, its total profit amounts will be reduced, even if their margins remain constant. They will enjoy less growth in revenue, which will threaten their share prices, and shareholder as well as Wall Street analyst happiness.
Moreover, there is a built-in risk when engaging in PHM that some portion, perhaps a significant, even the major portion of the benefits of PHM investments will end up aiding some other plan, as members change plan selections at least annually. If employed members have high turnover relative to their employer, or high “churn rates” relative to their plan selections, they may not remain members of a given insurer long enough for any, or at least enough payoff to the insurer that paid for their PHM services.
The upside potential, however, is that health plans that demonstrate success in PHM may deliver such added benefits to their employer clients that the added revenue they derive from PHM, along with perhaps higher loyalty levels among employers who are also clients for their insurance, will end up increasing their total profits and shareholder value. It is impossible to predict with any confidence what might be the overall economic impact on insurance plans that offer PHM services. Too much depends on how well they perform in the PHM marketplace, and what the overall mix of impacts turn out to be.
But plans do enjoy a significant advantage over employers, who might otherwise decide to develop and offer their own PHM programs. Thanks to federal regulations (both EEOC and HIPAA), employers are seriously limited in terms of what incentives they can offer for what things, as well as what they are allowed to know about their employees’ health as individuals. By and large, insurance plans are not so handicapped. Of course, neither are the growing number and size of specialized PHM vendors, which can include hospitals and physician practices in the same community as the employers.
Plans also may suffer from a disadvantage based on whatever reputation and image they have among their own plan members or consumers in general. Given all the scandals about denial of coverage, retroactive termination of individuals after they start using care for conditions the insurer deems pre-existing, and the general hassles that have made employees’ personal physicians antipathetic toward insurers, this may be a significant handicap.
One thing is clear, at least – insurers cannot afford to ignore the PHM market and the impact this can have on their premium revenue, relations with employer clients, and with consumers, for that matter. PHM is too big an elephant to pretend it is not in the room.
by Fred Fortin
March 5, 2008 at 10:46 pm · Filed under Insurance, Public Purchasers, Health Plan/Payer CEOs, Policy Makers, Regulators, Universal Coverage, Business of Health, Value-based health care, Ethics
I’m attending the AHIP health policy conference in Washington, DC this week and getting an earful about the elections and healthcare reform. Some impressions:
First up on the podium was Chris Matthews, TV commentator of Hardball fame. Matthews is a good speaker and captures the audience right away. He believes anyone of the three presidential candidates could take the election. Yes, there is still a path for Hillary to get the nomination but a lot depends on what happens today at the polls in Texas, Ohio, Rhode Island and Vermont.
To Matthews, America is in a “rut”. The people want change, they want deliverance. And doing nothing is definitely “out”. Obama is different, not your typical politician and he believes that this election is really going to be “transformative”, the likes of which we have not seen for quite a while. While he did not address health care reform in a specific way, Matthews argues that real political change only comes from brilliant, dramatic, unpredictable and grand moves. So I don’t think health care incrementalism is in Matthews’ play book.
Donna Brazile, TV political commentator and Chair of the Democratic National Committee’s Voting Rights Institute, and super-delegate, also believes that voters are in a foul mood. There “will be blood in this election”, she says. The next president will inherit a divided country and healthcare will be right in the middle of it. In addition, the deterioration of the economy will make health care reform doubly difficult. Even so, Democrats will want to get something in healthcare reform on the table quickly after the election.
Michael Murphy, Republican Political Consultant, and TV Commentator, on this point, says a McCain presidency may, contrary to popular thinking, do more for healthcare reform since if it is proposed by Democrats, the Republicans will block it. Like Nixon going to China, you need a conservative to front this kind of liberal change.
Dan Crippen, former Director of the Congressional Budget Office, observes that many people think rising health care premiums are capricious acts; they go up by themselves and are unrelated to cost structure. He asks “How do we change the 30 year old question in healthcare from ‘who should pay’ to ‘what are we buying’.”
Ezekiel Emanuel, Chair of the Department of Clinical Bioethics, Warren G. Magnuson Clinical Center, National Institutes of Health, asks the question of how do we make sure that the process of healthcare reform is legitimate if we need to make sacrifices? What voices need to be heard? He also agrees with many of the other speakers that we need to better assess what we’re spending our money on in healthcare. We need a better strategy. In responding to those who say that cost should not be a consideration in delivering healthcare, he advocates, that cost is an essential ethical consideration in healthcare because cost has an impact on our ability to pay for other critical services and needs. And that fact alone makes it an ethical dimension worth weighing.
In a similar vein, Paul B. Ginsburg, President, Center for Studying Health System Change, provokes the audience on questions about the importance of equity in healthcare, and the public tolerance for administrative control of the distribution of health care services. Containing health care costs will be painful, he reminds us. There is no painless solution. Ginsburg warns that health care financing systems can fail, but that they fail slowly. This health care crisis has been with us for over a decade. However, the affordability problem is now invading the middle class, crowding out other important needs.
The final speaker of the day one was the notable Theodore R. Marmor, Professor Emeritus of Public Policy and Management, and Political Science, School of Management, Yale University. Marmor observes that the lack of consensus should not be surprising since with healthcare we have five Americas: The British model embodied in the Veterans Administration system; the German social insurance program model in Medicare; the 19th century poor laws model in Medicaid; the private health insurance system; and pure charity medicine.
His own criteria for judging health reform proposals are fairly simple: Does is include everyone as payers and recipients for care? Does it cover what ordinary people think is medical care? Does it contain fiscal restraints to prevent the raiding of either the public or personal funds? It is accountable for results? And is the protection portable?
Marmor would like to see a real national conversation about healthcare since right now he feels what Washington is saying up to this point is pure gibberish. How, he asks, can we avoid another mistake like that which was made by the Clintons without a real national dialogue and consensus? We cannot wait another decade for an answer.
US Senator Ron Wyden took the stage first thing the morning of day two of the conference. He’s a frequent speaker at this conference usually focusing on his ‘Healthy Americans Act’ as a step towards real healthcare reform. He says the first 100 days for the new president will be critical for healthcare. Democrats — if they win — will need to put something on the table quickly. Congress is getting ready to act and Wyden does not want a repeat of the now infamous Clinton failure of 1994. This time there is an opportunity to do healthcare reform right. He wants a system where everyone has a basic private portable health insurance plan.
Recent history shows states cannot fix healthcare by themselves because the big drivers are federal, such as Medicaid and Medicare. And if we don’t fix the private market, the country will go single payer. Wyden wants a new private health insurance market that breaks the dependence on employer-sponsored coverage. His plan would still offer a choice of an employer plan. But his ‘Healthy Americans Act’ now before Congress would provide for an alternative to both single payer, and an over-dependence on employer-sponsored healthcare.
But how will health insurers respond to these proposed new changes? Cajoling his audience of health plan representatives, he argues that his approach would be one way to stop playing the healthcare blame game, replete with its usual designated healthcare villain of the day being held responsible for all that is wrong in healthcare. Health plans have all too often shared this distinction.
Andy Stern, President of Service Employees International Union, started his talk with an all-too-familiar tragic story of a healthcare disaster that end bankrupting an American family. He then switched gears to share the changes his own union has had to undergo to confront the new global economy. Healthcare, he believes, has also not reacted well to this new global economy. What we have now is a healthcare sector; what we need to build is a healthcare system. “Change is inevitable but progress is optional,” he lamented.
If there is one truth about healthcare reform, Stern believes, it is that the longer you wait, the worse it gets. And the US employer-based healthcare system is not sustainable for the economy of the future. It is dead and it’s time for hard choices. We need to move on to a more competitive approach. But he doesn’t think the country is ready, willing or able to go for a single payer system. We have to build a broader coalition on healthcare and negotiate a new blend in order to move on.
Stern warned that there is a big target painted on health insurers and the bullets are getting closer. Health insurers will have to walk in a new direction. People are ready for change. But where is the solution? “Be the agents of change”, he charged, “not the assassins of change”.
Gail Wilensky, Senior Fellow, Project Hope and a former Medicare chief, observed that even when we have expanded access to healthcare — such as the recent addition of drug benefits to Medicare, we still have problems with cost and quality. Medicare’s cost is unsustainable and its population is becoming more politically forceful. The program’s provider financial incentives are perverse and its spending constraints are ineffective when it comes to value and quality. It will be an immense challenge to moderate the Medicare’s cost growth.
Bruce Vladeck, Senior Health Policy Advisor, Ernst & Young, and also a former Medicare chief noted that the healthcare reform proposals put forth by the presidential candidates rarely mention Medicare or Medicaid. Problems with Medicare are the problems with the healthcare system generally speaking. He argues that Medicare costs — even with new efficiencies — cannot be sustained without new money. Politicians need to be more open and explicit about this hard fact. And he adds, that we must stop confounding the problems having to do with improving the quality of healthcare, with the problems of moderating the cost of care. It is a fantasy, he says, that improved quality will save serious money in healthcare.
by Scott MacStravic
February 27, 2008 at 1:51 am · Filed under Health Plan/Payer CEOs, Hospital and Health System CEOs, Business of Health, Medical Tourism
A recently published story in Wichita, Kansas describes how its local Galichia Heart Hospital will begin charging a flat fee of $10,000 for coronary artery bypass graft (CABG) surgery for patients where there is little chance of complications. Patients with risky co-morbidities, such as diabetes, or who have had this surgery before, are not eligible for this price.
Since the usual and customary fees for CABG surgery run in the $35,000 range, this is a major example of price cutting by a hospital. With growing numbers of consumers covered by high-deductible insurance and using their own health savings accounts, this should be a welcome option. It might even help stem the flow of patients overseas for this surgery, given the added costs of flying to India, Thailand, or Brazil.
It is also the first of what may be many shots across general hospitals’ bows from free-standing specialty hospitals in the battle to win the lion’s share of this usually very profitable service line. And with roughly five tenths of one percent of the population looking for this surgery each year, this is a big market to gain a share of. The hospital has admitted its intention to capture the attention of insurers, as well as consumers, with this low price.
Surgeons at Galichia perform about 200 CABG procedures a year, and hope to increase that to 300, according to its CEO. The two major general hospital systems in Wichita – Via Christi Regional Medical Center and Wesley Medical Center enjoy most exclusive contracts with insurers, including Via Christ-owned Preferred Health Systems and Blue Cross/Blue Shield of Kansas.
The $10,000 rate is better than any of the local general hospitals’ rates, according to Galichia’s CEO, so this dramatically lower rate may win some converts, at least when current exclusive contracts reach their renewal dates. It is unclear how much such a lower fee might change physician referral patterns, particularly to other physician-owned facilities, but it might attract business at quite a distance.
Galichia is running ads in Canada and the UK, for example, where long waits for such surgery tend to be common, in competition with other “foreign” countries already advertising similar savings and immediate service. Timely Medical Alternatives and North American Surgery founder Rick Baker in Canada is quoted as saying that “The price…is absolutely stunning.” His firms connect patients with specialty hospitals that perform surgeries at low, contracted rates.
With such a low price in the US, it seems at least possible that other hospitals may have to rethink their charges, or lose considerable business to those who have done or will do so in response to their rivals. It might at least prompt some efforts by insurers and patients to seek to negotiate new rates with hospitals they already do business with. [A. Atwater “Galichia Heart Hospital’s $10k Bypass Jolts Industry” Wichita Eagle Feb 24, 2008]
by Scott MacStravic
February 12, 2008 at 12:55 am · Filed under Employer CEOs, Health Plan/Payer CEOs, Employee Health Management, Health Management
When I was engaged in my doctoral studies, my advisor was a biostatistician who had done his dissertation research on “missing data”, i.e. on patients or other participants in research studies who got lost between the time of implementation and evaluation of the interventions whose effects were being studied. At first, I thought it sounded much like exploiting a reality I learned about in college, when there were literally no written records on the history of Scotland in the 7th and 8th centuries, so anybody who claimed to be could have a strong case as an “expert” on such history.
But the challenge of missing data is a particularly significant and difficult one in employee health management. Even though employers may offer incentives for completing the health risk assessment, screening, or other employee-dependent methods for collecting baseline data, not all employees do so, with participating ranging from lows of 10-20% when no incentives are offered, to highs of 90% if incentives of $250 are offered. Of course, paying $250 for everyone who takes it, even before they enroll in any EHM intervention program, adds greatly to overall costs, and thereby threatens overall ROI.
And even when incentives are offered for participation, the norm is for a given percentage of those eligible who were targeted and approached to participate in a given intervention to enroll (less than all targeted), then to drop out over time as they may feel participation is onerous, boring, unnecessary, or fruitless. Even if it is time/effort costing, boring and unnecessary, i.e. people find they can manage without outside support once they get going, they may still be improving on the health dimensions expected to improve because of their participation.
When only healthcare, workers compensation, and disability expenditures are involved, there will be no missing data, since these costs are routinely recorded as claims with the names of all who made claims identified. Employers can still choose to ignore any apparent improvement in targets who did not enroll, only completed the assessment, or those who enrolled but dropped out. On the other hand, if claims costs for those who participated at least partially trend lower than corresponding peers who did not participate at all, the case can certainly be made that this minimal participation made a difference.
When it comes to measuring declines in sick days lost, but not included in disability costs because they did not qualify, the employer may either have good records or not. If there are good records, then the data for partial participants can be compared to that for non-participants, as well as full participants, to see if absence rates for partials fall somewhere between the non- and full-participants, which would be expected, vs. remain unchanged compared to non-participants. Pitney-Bowes, for example, has insisted that only absence records will be used, rather than self-reporting. [T. Parry “Can Employers Trust Self-Reports of Lost Work Times?” IBI Research Insights, Nov 2006]
But for measures of productivity, where self-reports of impairment are relied upon vs. employer-measured output, or when other measures of performance are involved, unless participants repeat the assessment at least once after the baseline, there will be no way to gauge the impact on and value of changes in health and productivity among partial participants. Moreover, when the means of estimating results involve some extrapolation from published research –without a second or more subsequent repetitions of the assessment — there will be no basis for making the extrapolation.
For example, one EHM supplier I know of uses published levels of Body Mass Index and the average healthcare costs of members of a very large population for those at each BMI level from 18.5 (skinny) up to normal, then overweight (25-29.9) obese (30-34.9), very obese (35-39.9) and extremely obese (40+). The trouble is that it is not really known whether people who were once obese and lost weight, will have the same healthcare costs as those who have always been of normal weight. And the cross-sectional data will mix those who have always had healthy weight with those who have lost, while the program deals with those who are losing, only.
In any case, if there are no data on weight levels among participants beyond some point in time when weigh-ins or self-reports are expected, but do not occur, what are employers to do? Participation may decline markedly between assessment/enrollment and first, or second, third, etc. repletion. If the employer only counts those measured at year’s end, and there are only a fraction as many participants than as were participants at some time during the year, the count for impact may severely understate the actual effects and financial savings gained. As a result, the intervention may not appear to be a success, even though it was in reality, and the investment may not be continued.
Another vendor relies on the sheer number of risks, monitoring reductions in the actual numbers discovered in onsite screenings, then extrapolating from research conducted at the University of Michigan Management Research Center to estimate the productivity impacts of measured reductions in numbers of risks. This method is somewhat suspect, since it is known that the type of risk makes a difference, not just the numbers involved, and may not be the same as those affected in each situation.
But if enrollees do not even participate in repeat screenings, what shall the employer think about risk reductions among those who participated in the intervention, but not the second screening. And if a large incentive is needed to achieve high participation in the second screening, paying such an incentive will add to the costs already imposed by whatever incentives were paid for participation in the first. And counting only measured results runs the same risk of under-appreciating the actual gains as with the previous example.
Normally, the only thing that can be done is to either make an informed guess about changes that have occurred in those who did not complete repeat assessments, or to do a special study of at least a sample of them, perhaps visiting them at home to get an assessment completed, offering them more incentives, or otherwise creating a separate database of those who declined to participate in repeat assessments. The results from this sample can be used to extrapolate to those who were not part of the sample.
Another approach is to use the recorded results during interim participation and measurement stages, but before the year is over, to track changes that may have been noted among those who repeated the measurement at least once, but did not remain participants until the year’s end. In at least one case that I know of, participants in a weight/fitness improvement program are charged per month for participation, with incentives offered every quarter for participating if they show lost weight only.
Since they pay out of their own pockets, some naturally will decide that they can lose weight on their own and save the monthly fee, and still enjoy the incentive payment if they succeed, while not losing money if they don’t. Many such may participate for a few weeks, for example, feel they’ve got the hang of it, and not bother continuing. Since they must lose a given amount of weight, at least 1% with some employers, and 5% with others, to qualify for an incentive payment, they may simply weigh themselves at home, and not take the official weigh-in unless and until they meet the standard. But they may be improving their health or productivity even with lower weight loss than is required to qualify for an incentive.
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