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China Continues to Reveal Details of New Urban Health Insurance Plans

by Fred Fortin

In another speech last week, Vice-Minister of Labor and Social Security Hu Xiaoyi said that by 2010, 240 million non-working urban residents, such as children and students, will benefit from a basic medical insurance scheme now being piloted in 79 cities. From the press report,

” both central and local governments will subsidize the insurance project, and local governments are encouraged to set different contribution rates for adults and children, and families with different income levels. Studies have found that a contribution rate of about 2 percent of the average per capita disposable income would be “appropriate”. . . adding the government aims to have the project cover at least half of the total cost of those insured. The per capita disposable income for urban residents was 7,052 yuan ($940) in the first half of this year, according to the National Bureau of Statistics. If calculated on the formula Hu described, an urban dweller will have to contribute 141 yuan ($18.5) to be covered by the insurance plan.The premiums will be paid by households, instead of individuals, and the government will give subsidies of at least 40 yuan ($5.3) annually to each participant of the insurance program in pilot cities, with more going to families with low-income earners and disabled ones.”

One of the problems you keep finding in current social insurance programs — and in the proposed programs discussed above I believe — is that the collective funding usually offers only a very thin margin of coverage which often fails to pay for even the most modest of illness or injury. This was evident in the accompanying comments by Wang Lin, president of the Chaoyang Charity Association in Beijing, who said that “charity will continue to have a role to play to cover medical bills of the poor, even after the country provides medical insurance for all. For those with serious diseases, donations are very much needed, as a medical insurance plan usually does not foot all the bills.”

Yet an even bigger and more disputatious question will be how authorities will spend these scarce funds, what medical services will get this new financial attention, and how will cost-effectiveness and health outcomes be accounted for. China’s health care delivery system is simply not prepared yet to answer these kinds of questions. The hard work is still very much ahead of us.

Self-Service in Health Care?

by Scott MacStravic

The very idea of people serving themselves instead of relying on professionals in healthcare has been parodied in a TV commercial where a physician in a hospital is advising a patient, in his home, over the phone, to “Make an incision between the fourth and fifth abdominal muscles.”  Clearly, most sickness care requires professional training and experience, and cannot be replicated by consumers in most cases.

On the other hand, “self-care” has long been the objective of 24/7 phone advice lines, offered by insurers, to enable consumers to determine if they could take care of their own or family members’ symptoms or signs in particular cases.  Self-care medical guides have long been published to offer similar advice entirely via self-service reading thereof.  After all, when self-care is appropriate, it is the most convenient and cheapest alternative for patients, as well as saving considerable money for payors.

Self-service is a growing element of chronic disease management, where patients check their own weight, blood pressure, glucose levels, and other clinical metrics that may indicate progress in getting them under control, or a problem that a professional should handle.  Devices that measure such indicators may be directly connected to professionals for review, as well as uploaded into patients’ records or personal web pages to enable both patient and provider to track progress and evaluate treatment.

A growing number of providers are making it possible for patients to make appointments, obtain health information, arrange prescription refills, etc. online, rather than taking the time of office staff.  Enabling patients to self-serve in terms of learning about the risks and benefits of alternative treatments or medications is a way to at least reduce the time professionals might otherwise have to spend educating them, though patient self-education can also end up costing providers time in explaining why something they may ask for, due to direct to consumer advertising or online information they have obtained, is not really the best choice for them.

But the greatest potential for self-service in healthcare may be in what is truly health, rather than sickness care.  The two biggest challenges in proactive health management (PHM) — whether paid for by consumers, employers, insurers or governments – is to make participation in specific interventions and behavior/lifestyle changes required as easy and inexpensive as possible.  Unless they are easy, convenient, fit participants’ work/life patterns, etc. such interventions rarely attract and retain enough participants.  And unless they are inexpensive enough, they will be rejected by potential and current investors therein.

Self-service in PHM is easily the least expensive approach possible, in most cases.  The question is always whether self-service will be effective enough to yield optimal ROI.  Making the costs to sponsors and participants as low as possible is a great way to minimize the cost denominator in ROI ratios.  But it is by no means always the best way to obtain the greatest ROI net gains.  And unfortunately, people differ dramatically in terms of how intensive, what kind, and how expensive efforts must be to get them to make the necessary behavior changes needed for PHM success.

Involving physicians and nurses, as “promoters” of PHM participation, as coaches and motivators of behavior change, and as sources of needed prescription drug support and lab tests or diagnostic scans needed to monitor clinical measures, has proven to improve results.  But it also greatly increase PHM costs, thereby threatening both ROI ratios and amounts.  Moreover, there are many self-service approaches to PHM that cost very little to make available, accessible and acceptable to consumers, in promoting health, preventing or reducing risk behaviors and conditions, or managing chronic conditions.

For example, a recent webinar sponsored by HealthMedia, Inc. of Ann Arbor, Michigan described how automated, self-service-based PHM programs can address a wide range of individual differences, across the spectrum of behavior change motivations and barriers.  Through automated analysis of online surveys that consumers take, behavior change motivation and barriers are identified and measured, with tailored e-mail or mailed communications aimed at individualizing coaching and support, while keeping costs highly affordable.

Compared to information-only efforts, where medications adherence levels averaged 57.7% when the same information is communicated to all participants in the same PHM program.  By contrast, the customized approach has been found to achieve 75.4% adherence, a 28% higher relative level, achieved at minimal added costs.  Even more positive was the fact that high levels of adherence were reached in as little as 30 days of PHM participation, and declined only a bit after its initial success. Participants’ confidence in their medications, perceived importance of adherence, and refill-on-time behavior actually increased from the 30 to 90 to 180 days participation. [K. Wildenhaus “Improve Medication Adherence: The Missing Link to Better Outcomes” HealthMedia.com Aug 16, 2007.

The use of “custom-tailored” communications is growing among most PHM providers, as they recognize the dramatically lower cost potential in automated communications systems and the potential for self-service inputs by participants to enable these systems inexpensively.  In addition to the reduced sickness costs that are typically achieved through better adherence, participants in the program who also reported an improvement in their health because of that adherence were found to yield productivity-cost savings of $1440 on average.

In order to achieve optimal participation in PHM, and thereby optimal economic value for sponsors, participants must also feel they are gaining something worthwhile, in return for the time and effort they must put into improving their health.  In the HealthMedia adherence study, participants reported an average 27% increased confidence in their ability to control their diabetes, a 15% increase in their ability to manage the emotional issues accompanying their condition, 83% reported being better able to communicate with their provider, and almost twice as many reported a good understanding of their condition.

It is certainly unfortunate that most of the negative press that Medicare disease management demonstration projects have received, thanks to the mixed results achieved therein so far, has come from interventions that were very much on the high side in terms of expense, costing literally from ten to one hundred times as much as automated customization systems may cost.  The full potential of self-service by PHM participants, together with automated communications that can be used as often as weekly, even daily when necessary, is yet to be learned, but the signs so far seem promising to say the least.

Healthcare Providers as Health Managers: Clock Issues

by Scott MacStravic

Okay, I admit that had I not begun with an obsessive commitment to “C” issues, the title of this piece would have been “timing” rather than clock issues.  But it is clear that deciding when the ‘clock starts running’ is a key element in health management (HM), for not only providers but all current and potential payors, as well as for consumers.  And generally speaking, nobody seems to start the clock early enough.

The total challenge of health management is to reduce the incidence and prevalence of disease and injury, in order to reduce sickness care costs, productivity and performance impairment, as well as move personal health and employee performance into “better than normal” range.  Different payors have different notions of what is the most important goal, and how best to achieve it, as well as when they should begin.

If it were up to healthcare providers, the time to begin is probably pre-pregnancy in preparing mothers for healthy pregnancies and having healthy babies.  During pregnancy has already been cited as a great point in time to prepare parents for promoting optimal health in their babies after they’re born, from healthy diet to immunizations to child development.[W. Boggs “Better Prenatal Education May Improve Childhood Immunization Rates” Medscape.com Aug 16, 2007]

Preventing childhood obesity is known to be vital for their future health, and preventing metabolic syndrome among children would avoid the fifteen times higher risk of heart disease that this risk condition creates for children. [“Metabolic Syndrome in Kids Ups Adult Heart Risk” Reuters.com Aug 7, 2007]  Teens are among the most susceptible to adopting unhealthy behaviors such as smoking, alcohol and drug abuse, which can condemn them to lifetime addiction.

Insurance plans are increasingly tailoring minimal health insurance coverage for young adults who already see themselves as invulnerable, but if they do not include coverage for risk prevention, at least, they are only adding to the likelihood that when they are older, they will also be sicker.  While capturing them early makes it easier to convert them to more complete and expensive coverage, it could also ensure that they will be more expensive members than is necessary, unless health promotion and risk prevention/reduction are lifetime pursuits.

For younger workers, often with minimal skills and low wages, their employers often deny coverage of health insurance of any kind, and certainly don’t invest in their long-term health.  But when these workers get older, they will likely be expensive risks and performance-impaired due to lack of health management by anyone.  And with older workers, Medicare should worry about what their health will be like when they retire and become eligible for government-paid coverage.

The great disadvantage this country has is the unsystematic plurality of efforts to manage health.  All kinds of different organizations, different providers, payors, and advocacy organizations approach their own narrow segments of the population, their diseases or risks, and their times of life, while there is not even a systematic, lifetime framework upon which they might coordinate their efforts for greater efficiency and effectiveness.  The free market is not capable of doing the job when there is no organized market for lifetime health management.

Clearly, all the stakeholders involved, from insurers to consumers to employers to governments and providers – could get together in an integrated effort to create a health management system.  And until we have the will, shared by enough of these to make enough difference, we can predict that the healthcare crisis will never be solved, and the potential of healthy children, workers, parents, and aging will never be realized.  The clock for health management ticks from even before birth, and continues until death, but we haven’t yet timed our health management efforts accordingly.

As far as I know, not even healthcare providers are organized around, nor do they have a lifetime health management structure to apply to the challenge. But at least they include among them specialists in every phase of the individual life cycle, so may have the best foundation for the job.  But it will take the cooperation of all the other stakeholders to make lifetime health management work, and so far, nobody seems to have even stepped up to the plate to take on the challenge.

Healthcare Providers as Health Managers: Convenience Issues

by Scott MacStravic

Traditional healthcare providers, including hospitals and physician practices have long had an “edifice complex”, expecting patients to come to them for necessary services, to rely on face visits for communications and interactions.  Even today, only a modest proportion of physicians permit online communications with their patients, for example.  Hospitals have relocated or added locations in suburbs rather than the old-fashioned “pill hill” centrality in major cities, but are still losing patients to more conveniently located ambulatory surgery centers and specialty hospitals that established convenient locations earlier.

Convenience of location, hours of availability, and communications is even more important in health management, whether aimed at providers’ own employees or the workforces of employers that are clients for revenue-generating HM programs.  The U.S. Preventive Medicine, Inc. models of “Centers for Preventive Medicine” rely on hospital locations for most of the services they offer, though participating physician “partners” increase the number of locations where patients can obtain services. (www.USPreventiveMedicine.com)

The many hospitals and a few physician practices that offer “executive health” HM programs, which are still the most common example of hospital ventures in this market, almost all offer their major program elements at their own sites, requiring a one-day or longer stay.  While this stay is usually in luxurious surroundings, with “concierge” services to help make it easier for executive and other affluent clients to wend their way through the program, it is still necessary to come to a single location in most cases.  Until recently, most clients had to manage their own lifestyle changes, perhaps with the help of their personal physician back home, though many programs now offer phone coaching follow-up between stays.

By contrast, employers that offer their own HM programs often make them available at the worksite, with a growing number of onsite health clinics that include HM along with traditional occupational health services.  Retail clinics, conveniently located in popular superstores and pharmacies, offer HM services where consumers often shop, and even enable customers to shop while waiting, until a pager notifies them that the provider is available.

HM vendors often offer convenient “kiosks”, where HM participants can have parameters such as weight, body fat and blood pressure checked, in retail stores or worksites, in order to track their progress and qualify for incentive rewards.  Virgin Life Care offers such kiosks (“HealthZone” – www.virginlifecare.com) as does IncentaHealth (www.incentahealth.com).  IncentaHealth also offers daily online coaching for weight loss and fitness improvement.

In the IncentaHealth example, its services are offered mainly through employer-sponsored programs, though it also offers consumer-paid coaching through the New West Physicians in Denver and its Physician Health Coach program.  Participants get physician health recommendations, then IncentaHealth coaching for only $20 per month while they participate.  While these programs are limited to weight management and physical activity, these represent two of the most common health challenges that consumers have.

Whether providers are sponsoring HM programs for their own employees (and dependents, perhaps), for other business clients and their employees, or both – the programs are generally free to participants.  This means that the convenience dimension, i.e. the time and effort required of participants is the major cost to them.  Making it as easy as possible for people to participate, at times and places they find most convenient to participate, with communications channels and timing that fits best into their normal routine, is often the major factor determining the extent of both their participation and success.

Traditional healthcare providers’ insistence on patients coming to their places of business, at limited days and times of access, and communications at providers’ convenience will simply not work in HM, nor can it compete with specialized HM vendors who have already recognized and responded to consumers’ expectations.  Providers wishing to engage as many employees or other consumers as possible, and to promote their continuous and enthusiastic participation, will have to adopt a host of non-traditional convenience tactics in order to compete in the HM market, or achieve optimal results with their own workforce.

As the “new consumerism” increases the power of individuals and their importance in healthcare in general, traditional healthcare providers are already recognizing and responding to increasing consumer demands for greater convenience, even in traditional sickness care.  Providers must be prepared to make even greater improvements in convenience if they hope to achieve optimal results for themselves and their clients in HM, as well.

Messiness and Health Management to Change the World

by Scott MacStravic

I was struck by what I assume was an unintended connection between two recent posts to this blog – one by Nick Jacobs on “Change the World”, and the other by Fred Fortin on “Miscellany, Messiness and Medicine”.  To these I add an article noting a plan for fixing health care, published in WIRED in May [K. Philipkoski “Intel’ Andy Grove Pitches a Plan for Fixing Health Care” Wired.com May 2, 2007]

Andy Grove sees information technology as having a huge potential in fixing health care, along with efforts to “shift left” such care by moving it toward care that is not expensive, does not require hospitals and other institutions, but empowers consumers and innovative approaches to serving them such as retail clinics to take on otherwise highly expensive care.  High-tech gadgets can be used to monitor and manage the care of chronic disease and elderly patients at home, keeping them out of institutions.

Retail clinics can provide care in inexpensive “kiosks” or inexpensive retail and drug store space, and keep people out of hospital emergency rooms.  His other suggestion is the use of information technology in the form of electronic medical records which could be made portable all consumers carry their own with them at all times, making access to them when needed universally available, to ensure the quickest and best diagnosis and treatment of patients possible when they need hospital or physician care.

For some reason, however, Mr. Grove has little good to say about “prevention” as a way to fix healthcare, despite wide agreement among both health gurus and presidential candidates that prevention is an essential element for both reducing healthcare costs and enabling universal insurance coverage.  His objection to prevention is that it requires changing individuals’ behaviors, and he doesn’t think we have the capacity to do this yet in a cost-effective manner, although it is, theoretically, at least, in his view “…absolutely the right answer…”.

I can only conclude that Mr. Grove, as CEO of Intel, has not yet encountered the applications of information and communications technologies to prevention, rather than traditional physicians’ annual checkups, immunizations, and usually unsuccessful or overly expensive coaching for patients.  The search for cost-effective prevention has already concluded that technology innovations are essential to its realization.

Fortunately, such innovation is well under way and already in use.  While I know of no healthcare organization, in the traditional sense, that uses such innovations, the new brand of organizations usually deemed wellness, risk and disease management vendors are well underway.  Examples such as HealthMedia, Inc. and Thomson Healthcare, both in Ann Arbor Michigan, are already using online health risk assessments (HRAs) and customized online feedback therefrom to promote wellness, prevent or reduce risks, and manage chronic diseases.

They have also recognized that commercial or government insurance plans are not the best customers for such innovations.  Employers are, because they gain dramatically more positive impact from having healthier employees than do insurance plans from having healthier members or beneficiaries.  Employer gains include the full range of insurance costs combining healthcare, workers compensation and disability.  Moreover, healthier employers are absent less, produce more output and perform better across the balanced scorecard of business performance, realizing many multiples of sickness care cost reductions.

Instead of or augmented by physical examinations and screenings, online HRAs can be inputted directly into computers and automatically translated into individualized feedback, recommendations and continuous coaching, for a few dollars per employee per month in many cases.  These same HRAs can be used to estimate the productivity and performance value, as well as the extent of employee behavior changes and health status improvements.

The technologies used by most vendors, as well as most traditional healthcare organizations, have tended to emphasize, if not be exclusively devoted to professionals interacting one-on-one with patients in managing disease.  This is often cost effective, when the right patients, diseases and professionals are involved, but usually quite expensive.  Witness the costs of fifteen vendors and healthcare organizations involved in a Medicare DM demonstration project whose costs per participant ranged from $80 to $440 per month! and whose effects were generally negative in terms of savings vs. costs.

As far as I know, none of the new-technology-enabled approaches to affordable prevention have been tried with commercial insurance plans and either Medicare or Medicaid beneficiaries.  It may be that vendors who employ such technologies are focusing on employer clients whose pockets can be more generous, given their already demonstrated significant savings, even without counting the full economic benefits of employee health.

In any case, it would be a shame to characterize the entire armamentarium of “prevention” as not yet cost effective.  The new information and communications technologies available include many that are indeed “messy”, including consumer-directed communications with each other in support groups, and by the full array of wireless technologies, not merely the ones most providers seem to have tried.  And this approach to prevention still does have the capacity to “change the world”, since it can be used world wide as even underdeveloped countries are finding at least some of its technologies affordable.

Plummeting health scores…

by Nick Jacobs

Thanks to the Associated Press, our national egos can rest uncomfortably knowing that our health score as a nation continues to plummet.  You’d think that at over $2 trillion in health care expenditures nationally or nearly $6000 per capita, the score card would be better, but we have now dropped to 42nd in life expectancy worldwide.

Drunk drivers took the lives of almost 17,000 on the roads, and an estimated 510,00 are injured annually from alcohol related accidents. That works out to about one person per minute. Another part of the problem may be because we have so many guns. Every year it is estimated that more than 30,000 people are shot to death in murders, suicides, and accidents while another 65,000 suffer from gun injuries in the United States.  Defective automobile tires may have killed about 103 people over a number of years, but firearms kill about 85 people every day in this country.  How about obesity? The AMA estimates that nearly 300,000 people are dying annually due to obesity.

We may also rank 42nd because we have not used enough sun screen, have had too many household accidents and because the vast majority of medical centers are not dealing with their infection rates.  (The national average is a 9% infection rate, our medical center has been below 1% for nearly a decade.  They can be controlled.)

The bottom three spenders in healthcare dollars annually are the United Kingdom, Japan and Finland and Finland, Luxembourg and the U. K. are at the bottom as a percentage of GDP.  Guess what countries are included in the list that do better than the United States?  Remember, 41 countries are helping their citizens live longer than us and a few include: Finland, Luxembourg, Japan, the United Kingdom and Cuba?

The AP article pointed out that the country with the longest life span was Andorra?  Andorra is a tiny country between France and Spain where the people live nearly seven years longer than us.  Of course, the contrast to Andorra is Swaziland where the average person lives to be about 34.

Interestingly enough, after having spent time in Europe recently, It seems relatively apparent to me that the reason we are under performing so dramatically is that we don’t invest in preventative care, don’t really embrace public health and have never had a health policy for this nation.  Only about 4% of our trillions goes to prevention in this country.

Please forward this blog to our public officials.

Optimizing the Value of Healthcare Workforces

by Scott MacStravic

Given the constant warring challenges of having enough of the right people in their workforces despite severe labor shortages, and keeping costs within the limits set by miserly payment for patient care, healthcare organizations (HCOs) have no choice but to ensure they get the most value possible from their existing workforce.  While concepts such as “return on employee” (ROE) and “employee performance optimization” may not be commonplace, they are increasingly essential, as is equally true for “customers”.

While there have been many examples of re-labeling employees as “associates” or even “cast members”, what is really needed is the combination of thinking about and treating them, as well as motivating and enabling them to act as “partners”.  This may well require revolutionary changes in how employees are managed, and how managers function in healthcare.  And it will certainly require a revolution in the feedback systems that HCOs use in their employee relationship management (ERM) strategies.

When I began my career as a healthcare marketing executive, after teaching the idea for ten years, one of the practices I introduced in the two multi-hospital systems where I worked was a system-wide customer feedback mechanism, including patients, physicians and employees as “customers”.  But this was generally limited to measures of the satisfaction and suggestions for improvement of each of these customers, with “marketing” implications in terms of recruitment and retention of all three categories, with only physicians monitored, managed and marketed to in terms of the value they delivered to the system.

In the current competitive and “reimbursement” climate, seeking ways to optimize both patient and employee contributions are just as essential, and employee contributions include their impacts on both physician and patient value.  And the first, most essential requirement for optimizing employee value is to measure their performance and contributions, in order to manage them.  In many cases, this can only be accomplished on a team, categorical, or unit basis, but without measures of current employee value, and ways to monitor changes therein, there is little hope for increasing it.

Fortunately, the growing practice of pay-for-performance (P4P) measurement and bonus payments for HCOs provides yet another motivation and mechanism for measuring employee performance and value.  At a minimum, the contributions that employees make to P4P bonuses should be measured using the same metrics that determine the amount of added revenue their performance on such criteria delivers.  This can then be used as the foundation for a wider system of measurement of total performance and value based on the HCO’s “balanced scorecard” of performance measures.

An added source of ROE should be actionable feedback and input into HCO operations and their improvement, in quality, customer satisfaction, and efficiency.  The value of employee feedback can then be evaluated in the same performance dimensions as their overall worth is calculated. [“Designing Enterprise-Wide Real-Time Feedback Systems” CustomerSat, Inc. Aug 10, 2007 (www.mycustomer.com)]  This will require system-wide collaboration across the HCO’s “silos” and systems, along with increased development and empowerment of employees.

When and if HCOs master the art and science of employee performance measurement and management, they may be able to offer their mastery as part of services and relationships offered to local businesses.  This should help with employer relationship management and the public relations as well as marketing advantages improved relationships in that market deliver. And it would certainly be a great advantage for HCOs that venture into the employee health and performance market as a revenue-generating service to such employers.

To the extent that HCOs can achieve an integrated approach to employee performance optimization, for external ell as internal use, they may find a significant new source of revenue from employers, in addition to the added cost savings and revenue enhancement value of their own workforce optimization.  In any case, it is an opportunity that few HCOs can afford to ignore.

No Pay for Non-Performance in Healthcare?

by Scott MacStravic

The majority of pay-for-performance systems offer bonuses for healthcare providers that adhere to treatment guidelines and best practices.  In many cases, there are specific outcomes included, such as patient satisfaction, cost reduction, and reduced infections.  This “carrot” approach is intended to reward providers that improve or maintain high quality and efficiency, as defined and measured by specified criteria.

But just as is the case with P4P systems that apply to individual behaviors and health status, there are a growing number of “sticks” being added to systems that apply to providers.  Medicare, for example, has frequently included “budget neutral” policies in its P4P programs, where the extra payments for high-performing providers comes out of the payments for low-performers, in order to keep the total payments the same as usual.

Payers are also beginning to refuse to pay for the care required to address “never events” in medical care, such as wrong-site surgeries.  They argue that when providers cause costs to increase, often dramatically, by making serious errors in patient care, they should not be rewarded for such errors by getting increased payment over what would have been paid had there not been such an error.  While this makes eminently good sense, and will generally not harm providers dramatically, given the rarity of “never events”, this policy could end up having dramatic impact, as the definition of such events changes.

If payors decide that providers should not be paid for what amounts to careless or unsafe practices, for example, rather than egregious mistakes such as wrong-site surgery, they could save significant amounts, while providers could be severely affected.  Already lists of non-payable problems have been created that include quality failures such as decubitus ulcers in inpatients, for example.  The case can certainly be made that such conditions should not occur, since good care should prevent them among bedridden patients, but the effects of non-payment would be far greater than for truly egregious errors.

A recent study, for example, found that hospital-based or “nosocomial” infections have cost between $200 million and $473 million in the state of Massachusetts alone.  This includes extended inpatient stays, and additional costs of treatment for such infections.  While the recommendation accompanying the report calls only for hospitals to publicize their infection rates, it would take little for payors to decide to include them among the events for which they will no longer pay.  In such a case, payors could save hundreds of millions of dollars in dozens of states, and hospitals could be seriously hurt as a result. [“Infections Acquired at Massachusetts Hospitals Cost up to $473M Annually, Report Finds” Kaiser Daily Health Policy Report Aug 10, 2007 (www.kaisernetwork.org)]

Even publishing the different performance levels achieved by providers could severely damage low-performers, by causing patients, providers, and payors alike to avoid doing business with them.  This has been one of the expectations of the “Buy Right” concept originated in the 1970s, though the effects of publishing performance data has, thus far, been minimal.  With more costs and responsibility for sickness care use management being shifted to consumers, and easy Internet access to performance data, the effects of publishing comparative performance may become significant in the current and future system.

Any “punishment” of providers for poor performance will have at least two effects: 1) making it that much more essential for them to correct mistakes and improve poor performance; and 2) depriving them of resources that may be needed to do so.  With many hospitals and physician practices operating at or below minimal survival levels in terms of revenue vs. expense, significant cuts in payment could easily drive them out of business before they are able to improve.

For those who favor a “free market” approach to healthcare reform, this would be a consummation devoutly to be wished, rather than a negative effect.  But when poor performers are the only available or accessible source of care for particular communities or sub-populations, their going out of business would not always be an overall improvement in their healthcare system.  With individuals, “capital punishment” is reserved for relatively rare and truly egregious behavior, not merely lower than average performance, but with healthcare organizations, there could be a far higher percentage of providers so “punished”.

There is also the risk that payors could find the refusal to pay for “never” events could become overly attractive, since it reduces their costs and improves their profits.  In such a situation, the free market may favor payors too much, and cause overly aggressive definitions of such events, and even greater reductions in payment levels, since payors are competing with each other to keep their costs down.  It will always be a temptation for payors to choose not to pay enough for providers to survive, witness the severe underpayment compared to providers’ operating costs that is already the case for Medicare and Medicaid, where these payors can simply dictate how much they will pay.

While carrots and sticks are often effective combinations in achieving improvements in individuals’ behavior and organizations’ performance, the stick carries with it some side effects that should warrant extreme care in its use.  While there may well be a number of hospitals, as well as physicians and other practitioners that should not continue to deliver care, the potential that “No Pay for No Performance” could do significant harm, as well as good, should not be ignored in either public policy or private payment.

WHO’s China Chief Henk Bekedam Leaving

by Fred Fortin

Just saw this brief in the WSJ that Henk Bekedam is stepping down from his post and moving on to another WHO assignment after five years on the job in Beijing. I was greatly impressed when I met Bekedam a few years ago in discussions on the development of private health care insurance in China. He was knowledgeable, straight forward and committed. Bekedam was also outspoken and an important voice in addressing some of China’s most challenging health crises — SARS, avian flu, HIV, and smoking. While not afraid to weigh in when China’s response to these challenges was not what it should be, he still garnered respect. It was reported that a senior official within the Chinese Ministry of Health who has worked with Bekedam over the years said that, despite occasional disagreements, the “two sides worked well together and ‘he has contributed a lot.’ The official said China’s minister of health had personally requested the WHO delay his new appointment.”

Rising Chronic Disease in Developing Countries

by Fred Fortin

In a twist to the usual commentary on disease in developing countries, the latest issue of the Economist features an analysis on the rise of chronic diseases in the developing world. The authors argue that “chronic disease has become the poor world’s greatest health problem” and “that developing countries suffer more from ‘rich world maladies’ than the rich world itself . . . By 2015, says the World Bank, these ailments will be the leading cause of death in low-income countries. They already account for almost half of all illnesses there and impose substantial economic costs.”

Unfortunately despite the growing importance of these numbers, the developing world is still focused on fighting infectious diseases for both practical and political reasons that the article is at pains to point out.

This shift in the constellation of health challenges for poor countries, however, requires an accompanying shift in the strategies for global health care. In most ways, the prevention and management of chronic disease is a vastly more difficult proposition than the more straight forward interventions of infectious disease control.

Chronic disease management programs — those with a modicum of success — utilize complex cultural outreach, behavioral, educational and medical strategies to secure the focused attention of both the system and the patient in controlling the course of disease factors. Mounting these kinds of efforts will require a more substantial engagement with local communities and a meaningful change in public attitudes and behaviors. But the world health community has to take the shift seriously and not enable the denial that still seems to have a hold on our thinking.

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