Thursday, July 30, 2015

Health Care Cost Inflation Returns

True, that....
Call it the return to the old normal.

With the slow recovery of the U.S. economy, the advent of some blockbuster drugs and the entry of more than 8 million newly-insured persons, healthcare cost inflation is ticking back up. Writing in Health Affairs, CMS' actuaries are projecting a 5.8% year-over-year rate of inflation that reminds them of the years prior to the Great Recession. This rate is projected to grow faster than the Gross Domestic Product (GDP), which means that by 2024, the U.S. will be devoting 19.6% of its economy to healthcare.

Some eye-catching observations:

1) If it weren't for consumer cost-sharing, the inflation rate would be even higher;

2) Drug treatment for a single disease - Hepatitis C -  is driving prescription drug costs "sharply higher" and adding to the overall 5.8% rate;

3) No mention of the impact of the administration's innovations, like accountable care organizations;

4) Substantial uncertainty.

The Population Health Blog's take:

In a highly competitive global economy, even single point increases in healthcare costs underlying the manufacture of items that make up the GDP, automobiles or washing machines, is bad news.  If the projections are true, business leaders could reconsider the merits of overseas outsourcing or start dropping employer-based health insurance.

Costs in 2015 and 2016 will be lower than the 5.3%, which means it won't hurt enough to make healthcare a big factor in the 2016 elections.  While the Affordable Care Act remains a rhetorically rich target environment, the PHB expects politicians on both sides of the partisan divide to find better red meat elsewhere, like building thousand-mile walls or buying hundreds of millions of solar panels.  If you're an investor in healthcare stocks, continue to go long.

Any good news in other sectors of the economy could paradoxically make healthcare costs look comparatively worse. As energy and housing costs creep along at a lower rate, consumers are going to see a greater percent of their income going toward healthcare - either in the form of health insurance premiums or out-of-pocket cost-sharing.  If (and that's a big if) the U.S. economy can return to its efficient cost-cutting ways, expect the healthcare debate to heat up and for calls for a government-sponsored option to increase. 

The mean increase of 5.8% is an average.  Some segments of the insured population will see higher costs and others will see lower costs "around" the mathematical mean.  Which voter block "loses" by paying more than the 5.8% could drive the coming debate as it shifts from insurance coverage to affordability and access.  Case in point: the PHB's spouse is registered to vote and she's not happy with the guesswork behind our pricey monthly insurance premium.

While Americans have reasons to be reluctant to travel overseas for cheaper surgery, they'll be far less so for access to a course of just-as-good medications that are under foreign price control.  Call it medication tourism.

And finally.... uncertain abounds.  No one saw that Hepatitis C would have such a near-term impact.  Who knows what else is out there?  A new epidemic?  Another cure?

Stay tuned!

Thursday, July 23, 2015

A Primer on Population Health

If you need to help a colleague who is clueless about cost-saving potential  of population health, the Population Health Blog recommends you refer him or her to this efficiently written primer from The Health Care Transformation Task Force's High Cost Patient Work Group.

Basically, if the small number of patients who are destined to be high cost can be prospectively a) identified and b) helped, a lot of money could be saved.  By focusing resources on a small fraction of insured people, the costs for the entire risk pool can be decreased.

In the meantime the majority-remainder of the population can be aided with other lower-cost resources that include, but are not limited to wellness and prevention.

Who are the small numbers of people?

1) patients with a) advanced illness who are nearing end of life who may benefit from b) hospice.

2) patients with a) high spending patterns who may benefit from b) coordination of care by a dedicated health provider (such as a nurse or a lay community care worker).

This population does not include:

3) high cost patients with a) any illness who b) are destined to get better all by themselves or c) unlikely to derive any benefit.

Algorithms to spot that small number of patients use diagnosis codes, treatment codes and medication utilization data from the electronic record or insurance claims databases.  Other useful insights can be gained from patient surveys (and a number are available), using public data to ascertain socioeconomic status (zip codes are destiny), asking physicians to refer patients who are at risk and the design of insurance benefit (patients may not be aware that certain services are covered).

The science behind the use of these inputs is imperfect but getting better, and the more inputs, the better.  Don't let the perfect be the enemy of the good, however, because simple algorithms based on readily available data will get you started.

One of the advantages of this approach is that the cost of coordination of care is variable.  It can start small and be flexed up as expertise grows and opportunities arise

The Population Health Blog couldn't have said it better.

Wednesday, July 22, 2015

Are Primary Care Physicians (PCPs) Important to ACO Success? Payment Arrangements Say Otherwise

Long ago, the Population Health Blog learned that when it comes to health insurance, capitation or bundled payments brakes, while fee-for service payments are gas. Too many physician office visits?  Use "capitation" brakes. Want to increase physician visits?  Apply a payment for each encounter with some FFS gas. 

Health care organizations can pass this arrangement onto their physicians. They can pay them with a salary (a form of capitation), or a variable "productivity" compensation (seeing more patients is compensated with a form of FFS) or with a combination of both.
Simple, right?  To figure out this ying-yang of utilization management, just follow the money.

That's why the PHB was interested in this just-published Annals of Family Medicine paper on how primary care physicians are being paid by Accountable Care Organizations (ACOs). If you believe more primary care visits translate to savings in other parts of the ACO, then you'd want to apply gas. If you believe primary care visits are a cost that doesn't necessarily save money, you'd want to apply the brakes.

The authors used data from the 2012-2013 "National Survey of Physician Organizations" to compare primary care physician (PCP) compensation in ACOs with non-ACOs. 1,398 organizations were in the original database; after excluding solo practitioners and specialist physician organizations, 632 were left. 

Three groups were compared:

1) Medicare ACOs (21.1%) with exposure to some financial risk related to total health care utilization;

2) Non-ACOs (2.8%) with contracted financial risk for primary care costs (2.8%);

3) No ACO and no risk (76.1%).

Results?  PCPs in.....
Medicare ACOs got 49% of their income from a flat salary and 46% tied to productivity. 3.4% was tied to quality;
Non-ACOs at primary care risk got 66% of their compensation from salary, 32% tied to productivity and .8% from quality;

No ACO arrangements with no risk had compensation that was similar to the Medicare ACOs.

The PHB's take-aways?

Based on the non-ACOs, health care organizations are prepared to use salary to influence physician behavior.  If you believe PCP visits are a cost and you are at financial risk for utilization, apply more brakes than gas.  The model is still out there.


The leaders running Medicare ACOs don't know what the right balance of FFS and capitation for PCPs, and are mirroring a status quo that is indistinguishable from business as usual.  Despite the fanfare about the critical role of primary care in health reform, the Medicare ACOs have decided otherwise. If they ultimately succeed or fail, it won't be because of any special innovation involving their PCPs' compensation.

Image from Wikipedia

Thursday, July 16, 2015

The Latest Health Wonk Review is Up!

Hank Stern of the InsureBlog has posted the latest version of the Health Wonk Review.  Titled Hot Summer Nights, Cool Summer Drinks, this compendium of posts is sure to quench any thirst for health policy braininess.


Wednesday, July 8, 2015

Three Downsides to Commercial Health Insurer Consolidation

Writing in The Wall Street Journal, Scott Gottlieb argues that the Aetna-Humana and the Anthem-Cigna combinations are evidence of waning insurer competition that is the direct result of Obamacare.  Not only are ACOs not a panacea, but the Affordable Care Act's insurance mandate to limit administrative costs is forcing Aetna et al to spread their costs over a larger base.  Dr. Gottlieb fears that the oligopolies won't be able to deliver on innovation and will limit consumer choice   

Too bad The WSJ didn't give him more print space.  If they did, Dr. Gottlieb may have also pointed to three other potential downsides to commercial insurer consolidation:

1) The concentration of risk: While having a small regional health insurer go bust is a big problem for hundreds of thousands of insurance enrollees, having a for-profit national insurer with tens of millions of enrollees go bust would be a national catastrophe. Think Lehman Brothers, Black Swans and Too Big To Fail.

2) Cronyism: Politicians and C-Suite executives no longer blush at the prevalence of the revolving door between government and all industry.  Health insurance will likewise be too regulated and complicated to leave to anyone other than insiders, who will naturally be unable to discern the line that separates their interests from the patients'.
3) Political Power: Will Washington DC and 50 states really be able to stand up to a handful of companies that dominate a fifth of the national economy?  Years ago, the commercial insurers remained silent while they were called "Fat Cats." The Population Health Blog bets that the next time a While House blames the insurers for rising costs, they won't remain so deferential.

Image from Wikipedia

Friday, June 26, 2015

The Potential of Community Health Workers (CHWs)

He was among the highest.

Utilizers of healthcare services, that is. 

I had the pleasure of talking to a physician who is leading a group of community health workers (CHWs) assigned to taking care of dozens of patients like this.  Burdened by decades of multiple chronic conditions, patients like him are typically struggling with myriad complications of chronic illness, side effects from numerous medications, mental illness, extreme poverty and homelessness.  The result is an endless cycle of emergency room visits, admissions, discharges and more emergency room visits.

According to the physician I talked to, these highest utilizers don't need more physician care; us docs can only do so much with an office visit. They also don't need health insurance, because they already have it. 

What these patients really need are resources that can help bridge the aspirations of health reform and the reality of the street.

The Population Health Blog agrees. In its professional career, it saw plenty of insured people with access to health care who were still unable to get better.  They didn't need more of the PHB, they needed..... help, in the form of monitoring, education, coaching, encouragement and advice.

Enter this timely article by Dr. Kangovi and colleagues appearing in the June 11 issue of the New England Journal.  It's a good primer on the long history of CHWs and the work that will be necessary to mainsteam them into health reform.  
CHW-based programs in the U.S. have been around since the 1960s. They typically focus on the indigent, are modest in scope, and have been funded "hand-to-mouth" by community organizations.  However, they've also been used to facilitate insurance enrollment, support "Medicaid Health Homes" and provide preventive and screening services on a regional basis. 

The PHB believes, however, that their greatest value proposition may be in supporting interventions for high utilizing patients under Medicaid waiver arrangements or in managed care programs. By coordinating alternatives to the emergency room revolving doors, CHWs can save taxpayers a lot of money.

Dr. Kangovi et al describe five barriers to the widespread adoption of CHWs:

1) Insufficient integration with traditional providers - But the good news is that CHWs can now use the shared data and remote electronic communication of health information technology to extend the reach of the non-physician (e.g. nurses, social workers) members of a medical home.

2) Fragmented health care systems - But the good news is that health care organizations are slowly being forced out into the communities that surround them. CHWs are waiting.

3) Lack of treatment protocols - But the good news is that this is an emerging science. Some on-line resources already exist.

4) High worker turnover - the authors cite one Harlem program that lost a third of their workers over a matter of months.  The good news is that there are ways to identify "keepers" who will find the CHW career to be satisfying.

5) Low quality published evidence - But the good news is that the volume and the quality of published research is going up.  Even better news is that that will help inform accreditation programs.

That high utilizer mentioned above?  The PHB learned that his last encounter with the health care system was in a primary care provider's office, in the company of a CHW.

Image from Wikipedia

Monday, June 22, 2015

Apps Will Astonish

"Now this is meaningful use!"
In case you think the future for healthcare apps will be characterized by health information technology (HIT) "dead zones" of free downloads, fun gadgetry and vacuous consumerism with nothing to show for it, you should take a look at  this article appearing in the peer-reviewed journal Cell Systems

If authors Kenneth Mandl, Joshua Mandel and Isaac Kohane are even half right, "apps" could truly revolutionize HIT.  They argue that a superimposed "apps layer" ecosystem will demolish the "walled gardens" of EHRs and allow for true information sharing across clinics, systems and regions.

And that's just for starters.

As the Population Health Blog understands it, "Application Programming Interfaces" (or "APIs") will enable multiple third party apps to bridge to legacy EHRs.  That, in turn, will catalyze the creation of newer and better user experiences that reconcile doc and patient preferences with the current clunky one-size-fits-all EHRs. 

The result?

1. A "mash up" of "risks, trends and trajectories" with external data sources, telehealth and decision support systems. Why should a patient with cancer and his/her oncologist use the same computer operating environment as a patient and a dermatologist dealing with a rash?  Even better, apps can be easily substituted if a better one comes along.

2. Never mind ICD-9 or ICD-10, apps will be the "afferent limb" that links your unique genetic and phenotypic "diagnosis code" to the efferent limb of tailored treatment protocols.

3. Apps can collect and arrange the data from numerous devices at scale that not only allow for treatment compliance or disease management outside of the clinic, but the early identification of an emerging epidemic or medication side effects.

To achieve this, the authors recommend the EHR manufacturers not only retool, but adopt a uniform and open source approach to API development. Purchasers of EHRs consider should consider the future of APIs in their requests for proposals (RFPs).  They also recommend that research funding be directed toward apps that can operate across multiple information platforms. It would also help if there was a "seal of approval" process for app development that wasn't too closely tied to industry or too tied up in the regulatory miasma of government.

Wednesday, June 10, 2015

Are Some Physicians Stockholm Syndrome Victims?

A hostage sides with her
captors in a bank hold-up
Years ago, when the Population Health Blog was the staff physician supervising an overworked inpatient consult service, its team of residents was asked by a surgeon to evaluate abnormal kidney function tests on one of her patients. After quickly surmising that the cause was a simple case of easily-corrected dehydration, the residents complained that the surgeon should have spotted the diagnosis. As a result, they said, this was a waste of their time.

"Not so!" said the PHB. It pointed out that the resident's medical knowledge was so advanced that they could glance at some lab numbers and spot the diagnosis. It's not that the surgeon was dumb or lazy, but that they were extremely smart.

The PHB also challenged them to snap out of it. Their low self-esteem was allowing them to be held hostage by narrative that not only devalued their expertise, but put their professional well-being at risk.

Fast forward to today when it's not about troubled kidney function, but a troubled healthcare system.

As we look for solutions, physicians are being buffeted by a widespread narrative that they're largely responsible for low quality, high costs and poor patient experience.

For example, there's literature that physicians order too many or (too few) tests, that misdiagnosis is common and that their treatments warrant scrutiny.  Or, thanks to their "power of the pen," misaligned physician incentives have led to the United States' outlier status on life expectancy vs. per capita costs.

How much is truly under the physicians' control is up to debate. What's more, physicians bring tremendous value to the table of health reform.  But, public perception says otherwise, and that's likely playing a role in the declining public trust in physicians and drops in their prestige. That, in turn, is contributing to widespread professional dissatisfaction and burn-out with significant implications for patient care.

Which makes the PHB wonder if it's witnessing the consult service scenario described above, but on a national scale.  It's one thing for its physician colleagues to emotionally struggle with the tectonic challenges of health reform (and there are ways, like this and this, to deal with it), but it's entirely another thing for them to agree that their professional value has been diminished.

Which leads the PHB's to speculate about its biggest fear. In addition to the hassles of physician-owned practice, the intellectual and emotional buy-in of a narrative of incompetence may be leading many docs to willingly outsource national policy as well as local practice decisions about quality and costs to the corporation.

For some docs, this could be a professional version of the Stockholm Syndrome.

As so elegantly described by Paul Levy in his blog, the Stockholm Syndrome occurs when hostages misinterpret the near-term lack of abuse by their captors to the point of emotionally bonding with them. While he was writing about the relationship of healthcare institutions to electronic record vendors, the PHB wonders if the same could be said about the relationship of physicians to their administrators, policy makers, elected representatives, regulators and the other clerisy.

Their reward for any role they've played in marginalizing physicians is greater authority, and some docs may not only going along with it, but embracing it.

The PHB looked for physician surveys or other data to support this, and can't find it. It suspects no one has asked the question.

Until now.

Tuesday, June 2, 2015

The Myriad Ways of Strategy and Population Health for Governance Boards and Health Care Leaders

What's it take to be a "luminary?"
As healthcare organization leaders grapple with health reform's uncertainties, a common refrain is importance of "strategy".

It's no longer enough to maximize revenue, increase patient throughput, lower costs, manage debt, embrace financial risk, optimize FTEs, assure compliance or strengthen the balance sheet.

While those present management and fiduciary functions are still critical, governance boards and c-suite executives in both purchaser and provider organizations also have to make bets about the future.

For example, if healthcare inflation accelerates, how will your current customers react to their future costs-sharing? How and when will today's voters reconcile the burdens from growing public debt and government-sponsorship of the insurance programs you contract with? As "the internet of things" spreads, what is tomorrow's value proposition of your healthcare "things?"  Is reading this blog today going to lead to you being smarter in tomorrow's contentious meeting?

In other words, when leaders grapple with strategy, they're really futurists. They're making bets today on how to adapt current strengths and weaknesses to myriad downstream threats and opportunities.

Uncertainty has become a new watchword. Even if an organization doesn't change and sticks with old fashioned fee-for-service, they're still making a big wager on the future of individual billing versus risk-contracting for populations.

Which is why the Population Health Blog is interested in how leaders outside of healthcare deal with uncertainty. 

Being routinely unable to resist the materialistic allure of the WSJ. Magazine fashion ads, the PHB  happily stumbled into this Soapbox column on the single topic of strategy. Six "luminaries" were asked about it.

The recording industry executive emphasized visualizing the endgame. The professional sailor trusts her gut instincts. The computer gamer is all about capitalizing on lucky breaks. The presidential historian liked ongoing experimentation. The restaurateur is constantly shaping company culture. The matchmaker likes being open to change, even if it means being vulnerable.

Lesson? The PHB has read or heard all of this and more from leaders and in boardrooms. Examples include this (the end-game), this (intuition), this (luck), this (experimentation), this (culture) and this (change management).

"Strategy" remains a highly variable work in progress.  There is no best practice.

And then there's the huge health care opportunities and risks from contracting for the care of populations. Check out this interesting post by George Washington University's Miliken Institute of Public Health that describes a survey of 37 health care luminaries on the topic of population health. As the author points out, consensus on responsibility (and, as a side note, the assets and liabilities that accompany it) is lacking.  In addition, quoting the "Triple Aim" is turning out to be less than its admirers would like.

So it turns out that this is also very much a work in progress.

The PHB's takes?

 There are two:

1) Multiply the many approaches to strategy with the multiple takes on caring for populations and the possibilities are endless. Based on the variations, no one has cracked the code applying strategy to populations and risk-contracting.

For purchaser/provider board members and C-suite leaders, the good news is that your strategic bets on the future are - for now - as good as anyone's. The bad news is that the present day fiduciary work is not lessened and you're going to have to devote more effort (and time) on developing a still unsettled strategy approach to the uncertainties surrounding health reform.

2) Regrettably, despite describing itself as a "luminary" many times to the PHB Spouse, it was not included in the WSJ. column and the Miliken Blog.  This sadly suggests that her skepticism - for now - is warranted.

Image from Wikipedia

Wednesday, May 27, 2015

"Generative" Health Care Leadership, Governance and Boards of Directors

Time to get "generative!"
Thanks to bout of troublesome weather, the Population Health Blog has been stranded somewhere in the U.S. air-travel network. Undaunted by bitter loss of an upgrade and the prospect of a late arrival, it bravely used the down time to dig into the highly interesting book Governance as Leadership: Reframing the Work of Nonprofit Boards by Richard P. Chait, William Ryan, and Barbara Taylor.

While written for "nonprofit board members," the PHB believes the insights are applicable to just about any board of directors or other leadership group of an organization that is grappling with uncertainty. And given the uncertainty in health care, Governance is "must" reading for the leadership as well as the board of any hospital, physician-group, health system or provider organization.

Pointing to years of academic research, consulting experience and common sense, the book describes three "modes" of governance:

1. Type I Fiduciary, which relies on process and uses standing committees to ask (for example) if assets are being effectively deployed.  Think "data."

2. Type II Strategic, which relies on content and uses ad hoc committees to ask (for example) how strengths align with future opportunities.  Think "information."

3. Type III Generative, which relies on "cues," "framing" and "narratives" to ask less about the solution and more about the problem.  Think "insight."  
Boards are naturally inclined toward Type I and II governance. According to the authors, that's a mistake that can foster zero-sum thinking and the triumph of personal influence over group meaning.

Instead, when all three types are used at the right time for the right issues, they become synergistic and can create a tangible competitive advantage for the organization.  The best time to turn to Type III governance is when there is an issue that is ambiguous, salient, high stakes, contentious and irreversible.  The authors compellingly describe how present "cues and clues," can be used to "reframe" facts into new patterns.  As a result, the past can be re-narrated to imagine a new future.

Governance uses the example of the compelling insight that broken windows isn't the result of, but can lead to high crime rates.  That, in turn, led to the creation of "community policing."  The PHB would offer the health industry insight that the "problem" wasn't getting physicians to better care for persons with diabetes, but getting persons with diabetes to be better engaged in self-care.

You get the idea.

 The authors readily admit that Type III Governance is a "wilderness" that is an "outside-the" or "black" box that is non-linear, vague and subjective.

It seeks "sense" or meaning and creates multiple choices, not a single fix.  It generates insight and creativity, not mission setting, strategy development or problem solving.  It gets you to the drawing board.  It frames the problem.  It generates the hypothesis. 

And when reality is recreated, it can ultimately achieve a far richer level of down-stream buy-in.

How can Type III Governance be leveraged?

First of all, governing boards and their management teams must collaborate in this.  Boards have a particular role to play because they have the three "P's" of power, a plurality of multiple perspectives and a position of a more distant ("10,000 foot") vantage point.  Boards can work with their management teams by either acting as 1) sounding boards that foster generative thinking by asking, probing and identifying the cues, framing the data and renarrating the past or by 2) initiating generative thinking by focusing on ambiguous or problematic issues among themselves and their colleagues.

Be prepared to tackle sensitive subjects and dealing with multiple perspectives that is less about fixed unanimity and more about the sense of a "collective mind". Resist succumbing to notions or fostering groupthink.

Use retrospective questioning (to discover unknown strengths, flaws and patterns in the past) and dominant narratives (that create a meaningful bridge from the past to a portray a desired future) to gain greater understanding.

Embrace the generative mode early on the "elephants in the room." A otherwise unaddressed "big issue" will evolve over time and default processes and solutions will recast the situation as a planning or strategic challenge.

Use mindful deliberation without formality or rank that focuses less on creating the solution than on defining the problem.

To increase the chance of success, boards need regular exposure to inside-facing culture of the organization as well its outward-facing environment. That means having unfiltered access to the cues/clues inside (the "factory floor") and outside (with customers or other stakeholders). While there is a risk of board members or senior leaders running amok over established lines of authority, the risk to any organization is ultimately greater if they're confined to the boardroom or the C-suite. 

Generative thinking will feel more like "play" or a "retreat" than a meeting.  That's good.

Use tools like

Counterfactuals: What is it about the budget or the assigned FTEs that explains our goals?
Hypotheticals: If the company ceased to exist, where would its customers go?
Intuition: Is there a hunch about the next five years?
Catalytic questioning: Is there a headline we'd like to see?

Governance makes for interesting as well as fun reading. The authors avoid complex jargon and sprinkle their text with some insightful examples. While readers may struggle with the details of installing "generative" thinking into their leadership "workflows," the idea of using this template to harness the creative juices of a leadership group or a board is exciting stuff.