Vegas' Healthcare Lessons: A Field Trip Report

The Population Health Blog spent the last week in Vegas exploring the actuarial, medical, predictive, economic, social and quality dimensions of an important part of the property and casualty insurance industry.

If memory serves, this was the fourth time it was there.  And a lot has changed over the last few years

Naturally, the PHB's commitment to lifelong learning shielded it from Sin City's too-numerous -to-count temptations.  Being in windowless conference rooms from 7 AM to 6 PM prevented it from the succumbing to The Strip's scintillating jewelry displays, blinka-blinka light pollution and siren call of unfavorable risk-transfer arrangements (a.k.a. "gambling").

Plus, having the spouse for company helped, even though she vetoed perfectly reasonable entertainment options like this and this.  As a consequence, the PHB limited itself to an evening show and a variety of interesting eateries. The good news is that, as a result, the field trips outside the meeting venue gave it some time to compare the "old" and today's "new" Vegas to derive some healthcare lessons:

Old Vegas:

Small hotel lobbies, walls, winding walkways.

New Vegas:

Open hotel atriums, mirrors but still winding walkways

Lesson: You don't have to give away the keys to the business to give the consumer the impression of transparency. While healthcare has a long way to go on truly transparent pricing, the PHB suspects there will be a lot of mirrors and winding walkways between where we are now and where we want to go.

Old Vegas:

Rooms at $250 per night

New Vegas:

While rooms on The Strip can be $300 per night, that's comparatively less in inflation adjusted dollars, plus there are remote controlled curtains for the floor to ceiling windows and one, if not two, flat screen TVs.

Lesson: Consumers are expecting more quality at less cost. Healthcare remains an economic outlier.

Old Vegas:

Computerized slot machines

New Vegas:

Computerized insights on the users of the slot machines

Lesson: Knowing background, revenue/cost determinants and risk preferences of your customers is critical.  In healthcare, we call this "big data."

Old Vegas:

Illusionists, Carrot Top, The Osmonds, Elton John and Cirque

New Vegas:

Illusionists, Carrot Top, The Osmonds, Elton John and Cirque in over the top stages and elaborate auditoriums.

Lesson: If you have a winning formula, stick to it and do it better. Even though health insurers may get in the way, more patients will seek you out.

And finally.....

Old Vegas:

Some homeless people

New Vegas:

More homeless people. 

Lesson: The economy recovery is failing the most vulnerable. 

Image from Wikipedia

Health Care Cost Insights and Capitation for the Patient Centered Medical Home (PCMH)

The Population Health Blog finally caught up with the Oct 22/29 "Price, Cost and Competition" issue of JAMA. 

One of the more interesting articles was a Viewpoint editorial on the Patient Centered Medical Home (PCMH). After tut-tuting fee-for-service payment as antithetical to meaningful payment reform, the author admits what the PHB has been saying all along: a global payment that covers all the medical, coordinating as well as non-physician services of the PCMH is tantamount to old fashioned "capitation." As we learned in the 1990s, capitation's unintended consequences are a) signing up too many patients, b) limiting access to primary care and c) over-referring to specialists.  To counter that, the editorial's author suggests the PCMH movement seeks "accountability." 

We'll see about that.

In the meantime, some other interesting articles:

Are "for-profit" hospitals evil?  Not necessarily.....

237 hospitals that converted from not-for-profit to for-profit anytime between 2003 and 2010 were compared to 631 hospitals that had not converted.  Converting hospitals improved their financial margins (practically all were in the red and subsequently became break-even) vs. the comparison group, and did so without increased utilization, restricting access to care, higher death rates or declines in quality for their Medicare patients. Their path to profitability may have been lined by renegotiated commercial insurance contracts, cutting costs or moving non-performing assets off the balance sheet.

Can physician groups become monopolistic? In a word, yes.

Commercial insurance preferred provider organization (PPO) charges for ten types of physician office visits in ten different specialties across 50 states were correlated with a measure of local market dominance dubbed the "Hirschman-Herfindahl Index" (more on that here).  As the HHI index increased, payments also increased, suggesting that as much as additional $3 to $12 in fees for the same services were the result of monopolistic contracting.

Monopolies aside, if docs are in charge vs. the hospitals, can they reduce health care costs?  Also yes.

This study compared average "per-patient expenditures" of physician-owned versus hospital-owned integrated medical groups and independent practice associations in California from 2009 to 2012. Among the 158 groups, 118 were owned by docs; their expenditures were over a thousand dollars less compared to hospital owned groups.  Larger physician groups had higher expenditures than the smaller ones.  More on that in a future post.

Does price transparency help patients chose to spend less?

Over 500,000 insurance plan enrollees had special on-line access to prices for medical services prior to using them.  There were over 250,000 households and of these, approximately 7500 accessed the information. Compared to households that didn't check the information, the price-shoppers seemed to choose cheaper labs (a few dollars per test) and imaging options (about a hundred dollars per test).  In looking at the data, the DMCB suspects some may have also deferred testing by choosing to use them less frequently or not at all.