Healthcare Change is Here to Stay, Regardless of Supreme Court?

"Do you agree that Change is Here Regardless of Supreme Court's Decision?"

This question was recently posed by Jay Warden of the Camden Group to members of HIMSS.  Copied below was my response.

I believe SCOTUS is going to overturn the individual mandate, but leave the rest of ACA alone for Congress to fix. But, to the question, yes, I believe we finally reached a tipping point in the industry towards what I'm calling Healthcare 2.0, which boils down to bundled payments that put the economic burden of quality and cost control on the provider, neither of which exist under the current fee-for-service model. In the absence of federal pressure to change healthcare if the Affordable Care Act (ACA) is repealed-- partially or completely-- the employers now have the momentum and there's no turning back.

We are seeing a growing trend of direct contracting with providers by self-insured employers, which is disintermediating the insurance companies and their profits from the economic model. The federal individual mandate under ACA was foolish and naive-- and pushed by the insurance companies to line their pockets. We simply aren't the type of society that legislates that sort of thing from the federal level, and trying to do so was like poking a stick in a hornet's nest. But, the ACA is not all bad and I will give the ACA credit for getting the ball rolling. Employers like IBM, Cisco, Intel, Google, Facebook, Apple, WalMart, Ford, et al, are not going to allow the momentum stop. They are taking control of healthcare by squeezing traditional insurance companies like Aetna, BCBS, and United out of the picture and direct contracting for fixed-fee coverage-- or in some cases, hiring and building their own healthcare delivery organizations.

I'm a CIO in a national health system that allows for private and federally insured options and thus provides 98% insurance coverage without an individual mandate. In this model, if you want insurance for broader coverage, you can buy that in the private market. If you want very affordable, basic coverage, you can access that through the federal government or similar products that are legislated upon the private insurance companies. It strikes a very good balance between private market and federal involvement to ensure access and affordability. I'm also a part-owner of a small business that is leveraging new models for self-funded coverage; it's not easy but it is possible. Obama and Congress could have made it easier for all employers by repealing the McCarran-Ferguson Act (MFA) and opening the doors to interstate competition between insurance companies. Legislating insurance that's not affordable is like creating 30 million new criminals. You need to lower the costs of insurance, first, and you can do that by removing the federal laws that protect the insurance companies from open competition. The Obama Administration caved to the insurance lobby by allowing MFA to stand...since the 1940s.

Despite a less-than-perfect federal attempt, the ACA got things rolling and the momentum for healthcare change is hear to stay, thanks to employers who are no longer willing to accept the status quo.

EMR User Interfaces: Embedding Team-Based Care and Knowledge

There's a great new article in the March 2012 issue of The American Journal for Managed Care, "IT-Enabled Systems Engineering Approach to Monitoring and Reducing ADEs".  You can find it here.  The point I'm trying to make in this blog, by drawing attention to this article, is this:   It's time for EMR vendors to rethink the fundamental design and user interface of of their products.  They've been basically unchanged for 10 years, at least, supporting the same concept of encounter-based care that itself goes back at least 50 years.  EMR vendors need to stop thinking of patient care as short term encounters with a clinician and start thinking of patient care as long term project management with a team of care providers.  EMRs user interfaces need to look more like a project management tool that enables social collaboration, task assignment and follow-up, and the collective wisdom of the care team, including the patient's wisdom, more effectively.

In summary, the AJMC article concludes that, by using web-enable team resource management (TRM) tools, clinical work teams can significantly reduce the rate of adverse drug events in patient care.  According to the article, "the rate of ADEs decreased from 25.8 to 18.3 per 100 patients per year in the intervention group. The rate was virtually unchanged in the control group (24.3 vs 24.8)."  That's a major impact.

The study described in the article is particularly impressive in that, the TRM tool leveraged the collective wisdom of the care team in identifying, tracking, and measuring the causes and interventions associated with ADEs.  It's a prospective model for preventing ADEs versus a retrospective root cause and failure modes analysis of what caused the ADE.  Very, very impressive approach.  The team at  the Department of Family Medicine and UB School of Management, State University of New York, should be widely acknowledged for this innovative yet common-sense approach to patient care.

EMR vendors, please take note.  :-)

Healthcare Reform Is Being Debated in the Supreme Court Today

The debate focuses on whether the "Individual Mandate" for healthcare insurance is constitutional or not. This is a critically important day for the US...this debate has implications about constitutionality and federal authority that extend far beyond just healthcare. If I were President of the US, trying to improve healthcare quality and control healthcare expenses for everyone, I would advocate in favor of the Individual Mandate. If I were a judge and constitutional lawyer, I would advocate that Congress had overstepped the bounds of the Constitution-- i.e., Individual Mandate should be overturned at the federal level, and deferred to each state, much like the "other" individual mandate for automobile insurance that is now required in virtually every state. But if Individual Mandate is overturned at the federal level, the state governors better get their act together, quickly, otherwise all of us will suffer under the continuance of a dysfunctional healthcare economic system.

Cayman Collaborative Care Initiative

26 March 2012

To:  Interested Vendors

Dear Colleagues,

The national health system of the Cayman Islands, also known as the Health Services Authority (HSA), is developing a physician compensation model that includes physician productivity and clinical quality as risk variables to total compensation.  The project is known as the Collaborative Care Initiative (CCI). To these ends, the HSA is conducting an options assessment for vendors and products that can meet the reporting requirements to support the CCI metrics for productivity and clinical quality.   HSA defines the overall value of healthcare as follows.   Vendors must be capable of supporting this conceptual definition with their solution.

  

That is, the overall value of healthcare is greatest when the quality of care is delivered in a cost-effective manner.  Cost and quality are inextricably linked.  In this early iteration of CCI, physician productivity is being used as an inverse proxy for cost of care—highly productive clinicians reduce the overall cost per unit of high quality care produced.

Below are the high level requirements for CCI metrics and reporting.  HSA encourages vendors to suggest additional requirements and functionality to ensure the best overall solution.

1.     Timelines:  HSA will schedule vendor meetings and product demonstrations immediately, on a first-come/first-served basis.  The initial operational date for CCI reporting is July 1, 2012.

2.     Contact Information:  Interested vendors should contact Mr. Keith Higgins, Acting CIO, at keith.higgins@hsa.ky, to arrange demonstrations and discussions of their solutions.

3.     Cerner-Centric:  The HSA currently operates a full complement of Cerner Millennium products, operating in Cerner’s Remotely Hosted Option (RHO) in Kansas City.  The vendor’s product must be capable of extracting data from Cerner for purposes of reporting and analysis. 

4.     HSA Hosted Data:  The data extracts from Cerner must reside within the administrative and operational environments of HSA. Therefore, the data must be hosted in the Cayman Islands—either in HSA’s data center or a data center that is currently associated with HSA administration—or in Cerner’s RHO data center in Kansas City.

5.     Adaptable Data Extracts, Model and Content:  At present, Cerner is the primary source of data for clinical quality and physician productivity measures, however, HSA may, in the future, divest itself of the Cerner system.  Therefore, the vendor’s solution must be capable of functioning with very little modification, and minimal additional cost and time if this divestiture occurs.  HSA also utilizes a large number of standalone spreadsheets for tracking various aspects of the care process.  These spreadsheets could be useful in the context of CCI. The vendor’s solution must be capable of including this spreadsheet content by either extracting and integrating the data, or by accommodating the data collection directly in the vendor’s solution.

6.     Reporting Requirements:  The vendor’s solution must support the following reporting environments:

a.     JCAHO ORYX

b.     HEDIS

c.     PQRS

d.     Meaningful Use

e.     Pioneer Accountable Care Organization reporting

f.      Patient reported satisfaction with care

7.     Physician Productivity:  HSA believes that there are no perfect models for measuring physician productivity and therefore, compromises in this regard will be necessary.  Vendors are encouraged to suggest new and innovative models.  Traditional measures of physician productivity, especially revenue-based, are not appropriate in HSA’s context.  HSA is a national health system, therefore revenue generated by HSA is realized as an expense to the Ministry of Health and the Cayman Islands National Insurance Company (CINICO).  This tension between revenue vs. expense is the same in US-based direct contract agreements between self-insured employers and healthcare systems—a growing market trend in the US.  RVU-based models are not appropriate within HSA’s environment because the RVU model is CPT-driven, thus rewarding volume of clinical procedures over quality of clinical outcomes.  Furthermore, HSA and CINICO are migrating away from a fee-for-service/CPT-based reimbursement model towards a capitated, fee-for-quality/ICD-based reimbursement model.  At present, HSA believes that the best overall measure of physician productivity is based upon patient access to care, as measured by clinical encounters per unit of physician time worked, including telephone and email encounters.  Future models of productivity may emerge, therefore the vendor’s software solution must be adaptable and agile.

8.     Inpatient and Outpatient Duties:  The measures of quality and productivity must accommodate the physicians’ inpatient and outpatient duties.

9.     Administrative Duties:  The measures of productivity must accommodate the administrative duties associated with physicians’ roles, such as staff meetings and especially those meetings that are associated with care planning and clinical quality initiatives that impact broad issues of patient care, but are not specific to an individual patient.

10.  DRGs:  HSA does not currently utilize DRGs, therefore the vendor’s solution cannot be dependent on DRGs.

11.  References:  The vendor must provide at least three referenced accounts who are using the vendor’s solution in initiatives which are very similar to CCI.

12.  Affordability:   HSA is equivalent in size and scope of services to a rural health system in the US, with similarly modest access to operational and capital funds. The Total Cost of Ownership (hardware, software, labor services) for the vendor’s solution will be evaluated early in this options assessment.  Vendors will be expected to engage in these discussions accordingly and will be quickly eliminated from the procurement, regardless of rich functionality, if their solutions are not affordable within the context of rural healthcare.  If and when a contract is awarded, the contract will be firm-fixed price, with modest annual support fees.  HSA’s total operating budget is $85M per year.  The total bed count is 125.  HSA employs approximately 750 people, of which 40 are physicians.

Thank you and please contact Mr. Higgins if you have any questions or interest in this procurement.

Warm regards,

___________________________

Dale Sanders

Senior Technology Advisor/CIO Mentor

dale.sanders@hsa.ky

CIOs, Data and Patient Billing

Below is a Facebook message between a friend and me in which my friend asks for clarification about his hospital bills.

Healthcare CIOs are in a unique position to improve this terrible state of confusion and economic waste that exists in healthcare.  We understand the business and we understand the data of healthcare; and revealing data is the key to changing this dysfunctional situation.

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Dear Dale,

Dumb question… I went in for surgery a couple of weeks ago. When it got to the payment part as we checked in they slid a paper in front of us. Without insurance my cost would be $30K, but with insurance my cost was $3.5K total with my portion being 10 percent of that cost. That's nearly 10 times different.

To me, this seems to be one of the major problems with healthcare. Do they really believe that some who can't afford insurance can afford to pay ten times the cost for service? Now there must be a reason and the only thing that I come up with is that unpaid services end up being submitted back and the government helps cover the cost. How far am I off? Why is this the case? Should the cost be the cost?

Thanks,

MS

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Dear MS,

Well, first of all, I hope your surgery was minor and you're on the mend, buddy!  Please let me know.

What you experienced is par for the course and one of the main reasons that healthcare is in such a mess. Hospitals have "charges" for patients and they have "reimbursements" from insurance. Your $30K bill represents the hospital's charges, but their charges are not calculated with any sense of sanity. Those charges are arbitrarily established, usually by simply marking-up federal Medicare/Medicaid reimbursement rates by 300% - 500%.  In the rest of the business world, like Apple for example, products are priced according to "Cost of Production + Margin".    The goal is to minimize the cost of production and establish a margin that is reasonable for the market, meets shareholder goals, and achieves sustainability of the company.  Hospitals have no understanding of their true Cost of Production...they are generally clueless in that regard.  They understand Cost of Operation, but that’s not the same as Cost of Production—that is, how much does it cost for healthcare to produce high quality health, in your case, a successful surgery, or a healthy diabetic or newborn baby? 

Insurance companies would never agree to pay most hospital charges, because those charges are typically and arbitrarily high.  That's why hospital charges to patients include such things as a single acetaminophen pill that costs $6.  Instead, the insurance companies negotiate individual reimbursement contracts with the hospitals. That $30K bill that you received was meaningless from a true business sense—that’s not what the government (Medicare or Medicaid) or the insurance company is going to pay. But those charges are very meaningful to patients who don't have insurance because those patients are held hostage to these arbitrary hospital charges and pricing practices.  If you don't have insurance, you are faced with paying hospitals' charges for your bill, so the non-insured patients are penalized the most.   Keep in mind that 42% of bankruptcies in the US are directly related to healthcare expenses.

Each insurance company negotiates a separate contract with individual, somewhat more reasonable fees for reimbursing healthcare services and products...like $0.25 for a acetaminophen instead of $6. But these individual contracts are incredibly complicated and burdensome to manage, and make it confusing for patients and employers to understand the true cost of care. Imagine if your local grocery store negotiated a separate pricing structure for each customer... and there were no prices on the shelves. At the cash register, you wouldn't know your bill until the clerk scanned the products. The person ahead of you would pay $4 for a gallon of milk, while you might pay $2, and the person behind you would pay $1.50...depending on the contract that you negotiated with the grocery store. It would be incredibly inefficient to manage and confusing to everyone. But that confusion would make it nearly impossible for the customer to understand pricing, so the grocery store would likely take advantage of that confusion to keep prices higher than necessary for everyone. 

The confusion about pricing reinforces a concept that I call "disproportionate balance of knowledge", which means when one party knows a lot more about a situation than another party, the knowledgeable party is in a position to manipulate and take unfair advantage of the other party, and human nature being what it is, that unfair advantage is leveraged the vast majority of time in everything from parenting to real estate; car and plumbing repairs are notorious.  And healthcare is among the worst. But, if you can expose the pricing models-- cost of production and margin-- and you can make these prices transparent to the masses-- think Kayak, Zillow and CarMax-- it starts to balance the knowledge between the parties... and prices naturally come down.  By the way, the overhead cost of managing these bizarre pricing models in healthcare, with arbitrary charges and dozens of custom reimbursement contracts, adds 31% overhead to the cost of care which is at least $200B per year in the US, and that overhead is passed right along to patients and their families.  Thompson-Reuters recently published a report that revealed $36B in unnecessarily high US healthcare fees, directly attributable to hospitals’ variable and arbitrary charge practices.

So there you have it, brother. The mess of charges and reimbursements that we tolerate in healthcare, we would never tolerate in the rest of our lives.  We can't take the status quo any longer and the good news is, I truly believe that we’ve reached a tipping point of major and permanent change.

Helpful?

I might post this on my blog, actually...

:-)
Dale

If Healthcare Managed Restaurants

For the last couple of years, I've been using this metaphor to highlight the ridiculous nature of healthcare and particularly, healthcare billing-- the point being, we tolerate ridiculous behaviors and processes in healthcare that we would never tolerate in the rest of our lives, yet we keep building healthcare software that supports the insanity.  Why should we tolerate these crazy processes in what is one of-- if not the most-- important area of our lives?  Let’s at least build software that allows us to move away from these broken processes, even if we don’t have the cultural willpower to do so right away… at least give us the software option to be better, someday.

I used the metaphor again today in a lecture at HIMSS and several people asked me to blog it….so here you go….

If healthcare managed restaurants:

·      You wait 45 minutes for a table, even though you had a reservation.

·      You tell the waiter that you’re hungry– but there’s no menu.

·      The waiter returns with a meal that he thinks is appropriate for you…but he doesn’t know how much it costs.

·      You have no idea what the food is or what it costs, but you agree to eat it.

·      You leave without knowing your bill.

·      The restaurant sends the bill to your bank, not you.

·      Your bank tells the restaurant, “Your waiter ordered the wrong thing for you. We’re not paying for it.”

·      90 days later, the restaurant calls to tell you that your account is being turned over to collections.

:-)

Career Planning: Three Parts Chance, One Part Planning

This blog is mostly intended for the younger professionals whose careers are just beginning, but older geezers (like me) might also find it interesting, as they face the challenge of honoring their aging parents while maintaining their career. The key messages are: (1) Career paths and opportunities are three parts chance, one part planning and preparation; (2) The professionals that reverse that ratio— place great emphasis on planning and preparation, leaving very little room for chance—are often times the least happy and fulfilled. Wandering is sometimes the most direct path to a perfect destination; and (3) If you sacrifice your career in the interests of others, your career won’t sacrifice you.

There are too many first person pronouns in this story and for that, you have my first person apologies. This is an ode to a different person — a person who doesn’t look for what life owes her, but what she owes life — and the manner in which her attitude towards life has affected the way I look at my career. I share this story, though fearful that in doing so I disrespect the sanctity and solemnity of the entire event — the opportunity granted me. Hopefully, that fear is unfounded, the purity is intact, and the story somehow serves others who face similar quandaries. If nothing else, it serves as a long and public letter of thanks to very special people.

About a year ago, I had a fairly deep spiritual and introspective experience — the kind that happens to people who live alone on a tropical island, ala Tom Hanks in Castaway. It was the type of experience that forces you to rethink your priorities… I mean really rethink them, deeply.

During this experience, it struck me that the overwhelming priority in my life at this time should be to honor the irreplaceable time that remained in my mother’s life. At 87-years old, Ruby Sanders is still in amazing physical and mental condition. She still lives in the same house in Durango, Colorado where she raised six children; where winters are still winters. She’s a product of the Dust Bowl, escaping the plains of eastern Colorado and western Kansas with our grandparents, where they lived for a short time in a cabin with a dirt floor, escaping west to the mountains of Colorado just in time for the Great Depression.

 

During this hardest of times, the highlight of Christmas was often the gift of an orange or, even more special, a banana. Mom raised her first baby while our father was half-the-world away, in World War II, surviving The Battle of the Bulge.

A few short years after his return from WWII, they would suffer a parent’s worst nightmare, as our sister (their 18-month old daughter) would die painfully from aspirin poisoning. A few years would pass, the wounds of heart would become tolerable, and Mom and Dad would suffer yet another nightmare of parenting as our brother (their oldest son) at barely 18 years of age would be killed in an aircraft explosion. I can remember the scene at our kitchen table, early in the morning, when we found out — you don’t soon forget the inconsolable sobs and tears of your parents.

A few more years would pass — her wounds of heart now so deep they could never heal completely — and she would lose the love of her life (our father) at much too young an age, a victim of genetic cardiovascular disease. Some of us wonder if his heart failure was the result of a broken heart, never fully recovering from the tragic deaths of his children so young in life.

There are more stories of suffering for Ruby — too many to mention here — but throughout these periods of anguish, Mom would remain loving, caring, thoughtful, and resilient, never stumbling for more than a few steps, always hiding her broken heart to support the rest of her children, family, friends and community. Always, her first priority was instilling life and confidence in everyone around her.

About a year ago, during my Castaway reflective moments, I called Mom to check-in. Her voice was cracking with emotion, holding back tears. I prodded, “What’s wrong Mom?” to which she hesitantly replied, “Oh, I’m just so frustrated. I’ve been trying all morning to open this damn jar of peanut butter, but I can’t get it open and I feel so helpless!”

And with that, her little old lady tears came pouring out. It wasn’t long, maybe 30 seconds, and she stopped crying, apologized, and started counting her blessings — giving thanks for even having a jar of peanut butter when so many people have nothing.

With that conversation, I asked myself, “What kind of son am I if I fail to honor such a mother?  What if I fail to help her lead a worry-free life, the remainder of her life — a life that has had so many worries already?” I realized I would be no son at all.

I said a prayer at that moment, planting a seed of hope in the Universe, asking for an opportunity to return to our home town of Durango (population 12,000) so that I might help her lead that worry free life, the rest of her life. The likelihood of finding work in an isolated mountain town that would suit my career path was low, but I didn’t pray to that level of detail. All I asked for was the opportunity to return to Durango, in hope and faith that the details of my career and livelihood would work out.

Three months later, after more prayers and contemplation, I announced to our CEO of the Cayman Islands Health Services Authority that I would be leaving — two years sooner than planned. I didn’t have another job lined-up, nor any clear idea of what I might do to make ends meet in Durango, but my conscience  told me to commit first and plan later….the plan would come together.

Thankfully, it did, with the help of my dear friend Daphne Lawrence and the gracious willingness of Dave Garets at The Advisory Board (where I’ll be taking on a new position), and Lizzette Yearwood, my current CEO, who supported my transformation to a telecommuting role. Now, I have the privilege of returning home with nary a skip in my career to spend irreplaceable time with Mom, sisters, family, and friends.

I share this story in hopes that it might help those who are younger in their career and believe that you can and should plan every step of your career. I say rubbish. Keep your hearts opens to non-career priorities and the opportunities of random chance, for therein is the adventure of life. Jump when there is no safety net and see what happens. You’d be surprised how often you can fly.