Category Archives: healthcare

Outsource physician behaviour change to the experts: Big Pharma

So pay for performance doesn’t work. This is hardly surprising when you see the compromise and mediocrity forced upon policy makers to get ideas through. There have been instances of success in health care. Indeed, one could argue that the exemplary success of big pharma in changing physician behaviour has provided a rod for its own back. Why not harness this expertise in getting under the skin of doctors, and pay big pharma sales outfits to guide physician practice in constructive directions, rather than being distracted by flogging pills that don’t really work that well anyway, and potentially harm? Might have a chat with Christian.

http://www.nytimes.com/2014/07/29/upshot/the-problem-with-pay-for-performance-in-medicine.html

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“Pay for performance” is one of those slogans that seem to upset no one. To most people it’s a no-brainer that we should pay for quality and not quantity. We all know that paying doctors based on the amount of care they provide, as we do with a traditional fee-for-service setup, creates incentives for them to give more care. It leads to increased health care spending. Changing the payment structure to pay them for achieving goals instead should reduce wasteful spending.

So it’s no surprise that pay for performance has been an important part of recent reform efforts. But in reality we’re seeing disappointingly mixed results. Sometimes it’s because providers don’t change the way they practice medicine; sometimes it’s because even when they do, outcomes don’t really improve.

The idea behind pay for performance is simple. We will give providers more money for achieving a goal. The goal can be defined in various ways, but at its heart, we want to see the system hit some target. This could be a certain number of patients receiving preventive care, a certain percentage of people whose chronic disease is being properly managed or even a certain number of people avoiding a bad outcome. Providers who reach these targets earn more money.

The problem, one I’ve noted before, is that changing physician behavior is hard. Sure, it’s possible to find a study in the medical literature that shows that pay for performance worked in some small way here or there. For instance, a study published last fall found that paying doctors $200 more per patient for hitting certain performance criteria resulted in improvements in care. It found that the rate of recommendations for aspirin or for prescriptions for medications to prevent clotting for people who needed it increased 6 percent in clinics without pay for performance but 12 percent in clinics with it.

Good blood pressure control increased 4.3 percent in clinics without pay for performance but 9.7 percent in clinics with it. But even in the pay-for-performance clinics, 35 percent of patients still didn’t have the appropriate anti-clotting advice or prescriptions, and 38 percent of patients didn’t have proper hypertensive care. And that’s success!

It’s also worth noting that the study was only for one year, and many improvements in actual outcomes would need to be sustained for much longer to matter. It’s not clear whether that will happen. A study published in Health Affairs examined the effects of a government partnership with Premier Inc., a national hospital system, and found that while the improvements seen in 260 hospitals in a pay-for-performance project outpaced those of 780 not in the project, five years later all those differences were gone.

The studies showing failure are also compelling. A study in The New England Journal of Medicine looked at 30-day mortality in the hospitals in the Premier pay-for-performance program compared with 3,363 hospitals that weren’t part of a pay-per-performance intervention. We’re talking about a study of millions of patients taking place over a six-year period in 12 states. Researchers found that 30-day mortality, or the rate at which people died within a month after receiving certain procedures or care, was similar at the start of the study between the two groups, and that the decline in mortality over the next six years was also similar.

Moreover, they found that even among the conditions that were explicitly linked to incentives, like heart attacks and coronary artery bypass grafts, pay for performance resulted in no improvements compared with conditions without financial incentives.

In Britain, a program was begun over a decade ago that would pay general practitioners up to 25 percent of their income in bonuses if they met certain benchmarks in the management of chronic diseases. The program made no difference at all in physician practice or patient outcomes, and this was with a much larger financial incentive than most programs in the United States offer.

Even refusing to pay for bad outcomes doesn’t appear to work as well as you might think. A 2012 study published in The New England Journal of Medicine looked at how the 2008 Medicare policy to refuse to pay for certain hospital-acquired conditions affected the rates of such infections. Those who devised the policy imagined that it would lead hospitals to improve their care of patients to prevent these infections. That didn’t happen. The policy had almost no measurable effect.

There have even been two systematic reviews in this area. The first of them suggested that there is some evidence that pay for performance could change physicians’ behavior. It acknowledged, though, that the studies were limited in how they could be generalized and might not be able to be replicated. It also noted there was no evidence that pay for performance improved patient outcomes, which is what we really care about. The secondreview found that with respect to primary care physicians, there was no evidence that pay for performance could even change physician behavior, let alone patient outcomes.

One of the reasons that paying for quality is hard is that we don’t even really know how to define “quality.” What is it, really? Far too often we approach quality like a drunkard’s search, looking where it’s easy rather than where it’s necessary. But it’s very hard to measure the things we really care about, like quality of life and improvements in functioning.

In fact, the way we keep setting up pay for performance demands easy-to-obtain metrics. Otherwise, the cost of data gathering could overwhelm any incentives. Unfortunately, as a recent New York Times article described, this has drawbacks.

The National Quality Forum, described in the article as an influential nonprofit, nonpartisan organization that endorses health care standards, reported that the metrics chosen by Medicare for their programs included measurements that were outside the control of a provider. In other words, factors like income, housing and education can affect the metrics more than what doctors and hospitals do.

This means that hospitals in resource-starved settings, caring for the poor, might be penalized because what we measure is out of their hands. A panel commissioned by the Obama administration recommended that the Department of Health and Human Services change the program to acknowledge the flaw. To date, it hasn’t agreed to do so.

Some fear that pay for performance could even backfireStudies in other fields show that offering extrinsic rewards (like financial incentives) can undermine intrinsic motivations (like a desire to help people). Many physicians choose to do what they do because of the latter. It would be a tragedy if pay for performance wound up doing more harm than good.

AMA rejects price transparency

AMA at its best (worst).

It doesn’t want price transparency because its too hard to predict how much things should cost charging by the hour instead of by the procedure.

I’d want to know more about my surgeon than my dishwasher when making a purchasing decision.

So lets put up all those metrics and allow people to compare what matters.

http://www.smh.com.au/federal-politics/political-news/ama-rejects-call-for-more-fee-disclosure-20140729-3cs2y.html#ixzz396F0w0H6

AMA rejects call for more fee disclosure

July 30, 2014 Dan Harrison and Daisy Dumas

AMA president Brian Owler at the National Press Club in Canberra on Wednesday.

AMA president Brian Owler at the National Press Club in Canberra on Wednesday. Photo: Alex Ellinghausen

The Australian Medical Association has rejected calls for greater transparency on surgical fees, saying it was not possible for patients to compare prices for operations in the same way they might shop around for a dishwasher.

Appearing at a Senate hearing on Tuesday, AMA president Brian Owler, who is a neurosurgeon, said his organisation did not support the charging of excessive fees, but said the appropriate fee for a procedure depended on the patient’s condition.

”It is not possible to put up on a website all of our fees … and be able to go, like you’re buying a dishwasher, and be able to work out which doctor you’re going to on the basis of the fee that they charge,” Associate Professor Owler said.

”The experience and qualifications of many of the doctors will vary, their practices will vary, and really you need to see a patient to understand what their problem is, then formulate with that patient the best plan of management.”

Professor Owler’s comments follow a statement from the Australasian College of Surgeons in which it expressed concern about some surgeons, including some of its own members, charging ”extortionate” fees.

The president of the college, Michael Grigg, said it was working with the Australian Competition and Consumer Commission on ways to allow greater disclosure of surgeons’ fees without breaching competition rules.

Prominent neurosurgeon Charlie Teo said there were some surgeons who abused the ignorance of their patients.

But he said the recommended fee for some procedures, such as the approximately $2500 fee for the removal of a brain tumour, undervalued the work involved in complex cases.

”I can be operating on the world’s most difficult brain tumour and it takes eight to 10 hours and I still get paid $2500. Versus a plastic surgeon who charges $8000 to $12,000 for a breast augmentation,” Dr Teo said.

Dr Teo recommended Australia adopt a the American Medical Association’s ”22 Modifier” policy, which requires surgeons to supply evidence that the service provided was substantially greater than the work typically required for a certain procedure if they charged higher fees.

Greens senator Richard Di Natale, who initiated the Senate inquiry into out-of-pocket health costs, said patients needed greater transparency on costs.

”At the moment, the problem is that people become aware of the out-of-pocket costs when it’s too late, when they’re well advanced down the treatment pathway, and often there’s no way of turning back.”

The president of the Australian Society of Plastic Surgeons, Tony Kane, said its members were required to make a full written disclosure to patients of what the cost of their treatment would be, including the possibility of further costs, should revision surgery be necessary.

Dr Kane said members were required to make this disclosure at a sufficiently early stage to enable patients to take cost considerations into account when deciding whether to undergo the treatment.

Intervention kills

Excellent article on over-servicing in healthcare.

Includes reference to this Berwick/JAMA article (PDF): Eliminating-Waste-in-US-Healthcare-Berwick

http://www.theguardian.com/commentisfree/2014/jul/19/patients-hospital-care-over-intervention

Too much intervention makes patients sicker

A culture of over-investigation and over-treatment is now one of the greatest threats to western health
The ObserverJump to comments (209)

Hospital theatre

Patients should be treated ‘according to clinical need’, not a focus on medical, pharmaceutical and financial targets. Photograph: PA

A few weeks ago my mum was admitted to hospital with a life-threatening pneumonia, induced by an immuno-suppressive medication she was taking for her rheumatoid arthritis. When the chest x-ray revealed infection in both lungs my father and I, both doctors, understood that her condition was serious. But we also knew that if anyone could fight this, it was one of the toughest and inspirational individuals, a woman who 10 years ago survived a brain haemorrhage.

But after several days into her stay, once the markers in her blood and oxygen levels started to improve, I was particularly concerned when she became uncharacteristically negative and tearful saying: “Just let me go. I’ve suffered enough.” Several days of eating unpalatable hospital food and sleeping poorly had started to have an adverse effect on her physical and psychological condition. Despite starting to recover from the acute cause of her admission she was now being put at risk of an affliction that affects thousands of hospitalised patients daily.

Writing in the New England Journal of Medicine last year, Dr Harlan Krumholz, professor of medicine at Yale, described a syndrome that starts to develop close to discharge from hospital. Physiological systems are impaired, reserves are depleted, and the body cannot effectively mitigate health threats. It is instructive to note that this syndrome – created by the stressful hospital environment – is a significant contributor to hospital re-admissions. It is estimated that 10-20% of patients discharged from hospital in the UK and US will be re-admitted within 30 days, often with a condition entirely unrelated to their original admission.

Poor sleep and inadequate nutrition have an adverse effect on physical performance and co-ordination, cognitive function, immunity, and even cardiac risk. The elderly are particularly vulnerable to being re-admitted with falls and infection, with one study revealing that a fifth of hospitalised patients over 65 had an average nutrient intake of less than 50% of their daily requirements.

Within days of feeding my mum home-cooked food, which we’d brought in, and asking the nurse to not wake her up in the night for unnecessary “routine” blood pressure checks, insisting that she didn’t need to be jagged with a needle for blood every day and getting her to wear her own clothes, my mum was smiling again and was able to regain enough strength to be discharged a week later.

A culture of over-investigation and over-treatment is now one of the greatest threats to western health. In the US it is estimated that a third of all healthcare activity brings no benefit to patients. Examples include excessive use of antibiotics, imaging for non-sinister headaches, use of surgery when watchful waiting is better and unwanted intensive care for patients at the end of life who would prefer hospice and home care. In the US, a fee-for-service model encourages high volume and expensive procedures. But we should be alert to similar possibilities here: the UK’s “payment by results” – which in reality is a payment-by-activity model – potentially incentivises “doing more” on the part of physicians.

As a profession we have also been guilty – unwittingly or otherwise – of exaggerating the benefits of medications often perceived as magic pills by patients when their benefits are often modest at best. This also detracts from more meaningful lifestyle interventions by giving the public the illusion of protection. One recent study revealed that those taking statins consumed considerably more food and ended up heavier after several years compared to those not taking statins. Our over-obsession with cholesterol-lowering by any means has become “the end in itself” says Rita Redberg, professor of cardiology at the University of California San Francisco: “Who cares about cholesterol lowering if it doesn’t benefit the patient?”

Even respected medical guideline panels appear to be influenced by corporate interests. The National Institute of Clinical Excellence has, in successive weeks, issued statements expanding the offer of weight-loss surgery to up to a million more obese patients with type 2 diabetes and suggested statins could be given to millions of healthy people.

At best, this is a contribution to over-medicalisation; at worst, this can seem like the behaviour of a sort of lobby group for the device and pharmaceutical industry. (On Friday Nice’s director of clinical practice, Mark Baker, said that allegations that eight of the 12 members of the guideline panel on statins had direct financial ties to the industry were unjustified.)

 

 

Political interference often worsens the situation. Jeremy Hunt’s recent criticism tainting all GPs for not referring patients early enough for cancer diagnosis is totally unjustified, fuelling more defensive medicine through encouraging over-investigation. This is the worst kind of medicine and goes against what I remember being taught in medical school – which was to treat patients according to clinical need.

But there’s a solution. In an effort to curb the unsustainable healthcare costs, estimated to reach a staggering $4.6trn by 2020, a campaign known as Choosing Wisely is gaining momentum in the US. Part of the campaign involves communicating with patients that more expensive medicine doesn’t necessarily mean better medicine. And this is reflected by the evidence that four fifths of new drugs are later found to be copies of old ones – not surprising perhaps when pharmaceutical companies spend twice as much on marketing new medications as on research.

We need a more informed decision-making process that gives greater empowerment to patients. Encouraging patients to ask specific questions will also help them understand that sometimes doing nothing is the best approach. Questions such as: do I really need this test or procedure? What are the risks? Are there simpler safer options? What happens if I do nothing? And even how much does it cost? The Academy Of Medical Royal Colleges – led by Professor Terence Stephenson – will report by the end of the year, its recommendations building on this theme. We may discover billions of NHS money that does not add value to patient care.

Reflecting on my mum’s care and how she should have been treated from the moment she entered hospital, I’m reminded of the words from the visionary American physician and social activist Hunter Adams: “When you treat a disease, sometimes you win and sometimes you lose. But I guarantee you, when you treat a person, whatever the outcome, you always win.” It’s time for real “whole person” care.

 

Aseem Malhotra is a cardiologist and consultant clinical associate to the Academy of Royal Medical Colleges

Thanks CT.

This is bang on. Good to see some good people agreeing. I don’t feel nearly as mad.

http://www.afr.com/Page/Uuid/1fec72e4-07d2-11e4-a983-9084720e3436

ROSS GARNAUT AND PETER DAWKINS

Melbourne forum aims for politics-free economic thought

Melbourne forum aims for politics-free economic thought

The discussion of necessary reforms is dominated by special pleading by vested interests. Photo: Gabriele Charotte

ROSS GARNAUT AND PETER DAWKINS

Australia needs rigorous, independent economic policy debate and analysis to inform economic policy. The Melbourne Economic Forum seeks to contribute to meeting that need by bringing to account the considerable analytic capacity in economics based in the city.

A joint endeavour of the University of Melbourne and Victoria University, this new forum will bring together 40 leading economists, from or with institutional connections to Melbourne to discuss the great economic policy issues confronting Australia and the world.

The forum is independent of vested interests and partisan political connections. It will not support the position of any political party or campaign of any group. It will focus on analysis of policy in the public interest. Almost any policy proposal has implications for the distribution of incomes and wealth and income amongst Australians. Our objective will be to make these implications explicit and to point out their implications for wider conceptions of the public interest.

It would be surprising if high quality analysis of policy choice for Australia does not, from time to time, earn the criticism of participants from all corners of the political contest and from many groups with vested interests in particular uses of public resources and government power. The test of the forum’s value will be its success in illuminating the consequences of policy choice and not its immediate and direct influence on government decisions.

Through the final four decades of last century, dispassionate economic analysis and debate played a major role in illuminating government decisions on economic policy. Rational economic analysis became more important in underpinning serious discussion of policy choice. It emerged from interaction of economists in some of the universities with the predecessor to the Productivity Commission, the national media and later the public service and some parts of the political community. This interaction gradually built support for an open, competitive economy. The ideas preceded their influence, but eventually were of large importance in guiding the reform era under the Hawke, Keating and Howard governments. The resulting reform era laid the foundations for 23 years of economic growth without recession.

CHANGE IS A NECESSITY

 

Business organisations and the trade union movement joined the consensus and joined the discussion in constructive ways. The Business Council of Australia was formed to develop policy positions that were in the national economic interest, though not necessarily in the commercial interests of every one of its members.

Both rational economic analysis in the public interest and Australia’s high standard of living have been weakened by developments in the early twenty first century and are now under threat.

As mineral prices fall, productivity growth languishes and our population ages, Australia needs a new program of economic reform. Yet the discussion of necessary reforms is dominated by special pleading by vested interests.

Of course there is room for disagreement about the size of the challenge Australia faces if it is to maintain high levels of employment and prosperity. And different policy prescriptions will have different consequences for the distribution of the burden of adjustment to a more sombre economic outlook. A lazy policy response would shift the burden onto the shoulders of those Australians who lose their jobs or cannot find one.

Yet a budget that is viewed by the community as unfair is inimical to the task of building a consensus for reform.

The Melbourne Economic Forum will contribute to these debates, starting with a session on the economic outlook for Australia and the impacts of alternative policy responses. In September we will take on the international policy challenges most pertinent to the G20 meeting in Australia later in the year.

In November, we will venture into the hazardous territory of tax system reform and federal-state financial relations.

Bi-monthly forums in 2015 will tackle issues such as infrastructure, investment, foreign investment and trade policy.

Reviving the tradition of rigorous, independent policy thinking is not a hankering for the past but an essential precondition for a new wave of economic reform to secure employment growth and rising prosperity for all Australians in a far more challenging global economic environment.

Professor Ross Garnaut is professor of economics at the University of Melbourne. Professor Peter Dawkins is vice-chancellor at Victoria University. For more details on the Melbourne Economic Forum see melbourneeconomicforum.com.au.

The Australian Financial Review

Google founders on their distaste for health data regulators

 

http://www.forbes.com/sites/davidshaywitz/2014/07/04/google-co-founders-to-healthcare-were-just-not-that-into-you/

David ShaywitzContributor

I write about entrepreneurial innovation in medicine.

Opinions expressed by Forbes Contributors are their own.

PHARMA & HEALTHCARE  17,430 views

Google Co-Founders To Healthcare: We’re Just Not That Into You

At his yearly CEO summit, noted VC Vinod Khosla spoke with Google co-foundersSergey Brin and Larry Page (file under “King, Good To Be The”).

Towards the end of a wide-ranging conversation that encompassed driverless cars, flying wind turbines, and high-altitude balloons providing internet access, Khosla began to ask about health.

Specifically, Khosla wondered whether they could “imagine Google becoming a health company? Maybe a larger business than the search business or the media business?”

Their response, surprisingly, was basically, “no.”  While glucose-sensing contact lenses might be “very cool,” in the words of Larry Page, Brin notes that,

“Generally, health is just so heavily regulated. It’s just a painful business to be in. It’s just not necessarily how I want to spend my time. Even though we do have some health projects, and we’ll be doing that to a certain extent. But I think the regulatory burden in the U.S. is so high that think it would dissuade a lot of entrepreneurs.”

Adds Page,

“We have Calico, obviously, we did that with Art Levinson, which is pretty independent effort. Focuses on health and longevity. I’m really excited about that. I am really excited about the possibility of data also, to improve health. But that’s– I think what Sergey’s saying, it’s so heavily regulated. It’s a difficult area. I can give you an example. Imagine you had the ability to search people’s medical records in the U.S.. Any medical researcher can do it. Maybe they have the names removed. Maybe when the medical researcher searches your data, you get to see which researcher searched it and why. I imagine that would save 10,000 lives in the first year. Just that. That’s almost impossible to do because of HIPAA. I do worry that we regulate ourselves out of some really great possibilities that are certainly on the data-mining end.”

Khosla then asked a question about a use case involving one of my favorite portfolio companies of his, Ginger.io, related to the monitoring of a patient’s psychiatric state.

Responded Page, “I was talking to them about that last night. It was cool.”

That pretty much captures Brin and Page’s view of healthcare – fun to work on a few “cool” projects, but beyond that, the regulatory challenges are just too great to warrant serious investment.

(To be clear, Brin and Page emphasized their personal distance from Google Ventures, which has conspicuously pursued a range of health-related investments.  “Medicine needs to come out of the dark ages,” Google Ventures Managing Partner Bill Maris recently told Re/code.)

On the face of it, it’s pretty amazing that a company that doesn’t think twice about tackling absurdly challenging scientific projects (eg driverless cars) is brought to its knees by the prospect of dealing with the byzantine regulation around healthcare (and more generally, our “calcified hairball” system of care, as VC Esther Dyson has put it).  A similar sentiment has been expressed by VC and Uber-investor Bill Gurley as well; evidently taking on taxi and limousine commissions is more palatable than taking on the healthcare establishment.

Yet others – with eyes wide open – are taking on the challenge.  AthenaHealth’s Jonathan Bush, for instance, is maddened by the challenges of regulatory capture (see my WSJ review of his book here), yet he shows up each day to fight the battle.

Similarly, while I’ve not always agreed with Khosla’s perspective on algorithims, I’ve consistently admired his willingness to enter the fray (see here and here).

This morning on Twitter, he asked whether his willingness to invest in healthcare means he’s courageous (as I suggested) or naïve.

The answer, I imagine, is probably both.  The challenges in healthcare, especially regarding regulation, are real, and disruption is hard to come by.  As Brown University emergency physician Megan Ranney comments, there are “big risks, lots of roadblocks” but also “huge potential for humankind.”

I suspect the key to overcoming the regulatory roadblocks will be making the use cases more persuasive and immediate.  After all, most people have the enlightened self-interest to embrace life-saving innovations (anti-vaxers notwithstanding).

The challenge is that to this point, the benefits of technology generally seem less than persuasive – the tech seems “cool,” as Page and Brin might say, but not exactly convincing.  I’m not just talking about Google Glass (which perhaps defines the genre) and Google’s contact lenses (I’ve not met many experts who’ve bought into this technology), but also approaches like 23andMe.  When they ran up against regulators, there wasn’t exactly an outcry, “this technology has transformed my life and now you’re shutting it down.”  If only.

In contrast, efforts to shut down Uber typically generate far more impassioned protests.  Why? Because it’s immediately apparent to users how Uber improves their lives.  To use the service once is to be convinced.

What healthcare technology needs is to find a way to be similarly indispensable.  Page may cite the potential to save 10,000 lives, but the challenge is to convince anyone this applies to their own N of 1.  More directed examples of instances where technology could immediately impact lives, and could impact more were it not for oppressive regulation, would go a long way to rolling back the regulations that seem to impede progress.

Rather than focusing on the thousands of lives that could be saved in an imagined future, technologists would do well to provide a compelling demonstration of what big data and sophisticated analytics can achieve for the health of discrete individuals in the present, even with current limitations; success here could help innovative entrepreneurs push back on antiquated regulations, and bring healthcare delivery into the modern age while ushering in a new era in biomedical research driven by access to rich coherent datasets.

The truth is, Page is probably right about the underlying opportunity.  In particular, as I’ve long-argued, there’s tremendous potential to be found by thoughtfully combining comprehensive genomic and rich phenotypic data – immediate opportunities to impact clinical care, and the chance for a longer-term impact on scientific understanding.

I’m perhaps more optimistic than Page is, however, both about our collective ability to succeed meaningfully even within the constraints of our existing system, and about the ability of demonstrated success to move even the most intransigent stakeholders.

Healthcare, meet capitalism – Jonathan Bush

The $2.7 trillion industry lacks accountability for exorbitant costs. The system incentivizes doctors (and hospitals) to do tests and procedures, instead of paying them to do their jobs—keeping people healthy. It’s like paying carpenters to use nails.

“The biggest lie that we baked into our thinking,” Bush said in Aspen, is that “starting in 1958, in the wake of World War II, the government wanted to control wage inflation, so they let employers provide healthcare as an incentive (What could go wrong? It’s 1958!)—was this idea that healthcare itself is just a monolithic, identical thing. That there’s no value in price shopping. That there’s no value in choosing whether or not to get [a certain health service]. We act, as a society, on the unconscious level, like we’re not in charge. This is a massive problem. Not just because we utilize expensive things, but because we give up the opportunity for those things to get better.”

 

http://www.theatlantic.com/health/archive/2014/07/a-case-against-donating-to-hospitals/373637/

Video: https://www.youtube.com/watch?v=pWBf7G2JH2M#t=1830

Healthcare, Meet Capitalism

If transparent competition can drive the reinvention of U.S. healthcare, some creative thinkers stand to become unabashedly wealthy—and improve the quality of care in the process.
Athena (Aris Messinis/AFP/Getty)

Self-described “lunatic-fringe disruptors” depict U.S. healthcare like one of Ayn Rand’s dystopias. The $2.7 trillion industry lacks accountability for exorbitant costs. The system incentivizes doctors (and hospitals) to do tests and procedures, instead of paying them to do their jobs—keeping people healthy. It’s like paying carpenters to use nails.

“I believe we are on the cusp of an oil rush—a fabulous revolution of profit-making and cost-saving in health care,” disruptor Jonathan Bush told a rapt audience at the Aspen Ideas Festival last week. In the Rand comparison, Bush might be John Galt—were he not exuding as much benevolence as relentless capitalism. And he’s not giving up on the system; he’s trying to upend it.

Last week I moderated a discussion that became heated—by moderated-panel standards, and by no part of mine—between Bush, Toby Cosgrove (CEO of the Cleveland Clinic), Rushika Fernandopulle (CEO of Iora Health), and Dena Bravata (CMO of Castlight Health). It ended in an emphatic plea by Bush to never donate money to a hospital.

That was met with equal parts laughter and applause. From Cosgrove, seated three inches to his right, neither.

Logos of healthcare disruptors

To Bush, CEO and co-founder of the $4.2 billion health-technology company Athena Health healthcare is a business, driven by markets like any other. Altruism and profit-driven business need not be at odds. It’s incomprehensible and unsustainable that people have no idea what their care costs and have no incentive to consider cheaper options.

“Profit is a dirty word among the corduroy-elbow crowd in the research hospitals and foundations,” Bush wrote in his recently-released book, Where Does It Hurt? “But just like any business, from Samsung to Dogfish Head Brewery, this industry will grow and innovate by figuring out what we need and want, and selling it to us at prices we’re willing and able to pay.”

In Aspen, Bush mentioned Invisalign braces and LASIK surgery as procedures that have been driven by the free market. These things started off exorbitantly expensive, but prices fell and fell. For LASIK, the procedure was “$2,800 per eye [in the 1990s]; now it’s $200 per eye, including a ride to and from the procedure.”

The oft-cited, disquieting numbers—the U.S. spends the largest percentage of its GDP on healthcare of any country (by far) but ranks 42nd in global life expectancy and similarly underwhelms in many other health metrics—are projected to worsen. Massive hospitals systems are buying out their competition across the country, charging exorbitant premiums without incentive to cut costs or optimize the care they provide. Bush’s gushing proposition is that when patients can “shop” for healthcare based on quality and price, it will drive innovation and better care. Innovation will inevitably disrupt the bloated status quo. But the current system has to be allowed to fail. That might sound bleak, but to innovators like Bush, Fernandopulle, and Bravata, it’s an opportunity for reinvention.

Forecasting of this sort is the currency of the Aspen conference (hosted by the Aspen Institute and The Atlantic), but Bush has the infectious passion that makes it feel like he’s one of those people who, while giving a keynote on the need for change, is already halfway out the door to make something happen.

Here’s the second half of the discussion, which neatly explains some fundamental problems with healthcare delivery:

Dena Bravata is the chief medical officer of Castlight, whose platform helps patients compare cost and quality to make informed healthcare decisions—shifting incentives for doctors toward lower-cost, higher-quality care.

Rushika Fernandopulle is a primary care physician and co-founder of a small company called Iora Health that is trying to fix healthcare from the bottom up.

“We start by changing the payment system,” Fernandopulle said, “which I think is part of the problem. Instead of getting paid fee-for-service, we blow that up and say we should get a fixed fee for what we do. That allows us to care for a population, and our job is to keep them healthy. If you believe that, you completely change the delivery model.”

Iora assigns each patient a personal health coach who does the blocking and tackling in dealing with the healthcare system. They interact by email and video chat, reaching out to patients instead of leaving the onus on the patient to follow up on their care. In Fernandopulle’s view, athena health, which is still contingent on the current fee-for-service model, is something of a dinosaur. Fernandopulle is a disruptor of disruptors.

Toby Cosgrove, the former surgeon and current CEO of one of the largest healthcare systems in the U.S., the Cleveland Clinic, cites redundancy: “What we need to understand is that not all hospitals can be all things to all people.” The Cleveland Clinic, for example, has become expert in cardiothoracic surgery, drawing patients from across the country. In Cosgrove’s model, there might be only one hospital in the country that does a certain complex procedure—but it does the procedure extremely well, efficiently, and on a scale that is maximally cost-effective. Drawing on his experience in Vietnam evacuating injured soldiers, Cosgrove argued for moving patients to expert physicians, rather than trying to have sub-sub-specialized experts everywhere.

So the future of U.S. healthcare will not come in the form of more hospitals. As Cosgrove noted, we already have plenty. Hospital occupancy in the U.S. right now is 65 percent. “Twenty years ago [the U.S.] had a million hospital beds, Cosgrove said. “There are now 800,000, and we still have too many.”

Bush recognizes that the core of healthcare is the relationship between the doctor and the patient. He says that any successful health-business model will be predicated on maximizing the act of total presence during a doctor visit. Ancillary staff will do the busy work that might keep a physician away from her patients. The doctor’s undivided attention is what patients want, and giving it is what makes a doctor’s job meaningful and effective. Despite demand from patients and doctors for more time together, Bush notes, the average visit is eight minutes.

When large hospital systems leverage their market position and brand names to overcharge for basic services, they not only subsidize research, but they perpetuate inefficiency. A cornered market favors complacency and maintenance of the status quo. In every other industry, if you’re still using a pager in 2014—as many doctors are—your business fails when your clients go to Iora Health, where they can video chat.

In his book, Bush calculated the fortune that could be made if a person wanted to start their own MRI business. At Massachusetts General Hospital, an MRI can be billed to an insured patient for $5,315. Bush proposes that an industrious person could rent an MRI machine for around $8,000 per month, a suburban park office for $1,000, two technicians for $6,500 each (including benefits), and around $3,000 for taxes and fees. That’s $25,000 per month in cost. If you can do three scans per hour and run twelve hours per day, you’d break even at $28 per MRI.

“The biggest lie that we baked into our thinking,” Bush said in Aspen, is that “starting in 1958, in the wake of World War II, the government wanted to control wage inflation, so they let employers provide healthcare as an incentive (What could go wrong? It’s 1958!)—was this idea that healthcare itself is just a monolithic, identical thing. That there’s no value in price shopping. That there’s no value in choosing whether or not to get [a certain health service]. We act, as a society, on the unconscious level, like we’re not in charge. This is a massive problem. Not just because we utilize expensive things, but because we give up the opportunity for those things to get better.”

Pincer funding: how to support appropriate coding of adverse events without rewarding bad behaviour

There’s a problem with correct coding of adverse events. In effect, we want a system that rewards correct coding, but punishes harmful behaviour.

If the institution is punished in any way for adverse events, they will be far less likely to code their occurrence.

If the institution is not punished (i.e. rewarded or unaffected) for adverse events, then adverse events will either continue or at best remain unchanged.

A thought bubble had today at the safety and quality commission workshop involves the idea of a pincer funding arrangement, specifically suited to Australia’s current funding arrangements.

At the local hospital district (or individual hospital) level, pay for coded adverse events, but then impose financial penalties at the state (or local hospital district) level.

I imagine they’d just all learn new ways to game this, but the intent is to reward correct coding, but punish harmful behaviour.

Crossing the creepy line – big data in health

Hospitals and insurers need to be mindful about crossing the “creepiness line” on how much to pry into their patients’ lives with big data.

http://www.bloomberg.com/news/2014-06-26/hospitals-soon-see-donuts-to-cigarette-charges-for-health.html

Your Doctor Knows You’re Killing Yourself. The Data Brokers Told Her

Photographer: Evan Sung/Bloomberg

Photographer: Pat LaCroix

Photographer: David Paul Morris/Bloomberg

A cupcake eater in San Francisco.

Photographer: Matthew Staver/Bloomberg

A cigarette smoker in Denver.

Photographer: Tim Boyle/Getty Images

A customer at a convenience store in Des Plaines, Illinois.

You may soon get a call from your doctor if you’ve let your gym membership lapse, made a habit of picking up candy bars at the check-out counter or begin shopping at plus-sized stores.

That’s because some hospitals are starting to use detailed consumer data to create profiles on current and potential patients to identify those most likely to get sick, so the hospitals can intervene before they do.

Information compiled by data brokers from public records and credit card transactions can reveal where a person shops, the food they buy, and whether they smoke. The largest hospital chain in the Carolinas is plugging data for 2 million people into algorithms designed to identify high-risk patients, while Pennsylvania’s biggest system uses household and demographic data. Patients and their advocates, meanwhile, say they’re concerned that big data’s expansion into medical care will hurt the doctor-patient relationship and threaten privacy.

Related:

“It is one thing to have a number I can call if I have a problem or question, it is another thing to get unsolicited phone calls. I don’t like that,” said Jorjanne Murry, an accountant in Charlotte, North Carolina, who has Type 1 diabetes. “I think it is intrusive.”

Acxiom Corp. (ACXM) and LexisNexis are two of the largest data brokers who collect such information on individuals. Acxiom says their data is supposed to be used only for marketing, not for medical purposes or to be included in medical records. LexisNexis said it doesn’t sell consumer information to health insurers for the purposes of identifying patients at risk.

Bigger Picture

Much of the information on consumer spending may seem irrelevant for a hospital or doctor, but it can provide a bigger picture beyond the brief glimpse that doctors get during an office visit or through lab results, said Michael Dulin, chief clinical officer for analytics and outcomes at Carolinas HealthCare System.

Carolinas HealthCare System operates the largest group of medical centers in North Carolina andSouth Carolina, with more than 900 care centers, including hospitals, nursing homes, doctors’ offices and surgical centers. The health system is placing its data, which include purchases a patient has made using a credit card or store loyalty card, into predictive models that give a risk score to patients.

Special Report: Putting Patient Privacy at Risk

Within the next two years, Dulin plans for that score to be regularly passed to doctors and nurses who can reach out to high-risk patients to suggest interventions before patients fall ill.

Buying Cigarettes

For a patient with asthma, the hospital would be able to score how likely they are to arrive at the emergency room by looking at whether they’ve refilled their asthma medication at the pharmacy, been buying cigarettes at the grocery store and live in an area with a high pollen count, Dulin said.

The system may also score the probability of someone having a heart attack by considering factors such as the type of foods they buy and if they have a gym membership, he said.

“What we are looking to find are people before they end up in trouble,” said Dulin, who is also a practicing physician. “The idea is to use big data and predictive models to think about population health and drill down to the individual levels to find someone running into trouble that we can reach out to and try to help out.”

While the hospital can share a patient’s risk assessment with their doctor, they aren’t allowed to disclose details of the data, such as specific transactions by an individual, under the hospital’s contract with its data provider. Dulin declined to name the data provider.

Greater Detail

If the early steps are successful, though, Dulin said he would like to renegotiate to get the data provider to share more specific details on patient spending with doctors.

“The data is already used to market to people to get them to do things that might not always be in the best interest of the consumer, we are looking to apply this for something good,” Dulin said.

While all information would be bound by doctor-patient confidentiality, he said he’s aware some people may be uncomfortable with data going to doctors and hospitals. For these people, the system is considering an opt-out mechanism that will keep their data private, Dulin said.

‘Feels Creepy’

“You have to have a relationship, it just can’t be a phone call from someone saying ‘do this’ or it just feels creepy,” he said. “The data itself doesn’t tell you the story of the person, you have to use it to find a way to connect with that person.”

Murry, the diabetes patient from Charlotte, said she already gets calls from her health insurer to try to discuss her daily habits. She usually ignores them, she said. She doesn’t see what her doctors can learn from her spending practices that they can’t find out from her quarterly visits.

“Most of these things you can find out just by looking at the patient and seeing if they are overweight or asking them if they exercise and discussing that with them,” Murry said. “I think it is a waste of time.”

While the patients may gain from the strategy, hospitals also have a growing financial stake in knowing more about the people they care for.

Under the Patient Protection and Affordable Care Act, known as Obamacare, hospital pay is becoming increasingly linked to quality metrics rather than the traditional fee-for-service model where hospitals were paid based on their numbers of tests or procedures.

Hospital Fines

As a result, the U.S. has begun levying fines against hospitals that have too many patients readmitted within a month, and rewarding hospitals that do well on a benchmark of clinical outcomes and patient surveys.

University of Pittsburgh Medical Center, which operates more than 20 hospitals in Pennsylvania and a health insurance plan, is using demographic and household information to try to improve patients’ health. It says it doesn’t have spending details or information from credit card transactions on individuals.

The UPMC Insurance Services Division, the health system’s insurance provider, has acquired demographic and household data, such as whether someone owns a car and how many people live in their home, on more than 2 million of its members to make predictions about which individuals are most likely to use the emergency room or an urgent care center, said Pamela Peele, the system’s chief analytics officer.

Emergency Rooms

Studies show that people with no children in the home who make less than $50,000 a year are more likely to use the emergency room, rather than a private doctor, Peele said.

UPMC wants to make sure those patients have access to a primary care physician or nurse practitioner they can contact before heading to the ER, Peele said. UPMC may also be interested in patients who don’t own a car, which could indicate they’ll have trouble getting routine, preventable care, she said.

Being able to predict which patients are likely to get sick or end up at the emergency room has become particularly valuable for hospitals that also insure their patients, a new phenomenon that’s growing in popularity. UPMC, which offers this option, would be able to save money by keeping patients out of the emergency room.

Obamacare prevents insurers from denying coverage because of pre-existing conditions or charging patients more based on their health status, meaning the data can’t be used to raise rates or drop policies.

New Model

“The traditional rating and underwriting has gone away with health-care reform,” said Robert Booz, an analyst at the technology research and consulting firm Gartner Inc. (IT) “What they are trying to do is proactive care management where we know you are a patient at risk for diabetes so even before the symptoms show up we are going to try to intervene.”

Hospitals and insurers need to be mindful about crossing the “creepiness line” on how much to pry into their patients’ lives with big data, he said. It could also interfere with the doctor-patient relationship.

The strategy “is very paternalistic toward individuals, inclined to see human beings as simply the sum of data points about them,” Irina Raicu, director of the Internet ethics program at the Markkula Center for Applied Ethics at Santa Clara University, said in a telephone interview.

To contact the reporters on this story: Shannon Pettypiece in New York atspettypiece@bloomberg.net; Jordan Robertson in San Francisco atjrobertson40@bloomberg.net

To contact the editors responsible for this story: Reg Gale at rgale5@bloomberg.net Andrew Pollack