Neupert On Health : health economics

The Six Billion Pound Challenge -- How a Focus on Driving Outcomes can Improve Health Faster and Better than Legislation

pnblog — Wed, 11 Nov 2009 02:30:00 GMT

I commend the administration for shining the light on the need to improve health in America! While I want to be optimistic about change, I’m skeptical about how much real improvement we will really see under the guise of healthcare reform. Like I’ve noted before, the national conversation we are having -- which bill will pass, a public option or not, an abortion amendment or not, which party is winning -- is just the wrong conversation. Imagine if we were to take all the TV time, print space, blogs, and so on, consumed by the political debate and use it to advance an audacious goal like improving the state of our health! Imagine what we could accomplish with a big sustainable campaign across schools, employers, state governments and the media -- just imagine!

Today’s reality is that more than 75 percent of America’s healthcare costs stem from six chronic diseases. About 133 million Americans -- nearly one in two adults -- live with at least one chronic illness -- and the numbers are forecasted to grow unless we do something differently. Realistically, the only way to maintain some fiscal responsibility under any reform scheme is to address the controllable elements of chronic diseases.

What if we were to focus on a couple of conditions like obesity and diabetes? Two-thirds of American adults are obese or overweight, leading to chronic diseases like diabetes, heart disease and other conditions. Currently, obesity alone costs the health system $147 billion a year! What’s more, obesity is one of the biggest risk factors for developing the six chronic diseases that drive the majority of direct and indirect costs to our system, including diabetes ($218 billion), cardiovascular disease and stroke ($437.5 billion). Not to mention childhood obesity with equally alarming statistics (one in six children are obese), the most alarming of which is that children who are obese have a 70% chance of being obese as adults. Yet, obesity is completely within our control to manage/prevent.

According to CDC, the average American adult (age 20 and 74) is 5’6 ¾”, weighs 177.65 pounds and has a BMI of 28 (Note: an adult who has a BMI between 25 and 29.9 is considered overweight and an adult who has a BMI of 30 or higher is considered obese). To achieve a BMI of 24, America needs to lose 29 pounds per person. With the U.S. adult population at 205,639,360, that means 5,963,541,440 pounds…almost six billion pounds.

If we were to collectively lose this weight, we would have a direct impact on obesity and as a result, diabetes and other conditions. Healthier diet and exercise are things we can immediately start doing -- without legislation. Not to sound trite, but losing weight can be the “quick fix” for our health problems and rising costs. Obese individuals incur an 42% more in medical expenditures -- about $4,800 for per person per year -- compared with normal weight individuals, who incur an average of about $3,400 in such expenses. And little things matter -- for example, walking half an hour a day, five days a week cuts the incidence of diabetes by 40%. Think of the impact we could have on costs and the economy!

I know losing weight is hard work, but letting the growing waistlines of America continue unchecked will only doom us to continue the cycle of out-of-control healthcare spending. While I’m not sure I agree with Japan’s approach to legalizing waistlines, it does seem to have an impact. If we can send a man to the moon, create 200 different versions of yellow sticky notes and other wonders of the modern world, we can figure out how to lose a few billion pounds!

And it should all start with a public education campaign. Even though this is fundamentally marketing, it does belong in the domain of government action. It doesn’t take much to create a great ad campaign, viral marketing and so on. Look at the popularity of shows like the Biggest Loser -- now there’s a whole line of products and services. There have been a lot of one-off “celebrities” championing the cause of weight loss -- Mike Huckabee, Valerie Bertinelli, and others. But these have been isolated. Imagine if the government organized a group of great marketing companies -- Nike, Apple, Proctor and Gamble -- and got them together to create a campaign about obesity and health -- and involve popular sports heros or celebrities -- in a sustained way over a period of time. I’d bet there’d be some impact. Another great example of something that could easily and inexpensively be rolled out to schools nationally is the preventative childhood obesity program driven by the Columbus Research Foundation. These folks thought deeply about how to influence middle school students, and developed a program focused on education around diet/nutrition and exercise -- including a virtual cross-country competitive walk (students used pedometers connected to the Internet via HealthVault to track their progress). Ten middle schools were involved with nearly 1000 participants.

Real reform in healthcare isn’t solely the responsibility of government. It’s about individual responsibility and how we, as consumers, embrace our part of the current situation. I hope that reform will include changes to the payment system to enable and reinforce changes in behavior and stimulate innovation, but we don’t need to rely only on legislation to make things better. We can all individually start making better choices.

I understand that neither 'health reform' nor legislation are easy. As many have noted, whatever legislation passes will not include a 'silver bullet solution' to either goal 'bending the cost curve' or improving the value we get for our healthcare spend. Simple things can make a difference. By taking more responsibility for our own actions, we can impact the healthcare costs of our nation.

Reflecting on the healthcare system while waiting at the hospital for a loved one

pnblog — Wed, 30 Sep 2009 03:12:00 GMT

Often when we talk about healthcare reform, it can be a rather abstract discussion -- you watch some tv show with ‘experts’ reflecting on some 20 page bill or hashing through the merits of a public insurance option. Last week, however, all the intellectual and abstract ideas were brought into something very personal for me and my family.

My wife had a Hysterectomy, and I spent three days at Swedish hospital in Seattle caring for her. With all the waiting time, it was hard not to reflect on the experience and think about it in the context of health reform. I’m happy to say that my wife is now recovering on schedule, and she’s given me permission to share the story and my insights.

Once she had decided surgery was her best option, we became even more avid information seekers; we shopped for the procedure with the best outcomes and then the surgeon with the most experience and best quality results for this procedure. The best available counsel we found was for a Robot-Assisted Hysterectomy because there was less risk, less pain and faster recovery times vs. the alternatives. We didn’t have to shop for ‘price’ (thanks to Microsoft’s benefit plan, but that is a different future post)…but even if that were the case, we probably would have chosen a more ‘expensive’ option if it meant less risk and more productive days -- getting back to normal life as quickly as possible.

We all know that surgery can be pretty scary. Throughout the experience, everyone from the doctor’s office to the staff at Swedish helped to make the experience a positive one, allaying any fears and making us feel comfortable and confident. We often forget that healthcare is truly a people business. In just three days – the number of different people we dealt with was amazing -- five docs, seven nurses plus the ancillary folks (lab techs, transport and other helpers). They all took time to connect with our emotions while doing their jobs.

Swedish is leveraging technology to improve their systems. You see it throughout the organization, starting in the lobby, with signs advertising the hospital’s new EMR system. During the course of our stay, when there was time I asked various staff members about their experience with the new EMR, and they were positive about the system because they had all the information in one place. While a common complaint was that the data entry took them more time, they felt overall it made them more productive and effective.

This highlights that we need to remember that technology is a means to an end. It is NOT the introduction of technology that will make a difference, but rather how leadership leverages the right technology to make a difference…in both quality results and economic outcomes.

I also saw a real focus on patient safety, starting with the pre-op processes. Each member of the care team carefully checked her arm band, her chart and asked several specific questions to be sure she was getting the right action. For us, the repetition became frustrating, but if this process were to improve patient safety, then it would be worth it. Despite the technology investments, the core safety process was in the human factors.

After the surgery was completed, she spent two days recovering in the hospital. This was a day longer than originally planned due to very low blood pressure and a declining hematocrit. While I used the guest Wi-Fi for work and email, it was even more critical for answering key questions about her condition, the trade-offs, the next steps – which helped me to get some context and understanding to a) engage more thoughtfully with the care team about questions/choices and b) assure my wife about what was going on during the long time periods when neither doctor or nurse was around. I think hospitals should consider leveraging their video and wireless infrastructure more effectively for patient specific education and connecting with their care teams. This is potentially a big opportunity for improved patient compliance and care team coordination.

Because the low blood pressure persisted, I called her primary care physician to get her baseline BP. If we had stored this information in HealthVault, I wouldn’t have had to make the call – I would have just been able to look it up. Furthermore, I would have preferred to have gotten her discharge information automatically transferred to HealthVault. We were given paper copies. This should be easier.

So, what’s the moral of this story?

· We can’t lose sight of innovation and there’s a risk that could happen if the government were to become the primary funder of health.

· Technology is a means to an end, but we have a long way to go to figure out how to use it smartly.

· We can’t lose sight of how important the personal aspect of healthcare is. The emotional support and human caring delivered by the care team was the critical component of our overall satisfaction.

This experience reinforced for me that a ‘healthy’ health ecosystem requires consumer choice -- it is a critical component to the effective functioning of markets and innovation. We made the decision to ‘save time/hassle’ vs. saving dollars as we do in other aspects of our lives. This really drove home for me that the debate about ‘rising health care costs’ doesn’t really account for improved patient outcomes in terms of fewer lost days of work/productive living. I am all for comparative effectiveness of various options and knowing what things cost, but it needs to include patient values -- like less pain and getting back to normal faster -- or it may lead to bad unintended consequences. I am more concerned than ever that increased government financing of health will ultimately lead to fewer consumer choices and will stifle future innovation with tangible economic benefits.

I haven’t received the multiple confusing bills and outrageous line items of detail from the hospital stay yet. Nonetheless, when it comes to getting a quality outcome from an advanced surgical procedure, I prefer the current U.S. health system with all its flaws to the alternative future of less consumer choice and innovation.

Empowering Consumers

pnblog — Sat, 26 Sep 2009 20:48:00 GMT

So this week’s question from the Washington Post RX Blog was:

In the Baucus bill, insurers would pay a tax on the value above $8,000 for an individual policy and $21,000 for a family plan. What do you think of Sen. Baucus' proposal to impose a 35 percent tax on "Cadillac" health insurance plans?

My response is below.

We should have faith in consumers to make the right choices for their health -- only then will we reduce costs, expand coverage and drive value.

The motivation driving this tax is that health insurance plans (Cadillac or not) are another form of compensation -- something your employer provides for you with pre-tax dollars versus your paying yourself with after-tax dollars. The employer's ability to use pre-tax dollars creates a misalignment. Rather than tax a small percent of plans, it would seem better to correct the core problem. Until consumers are educated and empowered about how their health-care dollars -- both pre-tax and post-tax -- are spent, real reform won't happen.

One of the big snags in reform conversations is the idea that employment and health insurance are inextricably linked. Health insurance should be portable so that it can be taken from one job to the next and will cover you when you're temporarily unemployed. Labor mobility is one of the underlying strengths of the U.S. economic system, and health benefits connected to employment unnecessarily weakens labor mobility.

Moreover, the concept of health insurance should be more focused on 'major medical' needs like other insurance where you pay into a system to prepare for a catastrophe. But the norm of the current system is first dollar coverage which pays for every routine procedure. The fact that employers can use pre-tax dollars and ostensibly provide greater benefits for each dollar spent has led to this situation. This has driven up total health costs through misaligned incentives, extra administrative costs and limited provider innovation (e.g. packaging of services to meet routine needs). If there were a consumer-driven market, consumers would understand how their dollars are spent and there would be a more innovative insurance market.

The Wyden-Bennett Act provides this foundation. Consumers would receive cash from their employers equivalent to what the employer spends on health insurance. They'd have the option to buy the insurance they considered most appropriate, based upon need and determined by behaviors, through a health insurance exchange, which would be regulated by the government and encourage insurers to compete for their business.

Consumers make health choices every day, so why shouldn't they decide the coverage they need and the amount they will pay for it? People don't need the government to help them pick their car insurance.

Let's give people the right information to make the right decisions.

In the Health Reform Recipe, the Missing Ingredient Is the Consumer

pnblog — Wed, 16 Sep 2009 01:28:00 GMT

So this week’s question from the Washington Post RX Blog was:

What's Your Take On Obama's Speech? What did you think of President Barack Obama's Sept. 9 speech to a joint session of Congress? Was it effective? Did it "move the needle?"

My response is below.

I applaud the administration for shining a bright light on health reform. The government -- as buyer, regulator and leader -- must be a part of any solution. The political calculus has created a real sense of urgency to do something about this complex system which touches everyone and accounts for one sixth of our economy. The consequence however, through a lack of transparency and understanding, has reduced the public dialogue to be between "public insurance options" vs. "death panels." Framing the debate this way and consuming available public attention on "wedge" issues won't lead to a sustainable future system.

My attendance at an Institute of Medicine workshop this week in the midst of the buzz about the speech served as a stark reminder about the depth and breadth of the hard problems:

• Access (too many uninsured)
• Costs (growing faster than inflation)
• Demographics (aging populations driving up systemic costs)
• Quality (not enough -- as measured by comparative outcomes, disparity in care geographically)
• Worsening health (people dying because of a lack of focus on improving the care delivery process).

I was struck by the number of smart, passionate people representing the major stakeholders working together to drive change. Veterans of the process recognize that change is imperative but hard -- because the details matter. We are in this predicament because incentives, tax policies, government reimbursement schemes and increasing specialization and capability of medicine have led us here.

The president delivered an inspirational speech, laying out basic principles: everyone should have access, nobody with insurance will have to change it and cost growth must be slowed. Voters know there is no free lunch, and health is no different.

We can't achieve reform without educating the public. A sustainable system is not as simple as providing more access. Consumers are ultimately responsible for their health and their daily choices cost the system. We need to help them engage in their health differently, be wiser purchasers, and understand trade-offs. As long as they believe the price of care is their co-pay and continue to engage as they have, there won't be sustainable reform.

There are best practices at organizations like Geisinger that have re-invented care delivery and consumer engagement models. These leaders will tell you that success is about aligning incentives, understanding the details and making trade-offs.

The difficult work of figuring out the details and making hard choices is still ahead.

Three Simple Truths

pnblog — Wed, 26 Aug 2009 22:20:00 GMT

So this week’s question from the Washington Post RX Blog was:

Recent polls show declining support for President Obama's handling of the health-care issue. What should he do to get the effort back on track?

My response is below.

Today's debate is mired in details about the wrong topics, chiefly public insurance options and the best government bureaucracy to determine what gets reimbursed. To drive the unprecedented reform vital to our country's future, we must up-level the conversation and focus on real reform: analyzing the system holistically and figuring out how health care can be delivered in better ways to improve outcomes and value. The challenge is how to leverage market-based solutions while dealing with the unique properties of health, such as the moral imperative to provide for the under-privileged.

Much of the justification driving reform has been economic, yet the debate has been politically focused, obfuscating the economic issues rather than illuminating them. The result? A missed opportunity to educate citizens on the fundamental issues and frame a public conversation about the choices that will bring change.

To refocus, we should acknowledge three simple truths:

Healthcare isn't free. A recent Los Angeles Times editorial highlights a clinic offering free health care that turned people away because too many showed up. The editorial suggests mandating charity care by doctors as part of the solution. Unlimited health care will be paid for by all tax payers either directly or indirectly. Free goods are always over-used as evidenced by the classic example of The Tragedy of the Commons.
Reform and innovation are inseparable. The history of industry transformation has shown us that change and ultimately better value aren't possible without innovation. We need Congress to change today's rules to enable health service delivery innovation, allowing new entrants, solutions, business models and types of care delivery.
Change is a function of our willingness to change. As consumers, we have to be more accountable for and sensitive to the care we're using. Providers and insurers have to engage with consumers differently and offer new products/services that focus on outcomes and offer real value. The system that governs has to provide the right incentives to drive the right behaviors.

There are pointers in the right direction -- the Healthy Americans Act provides solid thinking about improving outcomes by focusing on prevention, wellness and disease management, and tying accountability and incentives appropriately. In the words of Sen. Ron Wyden (D-Ore.) -- "passing a reform bill that doesn't really reform the health care system is just about as wrong as not passing any bill at all."

Individuals and Personal Responsibility May Be the Tipping Point in Health Reform

pnblog — Thu, 13 Aug 2009 05:16:00 GMT

The latest turn in the healthcare debate is the increasingly sensational coverage of town halls happening across the country. While they’re described as rancorous and sometimes violent, I’m pleased to see my fellow Americans so passionate and involved in one of our country’s biggest long-term challenges. For most of us, we think of health care personally -- it’s about my relationship with my doctor or my insurance company -- versus considering the system as a whole.

But this dynamic seems to be changing. There are a number of forces -- the media and current political agenda, technology trends, the economy -- converging on Main Street that are pushing people to get educated and more engaged in Congress’ proposed changes than they ever have before. Our sensational media machine is in full swing highlighting healthcare across every communications vehicle available 24/7. Technology’s influence over other industries has created consumer expectations for more convenience and value from healthcare. And the downturn in the economy has forced many to face the stark realities of healthcare tied to employment. So perhaps out of all this turmoil will come something good -- people coming together around the cause of improving the healthcare for today and tomorrow.

What many fail to understand is that the personal connection people have with their own healthcare is the very core we need address in order to make some of the greatest changes to the system. People make choices every day that impact their health – and the system as a whole. The diabetic who decides to not follow the course of action prescribed by his doctor costs the system. This is evidenced by two studies I read this week. The first is from the CDC, which states something we all know – that by losing weight, not smoking, getting exercise and sticking to a good diet, we will dramatically lower the risk of chronic diseases, such as diabetes and heart disease. Imagine the impact we could have on the system given that 70% of current costs stem from six chronic disease states.

The second from PricewaterhouseCoopers highlights some stark realities:

About half of surveyed individuals indicate their current lifestyle was less than healthy
90 percent said they would become active in improving their health if they were diagnosed with a chronic illness, which is obviously too late
Disease management programs are rarely used -- employers report than less than 15 percent of eligible patients participate in the programs
25 percent of surveyed individuals are not more involved in their healthcare because they don't know where to go for good information
15 percent aren't more involved because they aren't interested
25 percent of people in poor health are not involved in their healthcare and treatment choices

The juxtaposition of these two studies really brings to light for me how much our reform efforts need to focus on our citizens -- educating them and involving them in the health system in very different ways than they have been in the past. For the health system to work for all, economic incentives and costs need to be aligned with consumer behaviors and choices. We can’t continue to support the diabetic’s decision to make poor choices and drain the system for all of us. There have to be some consequences for actions. If something’s free, I think we all know that there is a strong possibility that people will not appreciate its value. We can look to many examples of this over time.

While we can argue that patients absolutely need to step up and do more for themselves (and their children), we also have to acknowledge that our system hasn’t been designed to support them. We have a provider-centric system, not a patient-centric one. Today, the average time a physician spends with a patient is 18.7 minutes. There isn’t a lot of room in 18.7 minutes for much “education.” In Maggie Mahar’s new documentary, one physician describes how he’d love to spend time with the diabetic educating him on how he needs to get involved, but he gets paid more to do procedures.

“We are paid to do things to patients,” said one doctor. “We are not paid to talk to them.”

In addition to patients needing to take more responsibility for their own health, our government needs to set up (or get out of the way) a new framework that will enable "healthy" markets to develop new value chains to deliver services like education, motivation, etc. at lower costs than high-cost professionals. We need highly educated physicians focused on the right things -- like diagnoses, solving major health crises, etc. If we look at chronic care today, much of it is about helping patients stick to a particular course of action prescribed their physician. But today’s chronic care "business model" is based on physician and hospital care -- acute care. A totally different type of "business model" or offering is required to keep people well. We’ve already seen innovation like this in other health related-areas like veterinary medicine, dentistry, and cosmetic surgery where consumers have taken more control of their on-going care.

The decisions we make today will impact generations to come -- financially, socially, and medically. We have an opportunity to come together, influence our elected officials and shift the debate in Washington to drive real change.

Lessons from Medicare and Medicaid

pnblog — Fri, 07 Aug 2009 07:34:00 GMT

So this week’s question from the Washington Post RX Blog was:

Do you think that a government-sponsored health insurance option is needed to help control rising costs and "keep insurers honest," as President Obama says?

My response is now live: Lessons from Medicare and Medicaid.

My main points:

· How will another government-managed option be better at building a health system that works for the 21st Century than the one we already have (Medicare and Medicaid)?

· While these programs began with admiral goals and are politically popular, in reality, over the past 40 years, they have done little to control costs or drive innovation.

· What's needed is a new framework to drive innovation, better value, improved outcomes and increased access.

Please feel free to comment with your own thoughts on the public option.

Health Care Needs New Rules to Enable Innovation and Reward Experimentation

pnblog — Wed, 29 Jul 2009 03:00:00 GMT

(cross-posted on Microsoft on the Issues)

Technology is playing a major role in helping bring healthcare into the 21^st century. Many of us have seen it first hand in treatment from our doctors, from MRI scans to laser surgery.

But these clinical advancements represent only a small piece of what technology can do to transform health care. The power of technology lies in the potential to transform the rest of the health care system, enabling new ways of working and communicating, new economics and new business models. As consumers, we’ve experienced how technology impacts nearly every other area of our lives -- how we manage our financials, travel, communicate, shop and so on -- with more self-service, more control, more convenience and ultimately better value for what we spend.

Similar business innovation and consumer engagement has been slow to reach health care, where many physicians still opt for a pen-and-paper over a computer to maintain patient histories and chronicle treatments. Patients continue to navigate frustrating and hard-to-understand medical and insurance organizations, physicians don’t always talk to one another about care and medical errors, waste and duplication drain the system of resources.

Today, we are finally seeing the first signs of systemic change in health care. This change was clearly highlighted with the President’s recent visit to the Cleveland Clinic, which has leveraged technology to improve efficiency and health outcomes and give patients an active role in their health decisions. But the Cleveland Clinic is just one example. There are other health care institutions -- the Marshfield Clinic, Kaiser Permanente, the Mayo Clinic -- whose leaders have embraced technology to improve efficiency and quality while reducing costs. And newer players are showcasing the possibilities brought by innovation, including virtual care from American Well and new delivery channels like Minute Clinic.

But we haven’t yet seen widespread change. The rules governing health care simply haven't allowed this to happen. Congress created rules that have in fact stifled innovation (e.g. Medicare) by reinforcing volume over value -- reimbursing on a per-procedure basis rather than on the number of patients who remain healthy year over year. Now Congress needs to look to the organizations that have used technology to create a new health care reality -- such as the Cleveland Clinic -- and develop a new framework that drives value, rewards experimentation and enables innovation. Only then will we realize the policy goals of increasing access to health care while maintaining fiscal responsibility.

Reform efforts should focus on enabling the kind of transformation that Clay Christenson describes in his book "The Innovator's Prescription". He describes how almost every other industry has been transformed -- complex, expensive products and services once only affordable to the wealthy have become accessible to the "masses" and provided by those with far less training.

As I described in my post this week on the Washington Post’s Health Care Rx blog, real change requires:

Figuring out what works (and what doesn't)
Enabling supply-side innovation
Letting consumers do some of the work that expensive health-care professionals shouldn't be doing anymore

With our ailing economy and worsening health, it’s imperative Congress act quickly and tear down the barriers that exist to enabling innovation.

A New Place for Health Care Policy Debate

pnblog — Wed, 22 Jul 2009 20:34:00 GMT

About a month or so ago, the Washington Post launched their new Health Care Rx blog, and I was asked to participate as a panelist. Every Monday, questions are sent out, and a variety of “experts” from across the health care industry respond. It provides a great snapshot of the many different perspectives that exist.

This week’s question:

The Blue Dog Coalition worries the health bill in the House does not address fundamental cost drivers in the system. Is it possible to rein in costs in the current system? How?

My response is now live: It's Not About Costs, It's About Enabling Transformation

My main points -- real change requires:

Figuring out what works (and what doesn't)
Enabling supply-side innovation
Letting consumers do some of the work that expensive health-care professionals shouldn't be doing anymore

To read the full post, click here. Please feel free to comment with your own thoughts on how to rein in costs in the current health care system.

And you can see my responses to previous questions:

Who Pays for Whose Heath Care? [Posted July 14]

The political debate is often framed around covering the uninsured. At the heart of this is the supposition that health care is a moral obligation -- that everyone has a "right" to it. But it's difficult to separate the moral from the economic because there is no other "liberty" that requires payment.

Defusing the Health Care Bomb [Posted June 16]

The "big red wire" that needs to be clipped first is the fee-for-service payment system driven by the government today through Medicare reimbursement decisions. Until that's addressed, the ticking bomb won't be stopped.

Diagnosing and Treating the Health Non-System [Posted June 7]

We do not currently have a health system at all: it is a health non-system.

If you want to follow the conversation, you can add the Health Care Rx blog to your RSS reader here: http://views.washingtonpost.com/healthcarerx/atom.xml, and I will be posting summaries of my responses on this blog.

Aligning policy, technology, and business innovation – perspectives from the Connected Health Conference…

pnblog — Sat, 13 Jun 2009 01:59:00 GMT

We’re just wrapping up our annual Connected Health Conference. I wanted to share some insights and observations from the past three days. We had 925 attendees representing 409 organizations -- attendance more than doubled from last year, which is pretty amazing given that conference attendance is down all over the US… At this year’s conference, our Amalga and HealthVault customers and partners all came together for the first time. The most frequent comment I heard from attendees was excitement about the breadth of work we are doing and the new opportunities they see as a result. The main issue that came up over and over again was the importance of driving and aligning innovation in health IT, health policy (e.g. reimbursement strategies), and business.

This topic first came up during our opening keynote panel on Thursday with Professor Uwe E. Reinhard, Dr. David Kibbe and former HHS Secretary Mike Leavitt. Secretary Leavitt introduced the notion that advancements in reimbursement reform are needed as much as stimulus for technology adoption. According to Leavitt, health IT will become ubiquitous when consumers demand it from their healthcare providers. While I agree with Levitt about informed, engaged consumers being key drivers of change, I also think that physicians, industry and other partners must demand a smarter approach to reimbursement from policymakers. One place to begin innovating and experimenting with a better reimbursement system is at the state level. During this morning’s keynote, Dr. Mark Smith of the California Health Care Foundation, made several insightful observations about factors affecting HIT adoption such as; better, simpler solutions for physicians, a stronger voice for government as purchaser in mandating effective standards and a reimbursement policy that rewards outcomes vs. volume. However, as David Harlow pointed out during a conversation today, our tough economic climate makes it difficult for states to take the lead.

Dr. Kibbe emphasized the need for web-based tools that could be assembled in a modular way to qualify for stimulus dollars. Both Kibbe and Smith made the strong point that physicians haven’t adopted existing technology solutions for a reason and that any stimulus/policy reform needs to be flexible enough to allow innovation in solutions vs. trying to “jam” solutions that don’t meet current needs or practical market requirements. In speaking with our Amalga partners, they too are interested in understanding how meaningful use and certification will be defined and applied. Our customers shared many examples with each other of liberating and unifying data which makes measuring quality and proving effectiveness easier and automatic. As much as health IT has the potential to help cut inefficiency and improve operational throughput, we still need the right policy solutions to bring greater transparency to what patients are purchasing from their providers and that quality of those services…as Leavitt demonstrated humorously with his story about colonoscopy pricing.

You can see some of the highlights of the panel discussion as well as Mark Smith's keynote below.

Our commitment to connecting technology, policy and business innovations is central to our vision of unifying a fragmented health ecosystem. In his remarks, Microsoft Chief Research & Strategy Officer Craig Mundie highlighted the major role health plays in economies around the world and the huge opportunity for software to improve peoples’ lives. Our Connected Health Conference this week brought together many different "perspectives" from across the fragmented health ecosystem -- what really struck me was everyone's energy and desire to let innovation reengineer the health system. I hope that the public and private sectors can work together to drive real change. We all know that that it's not going to be easy, but it will -- and must -- happen.

And the debate rages on…about access…

pnblog — Wed, 10 Jun 2009 05:01:00 GMT

I think we’d all agree that the healthcare debate continues to intensify. Many say it has entered a new stage as conversations move to proposals -- with Senate Democrats recommending a bill that will amplify the debate even more -- to decide if the US will adopt universal coverage.

Access seems to have replaced change as the word of the day. Everyone seems to be focused on it -- including Peter Orszag and Virginia Postrel. There’s no doubt that access is important -- but addressing access prior to reengineering the system is like adding passengers to a sinking ship. And in this case, the ship is going down in a sea of red -- the growing debt that will be incurred.

What we really need to do is what I highlighted in my contribution to the Washington Post’s new Daily Dose Panel Blog, Diagnosing and Treating the Health Non-System.

It’s not just about access. There are multiple symptoms and ailments that interact with one another. The three principal "diseases" are:

· Access (too many uninsured people)

· Value (too much spending for the health results delivered)

· Ignorance (at every level - who really pays for health, misaligned incentives, true costs, quality measures, transparency and more)

The most important to fix is value -- how do we improve health outcomes for the same or lower economic cost? Why is this most important? Everyone acknowledges that health spending is already in an economic crisis -- both in the near term and certainly in the long term (Medicare's unfunded liability exceeds $36 trillion!). Even if everyone in the country woke up tomorrow morning with health insurance coverage, it still would not address the hard economic truth -- we must get more value, as measured by better health outcomes, for every dollar we spend on health. The recent article in the New Yorker illustrates this particularly well.

The whole operating framework surrounding the health delivery system requires re-engineering to realize value. We need a system that supports and rewards innovation in health around new drugs, new devices or new procedures. Today, this innovation happens on a small scale, at times producing great results. But what we need is broad-scale innovation around health delivery for chronic disease management (which accounts for 70% or more of total spending) as well as prevention and wellness.

The reason this innovation and re-engineering isn't happening right now in the delivery of health services is because of the inflexibility in the payment system and misaligned incentives -- largely the result of Medicare rules and regulations driven by Congress today.

Each of us pays for health care (taxes, lower incomes, cash) whether we realize it or not, but as consumers, we’re rarely informed and engaged with our own health. We can’t get the basic data we need to make the right daily decisions.

I believe that Congress must focus on building an operating framework of rules and regulations that aligns physician and hospital payment with health outcomes and encourages innovation on how best to deliver it. This is evidenced by an amazing statistic I read this week. In June 2008, the Congressional Budget Office estimated that up to one-third of 2006 spending – roughly $700 billon or nearly 5% of our GDP – did not improve health outcomes. And we want to add more people into this system?

Navigating through the noise to find the signal

pnblog — Wed, 13 May 2009 06:04:00 GMT

I don't know about you -- but trying to keep track of and make sense of the company announcements, the many awareness events designed by politicians and the folks hoping to influence the policy makers, the work being done by folks at HHS and the Hill to create new rules and policies and the press and punditry all commenting on all these activities -- makes my head feel like it is going to explode!

Just look at the past two weeks. IBM said they were going to finance $2B of HIT spend to enable health systems to bridge the 'donut hole' in the stimulus package, complementing their earlier announcements this year of health ‘innovations’ through their partnership with Google and Continua. GE followed with an announcement of $6B of investment, financing and 'innovations' that will lead to even more billions of savings in the U.S. health sector...and they will help underserved health markets globally at the same time! At a White House event this past Monday, a group of health industry stakeholders promised trillions in future savings by restraining price increases and 'doing better’. And Tuesday, there was another White House event on health -- featuring the role of employers. Cecily Hall, a colleague of mine at Microsoft, attended and explained some of Microsoft's innovative health benefits around clinically driven weight loss and mobile medicine. I don't know how many billions of savings this event will lead to -- since I'm still on yet another plane, but given I have a 'healthy imagination' -- I am confident the projected savings will be significant.

The choices we make about the future of our health system matter a lot for the future welfare of our country -- so I hope we have an informed and fact based debate that goes beyond the sound bite outline that seems to be shaping up in both the media and the political arena. Health touches everyone. We have all been to the doctor and had our own or extended family based experiences, and so we all have our opinions about what works and what is broken in our healthcare system. Consequently there is a lot of 'noise' about both the challenges and the ways to fix the healthcare system -- some that ignore basic laws of economics.

For whatever reason -- a generation of employer sponsored health insurance, government programs, no checkout lines in the doctor’s office – has caused people to make a fundamental mistake, to think of health care as something 'unique' and to suspend the principles of economics when they conceptualize and think about the problem. The price of healthcare is not your co-pay...no matter what the public perception is. Providing universal insurance and covering everyone will not fix the health system by itself...and in fact may exacerbate critical flaws that exist. No matter HOW it is funded (cash at checkout, employer payroll costs or taxes); individuals are paying for their health care...just like they are paying for their retirement income or car insurance. There is no economic free lunch here -- that a government run, single payer system or other construct makes it either free or creates 'more healthcare' for folks to consume. It doesn't. Yes, the societal question of income re-distribution remains (namely am I paying for my health care AND your health care or just mine). But we should not confuse how to organize a sixth of our economy around income re-distribution goals...think of how clear, fair and effective our income tax system is.

Educating the public around the principles that health is an economic good and that individuals are indeed paying for their own health care, albeit in hidden ways, would go a long way to improving the probabilities for a more efficient, intelligent health system coming out of the reform debate.

If we acknowledge that health, that is the delivery of health care services and the prevention of illness, are economic activities -- then we can ask the question about what is the best way to organize that economic activity to create value -- value for producers (doctors, hospitals), value for consumers (patients, employers, payers), and value for society (more quality life years). It is not a zero sum game. In most of our economy, we expect market mechanisms -- things like prices, product or service innovations, or profits -- to allocate resources, improve productivity, lower costs and improve quality over time. In health, many of these important factors are constrained or hidden given the structure of the payment system and the role of the government in setting the rules of the game.

In applying the principles of economics to the health reform debate, it is important to be consistent and not selective. There are many stakeholders in the dialog who believe that the problems are the result of for-profit companies (insurance, pharma) and that non-profits and government are a priori better (better use of resources and results). This perspective is simply wrong and not supportable with an analysis of the facts. Participants are optimizing given the rules/framework they understand -- and here the government is setting the rules (taxes, reimbursement, CMS) and must take accountability for the consequences -- intended and unintended just like in the housing boom and financial crisis. One of the really hard challenges in health is measuring the right outcomes/results. Does pay for performance mean the physician ‘checked all the boxes’ for documentation or that we got more health for a given set of inputs? In the end, not-for-profits are economic actors too -- no margin, no mission -- they have to pay market prices for inputs and charge market/regulated prices for outputs. They raise money in the capital markets (debt) and mostly try to optimize like for-profit enterprises.

Today's health system in the U.S. is a regulated system....and it many ways it doesn't work so well...but perhaps better than our 'facts' acknowledge. Everyone acknowledges that we need to get more 'value' out of the resources we have put into providing health care. Everyone acknowledges that there is no 'silver bullet' or no easy fix to the multiple challenges that exist in delivering and paying for health. Nearly everyone acknowledges that 'cash based' segments of the health system (cosmetic surgery, corrective eye surgery, dentistry, veterinary) have done a better job innovating and delivering better quality and lower costs than the more heavily regulated segments of the system. Unlike other industries -- a lot of the challenge in health is we don't know enough -- about disease, about what treatments really work, about what to do when -- and so on. Consequently, we need a system and framework that allows and incents systematic learning and improvement, discovery of new diagnostics and therapeutics and the best systems to deliver them.

So let's have a real conversation about how to build a framework for a health system that works.

Interesting week of interactions

pnblog — Sat, 02 May 2009 21:36:00 GMT

It has been an interesting week for me, participating in three different events in the last seven days. With HIMSS at the beginning of the April -- it has been a real opportunity to get a snapshot of what folks are thinking, planning and worrying about in these hyper-active times of HiTech and health reform.

Thursday, I was on a panel at the Markle Foundation’s Connecting for Health event -- talking about ARRA, meaningful use and certification. I have to give a lot of credit to the Markle folks and participants for driving a very well thought out set of principles and priorities for ONC to consider in defining both meaningful use and certification, and more importantly reminding everyone of what the goals of HIT are all about -- better health outcomes. They had an impressive crowd of thought leaders at the event (which shows the interest in getting meaningful use defined right) and they have a broad and growing group who are supporting their consensus position. You can read more about it here -- and Microsoft is supporting the recommendations, along with many others.

Last Friday and Saturday, I participated in Innovation 2009, hosted by Health Evolution Partners, led by David Brailer. The participants and speakers were fabulous (and I'm not generally a fan of conferences). The discussion centered around new business ideas, how to innovate, the challenges facing large companies and the policy frameworks required to get the U.S. to the promised land of better health outcomes at the same or lower costs. I am an entrepreneur at heart (this being my 5th start up), so it was really exciting and a bit unexpected to hear from the many companies doing innovative and very focused things in the broad health ecosystem. I won't enumerate them here -- but suffice it to say the number of follow up actions I left with from this conference exceeded HIMSS -- which had a 1000 times the attendance. (Perhaps this is an indication of where innovation is happening). We had lots of discussion about the need for health reform -- that it should encourage innovation in multiple directions (care delivery, payment, new entrants). And a very real fear was raised -- that reform could actually stifle innovation. One discussion point was the 'public plan' option being floated by the administration and a prominent spokesperson said implementation of that "would be a catastrophe!"

On Monday and Tuesday, I participated in the Milken Institute Global Conference. They also do a great job of getting world class speakers, but given there are over 3k participants, it was a very different feel than Innovation 2009 with less than 200. The Milken conference is broad -- finance, credit, energy, international, education and health. What really strikes me is the number of folks that go to the conference that are really interested in the challenges and opportunities in health. I was fortunate enough to participate in a great conversation between Elias Zerhouni (former head of NIH), Jamie Heywood (founder of patientslikeme.com and super smart guy), Anne Wojcicki (founder of 23andme.com and super smart gal), and others about the critical challenges in the current paradigm of clinical trials and therapeutic discovery. Increasing the rate of discovering what works in health (precisely identifying the disease, finding targeted cures, providing feedback loops) is critical to addressing the cost crisis, the quality challenges and improving health outcomes. Here again, the system is failing (FDA, large drug companies) because the framework, institutional infrastructure and information platforms aren't flexible and adaptive enough to deal with the real needs of today. As a result, new groups are forming to find ways to innovate either around or completely alongside the existing institutions to accelerate knowledge -- like Alpha 1, patientslikeme.com, collabrx and many others. It is interesting to note the role of philanthropy and foundations in changing how the science and infrastructure is being driven -- groups like the Canary foundation and FasterCures and of course the Bill and Melinda Gates Foundation.

The flu pandemic has been the center of the news and was certainly a topic in all of the conferences above. From helping to prevent pandemics, to accelerating knowledge and understanding, to improving health outcomes and increasing access to quality health care -- information technology and platforms -- are critical.

Tear Down the Walls and Liberate the Data

pnblog — Sat, 04 Apr 2009 01:13:00 GMT

(cross-posted on Microsoft on the Issues)

In 1987, President Ronald Reagan gave one of his most well remembered speeches. Few of us could forget his words to Mikhail Gorbachev to “tear down this wall”—proving to be prophetic when the German Democratic Republic announced the re-opening of the border in 1989, and the subsequent destruction of the Berlin Wall. What followed? A new flow of people, ideas, commerce, and capital—creating the groundwork for unification and a better way of life in Germany and Eastern Europe, benefiting all of us economically and politically in unanticipated ways.

A similar type of disruptive change needs to happen in the health ecosystem today. Just as the free flow of ideas and capital were the foundation for dramatic improvements in society, so should the free flow of health data be the foundation for realizing a future of secure, personalized, data driven medicine in health.

Yet many outdated ideas and mechanisms stand in the way of change; the most important of which are the now impractical walls that were erected and still exist around patient-data. And all of us—IT vendors, providers, payers, pharmacy benefit managers, policy makers and others in the health ecosystem have enabled the walls to exist in spite of the obvious benefits to patient safety and the overall health economy.

Real-time, accessible, meaningful and comprehensive data is fundamental to health care as a whole–to make a diagnosis, provide quality care, pay the right bill, discover new therapies, and so on. What’s of paramount importance is liberating the data and making it available for re-use in different contexts. This is critical for improving outcomes, paying for value, creating a learning healthcare system, enabling discoveries and fundamentally changing the dynamics of the ecosystem. We should be treating health data as a vital asset—health enterprises and consumers—to drive an efficient, high-quality, value-based, evidence-focused future for medicine.

So why isn’t there data liquidity or the appropriate flow of data in the ecosystem? There are two major walls preventing the liberation of data and each is starting to have some cracks.

First, there is the “it’s-my-data” wall put up by hospitals, insurance plans, pharmacy benefit managers, and others. They believe there is some competitive advantage by keeping the data inside their walls. And there are lots of excuses supporting their position–patients don’t want it, they can’t understand it, it might do them harm blah, blah, blah. This wall is starting to crack. Many institutions recognize that the consumer has a right to a copy of their data and are making the appropriate connections to personally controlled health data repositories like HealthVault or Google Health. Many others are writing about it too—John Moore asserted in a recent post, “Personal health data belongs to the consumer and the consumer should decide how it is shared. This is a very radical concept that still has most providers, payers and other data holders shaking in their boots.”

The second wall is the “waiting-for-the-right-standards-set-by-government” wall. There are multiple excuses buttressing this wall; the core of which come down to technology, standards or policy excuses. Without debating each point–one inexcusable barrier is the IT enterprise system vendors who make it difficult or expensive to get access to the data, to separate it from the application. They believe that proprietary “lock-in” provides them with a strategic advantage. We’re all in business and need to create strategic value for our products, but let’s do it in the application layer—rules, workflow, user experience, price, or services—not by trapping patient data in a proprietary database structure.

Our customers and partners and their customers need to be able to re-use their health data, and in ways they haven’t always thought of or anticipated. They have to be able to build cross-vendor systems to improve care. If information can be made liquid—flowing from where it is generated to where it is needed, and combining it with other bits of information to provide a comprehensive view—it can be tremendously powerful.

We, in the IT industry, can step up and be a driving force in enabling data to become liquid—specifically, doing this by separating data from applications. This is one of the recommendations from a study by the National Research Council of the National Academies that takes a look at what types of computational technology and investments are best for improving health outcomes. Let the excuse not be that the data is trapped in systems that we built, that we have to wait for standards.

We need to enable this, and we can start to do it today. Just look at the Health Information Exchange in Wisconsin and CVS MinuteClinic. In the former, value is being added immediately to users in the ED, without requiring all the participating EDs to change their systems or to be standards compliant (or CCHIT certified). At MinuteClinics, summary after-visit health data are made available to customers online using the Continuity of Care Record standard.

There’s a proven model for extracting and transforming data in many ways—HL7 feeds, non-HL7 feeds, web services, database replication, XML and XSLT, and more—and along the way we can create value by interpreting the data and adding metadata. At Microsoft, we’re doing it today both in the enterprise with Amalga and across enterprises to the consumer with HealthVault. We hope other vendors follow this lead to drive better outcomes for patients, and we expect buyers of IT systems to demand vendors to meet this standard (excuse the pun). Where standards are available, we should leverage them, and where standards do not yet exist, we should output the information in a consistent consumable format for the install base.

I understand that there are many, many complicated aspects of this problem, including the need to reform our payment system. But we don’t have to work out everything first to begin building a better, more data enabled, data rich and accessible health delivery system now. David Kibbe did a nice job simplifying and laying out some core recommendations in his post, Five Shovel-Ready Health Care Reforms.

I have argued previously that HiTech should focus on investments which leverage existing digital data sources and drive better health outcomes. With the dollars that are being allocated to EMRs, it’s critical that the data is liquid and that the consumer is connected to the data in a meaningful way

I understand that this kind of disruptive change can be uncomfortable because the forces unleashed can lead to unpredictable results for specific stakeholders. But like the fall of the Berlin Wall, it is clear that the most important stakeholder—the citizen or patient—will be better off, and the other key stakeholders—providers, payers, policy makers, etc.—will participate in a healthier ecosystem. There will be profound, new opportunities for everyone in this future.

The time for excuses is over. Let’s tear down the walls and get the data flowing. We can do it now.

Health Affairs event and special issue on Health IT

pnblog — Wed, 11 Mar 2009 07:20:00 GMT

Today I spoke at a very well attended Health Affairs event in Washington DC -- originally designed (months ago in a different time warp in HIT light years) to discuss lessons learned by folks leveraging HIT in effective ways, along with the usual challenges, issues and opportunities. Naturally the discussion was hijacked by the implications, potential consequences and opportunities raised by the ARRA stimulus act and the HITech portion of it in particular.

There is much to report from the event -- because there were a lot of smart and thoughtful panelists -- and because the issues are at the same time complicated, familiar and not super well understood. I don't have time to cover them all in this post.

There is a strong consensus (it showed up in comments from many panelists) around the theme I care most about -- which is we must focus on the outcomes one wants to achieve (better health outcomes at the same or lower cost) and then encourage innovation between providers and technology suppliers to deliver those outcomes. Said another way -- technology is a tool (a means) and not an end in itself. This is why health reform and the health stimulus have to be intertwined and self-reinforcing. Just spending money on HIT is not going to lead to the 'down payment' (i.e. future savings) that Obama believes it is.

Mark Smith brought this to life most effectively in his remarks -- that by adding a computer to Kramer's bookstore you don't end up turning it into Amazon.com. Kaiser reported in the article summarizing the experience in Hawaii with KP Healthconnect (EMR) -- that family practice office visits went down by 25+%. For Kaiser, an integrated delivery network and health plan -- that is a benefit to their bottom line. (I should note patient satisfaction went up in this period because needs were met by phone/email -- a totally win/win situation for Kaiser and consumer alike). For a more typical, small office family physician -- that is a disaster...because revenues are tied to visits. To succeed, we have to change the paradigm of healthcare away from the tyranny of the visit based payment system (Kramer's bookstore) and reward longitudinal care systems (future amazon.com). If we spend a bunch of money automating existing systems of care -- and not enabling new platforms -- we have missed the huge opportunity to make a difference.

Carol Diamond made the subtle, but I think hugely important point that has not fully sunk in to the folks waiting at the starting line of the HIT land rush -- that the public is going to expect accountability for improved outcomes with the stimulus spend. Health touches everyone -- and if the country spends $30+Billion dollars on 'investment' and the average citizen experience with the health delivery network is no different and costs continue to rise -- there is going to be accountability for where did the money go. She is rightly trying to focus the minds of the folks with the wagons -- better pick your spots wisely -- just getting a homestead isn't good enough -- it had better be productive land.

My biggest ah-ha moment came a few hours after the event in a conversation with the CEO of a large player in the healthcare supply chain. I realized that a significant portion of the Health Affairs event, the broader conversation about overall HIT investments and the specific conversation I was having ALL ACKNOWLEDGED and CONCLUDED that individuals (people, patients, consumers, whatever label we want to use) have a right to a personally controlled health record and that the personally controlled health data management platform is a critical component (perhaps a necessary component) of ANY FUTURE HEALTH IT SYSTEM and probably any payment reform system.

The ah-ha point is -- Microsoft has made a difference -- a huge difference -- by taking the leadership role it did 3 years ago by investing in building, defining, evangelizing, shipping and refining a personally controlled health data management system, HealthVault. We have a long way to go to make it easy, ubiquitous and fully connected -- and to deliver the value I know it will to consumers/patients in their everyday health lives. But I know it is a good and innovative idea and one that has changed and framed the debate in a positive way. While I have always believed that -- to see the effect and reality of the impact -- made my day.