Medical Trends - California Dreamin' - Disruptive Health Care Innovation (With a Catch)

About 20 years ago, Paul Ellwood, M.D., a Stanford graduate and father of managed care, envisioned a health system controlled and channeled through 10 or so major megaclinics.The basic thought was that every region needs a comprehensive, integrated health system with salaried primary care and specialty physicians and with sufficient infrastructure to meet most patient needs and to connect physicians and hospitals and ancillary facilities with an electronic medical system to measure quality and outcomes.

“Are Megaclinics the Wave of the Future, Medinnovation.blogspot.com, September 3, 2008

Health care hasn’t become affordable because it hasn’t gone through disruptive decentralization.

Clayton Christensen, author of The Innovator’s Prescription, as quoted in “Disruptive Innovation, Applied to Health Care,” New York Times, February 1, 2009

Since I wrote Innovation-Driven Health Care: 34 Key Concepts for Transformation (Jones and Bartlett, 2007) and 732 blogs on medinnovationblog.blotspot.com, the subject of innovation has fascinated me.

So Janet Rae-Dupree’s column in today’s New York Times is grist for my mill. She writes about science and emerging technology in Silicon Valley, California, where dreams of society-changing dreams are born.

Two Themes

Her column has two themes.

• One, that health care’s cost ills stem from a century old business model – that doctors and hospitals are paid fee-for-service to treat disease, not promote health, and that this “frozen model” must be thawed out, and treatment assigned to nurse practitioners and others “trained to handle routine ailments.”

• Two, that we need more “fixed-fee” (read that as capitated) “integrated systems” accepting monthly payments from members in exchange for cradle-to-grave health care through lower cost facilities , leaving high cost care to specialists in such systems as Kaiser Permanente, Intermountain Healthcare in Utah, the Mayo Clinic, the Geisinger Health System in Pennsylvania, and the Veterans Health Adminstration .

The catch is that we must turn the system upside down – by redirecting it from doctors and hospitals in our towns and cities to large regional integrated medical centers, and by changing the payment system from traditional fee-for-service to capitated prepayment.

A Seductive Dream

It is a seductive dream: these systems, say supporters, can follow and treat patients wherever they go thoughout their their lives, doctors and hospitals within the system have no incentives to provide more care; information systems within the integrated systems will assure no tests or prescriptions are duplicated or are unsafe; preventive tests will be promoted; and costs will be lowered, as much as 20% to 22% at Mayo and Kaiser. Consumers could pocket the difference in costs though lower premiums.

Innovating on Large Scale

Futhermore, large organizations can innovate and experiment on a large scale. As Kaiser has done since 2006 with its Sidney R. Garfield Health Care Innovation Center in San Leandro, California, to test such new technologies as videoconferencing linking health care professionals with patients in their homes.
We could, says Mrs Rai-Dupree, turn the system upside down and shake it up to take it whole again.

Appealing Dream

It is an appealing dream. Many of these integrated systems are now over 50 to 100 years old, and they work well in certain sections of the country. But they are slow to take hold among independently minded doctors and hospital leaders, require an expensive investment in infrastructure to set up, and have not worked well in many sections of the country. Kaiser, for example, has abandoned plans in three or four American cities, and Mayo has restricted its satellites to warm, affluent retiree settings such as Jacksonville and Scottsdale. And 75% - 85% of doctors still practice in groups of ten or less.

A Dream Catching On

On the other hand, there are signs “disruptive decentralization” is catching on in the form of retail clinics, worksite clinics, and telemedicine applications in patients’ homes. Maybe new information technologies, telemonitored home care, worksite care, lower cost facilities, and armies of nurse practitioners and physician assistants, will make care simpler and less expensive. But, I, for one, think these innovations are likely to occur on a larger and more diffuse scale, outside mega-clinics and mega-organizations like the VA.

California As Home of Megatrends
But I may be wrong. Many of the megatrends of our time have originated in California, and Kaiser has been a huge success in California. As John Naisbitt observed in Megatrends: Tne New Directions Transforming Our Lives (1982),

“California is the key indicator state… Beginning with the granola ethic in California a dozen years ago, and moving through new concerns about nutrition and physical well-being, there has been evolving a reconceptualization of health care from a sickness orientation to a wellness orientation, and from short term to long-term."