Thursday, June 7, 2007

Costs - Brailer Resurfaces as Health Care Cost Cutter

The health care industry is ripe for innovation. We've used better technology to treat illnesses, but we've never harnessed technology to make the system efficient.

Larry Levitt, Kaiser Family Foundation, ”CalPers to Invest in Containing Health Costs, The pension fund plans to back companies that seek ways to make medical care more efficient,” Los Angeles Times, June 5, 2007

We’re going to be investing in things that can reduce the rushing costs of health care.

David Brailer, MD, Former Bush Administration National Coordinator of Health Information Technology, “Venture Fund to Seek Out Cost Cutters in Health Care, New York Times, June 5, 2007

It is generally agreed the U.S. spends enough money on health care. There’s plenty of money sloshing around out there. We just spend it in the wrong places, high technology hospital care, in the wrong way, fragmented fee-for-service care. That’s one reason presidential candidate are talking so much about cutting costs as a prelude to reform.

In any case, I find it fascinating that Doctor David Brailer, a medical economist as well as a physician and former government official, has resurfaced at the head of his own venture capital fund dedicated to using technology to cut costs.
Brailer, you may recall, was President Bush’s National Coordinator of Health Information Technology. He served for two years as the national salesman of electronic medical records before resigning in May 2006.

Now he’s saying his investment firm has no plans to invest in electronic health records, which he terms a “saturated market.” I interpret this remark as meaning EMRs aren’t an effective way to cut costs.

Health Evolution Partners, backed by $700 million from Calpers, the big California pension fund, now hopes to cut costs by the re-allocating technology to cutting costs.
Brailer says he would like to invest in companies that “keep people out of institutions.” He gives the examples,

•Remote monitoring of patients with chronic diseases in their homes.

•Management of chronic disease


•Predictive genomics to tailor drug doses

•eBay-style Internet marketplaces for services like reading chest X-rays

Brailer is making a safe bet.These technologies already exist.

•Companies like American Telecare in Minnesota and Piedmont Health Systems in Atlanta have already demonstrated you can dramatically reduce hospital and emergency room admissions for home bound patients to near zero in some cases.

•John Shard, MD, health of Enhanced Care Initiatives in Lakefield, Connecticut, has shown you can decrease hospitalization by 33% and ER visits by 25% among the frail and elderly by simply paying “hands-on” attention to them and decreasing their social isolation.

•Management of chronic disease, led by companies like American Healthways, is already a giant industry.

•Telemedicine and its technologies have been around for 20 years.

•Predictive genomics is rapidly evolving, thanks to predictive modeling and artificial intelligence and genomics technologies.

•Only the Internet marketplaces for auctioning and spreading interpretations of radiologic and cardiology wave rhythms remain to be done.

I’m reminded of a quote in my book Innovation-Driven Health Care about present and future innovations by Brooks O’Neil, a senior analyst. All of the present and future innovations he spoke about entail cost cutting.

“I see five huge innovations going forward:

1.Consumer-driven health care

2.Chronic care management

3.Health care IT (particularly tools for consumers to better manage and pay for their health care)

4.Public-private partnerships to manage care for seniors (Medicare) and the disadvantage (Medicaid)

5.Customized car centers (chains to delivery high quality, cost-effective patient services locally, regionally,l and nationally)”

But then Brooks added this caveat,

“The regulatory environment has got change to allow these innovations to occur. We’ve got to open up Stark, eliminate corporate practice lays, eliminate Certificate of need, and eliminate a few other things, too.”

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