Friday, October 31, 2008

Waste, abuse, and fraud, In Health Care: One Man’s Hope is Another Man’s Waste

One man’s meat is another man’s poison.

English Proverb

Both presidential candidates have put forward proposals for curtailing waste in the U.S health care system…But, what really, do we mean by waste?

Henry J. Aaron, PhD, Senior Fellow, Brookings Institute, “Waste: We Know Your Are Out There,” New England Journal of Medicine, October 30, 2008

Health care critics often cast private practice in a negative light. Doctors order too many tests,perform too many procedures, prescribe too many drugs – often for dubious or self-serving reasons. If only we would root out those things deemed to be useless, ineffective, unnecessary, ineffective, duplicate, defensive, and downright venal, we would save $700 billion, 1/3 of money spend on U.S. health care.

Here’s how Henry Aaron, senior fellow at the Bookings Institute, puts it

Reports abound of needless or low-benefit procedures, some performed for fear of litigation, some ouf of venality, some demanded by importunate patients, and some representing the mindless repetition of established routine.

That’s what many pundits believe, and they often offer this answer: Establish a National Institute for Health Care Effectiveness and Health Care Decision Making to decide what works and doesn’t work. Don’t pay for what doesn’t work, and lower all private fees to Medicare levels.

But doctors and patients know health care is not so simple. Much of care is based on hope, that something might work, life might be improved, functionality might be restored even if chances for success are small and costs are high. The operative word is “hope,” not “effectiveness.”

Henry Aaron uses technocratic bureaucratese to define waste, “Waste could be as care that costs more than some threshold per unit of health care improvement,” and he offers this table to clarify what he means.

Probability of Benefit or Harm from Three Hypothetical Medical Interventions.

Intervention Probability Probability Expected Years
Of Extending of Death of Extended Life

By 1 Year, By 5 years

1 0.5 0 0 0.5

2 0.25 0.05 0.7 0.5

3 0 0.1 0.9 0.5

I don’t find this data particularly help, and as Aaron admits, “The very definition of waste is unclear, and the term is fraught with ambiguity.” Low probability procedures may help patients, and besides, as long as someone else is paying, little incentive exists to avoid waste, either among patients or doctors.

What is Aaron’s solution? The first step, he says, is to invest “heavily” in research into what works and doesn’t work, and the second step, is to extend coverage to the uninsured, with limits of spending. He goes on to list these ways to cut costs.

• Carefully analyze cost-effectiveness

• Shift costs to patients

• Free Medicare to extend its spending and regulatory clout to private medicine

• Change physicians’ financial incentives.

• Provide patients with medical homes to improve disease management and coordination.

• Increase use of IT

• Reform insurance markets

None of these measures, he adds, will yield dividends early, and their payoffs are often greatly exaggerated. He concludes “That all these changes would take decades to become fully effective only adds to the urgency of initiating them promptly.”

Aaron’s line of argument doesn’t impress me. Maybe doctors ethics and training to do what is best for their patients isn’t a bad thing. Maybe health care going from 16% of GNP to 20% isn’t a bad result. Maybe health care revenues and their ripple effect are good for economic growth and greater employment in most communities. Maybe most of what doctors decide for patients is clinically sound most of the time, and maybe most of the time what “might” help them is what patients want.

As a surgeon once told me, “I’ve never met a patient who didn’t want to live another day.” Hope springs eternal, and “waste” sometimes has a purpose that cannot be defined in statistical terms.

Wednesday, October 29, 2008

health care and the economy - Speaking Out: Imperiled, Independent Privately Practicing Physicians Are Good for the Economy

Sometimes, in the course of human events, it’s important to tell the other side of the story.

The independent practice of medicine is in trouble. By 2020, there’s likely to be a shortage of 50,000 doctors in the U.S, fewer doctors are entering private practice, more are leaving, and more are seeking employment with limited hours. Privately practicing doctors are demoralized and are seeking to bring to the public at large and policymakers an understanding of their plight and the decreasing appeal of medicine to the best and the brightest..

Forces for reform are advocating changes that lessen doctor autonomy – IT dictated practice protocols, salaried positions with fixed practice patterns in big groups or hospital systems – or that marginalize payments – cuts in physician reimbursement, Medicare payment rates for all payers, limited payment for high-cost care, competitive bidding for hospital episodes-of-care. These “reforms” are all part of a pattern to bring doctors to heel, but not necessarily to heal.

Lastly, there is a behind the Medicare and private practice scene effort, to minimize fee-for-service payments, said to inappropriately incentivize doctors to do either the wrong, the high-priced, or ineffective thing.

In other words, you can trust government officials or health plan executives but not doctors to do the right thing. All that is required is the establishment of a Center for Medical Effectiveness and Health Care Decision Making and rules for what one can and cannot do, or what one will be paid for..

And yet every Chamber of Commerce official knows health care is usually the major employer in most communities. Chamber members know physicians in private practice directly or indirectly generate 13 jobs. These physicians still comprise of 80% of the caregiving doctor workforce. The Chamber also knows hospitals, whose patients usually come from a medical staff engaged in private practice, are more often than not the biggest single employer in town.

I’ve said some of these things in a previous April 13, 2008 blog, which I shall reprint now.

Best Kept Secret: Health Care is Good for the Economy

For many residents of Bangor, the hospital is replacing the mill as the passport to the middle class. This trend extends nationally, and it could help blunt the faltering U.S. economy. Demand for health care tends to stay strong during recession. Cash-strapped consumes are more likely to cut back on new appliances or cars than visits to the emergency room.

Conor Doughtery, “Factories Fading, Hospitals Step In,” Wall Street Journal, April 15, 2008

To hear politicians tell it, health care in the U.S is in a doleful state – unfair, unaffordable, inaccessible, uncoordinated, and uncommonly and unnecessarily complicated.

Yet if you speak to the local chambers of commerce, business groups, employer recruiters, or economists-in-the-know, they’ll tell you health care is the biggest employer in town – bigger than oil in Houston, bigger than the Street in New York City, bigger than education in Boston, bigger than insurance in Hartford, bigger than the furniture industry in North Carolina, bigger in Nashville than state government, bigger in Arkansas than chicken , bigger than Hollywood in L.A., bigger than manufacturing almost everywhere you care to look.

In the U.S. from 1998 to 2007, manufacturing fell from 14% to 10% of those employed, while health care rose from 9.5% to 11.5%. Last year, manufacturing lost 310,000 jobs. Health care gained 363.000. In places like Duluth, health care now employs 20% of all workers, up from 14% five years ago. In Minnesota as a whole – thanks to United Healthcare, Medtronic, the Mayo Clinic, and countless other health related firms in Medical Alley – health care is by far the dominant employer. In Bangor, Maine, from 1990 to 2007, manufacturing jobs fell from 16% to 6%, while health care positions rose from 12% to 20%. And so it goes in almost every city and region in the US.

Health care differs in some ways from manufacturing. Entry level jobs pay less, and wage differentials from workers and top doctors and hospital administrators tend to be greater. Health care requires more education. You can’t just step off the street into a job.

And if politicians have their way, health care may grow even faster, as more federal monies are pumped into the system. It’s going to happen with Republicans, too, as market-based health care grows. There’s no getting around it. As Americans age, they require and demand more health care. So relax, you doctors out there. You’re in a growth industry

Monday, October 27, 2008

data, use and misuse -Sabermetrics: The Solution to the Health Care Crisis?

In the past decade, baseball has experienced a data-driven information revolution. Numbers-crunchers now routinely use statistics to put better teams on the field for less money. Our overpriced, underperforming health care system needs a similar revolution.

Billy Beane, Newt Gingrich, and John Kerry, “How to Take American Health Care From Worst to First,” New York Times, October 24, 2008

When we talk about the health care crisis, my wife often comments “ No one seems to know what’s going on, or what to do about it.”

Well, Loretta, I have news for you.

Billy Beane, a baseball guru believed to be responsible for the success of the Tampa Bay Rays and other low-paid, high performing teams; Newt Gingrich, the all-knowing, all-feeling conservative commentator: and Senator John Kerry, a liberal who knows a thing or two, about health care, says the answer to our health care problem is sabermetrics.

Sabermetrics in Baseball

Sabermetrics? Yes, sabermetrics, the use of obscure statistics to predict and improve performance, even among unknown players. It’s the numbers not the names that count. In the case of baseball, sabermetrics is made up of such things as WHIP (walks and hits per inning), VOPR (value over replacement player), or runs created – a number derived from the formula ( (hits + walks X total bases)/ (at bats + walks).

In baseball, the beauty of sabermetics is you can predict what to do, what risks to take, what players to draft, what line-up to use at much lower costs per player with superior results.

Sabermetrics in Health Care

In health care, our trio of non-medical experts explain, you can use sabermetrics to pick the right doctor, and identify clinical approaches that work statistically, based on mega-analyses of mega- studies rather than on informed opinion, personal observation, or tradition.

I would disagree Beane, Gingrich, and Kerry, on one point. There is nothing “obscure” about the information doctors could collect to improve care. It is well known, for example, about the data needed to avoid vascular complications in the metabolically related diseases of hypertension, hyperlipidemias, diabetes, health disease, and stroke – which cause roughly 50% of deaths in America.. Once you know a patient’s blood pressure, total cholesterol, HDL and LDL cholesterol, and Hemoglobin A-1C, you can treat the patients accordingly and cut deaths from vascular complications dramatically.

Access to Evidence-Based Data

Our health system, the three baseball aficionados argue, would be much better and much cheaper if doctors had “better access to concise, evidence-based medical information.” No question of that. The cost of routinely bringing this data to patients’ side isn’t mentioned, nor is how we’re going to pay for it or what the savings might be.

The three amigos hasten to add,

“Evidence-based health care would not strip doctors of their decision-making authority nor replace their expertise. Instead, data and evidence should complement a lifetime of experience, so that doctors can deliver the best quality care at the lowest possible cost.”

The operative word here is “should.” But what about doctors who take exception to the rules and who decides to treat the patient as an individual rather than a statistic? People, after all, die or get well as unique individuals not as statistics. And what about the thesis of “personalized medicine, “ which says different people with different genomes respond differently no matter what clinical studies show abut the “average” patient?

Abandoning Tradition for Data

But I digress. It may be true that dispassionate neutral data can complement a manager’s or baseball executive’s judgment as is the case with the Tampa Bay Rays and produce superior results at a lower cost.

And it may be,

America’s health care system behaves like a hidebound, tradition-based ball club that chases after aging sluggers and plays by the old rules: we pay too much and get too little in return. To deliver better health care, we should learn from the successful teams that have adopted baseball’s new evidence-based methods. The best way to start improving quality and lowering costs is to study the stats.”

That’s The Direction We’re Headed.

The sabermetric crowd is at the gates of clinical care, waving Health 2.0 banners, crying out for a National Institute of Comparative Effectiveness, calling for Pay-For-Performance, insisting that widespread EMR installation will cut costs, and heralding the glories of predictive modeling. And health care enterprises like the Cochran Collaboration, Kaiser-Permanente, and Intermountain Healthcare has shown impressive results.

A systems approach to treating disease may improve care based on statistical evidence, but will it save money? After all, doctors will have to order more tests to collect the right data. And preventing early deaths will prolong life which will result on spending more on treating the elderly. But in health care, it’s not about saving money. It’s about the right thing to do.


Still, after the collapse of our financial system, with the failure of a vast array of financial geeks bearing algorithmic rifts, I’m dubious about data-engineering. And after the failure of managed care, with its huge data depositories, to control clinical behavior and improve quality.I remain skeptical.

I suppose care can be reduced to a numbers game. But as a patient, I would rather not be reduced to a number – or a set of numbers. Information technologies are always ahead of their interpretation or implementation. And hope of what might work may be beyond the scope of data.

Saturday, October 25, 2008

physician income - Obama Tax Plan Would Hit Many Physicians Hard

I have no idea what percent of American physicians will vote for Senator Obama or Senator McCain, nor do I know which of their health plans physicians prefer.

But I do know this. Obama’s tax plan would hit many physicians hard. You do not need to be a rocket scientist to see this. In their 2007 book, Merritt Hawkins & Associates Guide to Physician Recruiting, the authors listed these average incomes for 15 recruited specialists.

1. Internal Medicine, $162,000
2. Family Medicine, $145,000
3. Radiology, $357,000
4. Orthopedic Surgery, $370,000
5. Cardiology, $342,000
6. General Surgery, $272,000
7. Hospitalists, $175,000
8. Ob/Gyn, $234,000
9. GI, $315,000
10. Emergency Physicians, $230,000
11. Urology, $320,000
12. Anesthesiology, $306,000
13. Psychiatry, $174,000
14. Neurology, $210,000
15. Otolaryngology, $272,000

These figures presumably are mostly starting salaries that would increase as physicians climb their career ladders. Consider the fact that 2/3s of American physicians are specialists, and it isn’t hard to imagine that most physicians would pay higher taxes, perhaps for a good cause.

Senator Obama has famously and repeatedly declared he will raise taxes on those make $250,000 or more, which would include the majority of physicians.

Take a look at the following data, compiled from Senator Obama’s and Senator McCain’s websites to see what effect that their dueling tax proposals would have on your personal taxes (Brain Carney, “The Election Choice: Taxes, “ Wall Street Journal, October 25, 2008).

Current Law McCain Obama

Highest Income, 35% 35% 41%
above $250,000

Capital Gains 15% 15% 20%

Dividends 15% 15% 20%

Income + Payroll 35% 35% 43-45%

Estate Tax 45% 15% 45%

Corporate Tax 35% 25% 35%

Depending on your income and your situation, you do the math, and you decide which tax plan you prefer and how this ties into your opinion on the candidate’s health plans.

U.S. health care system, physician culture - Paradoxes abd Tensions Facing American Physicians

Despite the ideals and wishful thinking, the government’s job is not to provide full employment and wealth, and it can’t provide them anyway. The aging population will make the system unaffordable. It is already unaffordable.

John Naisbitt, Mindset, 2006

Uncover and work with paradox and tension. Do not shy away from them as if they were unnatural.

Edgeware, Insights from Complexity Science for Health Care Leaders, 1998

As long as advocates of a government-driven versus a market-driven care compete for political supremacy, American physicians will experience natural paradoxes and tensions.

This is inevitable. One cannot have a free, choice-filled, autonomous health system with access to the latest technologies and vast uniform social welfare programs covering all with restrictions at the same time.

The barriers to the former are uneven quality, high costs, and more uninsured; the barriers to the later are high taxes, limited freedoms, less innovation, slow productivity, and restrictive practices. The contest between government and market approaches to health care inevitably produces paradoxes and tensions for American physicians.

Paradox #1 - Other developed nations have better health statistics than the U.S. – longer lives, less infant mortality, and fewer deaths that might have been prevented through medical care.

The U.S. culture differs from that of other countries. We demand greater access to high technologies, have a more heterogeneous population, are a vast continental with sharp regional differences, experience more violence and accidental deaths, and have more obesity and diabetes than other developed countries. Some of this is due to the vibrant vitality of our exceptionalism, some to excesses and freedoms of U.S. culture. Most of these statistics are beyond the control of health professionals What is often overlooked is that Medical care accounts for only about 15% of the health of any nation. The rest rests with its culture.

Paradox #2 - U.S. physicians have higher incomes than physicians of other nations.

This is true, and there are reasons for the differences. U.S. physicians must subsidize their education through college, medical school, residencies, and beyond, which is not the case in most other nations. The typical medical school graduate in the U.S. is $150,000 in debt, which often reaches $300, 000 for married medical couples. Also due to the litigious proclivities, U.S. physicians must endure high malpractice liability costs. Practice expenses are also greater in America. These factors aren’t necessary desirable, but what is, and U.S. physicians’ higher pay is partly illusionary when these factors are taken into account.

Paradox #3 - In the U.S., medical progress and new technologies account for about 70% of health inflation.

The paradox here is that the U.S. people demand quick access to the fruits of technological progress, often for elective life-style procedures such as joint replacements and cosmetic procedures. Furthermore, in many diagnostic workups and procedures, advanced technologies – X-ray imaging and heart bypass and stents – have become the accepted and expected standard of care. Finally, practitioners offering high tech care have higher incomes and better life styles than generalists offering cognitive advice.

Paradox #4 - Many mandatory or universal coverage advocates believe Medicare payments should be the gold standard for reimbursement.

This is already the case in certain sections of the country. Unfortunately, this leveling of rates creates paradoxes and tensions. Medicare payments and sister Medicaid payments are usually far below those of private payers. This fact may cause physicians to cease accepting new public-paid patients or may drive physicians out of practice, precipitating an access crisis.

Paradox #5 - There is a yearning for a return of Marcus Welby- like care, for more compassionate physicians, and for a return to more coordinated and comprehensive and less costly care in ”medical homes.”

This yearning is understandable and desirable, but faces barriers: 1) a specialty dominated health system with 2 of 3 doctors being specialists; 2) payment differentials between specialists and generalists; 3) current special interests – hospitals, high tech specialists, health plans, device manufacturers – who profit from the status quo. In addition, there is a renewal among medical school educators for an emphasis of a liberal arts education with a refocus on narrative medicine, listening more closely to patient stories.

Paradox #6 - Doctors are being told they should tell patients exactly what they are doing, including telling them when they are prescribing placebos.

A fine idea in a perfect world of symmetrical information equally shares by patients and doctors. But not practical, desirable, or even advisable in the real world. Studies show 30% to 40% of patients unwittingly received placebos improve. Telling patients you are prescribing placebos will offend many patients, and signal to them you are not taking them seriously or labeling them as hypochondriacs.

Paradox # 7 - The government should establish a Medical Advisory Commission “with teeth” with a specific payment schedule created by Congress.

A bad idea, certain to drive more doctors, who cherish their autonomy, out of practice and to discourage more bright young people from entering the profession. A Center for Medical and Health Effectiveness is also being proposed. Most drugs are approved for “average” patients, but the whole thesis of “personalized medications are that individual patients, depending on their genomic makeup, may respond differently to the same drug. Congressional mandates telling doctors what to do and prescribe might have the effect of reducing doctors to mere medical technicians, devoid of independent thought.

Paradox #8 - Policy makers are fond of proclaiming that the system should be stripped of “perverse incentives” by “aligning” incentives of hospitals and doctors.

This is another way of saying hospitals and medical staffs should be “integrated.” This in unlikely to happen except in large health enterprises with salaried doctors. The truth is that the gap between the hospital “admonisher,” ie. those in executive suite, and practicing doctors on the ground are widening. The gap grows because of control issues and competition for the health care dollar between hospitals and doctors.

Paradox #9 - Politically it easy and safe to say that health care ought to be a “right” and that mandated universal care ought to be the norm for our society...

But it a quite another thing to implement because of the diverse desires of patients and doctors, distrust of government, the trend towards decentralized rather than centralization, and the smothering effect of government mandates on innovation.

Paradox #10 - The partisan divide between those who say medicine is a “Science” rather than an “Art, ” who advocate “group” or “team” care rather than solo or small practice care, and those who push for government-based care rather than market-based care will continue to pose paradoxes and tensions for doctors.

Those who say medicine is a “Science” rather than an “Alert’ claim practices can be” rationalized” through information technologies, including pay-for-performance program, best practice guidelines, application of Health 2.0 algorithms, elimination of waste and duplication, and widespread collection of data through EMRs, and regulation and discipline of practices using the data. This belief system poses dilemmas for doctors who think of themselves and patients as individuals with freedom to practice and choose as they please.

There are those who fervently believe large group practices with salaried caregivers acting as teams, acting upon best practice data at their fingertips, and following group-agreed upon rules will rule. This may be, but many physicians prefer to practice autonomously following their instincts and experience. These large practices are gaining traction but still comprise less than 15% of practicing physicians.

What ultimately evolves will likely be incremental for the simple reason that the incoming president will face a budget deficit of over $1 trillion. If Barack Obama is elected, which seems probably at the moment, this deficit will be constraining for his policies which are projected to cost $4.3 trillion over the next nine years and to project 171 new federal programs.

Wednesday, October 22, 2008

clinical innovation - Health Care Innovation: Govrnment-Down or Society-Up

There's nothing mysterious about innovation - it's niches, sons of niches, and government gliches.

Tongue-in-Cheek Entrepreneur

In the U.S., decisions are based on proximity to performance. The American entrepreneurial economy differs from European economies. American organizations make decisions based on proximity to performance, the market, technology, society, environment, and demographics.

In Europe, on the other hand, distance from the market of centralized systems makes innovation and responsiveness difficult. What separates us from other nations is our individual ingenuity and entrepreneurship, as opposed to government-imposed agendas, which tend to smother innovation.

The recent economic crisis, said by some to be due to lack of centralized regulations, dismal U.S. health statistics, and a U.S political shift to the left, raises this question: Is national innovation preferable to private innovation?

Two “Perspective” articles in the New England Journal of Medicine form the basis of this editorial.

· In the first, Victor Fuchs, PhD, retired Stanford economist, says national reform should start with three “inconvenient truths” as a starting point for national health reform.

1. Over the past 30 years, U.S. health costs have grown 2.8% faster than the rest of the economy.

2. Advances in medicine, mostly secondary to private innovation, are the reason for this 2.8% faster growth.

3. Universal coverage will require national reform and financial sacrifice by the wealthy and healthy and those who afford to pay to pay for the sick and the ill who can’t afford to pay.

· In the second, Karen Davis, PhD, president of the Commonwealth Fund in New York, says we ought to learn from other countries to develop innovative national strategies to cut spending. She cites the following data based on predictive modeling by the Lewin Group. Here I list the data in descending order of spending impact.

1. Establishing a National Center for Medical Effectiveness and Health Care Effectiveness, -368%

2. Promoting public health and disease prevention through new taxes in invested in prevention programs, -293%

3. Instituting Medicare episode-of-care payment, -229%

4. Strengthening primary care and care coordination, 194%

5. Promoting public health by reducing tobacco use through next taxes invested in prevention programs, -191%

6. Limited payment updates in high-cost areas, -158%

7. Limiting federal tax exemptions for premium contributions, -131%

8. Apply Medicare provider payment methods for and rates to all payers, -122%

9. Instituting competitive bidding between Medicare and private plans, -104%

10. Promoting health information technology, -88%

In other words, Big Brother will take care of you through federal innovations: new taxes, new programs, and new regulations. “What is required,” Dr. Davis asserts, “is national leadership and commitment to moving towards a high-performance health system.”

It sounds a bit like All for Medicare, and Medicare for All, with national prevention programs to get Americans to change their smoking and eating habits, and cutting and limiting doctor payments. You can call this innovation. I do not.


1. V.R. Fuchs, Election 2008: “Three ‘Inconvenient Truths’ about Health Care, “ New England Journal of Medicine, October 23, 2008

2. K. David, Election 2008: Slowing the Growth of Health Costs – Learning from International Experience,” New England Journal of Medicine, October 23, 2008.

3. C. Schoen, R. Osborne, M, Doty, B. Peugh, J. Murukutla, “Toward Higher Performance Health Systems: Adults’ Health Care Experiences in Seven Countries,” 2007, Health Affairs,(Millwood, 2007.26:w717-w734

Tuesday, October 21, 2008

blogging doggerel, employers - American Business is Mad as Hell

Prelude: American business are dissatisfied with health care their employees receive. It costs too much, quality is uneven, and outcomes are disappointing. Business doesn’t think it’s getting value for what it pays for. And, rather than waiting for government reform, it’s decided to do something about it.

Businesses, big and small, won’t take it any more,
And, believe me, they have big changes in store.
These changes include work site clinics,
primary care medical homes and mimics.
big innovations at their very core.

Business is changing what it pays for big-time,
It aims to get more for its health care dime.
Health premiums consumes too much revenues,
and contributes too much to board room blues.

Business dislikes uncontrolled expenses, employee dissatisfaction, and indifferent outcomes,
Business pays 1/3 of all health care expenses,
It doesn’t believe it gets value for these enormous sums.

If you give the matter any thought at all,
you’ll see why business moves fast and doesn’t stall.
CEO jobs depend on economic growth,
Shareholders cut no slack for executive sloth.

Growth relies on consistent profitability.
a function of stability and innovative mobility.
When you’re confronted with uncontrolled expenses,
as in health care, you quickly come to your senses.

You ask, what can I change to get better value for what I spend?
How can I above this current mess transcend?
You begin to think of fundamental innovation.
of new strategic locations and new idea creation.

Why not, you ask, deliver care at the worksite,
There you can control care and do things right.
There you can hire and incentivize physicians,
to do the right thing by freeing them from perverse fee-for-service conditions.

There you can have an EMR containing best practice guides,
that will look at problems from the best sides.
There you can give your employees the best generics,
without sales representatives’ brand name atmospherics.

There you can pick specialists to whom you want to refer,
You can prefer the best with whom to confer and defer.
If work site clinics aren’t your nom de plume,
consider referring employees to a medical home.

There primary physicians comprehensive care coordinate,
1/3 less expensively and 1/5 more effectively than the literature for specialty care the current system indicate.
As a business person you can move fast,
faster than those tied to the political mast.

Business CEOs have their survival and jobs at stake,
Government will always grow with lobbyists on the take.
Businesses come and go,
Government is always on the grow.

To cut costs and improve care, you take action.
You can avoid the current political impaction.
You can act on your own,
Nothing is set in stone.

Monday, October 20, 2008

Future - 2020: A Financially Sustainable U.S. Health System

Much of what is discussed in virtually all forums as health care reform is really health care financing reform. We really have not gotten sufficient national attention on the real underlying issue, which is the entire health care delivery system, needs to be modified.

Scott Serota, President and CEO of Blue Cross Blue Shield Association, which insures 102 million Americans and has networks that include 90% of doctors and 80% of hospitals.“A Plan to Improve Health Care and Limit Costs,” New York Times, October 18, 2008

January 1, 2020 – Back in 2008, Scott Serota and the Blues figured out America needed a more affordable, improved, and sustainable health system.

The Blue Cross Blue Shield Association proposed four starting points for a more financially sustainable system – eliminating 30% “waste” within the system, cutting prevalence of pre-diabetes, then numbering 57 million Americans, ceasing payment for avoidable hospital complications, and reducing costs so that everyone, private and public, could afford health care, thus assuring more premium revenues.

2020 Is Here

Well, it 2020. I’m happy to report the U.S. health system has finally developed a sustainable health system. It’s been a long haul, and it hasn’t been easy.

It’s the story of a 12 year struggle with realities – coping with a severe economic contraction; making tough political compromises between liberals and conservatives; decentralizing of health institutions, including virtual monitoring and managing of the chronically ill and dying at home; competing globally for the health care dollar; responding to consumer demands for affordability, convenience, choice, and access; optimizing
clinical benefits for money spent; and most importantly, developing sustainable business models in which outcomes matched money expended.

The resulting U.S. system hasn’t satisfied the two political parties. Democrats, particularly its liberal wing, are disappointed a single-payer approach hasn’t evolved. Republicans are unhappy a consumer dominated system hasn’t caught fire. “Progressive capitalism,” the U.S. version of socialism, has replaced unfettered capitalism.

U.S. Health Care Bubble Burst

In 2009 the U.S. health care bubble burst, like the bubble of 1999 and the credit bubble of 2008. The health industry deflated downward. Hospitals closed, hospitalists were laid off, some hospital-owned practices were discontinued, , turnaround consultants became the rage, people delayed going to doctors, patients cut back on prescription drugs and elective surgeries, and thousands of health workers lost jobs. Even the highly profitable managed care and pharmaceutical industries downsized, consolidated, and laid off workers. Doctors were affected less than other health care sectors, because of the shortage of 200,000 physician shortage.

No Economic Immunity for Health Care

Like other industries, health care had to develop sustainable business models that revenue streams supported. Hype and hope based on technological transformations – personalized genomic-based drugs, minimally invasive procedures, predictive interventions, Internet-guided algorithms for managing care, bonuses for superior performance, and enlightened consumers striving for more perfect health – weren’t enough. Nor were lofty thoughts about achieving great savings through information technologies, preventive programs, and coordinated comprehensive care of chronic disease. These were all good ideas, and some paid dividends in the long term – but not soon, not quickly enough to turn the recession tide.

Competing Globally

U.S. business found it could no longer compete in the global marketplace when health costs outstripped those of other developed nations by 6% of GNP. Similarly, U.S. hospitals found they had to meet the prices of foreign hospitals, which were luring U.S. medial tourists. The world, as Thomas Friedman of the New York Times, liked to say, had become “flat,” thanks to information generated and transparency engendered by the Internet, U.S. employers and patients found they could get equivalent care abroad at a much lower price.

Consequently, the business and health care industries slowly learned to to live within their means. They did so by innovating and developing business models that sustained themselves with adequate and realistic revenue streams.

Major corporations and small and medium sized businesses offering health benefits turned away from specialty dominated networks to primary care medical homes and to retail and worksite clinics to cut costs, and they set up wellness and prevention programs to increase productivity, improve workers’ health, ward off chronic disease, enhance employee satisfaction, and to serve as recruiting tools.


Meanwhile Medicare found itself in deep trouble. Federal budget officials knew by 2010 the federal treasury was well down the road towards bankruptcy. Medicare had to change its ways of doing things. In 2011, it reorganized by setting up new contracting processes and a competitive bidding system with physicians and hospitals in 15 jurisdictions. It launched demonstration projects focusing on pay-for-performance, medical home, and bundled fees for hospitals and medical groups.

The Medicare Payment Advisory Commission urged Congress to pursue three initiatives “expeditiously” – a medical home demonstration program, bundling of hospital-medical staff payments for all care during a given hospital admission to be paid to a single entity, and the creation of accountable care organizations much like existing large group practices.

These demonstration projects became permanent programs. All had the underlying idea of limiting expenses by setting budgetary caps and limiting fee-for-service options. Using these techniques, Medicare and Medicaid expenses were gradually brought under control.

Consumer-Driven Care

It became clear that expanding coverage expanded costs of care. It also became obvious that changing consumer-incentives to seek care and take care of themselves were keys to developing sustainable economic models. Unlimited generous entitlement programs, whether at the federal or corporate levels, were pathways to insolvency and non-competitiveness.

In December 2003, as part of the new prescription drug act, Congress made it possible for all citizens to have health savings accounts (HSAs) which were usually linked to consumer-driven high deductible health plans (CDHDPs). Shortly thereafter, health plans began to systematically increase deductibles on all of its plans, whether they are HMOs, PPOs, or variations thereof.

The great cost shift to employees and individuals was on. There was great suspicion on the “progressive” side of the aisle that HSAs and CDHDPs were corporate and conservative con games.
But these new approaches caught on – slowly- despite withering criticism among those who thought only government, not individuals, possessed the judgment and wisdom to make health care choices.

By 2015, nearly 25% of employees were in HSAs, which had been shown to significantly reduce premiums and as a means of setting aside money if care was not accessed. Critics complained patients delayed or avoided care to save money. But businesses, particularly small and medium sized businesses, pushed HSAs to save money and sustain profit margins.

By 2015, HSAs were still growing, the economy had recovered, and people had regained confidence in 401Ks and other retirement financial vehicles. Also a growing subset of consumers, many well-educated non-medical professionals, using the Internet to judge the value of health services, felt they have sufficient smarts and data to choose their care.

Focus on Value – Clinical Benefit for Money Spent

Meanwhile multiple activities are going that began to create a new understanding of what constituted “prevention.”

Codes were developed by the Reimbursement Update Committee to pay physicians more to spent time with patients and to counsel them about prevention.

Corporations set up health appraisals for employees and on-site wellness programs. Corporations also established worksite clinics where prevention was stressed and people at risk received free generic drugs and wellness counseling. The old adage – an ounce of prevention is worth a pound of cure – was taken seriously, and returns on investment in wellness programs were said to be in the 2:1 range.

On clinical frontlines, several developments were taking place..

• In the Southeast, a fundamental mind shift occurred among a wide swath of practicing physicians in diagnosing and treating cardiovascular disease and its metabolic manifestations. This new paradigm resulted in an organization of hundreds of practicing physicians, the Consortium of Southeastern Hypertension Control (CIIOSEHC). According to William Bestermann, MD, a COSEHC president. longtime student of cardiovascular disease, and a self-confessed data addict, hypertension, type 2 diabetes, heart attacks, renal disease and stroke, represented the same metabolic disorder. In diabetics, vascular events accounted for 65% of deaths. By following a protocol aimed at achieving goals of Hb1AC of less than 7%, blood pressures of less than 130/80. total cholesterols of 200 or less, and LDL of less than 100, Bestermann and his colleagues dramatically reduced rates of health attacks and avoided expensive procedures like angioplasties and coronary bypasses. They showed ordinary clinicians could achieve extraordinary results by sticking to preventive fundamentals.

• In another preventive approach, Dr. Mark Fendrick and his colleagues at the University of Michigan formed an organization known as the Center for Value-Based Insurance Design. They were able to demonstrate by decreasing co-pays for drugs that offered clinical benefit in chronic diseases like diabetes, they could improve outcomes in these disease by removing the cost barrier, and in the process, they saved thousands of dollars by preventing complications.

EMRs and Health 2.0

In 2004 with great fanfare, President Bush announced a goal of creating and perfecting a national interlocking information technology system within a decade. Its backbone was to be EMRs in every physician’s office connected to similar systems in hospitals. It was not to be. It was an example of “irrational exuberance” fostered by those who believed the Internet as some sort of Holy Grail for solving America’s health system problems.

By 2008, the original national medical director of the proposed system had resigned, and only 10% to 15% of practicing doctors had adopted complete EMRs. To doctors, most of whom were in small practices, EMRs were simply an unsustainable business model. EMRs cost too much, had little tangible return on investment, decreased productivity, disrupted normal practice patterns, and served as a punitive health plan vehicle for judging their practices, and even excluding them from networks. Yes, large enterprises – Kaiser Permanente, the VA, and the Department of Defense - showed it was possible to create system-wide EMR, but independent physician adoption remained stagnant

By 2015, however, doctors had begun to move towards EMRs because of multiple factors – newly designed, cheaper, more doctor friendly models, clearer certification standards identifying acceptable EMR systems, federal and state subsidies for doctors who identified themselves as medical home providers, requirements of Medicare and health plans to have EMRs to participate in pay-for-performance projects, and the movement of physicians toward salaried employment in larger groups and hospital systems with the infrastructure to support EMRs.

Meanwhile, a separate but related movement, Health 2.0, was vigorously growing. It too was based on a belief in the powers of the Internet, and Web 2.0, a term coined in 2003. Health 2.0 advocate said Web 2.0 methods could be used to rationalize, analyzc, aggregate, manage, select, prevent disease, promote good health, and signal the most likely cures.

The Health 2.0 movement, was created in 2006 by Matthew Holt and his partner, Indu Subaiya, two San Francisco health analysts and consultants. In The Health Care Blog, Holt announced a September 2007 Health Care 2.0 conference. Over 500 people attended, including big Internet players like Google Microsoft, Yahoo, and WebMD, and swarms of software entrepreneurs and “user-generators,” representing those who creators of Internet-based wikis, mash-ups, videos, social net workers and consumers sites.

A second Health 2.0 conference, scheduled for October 22 and 23, again in San Francisco, was sold out. Health 2.0 was variously defined as,

The use of social software and lightweight tools to promote collaboration between patients, their caregivers, medical professionals and other stakeholders


A new concept of health care wherein all the constituents (patients, physicians, providers, and payers) focus on value(outcomes/price) and use computers to compete over the full cycle of care as the catalyst for improving the safety, efficiency, and quality of health care.

Interest in Health 2.0 was at a white heat, partly because Google and Microsoft had entered the arena of creating personal health records for individuals and employers as the missing piece of a national information technology system, and user-generators thought the world of Health 2.0 was their oyster..

But their was a cloud on the Health 2.0 system. It was reminiscent of the meltdown, namely, the lack of sustainable business models to support all the innovation going on among user-generator software aficionados.

The Revolution Health Group (RHG), which three years before, had been started by Steve Case, founder of AOL, and backed by $250 million of his money, was failing because of lack of revenues. Case had started RHG, a consumer-oriented site, to “revolutionize”care by providing consumers with unlimited information to help them drive the system and improve their health. But RHG lacked focus, and it focused too much on specialist driven care. In 2008 RHG wit Waterfront Media. Waterfront's Everyday Health was the #2 health care Web site, after WebMD, and Revolution Health has been #3. Waterfront had a number of sites emphasizing consumer health issues.

Health blogger Dmitriy Kruglyak saw the demise of Revolution Health as undermining the "Health 2.0" movement. He said that, given Steve Case's substantial funding, Revolution "tried almost every Internet health idea under the sun. Many of those came by way of acquisitions, while many were developed internally by copying competitors. But, "despite impressive starting war chest and exhaustive experimentation, most revenue streams failed to materialize, aside from plain-vanilla advertising."

Kruglyak argue"Health 2.0" companies were suffering the same illusions of the Dotcom bubble--they are in love with the technology but do not have a sustainable business model. He concluded, "The sooner people ditch the hype and focus on proving their claims with metrics, the faster we will realize the true promise of the eHealth."
Part of the “irrational exuberance” of Health 2.0 may have been the belief that, given enough information and enough transparency and enough rationality, consumers and employers and health plans would surely pick providers offering lower costs with better quality. Somewhere along the line, they forgot too much information could hinder and overshelm good judgment, and consumers would trust their doctors more than algorithms generated by payers.

Health Plans Push Sustainability

From 2010 to 2020, health plans adjusted to political and economic realities. Health plans were not popular among consumers, physicians, or hospitals. Indeed, polls indicated Americans ranked health plans right down there with oil companies and pharmaceutical companies.

Public sentiment and politics forced Congress to health plans to abandon Medicare Advantage plans, which had been created to market Medicare drugs and which had served as profit vehicles for HMOs; to accept all who applied for membership regardless of pre-existing illness or health risks; to cease canceling claims from existing members who had become burdensomely expensive for HMOs to carry as members; to compete with or to join health plans fashioned after plans offered members to Congress, government employees, and military veterans; and to make premiums uniform across state lines. These were not trivial adjustments.

To survive, health plans responded by; 1) not paying hospitals for “never” events, i.e. complications in hospitals that should never have occurred – infections, blood costs, mismatched transfusions, venous thromboses, surgical errors.; 2) insisting on a massive switch to generic rather than brand name drugs; 3) striving to cut the prevalence of obesity, and its twin sister, type 2 diabetes; 4) reducing 30% to 50% “waste” in the system – unnecessary, duplicative, and overly expensive drugs and imaging procedures; and 4) by using IT to identify, rate, and exclude doctor-overusers and abusers.


In this year of 2020, health costs and other burdens on the federal budget, energy costs, have been brought into line with the rate of general inflation. Don’t misread me. All isn’t well in 2020. Technologies still drive costs, too many patients are still fat and diabetic, people still demand access to the latest, and .administrative efficiencies are still lag behind other developed countries; the doctor shortage still exists, access to care is limited, but drug prices, in part due to government negotiated prices, are down; hospital costs are dipping, thanks to transparency and foreign competition; and American people and health providers have recognized they can’t have it all and can’t afford total dependency on government with the ensuing tax burden They have begun to live within their means, to take better care of themselves, to pay more out of pocket for care, to exercise more, and to watch their midriffs.

Thursday, October 16, 2008

Goverment vs. market reform, liberals vs. conservative -No Soothsayer on Health Reform

I’m no soothsayer on health reform. But based on interviews I’ve conducted with Grace Marie Turner, founder and president of the Galen Institute and a McCain backer, and with David Cutler, PhD, a Harvard economist who is Obama’s chief health reform advisor, I predict prospects for health reform in the next administration are dim. The current financial crisis makes this a safe bet. There will not be enough money to go around, the budget deficit will be staggering, and health reform will have to wait.

Where one stands on reform depends on where one sits ideologically.

Here is a liberal physician’s view. David Blumenthal, MD, is an unpaid advisor to the Obama campaign for president,

The choice facing health care professionals. Like all Americans, is basic: Who deserves to be trusted with the stewardship of America’s health care system? The McCain proposal violates the bedrock principle that major health policy reform should first do no farm. It would risk the viability of employer sponsored insurance and the welfare of chronically ill Americans in a pell-mell pursuit of a radical vision of consumer-driven health care. Senator McCain’s plan does not demonstrate the kind of judgment needed in a potential commander in chief of our health system.

And here is the take of Joseph R. Antos, a PhD of health economics and the conservative American Enterprise Institute.

Reforms as sweeping as the Obama plan come with a high price tag. According to the campaign, federal health care spending could increase as much as $65 billion in a year but only after $200 billion a year in cost savings. The usual suspects show up as savers: health information technology, disease management, prevention, and comparative effectiveness research – all important ideas, but none liked to produce savings soon. ..Although the plan would significantly increase the number of Americans with health insurance, it remains to be seen whether that would come at a price Americans would be willing to pay.


1. Richard Reece, “Point Counterpoint: Two Experts Debate the Candidates Health Care Proposals,” Physician Practice Options, September, 2008.
2. Richard Reece, “What are the Prospects for Reform?” Physician Practice Options, September, 2008.
3. David Blumenthal, “Primum Non Nocere – The McCain Plan for Health Insecurity,” New England Journal of Medicine, October 16, 2008.
4. Joseph Antos, “Symptomatic Relief, But No Cure – The Obama Health Plan, New England Journal of Medicine, October 16, 2008.

Primary care versus specialists - Numeric Characteristics alist-Dominated Statesof Speci

An authority on primary care remarked to me the other day that the states most top-heavy with specialists and with the greatest shortage of primary care physicians were the northern tier of states - Massachusetts, Connecticut, New York, and New Jersey. I cannot verify the accuracy of his remark, but it fits my impression of the state of the physician workforce.

I’ve always maintained a region’s demographics and culture dictates and shapes its health care. You can express demographics in numbers, and the cultural response follows.

1. The four states - Massachusetts, Connecticut, New York, and New Jersey - have more physicians per capita and a much high population density than other states. This may be because these states have many teaching centers geared to specialty care. Crowded states tend to have more specialists and fewer primary care physicians.

`1) Physicians/capital Rank among 50 states

Massachusetts, 453/100,000 #2
Connecticut, 368,000 #5
New York, 400,000 #3
New Jersey, 332,000 #8

Average rank #4.5

Population Density/sq mi Rank among 50 states

Massachusetts, 822.7 #3
Connecticut, 722.9 #4
New York, 408.7 #7
New Jersey, 1171.1 #1

Average Rank # 3.8

2) The four states have a high per capita income. Well-off citizens tend to visit specialists more often, particularly for elective procedures. Also specialists tend to congregate in high income regions.

Per capita income Rank among 50 states

Massachusetts $49,467 #4
Connecticut, $53,296 #2
New York, $46,424 #7
New Jersey, $47,705 #6

Average Rank #4.8

3) The four states have older populations than 42 other states. According to Medicare, the typical Medicare patients with chronic illness is seen by 6 specialists. In 42 states, the median age is younger than in these four states
Median age Rank among 50 states

Massachusetts, 38.3 #10
Connecticut, 39.1 #8
New York, 37.4 #18
New Jersey, 38.2 #11

Average rank # 11.8

4) Public education expenditures per pupil

The four states rank at the top in public education. Well educated people may gravitate towards specialists, though I have no solid evidence of this.

Expenditure per pupil Rank among 50 states

Massachusetts, $11,267 #5
Connecticut, $11, 572 #4
New York, #14,419 #1
New Jersey, $13,800n #2

Average rank #3.0

5) Population without health insurance. The significance of this is unclear to me, except perhaps to observe that 33 states have high numbers of uninsured and five southern and western states have much larger numbers of immigrants have much higher uninsured rates – Texas 24%, New Mexico 22%, Florida 21%m Arizona 20%, and Louisiana 20%. I might also note specialists are flocking to Texas because of malpractice caps.

Massachusetts, 10% #5
Connecticut, 10% #9
New York, 14% #22
New Jersey, 15% #30

Average rank, #16.5

If you are interested in the demographic and cultural characteristics of the state in which you practice, I recommend Sate by State: A Panoramic Portrait of America (Ecco, a HarperCollins imprint, 2008)

Wednesday, October 15, 2008

electronic medical records, Reece personal musings - A Voice in the Wirelessness, Part 2

One does not begin with the right answers, one begins with the right questions.

Peter Drucker, 1909-2006

The Health 2.0 term represents irrational exuberance around unproven healthcare ideas that do not have a sustainable business model.

Dmitri Kruglywak,, September 15, 2008

There’s a lot of excitement these days about Health 2.0, using Web 2.0 technologies to connect consumers to health care through social networks, consumer sites, wellness programs, and personalized medicine. The idea is to apply easy-to-use software to search for health answers through wikis, blogs, videos, and other online communications, in order to connect people with each other, and to improve health and health care.

Finding A Sustainable Business Model

The problem is to find an sustainable business model that people will pay for. This problem has been brought to everybody’s attention by the failure of physicians to embrace online technologies and EMRs and the quiet exit of the Revolution Health Group (RHG) from the Health 2.0 marketplace. RHG was backed by $250 million supplied by Steve Case with the promise it would “revolutionize” and “transform” health care by supplying consumers with information. It didn’t happen. Revenues weren’t there to sustain the idea, and Waterfront Media, whose Everyday Health is the #2 health website, after WebMD, has agreed to buy RHG for $300 million.
According to Consumer Power Report #148,

Health blogger Dmitriy Kruglyak sees the demise of Revolution Health as a stand-alone operation as undermining the premise of the "Health 2.0" movement. He says that, given Steve Case's substantial funding, Revolution "tried almost every Internet health idea under the sun. Many of those came by way of acquisitions, while many were developed internally by copying competitors. While it is hard to call this approach focused, at least they had a chance to try and copy almost everything that had promise, giving them the first dibs at success." But, "despite impressive starting war chest and exhaustive experimentation, most revenue streams failed to materialize, aside from plain-vanilla advertising."

Not Pessimistic

I am not so pessimistic. A sold-out Health 2.0 conference is being held in San Francisco on October 22 and 23, and all the big players, Microsoft, Google, WebMD, Yahoo, and 50 other major and minor web playes, will be there, fired-up and raring to change the health care landscape through personal health records and other various and sundry applications.

Sitting Back and Asking

Now is a good time to sit back and ask: do we have another bursting of,, or bubbles on our hands?
Health 2.0 is not the same as Medicine 2.0, which applies more to physicians and their failure to adopt EMRs on a massive scale, but these 2.0 ventures share the problem of being financially unsustainable.

In yesterday’s blog, I asked: Is it possible 85% to 90% of physicians have solid reasons for not installing complete EMRs and does their reasoning make sense? I answered by saying clinical judgment at the point of care should not be trumped by algorithm intelligence.

EMRs Don’t Make Business Sense for Physicians

But a second more fundamental reason for rejecting EMRs is that EMRs simply don’t make business sense and represent a failed business model. Why would any rational doctor, many of whom are economically marginal already, install an EMR that
• has no tangible return on investment
• costs $30,000 or more to install
• slows productivity for 6 months or so
• benefits others, i.e. health plans, but not physicians
• changes and disrupts existing practice patterns
• has shown few improvements in meeting quality standards when compared to doctor groups not using EMRs.
• may be used to exclude or rate practices, and decrease reimbursement
• when used in P4P programs, has not resulted in bonuses that meet expenses of participating .

Legal EMRs

Now, unfortunately, another reason for not installing EMRs has surfaced. Poor EMR design and user errors may make physicians vulnerable in malpractice actions (“Is Your EMR Legal? AMA Medical News, October 13, 2008). If doctors buy the wrong EMR or use it wrongly, they may be easy targets for malpractice attorneys. Among other things, the article says, the EMR should,
• Assign authorship to each entry.
• Function as a normal way of doing business
• Record the time and identity of each user.
• Make alternations obvious..
• Be easy to audit.
• Allow open billing.
• Have controlled access.
• Allow cut and paste functions.
• Identify original sources.
• Allow free text entry.
• Meet certification standards and safeguards

The problem with all of this is that certification standards are continually evolving, and many EMRs may not meet all the standards. Almost any EMR can be disqualified as a legal record in court. Each user should have login names and passwords and ideally its users should undergo training for proper ENR use.

This may all be necessary, but many physicians are too busy practicing medicine to worry about the legality of an EMR and examining its various functions, which is yet another reason why they don’t rush into EMRs.

Hype alone, either for Health 2.0 applications or for EMR installations, is not enough to transform, rationalize, inform, and discipline consumers and physicians. The business model must be reasonable, affordable, and sustainable.

Tuesday, October 14, 2008

electronic medical records, Reece personal musings - A Voice in the Wirelessness

Beware of Geeks Bearing Formulas.

Warren Buffet

In previous blogs, I’ve suggested clinical algorithms, computer-driven best protocols, diagnostic support systems, and electronic medical records aren’t necessarily what they’re cracked up to be, nor do they automatically improve care.

I’ve been a Voice in the Wilderness, or perhaps I should say a voice in the Wirelessness.

In this blog, I pose these simple questions:

• Is it possible that the 85% to 90% of American physicians who failed to install complete EMR systems or to use computer algorithms for diagnostic support know or smell something that geeks have missed.

• Is it possible that computer compulsivity interferes with compassionate care?

• Is it possible you can’t accurately judge or guide quality of care by when or how often a physician uses computers?

Lately I’ve been wondering if parallels exist between the current financial crisis and the clinical crisis, and whether reliance on algorithms contribute to those crises.

In an October 11 New York Times piece, “The Rise of Machines,” Richard Dooling an expert on artificial intelligence vis a via human intelligence, observes:

The Wall Street geeks, the quantitative analysts (“quants”) and masters of “algo trading” probably felt the same irresistible lure of “illimitable power” when they discovered “evolutionary algorithms” that allowed them to create vast empires of wealth by deriving the dependence structures of portfolio credit derivatives.
Is it possible clinical geeks are suffering from this same lure of “illimitable power,” i.e., that you can better cure disease and create health from derivative algorithms rather than on-the-spot conversations and direct observations?
As the current financial crisis spreads (like a computer virus) on the earth’s nervous system (the Internet), it’s worth asking if we have somehow managed to colossally outsmart ourselves using computers. After all, the Wall Street titans loved swaps and derivatives because they were totally unregulated by humans. That left nobody but the machines in charge.

Is it possible that we have outsmarted ourselves by believing artificial intelligence from cyberspace is superior to human intelligence on the ground and that we can regulate care through algorithms?

“The unlimited replication of information is generally a public good…The problem starts, as the current crisis demonstrates, when unregulated replication is applied to money itself. Highly complex computer-generated financial instruments (known as derivatives) are being produced, not from natural factors of production or other goods, but purely from other financial instruments.”

Is it possible that unregulated and unlimited replication of information is not a good thing?

We are still fearful, superstitious and all-too-human creatures. At times, we forget the magnitude of the havoc we can wreak by off-loading our minds onto super-intelligent machines, that is, until they run away from us, like mad sorcerers’ apprentices, and drag us up to the precipice for a look down into the abyss.

Is it possible that those who program, i.e. technocrats and bureaucrats and specialistcrats, these super-intelligent machines have lost sight of the human consequences of their work?

Here’s a frightening party trick that I learned from the futurist Ray Kurzweil. Read this excerpt and then I’ll tell you who wrote it:
But we are suggesting neither that the human race would voluntarily turn power over to the machines nor that the machines would willfully seize power. What we do suggest is that the human race might easily permit itself to drift into a position of such dependence on the machines that it would have no practical choice but to accept all of the machines’ decisions. ... Eventually a stage may be reached at which the decisions necessary to keep the system running will be so complex that human beings will be incapable of making them intelligently. At that stage the machines will be in effective control. People won’t be able to just turn the machines off, because they will be so dependent on them that turning them off would amount to suicide.

Brace yourself. It comes from the Unabomber’s manifesto.

I’m not suggesting clinical algorithms will bring about the doom of clinical medicine, or that there is anything intrinsically evil about them. I’m merely saying that we not get ourselves in the position where we think A.I (Artificial Intelligence) is superior to emotional intelligence and the subtleties of human interaction.

It is possible we can place too much faith in machines and too little in clinical judgment.

Monday, October 13, 2008

Health care truths 12 Self-Evident Health Care Truths

1. Pay primary care physicians on par with specialists, and medical students will gravitate in greater numbers to primary care.

2. Pay physicians offices a facility fee, as provided for hospitals, and more care will be provided in physicians’ offices.

3. Outpatient care is less expensive than inpatient care but is not accessible 24/7.

4. Personal physician, i.e., primary, based- care is less expensive than specialty care by 33% and produces better outcomes by 20%.

5. Parkinson’s Law of health care: Demand, expense, and bureaucratic obstacles to care expand exponentially when other people, i.e., third parties, pay for it.

6. Universal coverage is not the same, indeed may be meaningless, when universal access to physicians does not exist.

7. Electronic medical records are not currently an effective way to communicate with patients, other physicians, or hospitals.

8. The present U.SD. administrative structure (payment by private for-profit, private non-profit and public payers) is more costly than a single-payer system but may be more acceptable to most Americans.

9. Patients, i.e. consumers, paying more out-of-pocket, seek less care, are more conscious of their health, but may delay seeing timely care.

10. The U.S culture – individualism, belief in opportunity but not necessarily results, demand for access to the latest and best in technological care, and mixed populations with different belief systems – are more important factors in health outcomes than national health policy.

11. The medical homes concept – more pay for personal, coordinated, and comprehensive care – is attractive and needed but could die in wake of unreasonable eligibility requirements and lack of effective communication systems with specialists, hospitals and referral facilities.

12. The severe shortage of primary care doctors with accompanying lack of access to them will spark the next wave of demands of health reform

Sunday, October 12, 2008

Obama strategies - Abracadabra! Obama’s MagicWand!

Barack Obama, the political magician who will likely be our next president, has a national magic wand for transforming the health system and America society as a whole.

With a few flicks of his magic wand, Obama proposes and promises the following.

• A national mandate to offer workers’ insurance or pay a tax

• A new national public plan (similar to Medicare) for the uninsured and small businesses

• A new national insurance exchange that would offer choice of private plans for everyone

• A new national mandate to cover all children

• New expanded national coverage paid for by all those making over $250,000 and by savings on EMR, disease management, and prevention

• National regulation of all private insurers forcing them to cover all regardless of pre-existing illness.

• National incentives to expand EMRs

• National elimination of private Medical HMOs

• National government negotiation of drug prices.

So Much for Health Care

So much for health care, Obama also has other magic tricks up his sleeve. According to an October 10, 2008 piece in the Wall Street Journal by Kimberly Strassel, and I quote,

And now, America, we introduce the Great Obama! The world’s most gifted political magician! A thing of wonder! A thing of awe!

To kick off our show tonight, Mr. Obama will give 95% if America’s working families a tax cut, even though 40% don’t pay income taxes!

For his next trick, the Great Obama will jumpstart the economy, and he will do it by raising taxes on the very businesses that are today adrift in a financial tsunami! That will include all those among the top 1% of taxpayers who are in fact that nation’s biggest employers who currently pay the highest corporate taxes in the developed world. Mr. Obama will, with the flick of his fingers, show how to create more jobs with less money. It’s simple, really. He has a wand.

And just watch the Great Obama perform a feat never yet managed in all history. He will create an enormous new government health program, spend billions to transform our energy economy, provide financial assistance to former Soviet satellites, invest in infrastructure, increase education spending, provide job training assistance, and give 95% of Americans tax cuts – all without raising the deficit a single penny! And he’ll do it in the midst of a financial crisis! And with falling tax revenues! Voila!

And what about a little magic from Mr. McCain? He has none - just straight talk and a deep belief in American entrepreneurship and innovation. Unfortunately, he’ll need all the magic he can muster if he is to catch the Great One!

Speaking of entrepreneurship and innovation, Thomas L. Friedman, the New York Times international columnist and author of Hot, Flat, and Crowded: Why We Need a Green Revolution and How It Can Renew America (Farrar, Straus, and Giroux. 2008), the magic word is Green, as in Green Revolution, Going Green, and Green not Greed.

Friedman, a brilliant writer, is no fool. He knows the salvation of America lies not in a single word, but in a magic formula based on systematic innovation that
cools the planet, and develops “clean” alternatives to “dirty” fossil fuels.

His magic formula is REEF-IGDCPEERPC TTCOBCOE, which stands for: a Renewable Energy Ecosystem for Innovating, Generating, and Deploying Clear Power, Energy Efficiency, Resource Productivity, and Conservation < The True Cost of Burning Coal, Oil, and Gas.

There are those, such as T. Boone Pickens, who think America’s current financial crisis resides in the $700 billion we spend each year to import oil. That may be, and it may be one reason we can’t finance Obama’s ambitious health and national restructuring.

Maybe some politician will be able to wave a magic wand to get us out of this morass, but I agree with Thomas L. Friedman, who says in his October 12 New York Times column, “The Post--Binge-World,” of government’s workout plans to bail out the economy,

” This workout promises to be painful, complicated, and protracted. But it must regulate the excesses without smothering the underlying innovative, entrepreneurial, and risk-taking attributes of our economy, which is what will ultimately bail us out – and they always have.”

Friday, October 10, 2008

book review, reece personal musings - Managed Care Memoir

A Web-based entrepreneur emailed me yesterday to inform me he would like to sell A Managed Care Memoir: A Physician’s Whistle-Stop Journey, 1983-2003 (Infinity at the Miami Book Fair International and on three of his websites for a mere $149.

His offer tempted me. The book, published by a vanity publisher and offered on, hasn’t sold well and is gathering dust. Yet of my ten books (another, tentatively called The Primary Solution, may be on the way), A Managed Care Memoir is perhaps the one of which I am most proud. The book traces the rise and fall and sidetracks of managed care and features 27 pit stops on the HMO railway.

1. 1983, Minneapolis, The Journey Begins

2. 1985, Minneapolis, HMOs Derail University Hospital

3. 1987, Minneapolis, HMO Speak Trumps Doctor Speak

4. 1990-1995, Oklahoma City, Managed Care on Route 66

5. 1997, New York City, Author Explains HMOs to Big Apple Audience

6. 1997, Cambridge, Massachusetts, Harvard Business School Professor Predicts HMO Train Wreck

7. 1998, San Francisco, Wall Street Journal Reporter Says HMOs Erode Trust

8. 1998, Vail, Colorado, Conference Speakers Says HMO “Shake-Out” Is At Hand

9. 1998, Little Rock, Arkansas, Author Ponders Collapse of Medical Financial Trestles

10. 1998, Nashville, Tennessee, Conference Addresses Failures of Physician Organizations

11. 1998, Minneapolis, Wall Street Backed Physician Organizations Fail to Leave Station

12. 1998, Denver, Health Economists Says HMOs are on Downhill Grade

13. 1999, Old Saybrook, Connecticut, Media Creates Bad Karma for HMOs

14. 1999, Austin, Texas. Patients Ignore HMOs, Care for Themselves

15. 1999, Old Saybrook, HMOs Go Up, Around, and Down the Laffer Curve

16. 2000, Old Saybrook, Hospitals Are Not The Center of the Tracks for HMOs, But They Are for Physicians and Patients

17. 2000, Fort Worth, Texas, Lawyer Lays Roadblocks Across HMO Tracks

18. 2000, New Haven, Connecticut Rail Rage, Connecticut Physicians Sue HMOs

19. 2000. Wilton , Connecticut, A Physician Executive Seeks an HMO Detour

20. 2000, Minneapolis, Another Physician Executive with Another HMO Alterative

21. 2001, Old Saybrook, Software Speeds and Improves Care

22. 2001. Saratoga Springs, New York, Expert Teaches How to Drive on Information Railway

23. 2001, Cambridge, Massachusetts, Harvard Business School Conference Serve as Depot for Consumer Advocates

24. 2001, Minneapolis, CEO of Health Plan Converts HMO into Patient-Driven Locomotive

25. 2001, Cochrane, Georgia, In Busy Practice Physician’s Computer Skills Are Not Enough, An Interview with Ed Roberts, MD. Inventor of the First Practical Personal Computer

26. 2001, Jackson Hole, Wyoming, Father of HMOs Says System Needs Quality Reform

27. 2001, End of the Line and Beyond

Well, that's now ancient history. We’re now 5 years beyond the book. What has happened?

• HMOs are still wildly unpopular (A Harris Interactive Poll, Oct. 2007, indicates only 5% of Americans regard HMOs as “trustworthy,” and 45% say HMOs “need regulation.”

• HMOs are still in the game (They have changed their stripes by emphasizing Consumer-Driven High Deductible Plans, pushing wellness, and profiting from Medicare Advantage Plans.)

• Physicians have brought a class action suit against HMOs and won (The settlement resulted in HMOs contributing more than $100 million to a 501C3 organization known as the Physicians Foundation for Health System Excellence.)

• HMO reform is on the political reform agenda (HMOs, politicians say, should accept everybody regardless of their health status or pre-exiting illness.)

• Health reform is stuck in neutral (This is partly because of heavy lobbying on part of existing stakeholders who like the status quo and partly because of Americans’ distrust of a government dominated health system.)

• Managed care premiums have nearly doubled.

• And lastly, we are in the throes of an unprecedented financial crisis, the dimensions and directions of which are still uncertain but which could lead to a cascading collapse of major health institutions that depend on credit to sustain themselves.

Wednesday, October 8, 2008

Minneosota, book review - The Road to Reform

Does the road wind up-hill all the way? Yes, to the very end.

Christina Rosetti, Up-Hill, 1830-1894

I’ve always liked the metaphor of a road as the path to the future. Roads wind, twist, and turn. Roads go uphill and downhill. Roads can be blocked, can go nowhere, and you can always go off the shoulder.

One of my favorite books is The Road to Reform? The Future of Health Care in America (The Free Press, 1994). The late Eli Ginzberg, then the dean of health care analysts, wrote it on the eve of President and Hillary Clinton’s failed health reform bill.

The front flap of the book reads,

“Each of the key players is sharply edged, high-earning physicians, the over-bedded hospital sector, employers squeezed by rapid rising benefit costs, inefficient private health insurance companies, highly profitable pharmaceutical and medical supply companies, and, finally, the public who wants more and better care but doesn’t want to pay for it.”

Sound familiar? It should, for satisfying these stakeholders block the road to health reform today. The road to universal coverage is as uphill as it has ever been. We are an incremental, experimental, and conservative nation, which is why we should pay attention to experiments going on in states like Massachusetts and Minnesota. These states are further down the health reform road than most..

I know more about Minnesota than Massachusetts, since I was editor-in-chief of Minnesota Medicine from 1975-1990, and practiced in Minnesota for 25 years. Minnesota has a consensus culture dating back to farmer collectives, and its citizens and its physicians have a reputation for striking compromises for the common good.

These compromises do not always work. The modern managed care movement, which exploded in Minnesota in the early 1970s, hasn’t worked and has had its share of scandals, like the billions of dollars United Health Care CEO William McGuire walked away with after stock option backdating.

But Minnesota still seeks an equitable road to reform. In 2004, the Minnesota Medical Association (MMA) formed a 21 member Health Care Reform Task Force to develop a reform plan. In 2006-2007, the MMA formed Healthy Minnesota: A Partnership for Reform, which has a 26 member steering committee composed of leaders from health care, government, business, labor, education, and patient advocacy groups. These efforts culminated in a law, S.F. 3780, which passed the Minnesota house by 127-7, and the the Senate by 62-5, and which was signed into law on May 29. 1980.

The principle components of the new law are:

1) Medical Homes for coordinating care of complex chronic diseases - The law does not mandate medical homes but encourages patients with chronic disease in public programs to have a medical home. It does not restrict access to specialists, nor does it hold medical homes responsible for all medical expenses. But it sets 2009-2010 deadlines for establishing criteria for certifying medical homes, e.g. having a dedicated care coordinator; for paying medical home practitioners, probably in $50 month per patient range; and for mandating that private health plans have medical homes in their network and for paying plans for care coordinators for patients who choose medical homes.

2) Paying for public health programs for community health boards and tribal governments – These payments, in the form $47 million in grants, will consist of matching grants for projects focusing on obesity and tobacco use.

3) Extending eligibility for insurance coverage to all families with incomes of $60,000 or less – The aim is to expand coverage to 13,000 Minnesota and to encourage 5,000 more to buy insurance on the private market.

4) Institute payment reforms based on pay for performance, peer grouping, baskets of care, and an essential benefit set - The law calls for a standardized statewide system for measuring provider quality and for allowing consumer to compare care. The term “baskets of care” refers to bundles of care or sets of related services with a set price for each bundle, which physicians may establish but may not vary. The baskets, or bundles, of services include – primary care, preventive services, coronary artery and heart disease, diabetes, asthma, depression, and others deemed appropriate.

I have no clue if the Minnesota road to reform will work, or the state will reach its destinations by 2011, the final target date for implementation. But at least, it’s a plan, it’s pragmatic, and it’s agreed upon by major stakeholders.

Tuesday, October 7, 2008

Health 2.0, limits of technology - Health 2.0: A Cautionary Note and a Modest Proposal

Health 2.0 (as well as the closely related concept of Medicine 2.0) are terms representing the possibilities between health care, ehealth, and Web 2.0 and has come into use after a recent spate of information in newspaper articles and in the physician and medical literature. A possible explanation for the reason that health has generated its own 2, 0 are its applications across health care in general, and its practically limitless potential in health promotion.

Wikipedia, 2008

Left-Brain Software

This is for left-brained software enthusiasts, who believe,

• clinical medicine is logical, linear, and linked closely to scientific rational thinking;

• there is a protocol for all, and for all a protocol;

• there is a set of guidelines for every specialty, and for every specialist a guideline to fit every patient;

• every clinician should dance to algorithms, and everything and everybody can be reduced to a sophisticated individual algorithm;

• if all doctors had an EMR with embedded best practice information at their fingertips, clinical medicine would be safer, better, and more efficient;

• clinicians are either have too little information or are overloaded with too much unsorted information generated by experts;

• if one would use the Net more to coordinate care for the Big Seven Chronic Diseases accounting for 80% of all costs - Coronary Heart Disease, Congestive Heart Failure, Hypertension, Cancer, Asthma, Depression, and Chronic Obstructive Lung Disease- and their derivatives, spending would drop, satisfaction would rise, and outcomes would be improved.

Right-Brain Wisdom

These software aficionados may be partly right, but I would remind them May there’s another world out there – an untidy, often messy, world based on the wisdom of crowds and the wisdom of pragmatists who have been there and done that. It is the world of the Right Brain – which organizes patterns into trends, relies on its gut instincts, and sees the world as a whole, not in bits, bytes, and clicks. I would also remind you them banks of computers, programmed by specialized experts in financial derivatives using the latest in software, missed the boat in spotting what was wrong with the system and predicting the economic meltdown.

A Messy World

The world of clinical medicine is messy, fickle, and full of artful decisions that have nothing to do with logic. Diagnosis, treatment, and trust in physicians do not always lend itself to computer resolutions. There is still a place for the clinician who can sift the relevant from the irrelevant; takers from the fakers, the really sick from the worried well. These clinicians have a Right Brain, and it functions on the basis of having seen this before, knowing the narrative of disease, knowing when there is a complicated diagnostic or therapeutic problem, sensing when or when not additional information is necessary, recognizing limits of data intervention.

A Modest Proposal

That’s what this little essay is about – the practical limits and the proper applications of Health 2.0. For you, those in the Health 2.0 crowd, I make the following modest proposal.

• Go directly to a busy clinician’s office. Do not pass Google. Disregard computer mindsets. Use your mind, your observational powers, and your common sense.

• Spend a month at the doctor’s office. The typical clinician sees about 500 patients with diverse problems. See how he or she handles the mix.

• Choose practitioners using your favorite EMR containing the latest best practice guidelines.

• Tag along with the clinician during his or her 10 to 12 hour day.

• See the patients as he or she sees them, and while you’re at it, record the expense of data entry and documentation required, who it benefits, and what it returns on investment

• Observe the variety of patients, their multiplicity of complaints, and their subjective and objective reasons for being there.

• See how the clinician sorts through the maze, guides the patient through the labyrinth, how he or she judges the severity of problems, and how he or she judges severity and reality of complaints, and what to do and what not do about them.

Questions to Ask of the Doctor

Once the clinician has done his or her work with a patient, present them with your best practice information on the EMR, and asks these questions.

• Did the information have any clinical relevance?

• Did it add anything to useful to diagnosis or treatment? How often?

• Was it helpful in those “soft” subjective clinical situations – the well patient just dropping in for a visit or an annual checkup? The elderly patient seeking attention or hand-holding? The wife concerned about her husband’s drinking? The vague complainer? The baby boomer armed with questions garnered from the Internet?

• Did the software give the clinicians a flash of insight, a warning of an incompatible drug interaction?

• Did it help identify the malinger, the psychosomatic, the addict looking for a fix, the unhappy patient looking for an excuse for a malpractice suit?

• How long did it take to enter the data into the EMR? Who entered it? At what expense?

• Is the embedded software useful as a diagnostic support tool, for unraveling complicated diagnostic problems or coming up with an unexpected diagnosis?
If so, how often?

• Did the EMR generate information that could be communicated or to be sent to the local hospital or another doctor? Can the patient understand and use the information? Is the EMR, in short, an effective communication vehicle?

• Did the doctor have any ideas on how the data might be easier to enter or rendered more useful?

After a Month in the Trenches

After you finish your month in the clinical trenches, consider again your position on the logic, linearity, limitations, and utility of Health 2.0 in clinical settings.

You may conclude your Left Brain was right in the first place, that the computer is an indispensable tool for the proper practice of medicine, for deciding what is the right and wrong thing to do, and being consistent across spectrum of care.

Or you may say: Hey! There’s a place for the Right Brain, too, for independent thinking outside of cyberspace, for thinking and action based on clinical experience and the idiosyncrasies of the patient.

Humankind may be too complicated, unpredictable, and variable with too many combinations and permutations to be reduced to finite algorithms. The computer may be too simple a tool for all or even most situations, , and its use may be restricted to a few select circumstances, not to the practice or patients as a whole.

Monday, October 6, 2008

Primary care - Will Primary Care Be Re-Empowered by an Ailing Economy?

Richard L. Reece, MD, and Brian Klepper, PhD, September 25, 2008

Prelude: The following appeared on September 25, 2008 in

For some time, we have speculated that America's health system is sliding towards a financial crisis that could spill over into the general economy and bring it down.
The logic goes like this: explosive growth in the cost of healthcare is pricing rank-and-file Americans out of the coverage market and reducing the system's (inflation-adjusted) available revenues. All the while, service demands have continued to increase, creating a mounting resource-demand mismatch.

We can see this already on the system's edges, in the crises or shutdowns at the nation?s safety net health systems—Martin Luther King in Los Angeles, Women's Hospital in Philadelphia, Grady Hospital in Atlanta—where demands for care simply outstripped the resources required to provide it. Because healthcare is one-seventh of the economy and one-eleventh of its jobs, a meltdown that starts at healthcare's edges and then spreads throughout the industry might cascade to all other sectors as well, wreaking havoc throughout the economy.

Now we believe it could happen the other way around, with the collapse of financial institutions sinking healthcare markets. Consider what might happen, for example, if the many health systems whose margins have been kept afloat through investment income, suddenly lost that revenue stream. The ability to provide care, or to purchase goods and services from others in the health industry, would be dramatically compromised.

Market-based, not policy-based reforms

As the largest part of the economy, America's health system will be sorely tested by the financial markets' turmoil. The challenges posed by diminished resources and the tightening of credit will intensify the pressure on healthcare professionals and organizations that have long resisted major structural changes—like the re-empowerment of primary care, pricing and performance transparency, and payments linked to results—that can finally check rampant cost growth and re-establish stability and sustainability to the industry. If they suddenly share in our pain, they're more likely to be receptive.

Despite the current wisdom, the major levers for reform aren't likely to come from the federal government. In 2007, members of Congress accepted $445 million from the healthcare industry, about 16% of all the lobbying contributions accepted from special interests in exchange for influence over policy. They're hardly likely to disappoint their benefactors by passing laws that would drive out the significant healthcare waste that is an important portion of revenues and margin.

And even if they were interested in addressing the problem, and even if healthcare hadn't fallen off the political radar screen compared to the economy, gas prices, food prices, the current economic turmoil and mounting budget deficits would trump Congress' ability to focus dollars on fixing healthcare.

No, it won't be big government, but big business that drives change. Business is finally apoplectic about healthcare's excesses—the cost, the questionable quality, the lack of demonstrable value, and the employee dissatisfaction—and fed up with its excuses. They want results right now. They don't know why health plans—supposedly their surrogates to insure good care at reasonable cost—and the health industry as a whole aren't cooperating.

Businesses' own growth and economic health depends on its ability to compete globally. Now, in a new push, business leaders appear to be coming together and mobilizing decisively to change the ways the system. They are mad as hell, and they're tired of haggling. They're not going to take it any more, and they're giving notice of their intentions. They are in a mood to demand cooperation, and if it is not there, to seek their own solutions.

Two facets of a primary care initiative by business

Given this backdrop of economic turmoil, increasing pressure on the industry, and business' dissatisfaction with healthcare, let's examine two major events—worksite clinics and primary care re-empowerment—that underscore business' determination to transform the system, and in the process, cut costs, insure quality, and satisfy their employees. Both are focused on "the medical home," though the worksite clinic model is, at this point, the most fully realized by far.

Worksite clinics

The uptake of worksite clinics by mid-sized and large corporations is so rapid that it is hard to understand it in any terms but transformative. Walgreens estimates that America has about 7,600 corporate campuses with 1,000 or more employees (that would generally mean about 2,200 or more lives). About half of all Fortune firms are expected to have clinics by 2010. Because a properly configured clinic is scalable and provides a platform for very proactive management of care both inside the clinic and downstream, on the network, the trend is spreading like wildfire to smaller firms with as few as 250 employees. They're also being bundled with high deductible plans and becoming available to coalitions of smaller employers as well.

Large clinic firms, like Walgreens' subsidiary Take Care, and smaller ones like Orlando-based WeCare TLC and Atlanta-based Worksite Rx, are actively catering to the rush of employers who see this model as a way to dramatically improve care while reducing cost.

"Think of an employer sitting at the table with his healthcare relationships: brokers, health plans, doctors, hospitals, drug and device companies. Everyone but him wants it to cost more, and they are all in direct control of cost creation. So our model is different. We have two goals: Providing better care for the patient, and being a fiduciary for the purchaser. Everything else is secondary." That's a comment by Lynn Jennings, board chair of WeCare TLC, and it typifies an orientation that caters to this new corporate activism on healthcare.

Worksite clinics offer fully integrated health management platforms, separate from and in front of the health plans. Participation is voluntary, but patients who use the clinic don't need to access the health plan until they leave the clinic. In other words, the model goes around the health plan to achieve savings, quality improvement, and employee satisfaction.

The clinics build in significant incentives for both patients and doctors. Employees using the clinics may get free visits, free drugs and labs. Access to the clinics is convenient, fast, private, and secure. Time spent in the clinic often doesn't count as paid time off.

Staff physicians win as well, often making one-third or more than doctors in private practice, with the luxury of spending more time with patients and, because no money changes hand, focusing on care and not worrying about the practice's business aspects.

The clinicians use a complete complement of informational tools: claims analytics and health risk appraisals to identify patients at risk, electronic medical records with embedded best practice and care gap guidelines, and provider profiles to steer patients needing referrals to high performance specialists and inpatient facilities.
Worksite clinics can have had tremendous impact. The City of Port St. Lucie, FL, reported a 3.1:1 return on investment and an 18% total health plan cost drop in its first year of operations. Returns on occupational health, retention and recruitment and lost productivity, are harder to quantify but probably even higher.

Transforming community primary care practices

Worksite clinics are fine for patients in corporations, but how do we change the thousands of small and mid-sized primary care practices in the field? More importantly, how do we allow them to perform the full range of cognitive medicine services they're capable of? Finally, how do we make it worth their while, get primary care off the gerbil's wheel, and encourage young doctors to become generalists?

Two years ago, Paul Grundy, MD, MPH, IBM's Director of Health Transformation, became concerned that his company could not buy comprehensive coordinated care for its U.S. employees.

He could buy an amputation of a diabetic's leg, but he could not buy prevention services to avoid that amputation. Often, he did not see "value" in the outcomes or patient satisfaction associated with the episodic care that IBM was purchasing. He also worried that many of his employees could not name their personal physicians. He saw American primary care's very existence threatened. He knew from a literature review and from IBM's Denmark experience that primary care-based systems saved about 20% in costs and produced 30% better results with immensely greater satisfaction among patients and physicians.

Grundy and his colleagues act

Working through a multi-constituency, action-oriented organization, the Patient Centered Primary Care Collaborative, Dr. Grundy and his colleagues began to drive a powerful market-based reform initiative.

They assembled leaders of nearly 50 Fortune organizations and seven major health plans to describe their findings. His advice to the plans was to move quickly to a primary care model or risk public confrontation and isolation by the Fortunes.
He gathered medical society representatives-family physicians, internists, pediatricians, and osteopaths-for recommendations to re-empower primary care. The result was a declaration of Joint Principles of a Medical Home. Effectively, they argue that American healthcare can be dramatically improved and its cost crisis largely ameliorated if:

• Primary care physicians are paid more to collaborate with specialists on the full continuum management of their patients. This would also reduce the profound income gap between primary care and specialist physicians, and provide reason for medical students to again enter primary care as a career.

• Mechanisms can be developed to ensure that primary care physicians have access to the full range of modern patient evaluation and management information technology tools.

• The rules of engagement are changed between primary care physicians and specialists, so that they can more easily collaborate on patients' care.
This is not a lone view. MEDPAC, the Medicare Payment Commission has also urged Medicare to use medical homes to get Medicare costs under control. In 26 state legislatures, 108 bills introduce "medical homes," and 20 bills in 10 states define the concept and provide for demonstration projects. A few innovative health systems around the country—the Geisinger Health System in Pennsylvania; the Holston Medical Group in Kingsport, TN; Alabama Medicaid; HealthPartners in Minnesota—are actively proving its value.

So far, the major health plans have mounted a few pilots, but nothing substantive or systemic has changed in the way that primary care physicians around the country treated by health plans or specialists. The jury's still out on whether they'll be willing to drive down total claims costs—remember they make a percentage of the whole—by taking advantage of primary care, the most powerful tool at their command.
What does this all mean? Business is defending and advancing its own best interests by taking an active, influential role in transforming healthcare. Whether it can bring enough pressure to bear to bring the entrenched healthcare industry along remains to be seen. But its cause may have just received a boost from the nation's economic woes.

Dr. Richard Reece is author of Innovation-Driven Healthcare: 34 Key Concepts for Transformation and is currently at work on a new book with Paul Grundy MD MPH called Primary Solution. He maintains a column at MedInnovation Blog.
Brian Klepper is a healthcare analyst, speaker and commentator whose consulting firm, Healthcare Performance, helps organization understand and negotiate market-based healthcare reforms that are gaining traction now.