Health Business Blog

The Consumer-Purchaser Disclosure Project (CPDP) advocates “a transparent health care market, in which decision-making is supported by publicly reported comparative information.” The goal is to combine better information with payment reform to improve quality and cost.

I spoke recently with Peter Lee, co-chair of CPDP and Executive Director, National Health Policy at the Pacific Business Group on Health. We covered the structure and function of the CPDP, payment reform (including the reimbursement for procedure-oriented specialties vs. primary care), health IT, and his expectations of where we’ll be a decade from now.

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Revival of the so-called public option in health reform legislation has big business in a big tizzy. I listened in on a Business Roundtable briefing yesterday where two talking points were hammered on repeatedly:

• The public plan will result in cost shifting to the private market, raising costs for businesses that provide insurance
• The public plan will stifle innovation (e.g., in new treatments) by focusing on cost above all else

I’m slightly puzzled about why the Roundtable (which represents large businesses) feels so strongly about this. First, it is far from inevitable that a public plan would result in cost shifting. Second, the innovation argument is at best a mixed bag. Maybe a public plan would reduce the introduction of costly new technologies (and maybe not). But it might bring innovations in another area where they’re needed: cost control.

Big employers assume that the public option would undercut commercial premiums. Let’s examine that notion a bit.

There are three main ways a public option could conceivably offer a lower premium than competing private plans:

• Lower administrative costs: public plan proponents point to research that shows Medicare administrative costs are lower than for private plans
• Lower reimbursement rates to providers: the government might impose rates on providers or use its power to extract lower rates
• Lower utilization of medical services: government might provide more effective medical management

It’s unlikely that the public option will have a significant cost advantage, at least initially:

• Administrative costs:
  • A public plan would incur many of the same administrative costs as private plans, e.g., marketing, claims management, medical management, provider profiling. It’s hard to see why these would cost the government less than the private sector
  • One reason Medicare administrative costs are low is that the government does little to manage medical costs.  As a result higher medical costs offset the administrative savings. Traditional Medicare also does little marketing and doesn’t pay commissions whereas a public plan probably would spend in these areas
  • A public plan would have some advantages, namely no need to pay taxes, or earn a profit. (Of course you could say the same for non-profit health plans)
  • Reimbursement rates:
    • If a public plan passes, it probably will not allow the public option to impose rates on providers (e.g., Medicare rates). Instead the public plan would negotiate with providers, just like private payers. The public option is not likely to be the largest player in many regions and therefore it seems unreasonable to expect it will be able to obtain deeper discounts than others. This is especially true because only a small slice of the population will even be eligible to participate in the public plan.
    • The public option will face political pressure (e.g., from doctors) not to push too aggressively on rates, and Congress has demonstrated its sympathy to providers on this point as illustrated by its failure to adhere to the Medicare Sustainable Growth Rate rules, which it overrides nearly every year
    • If the public plan manages to push rates down –because it is focusing on price more than its competitors are—private plans are likely to seek and obtain contracts that match the public plan’s rates. This is different than the situation with Medicare and Medicaid, where commercial plans understand they must pay more than Medicare and Medicaid rates to keep providers viable. They won’t feel the same way when they’re competing with a public plan
    • The public plan will find it politically untenable to offer a narrow provider network, which is the most straightforward way to control costs. That will provide an opportunity for private insurers to offer narrower, lower priced products
    • Utilization management
      • There is no reason to expect that a public option would do a better job managing utilization than private payers. Medicare, for example, does a poor job today
      • To the extent that sicker patients choose a public plan, they would drive utilization up. It seems to me this could happen since private plans would like to avoid these patients whereas the public plan presumably would not

Interestingly, not all businesses oppose the public option. I spoke today with John Arensmeyer, founder and CEO of Small Business Majority (SBM). He told me his group has chosen not to make the public option their “signature issue” but that “it’s one component to provide additional competition and choice, especially in states that are dominated by one or two carriers.”

In a poll of its members –who like small business people are mostly Republicans and independents– SBM found that 70 percent favor the establishment of a public option while only 19 percent want a system with private payers only.

SBM’s very sensible small business prescription for healthcare reform includes the following:

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The Institute for Healthcare Improvement will host a free audio program, New Ways to Reduce Diagnosis Errors on November 5 at 2 pm, featuring Gordon Schiff MD, from the Brigham and Women’s Hospital and Pat Croskerry from Nova Scotia.

It’s an all too familiar story: The initial diagnosis of a patient’s condition turns out to be wrong; or there’s an incorrect interpretation of a test result; or a patient never learns of a test result; or a physician relies too much on memory to form a diagnostic opinion, forgetting about other important clues. Each of these diagnosis errors can be traced back to a system failure or an overreliance on cognitive skills (ignoring decision supports), and often, both. Thankfully, many years’ worth of robust research on diagnosis errors is finally receiving greater attention, and is starting to lay the groundwork for improvement across the US and internationally.

Gordon Schiff and Pat Croskerry are among the leading-edge researchers helping to frame the problems and shape the strategies that are most likely to reduce diagnosis errors. WIHI host, Madge Kaplan, is thrilled to welcome them to the program to share their ideas, and to point to people and places developing and deploying better processes for providers and patients alike. Multiple stakeholders in health care have a role to play, including WIHI participants. Join us on November 5.

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Health Wonk Review Halloween edition is posted at Boston Health News.

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EmFinders is a new company whose EmSeeQ wristwatch-style device is used to locate Alzheimer’s patients and others with a tendency to wander off. The device uses cellular signals to transmit its location and is integrated into the 911 emergency network. One version of the device has a wristband that requires two hands to release, a nifty feature for those who may like to take devices off as well as wander.

In my conversation with CEO Jim Nalley we discussed how he came up with the idea, how EmSeeQ differs from other location technologies, and what happens when an alarm is triggered. We also discussed the company’s business model and go to market strategy.

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This is the transcript of my recent podcast interview with MedApps CEO Kent Dicks, on the floor of last week’s Connected Health Symposium.

David Williams: This is David Williams of MedPharma Partners and author of the Health Business Blog.  I’m speaking today with Kent Dicks.  He is founder and CEO of MedApps.  Kent, nice to see you today.

Kent Dicks: Nice to see you too David.  Thanks for joining us here.

Williams: Kent, tell us about MedApps?

Dicks: MedApps is a wireless remote patient monitoring system that connects patients in their home to their electronic health record and ultimately their care giver by using low cost, off the shelf devices that typically would be found at Walgreen’s, CVS, and Target and connecting them via mobile wireless technology to a central server.

Williams: How is that different from some of the remote monitoring approaches that have been used in the past?

Dicks: The traditional Telehealth 1.0 systems are boxes that are plugged into phone lines and typically dedicated for point of care.  A lot of times they’re being used with patients who are entering the emergency room or the hospital and incurring a lot of health care costs.  They’re used more in a reactive mode versus a proactive mode.  We found a niche where –instead of having a $600 scale from some of these existing systems– you could interface to a $60 scale that’s off the shelf and you could send the data to a central server where it can be monitored.  I’m a big believer that whether it’s a $600 scale or a $60 scale, that if I can verify that you took your reading, you’re more likely to take your medication and you’re more likely to stay out of the hospital.

Williams: Does the patient have to be a high tech oriented person in order to make use of your system?

Dicks: Absolutely not.  We realize there is a generation there of about ten years of people who are getting older and are generating health care costs that haven’t had a lot of experience with technology or have access to technology.  So instead of them having to adjust to technology, we’re adjusting our technology to them.  We make it seamless and invisible in the background.  All they have to do is just take the readings.

Williams: I know that in this field reimbursement has been a challenge.  How do you think about reimbursement and getting paid for what you do?

Dicks: Reimbursement is going to continue to be a challenge for a while.  It’s good that we’re having these health care reform talks right now, both positive and negative.  Anything we can do to talk about lowering health care costs and looking at remote patient monitoring for distance is a great thing, but our model is not predicated on reimbursement right now.  It’s predicated on going after large enterprises that are financially responsible for patients; for example disease management companies.  Consumers right now are not willing to pay $399 for a device.  They’re not willing to pay $3.99 for an iPhone application, but large enterprise customers are dragging us in saying: we need to reduce our health care costs because we’re seeing annual increases of 10%, 20%, or 30%. That’s what we’re trying to address.

Williams: Kent, tell me some of the big partners that you’re working with.

Dicks: We’ve decided that instead of creating our own ecosystem of health care that we would enable the health care market place.  So we’re working with Microsoft HealthVault, with Google Health, with anyone who is basically aligned with the shelf space. LifeScan, Abbott, Roche, Bayer, HoMedics, Omron, the carriers: AT&T, Verizon, Orange.  Those are the people that it will take bring a new health care ecosystem together.

Williams: Great.  Well Kent, have a terrific show.

Dicks: Thanks very much.  Thanks for talking to me.

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Wandering around the floor of the Connected Health Symposium, I was lucky to run into Kent Dicks. He’s CEO of MedApps, a company I’ve been following since its founding a few years back. I like the company’s focus on the development of simple, powerful, home-based wireless remote health monitoring systems. This is a tough field, where the disappointments have far outweighed the successes over the past decade or more, but the tide is shifting. The main enablers are the emergence of lower cost, simpler, more reliable systems like this one, and increasing acceptance of the technology by patients and physicians. Over time we’re likely to see the reimbursement environment improve.

In our brief discussion, Kent described MedApps’ approach and contrasted it with other systems on the market.

You can also read the transcript.

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This is the transcript of my podcast interview with Dr. Deborah Jeffries of Polycom.

Williams: This is David Williams, co-Founder of MedPharma Partners and author of the Health Business Blog speaking to you from the exhibit hall of the Connected Health Symposium in Boston.  I’m speaking today with Dr. Deborah Jeffries, director of health care markets for Polycom.  Thanks for speaking with me today.

Jeffries: You’re welcome.  It’s good to be here.

Williams: I’m looking at a pretty impressive Polycom set up here with the video and PC and a bunch of pieces of equipment.  Tell me what you’ve got set up.

Jeffries: David, right now we’re at a unique time in history.  We see the rollout of broadband, the  $7.2 billion that’s going out so that connectivity is really going to be achieved in rural areas. Polycom is a leader in voice, video and collaborative data and we have products that will enable anyone from anywhere to hop on and have a high quality video encounter. In particular, you’re standing in front of the Polycom practitioner cart. This cart is wireless, it enables you to have the patient presented in front of this cart and bring in a physician at a distance to consult. Whether it’s a neurologist, a cardiologist, or rheumatologist, they’re going to see a high definition, excellent image, hear excellent sound and be able to help that patient.

Williams: What do you find in terms of the ability of a physician who hasn’t grown up in the telehealth era to be able to look at an image for the first time and to be able to use it?  Is there a learning curve or are there pieces that are missing for them?

Jeffries: When I went through medical school, I went through the traditional method of looking in an ear and someone else looking in an ear and deciding whether we both saw the same thing.  When you look at using telemedicine, all of a sudden you have cameras that are able to show you the tympanic membrane, full size on a big beautiful monitor. You can point to the stapes and you can look at whether there is fluid.  It just makes it bigger, more beautiful and better than if you were in person.  So there are many instances with these cameras that can be attached to the Polycom practitioner cart.  You can see things better than you could if you were in your office.  If you use an examination camera for example to look at the back of your throat, the uvula is the size of your hand and you can see what’s going on with the patient.  So yes, there are some differences that the physician will learn in terms of working from a telemedicine point of view, but what they find is, because of the convenience of Polycom equipment, to work from anywhere you can use Polycom CMA desktop to hook up with your patient; and with the quality of the images –because of the lighting and the magnification– you can see these beautiful images that help them work with their patients.

Williams: What’s impression is gained by the patient or their family?  Are they comfortable not seeing the doctor or physically being with the doctor?

Jeffries: Yes, well this is very interesting. The patient actually is very excited about this because they don’t have to drive into a major hospital system, try to figure out the complex parking situation, and locate their doctor.  It’s very inconvenient many times for patients to be able to get in front of their doctor.  With the quality of the image on the high def beautiful monitors, you can see the person very well.  It means that they’re seeing the physician in an excellent fashion, but also that it’s convenient for them.  They can stay in their community health center or they can be at their rural hospital and still connect with an expert that might be many miles away at a stroke center of excellence for example.

Williams: The Wall Street Journal did an article on this the other day and they mentioned a couple of high impact opportunities.  One was stroke, to determine whether the patient can get tPA within the window for that and another one was about whether a neonate should be transferred to a neonatal intensive care unit.  Are you actually seeing those applications and are there others that are like that?

Jeffries: Absolutely, and in fact tele-stroke is one of Polycom’s primary initiatives.  It’s so important because it benefits everyone.  First of all, let’s talk a little bit about stroke: you’re going to have either a stroke that’s due to a clot or you’re going to have a stroke that’s due to a bleed.  If you’re a person that’s having a stroke due to a clot, you’re going to have four hours to get a drug called Tissue Plasminogen Activator that can break that clot up.  If you get that drug within a three to four hour period, you can walk away from a stroke without the debilitating effects of the stroke.  So from the patient point of view, it makes the difference whether they leave the hospital happily in a week or so versus dealing with rehab for the rest of their life.

In terms of the physicians, the neurologists, we don’t have enough of them.  It’s critically important for them to make the evaluation between a clot or a hemorrhagic stroke.  If you have a hemorrhagic stroke and you give this drug, it can be devastating if not fatal.  So the neurologist needs to be able to hop on a product like Polycom’s CMA desktop from anywhere, hook up and see the patient live, do an NIAH stroke scale evaluation, because they visually can see the patient, as well as from their desktop unit.  They can bring in the CT image and determine if it’s a clot or it’s a hemorrhage.  So the neurologist is better able to do their job and has a better quality of life and they can help their patients.  Not only that, there are many instances where patients currently without telemedicine are being sent to the stroke centers of excellence that really can’t do anything for them.  So from the perspective of the hospital center of excellence, they have their beds perhaps occupied by people they can help.  They can bring the neurologist in over the Polycom equipment and have a live encounter to triage and decide if perhaps the patient is better served by staying in the remote, rural hospital than by being transferred.  So it basically benefits everyone all the way around, primarily and most importantly the patient, but also the neurologist, the remote hospital and the center of excellence.  Now from the remote hospital’s perspective, they want to be able to have the patient in the community so that their family can visit so that they can really make it a better quality and better experience for that patient.

Williams: A lot of technology in health care tends to drive costs up, which is different than in other industries.  Do you think the impact of telemedicine will be to drive costs up, down, or will it be a neutral impact?

Jeffries: It’s a very interesting question.  I think now that we see the rollout of broadband the communication quality is taken care of. I think what we’re going to find is that the power of the information is going to be able to be pushed from medical centers of excellence and universities out all the way to the community health centers and to perhaps the patient at their home.  What you’re going to find is a transfer of that information out to that area.  Now incorporated in this are the benefits of collaborative video.  Not only are you able to save the trips  –perhaps a psychiatrist is having to drive 15 hours in their car around the vicinity to see their patients– now can do that from their desktop.  Not only do you save that, but if you look at the health care organizations and the amount of money that is spent on sending physicians to be trained where they’re paying for hotels and transport and even board members being moved from the different organizations, all the cost savings in a truly collaborative video world that Polycom offers can contribute to the bottom line a very significant way.

Williams: One of the things that you typically see is on this subject is a diagram that shows a state and then the state capitol or large city and then some rural areas in places like New Mexico or South Dakota; it shows the nodes coming into the center.  If you take it a step farther, is there any reason conceptually that the center couldn’t be in Singapore or India or someplace that’s low cost and high quality? Could you cut the regional center of excellence out of the loop completely and have more competition among the physicians or more choice for the patients to select specialists from around the world as opposed to just around their state or region?

Jeffries: Well certainly that’s a very interesting question.  Here at Polycom, as you mentioned, I am the Director of Health Care Markets for the Americas, but we also have the Global Director of Health Care Markets, Ron Emerson who is a registered nurse and a respiratory therapist. He has served on the American Telemedicine Association’s board and also supported a telemedicine organization in Maine. Ron has just finished a global trip and we are seeing a tremendous growth in telehealth and collaborative video throughout the world.  I frequently am on with Australia, India, and China, so things are opening up and avenues are going to be presented that allow the patient ultimately to receive the best care.

Williams: I’ve been speaking today with Dr. Deborah Jeffries from Polycom at the Connected Health Conference in Boston.  Dr. Jeffries, thank you very much.

Jeffries: You’re welcome.

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Growing up in the  1970s/early 80s in the Washington, DC suburbs, I became a fan of goofy humor on the radio. We had WJOK, which according to Wikipedia was the first station to broadcast routines from comedy albums. (It’s now a Christian station in Wisconsin.) There was also WHFS, an alternative station where I listened to the Doctor Demento show (when Weird Al was first breaking in).

WHFS also used to play fake commercials, which were hilarious. I still remember the refrain from one, “Ok mortuary, ok mortuary…” for a funeral home that cut a lot of corners but was still good enough.

I don’t get to listen to radio much these days, except when I’m traveling for business and driving a rental car. I like XM radio because I can choose from a bunch of comedy stations, but the other day –driving around I don’t remember where– I had a flashback to my youth.

The ad was for a cookie diet: eat 6 cookies a day and lose weight. I thought it was a joke but it turned out to be for real. Now I see it written up in the New York Times (A Few Cookies a Day to Keep the Pounds Away?) and see that it’s for real.

Revenues from the Cookie Diet are expected to be $18 million in 2009, a 50 percent increase from 2008. Wow!

Fortunately the article is fairly critical of this diet and others like it. From what I can see the main trick to it is that if your diet is mainly cookies (with just one regular meal thrown in) you’ll eat fewer calories than you would otherwise. But how someone can think that eating this is healthy is beyond me.

I’m no expert but it seems to me that a better diet would be one that includes regular food but no cookies. Perhaps I’m missing something however.

If you don’t like the Cookie Diet try the Cake Diet.

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I wandered around the Connected Health exhibit hall today and had the chance to speak with Dr. Deborah Jeffries, who was demonstrating Polycom’s telemedicine capabilities. This was top of mind for me after writing about the topic  yesterday (What will finally break the back of health care costs? Telemedicine) I came away impressed with the current capabilities and potential of the system. In particular the telestroke application is impressive and impactful.

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