The one major sector of the economy that’s as dysfunctional as health care is higher education, where costs have also ballooned. Now that student debt is getting the attention it deserves and politicians are beginning to turn their focus to college costs, there will be pressure for creative solutions. I’m encouraged that leading universities like Harvard and MIT are starting to put classes online.

It will be a long, long time before this movement disrupts the business model of Harvard and MIT themselves. That’s because there’s a large and –thanks to the emergence of China– growing surplus of people willing to pay full freight for the privilege of a Harvard or MIT education. It can also be worthwhile to go to such schools to make connections and to have a rich cultural and social life. But schools of much more middling quality charge nearly the same tuition as the choicest universities, and they should be very worried indeed. Would you pay $200,000 for four years at Generic College when you could take online classes at Harvard and MIT and pay a few thousand dollars for a certificate indicating your completion of the classes?

I hope the Harvard/MIT experiment progresses rapidly and that lesser schools find creative ways to respond that increase the value that students receive.

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• How John plans to partner with CEO Dr. Giovanni Colella
• How lessons from the PBM field can be applied to Castlight’s transparency model
• What Castlight plans to do with its recent $100 million Series D investment
• The potential impact of the upcoming Supreme Court decision on ObamaCare and the Presidential election

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I’ve known John since 1989 when we worked together as consultants at LEK in Boston. Later John went to Oxford Health Plans and Walker Digital before joining Medco. At Medco he helped the company enter a variety of markets including Medicare, pharmaceutical services and international. Somewhere along the way I introduced John to Castlight CEO and co-founder Dr. Giovanni Colella, who was CEO of RelayHealth at the time.

I expect Giovanni and John to complement each other very effectively. They are both visionary and ambitious, which you wouldn’t automatically think would be a great fit. But they are also both empathetic, magnanimous, and focused on growing the business rather than claiming credit. John is savvy in the world of payers, policymakers and large companies. Giovanni is a classic Silicon Valley entrepreneur: a great leader, fundraiser and motivator.

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Researchers facilitated focus groups with a group of mostly well educated, affluent adults in Palo Alto, CA. About half had a graduate degree, and 40 percent had incomes over $100,000. Not surprisingly, as a whole this group wanted to participate in “shared decision making” with their physicians. However, many felt inhibited and in particular were concerned about being labeled as “difficult,” which they thought could lead to problems down the road. Here’s a sample comment from a focus group:

“Is the guy going to be pissed at me for not doing what he wanted? …Is it going to come out in some other way that’s going to lower the quality of my treatment? …Will he do what I want but… resent it and therefore not be quite as good?”

I can identify with this demographic group and with the sentiments. And I agree with the authors that if this group feels it can’t speak up, it’s unlikely people with a lower socioeconomic status will do so.

I didn’t see anything in the article differentiating between primary care physicians, medical specialists and surgical specialists, but to me those distinctions are helpful in approaching the issue. There’s really no reason that people should settle for a primary care physician relationship where they feel intimidated. I would encourage people to shop around for someone who will take them seriously and engage with them with the right tone and at the right level. The newer crop of primary care physicians in general is open to this approach, as are some more established physicians. I recently found a new primary care physician in Boston (after my old one retired) who very much fits this mold, and I’m happy about it. One of the key issues in the article was the lack of time patients have with their physicians. If that’s an issue it might be worth finding a concierge practice, despite the added cost.

Surgeons are a different story. As my father told me when I was 22 years old and having a consultation about a shoulder injury, “surgeons like to cut.” Sure enough I emerged from that appointment with a strong recommendation for surgery (which I didn’t follow through on). The thing to remember in these situations is that in many cases a surgeon is also a salesman. In the same way you have to remember to be careful in dealing with a real estate broker who has a great house for you, and not get into the psychological situation of feeling the need to please him or her or feel badly about wasting his time, consider that the surgeon may very much want your business. The surgeon may be very professional, and even believe he/she has your interest at heart, but as someone who’s committed a career to performing surgery and who has an economic incentive to perform it, he/she may not be as objective as you’d ideally like. You really should think about bringing a non-surgeon physician –like your primary care doctor– into the discussion and asking specifically about alternatives.

Today I met a man who had a wrist brace. I asked him about it and he told me he had gone to a surgeon at a respected hospital in Boston who diagnosed him with a cartilage problem and recommended surgery to “clean everything up.” He had the surgery and six months later wasn’t feeling any better. In fact, he told me on some days he can’t even pick up a glass. He went back to the surgeon recently and was told, “surgery isn’t an exact science and these things happen. I can go back in and fix it up.” According to the patient, the surgeon didn’t express that lack of certainty the first time around. Of course, I’m reporting second hand on what I was told. Maybe the surgeon provided a more nuanced view the first time and the patient just heard what he wanted to hear. On the other hand, maybe the guy should have taken the risk of being labeled a “difficult patient” and gotten more details on the surgery and its possible downsides. I would have.

Medical specialists –in general– are somewhere in between primary care and surgery. The best of them are into shared decision making. If you can find someone like that, go for it. (I’ll try to write more about this another time.)

Interestingly I’ve found that referring physicians don’t have a good sense of how those they are referring to interact with patients. I had one occasion where my primary care doc referred me to a highly regarded surgeon that I perceived to be a  pure salesman. I asked him for another referral and found someone much more to my liking. My PCP told me he appreciated my feedback –it wasn’t something any other patient had ever shared with him and I guess he had probably never asked patients either. If you have a primary care doc you work well with I would definitely report back on your experience with specialist referrals, because you may end up helping other patients.

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David Williams:  This is David E. Williams, co-founder of MedPharma Partners and author of the Health Business Blog. I’m speaking today with Andrew Dreyfus.  He’s CEO of Blue Cross Blue Shield of Massachusetts.  Andrew thanks for being with me today.

Andrew Dreyfus:  It’s good to be with you, David.

Williams:  I’ve heard that commercial health insurance premiums, including those from Blue Cross, are going to be almost flat next year.  Is that true?  And if so, what’s the reason for it?

Dreyfus:  Not quite flat but close. We are seeing our lowest rate of increase in premiums in almost a decade.  There are variety of factors behind that. We’ve seen this nationally: the slowdown in the economy has resulted in a general drop in use of health care services. That’s one reason. But I think the more important reasons here in Massachusetts have to do with some affirmative steps we’ve taken at Blue Cross.

Almost two years ago we asked hospitals and physicians to either reopen contracts or in new negotiations to agree to a much lower level of increase than in the past. The price or unit cost of hospital and physician care was growing in Massachusetts at five to six percent per year;  that five to six represented about half of the overall cost, which is why premiums were growing at 10, 11, 12 percent per year.

We asked hospitals, in the interest of affordability, to reconsider those increases. We were able to get them to accept much more modest increases, more in the zero to two percent range.  That has certainly suppressed the growth in premiums. Although those negotiations were challenging and difficult, we really appreciate that the hospitals and physicians understand that we’re in a new era and they have to make a significant contribution to health care being more affordable.

Around the same time as we asked on the price side for hospitals and physicians to be more modest, we also began to see widespread adoption of our new payment model, the Alternative Quality Contract (AQC), which is a global payment model with significant quality incentives.  We began with a few groups in 2008 and 2009.  We now have 75 percent of the primary care physicians and specialists in Massachusetts are accepting global payments. They’re caring for about 700,000 Blue Cross HMO members in Massachusetts and those contracts have very explicit goals for reducing the rate of growth.

When you combine the economy, the contracting pressure we put on physicians and hospitals in the fee-for-service world, and our new payment strategy, it’s a triple threat. Those three pressures have caused the cost to come down significantly.

Williams:  It seems like 10 or 15 years ago there was a time when cost had been accelerating rapidly and then all of a sudden slowed down a lot.  But then they started to rise fast again.  Is there something different about it this time?

Dreyfus: There is a cyclical nature to cost and spending in health care. That’s one of the reasons why no one here is declaring victory. We’ve had a year or two of more modest increases, but we really want to see three, four, five years of sustained low levels of increases in the zero to three percent range before we would believe that we have somehow conquered or the inexorable health care cost inflation that we’ve seen over the last 20 years.

The people who look back at the last slowdown see a couple of reasons. First, there was some experimentation with different forms of payment. That was the early advent of what we think of now as managed care, and the early versions of managed care tried to restrict choice significantly.  There was obviously a very strong and negative response from the public and from physicians, so a lot of those restrictions were loosened, which then caused health care inflation to increase.

I think we’ve learned the lessons of that last experience. We’re trying to be smarter about it this time, both in trying to maintain the level of choice that our members want and need and also building more powerful incentives into the system, especially for physicians to curb excessive care.  In the 80s and 90s physicians felt like artificial limits were being placed on them, which they thought could result in deterioration of quality.

This time, we’re rewarding and providing incentives for better care. I think that has eased the skepticism or concern that physicians have, which I’m hoping will make these changes more durable than before.

Williams:  Say more about quality. The Q in AQC stands for quality and I’m sure you take it seriously.  But is it something that’s taken seriously by your providers and by your customers?

Dreyfus:  I think it absolutely yes. Our new payment model, the AQC, is mostly discussed today in terms of saving money.  But in fact, it was initially developed as much as a quality improvement as a cost saving tool.  The paradigm shift in this payment model is that we’re asking physicians and hospitals to move out of fee-for-service, which rewards volume and intensity and complexity and move in to a system that rewards outcomes and quality.

In the past, physicians and hospitals earned their margin –and we certainly believe they should have a margin– based on volume. Now, they’ll earn their margin based on quality, and the quality bonuses are significant enough that they really catch the attention.  For example, we were one of the early plans that developed pay for performance programs with hospitals and physicians. Typically we would add a one to two percent bonus on top of the fee-for-service payments.  That got a little attention but not a lot.

Now it’s five, six, in some cases up to 10 percent bonuses they can achieve. So at the end of the year, a primary care physician is getting a very significant bonus for quality.  It really changes the way they think, and they’re reorganizing their practices.

The other thing is the measures we chose for quality. There are 64 measures, half on the in-patient hospital side, half on the outpatient ambulatory side. They’re not in a black box back here in our offices at Blue Cross.  They’re nationally accepted, nationally validated measures that physicians care about and believe in.  The fact that they’re investing time and energy in creating systems that track and monitor improve on these measures demonstrates that real quality change.

We have a classic experiment here because we have a group of physicians who entered the contract early and then a group of physicians who did not. An independent analysis, which is being conducted by researchers at Harvard Medical School and various universities and funded by the Comonwealth Fund, has published in the New England journal results that show that quality has improved, costs are coming down.  We’re looking forward to the results of the second year, which we think will be published in an academic journal this summer or fall.

Williams:  Fifteen years ago or so when there was a slowdown in health care costs, employers were perfectly happy with what the HMOs were doing.  But then when there was a backlash from the employees, employers didn’t really say anything. Everybody pointed their finger at the health plans and then things kind of spun out of control from there.  Do you expect employers to play a different role this time around?

Dreyfus:  I think there is a more significant role that employers can and will play this time around.  I think your analysis is right that employers did stand back a little bit.  The urgency of health care affordability for employers is much greater. It’s partly because they’re competing, to those employers who compete internationally, and they’re competing with companies whose healthcare costs so much lower, if they have any healthcare cost and in some cases they’re in national systems.

And also it’s just too great a barrier now to productivity and so a lot of small employers, for example, will tell you that they’re unable to new workers simply because adding a worker means adding maybe $15,000 per worker in added healthcare cost, let alone other employee benefits in custom they have.  And so I think there’s an eagerness to get involved and I’d say that expresses itself in two principal ways.

The first is that when employers design benefits now, they’re really thinking how do we design a benefit that encourages our employees to stop and think about the cost, quality or total value of the care they’re getting.  And so they’re using more plans that have more or greater cost sharing with consumers, they’re using plans that have health savings accounts or other devices for their employees to really think about that this is partly their money that they’re spending, not just some third party’s money that is invisible to them.

So they’re much more involved in designing benefits.  We have some very popular new products, for example, that place the hospitals and in some cases physicians in different tiers depending on their cost and quality measures. There’s greater cost sharing if you go to a more expensive provider that doesn’t demonstrate a quality difference.  We had those products for several years.  There wasn’t a lot of take up.  Now they’re the fastest growing products in our portfolio. We find that employers like it. It’s a way to keep their premiums low and engage their employees in the decision making about purchasing health care.

The second major way beyond benefit design is that employers are getting more involved in wellness, especially large employers. But we’re starting to see it come to the smaller employers as well.  There’s a recognition that diet, exercise, and nutrition are big factors in determining people’s health. Obviously in some cases it may not pay off in a year or two.  They may pay off longer term, but there is an interest in that and it also affects absenteeism at work, productivity at work.

So for example, here at Blue Cross, we’ve been very involved as a model employer, to get our employees much more involved.  If you walk around the halls of Blue Cross, you’ll see everyone wearing pedometers like I have. We’ve been having a big contest here, which gets people extraordinarily motivated. We’re doing the same work with many of our customers.

The final piece of the employer engagement is there’s a broader recognition today that there are small number of patients in our system that driving a lot of our spending. One percent of our members drive about 20 percent of our spending, and five percent drive about 50 percent.  While there are a few heart transplants or babies that are born early that require very intensive care or major traumas, the majority of the five percent are people with multiple chronic illnesses. Those are illnesses that in some cases can be prevented, in some cases that can be slowed, and certainly in all cases can be managed more effectively than we do today in our fragmented fee-for-service system.

So employers, when they evaluate the effectiveness of a health plan like Blue Cross, are really looking at what kind of resources are devoted to these expensive patients with chronic illnesses. How do you help the delivery system manage them?

Williams:  We’ve speaking so far about private efforts in health care, but obviously governments are a huge factor: state governments and federal governments.  What do you see going on now in the Commonwealth of Massachusetts?  It seems as though the government is picking up some of the same themes that you have been working on.

Dreyfus: We’re obviously watching it very closely.  Just to step back, our view is that, first of all, there is a legitimate public role for government to play in health care, to set standards, expectations, hold the system accountable. I think we’ll see a vigorous debate in our legislature in the next six to eight weeks over some bills that are currently being proposed that will add some new regulatory and reporting dimensions to our health care system.

Government is also a big payer of healthcare itself, through the Medicaid program and the Group Insurance Commission that pays for state and some municipal employees.  So I think there’s a real opportunity, in this case, for government to copy or model the progress we’ve been making in the market.  Sometimes government leads, in this case, government may be following, but I think there’s an ability for them to help accelerate the adoption of these kinds of new payment models in the market.

We are always cautious; the government can overreach and over regulate.  We already have a fairly complex state regulatory structure with half dozen different state agencies that are involved in some oversight of the health care system, and so hoping there may be some rationalizing of those functions as part of this conversation.

In Massachusetts we passed a health care coverage bill in 2006. The leaders in the state who participated in that –and I was among them– made a very explicit political and economic decision to work on coverage first and to postpone the tough questions about cost, because past efforts here and around the country to deal with the coverage problem ended up being stymied or halted because they didn’t solve the tougher, more complex cost issues.

We said we’re going to do this sequentially, so coverage first and cost second. There were some early, more modest attempts to deal with cost for the last several years.  I think now we’re going to have a bigger attempt to do that and I think it’s appropriately focused. Obviously if we allow health spending in Massachusetts to grow too rapidly, the extraordinary success we’ve achieved in coverage will be subverted. We don’t want that to happen.

Williams:  People around the country have been hearing a lot about Massachusetts health care recently, especially in the Republican presidential primary.  And now that Mitt Romney is going to be the nominee it seems we’ll probably be hearing even more about it.  I’m curious what you hear from your peers when you travel around the country.  What kind of comments and questions do they have about Massachusetts health care?

Dreyfus:  I get a lot when I give talks to groups outside Massachusetts or groups that are visiting here.  I often start by saying, hi, my name is Andrew Dreyfus and I’m from the future, because I do think there’s going to be a lot of change,like what’s happened here in other states and nationally.  There’s a lot of mythology about what’s going on in Massachusetts.  And so I have to spend a lot of time correcting the facts.  People think that state spending has skyrocketed. In fact, state spending has come in about where we predicted state spending –so certainly some added cost for subsidies for low wage workers, but that was predicted and calculated.

Great shortages of primary care physicians is another mythology. That’s an issue that the whole nation will struggle with, but we have more primary care physicians per capita than any state in the country. There’s some concern around the country about the level of regulatory activity in the state and in some cases I agree with  those concerns. But I think again, there’s a lot of mythology.

So I spend some time correcting misperceptions.  Once a national health care leader said, “Well, Andrew, I’m not sure that your lesson is that valuable for us because it sounds to me like you’re really a public utility.” He was commenting on the level and intensity of the regulatory oversight and scrutiny we’re under.  I don’t think we’re a public utility.  There’s a lot more market oversight here than  in other states and that makes people nervous. I think other states will choose to implement their reforms differently.

Even under the national model, there’s a certain amount of flexibility.  So I think, for example, our exchange that we call the Connector has taken a pretty aggressive stance as a purchaser and in some ways as a second regulator.  In other states, I think they’ll have more market-oriented exchanges, which will be more along the lines of Travelocity: Here are some plans, here are the prices, you go choose.  And it’ll be interesting to see how that develops.

Williams:  If the Supreme Court or Congress overturns the Affordable Care Act, either in whole or in part, what impact would that have on Massachusetts’ health care, overall, and on Blue Cross in particular?

Dreyfus:  First of all, I hope that the Supreme Court or Congress does not overturn the law because I think that on balance of the law is very important, especially in extending coverage to the almost 15 million people in the country without  the security of health insurance.  Having said that, we would be the state that would be the least affected by a change in the national law.

For example, if the Supreme Court overturned the so-called individual mandate and decided it was unconstitutional, we have a mandate that’s based on state law and the state constitution.  Legal experts have really not raised issues about the state’s ability to impose such a mandate.  That mandate is relatively popular in Massachusetts and has been implemented with very little controversy.  I think people will start talking about it more but I think we’ll be able to sustain that.

And again the rest of our reforms for the most part have been done on a state basis. There’s obviously been some additional federal Medicaid money that came in initially and there’ll be some more federal Medicaid money that will come in 2014 as part of the national law. So we would miss that money in Massachusetts because it could help further stabilize our system and allow, perhaps, some state funding to go to some other uses.

And I think if either the Supreme Court overturns it or a Republican President or Congress overturns it, we’re on a long wait again for a big national reform.  Typically, it takes a lot to get this done.  It took a lot for Congress and the President to do it.  They barely did it.  It was unfortunate that it was not a bipartisan initiative, which I think everyone had hoped.

It could take another decade to solve the problem.  I also think nationally there’s a second issue that’s going to have almost as great an impact if  soon after the election, Congress gets back to the issue of the deficit and the budget. Clearly both the Medicare program and the Medicaid program and some of the expansions that are anticipated in the Obama health care law could be faced with some cuts or put in jeopardy.

That’s a legitimate concern for our state as well.  But with the market changes that we’re seeing in Massachusetts, our new payment models, some of the responses by the hospitals and physicians to integrate and merge and get larger and get more coordinated, I think those trends are here to stay.

Williams:  As you mentioned, when you go around the country you describe yourself as being from the future, but here in Massachusetts, what sort of future do you expect five years or so from now? What do you think are the key health care issues that we’ll be debating in Massachusetts?

Dreyfus:  It’s a hard time in health care to do predictions and scenario planning and strategic planning, but it’s obviously something we have to do.  The kind of changes that we’re talking about –especially in the delivery of health care ( hospitals and physicians integrating, care being more coordinated, consumers being more engaged in care)– that’s a decade long transformation.

Five years from now I predict we’ll be halfway there.  I think we will have much greater transparency about the cost and quality of care. Right now we think of these issues at the level of hospitals. I think we’ll get increasingly granular about that:  how has this group of surgeons done versus that group of surgeons, or this group of gastroenterologists versus another.

I think that patients will start to become accustomed to engaging with their care more. We’ve seen patients increasingly using online resources to learn about their illness and to think about options for their care.  I think that they’ll be more involved.  I think health plans will have to increasingly find broader ways to create value in our health care system.

If you think about 10 years ago, the health plans essentially designed benefits and products that employers bought, negotiated contracts and built networks of hospitals and doctors and then processed claims against those benefits and that network.  And that worked fairly well, and in Massachusetts plans are held to the highest standards of administrative efficiency in the country.

But over time, we will have to offer more than that.  We’ll have to offer our customers a much deeper engagement in wellness and even more creative benefit design.  With our hospitals and physicians, we’ll have to be deeper partners and we will probably increasingly be in the analytic and informatics business as much as we are also in the insurance business.   We’re doing a lot of that now, a lot consultation to physicians and hospitals.

Then finally, I think we’ll be in a different position with our members.  I think more of our members will probably be buying insurance directly from us because there are certain trends in the market, which may make it less of a wholesale market, which could describe the insurance market today.  Most people are getting their insurance through their employer or through government.  We may have a little bit more of a retail market and that is going to require us to build different capabilities and be more nimble, more agile, more online, more 24/7.

So I think in five years you’ll see health plans evolve in that way, with closer partnerships with our customers and our physicians and hospital and our members.

Williams:  Andrew Dreyfus, CEO of Blue Cross Blue Shield of Massachusetts.  It’s been a pleasure speaking with you today.  Thank you so much.

Dreyfus:  Thanks for having me.

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But an article in today’s New York Times (Working Late, by Choice or Not) indirectly points to the big benefit of wellness and prevention, which is the ability to remain in the workforce into old age, rather than having to retire or slow down substantially based on chronic disease or disability. Millions of baby boomers are now reaching the traditional retirement age of 65, but it’s in their interest and the interest of the country as a whole that many of them continue working for a long while after that.

The big financial payoffs come from enhanced productivity, which increase the size of the economy, increased tax revenues to help cover the deficit, and an ability to counteract shortages in the labor force caused by reductions in immigration, policy changes, or poor planning. While I’m sure older people aren’t happy about it, the fact that fewer retirees have employer paid pensions or health insurance, and that the Social Security eligibility age is rising a bit, increase the level of interest for older people to stay in the workforce.

The Times profile includes a 72 year old home care aide whose IRA lost value, an 87 year old doctor who loves to work, a 77 year old retail clerk still striving to make quota, a 78 year old plumbing inspector who likes to stay active, and a 92 year old Walmart shelf stocker who doesn’t “want to sit down and die” but also probably needs the money.

The article doesn’t describe what these particular folks did to stay active and healthy. But for the population as a whole wellness and prevention can play a big role. Someone who’s 25 can go out drinking every night, eat poorly, not exercise, sleep too little, smoke and still manage to hold down a demanding job. But if they keep it up they’ll be in tough shape by age 65 if not before. Of course, even someone who does everything right from a lifestyle standpoint can still get sick or disabled, but it’s less likely.

One sector of the economy where this phenomenon will help is nursing. We often hear doom and gloom scenarios (usually from self-interested parties) about the coming nursing shortage, as older nurses retire and more people need care. But the scenario I paint is rosier: one where nurses retire later than they have in the past and more seniors in general are up on their feet, not needing nursing care.

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I first described the Image Gently campaign in early 2008, and am happy to see that it has continued to make progress. Now the FDA is moving forward with a plan to require manufacturers to take pediatric safety into account with new devices. As AuntMinnie reports, FDA proposes to require the following:

• Specific preset pediatric control settings that are appropriate for the intended patient
• Pediatric procedures, labeling, and protocols that are designed to minimize radiation exposure while providing image quality of acceptable clinical value
• Display and recording of patient dose or dose index and ability to record other patient information, e.g., age, height, and weight (either manual entry or automatic calculation)
• Software interface features that alert the end user to important pediatric use issues (e.g., interactive software pop-ups that remind users of special pediatric issues when setting up the image acquisition)

Makers that don’t meet the requirements will have a warning label attached indicating that the equipment shouldn’t be used with children.

Interestingly, the device industry and radiologists seem to be pleased with FDA stepping up its oversight of how approved equipment is used. They’re worried –and rightly so– that patients and families will push back against the use of scans as awareness of radiation dangers rises.

In an era of hostility toward government intervention (and I’m willing to bet Republicans are well-represented in the ranks of radiology) it’s interesting to see the embrace.

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But Massachusetts has a vibrant private health care financing sector. All the major commercial health plans are at the top of the national rankings and are focused on quality and cost containment. And after years of hefty premium increases, customers will be seeing renewal rates that are nearly flat.

Blue Cross Blue Shield of Massachusetts (BCBS MA) is the largest health plan in the state, and is making substantial progress with its innovative Alternative Quality Contract (AQC). In this podcast interview, BCBSMA CEO Andrew Dreyfus and I discuss:

• Why premiums are stabilizing
• The role of BCBS in cost containment, and how things have changed from the early days of managed care
• How the AQC emphasizes quality
• Opportunities for employers to play a role
• How state government fits in
• Potential impact of the Supreme Court’s review of the federal law
• Health care issues we will be debating five years from now

You can read the transcript here.

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Video and text versions are available.

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And yet, most discussion of the topic doesn’t take the individual employee into account. Firms debate headphone use at the office from today’s Boston Globe is just the latest example. The topic is whether or not headphones are a good idea in the workplace. The article focuses on productivity, communication between co-workers, and distractions, but there is no emphasis at all given to how preferences might be based on how individuals’ minds work.

I worked in an open environment only once, for less than two years, in my first job out of college. I liked the company but retreated to a conference room or other private space as often as I could. In a later job, where offices were shared, I opted for a small one with no officemate as soon as I could. Ultimately I started my own company and did away with the problem once and for all.

Still, I feel badly for those chained to their cubicles, desks or whatever. It isn’t easy to speak up and ask for a special arrangement, like working from home or in an office. It’s likely to be seen as anti-teamwork. Yet some people can be more collaborative if they aren’t immersed full-time in a common space. Bosses would do well to take the different needs of employees into account when designing workspaces.

Perhaps the introvert bosses among us will take the lead.

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Things changed with the advent of managed care. Income got a little harder to come by, autonomy took a big hit. More recently with the quality and patient safety movement accountability has risen and respect isn’t automatic. Physicians are even expected to be team players. As the field has evolved into big systems it’s now harder for a doc to maintain a viable private practice, and you see very few opening up. Some specialists still find a way to make a ton of money but in primary care it can be pretty ugly. In wealthy, high cost of living places like San Francisco primary care physician incomes don’t automatically land one in the upper middle class.

Meanwhile, other ways for high-achievers to make a lot of money without a lot of accountability have emerged, with financial services serving as Exhibit A.

No wonder many docs say they’d do something different if they had a chance to start over.

And yet the number of medical school applicants is rising. Maybe it’s because applicants are uninformed about what awaits them, and in a few years they’ll be filled with regret just like their elders. On the other hand, the prospect of a steady, decently paid job with a chance to help people probably looks pretty good compared to some other choices that are available, such as going to law school and then ending up in a menial role.

It’s too bad that medical school is so expensive. High medical school debt is bound to deter students from becoming lower-paid but essential primary care physicians.

Maybe in another generation or so we’ll evolve to a single payer system and government sponsored medical schools. Seems far-fetched now, but I think that’s where we are heading in the long run.

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What that means is that as health care costs are brought under control –as I firmly believe they will be– there’s an opportunity for middle class Americans to resume an upward trajectory in real wages. MIT economist Jonathan Gruber has picked up on this theme in a new study for the Blue Cross Blue Shield Foundation of Massachusetts.

I believe that Massachusetts is on the cusp of taming the health care cost beast, a situation made possible by RomneyCare’s near-universal coverage followed by innovative efforts of private health plans and providers, plus the threat of state government intervention. While out-of-state ideological critics caricature the Massachusetts approach, they may soon be treated to the specter of the state outshining others in real wage growth, in a way that doesn’t hurt the competitiveness of our employers.

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I like Elizabeth Warren and will probably vote for her, but I don’t fault Brown for his move. First, his daughter might have been eligible for coverage under Massachusetts’ health reform law (assuming he’s claimed her as a dependent). Brown isn’t against the Massachusetts law (aka RomneyCare). Second, there’s nothing really wrong with taking advantage of a law one disagrees with, assuming one isn’t claiming it’s immoral.

On the other hand, Brown has faulted Warren for not voluntarily paying higher taxes even though she supports the Buffet Rule, which would exact higher taxes from millionaires. If it’s hypocritical for Warren not to put her money where her mouth is on taxes, then Brown should probably not be indulging in the benefits of ObamaCare.

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David Williams: This is David E. Williams, co-founder of MedPharma Partners and author of the Health Business Blog. I’m speaking today with Julie Yoo, co-founder and Chief Product Officer at Kyruus. Julie, thanks for being with me today.

Julie Yoo: Thank you, David. Great to be here.

Williams: What is Kyruus?

Yoo: Kyruus is a “Big Data” driven health care services company based in Boston, Massachusetts. We work with any organization in health care that manages a large network of physicians. We take an approach that we call Physician Network Optimization.

We use data and analytics to help understand the distribution of value and risk across these large physician networks, and use the insights generated from that data to help optimize behavior and performance across those networks as well.

Williams: That sounds impressive. From the standpoint of a customer who’s interested in network development and referral management, what kind of business problem are they solving and how do you help them with that?

Yoo: Referral network management is a great market to talk about, given that it’s at the front of every CEO’s mind in the hospital and health care industry today. Given the economic pressures and the competitive dynamics of today’s hospital and health care industry, many organizations are seeking to maximize inbound business to their facilities. For example, having a mechanism to identify and conduct outreach to primary care physicians who have rich populations of patients who may benefit from specialist services of a given facility. Then also thinking about existing physician networks and maximizing the value within those.

In addition, organizations are concerned about leakage. We can help hospitals understand where business is leaving their facilities and where there’s opportunity to keep patients within the system to receive optimal care and care coordination. This includes educating physicians within the network about the services and specialists who are available, and the potential best clinical match for a given patient using the types of data that we have.

Williams: I would expect that sophisticated hospital system or health system would have a lot of that kind of information. Are you able to add value to what they already have?

Yoo: As it turns out David, many of our facilities struggle with one of two things. One is, it turns out that a number of facilities struggle with maintaining the most up to date information about physicians on their staff.

As we all know, many of the traditional processes for collecting and maintaining information about physicians are very manual, are done on a periodic basis –maybe annually or every other year– in conjunction with credentialing and other processes.

Therefore, we’ve seen huge struggles around making sure that even basic information like affiliations and where individuals are practicing are up to date and accurate across the network. That’s one big issue;  we actually help our customers from the get go.

The second big issue is the rapidity with which this information is changing. Part of our value proposition is the fact that information in the public domain is growing exponentially. Consumers are now arming themselves with information that’s available on the web and bringing that to their doctors, saying, “Hey, I’ve looked up this particular doctor, here’s the information that I have on them.”

Oftentimes it catches clinicians by surprise. So a part of what we offer is a monitoring and verification service whereby we are mining information from thousands of publicly available data sources to ensure that these facilities can maintain up to date, accurate, and dynamic databases associated with this information.

Williams: It’s interesting that at the same time these organizations are struggling with managing their own internal data, there’s a flood of data on the web and the public domain that may be coming into their organization and not brought by their own employees or executives, but by consumers.

Can you comment on the area of compliance and transparency regarding industry payments to physicians. I know with the Sunshine Act, there’s a lot more data that’s out there. Does that figure into your work as well?

Yoo: Absolutely. A core part of our offering is that we have what we believe to be the industry leading database on all physician/industry interactions. As you allude to, that is a trend that started a couple of years ago with the institution of a number of settlements with large pharmaceutical and medical device companies whereby they were required to disclose this information into the public domain.

There is an impending law associated with health reform that will require all manufacturers to disclose that information in the next couple of years. In addition to that, a number of the more unstructured data sources are out there that we mine. These include scholarly publications, conference proceedings, guideline committee proceedings, and things of that nature that contain self-reported disclosures from physicians and other clinician researchers that can be mined to effectively understand these relationships.

We provide data on what types of relationships are happening and what sort of potential conflicts of interest they might pose to institutions that we work with.

A core part of our service is mining a universe of data, providing that back as a service to institutions and individual physicians so that they can monitor and manage their public profile, and also comply with existing policies and regulations that are in place within their institutions and with state and federal regulators.

Williams: You mentioned the term, ‘Big Data’ at the start of our discussion. It’s a term that I hear a lot. I hear it so much that it makes me wonder if there is a hype factor attached to it. Is Big Data something fundamentally different or is it just an evolution from medium-large data to large data, to really big data?

Yoo: We certainly embrace the term, but also the actual implementation of Big Data technologies. We’ve seen the evolution of data-oriented technologies over the last several decades. Initially it was simply the concept of data storage. We had a whole era of data storage companies emerging, such as Teradata and Oracle.

Once we were able to store data in a sophisticated way, we started asking questions of that data. Out of that was born search oriented technology. The world and all sorts of businesses benefited from that paradigm. We then saw migration into the world of business intelligence, where more sophisticated users carried out massive, highly structured databases of things like financial data. Many industries reap benefits from that.

We very much see Big Data as the next step in that evolution. It’s the ability to effectively integrate, aggregate, and analyze massive sets of information, but also generate novel insights from that.

Being able to integrate never-before-joined data sources and generate insights from that is something that will not only have a foothold in our society for the foreseeable future, but will also enable a whole set of new industries and new ways of doing business, like all those previous data technologies have done over the last few years.

Williams: There’s a tremendous amount of technology involved in Kyruus, but you also have people and are growing your staff. What’s the profile of  the current team? How would you anticipate that changing over the next year or two?

Yoo: We have a phenomenal team here. We’ve been very fortunate to attract a number of like-minded folks from both non-health care and health care oriented industries. Therefore we have benefited from many of the best practices that have worked very well in other areas; we are bringing that into the health care space. We’ve got engineers coming from all sorts of disciplines including financial services, e-commerce, retail, and travel.

We are bringing many of the Big Data principles to bear on the health care system, but have also brought in deep domain expertise from folks who have been embedded in the health care system for many years. They have worked with many of the data types and data questions that we are looking to answer through our platform for our customers. That has created a unique environment here at Kyruus.

We are continuously growing. We’ve grown 10x over the last year, starting with just a handful of folks to where we are today. We’re benefiting from being here in the Boston area, where clearly there’s a mixture of talent and companies that are seeding talents into the market. Many recent acquisitions have really created a flood of great engineering and business talent in the area that we are really able to take advantage of.

Williams: I’ve been speaking today with Julie Yoo. She’s co-founder and Chief Product Officer at Kyruus. We’ve been talking about big data in health care. Julie, thanks so much.

Yoo: Thank you, David.

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In this podcast interview, Kyruus co-founder and Chief Product Officer Julie Yoo provides more depth on the following topics:

• How Kyruus adds value in network development and referral management
• Leveraging the huge new wave of public disclosure of industry payments to physicians
• Whether “Big Data” is really something new and different or just marketing hype
• What kind of staff Kyruus is seeking to hire as it scales up

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I’m a supporter of the ACA overall, and it’s always nice to get a check, but I’m not too pleased with this result. The policy treats any dollar spent on medical costs as good, and any money not spent –or spent on administrative costs– as bad. That means if a health plans spends more money –for example by overpaying for services, paying for too many services, or paying fraudulent claims– they don’t have to provide a rebate. Some proponents expect that the rebate rules will keep premium increases in check because plans will be embarrassed by the prospect of having to pay rebates.

But a counter-argument is that plans will treat the MLR requirement similarly to how individuals treat their flexible spending accounts (FSAs). When December comes, FSA holders check their accounts and are eager to exhaust their funds through purchase of things they don’t really need, like another pair of eyeglasses. Similarly it seems health plans could relax their cost containment initiatives if it looks like they are not spending up to the 80 or 85 percent mark. Cost containment requires administrative expenditures, which the ACA frowns on. A plan could cut back on administrative costs and keep that money. Policyholders wouldn’t get rebate checks and plans would make more profits.

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David Williams: This is David E. Williams, co-founder of MedPharma Partners and author of the Health Business Blog. I’m speaking today with Ray Desrochers. He is executive vice president of sales and marketing at HealthEdge. Ray, thanks for being with me today.

Ray Desrochers: Thanks for having me here David.

Williams: Ray, your company is in an exciting space serving healthcare payors, and there’s certainly no shortage of topics that payors may be concerned about today. How do you think about the overall set of issues that are on payors’ minds, and where does HealthEdge come in?

Desrochers: There’s a lot going on right now across the industry. There’s certainly a lot of anxiety as payors are trying to determine how they’re going to play in the world of next-generation healthcare business models.

This includes everything from value based healthcare, to next-generation consumer based healthcare, to ACOs to payment reform initiatives. Folks are trying understand what all this means, then determine what it could mean to them, and how they might want to participate.

At the same time we’re seeing  a lot of anxiety around regulatory change, thing like ICD-10 as an example. And people are trying to figure out exactly what this is going to mean regardless of what the date is. They’re still going to have to get themselves to a point where they can comply. They’re going to have to remediate their existing system infrastructure.

People are trying to figure out how they are going to do that, how they are going make sure they’re ready for the next variant that comes out, ICD-11 or whatever it might be. And then also how they’re going to participate in the new healthcare economy, particularly one that’s based upon these new healthcare business models.

Williams: HealthEdge is obviously playing in the space, but how broad is your suite of products and services to address these topics?

Desrochers: We offer a complete enterprise class offering for healthcare payors that includes both the core benefit administration claim processing platforms –all the way from enrollment to billing to pricing to claims processing to benefit definition and administration, all the way down the line to customer service.

We also offer a full business intelligence suite to provide transparency inside of the enterprise and also transparency outside of the enterprise, which is something that we think is equally important with these new models. Everyone participating in the models knows where they stand in real time. Last but not the least, we’ve got a set of portal offerings designed to connect everyone involved in the healthcare delivery cycle.

Williams: Certainly with the Affordable Care Act, one area that concerns payors is the medical loss ratio requirement and how that encourages a different set of thinking among health plans. How do you fit into that thinking?

Desrochers: The administrative cost and administration burden that people have been dealing with over the last few years has to change dramatically for folks to succeed. One of the things that a number of organizations are looking at now is how to eliminate all of this system redundancy and how to eliminate all the manual processing that’s going on.

That manual processing includes lots of human error, lots of manual reprocessing and repricing, lots of things that actually take away from core parts of their business. At HealthEdge we have a unique technology that’s built not on a traditional configuration model but on an English-like healthcare specific grammar.  It’s a patented technology so we have the only system on the planet to use that.

It allows an organization to quickly configure almost anything they can imagine. They can make sure they’re doing all their business in an automated way so they don’t need to deal with an out-of-control manual processing burden. It’s not unusual for us to go into situations where we see payors that are at 15%, 20%, 25%, 30% manual processing.

At the industry accepted $6 to $8 per manually processed claim, it doesn’t take a whole a lot of claims to get to a point where it’s a number that does not make any sense. Folks are going to need to investigate how to take advantage of next generation technology and streamline existing infrastructure to serve the market in a cost effective way moving forward.

Williams: People talk about administrative efficiency but some of the new requirements add complexity and take folks in the other direction, especially if they’re reliant on old, inflexible systems and have to deal with a lot manual processes and workarounds.

Can you address that as it relates to Accountable Care Organizations and ICD-10? Where does HealthEdge get involved with those?

Desrochers: ICD-10 is what many in the industry are calling the Y2K of healthcare. We’re moving from 17,000 diagnosis and procedure codes to 155,000 much more complex, much longer diagnosis and procedure codes. If you take a look at the core system that people are dealing with and all of the other systems that touch that then it is an enormous challenge. It’s a challenge that’s not a one-time opportunity, it’s a challenge that’s going to happen over and over again. Today it’s ICD-10, tomorrow it will be ICD-11, and the next day it will be whatever other new standard comes our way.

HealthEdge is trying hard to remove this ongoing challenge as much as possible by providing automated solutions to allow payors to not have to think about it; to be able to trust that their vendor can provide them solutions that as soon as these new standards become applicable, they’re ready.  They’re ready to accept ICD-10 claims for example, something HealthEdge has been doing for about three years now; accepting ICD-10 claims and accepting claims that are both ICD-9 and 10.

The goal is to remove the burden from the payor so they can focus on how to grow the business and successfully participate in the new healthcare economy. The same can be said of all of these next-generation healthcare business models. When payors look at ACOs and value based products, they assume they’re going to have to do some additional manual processing. They plan to band aid, bubble gum, or scotch tape some number of systems around the edges to make it happen. Obviously those are not very good answers because the administrative cost continues out of control. And regardless of how short-term they say any of those band aids are going to be, they never end up that way.

Folks are finding themselves in a never-ending spiral that they can never escape. We recommend instead –regardless of which system you’re looking at, regardless of how you’re going to approach this from a technology standpoint– to pull up a level, and ask, “What am I going to do in my business and ultimately what are the tools, what are the processes what are those techniques that are going to need to be put in place to be successful?” HealthEdge is helping organizations with that.

Change has been one of the things many in the industry had feared over the years. But moving forward successful payors will be the ones that embrace change, to one-up the competition by being first to market in any of these new models; both the ones we know about today and the new ones that will come up tomorrow.

Williams: Payors are known to be conservative when it comes to swapping out core systems. I think about a player like TriZetto that’s out there that’s well established. Despite some of the limitations people are afraid to move away from it. You’re obviously making an argument that change is necessary and those payors that embrace are going to be successful.

But assuming you do compete against TriZetto, how do you differentiate yourself from them? How do you try to coexist with them or persuade payors to move more toward your solutions?

Desrochers: We’ve gone from a world where the conservative payor community didn’t want to change just a few years ago to a world where –as an analyst said– we’ve just entered one of the most significant technology change-out cycles that the payor market has seen in the last 30 years.

We completely believe it. They’ve gone from the conservative, “I don’t want to touch anything, I don’t want to move anything, I don’t want to change,” to a world where they know that if they don’t change, they don’t start to embrace new technology and they don’t figure out how to play in these next generation business models, they’re dead.

They really have to compete. They have to find ways to do this. So a lot of the barriers that existed just a few years ago what people really did not want to move, are coming down. And we are working with organizations you would normally call early adopters, but that nonetheless have determined that this is the only way to truly compete in the 21st healthcare economy. That’s what they are doing, and that’s what we’re seeing.

Williams: There are a lot of smart folks looking at things that way. Another Massachusetts-based company, ikaSystems is out there and has some deep pocketed backers. Do you do the same thing as them or do you take a different angle in approaching the market?

Desrochers: We really don’t see ika at all as an example of what we’re doing. TriZetto your first example, obviously we’re in with them quite a lot. We see them in a number of deals. ika is really a consulting firm. They’re a consulting firm that ultimately can build to order whatever it is you’re looking for. And we are an enterprise class software company.

So while we have implementation and consulting services that are geared to helping you to integrate and deploy the product, we’re not out there doing general consulting per se. We have a commercial enterprise class product and have an investment of over $150 million that’s helped us to build what we believe is a pretty unique piece of technology and the best in the market. It’s really an apple and oranges, apple and oranges type of story there.

Williams: So the similarity is both are serving payors with a need for flexibility beyond what traditional solutions offer, but you’ve taken an enterprise class software approach and ika is offering custom solutions from a consulting standpoint it sounds like.

Desrochers: That’s exactly right. That’s our perception.

Williams: What customer base do you serve?

Desrochers: We have a wide variety of customers based around the country, and a variety of shapes and sizes ranging from small to mid-sized TPAs some larger TPAs, and then all the way up to a number of commercial Medicare and Medicaid plans. So the customer names: FirstCare in Austin, Texas, Neighborhood Health Plan of Rhode Island – it’s all Medicaid, Independent Health in upstate New York, which has a number of different lines of business, POMCO a large TPA about a half a million members based on Syracuse, New York, and the list goes on and on and on.

So really commercial play, government play, Taft-Hartley play, TPA play, it’s a variety of organizations that have a couple of things in common. Number one is a strong desire to take on new business and compete in next generation models without being handcuffed by existing technology. Number two, organizations that want to eliminate manual processing and reduce their administrative spent. Number three, organizations that want to play in this world of ICD-10 or whatever other standards might come their way without needing to endure costly and time consuming migration and conversion efforts. And number four, customers that are looking to compete in a different way when it comes to customer service.

One of the worst kept secrets in the industry is that customer service from payors has been declining rapidly over the last few years. These are good organizations that want to help you and answer your questions correctly, but because of all of the new complexity that we’re seeing in all of these new business models and the systems that are scotch taped and bubble gummed and whatever else together in order to be able to service these models, it’s very, very hard to get answers, particularly answers to questions of any complexity. That’s a huge problem across the industry. We believe as more and more people adopt these models, it’s going to get much, much worse.

Williams: The organizations you described as customers tend to be up smaller than some of the big Blues or national plans. With some of the big segments that you’re not addressing now, is it just a matter of time? Or do you expect to stay with smaller customers?

Desrochers: No, we’re definitely seeing a significant uptake in the larger payor community as well. Regarding the “megas,” the Blues across the country and many others that would consider themselves large payors, we are definitely talking to a number of them right now and I think it’s fair to say that is certainly part of our target market at this point. I think you’ll be seeing a lot of momentum from us in that area.

Williams: That sounds exciting. How would you summarize your biggest opportunities and threats?

Desrochers: From an opportunity standpoint, the market has never been more dynamic, never more in need of next-generation technology solutions, particularly technology that can address all of the things that we’ve talked about today. We happen to have a unique product offering with patented technology, the only one of its kind, and it happens to be able to uniquely address many of these next generation healthcare business needs that we’ve talked about.

The threat is that people stay idle, that people really have the deer in the headlights syndrome and become so confused by the number of options out there that they don’t move; that they’re afraid to move, that they can’t really turn their businesses the way that they have to in order to be successful.

In the last six to 12 to 18 months in particular, it’s become evident that more and more organizations, regardless of size, are realizing that in order to compete in this next generation of healthcare business, they must be ready be ready from a process standpoint, be ready from a system and technology standpoint, be ready from a people standpoint. They have to gear up and tool up to be able to take their fair share of the next generation market.

Williams: This is David Williams. I have been speaking today with Ray Desrochers. He is executive vice president of sales and marketing at HealthEdge. We’ve been talking healthcare payors, new business models and how HealthEdge is positioned to help them out. Ray, thanks so much.

Desrochers: Thanks for having me David.

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Their arguments:

• Most states are busy using federal funds to set up health insurance exchanges and expand Medicaid. They’re not as keen to stop as is widely believed
• Hospitals and health plans favor health reform to make their businesses more stable and sustainable
• Large employers look forward to an end of cost shifting
• There’s simply no going back to the pre-reform mess

From my daily dealings in health care, what I see is that most participants either actively support reform or are going along with it for pragmatic reasons. There is little energy for repeal or rejection by the Court. It’s mostly people outside health care who oppose ObamaCare on ideological grounds. They won’t be the ones to pick up the pieces if ObamaCare is tossed out. My prediction is that if the Court rejects ObamaCare many of its components will be back in a similar guise before long.

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Traditionally, health plans have been reluctant to move away from legacy systems such as TriZetto, because risks seemed too high relative to the benefits. However, the changing environment makes staying the course riskier, and that’s providing an opening for players such as HealthEdge, that position themselves to address the new business models with efficient, effective, automated solutions.

HealthEdge Sales & Marketing EVP Ray Desrochers provides his take in this podcast interview.

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The survey found 84 percent of physicians would prefer online CME compared yet only 6 percent participate in online education “very often” today. Reasons for favoring online CME included an ability to view content at a preferred time, avoiding travel, and spending more time on leisure.

The 6 percent figure seems very low to me. After all, there’s plenty of online CME available now, and doctors are notable for their rapid uptake of mobile devices and computers for their own use. If 84 percent want but only 6 percent get, there’s a bigger demand for computer training than I would have guessed.

Online CME is a lot less expensive to produce than the traditional, live, in-person variety. Pharmaceutical companies and medical device companies are less and less likely to sponsor expensive CME programs, and doctors themselves are unlikely to step up. That alone is enough reason to forecast a big jump in online CME. Until recently it’s been rare to see CME providers take advantage of the interactive technologies available in online formats, which is one reason actual use of online CME has lagged behind its potential. That’s likely to change rapidly as the medical world catches up.

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David E. Williams:  This is David Williams, cofounder of MedPharma Partners and author of the Health Business Blog.  I’m speaking today with Dr. Daniel Mruzek.  He is a psychologist at the University of Rochester Medical Center and he has one of the first projects featured on Innovocracy.

Dr. Mruzek, thank you for being with me today.

Daniel Mruzek:  Well, it’s a pleasure.  I’m happy to be here.

Williams:  Tell me about some of the issues that parents and caregivers face when they’re toilet training kids who have autism.

Mruzek:  Many children with autism learn to use the toilet much later than the general population.  In fact, many children with autism still are not toilet trained by the time they enter the school age years and some are not toilet trained by the time they reach even middle school or high school.  One of the participants in a study that I conducted about a year and a half ago was 16 and was not yet using the toilet independently.

Williams:  What techniques are typically used for toilet training kids with autism and how do these techniques differ from the techniques that are used with kids who are developing in a more typical manner?

Mruzek:  Strategies that are typically used with children with autism center upon the use of positive reinforcement for urination into the toilet.  In short, a behavior modification approach is used or sometimes, the phrase “applied behavior analysis” or the “applied behavior analytic type intervention” is used to facilitate toilet training.

How that looks though, is much like training for children who are typically developing but much more structured and often, much more intensive and lasting for longer periods of time.

Now, this isn’t true for all children with autism.  I want to point out that some children with autism do train up very, very quickly.  In fact, some can train up in a day or two once they’re ready.  I want to be careful not to overgeneralize the problem.

Having said that though, for most children with autism, there is a concerted effort on the part of parents, and often teachers, to toilet train; they use very highly structured methods including the use of behavior modification, primarily positive reinforcement for attempts and then subsequently, success, and it could take a great deal of time.

Williams:  What are the areas that you have pursued in your research on this topic?

Mruzek:  Well, I work clinically for a good portion of my week and so I see a lot of children, many children with autism in my particular practice and many are not toilet trained.  In fact, that’s often the referrals, to help families and teaching staff.  I use many of those behavior modification techniques I just alluded to, but I was looking for a strategy that reduces the stress for parents and teachers and the child, and was effective, and hopefully effective in a shorter period of time.

One of things I stumbled upon in my clinical travails was the use of a bedtime alarm.  There are some products on the market for teaching children to be dry through the night, not to wet their beds.  These are usually little alarms that go off when the mattress is wet, and that sets the occasion for changing up the bed, changing into fresh night clothes, that kind of thing.  This is reasonably successful for many children who have what’s called “nocturnal enuresis” or bedwetting.

What I did is I took that technology and I adapted it for day time use in the context of the classroom for children with autism.  We had some nice success clinically and it set the occasion for my research project, looking at a way of combining simple technology with a curriculum that maximizes the probability that a child with autism will be toilet trained in a reasonably short period of time and with less anxiety for all parties involved than other methods.

Williams:  You have a specific project that you proposed, and it’s posted on the Innovocracy site for funding.  Are there specific aims for this specific project?

Mruzek:  Absolutely.  A few years ago,  biomedical engineer Steve McAleavey and I applied for and received some intramural funding, some startup money to pilot out our toilet training concept and technology with some children with development disabilities.  That was very successful, but we have some more work to be done in working out both the curriculum and the technology, and then making it available to parents and teachers.

To answer your question directly with regard to our relationship with Innovocracy, we’re looking at carrying on a bit more of the piloting, looking at a broader range of children with developmental disabilities, children with autism, and documenting both when it will work and when it may not work.  Because it’s possible that this kind of teaching approach for toilet training will work with some children, but possibly, not with others.  We’d like to test it out so that we can be confident when it’s recommended for use by parents and teachers.

Williams:  Why have you turned to Innovocracy for funding this project?

Mruzek:  This is the kind of project that is difficult to get on the radar of big funders, either NIH funds or some other private foundations that give large grants.  This has been a difficult one to draw their attention and so, I’m looking for somebody who can help me further develop the prototype technology and  the prototype curriculum.

We can do this with  ”small N” research.  That is, we don’t need terrifically large numbers at this stage of development.  What I need is funding to work with few families with children with autism, to bring this prototype to the point where (a) it can be available to others clinically, and (b) if indeed it continues to be successful, we can eventually look at some large end research to really document when it’s most appropriate and most helpful.

Williams:  What sort of response have you seen so far to the funding request?

Mruzek:  It’s been terrific.  We’ve been with Innovocracy now for about 10 days, I believe, and we’ve already had over two dozen people step forward to sponsor this research.  I’m very gratified by that and appreciate the people who see the potential here, to help children with autism and their families.

Williams:  I know this crowdfunding approach is being applied to scientific research and development for the first time and I’m wondering from a sponsor standpoint, will they get something out of participating?  For example, do you plan to communicate with them?  What should somebody expect if they’re giving a donation to the research?

Mruzek:  I’d be more than happy to keep the community updated with regard to progress.  This can be done, I would imagine, through the blog site or if the individuals care to contact me here directly at the university. I’d be more than happy to get them updated as to the progress and again, bring this technology to bear to help families.

Williams:  That’s terrific.  For those listeners out there, I’ve made a donation myself and I encourage you to do the same thing.

Dr. Mruzek from the University of Rochester, thank you very much for speaking with me today and I wish you great success with this project and others.

Mruzek:  I appreciate the chance to talk about this project and to share with you some ideas we have to improve the quality of life for children with autism and their families.  Thank you very much.

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But from my perspective Catalyst is a dynamic organization that was starting to be limited competitively by the fact that it relies on SXC for its transactional software that drives its core operations. Usually when organizations merge there are operational hiccups as the acquirer digests or rips and replaces the target’s systems and processes. That won’t have to happen in this case. Also, SXC should really understand what it’s getting into, because acting as the software vendor gives SXC excellent insights into Catalyst’s operations.

The combined company is now big enough to be a serious competitor of the big 2 PBMs, but small enough to differentiate itself and rock the boat.

The market seems to like the deal, with both companies rising substantially after the announcement on a day when other PBMs fell. You don’t usually see that.

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I’m quoted in the Buffalo News article: BlueCross and Kaleida partner to form medical team, written by Henry L. Davis.

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The article notes that multidisciplinary collaboration in cancer care is becoming the norm, but even so it’s not working out as advertised.

From the patient perspective, there are a number of troubling aspects to this story. I’m no expert on breast cancer, but here are some things to keep in mind based on my read of this article:

1. Surgeons like to cut. I hope you know that already. Even the best have a bias toward surgery, so if you consult a surgeon don’t be surprised if a surgical solution is suggested and even assumed, and that a consultation leads right into scheduling a procedure without a wider discussion of options
2. Surgeons are very familiar with surgery, but might be a little hazier on post-surgical recovery. In the case of breast cancer, many patients –especially those that choose surgery due to fears of radiation– are surprised to find out they may need radiation after surgery anyway. If they’d known before they might have skipped the surgery
3. When surgeons and radiation oncologists actually do consult with one another, they tend to have conflicting views. That means it’s up to the patient –who presumably is less well trained than the doctors to make a scientific/medical judgment– to reconcile the advice. I don’t find that very helpful

There’s not much an individual patient can do about the state of affairs. But as a first step, don’t just assume the expert has provided the full set of options.

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David- looking through the BCBS slide deck– how do you explain slide 10, which clearly shows an upward trend in spending since 2006, and slide 12, which shows a decrease in premiums?

Can you find even a single mention in any of the slides that might put an iota of responsibility in the lap of the insurance industry? patients?

The study/results/conclusions seem intent on getting to blame providers/hospitals… and to justify the goals of MA politicians who want more political control over health care dollars– and decisions.

These are reasonable points, but all can be addressed. First, the big picture issues addressed in the 2nd and 3rd points:

• The overall message of the materials is that Massachusetts is an expensive state for health care and continues to get more expensive. However, health reform does not seem to have changed the trajectory
• I think Novack’s objections to the contents and conclusions are that provider price increases are identified as the main driver of aggregate cost increases, and that provider market power is pointed to as the cause. I suppose that could be construed as blaming providers and letting plans and patients off the hook, but from my perspective as a purchaser of health insurance I look at it as a failure of the health plans to drive sufficiently hard bargains with providers. Also, benefit designs in Massachusetts are heavily weighted toward traditional, broad network products that give the patient/consumer no incentive whatsoever to consider costs. That, for example, is why many people drive past their community hospital on the way to MGH for a routine colonoscopy. The blame for that goes to the health plans–for not offering better products, and purchasers –for not demanding them
• MA politicians may seize on the data to support their goals, but I can’t believe a health plan foundation would intentionally cede power to politicians at the expense of the private sector

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After initial success with the approach, Mruzek turned to crowdfunding site Innovocracy to raise funds for further development of the device and training program. I donated $50 to the effort, and encourage you to give as well.

For more on crowdfunding for scientific research, see my recent interview with Innovocracy co-founder, Mikael Totterman.

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In 1792 Congress passed, and Washington signed, a law mandating the purchase of firearms by all able bodied men.

In 1798, when five framers were still serving in Congress and framer John Adams was in the White House, Congress passed, and Adams signed, a mandate requiring seamen to  buy hospital insurance for themselves.

According to Elhauge –who joined an amicus brief supporting the mandate’s constitutionality– no one  in Congress at the time thought to object to the laws on Constitutional grounds.

I don’t know what role this brief should or will play in the Court’s deliberations, but assuming the facts are correct in Elhauge’s New Republic piece it’s much more evidence of original intent than I ever would have expected.

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When the local TV news got hold of the story they constructed an exciting, visual montage for their viewers. I still remember them showing a clip of a public safety (i.e., university police) car driving down the street on a rainy night with its lights flashing, as though in hot pursuit of a rapist. In four years, I never saw a public safety car using its lights, so the TV cameraman either got very lucky or asked the officer to stage the scene.

All of this is a much too long way to write that I’m skeptical of what I see or read. In yesterday’s post, I reported on an Associated Press article about how the Supreme Court may not fully grasp the essence of the Patient Protection and Affordable Care Act (PPACA), aka ObamaCare. The article quoted plaintiff’s attorney Michael Carvin saying that wellness, prevention and contraceptives are things a 30 year-old would never need. That perspective is demonstrably false.

It occurred to me that a Jones Day partner selected to argue the case of the decade before the Supreme Court is unlikely to be a fool, so I emailed him to ask about the veracity of his quote and whether it was taken out of context. Here’s his reply:

“The quote is somewhat out of context. My point (and exact quote) was that the Bronze Plans do not protect against the catastrophes that render healthy people unable to pay their medical bills, but provide for services that are routine and are usually fully compensated absent any insurance, i.e., entail no cost-shifting.”

(As a legal scholar he italicized i.e., since it’s Latin. I can respect that.)

So the issue is a bit more complex than described in my post. The Bronze plans have some characteristics of a catastrophic plan –in that they have high deductibles– but also have some of the elements of comprehensive plans, in that they cover routine services.

It remains to be seen whether the Supreme Court justices understand the nuances of PPACA. But despite the impression provided by the AP article, I now have no doubt that counsel does.

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During the recent oral arguments some of the justices and the lawyers appearing before them seemed to be under the impression that the law does not allow most consumers to buy low-cost, stripped-down insurance to satisfy its controversial coverage requirement.

In fact, the law provides for a cheaper “bronze” plan that is broadly similar to today’s so-called catastrophic coverage policies for individuals, several insurance experts said.

“I think there is confusion,” said Paul Keckley, health research chief for Deloitte, a major benefits consultant. “I found myself wondering how much they understood the Affordable Care Act. Several times the questions led me to wonder how much (the justices’) clerks had gone back into the law in advance of the arguments.”

There are two aspects of the law that work in offsetting ways. The requirement to purchase a health plan that covers “essential health benefits” appears to require comprehensive coverage. On the other hand, the “bronze” level will have deductibles in the $3000 to $6000 range and could be more appropriately classified as catastrophic rather than comprehensive. People under 30 can buy even more stripped down plans.

Plaintiffs disagree with this assessment, of course, but their argument is a bit of a head scratcher:

“The bronze plan is not catastrophic coverage,” said Michael Carvin, who represents the National Federation of Independent Business.

“It’s got all the minimum essential benefits in it,” he added. “It’s got to have wellness, preventive, contraceptives — all kinds of things a 30-year old would never need.”

I’m not sure which 30 year olds Carvin is hanging out with. But wellness benefits –addressing lifestyle issues such as smoking, alcohol, and eating habits– are completely relevant to someone in that age group. Some preventive services, such as colonoscopy are more relevant for older people, but others such as vaccines and Pap smears are important.

Finally, if Carvin actually thinks a 30-year-old “would never need” contraceptives then that’s very funny indeed.

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What is Innovocracy?

Innovocracy was created to bridge the gap between powerful ideas and beneficial applications of those ideas. We offer a funding source that connects people who want to support innovation in academic research and those innovators found on campuses around the world.

How did you get the idea?

I have always been fascinated by how technologies are often first developed in academic institutions and then make their way to transform our daily lives.  This is the path that many ground breaking technologies from the Internet to life saving medications have traveled.  It is possibility one of the greatest assets that any developed country can hope to harness.

Until I started working with many great academic institutions, I didn’t realize that there were so many innovations that never achieve their potential to change our lives. This is mostly because they languish unattended due to lack of funding needed to transition them to actual prototypes and products.  One of the most common challenges faced by academic innovators is that typical funding sources do not support the development of prototyping and product creation.

As we know from countless examples, great innovations such as the computer mouse and graphical user interface would never have blossomed if practical approaches to prototyping had not been pursued.  This is also true for medical devices and alternative energy applications. Over the years, I have worked with great researchers on individual projects in arthritis, cancer, and cardiac conditions to help these technologies become products and services.   The work has been rewarding, but there has always been frustration that so many other life changing innovations could be coming out of academic institutions if only there were more avenues to help academics fund prototypes.  Most of the time, all it would take is a fairly modest amount of money to help create that functional prototype to get the process moving.

These experiences led to the creation of Innovocracy.  Our collective aspiration is to become the go-to-platform for academic-based innovators who are out to change the world and people’s lives for the better.

Crowdfunding for startup companies is getting a lot of attention. Is Innovocracy employing a similar concept?

This is an exciting time for empowering individuals to contribute to great projects and companies. Specifically, we seek to become the trusted source for allowing individuals to help fund important academic innovations. With Innovocracy, an Innovator can post the details of their proposed project and request funding, usually between $3,000 and $15,000 (though we do not cap the amount of the requests), to get their project from idea to reality.

Individuals and organizations that want to support those projects can become supporters by pledging any amount towards that goal. If the goal is reached, Innovocracy funds the project and charges the Supporters for their contribution. If it does not, no funds are collected or distributed. Where we differ from crowdfunding for start-ups is that we are exclusively focused on donations rather than the sale of equity.

Who are your partners?

As we move towards our official launch in Q3 2012 there are opportunities for institutions of higher learning to join us as Launch Partners. Launch Partners get an early start in the Innovocracy Network by enabling their researchers and students to fund projects through the system. Our current Launch Partners include Cornell, University of Rochester, Rochester Institute of Technology, and Clarkson.

What is an example of a project (or projects) being funded?

We are currently seeking support for a project in the Autism area.  Many children with autism are not toilet-trained by their school-age years or beyond. A number of factors can make toilet training difficult for children with autism, including communication deficits, sensory and motor differences, general deficits in skill-building, and anxiety.  University of Rochester researchers Daniel W. Mruzek (a psychologist and autism expert) and Stephen McAleavey (a biomedical engineer) have developed an innovative toilet-training procedure using an electronic moisture pager and corresponding curriculum. The objective of the project is to further refine the prototype product and further field test it among children with autism.

Prospective Supporters can view information about the project here.

What are some of the possibilities you envision over the next few years?

We hope Innovocracy becomes the platform of choice for individual support for academic innovation.  In the future this may also span into opportunities for public and private organizations to co-sponsor projects to help increase their profile.

Are donations tax deductible?

The donations are currently not tax deductible but we hope to enable this in select situations in the future.

How will you measure your success?

Our current focus in on ensuring that our Launch Partners and initial Sponsors have a good experience on the site.  Over time, our success will be measured by the number of participating institutions and Sponsors as well as the progress that we have on further enabling innovation.

How can someone get involved?

If you are an individual, please check out our current Autism project to see if it may be of interest.  We will also be accepting a few more Launch Partners onto the platform to provide additional sponsor options.

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So it’s really no wonder that spending priorities in this country are biased toward the old, or that the biggest –and completely unfunded– spending boost for the old in the form of the Medicare Part D drug benefit occurred under the notionally conservative George W. Bush and a Republican Congress. It’s disappointing but unsurprising that the “brave” Paul Ryan approach to Medicare reform puts 100 percent of the pain on the younger generation. Of course Democrats pander to the aged, attacking any Republican move on Medicare as a burden on the old even when it’s exactly the opposite.

Medicare is the main cause of the United States government’s fiscal challenges and its inexorable growth puts a squeeze on other areas of discretionary spending. The result is wide and growing intergenerational inequity in federal spending. We’re also hurting the country’s long-term competitiveness by spending big money on expensive medical interventions for the old that yield marginal benefits while squeezing out incredibly high return on investment activities in early childhood intervention.

Don’t expect the old, and the baby boomers following them, to look out for the interests of the younger generations or to embrace significant policy changes. I would put more hope in a new party or movement that emphasizes the interests of those younger than 50 or 60. You can catch glimpses of the potential for change in the Tea Party, Ron Paul’s candidacy and Occupy Wall Street, all of which have an important or dominant youth component. But the Tea Party’s reactionary, anti-intellectual platform, Ron Paul’s idealistic sounding but impractical and naive approach, and Occupy Wall Street’s smugness and obsession with the economically successful are just not going to do the trick.

I don’t know where the youth movement will come from. My best guess is it could appear in the next Presidential election in 2016, when there’s a chance that younger Republicans, Democrats and Independents will find some common ground, supported by more enlightened sectors of the older population. An explicit focus on intergenerational equity would be a great element to add to the national debate.

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As Massachusetts policymakers debate what can be done to tame rising health care costs, let’s not forget that the overriding goal must be to improve the health and well-being of our state’s residents while spending less of consumer, employer and taxpayer money. In other words, we need better outcomes and better value for our health care dollars. Getting there will not be easy, but there are two principles everyone should be able to rally around: 1) the health care system needs a greater emphasis on primary care, and 2) it needs much more patient engagement.

There is ample evidence that expanded access to high-quality primary care is beneficial, and that it leads to improved prevention and control of chronic illness, better coordination of care, and a reduction in unnecessary emergency room visits and hospital admissions. As for patient engagement, a recent survey by the Commonwealth Fund confirmed what other research has consistently found – that patients who take an active role in their own care, “from self-managing a health condition to actively participating in treatment decisions,” experience higher quality of care and fewer medical errors.

Thanks to an ongoing collaborative effort among physicians, health plans, purchasers, and consumers, Massachusetts has powerful tools available to support the enhancement of primary care and patient engagement. For more than a decade, Massachusetts Health Quality Partners (MHQP) has been measuring, analyzing, and reporting on the performance of the state’s primary care physicians in two critical areas – clinical quality and the patient experience. MHQP’s latest report, which summarizes multiple dimensions of clinical quality for more than 4,000 primary care physicians at 150 of the state’s medical groups, was released this week. It is available online, at mhqp.org, in a format that allows for easy comparison and analysis.

The measurement and transparent reporting of clinical quality information equips patients and consumers to be much more actively involved in decisions about how to get the right care, in the right place, at the right time. In addition, the reporting of reliable, evidence-based data can help to drive improvements in medical practice. There have been numerous examples where physician groups have used the information in MHQP clinical quality reports to redesign care for patients with chronic conditions including diabetes and asthma, or to reduce costly, inappropriate care such as the overuse of antibiotics or the misuse of imaging for lower back pain. Statewide, primary care is improving, and MHQP is able to capture these trends. Although there is still too much variation among physician groups on some aspects of clinical quality, every measure that MHQP has tracked over the last eight years has shown improvement.

Regardless of what happens on Beacon Hill, the next wave of Massachusetts health reform is already upon us. In recent years, we have seen a growing movement toward changing the way physicians and hospitals are paid and the way medical care is organized and provided. If done right, these changes will help to improve the coordination, effectiveness, and efficiency of care, especially for people with chronic conditions and intensive medical needs. But getting the next phase of reform right means that the likely solutions to rising costs – payment reform and new “systems of care” like medical homes and accountable care organizations – will have to strongly emphasize high quality primary care, patient engagement, and an excellent patient experience.

With reliable, trusted data and actionable information on what works, who produces what results, and how performance can be improved, consumers, patients, and providers can all contribute to improving our health care system.

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I met today with CEO Avner Halperin, who gave me a tour of the company’s Waltham, Massachusetts headquarters and demonstrated the product. Governor Deval Patrick attracted EarlySense to Massachusetts as part of his trade mission to Israel, where EarlySense is based. I was introduced to the company a couple years ago by a client who was impressed with the technology, but Avner and I actually go way back. Until  recently, the last time I saw Avner was at DAR Constitution Hall in Washington, DC 27 years ago when Senator Bob Packwood gave the commencement address to the Walt Whitman High School graduating class, of which Avner and I were both members.

In this podcast interview Avner discusses the company, its technology, and the decision to locate in Massachusetts.

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Lin found that Asian ethnic groups in Santa Clara County who were known to have a traditional gender preference for boys had clearly lower female-to-male birth ratios than those Asian ethnic groups who did not have a preference.

“Mothers born in China, India, and Vietnam [have female-to-male birth ratios] that are well below normal, and those from Pakistan are much closer to normal,” Lin toldAuntMinnie.com. “Breaking it down by ethnic group is showing us that this is not simply noise or some kind of a random fluctuation. These are showing up where we expect them, in the ethnic groups where there is a cultural preference for boys.”

Elsewhere in California, however, counties that have continuing proliferation of keepsake ultrasound centers experienced alarmingly low BGRs among Asians in 2010, Lin said.

Low birth-gender ratios among Asians in urban counties in 2010 were as follows:

• Sacramento: 888
• Los Angeles: 889
• San Francisco: 919
• Riverside: 919
• San Joaquin: 927

“While we still don’t have a direct proof of cause and effect, we see a correlation that in counties like San Joaquin County and Sacramento County, [there's] a downward trend in BGRs, and at the same time, continued proliferation of these keepsake ultrasound centers,” he said.

The findings disturb me for the same reasons the practice is disturbing when it occurs outside the US. In addition, I worry that the findings have the potential to restrict access to abortion for everyone by pointing to signs of abuse.

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The article describes how advertisers are getting on the bandwagon, placing context sensitive searches on health topics. That’s leading to user concerns about privacy. If anything, the typical user is probably insufficiently worried about what they’re sharing. As I’ve pointed out (What if Google finds out you have cancer before you do?), search providers have access to a bevy of information that can provide a highly detailed profile of individual users. Since the time I wrote that post in 2007, social networks have taken that surveillance to the next level, by collecting information about online interactions with others. Mobile takes things even further by combining the same search data with information on a person’s movements and real-time location.

Users expect that a search for pregnancy would turn up an ad for a pregnancy test, but they might be a little more creeped out if their phone tells them that it’s likely they’ve just been exposed to HIV based on their location, who they’re texting and about what, search history etc. I don’t think that scenario is far-fetched. All the pieces are in place to make it happen.

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“Astonishingly, more than half of ObamaCare’s newly promised health insurance coverage was accomplished by assigning nearly 26 million more people to an already broken Medicaid program and telling governors, ‘Now, you find a way to help pay for it.’”

Actually the federal government will pay 100 percent of the cost of Medicaid expansion from 2014 through 2016 and 90 percent of the cost thereafter. Is that what you inferred from the prior paragraph? I didn’t think so.

It’s true that states are likely to incur some costs as a result of Medicaid expansion, but there are also offsetting savings. Supporters of health reform would also argue that there’s value in getting tens of million uninsured people into coverage.  The impact on states is a complex topic, which deserves serious analysis. If you’re interested, you may want to check out the Kaiser Family Foundation’s analysis.

The Senators are eager to pick on details of ObamaCare such as provisions impacting college students. But when it comes to their own plan they are laughably vague. Here’s the totality of what they propose:

“We and our Republican colleagues voted against the law two years ago and will continue to work toward a smarter, step-by-step solution that will make health care available to more Americans at a lower cost to the federal government, the states, and individuals seeking care.”

Sorry, Senators, but after two years of touting “repeal and replace” you’ve still got nothing to say about the “replace” part. If and when you do come up with something serious, I’ll be willing to bet it will be at least as easy to criticize as your beloved ObamaCare.

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Supreme Court

I expected that half this week’s submissions would relate to the Supreme Court’s deliberations on the Affordable Care Act. But there were only three posts on that topic, perhaps because other bloggers have the path of avoiding subjects where the mainstream media is pouring in tons of time and resources.

Two of the submitters are strongly convinced the Court will uphold the law. Maggie Mahar, writing at healthinsurance.org argues that “the hullabaloo is totally unwarranted… I cannot believe for a minute that this Court wants to go down in history as the Gang of Nine that quashed the most important piece of legislation that Congress has passed in 47 years.”

At Managed Care Matters, Joe Paduda cites a “general consensus of legal experts” that the individual mandate will be upheld, and notes that health plans are expecting the law to be upheld and are preparing “fast and furiously” for full implementation.

William Sage also seems to expect the law to stand. As he writes on the Health Affairs Blog, the first of 10 things he learned from Day Two of the oral arguments is, “Reports of the mandate’s death are greatly exaggerated.” Number 10 is, “Justice Scalia comes from another planet.”

The Way Back machine

While the SCOTUS posts are right up to the minute, two submitters take us back in time. Dan Diamond of the Advisory Board Company’s Daily Briefing dials us back to the Mad Men era of the early 1960s when the AMA approved TV scripts and half of adults smoked but few were obese. There’s a nifty infographic to sum it all up.

Julie Ferguson of Workers’ Comp Insider invites us back a further four decades to review a prescient 1925 article about telemedicine.

Wonks among us

The wonky core of the HWR is upheld by a some of our veteran contributors, who analyze various aspects of health care reform and the workings of the marketplace.

HealthBlawg’s David Harlow welcomes us to the world of health insurance exchange regulations and the difficulty most states have in getting their exchanges ready in time.

Kelley Beloff of InsureBlog shares her lack of enthusiasm for Medicare’s Sustainable Growth Rate approach and so-called “doc fix” legislation.

Financial incentives matter in health care, even in the Netherlands. That’s the conclusion posited by Jason Shafrin of Healthcare Economist. Abolishing cost-sharing boosted patient-initiated utilization. Introducing fee-for-service led to more physician-initiated utilization.

At John Goodman’s Health Policy Blog, Greg Scandlen explains that even though “almost everyone” says fee-for-service is the big problem in health care, “almost everyone” is wrong. He points to third-party payment as the culprit.

Consumer Operated and Oriented Plans (CO-OP’s) were the fallback position of Affordable Care Act supporters who championed a public plan. The CO-OPs have now been funded and the Robert Wood Johnson Foundation’s Pioneering Ideas shares an informative Q&A with CO-OP sponsor, Sara Horowitz of the Freelancers Union.

On the Disease Management Care Blog, Jaan Sidorov informs us that the chaos of EHR implementation destroys cues and reorders organizational habits, forcing a ground-up restructuring of clinical routines. Maybe we don’t need expensive computer systems, but can achieve the same results by tearing up paper charts and having docs start over from scratch.

Pfizer’s unprecedented efforts to defend Lipitor sales after patent expiration is bearing fruit after a slow start, reports Adam Fein on DrugChannels. That has big implications for the raft of blockbusters losing patent protection over the next year or two.

In California, a move is underway to limit out-of-pocket expenses. Anthony Wright from Health Access Blog shares the details.

Putting the patient second (or lower)

A few bloggers sent in posts that help remind us that not everything in medicine is “patient centered.”

Roy Poses of Health Care Renewal draws our attention to a convoluted attempt by the European Society of Cardiology to defend financial relationships among physicians, medical societies and industry. “It should be no surprise that it took a full page of the article to list all the financial relationships among its authors and such corporations. So in a self-referential way, this again demonstrates the hazards of conflicts of interest, in that they confuse the thinking of the conflicted.”

Can Someone Override Your Advance Directive? asks Amy Berman on the Health AGEnda blog. I think you can probably guess the answer. In this case it happened to a patient who was pressured to lift his Do No Resuscitate order by a surgeon.

Hospitals love high tech, pricey, and profitable robotic surgery and proton beam therapy as Gary Schwitzer shares in a series of posts here, here, here and here from Health News Watchdog blog. The marketing approach can be aggressive and inappropriate, we learn.

Well, well, wellness

Colorado may still be the least obese state, but even there obesity is now over 20 percent and rising fairly quickly. Louise Norris of Colorado Health Insurance Insider walks through all the key Colorado population health stats.

Corporate Wellness Insights’ Fiona Gathright has the perfect antidote to rising obesity rates and “sitting disease.”  No surprise, the answer is “awesome wellness benefits.”

Kindred Karnival

The very first edition of the HealthCare Social Media Review will be up next Wednesday on the HealthWorks Collective. “This carnival is intended to showcase posts about health care social media use, best practices, guides, resources, case studies, experiences, new techniques and technologies and new social media communities and tools.  We seek to spread the word that the use of social media in health care is becoming unavoidable and is of critical importance to both patients and providers worldwide.”

I expect this carnival to draw submissions from many in the Health Wonk Review community, and it’s conveniently scheduled on weeks HWR doesn’t publish. I’ll be hosting one of the first editions here on the Health Business Blog.

Finally, Wright on Health hosts the next Health Wonk Review.

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A newly published large scale study demonstrated that Type II diabetics who receive periodontal treatment have medical costs that are lower by $1814 per year compared to the control group. The savings held up over the three-year scope of the study. The concept is that oral infections worsen a patient’s diabetes; treating the infection improves the diabetes. From Health Leaders:

The study’s release coincided with United Concordia launch of a diabetes-specific program that provides 100% coverage for surgical procedures, other treatments, and maintenance for patients with gum disease.

“This is the most statistically conclusive study proving the relationship between oral health and medical cost savings. The savings are just the start of what is to come,” United Concordia COO/President F.G. “Chip” Merkel told reporters. “We believe that employers will realize reduced medical costs when their employees with diabetes receive appropriate periodontal care.”

Merkel suggests that a targeted approach to dental coverage would go a long way.

“The thought is you don’t need to cover everybody in the population,” he says. “The better thing to do is cover those targeted populations where we can show savings and where we know an intervention program of information and assistance will help them get in and get the treatment they need.”

I don’t doubt that the study sponsors have a commercial goal in mind, but it seems to me the idea of expanding dental coverage, especially for populations like diabetics, is a smart thing to do.

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Here’s a video clip from 2008 highlighting Obama’s opposition to forcing people to buy insurance. It may load a bit slowly, but in the first 60 seconds you’ll see him criticize John Edwards and Hillary Clinton for their support of the mandate.

Meanwhile, Mitt Romney was firmly on the side of the mandate. On April 11, 2006, shortly after passage of health reform in Massachusetts, Romney had an op-ed on the Wall Street Journal’s OpinionJournal, where he explained the mandate this way:

Some of my libertarian friends balk at what looks like an individual mandate. But remember, someone has to pay for the health care that must, by law, be provided: Either the individual pays or the taxpayers pay. A free ride on government is not libertarian.

It will be ironic if the Supreme Court strikes down Obama’s signature legislative accomplishment based on the unconstitutionality of a tenet supported by Republicans and Obama’s Democratic opponents, but not by Obama himself.

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Massachusetts is an expensive state for health care. In fact, our per capita costs are the highest in the country. Costs were high before health reform and have continued to rise since the universal coverage law was passed in 2006, but the law had little impact on the rate of spending increases. If anything, Massachusetts costs have risen a little slower than the nation’s as a whole. That doesn’t mean the law is a failure, because cost control was not its objective.

High costs in Massachusetts are attributable to a number of factors. We’re a high cost state to begin with so most things cost more here. We tend to use expensive academic medical centers even for routine services. Our population is older, richer and has better insurance than the US as a whole. We have a lot of specialists and a few provider organizations with substantial pricing power.

The main driver of rising spending is rising prices for health care services. Higher utilization is a factor, too, but not a big one. There are big geographic differences in per capita spending, which is a function of utilization and price. Higher prices and utilization are not correlated with better outcomes.

There are some lessons in this analysis that are applicable more broadly, and others more specific to Massachusetts. The more universal lessons for me are:

• Pricing is an important issue. One person’s cost is another’s revenue, so payment reform initiatives need to be thought through and implemented properly in order to succeed
• The lack of correlation between price or utilization and outcomes means resource use is far from optimal. If anything the baseline for planning and policy should be low price and low utilization, unless someone can prove that more is better
• Better plan design that exposes consumers to the consequences of their choices could help restrain cost growth or even reverse it

At least in the Massachusetts context, it’s reassuring to see that reform has achieved its coverage goals without the undesirable side effect of increased per capita spending. With near universal coverage in place, Massachusetts is ready to tackle costs. With good analysis, appropriate policies, goodwill and a bit of luck we may make some progress.

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RomneyCare/ObamaCare was and is workable in Massachusetts. Low baseline rates of uninsurance, high incomes, low unemployment, innovative non-profit health plans and providers, along with enlightened attitudes toward the potential of government to do good are all contributors.  The state’s economic strength is largely a product of its highly educated workforce, which can command high wages. It’s a heck of a lot easier for a company to pay a $10,000 insurance premium for an employee who makes $100,000 rather than one making $25,000. In Massachusetts we had the luxury of being able to afford to put everyone into comprehensive insurance, and then start tackling costs as we are doing now.

Would RomneyCare work in a state like Texas, with lower wages and higher rates of uninsurance? The answer is no. Unlike Massachusetts, Texas can’t afford to pay subsidies to all the low income and middle income people who are uninsured. And, taken as a whole, their employers are much less able to afford insurance for Texas workers. So Texas faces a different and less palatable set of choices than Massachusetts. If they want to get everyone into coverage, they have to settle for coverage that’s stripped down and/or they have to raise taxes or do more cost shifting from the commercial market. If they are satisfied letting people fend for themselves, they have to settle for wide disparities in access.

ObamaCare does have a chance of working in Texas, because it brings with it a pile of federal money that helps make the tough tradeoffs go away.

So maybe Strassel should give Romney more credit. If Romney asserted that each state should tailor its own solution, it would mean acknowledging reality. And in this Republican primary season, reality is not on the ticket.

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Somehow I doubt the GOP is really sincere in its criticism, because the much-maligned Patient Protection and Affordable Care Act actually does have important cost control provisions in it. One example is the Independent Payment Advisory Board, which the House voted to repeal today. Republicans don’t like IPAB because it would lead to “rationing” –which is just a pejorative term for health care cost control. They somehow think passing malpractice reform will save an equal amount of money. Very wrong they are on that one.

Another provision requires health insurers to justify rate increases above 10 percent. The capitalist in me doesn’t like this one, but from a practical standpoint it does put pressure on health plans to keep rate rises down to avoid being on the naughty list. They do it by negotiating harder with providers to keep reimbursement under control.

Where are the serious GOP alternatives to the Affordable Care Act?

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The letter asserts that the authors neglected to account for the likely wave of nurse retirements and that the projections depend on the continuation of interest of students to go into nursing, which the study authors say is uncertain. Here’s the key sentence: “In fact, misleading reports about the end of the nursing shortage may convince prospective nurses to seek careers in other field instead.”

In their reply, the study authors largely agree with the letter writer, except they point out that their study does in fact account for retirement. Frankly I don’t see the point of publishing this exchange since everyone agrees with one another and the one substantive assertion about methodology in the letter is false.

I’m going to presume that my January Nursing shortage. Is it a case of crying “wolf?” is one of the so-called misleading reports the letter writer refers to. If I’ve discouraged someone from going to nursing school, so be it, but for the record, if you want to go, by all means do it.

The same authors have a similar article in today’s New England Journal of Medicine, and unlike the Health Affairs article, this ones seems to be open access. You can read about their sophisticated workforce model that takes into account many factors and concludes that a nursing shortage is likely to re-emerge in the near term.

My issue with the workforce projections is that they don’t take into account long-term technological change, but simply assume that nurses will be used as they are today. I’ve taken  heat for writing that robots will replace a lot of nurse functions over time. People seem to be offended by that notion and have accused me of not having sufficient appreciation for the skills nurses bring.

So let me try a different tack. Think about some of the job categories where demand is being tempered by the availability of substitutes. Here are a few I have in mind that have similar levels of education to nurses:

• Flight engineers. Remember when commercial jets, like the Boeing 727 used to fly with two pilots and a flight engineer? Those planes were replaced by 737s and 757s that use two member flight crews instead.
• Junior lawyers and paralegals. Legal discovery used to take up many billable hours for large cases. Now much of it is being automated
• Actuaries. Insurance companies used to hire tons of them, but their work can be done much more efficiently with computers

I don’t know exactly how the nursing profession is going to evolve but I do notice that the advocates for training more nurses are typically those who run nursing schools rather than prospective employers of nurses, such as hospitals.

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I was surprised again today when I read about a Medco study indicting that 26 percent of US women took a drug for depression, anxiety or attention deficit disorder in 2010. That’s up from 22 percent in 2001. (For men the corresponding numbers are 15 percent in 2010 and 12 percent in 2001.)

It can’t really be the case that more than one in four women suffers from these disorders, can it? And even if so why are so many getting prescriptions when there are other treatments that don’t involve medication?

According to David Muzina of Medco’s Neuroscience Therapeutic Resource Center:

“These findings confirm that mental illness is a growing problem in the United States and that more patients are seeking needed therapy.”

Actually I don’t agree. The study confirms that more people are getting drugs for mental illness. It doesn’t confirm mental illness is a growing problem or that patients are getting needed therapy.

I’d like to hear from anyone with insight into what’s going on here.

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• If you took middle school civics, you may recall that the President doesn’t repeal laws himself. That duty is reserved for Congress. If Republicans retain their House majority and take control of the Senate, they may be in a position to move things along. But it’s far from certain that Presidential coattails would be long enough to give the GOP a filibuster proof majority in the Senate
• Some popular provisions of the ACA will be hard to take away, such as the right to keep dependents on coverage until age 26 and the restrictions against using pre-existing conditions as a way to deny coverage
• Romney says he’ll grant waivers to the law from all states, but that depends on states requesting the waivers. Some will, some won’t
• If the law is repealed it has to be replaced with something. That something will be a tough sell –assuming Republicans can even agree on what it is
• Repealing the law may drive up the deficit, depending on how it’s done. That may mean having to look elsewhere in the budget for cost savings… or tax increases (disguised as something else, of course)

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• The plan is mainly focused on facing up to the scale of the crisis in Medicare funding, rather than just scoring political points or pressing an ideology that’s disconnected from reality
• It kicks in soon, rather than trying to grandfather in everyone anywhere close to retirement like the Ryan plan
• It moves the eligibility age up 3 months per year, which is fast enough to make a difference, unlike Romney’s month per year idea
• It puts steep limits on premium subsidies to beneficiaries with $100,000 or more of income, which rightly does away with the notion that anyone who’s paid into Medicare should be able to get a free ride

I doubt it’s feasible to toss everyone into the federal employee program without destabilizing it, but it’s not an unreasonable starting point.

If this plan or something like it comes into being, it will significantly reduce spending growth and enhance intergenerational equity. And actually, the proposal would make Medicare’s approach a lot more like the Patient Protection and Affordable Care Act (PPACA/Obamacare) approach than it is today, which ultimately maybe could bring the country together. Ok, I’m not holding my breath on that one.

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The next edition will be hosted here at the Health Business Blog on March 29.

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According to today’s Wall Street Journal (The Robots Are Coming to Hospitals) it’s already starting to happen. So far at least, the staff are welcoming the robots and don’t feel threatened. But there are only about 1000 such robots deployed nationwide. Attitudes may change when it becomes clear that these are not novelty items, but serious competitors to humans in performing important but routine tasks. There’s no reason robots can’t continue to expand their roles into more and more of what humans do. (Maybe there will be a new version of the John Henry story to read to the kids.)

There’s good news in this if hospitals use robots to decrease costs and increase the reliability of processes, which is what I expect. There’s certainly the potential that something will be lost in the way of human contact. But at least for some patients relying more on robots and less on people will be a comforting thing. Think of the patient or family who’s scared to push the call button again for fear of getting on the nurse’s bad side. If things are done right, nurses will actually have more time to perform the most high value, personalized functions, and job satisfaction will increase.

All this supports my view that the pending nursing shortage is nothing to worry about. To the extent that nurse workforce predictions fail to account for the tasks that can or will be done by robots, they will exaggerate the number of nurses actually needed. Nursing will be an entirely different profession a generation from now, and many of the low skill jobs in hospitals will disappear completely.

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In fact, if you forget for a moment the bitter partisan divide over the Patient Protection and Affordable Care Act (PPACA or ObamaCare), it’s easy to make the conservative case for a health insurance mandate.

The Sacramento Bee writes about the rapid rise in million dollar plus hospital bills in Northern California –3,000 such bills in 2010 alone. They describe cases including a newborn with a serious illness, a 28 year old with liver cancer who needs a transplant, and another man who got drunk and crashed his car into a tree. All generated bills topping $1 million.

All of these patients are receiving treatment despite an inability to pay. And that’s how it should be. But those unreimbursed costs are being covered elsewhere in the system: largely by purchasers of private insurance who pay higher premiums as a result. In other words, people without insurance who wrack up big bills are freeloading off of those who are insured.

If you die without life insurance, you won’t get a payout. No car insurance? Don’t expect someone to pay for your car to be repaired. No homeowners insurance? If you’re burglarized you’re out of luck. But health care is different, because you’re not denied benefits even if you fail to purchase insurance.

Romney was criticized –even by supporters—for his casual offer to bet Rick Santorum $10,000. It seemed to some like such a big pot of money as to be crazy to talk about, even though as I pointed out, $10,000 doesn’t buy much health care. But folks who oppose mandates to buy health insurance and who have trouble contemplating $10,000 need to get their minds around bigger numbers like $100,000 and $1,000,000. Because those are the sorts of figures they may stick the rest of us with by not having health insurance.

Mandate opponents want to frame the issue as the government forcing people to buy something they don’t want. But a more accurate way is to describe purchasing insurance as a way to take personal responsibility to avoid imposing economic harm on others. I wouldn’t want the country to shift in another logically consistent –but immoral– direction of denying care to people who don’t take responsibility in advance. People don’t want to get sick and run up a huge bill, but they can’t really avoid it if something happens to them. So the complaint about being forced to buy health insurance is childish and self-centered.

In the name of personal responsibility I support a mandate to buy catastrophic coverage. Due to the way health care is delivered and priced, it makes sense for almost everyone to purchase comprehensive insurance that covers routine services, too. But I wouldn’t require it.

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Cline is happy to receive frequent calls from a nurse who coaches her on diet and exercise and coordinate her medical and social work appointments. And Advocate Health is confident in generating a substantial financial return on its investment in such care coordinators, because it is paid by Blue Cross as an ACO, presumably receiving a fixed fee per member rather than billing on a fee for service basis. As Advocate’s chief medical officer tells the Times, “It’s more than just economics. It’s the right thing to do.”

That’s good to hear, because for too long providers that do the right thing (like preventing hospital admissions where possible) have suffered financially rather than reaping any kind of reward. Putting the financial incentives in the right place is a smart and obvious idea that’s too often absent. ACOs won’t get things exactly right but they don’t need to. Most doctors and hospitals aren’t driven purely by financial goals, so as long as the incentives are directionally correct –in that they don’t get punished for doing what’s clearly the right thing, then it’s ok.

The HMO backlash in the 1990s was overblown and we’re still living with the consequences. It was easy to find horror stories about patients being denied needed care, but in truth most restrictions weren’t terribly onerous and patients could navigate their way around if they tired hard. Managed care did hold costs down for a few precious years and employers didn’t do nearly enough to defend the insurers when the backlash began. As a result we reverted to non-managed managed care such as Point of Service (POS) plans that were basically glorified fee for service arrangements.

There’s a great deal more understanding today that health care costs simply have to be contained. And yet there’s a serious danger that partisan and ideological attacks and charged words such as “rationing,” “government overreach” and “death panels” will set back the cost containment movement.

ACOs are far from perfect and are not the last word in health care cost and quality approaches, but it’s good to see them getting some favorable press.

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And yet just about the best thing that could happen to Romney is to make it through to the nomination while being considered a moderate by the GOP faithful. Is someone who thinks Obama is a communist Muslim Kenyan really going to be any less likely to vote for Romney than Gingrich or Santorum in the general election? Meanwhile, the independent (aka, moderate) electorate that decides the election will be a lot more likely to vote for Romney when they learn he’s not right wing enough for the purists.

People who care about health care aren’t going to be impressed when they read Santorum’s plans for health reform. If Santorum’s platform were a high school essay it would come back from the teacher with an F for poor logic, lack of originality and  inappropriate use of CAPITAL LETTERS. Santorum basically wants to repeal the Affordable Care Act and replace it with a mishmash of slogans and tired non-fixes from the scrap bin, like the idea of allowing insurers to sell insurance across state lines (another way of saying usurping states rights when it’s convenient to do so.)

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On the pro side, Bruce Gary of Rhinelander, WI asserts that since many employees are subject to random drug tests as a condition of employment, there’s nothing stigmatizing about requiring welfare recipients to receive their funds. That’s a reasonable argument.

On the con side, Peter Provet from Odyssey House in New York City argues that there’s no reason to limit the testing to the poor. “Why not test all students in state-funded schools and mothers who giver birth in publicly funded hospitals?” I think you could take that logic even further and test everyone who receives Social Security or uses a public road.

Jim Karavite of Royal Oak, MI points out that children could end up suffering unjustly for the sins of their parents.

I see the merits of the various pro and con arguments but mainly come down on the con side overall. In particular, testing sounds great but is expensive to administer and leads to false positives that are difficult to overcome. It’s also no substitute for a comprehensive education, treatment and testing program. Provet’s point about other public programs is good food for thought, but Rhinelander also has a good argument that parallels employment and government payments.

Ultimately, this push for testing strikes me as a distraction and a wedge issue.

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Williams:            This is David Williams, co-founder of MedPharma Partners and author of the Health Business Blog.  I’m speaking today with Tom Abshire, senior vice president of product marketing and member engagement for Virgin HealthMiles.  Tom, thanks for being with me today.

Abshire:            Thank you David.

Williams:            What is Virgin HealthMiles?

Abshire:            Virgin HealthMiles is a business that’s focused on three things for our clients: 1) helping them create a motivating and engaging environment around their health and wellness program, 2) helping them measure those outcomes, and 3) helping them manage the success of their health and wellness strategy.

Williams:            How does Virgin HealthMiles fit in with other Virgin businesses?  How closely is it tied?

Abshire:            We’re one of the 40 companies that comprise the Virgin group.  It’s not common knowledge that Virgin has been investing in health and prevention since the 1970s.  We’re a part of Virgin’s health sector, which includes other health related businesses like the health clubs or Assura Medical in the UK.  That’s an area that Richard Branson is passionate about; creating companies with a social mission and impacting the global issue of preventable diseases.

Williams:            A lot of people do wellness programs and there are many standard approaches.  I’m wondering from your perspective, what’s wrong with those standard approaches to wellness that are used by most employers? If the standard approaches aren’t very successful, why do we see them persist in the marketplace?

Abshire:            Standard approaches just aren’t as effective as they need to be.  Much of the cost of health care and the increases are driven by preventable lifestyle related diseases.  That’s where wellness is supposed to be at the forefront of prevention and reversing those trends.

They persist as much as anything because of inertia.  They keep coming back to the same old things with the same old partners and getting the same results.  Much of the approach to wellness has been driven by the tradition of the medical system with which we evolved. There’s too much around last century’s focus on communicable disease when the answer was ‘do this’ or ‘don’t do this.’  It was more of a point in time issue.  The top down approach like what we have today really made sense.

Health issues today, the issues of lifestyle related diseases, are largely behavioral, so the fix needs to come from within.

That’s why Virgin is leading the way with our consumer group.  We think about the problem from the point of view of the individual and their motivations and helping them find the simple things they can do to stay healthy.

Williams:            Wellness is a topic that a lot of companies are interested in. There’s a feel good and positive image that can be created by investing in wellness, but does wellness have a real impact on profitability?

Abshire:            It certainly does.  Look at the economics behind the treatment of diseases and the impact on profitability. We know we have to do something.

Our group did an economic study last year and found, looking across different industries, that for the average company in a leading industry like technology or financial services, the impact over the next ten years of lifestyle-related diseases alone would cause about a 25% reduction in per employee profitability.  Even the profitability leaders would see a 10% reduction in the average profitability per employee.

They have to do something unless they can raise prices or change behaviors.  That’s where wellness really comes into play.  That’s where more employers are going to see more of an impact on profitability.  There would be fewer consumers for the health services that they’re paying for and providing.

Added to that, there will be benefits in a couple of different ways; lower health care costs and higher profitability.  There is quite a bit of research out there that shows a large part of the positive impact of the healthy employee base is the increase in productivity.  Sometimes there is two to three times the cost savings that one would see in the savings from medical care costs alone.

As we come out of the current economic struggle, retention of top talent is going to be critically important for companies.  We hear all the time through our interactions with employees how they love programs that they feel part of and enabled by because they feel that that’s much more of an investment in them by their employer. It really drives up loyalty and cohesion within the culture for the company.

Williams:            What are the main tenets of Virgin’s approach?  I know you refer to them as “breakthrough.”  Why is that term justified?

Abshire:            As I mentioned, we’re building the business along three ideas: motivation, measurement and management.  These are breakthroughs because they address the two biggest blockers for success and prevention today.

The first blocker is that the vast majority of employees are unaware or uninterested in the health and wellness services available to them.  We’ve seen it in our own research, outside research and in discussions with our own clients, that in the best case, two-thirds of the employees don’t know about the programs and services that are offered to them.  In some cases as many as six in seven employees didn’t know what their employers are offering.  Health and wellness can be impacted simply by increasing awareness and preferences to act in that employee base and with increased engagement, best case of four or five times.  That’s a very consumer marketing kind of notion.  That’s why Virgin has come into this, helping people understand what’s available and guiding them down the appropriate path that makes sense for them.

The other area that we’re really striving to make a breakthrough on is the whole notion of managing.  A number of employers that we speak to think these programs are manageable just like any other core business process, but the great majority don’t have the information they need to make good decisions.  An awful lot of the information in health and wellness is focused on defining the costs. They will tell us what the costs are to a high degree of detail, for example what the costs are for coronary artery disease or surgery or a stent. They can tell us all kinds of information about those costs, but typically providers today can’t answer simple questions like: did the person smoke, and were they offered a smoking cessation program?

Our goal is to help organizations manage broadly across behaviors and programs people are engaging in, to measure results of those programs, and actually make health and wellness a business process for companies to manage.

Our breakthroughs are around alignment and transparency.  Our approach is centered on aligning the employee, the company and the culture to be healthy and active and driving forward in a productive and positive way.

We’re also working to bring other program providers into this. It’s the success of the client’s strategy, not an individual program that we’re trying to empower, to enable success across the value chain.  That’s a breakthrough today.

Secondly we’re providing real time information to employees on what they should do and what’s most important or relevant to them.  For employers we’re doing much the same, but in this case it’s helping them understand their baseline and what they seem to be doing that’s working for the employees and where they need to focus in the future to have even greater impact from their strategies.

Williams:            What sort of changes should we expect to see in wellness programs over the next five years or so other than coming closer to your model? Are wholesale changes likely?

Abshire:            As I am out and around and talking to people in the industry, I’m really excited about what we can do for consumers.  As I said, the goal here is to make this something that’s more internally driven versus the top down approach we’ve had for the last 20 years or more.

Just thinking about today’s wellness programs and strategies and how they’re delivered to the employee or consumer, often times there are programs where each is an island unto itself. This forces the employees essentially to be their own health strategists.  I’m excited about what we’re doing, what other companies are doing around trying to align a more common user experience that improves the individuals and the organizations, that build the drive toward wellness and productivity through their actions and their cultures. Wellness becomes something we do within our organization and within our own motivations, as opposed to something provided to us by a third party.  I think that’s critical.

One of the big challenges is that we are running out of options.  Most of the health and wellness strategies and plan design strategies we’ve had in the past have been more about shifting costs than they have been about reducing demand and reducing costs. We’ll see more transparency from individuals and organizations to look at what’s working and what’s providing value because they’re going to have to do that.  There’s not money in the system to keep increasing the cost to employers. The strategies of the last several years of shifting costs to consumers through high deductible plans or through co-insurance can’t continue. We see these eight to ten percent increases in health care costs each year consuming that disposable income as those families have to pay the higher expenses.  So since we’re just about out of resources we have to look at things differently and be more efficient with the resources we have.

Williams:            Tom, anything that I missed in our discussion?

Abshire:            David, I thank you for inviting me and giving me a chance to speak to you and your audience.  It is a really exciting time to look at different options.  We’re seeing a lot more sophistication from clients who are searching out new ways.  People are becoming much more familiar with the notion that we have an internal motivation driven problem today and not something that can be solved externally.  I’m very excited by what is coming over the horizon.  People like ourselves bring together ideas like incentives and game mechanics and social and are using those in a more tried and tested way to have an impact on this problem.  One of Virgin’s interests in this is creating an organization that solves a problem. We think this is one that’s really important and worth solving.

Williams:            Great.  Tom, thank you very much.

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Some medical debt is like the real debt described above, but a lot is not. Hospitalized patients receive bills that are often indecipherable, incorrect, and owed by an insurance company. Even when technically correct the amounts can be non-sensical and vary widely from provider to provider. Patients don’t voluntarily incur these expenses –sometimes they aren’t even conscious when the decisions are made. Unlike in typical industries, providers charge patients vastly different amounts for the same services. They often charge the most to those who lack insurance and have lower ability to pay. They also expect a significant percentage of patients not to pay at all. In fact, hospitals may even boast about how much “uncompensated care” they provide.

That’s why Medical bills can wreck credit, even when paid off struck a nerve. The article describes the plight of consumers who paid off medical bills after they were referred for collection, and yet found their credit ratings dinged. There are a variety of anecdotes:

• A couple paid off a $200 bill sent to collections, then found they couldn’t get a mortgage because their credit score had fallen dramatically. Turns out the $200 bill was in error to begin with
• A breast cancer survivor was placed in handcuffs at the end of a chain of events prompted by the failure of a hospital to place her in the charity care program
• An Iraq vet had trouble refinancing his home because a bill that was still in dispute was referred to a collection agency

It’s a bit shocking that even medical bills that are paid off –sometimes just to end the nuisance– can have a long-term, negative effect on one’s credit rating.

Congress is debating the Medical Debt Responsibility Act that would force credit rating agencies to delete paid off medical debt from credit reports within 45 days. That seems quite reasonable to me, especially since we’re talking about debt that’s actually been paid.

I don’t begrudge providers the right to send debt to collection. The reality is they have to collect at least some of what’s owed, and there are plenty of people who seek to avoid payment if they can. But a credit report should differentiate between medical debt and real debt.

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Williams:            This is David Williams, co-founder of MedPharma Partners and author of the Health Business Blog.  I’m speaking today with Jeff Tangney.  He is co-founder and CEO of Doximity.  Jeff, thanks for being with me today.

Tangney:            Thanks David.  Great to be here.

Williams:            Jeff, with so many existing social networks out there, why would you start a new one?

Tangney:            Good question.  All of us feel we’re getting all these notifications and updates and requests, but as a physician, there’s actually no good way to communicate with other physicians.

Email is illegal because it’s not HIPAA compliant. Neither is texting.  Today, if a physician wants to get –for example– a lab value on a patient that they saw last week, most of it happens over the fax machine.  In fact, 15 billion faxes were sent in health care last year in the United States.

We’re making that whole process a little easier, a little bit more like the teenager sitting in the patient waiting room on Facebook or Twitter and a little less like the 1970s.

Williams:            It’s amazing –the fax machine.  It’s the seventh birthday of the Health Business Blog; seven years ago in one of my first posts I wrote about my disbelief that fax machines were still around.  And they’re still with us today.  Maybe in another seven years they’ll slow down a bit.

Tangney:            They’re going strong.  Our goal is to rip it out of the wall.

Williams:            You mentioned similar functionality to Facebook or other mainstream social networks.  How does the functionality of Doximity compare to LinkedIn or Twitter or Facebook?

Tangney:            Reid Hoffman from LinkedIn has a good quote which is that today’s online social networks are really just representations of the offline networks that we’ve had for lifetimes. Facebook is the backyard barbeque, LinkedIn is the corporate office; who’s getting promoted, who isn’t, and Twitter is the bar; people talking about the latest news.

We’re bringing in the hospital; the place where you can have those HIPAA compliant discussions.  We offer authentication of every user.  You not only tell us you’re a doctor, you have to prove that you are.  That allows folks to have HIPAA compliant discussions about patients.

We work on the iPhone, the Android and the web.  About three-quarters of our use is actually on mobile devices because doctors are more mobile than your typical professional.  They can take a photo of a tough case on their iPhone and post that.   We offer iRounds, a curbside consult forum organized by specialty.  That’s not something you would find in your typical forum.

We also do a lot in pre-loading. We pre-populate the CVs of all of our doctors.  We know what articles they’ve published, what clinical trials they’ve done, what insurance they accept, their office phone and fax from a number of public databases. So that even if someone is not yet a member of the network  (and today we have about 8% of U.S. physicians as active members) another doctor can still look them up and find their basic office, phone, fax and clinical history.

Williams:            Do you integrate with other social networks like for example Twitter?  Some of the things I tweet might still be relevant within Doximity.  Is there a way to bring tweets over the wall or is that not part of what you do?

Tangney:            David, I’m guessing you’ve used the product.  Yes, actually that’s one of the popular features.  Doctors who are on Twitter can actually tweet and add a #dox.  You’ll see it in a lot of places these days and that will automatically bring it into their Doximity stream.

Also we integrate with LinkedIn and Facebook.  A lot of people pull over their profile.

Our goal is to provide a place that is safe to talk about patient issues.  It is recreating that offline doctor’s lounge in some ways.  Integrating with these other networks we view as positive.

Williams:            There are some physician-only platforms already.  Sermo is one example. Your prior employer, Epocrates is another platform.  Is there a relationship between Doximity and those?

Tangney:            Sermo is a physician only network, but all the physicians who participate in it are anonymous so that they have a “handle,” nightdoc2 for example.  The discussions tend towards politics.  It’s an interesting social case study.  When you let people wear masks, they have a different discussion than if they’re there as their real person.  There’s a place for Sermo, but we’re offering something quite a bit different.  When you have a real name authenticated network, people discuss different things.

I was one of the two founders of Epocrates and was president and COO for about ten years.  I have a long history and great knowledge of Epocrates.  I left there about two years ago.  We do partner with Epocrates on some things.  Epocrates really isn’t a physician network.  It’s a clinical reference that’s used on iPhones.  We’re evaluating other partnership opportunities that are down the road.

Williams:            One topic that people are always interested in as it relates to social networks is the business model.  What kind of a business model do you have today and what are you expectations about its evolution?

Tangney:            Today we make money from market research firms; Gerson Lehrman Group, Coleman Research Group.  Such firms paid over $100 million last year to physicians in the U.S. in honoraria, typically to talk with someone who needs their expertise.  It’s a hedge fund manager who wants to know what you think of this new stent that just got approved or it’s a medical malpractice lawyer who wants your quick opinion on who the top experts in this area might be.

We require that they pay our doctors a minimum of $250 per hour. In most cases it’s been around $500 per hour. We provide them a LinkedIn for doctors, a place where they can find who really is the expert on specific subjects  –for example neuroendocrine tumors because they have a reporter who wants to talk about Steve Jobs’ disease.  We charge the market research firm a matchmaking fee of $200 per doctor. It’s been a decent revenue source for us and for our member physicians.

Down the road this certainly will evolve.  There are a lot of other directions that we can go.  We have some hospitals, some alumni associations who are partnering with us and paying us to host their medical networks.

As we learned at Epocrates there are a lot of different players who are interested in a physician audience.  Physicians make billions of dollars of decisions every year. Our goal here is like we did at Epocrates, to walk that line, not to make it crass advertising but to offer platforms for folks to communicate about the newest treatments, the newest CME and those types of things.

Williams:            You mentioned that you have about 8% of U.S. doctors on your platform.  Say a little bit more about that in terms of what the typical user profile is and also how you measure utilization.  What are the metrics that are relevant here and what are you achieving?

Tangney:            We are 8% today.  We’re adding about 1,000 new doctors a week right now so we’re continuing to grow at an accelerating pace.

Our average physicians have profiles that are 57% complete.  That means that they have filled out more than half of the fields that we have on our profiles; education including undergrad and medical school, residency and fellowship, work history, clinical interests, faculty, photos, titles, the insurance they accept, and ACOs or medical groups they’re part of or affiliated with or hospitals they’re affiliated with.  Those are the various things that are all very searchable.  Our average user fills in slightly more than half of those.

Our utilization is something that we look at very closely.  We have utilization that is several times LinkedIn. We have about three times as many U.S. doctors on Doximity as are currently on LinkedIn.  Our utilization s well above 10% per week that are coming back and using us to send a message to another doctor or read a news post on iRounds.

As we grow the network, we see that people are finding more people that they know and are more and more likely to use it.  That engagement stat we measure on a weekly basis and it’s continuing to grow.

Williams:            Can you provide an example of a doctor using Doximity to achieve something for a patient that would not have been possible without Doximity?

Tangney:            We’ve got a bunch of examples.  We’ve had a least a dozen major cases solved on iRounds.  One example is a pediatric gastroenterologist in Texas who is the expert in Texas on treating pediatric gastric disorders. He had a patient who he just couldn’t figure out and he posted about the patient in a moment of distress; “Does anyone know what to do?”  He got a reply from a doctor in California who was just finishing a clinical trial on a new type of treatment that has been recently published.  Through that dialogue he was able to find a new course of treatment for his patient and solve her problem.

We had an ER doc, a surgeon who posted about a patient he had seen who had accidentally swallowed a metal bristle from a grill brush.  It had mistakenly gotten into his hamburger and it perforated his intestine.  He posted it as what he called a fascinoma; an interesting and rare case.  He actually found two other emergency room physicians who had encountered the same thing in the last year and so now they’re asking, ah ha, I wonder how common this is.  They are writing a paper on safety standards around grill brushes because if grill brushes are a problem and will perforate bowels across the U.S. they thought that they should bring that to people’s attention.

Williams:            My image of somebody who would be on a service like Doximity is somebody younger, maybe right out of residency.  Is that accurate or what are you seeing in terms of diversity of profiles and users?

Tangney:            Our average age is 40, but it’s a bimodal distribution.  In other words there are some of the young doctors –fewer residents but more fellows.  These are folks who have just finished ten years of training and are hanging out their shingles now, for example as a thoracic surgeon. They are super connectors.  They are the ones who have the greatest business need to stay connected to primary care physicians and referral sources in their areas.  They have the greatest number of colleagues on the network.  They have the greatest amount of activity.

Then we see another bump in the late 50s where you see physicians who realize they’re falling a little out of touch or that they have more time to reengage with some of this technology.  They’re great.  They’re some of the best responders to these types of questions because they have decades of experience and they’re in a place where they have some time now to give back, to mentor, to help folks who haven’t had as much experience.

You’re right that the busy years in the middle, those 40s, they’re our later adopters.  The users are mainly younger docs.  Then we have little blip again in the late 50s and 60s.

Williams:            Doximity strikes me as tool that would be very useful for an independent physician.  How does it fit in with some of the trends toward provider integration?  I’m thinking about phenomena like patient centered medical homes or accountable care organizations.  Would you see yourself having corporate customers or people that are using it as more of an enterprise product?

Tangney:            Yes.  You’re right that private practice physicians see us as having value as a referral network tool, absolutely.  We have 600 doctors from Kaiser Permanente who are in our network, which is more than I ever expected to get.  When you boil it down, even though they’re inside Kaiser and don’t worry about referrals very much and it’s a completely closed system, they still need to collaborate. The tools that they have today don’t have secure texting –and we do.

They don’t have a quick way of pulling up their colleagues’ training just to see for example who wrote the paper on laparoscopic hysterectomies.  We provide them an easy way of doing that and that’s an additional social layer over a lot of the EHR and other systems that they’re currently using.

Williams:            I’ve been speaking today with Jeff Tangney.  He is co-founder and CEO of Doximity.  Jeff, thank you very much for your time.

Tangney:            Great, thanks David.

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Jeff co-founded Epocrates and helped run the company for 10 years, so he knows a thing or two about physician needs. Doximity is optimized for mobile platforms and also provides its users with the opportunity to earn extra income through partnerships with expert networks. About 8 percent of US physicians are currently signed up and using the service.

I have to admit I’m also fond of the company’s name. In an era where it’s hard to find an original name they were clever enough to combine “doctor” and “proximity” into a smooth sounding word that describes the service well, is easy to spell and is not too long. It also sounds like oximetry.

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The $136.1M Blue Cross figure equates to less than $50 per member per year (they have 2.8M members), which is equivalent to about 2 primary care co-pays or about 1 day of what my business pays for a family premium.

CEO compensation is quite restrained as well. The Blue Cross and Fallon CEOs are in the $800,000 range, or about what a moderately successful orthopedist makes. At $1.2M, Harvard Pilgrim’s CEO is getting close to the income of a typical fertility specialist, and at $1.7M the Tufts CEO is at the level of a law firm partner. They are far from the highest paid people in Massachusetts and frankly I don’t see how they could be expected to make less.

With that said, I’m definitely unhappy with the fact that premiums have risen relentlessly. We’ve experienced annual double digit health insurance premium increases since opening our consulting firm 10 years ago. None of our other major expenses have grown at that pace.

Health plans aren’t the biggest cause of cost increases. Pressures come from providers (hospitals and physicians), suppliers (pharma and device), employers (who fail to embrace better managed care) patients (through increased demand) and government (through reimbursement policies and regulations). But for too long health plans were overly complacent about overall costs. Plans are becoming more aggressive about cost control now as they react to demands from customers, regulators and the public. Massachusetts plans have been creative about rolling out new benefit designs and payment plans that preserve quality and control cost.

It’s worth monitoring health plan profits and executive compensation,  but if anything the profit motive for these not-for-profit organizations is too low. Incentives for more radical, impactful change lie in the for-profit sector. Case in point is private equity backed Steward Health, a profit-seeking entity with a big appetite to control costs and generate profits well in excess of what the health plans are pulling in.

High profits are not the enemy of health care cost containment in Massachusetts.

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The Health Business Blog turns seven years old today. Continuing a tradition I established with birthdays one, two, three, four, five and six, I have picked out a favorite post from each month. Thanks for continuing to read the blog!

March 2011: Why you shouldn’t feel good about paying a low price for wet AMD treatment

Repackaging Avastin seems like a harmless, clever  trick to save thousands on Lucentis. But now that the world has decided that the price point for a wet AMD treatment is $20 or so who is going to bother developing a new treatment for wet AMD? I’ve already seen situations where companies chose to drop development of early stage compounds in this therapeutic area because they are afraid they can’t make money.

April 2011: Are decision support tools turning doctors into idiots?

Some physicians are reluctant to used computerized decision support (CDS) tools because they fear loss of respect from patients and colleagues. I prefer physicians who uses sophisticated decision aids such as SimulConsult, which allows physicians to extend their expert knowledge to make differential diagnoses of rare conditions that even excellent, experienced specialists may see rarely in the course of a career. Point of care information tools such as UpToDate also enhance evidence based practice.

May 2011: How to start an adult discussion of Medicare

Now is a good time to take a deep breath and entertain a serious discussion about the future of Medicare.  It would be nice if party leadership and voters would steer the debate in a more constructive direction. In my view, that would start with the articulation of a few consensus points, such as: the Medicare financial crisis is here now –solutions can’t wait, Medicare is unfair to the younger generation, and Medicare cost containment doesn’t have to be a zero-sum game.

June 2011: Harvard Pilgrim CEO Eric Schultz speaks with the Health Business Blog

I sat down with Eric for a videocast on a wide range of health care business topics. In this first of four segments we discuss the role of health plans in influencing cost and quality, what HPHC brings to Accountable Care Organizations (ACOs), and whether there’s any difference between the current shift toward global payments and what we witnessed in the 1990s.

July 2011: What’s the difference between Colgate Total Gum Defense toothpaste and regular Total?

The new Total Gum Defense toothpaste lists the same ingredients and makes the same claims as regular Total. I asked a dentist and even a periodontist, but they didn’t think there was any difference.

Finally I called Colgate customer service to ask my question. Judging from how quickly they came up with an answer, this is clearly a question they’ve been receiving a lot. The rep pointed to two differences:

• The formulation is milder –using a different type of hydrated silica
• The flavor is less minty –presumably making it more tolerable for those with sensitive gums

August 2011: Niche blockbusters: The next drug cost crisis?

For quite a while  rising drug costs were a major driver of medical inflation. Big pharma was rolling out lots of “me too” products in existing drug classes that could be prescribed widely. In a normal market, having lots of competition might drive prices down. But not in health care, where third party reimbursement and the need to obtain a doctor’s prescription subvert the usual supply and demand relationship. The cost threat today stems from “niche blockbusters” –very expensive treatments that reach $1 billion in sales despite serving few patients.Creative entrepreneurial and policy responses are needed to contend with this emerging phenomenon.

September 2011: What the Talmud teaches about drug company gifts to doctors

I heard a Rabbi discuss the prohibitions against bribes in Jewish law. He shared the Talmudic insight that “a gift blinds the eyes of the wise” and taught that this refers not just to obvious bribes but even to small, innocent-seeming gestures that appear too insignificant to influence another person but that actually do cause a conflict of interest. I told him this sounded very similar to contemporary relationships between pharmaceutical companies and prescribing physicians, where small gifts like pens and take-out lunches are tools of the trade –viewed as innocuous by their recipients but seen as a good investment by the givers.

Turns out this observation has been explored in greater depth in the Journal of Medical Ethics.

October 2011: VC funding drops for biotech, medical devices. Should we worry?

VC funding for biotech and medical devices is way down. That’s a serious problem for entrepreneurs in those fields and poses longer term problems for larger drug and device companies and consumers. But there are substantial near term opportunities in health care services and health information technology, which I outline.

November 2011: Dr. David Blumenthal on life after ONC (podcast interview)

At the Partners Connected Health Symposium I sat down with Dr. David Blumenthal, former National Coordinator for Health Information Technology. We discussed the unfolding impact of his work on Meaningful Use, the role of the patient, health IT in the UK, and the future of health IT funding considering the partisan divide in Washington.

December 2011: Is $10,000 a lot of money? Not in health care

It was quite a few gaffes ago, but you may still remember Mitt Romney’s offer to bet Rick Perry $10,000 during a presidential debate.

According to the dominant storyline, $10,000 is a sum so vast that only a really rich person like Romney could contemplate offering it up. Mentioning $10,000 somehow proves Romney is out of touch. But $10,000 is actually a very relevant figure for a discussion of health care policy, and it’s a figure the electorate should get used to discussing.  I list several examples of what $10,000 represents in the US health care environment including six months of family health insurance in Massachusetts, two months of Avastin, and a typical employer’s annual contribution to an employee’s health insurance costs.

January 2012: Nursing shortage. Is it a case of crying “wolf?”

How many times have you read about the staggering shortage of nurses? It’s routine to see numbers in the hundreds of thousands tossed around –representing the seemingly insatiable demand for nurses from an aging population. I’ve always been suspicious of these estimates. The latest news about how nurses are having a hard time finding jobs has reinforced my perception.

February 2012: Lab tests in health risk assessments help spot diabetes, high cholesterol and kidney disease

Employer-sponsored health risk assessments that include laboratory tests appear to do a remarkably good job of identifying diabetes, high cholesterol and chronic kidney disease even within an insured, well-educated population. The study (Value of Laboratory Tests in Employer-Sponsored Health Risk Assessments for Newly Identifying Health Conditions: Analysis of 52,270 Participants), published in PLoS ONE, was conducted by Quest Diagnostics medical director Harvey W. Kaufman, MD and colleagues.

In this podcast interview, Dr. Kaufman sheds light on the findings and implications.

–

Thanks again for reading the blog!

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Apologies for the audio quality. It’s not the best.

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More recently tons of banks have been setting up shop. Also pretty useless from my standpoint –do we really need more than ATMs and the occasional safe deposit box?– but apparently they are grabbing up space as a kind of interactive billboard to fight for share of wallet among an attractive demographic.

I guess I should get used to these blights on the neighborhood because it sounds like something even worse could be on its way: retail stores to sell health insurance. As implementation of the Affordable Care Act proceeds, health insurers are looking for new ways to find retail customers and to bypass brokers. And you guessed it, they’re opening up retail stores to do so. A Kaiser Health News article has more, including a report of a Blue Cross Blue Shield store in Florida, Highmark in Pennsylvania and a 16,000 square foot UnitedHealthcare store in Queens.

So as much as I’d like to see the demise of the phone stores and banks, I really don’t want to see them replaced by the Harvard Pilgrim, Tufts, Fallon, Steward and Blue Cross Blue Shield stores. But I fear that day may be near.

Is this post curmudgeonly enough for you?

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Life expectancy has increased by roughly a decade since Medicare was enacted almost 50 years ago, yet the eligibility age hasn’t  budged from 65. Medicare spending has ballooned and is the biggest driver of the federal deficit that Republicans profess to care so much about. Common sense suggests that increasing the eligibility age is one lever that should be pulled, even if gently. Romney proposes raising the eligibility age by one month per year. That pace is too slow, since it will take 24 years to boost the eligibility age by two years. But even worse, Romney wouldn’t even start the plan until 2022, so as not to disturb anyone’s retirement plans.

The Medicare funding crisis is upon us now; the time to act is not 10 years from now. A person who is 55 years old now doesn’t need 10 years’ notice to make arrangements for an extra month of health insurance!  A more reasonable approach would be to start the process immediately and to raise the eligibility age at roughly double or triple the pace Romney intends.

By the way, that tweak won’t be nearly enough to make Medicare self-funding. Even now, the Medicare payroll tax and recipient premiums cover only about half of program expenditures (see figure 5). There will need to be plenty of additional reforms that impact costs and revenue if there is any hope of taming the beast. A good place to start would be repeal of the unfunded, Republican-driven Medicare Part D drug benefit.

Romney performs a serious disservice by making identical eligibility age proposals for Social Security and Medicare. Notwithstanding GOP presidential primary hysteria about Social Security (remember Rick Perry’s Ponzi scheme claims?), that program is actually quite fiscally sound and can be sustained over the long term with minor tweaks to age limits and benefit growth rates. The payroll tax is sufficient to cover expenses into the indefinite future without resorting to big doses of general funding.

I know everyone’s pleased about the bipartisan agreement to extend the temporary 2% Social Security payroll tax reduction. However, I think it’s a really bad idea because it undermines the self-sufficiency of one of the few properly funded federal programs.

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A few weeks ago I parsed an Explanation of Benefits (EOB) I received from Blue Cross Blue Shield of Massachusetts after a visit to Sports & Physical Therapy Associates, an excellent physical therapy center with 14 locations in Greater Boston. The post (What does an Explanation of Benefits (EOB) actually explain?) generated a number of comments and questions on the Health Business Blog itself and when it was cross-posted at KevinMD. In particular:

• What would a cash paying patient be asked to pay?
• How is the $225 in “charges” derived? Is it determined by Medicare?
• Does the provider lose money on the Blue Cross contracted rate?

I’m not a billing expert so I sent an email to Sports & PT to ask them to respond directly. I was impressed with their informative and thorough response, which I am posting here with their permission.

Mr. Williams,

We would be happy to provide you with some insight into how insurance claims are processed.  Please find your questions with the corresponding answers below.

When a patient first comes to our clinics, we provide them our Policy Disclosure document.  I think you will find it valuable in understanding the relationship between patient and provider, patient and insurance carrier, and lastly, provider and insurance carrier.  Here is the first paragraph:

“Sports and Physical Therapy Associates (SPTA) is pleased to participate in your health care and we look forward to establishing a lasting relationship as your physical therapy provider. As part of this relationship, we wish to establish our expectations of your financial responsibility as outlined in our Financial Policy. Letting you know in advance of our Financial Policy allows for a good flow of communication and enables us to better satisfy you. Your medical insurance is a contract between you and your insurance company; we are not a party to that contract. We can often help with providing information about your benefits, but you are primarily responsible for knowing what type of coverage you have and for any charges that you have incurred as a patient with us. Please review and sign the following Financial Policy prior to your first visit.”

Questions:

1. What I would have been charged if I didn’t have insurance? Do you offer discounts to cash paying customers? If so, what do they have to do to get a discount? How much are the discounts?

For patients with no health insurance we offer a “Self-pay” rate. Our self-pay rate is $100 for evaluations and $75 per visit for follow-up appointments. The rate is based on the average reimbursement we receive from our insurance carriers.

For the most part patients utilize their insurance to cover their episode of therapy but may “run out” or exhaust their benefit prior to the doctor, patient, or therapist’s desired end result. We offer this self-pay rate to all patients who must pay out-of-pocket for their services. In addition, if a patient’s insurance reimburses at a lower-than-average rate we charge them the lower amount. For example, BCBS reimburses around $75-80 per visit but Tufts pays us $68 per visit. A Tufts patient whose insurance cuts him or her off could pay out-of-pocket for continued services and would not be charged more than his or her insurance was paying us ($68/visit). For those patients that are having financial challenges, we will set up a payment plan.

2. How do you come up with the $225 in charges? Is that your price or is it do to with Medicare rules?

Medicare sets the standard when it comes to reimbursement rates as well as billing/documentation guidelines; however, Medicare does not have anything to do with how much we charge for each procedure. The charged amounts are comparable to what other outpatient physical therapy practices are billing (for each procedure) in our region.

Though we may bill $225 we do not receive $225 from our patients or their insurance carriers.  Each insurance has a different allowed amount. We never receive more than your allowed amount. Who we receive the allowed amount from is dependent on the patient’s benefit (if you have a deductible you would be responsible for paying us what your insurance allows for the visit, if you don’t have a deductible your insurance would pay, if you have a copayment they would pay everything except for the co-pay).

Example from your EOB – Note: the actual procedure codes/descriptions are missing from your EOB causing you some confusion (I agree, this is frustrating).

They allowed $81.31 (you pay $25 they pay $56.31 = $81.31), and we adjust off the remaining amount according to our contract with BCBS. For more information on the procedures and descriptions you’ll have to consult with your therapist.

3. Do you lose money on the Blue Cross reimbursement? Do you consider your contract with them a loss leader?

We don’t lose money because we never expected to receive more than the contracted allowed amount. However, if we didn’t contract with BCBS (the largest health insurance carrier in the state) we would lose a lot of money. Why then charge more than we expect to receive? We bill over 200 insurance carriers and they all reimburse at different rates so it’s easier to have a set charged amount for each procedure then make the contractual adjustment at the end.

Please let me know if you have further questions.

All the best,

[Billing Manager]

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Kaiser Health News and NPR found a request for information letterfrom Walmart to prospective partners saying the retailer was seeking help to “dramatically … lower the cost of healthcare … by becoming the largest provider of primary healthcare services in the nation.” When asked, Walmart denied that it had such an objective.

Walmart is probably planning to build a network of in-store clinics that are a lot like MinuteClinics. Walmart’s already had a couple false starts in this arena and there’s no great reason to be confident that it will be successful this time around. Most people seem to think Walmart mainly wants to boost retail traffic.

As the article points out, primary care is not where the costs are. Rather, the big money is in specialty physicians and hospitals. I’d like to see Walmart de-emphasize its me-too store clinic strategy and do something bold and potentially impactful.

Open a hospital for instance. Maybe partner with Toyota or Apple to do so.

Ok, I know it’s a completely impractical suggestion, but I would really like to see someone apply Walmart’s supply chain and retail expertise, Toyota’s process engineering and Apple’s design philosophy toward health care. Rather than start with the presumption that everything is going to be expensive, complex and opaque, go for a lean, mean, yet elegant structure.

It’s probably impossible to build such a facility in the US. But maybe the first one can be set up just across the border in Mexico, drawing traffic from north and south of the border –probably self-pay and high deductible patients to start. Staffing will clearly be a challenge, but with the right setup it could become an attractive place to work.

The Walmart $4 generic issue was a bold move. Copying MinuteClinics is not. Why not go for something more worthwhile?

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I was in the pharmacy recently and saw that Colgate has added a Total Gum Defense line extension to its already large set of Total products. But this product makes exactly the same set of claims as the regular Total –”Helps prevent: Cavities, Gingivitis, Plaque. Fights Tartar, Freshens Breath, Whitens” –and lists the same active and inactive ingredients. Then yesterday I was at the dentist’s office, where there was a big basket of Total Gum Defense samples. I asked a periodontist there if there was any difference and she said, “Not as far as I know.”

I poked around the Colgate website and couldn’t find any differences mentioned there. (Could be hiding somewhere but it wasn’t apparent.) I did find it instructive that the site lacks the ability to compare the various Total products head-to-head, probably because the main differences are how they’re positioned to the market rather than anything substantive.

Finally I called Colgate customer service to ask my question. Judging from how quickly they came up with an answer, this is clearly a question they’ve been receiving a lot. The rep pointed to two differences:

• The formulation is milder –using a different type of hydrated silica
• The flavor is less minty –presumably making it more tolerable for those with sensitive gums

I guess it’s enough of a difference to be plausible, and maybe labeling regulations prevent them from being more explicit. But my guess is that Colgate Total Gum Defense is just a typical consumer product line extension, designed to grab a little more shelf space, appeal to a few more consumers, maintain price premiums, and keep generics at bay.

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Tiered health plans cutting costs, restricting options in today’s Boston Globe raises reasonable questions about new benefit designs from Massachusetts insurers that require members to pay more when they seek services at hospitals that are not on the preferred list. The article profiles Glenn McCarthy, a 48 year old man from Weymouth who faces $4500 in out-of-pocket costs after obtaining services at 2 hospitals that are in the higher cost tier. I empathize with the man and his wife, but overall I’m very much in favor of the availability of tiered plans like his.

To summarize the story:

• McCarthy was told he needed surgery for “an aggressive form of prostate cancer”
• He could have surgery at Faulkner Hospital in “more than a month” where his co-pay would be just $150
• He could have surgery at the Brigham and Women’s in about 2 weeks –with the same surgeon– but he’d have to make a $1000 co-payment because the Brigham is in a higher cost tier for the Blue Cross Blue Shield plan he has
• He opted to go to the Brigham because “his doctor advised against a delay.”
• He had complications after surgery and went to South Shore Hospital in Weymouth, also in the higher cost tier, and racked up another $3500 in out-of-pocket expenses

I don’t know the specifics of the case and am not a clinician, but I’m going to go ahead and make some observations about this situation anyway.

• It’s noteworthy but not surprising that the same surgeon was going to perform the surgery whether at the Faulkner of the Brigham. Have a look at the Faulkner website and you’ll see it’s actually branded as a Brigham and Women’s Hospital. It’s not just some off-price, low tech competitor as the article implies. The home page features a big come-on for the Brigham and Women’s Center for Robotic Surgery at Faulkner Hospital
• I’m skeptical about the scheduling delay. Sure it would be a drag to have to wait more than a month for urgent surgery, but even the two week timeframe for the Brigham isn’t very impressive. Maybe the McCarthy’s don’t know how to navigate the system, but I’m willing to bet that a well-informed consumer and the surgeon could have had the timing pushed up if it was medically necessary
• It’s too bad McCarthy got complications and then went to his local hospital, which is also in the higher tier. (By the way, can you imagine how the story would have read if McCarthy had gone to the Faulkner and ended up with complications. Would the article have blamed that on the lower end hospital?) But his situation is the exception, because very few hospitals in Massachusetts are actually in the higher tier. Two lower tier hospitals –Quincy Medical Center (part of Steward) and Milton Hospital (part of Beth Israel Deaconess)– are within 10 miles of Weymouth

Certainly $4500 is an unwelcome expense, one that the McCarthy’s are struggling to pay off. And yet it’s small change in the context of overall health care costs and even relative to the costs of the McCarthy’s health insurance.

A typical Massachusetts family health insurance premium is in the range of $1500 per month or $18,000 per year. (I don’t know what the McCarthy’s pay.) At that rate, the $4500 represents only 3 months of premium. Meanwhile, tiered plans are priced at least 12 percent below non-tiered plans. That means about $2200 per year on an $18,000 policy. So even if McCarthy wanted to go to higher tier hospitals he’d still break even financially as long as he only had this type of unfortunate episode once every two years.

In the meantime we need to consider tiered networks more broadly than just this case. Consider:

• The introduction of tiered networks has enabled the Massachusetts Health Connector to enroll everyone who qualifies for fully subsidized insurance, despite the state’s difficult fiscal situation
• Tiering is meant to incorporate quality as well as costs. The two should generally trend in tandem, e.g., if costs of complications are included
• The ratings are not static and hospitals can shift between tiers year-to-year. I would expect South Shore Hospital to do everything it can to get onto the lower tier list. Why shouldn’t they be as cost-effective as Quincy and Milton?
• I am sympathetic to the plight of high cost, prestigious hospitals such as the Brigham. But they, too, can make improvements or reconfigure their networks. For example, I would argue that the Faulkner affiliation is a good example of how this can be done
• I note that Dana Farber and Children’s are upset about being listed on the higher tier. I know that I would want those hospitals in my network. Yet this may also provide an opportunity for Blue Cross or its competitors to add benefit designs that have multiple tiers rather than just two, or for these institutions to demonstrate that their higher quality justifies their higher costs
• Hospital systems such as Steward have an opportunity to carve out a major market opportunity as high efficiency, high quality hospital systems –and inject some welcome “value” competition into the provider market

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Williams:            This is David E. Williams, co-founder of MedPharma Partners and author of the Health Business blog.  I’m speaking today with Dr. Harvey Kaufman.  He’s a Medical Director from Quest Diagnostics and he’s also co-author of a recent article about the value of laboratory tests and employer sponsored health risk assessments that was published in the journal PLoS ONE.  Dr. Kaufman, thanks for being with me today.

Kaufman:            Thank you.

Williams:            What was the motivation for conducting this study in the first place?

Kaufman:            Quest Diagnostics is a leading provider of workplace wellness programs to employers across the country. Employers are struggling to manage population health as a business imperative. We were asked repeatedly about the documented value of employer sponsored laboratory based wellness programs, and there’s no existing literature evaluating this benefit, especially across employers. We had the unique opportunity to close this gap and provide key observations that answer this question.

Williams:            There were three conditions chosen. Why those three in particular?

Kaufman:            We focused on the three common chronic conditions for which there is clear evidence that early detection and medical management can change their course by flowing or halting the disease progression. High cholesterol dyslipodemia is present in more than 1 and 3 adults, diabetes affects more than 26 million Americans, and there are an additional 79 million Americans with pre-diabetes.

The widespread recognition of chronic kidney disease is just emerging, but that too affects 26 million Americans. The most important risk factors for chronic kidney disease are diabetes, hypertension, obesity and cardiovascular disease. Health risk questionnaires can’t detect these common medical conditions. Only laboratory tests can. Also key is that the three medical conditions are silent conditions at the early stages, when intervention is most likely to change the course of the disease.

Williams:            What kind of results did you see, and was there anything that surprised you?

Kaufman:            The study evaluated 52,270 employees, spouses and domestic partners of working ages: 20 to 64, for first-time participants in their employer’s laboratory based wellness program. The resulting data showed that one in three participants, or 36% had one or more newly identified risk for these diseases. Fifty-nine percent of those with high cholesterol were newly identified, 28% of those with diabetes were newly identified, and 89% of those with chronic kidney disease were newly identified. Surprisingly, nearly 1 in 4 participants, even in the youngest age group (20-29), had a newly identified health risk. Participants’ level of education didn’t have any impact on the results and there was no significant difference between the disease risk between male and female participants. The majority of these participants had health insurance. This shows that health care access alone doesn’t guarantee detection of risk factors of these common health conditions, since many adults don’t seek preventative care in the absence of symptoms.

Williams:            I want to ask about use of the term, “health risk.” Are you referring to condition identified through a laboratory test, that’s subject to a confirmed diagnosis? When you say “health risk” I think you mean a pretty strong likelihood that somebody has one of these conditions, not just that they’re sort of “at risk” in a general sense. Is that correct?

Kaufman:            Right. The diagnosis of high cholesterol, diabetes and chronic kidney disease depends on laboratory tests, but also depends on an evaluation by a doctor to rule out other causes. The typical follow-up is a medical assessment and repeating the initial lab tests.

Williams:            It’s interesting that you mention that these are people with to access to insurance. You’re doing this with employers, who presumably not only offer reasonable health insurance, but who are also investing in wellness programs. So as you say, it’s not a question of access to insurance. Is it surprising that folks who have insurance don’t have a better sense of where they stand with risk factors or with diagnosis? Or is that a function of how people access the health care system, or what physicians do when those patients visit?

Kaufman:            Yes, I did expect people with health insurance to take advantage of the generous benefits that are largely supported by their employers. Our study really underscores that the issue isn’t access or quality of care, it’s that people aren’t going to see their physicians until they have serious problems. Employer sponsored laboratory based wellness programs fill this gap. They identify people who should be more engaged with their medical care. These programs complement physician care by driving awareness and driving people to seek medical professionals who can help them get on the right track.

Williams:            One of the things that struck me in reading the article was that you’re testing people that are younger than some of the usual thresholds for when people are tested for cholesterol or kidney disease or diabetes. Yet a fair number of problems were being identified in that younger cohort. This probably goes beyond what the article was addressing, but is it reasonable to explore whether some of those thresholds should be lowered, and is that one of the factors that’s at play here?

Kaufman:            Yes, unfortunately Americans as a group have become increasingly unhealthy.  That’s because we’re eating unhealthy foods, we’re eating too much of those foods, and we’re getting less physical activity and exercise than we should. Combine all that together, and you end up with a large percentage of people including those in their 20’s who are now at risk for heart disease, diabetes and chronic kidney disease. I think it was in November that the National Institutes of Health came out with recommendations supported by the American Academy of Pediatrics, to test children as young as 8 for high cholesterol. So we’re seeing what used to be a disease in older people is now in younger people and unfortunately now in adolescents and children.

Williams:            I know with some testing, maybe more on the screening side, there is a controversy about whether to do the testing and how much to do it. There are concerns about false positives, for example, leading to more invasive tests, or to treatments that could themselves be harmful. For these three conditions that you are testing for, are there concerns like that?

Kaufman:            Yes, we’re always concerned about wanting to identify the right people, and not identify the wrong people.  Employee sponsored laboratory based health risk assessments involve common laboratory tests that are relatively inexpensive and the conditions fall on to the right side, here. People who have these risks that are newly identified should see their physician, take that history, perform the physical exam and typically repeat the same test to confirm the initial result before they make a diagnosis. The tests are common, they’re relatively inexpensive, but by themselves; don’t lead to more expensive tests. The tests themselves are designed to minimize false positives for people who may think that they’re healthy and think that they’re invincible.

These diseases are hidden inside people, you can’t see them. If they’re not identified early, and identified late, possibly it’s sudden death, a significant illness and cost, so it’s important to identify them early even when the finding is not confirmed.  The individual may be heading in the wrong direction, such as having pre-diabetes. Through changes in lifestyle, by losing some weight, and becoming more physically active they can delay or avert the development of diabetes. In the end, knowledge is power when people have access to their lab results and understand them; they’re more likely to ask the right questions and make better decisions and receive better care. I don’t think there’s any downside there.

Williams:            What reaction have you already had, or would you expect to these findings from providers like physicians or commercial health plans or employers or others?

Kaufman:            Every entity you mention has a stake in improved population health, because we all must reduce the projected costs to both the public and private health plans. Our findings suggest that employer sponsored laboratory based wellness programs can be important keys in the early detection of these silent, common medical conditions. Doctors love it. They love the one page summary of the laboratory results that participants bring to them. Doctors love that they’re practicing medicine and making a difference in the lives of these patients. Participants keep telling us how this program has saved them, their spouse, and their domestic partners in terms of early identifications of cancers, hypertension and the three conditions that are the subject of the study.

For employers, it’s all about establishing a culture of health that can lead to healthier and more productive employees and lower their health care costs.

Williams:            I appreciate that you’ve published this article in PLoS ONE, which is a prestigious peer reviewed journal. It’s also an open access journal, which means rather than my having to have a subscription, or pay $25.00 or so for the article, I can actually read it. I’ll be able to link to it from this blog post, and everybody can see the details. I’m wondering, was it a conscious decision to seek out that particular publication, or an open access journal in general?

Kaufman:            Absolutely. PLoS ONE is now recognized as one of the most respected peer reviewed journals. We were looking for the widest audience given how our message crossed across from human resource directors to physicians. In addition, PLoS ONE has quick turnaround time, so it let us get the message out more quickly compared to other leading journals. Open access journals like blogs, have become more important in terms of how we communicate. When we seek to share information, they serve to document current conversations without many of the constraints of traditional journalism, yet with the same rigor of peer review.

They provide wide access to current research and thinking, and I think that’s the upside for exchanging current ideas and learning.

Williams:            I’ve been speaking today with Dr. Harvey Kaufman, Medical Director from Quest Diagnostics about the findings from a new study about the value of laboratory tests in employer sponsored health risk assessments for identifying health conditions. Dr. Kaufman, thank you very much for your time today.

Kaufman:            Thank you, David.

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Neumann focuses on a statement from the new edition of the American College of Physicians’ Ethics Manual:

Physicians have a responsibility to practice effective and efficient health care and to use health care resources responsibly. Parsimonious care that utilizes the most efficient means to effectively diagnose a condition and treat a patient respects the need to use resources wisely and to help ensure that resources are equitably available.

The term “parsimonious” has generated a lot of pushback. That’s not unexpected, because policymakers, the health care industry and consumers continue to studiously avoid serious discussions of cost. Neumann is on the side of the ACP, and makes the following key points:

• The embrace of “more efficient, more effective, and safer care” and reducing waste is sensible and productive, but won’t really address cost growth
• Society has to face the fact that unlimited access and unlimited patient choice are unrealistic
• The Affordable Care Act’s restrictions on using comparative-effectiveness research for coverage decisions and its ban on the use of cost-effectiveness thresholds will limit the law’s impact
• It’s nice to have a “patient-centered” approach to outcomes research embodied in the Patient-Centered Outcomes Research Institute, but it hinders the cost debate by de-emphasizing “considerations of societal resources”
• Accountable Care Organizations (ACOs) are actually well placed to employ “parsimonious” care, but no one speaks in those terms
• The ACP is performing a real service by bringing up a topic that isn’t being discussed honestly

I’m fully on board with Peter, and would add a couple observations from recent news:

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In this podcast interview, Dr. Kaufman sheds light on the findings and implications.

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Meanwhile, the Tea Party’s influence scared off the more reasonable, electable GOP Presidential candidates and we’re left with an odd bunch. Santorum is a pretty extreme social conservative and nowhere near qualified to be president, Gingrich is a narcissist and probably more of a socialist than Obama, Paul appears to be a modern day John Bircher, and who knows where Romney really stands? In any case, the group has taken the primary so far to the right that it’s opened up a huge centrist gap for Obama to fill.

The recent flap over birth control is pretty interesting in that regard. I doubt Obama planned it this way, but it seems likely that things will work out at least neutrally for Obama and possibly very positively. The original Obama proposal, requiring religious institutions to offer birth control coverage — was quite reasonable. It was in line with the policy that’s in place in most states in the US –one that doesn’t generate a lot of debate. When things blew up, Obama back tracked a little bit, forcing insurers to pay for the benefit. His move was enough to at least partially mollify the sincere critics (e.g., Catholic hospitals). But of course nothing Obama proposes will be seen as adequate by his ideological opponents, who are striving to present Obama as trampling on religious freedom.

But opponents are at a serious risk of overplaying their hand. In particular, they may accurately be perceived as against birth control. And that’s not something that the average person in this country is going to be comfortable with.

Birth control is not like the abortion issue. Although “pro-life” campaigners like to portray the “pro-choice” side as “pro-abortion,” it’s just not true. Even those who favor abortion on demand would like to see the number of abortions be as low as possible. That truth is lost on some of the anti-contraception zealots.

As a result of Obama’s partial backtracking, the opposition is split and a bit confused. The real anti-contraception people are coming out of the woodwork, and that’s going to scare the heck out of a lot of undecided and Republican leaning centrist voters. If the Republicans get painted as anti-birth control I don’t see how that’s going to be a winning message for the party. It could even trump bad economic news for some voters.

And although the financial impact hasn’t attracted much coverage, birth control benefits are very cost effective. The benefit reduces unplanned births and the associated medical expenses.

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Williams:            This is David Williams, co-founder of MedPharma Partners and author of the Health Business Blog.  I’m speaking today with Dr. Evian Gordon, executive chairman of the Brain Resource Company.  Evian, thanks for being with me today.

Gordon:            It’s a pleasure.

Williams:            We’re going to talk about personalized medicine for the brain. So first off, how is personalized medicine for the brain different than other kinds of personalized medicine?

Gordon:            Well it’s no different at all.  The goal essentially is to find biological markers that can accurately predict treatment response.  The difference is one of more pragmatic reality. Most of the findings in personalized medicine that are well learned have come out of the area of cancers and HIV/AIDS.

The most common examples cited are Herceptin for breast cancer, Selzentry for HIV/AIDS, Gleevec for leukemia, Iressa for lung cancer and Erbitux in colon cancer.

Even though there are a small number of findings, there are a growing number and it is rather surprising that they have been confined to the cancer area in the main.  So that’s been the biggest difference, but that I think is one of simply where the focus has been and where the investments have gone into. It’s cancer.

Williams:            Now speaking of investments, I know that you are involved in the iSPOT study, which I understand is a large study that is related to the brain and personalized medicine.  Can you tell us a little bit about that?

Gordon:       Sure.  This is a study from a European biotech. It’s a $20 million study. The goal is essentially to look at psychiatric disorders starting with depression and ADHD. The principle is to look beyond just the molecular findings –all the findings so far in cancer and HIV have been molecular.  The current word, as you probably know, is “panomics,” meaning everything from genomics to gene expression to metabolomics; everything that moves at the molecular scale.

And while that’s absolutely noteworthy and important, in the brain where most genes seem to be involved or 80% of our genes possibly involved in psychiatric illnesses, it seems unlikely that genes alone or any form of panomics are going to be sufficient to sensitively and specifically predict treatment response.  So what we’ve done is set up the first global standard to measure both molecular, but also everything else about the brain; the brain structure, functional MRI, electrical brain function, cognition and real world outcomes in addition to standardized clinical workups to see if by combining genes and brain markers we have a better chance of revealing some of these underlying biological disturbances that can predict treatment response.

The little catch is that it requires significant numbers.  By significant numbers I mean thousands.  This study is studying 2,000 patients.  We’re just looking at the first 1,000 at the moment and in the process also of very efficiently bringing integrated analysis facilities to really mine for the best biomarkers that predict treatment response.

It’s a fascinating phase and the principles are no different to any other aspects of biology. We have standardization.  There are 20 sites, ten in the United States and ten in Europe and Australia where the patients have been drawn from.  We have the power of standardization of all measures; hardware, software, ways of analyzing, but also the integration of all these methodologies and then the power of numbers.

Williams:            Why is it so hard to predict treatment response with psychiatric conditions?

Gordon:            Well I’m not sure that it actually.  It’s just that the current model is pretty much the opposite of looking at really standardizing the diagnosis of using signs and symptoms.  It was a wonderful effort when it occurred in DSM.  The treating was a shift forward from psychotherapy type analysis and trying to find a standardized way for diagnosis.

It turned out that signs and symptoms, if you take depression for example, asking questions like, “Did you sleep poorly?”  “Have you lost your appetite?”  “Have you lost your ability to experience pleasure?”  These have not turned out to be the sorts of subjective questions that have done well in predicting who will respond to which antidepressant and that’s why the results, the data from anti-depressants have been so poor.

It would seem in the whole of biology and the whole of medicine that we are essentially redefining medicine based on biology and essentially psychiatry is now entering that phase, that paradigm shift of seeking to find the biological underpinnings, which can hopefully be more accurate and objective in predicting treatment response than have been signs and symptoms.  While they have a value in diagnosis, they have shown to have a much less value in predicting treatment response especially at the individual level.

Williams:            You mentioned standardization as an important component of this iSPOT study and the overall approach.  Talk a little bit more about why standardization is important here.

Gordon:            That’s a good question David.  We’re an international consortium of medical scientists who are looking to study the whole brain as a system and find these biomarkers.  I suppose the context is that very little happens without standardization.  Very little of scale happens without standardization and that’s not just about biology.  If you look at all the major projects across history that have shown really big insights, they’ve required scale and they’ve required standardization.

One can only presume that when you’re dealing with a complex system, that’s just so that you can really compare apples with apples and not continually having small numbers of subjects with small effect sizes and the huge number of confounds so that you simply can’t compare one study with another very easily.

Standardization gets rid of that problem and allows you to benefit from the power of numbers. And if there is an effect size, you really know that it’s real and reproducible and you’re not distracted all the time by thinking that it could be because a paradigm was a little bit different or the analysis was slightly different.

So if you move the confound in that regard, it’s not the panacea of all aspects of finding biomarkers and certainly not the panacea for finding mechanism.  Sometimes these things are found serendipitously by having a great diversity. But if you can standardize on a global scale and get the power of numbers, it’s one way in which major inroads have been made in other areas where this has been attempted and that’s the reason why broad databases are of course coming back into fashion in science and systems are coming back into fashion in science which had become so fragmented and siloed and specialized.  It’s really an attempt to bring the whole back into tying up all the wonderfully important thousands of details and specializations.  Standardization is the glue that essentially does that.

Williams:            Now this iSPOT study as you mentioned is quite expensive; $20 million, a large-scale effort funded by a biotech company.  I’m sure it will produce a lot of interesting findings, but when you come right down to it, do you believe that there will be a business case for the use of some of the results of the study in pharmaceutical development or elsewhere?

Gordon:            I think that given that there are no current claims with the FDA on the brain and so many, relatively speaking on cancer, I think that it could potentially open the floodgates. We’re using three drugs by the way that constitute about 40% of the anti-depressants used in the United States.  A $6 billion per annum spend and if we can find any biomarker that either predicts if you respond at all or if you respond to one of them preferentially, can you predict that?  Or can you predict side effects and who shouldn’t go on that drug?  Or can you predict who gets better but then recurs?  There are a lot of predictions that can be made that are very valuable and have massive clinical validity in a sense if they work.

Once that proof of concept has been derived and registered and the claim lodged with the FDA where we can publish and replicate it, that would potentially open the flood gates to biomarkers being exploited more widely as has been the case after Herceptin with cancer.  So I think it’s a pretty pivotal time to see whether Brain Resource or iSPOT or somebody else can achieve the first landmark and biomarker. Follow-on effects are considerable and they expand the current model of DSM very dramatically.  DSM themselves are trying to incorporate biological markers, but if you look at the draft of DSM-V it doesn’t have a lot of them.

Certainly NIMH have done something very bold in my view.  They have put out a document called RDoC, which is the beginnings now of having domains that are not DSM based that can start moving towards a biological frame of reference. FDA of course is shifting very dramatically toward personalized medicine.  So that confluence of activity I think is a pointer it’s just a matter of time and solidness of the biomarkers that are found.

Williams:            Explain a little bit about the Brain Resource Company itself.  What do you do?  Who are your customers?  What are you trying to achieve?

Gordon:            In terms of biomarkers, by having this platform, this standardized platform and having attracted this study and numerous others, what we’re trying to achieve is setting up one of the landmark ways of finding these biomarkers, companion diagnostics with the key drugs used in psychiatry and then partnering with either pharmaceutical companies or licensing out the biomarkers to payers where clearly there are huge cost savings for people to actually get drugs who are going to benefit from them.  So essentially that model, the monetizing model of the business would be either through pharma or through payers. We’re already in discussions with both in that regard.

The third possibility in this is to use this platform for drug discovery.  So instead of looking at drug discovery from a molecular level only in the microscopic scale to additionally look at the whole brain as a system and look at the kind of circuits that seem to drive the brain; circuits associated with fear and safety like the amygdala fight or flight system that is so critical to the way the brain processes everything in terms of first and foremost minimizing danger.  So looking at circuits like that in the amygdala, medial pre-frontal cortex or how specific chemicals like serotonin work.  So really teasing out those circuits within the brain associated with specific neurochemistry and explicit molecular variance and using that broader insight to also help develop and discover new drugs.  That would be the third tier of the way we see Brain Resource operate.

We also draw from the same insights about the brain to empower people with insights about their brain and how to train themselves on the web in the aggregation product called mybrainsolutions.com. The principle is the same.  It’s about aggregating information to either –on the medical side, find biomarkers that can improve treatment and on the self-empowerment side for people to use those brain insights to train their own brains to be more effective.

Williams:            Well it sounds really fascinating and that a lot of progress is being made already. But also it sounds like we’re really still in the infancy of brain science.  Ten or 20 years from now where will we be in terms of insight about the brain and how it will be used?

Gordon:            Our hope is that in the next 12 months we’ll be peppering the FDA with claims about biomarkers from iSPOT both for depression and for ADHD. We have a number of reasons to feel confident that we will have the biomarkers even from the 1,000 patients and 150 ADD patients.

Things are done incredibly slowly in medicine but this has been a 30-year germination phase from inception to now for us in setting up this standardized platform and database.

I’d say in the next year we would expect some tipping point in terms of biomarkers, potentially.  Realistically though things always take three times longer than one expects as a rule of thumb.  Hopefully within the next three years there will be some brain based biomarkers that will have been replicated and be accepted as clinically meaningful.

After that point I think that there’s going to be an inexorable –probably slow– shift of how to reconcile this biological tipping point of how the brain and biology is impacting psychiatry with the current signs and symptoms and more of a pragmatic clinical diagnostic focus and consumers getting empowered and reconciling them into this equation.

I think it’s going to take five to 10 years to find the right mix. And certainly when it’s all about who pays for what being such a critical variable, that’s going to be another factor as are many of the privacy and other issues.  I’ll say a year to three years for a tipping point and three years to 10 years to really shift the balance of our understanding and our clinical usefulness of this biological information about the brain.

Williams:            I’ve been speaking today with Evian Gordon.  He’s executive chairman of The Brain Resource Company.  Evian, thanks so much for your time.

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Mark Colwell, Marketing Manager of GoHealthInsurance.com answered my questions on the topic in an email interview.

Why have some companies started offering insurance to domestic partners? Do they face any complications in doing so?

There are now six states, almost seven if you include Washington, that will give marriage licenses to same-sex couples, compared to only one state in 2004. The tides are obviously turning and many companies started offering same-sex benefits in the 1990s. Right now private companies are ahead of the federal government by acknowledging the need of affordable health insurance for same-sex couples.

A company first has to decide whether they will provide domestic partnership benefits to same-sex and opposite-sex partners. Also some companies have started reimbursing couples for the amount they are taxed for the same-sex benefits. Right now, same-sex benefits are viewed as taxable income by the IRS (whereas married couples’ health benefits are not viewed as taxable income) which is a disadvantage of offering the benefits.

In states where gay marriage is legal, how does that affect beneficiaries of federally funded programs such as Medicare and VA benefits? What about Medicaid?

State laws regarding same-sex marriages do not affect federal guidelines.

Same-sex couples are not entitled to the same benefits under COBRA as married couples, which is a huge disadvantage if a partner is fired or let go from a company. Also as noted before, the IRS taxes same-sex benefits which is another big disadvantage to opposite-sex couples.

When it comes to Medicaid coverage, it will be greatly expanded over the next few years due to health care reform. The expansion will allow low-income individuals without children will be able to get Medicaid coverage – this will help many same-sex couples who do not have access to coverage or cannot afford it.

If a gay spouse travels out of state and needs treatment, are they still covered in a state that does not recognize gay marriage?

This situation would be more dependent on the type of coverage the couple currently has through work or privately. If the plan covers out-of-network health care costs, then they will be covered in another state. Unfortunately, Health Maintenance Organizations (HMOs) do not cover out-of-network costs leaving the couple susceptible to pay for the health care services.

Are any insurance companies offering products tailored to gay or lesbian couples? Do you expect that they will?

There are plans that are tailored to add a domestic partnership or another same-sex individual. Not all plans offer this coverage and it depends on the health insurance company, but it’s great to know that there are plans that offer this type of individual coverage. In the future, more plans will probably change to include the coverage to stay competitive.

What resources are available for a person in a domestic partnership seeking health insurance?

If a person wants to try to get their company to offer the benefits they should check out the Human Rights Campaign. HRC has provided a lot of literature on how to advocate for LGBT equality in the workplace.

Otherwise, a person could apply for individual coverage if group benefits are not an option.

Are there opportunities for people to lobby their employers or state politicians for insurance equality?

There are opportunities for individuals to lobby and learn more about the guidelines set in their state. Again the HRC has a lot of resources online to help answer these questions and holds events regularly.

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GoHealthInsurance.com is a health insurance technology platform used by millions of health insurance shoppers each year.

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Williams:            This is David E. Williams, co-founder of MedPharma Partners and author of the Health Business Blog.  I’m speaking today with Colin Barry,  CEO of MEDfx.  Colin, thanks for being with me today.

Barry:            Thank you David.

Williams:            Tell me a little bit about what problem your company is trying to solve.

Barry:            Every other sector of our economy has leveraged technology to drive massive improvements in efficiency, quality and service delivery.  Our health care delivery system is a key target for this kind of improvement.  The potential of health information is largely untapped because it still remains in a form such as paper that is not efficiently communicated or aggregated.

MEDfx is focused on solving this very problem by making electronic health information available and fluid.  Our solution allows physicians to quickly access information that’s pertinent to a patient’s care.

Williams:            It seems as though your focus is care for military veterans and soldiers on active duty.  Is that in fact a focus and if so what is the use case?

Barry:            Our role is helping to bridge the connection between the VA and the DOD and the private sector to bring all this information together.

Nearly 60 percent of military personnel receive their health care through non-military providers.  A typical scenario is that a veteran receives care at a private health care facility and using our technology, the treating clinician is able to view a universally accessible health record containing information from the VA, DOD and other private health care facilities.  This might include the patient’s allergies, their medications and diagnostic test results that would otherwise require phone calls, faxes or redoing unnecessary diagnostic testing.

Williams:            Are there key difference between veterans or the active duty population and civilians in terms of their needs?  I’m just curious about why you’re focused on this particular issue.

Barry:            There are some key differences.  Veterans, through the VA and the DOD, are served by some of the most widely deployed electronic medical records systems.  They’re very advanced in maintaining the health information within their individual organizations.  Veterans and active duty service members benefit from this centralized medical records system, which provides a level of continuity when receiving care at veteran and military service facilities.  These are very large organizations.

The rest of the population, in most cases, receives care from smaller organizations that lack the available health information, which is a challenge.  This speaks to the problem itself and our focus on making health information available across organizational boundaries.  In our case, the information follows the patient wherever they might seek care.

Williams:            I noticed that you’ve got a product called Virtual Lifetime Electronic Records.  Does that tie in closely with what you’re describing?

Barry:            It’s similar.  We don’t have product for Virtual Lifetime Electronic Records.  It’s actually a government funded initiative that was launched in 2009 by the President as a directive to the Department of Defense and Department of Veterans Affairs to create a Unified Lifetime Electronic Health Record for members of our Armed Services.  ULER contains both administrative and medical information for service members and veterans, providing access to information from day one of the service member’s military career through transition all the way through veteran status and beyond.  Think of it as a universally accessible health record for active and non-active service members and their families.

The goal here is to provide more efficient processing of benefits, better informed clinicians, services and care providers, improved continuity and timeliness of care and enhanced awareness among all involved parties and elimination of gaps in records.

Williams:            And who is funding this?

Barry:            This is government funded.  Our technology supports this initiative on the private sector side so that we can support the exchange of health information from the private sector to the VA and the DOD when they might be treating a patient and need information at the point of care.

Williams:            When a person on active duty or a veteran goes to a private facility or a non-governmental facility, does that facility have to be connected in with you or can the patient just bring some sort of key or link that allows access to the records?

Barry:            There have been pilot programs where people have health information stored on some small device or flash memory stick, but the real push right now is based on the Nationwide Health Information Network. And that underpins a large part of the Virtual Lifetime Electronic Record initiative.

These create the secure standards to be able to transport this information through the networks securely over the internet so that people don’t need to carry around a physical device or something similar, which is difficult to update with additional health information or easy to lose.  We add much more fluidity to the information when it’s available real time, on demand.

Williams:            I’ve heard of the Nationwide Health Information Network and I know there have been various pilots.  What’s the status of that initiative?  Is it something that’s up and running that you can actually use or is that just a future plan of what you’d like to be able to do?

Barry:            That’s a great question.  Actually it is in use.  In 2009, we were the first to bring it into production use, starting with the Social Security Administration, the VA and DOD. After that we added CMS to the network for a community in Virginia.

As of the end of last year, there are over 20 organizations connected to the Nationwide Health Information Network; a vast array and variety of sizes of organizations from federal agencies to large IDNs. Health information exchange organizations are all collaborating and using this today.

Williams:            One partnership that I’ve seen mentioned in connection with your company is MedVirginia, but I’m not familiar with MedVirginia or the nature of your partnership.  What’s that all about?

Barry:            MedVirginia is a super regional health information organization.  They aggregate data for their stakeholders in Central Virginia and were very much and still are a leader in connected health solutions with a particular focus on the Nationwide Health Information Network.

It was with them in collaboration that we did the work to be able to connect up entities like the Social Security Administration and do the VLER work to connect the hospitals and facilities for both public and private.  They’re real leaders in this space. Our focus is on the technology and we’re able to accommodate the standards and guidelines that are being published through the  Office of the National Coordinator of Health IT, which is really describing the plumbing of how this works in a safe and secure way to be able to move this information from stakeholder to stakeholder.

Williams:            Going back to what you said at the beginning about the problems that you’re trying to solve, it seems like there is actually a pretty clear set of issues that you’re addressing, but things are still in the relatively early stages. Can you give me a sense of what kind of milestones you expect along the way and what kind of timeline to expect before this technology is widely implemented ?

Barry:            There are several initiatives. VLER is a very important one, which supports moving health information from the government organizations and the very large systems –the top down approach.

At the same time, we have states that are receiving funds through the stimulus act to create Virtual Lifetime Electronic Records at a state level.  We have the national level, we have the state level, and there are also initiatives that leverage standards to do it at the community level.  There are three things working simultaneously to sandwich in this problem.  It’s not all just top down –how long will it take everyone to get on the nationwide health information network. We’re seeing a lot of activity at all three tiers.

For all the good reasons we talked about, I think this consensus at making electronic health information available will make a tremendous impact on health care delivery in this country. You can think of it like this; the “plumbing” is in place in a handful of geographical locations to support Virtual Lifetime Electronic Records. We’re starting to do smart things and leverage this data, but are only at the beginning of tapping the potential of the information itself.  We’ll see more “plumbing” and see new innovative ways to harness this data for the benefits of patients and care providers.

Williams:            I’ve been speaking today with Colin Barry, CEO of MEDfx.  We’ve been talking about the Virtual Lifetime Electronic Record or VLER program.  Colin, thanks so much for your time.

Barry:            Thank you very much David.

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The section of his website is entitled “Repeal and Replace ObamaCare with PATIENT-CENTERED HEALTHCARE” and has two tenets:

• “Every American should have access to high-quality, affordable health care, with health care decisions made by patients and their physicians, NOT government bureaucrats”
• “America needs targeted, market-driven, patient-centered solutions to address the costs and underlying causes of being uninsured rather than a one-size fits-all, government-run health care system”

It’s interesting that he’s calling for universal, affordable access. Sounds a lot like the Patient Protection and Affordable Care Act (PPACA). The only difference is this piece about “government bureaucrats.” I wonder what specific elements of PPACA he means by this –because I don’t see a lot of interference in “health care decisions” in the Act relative to the pre-PPACA days.

It’s hard to argue with the idea of “targeted” and “patient-centered” solutions. And actually, that’s the path taken by PPACA. Didn’t opponents criticize the length of the bill? A lot of that is because there are many different targeted approaches taken: some for individuals, others for small business, others for medium sized organizations, still others for large entities. Other targeted interventions are in place for high-risk patients, and there is an innovation center to support the efforts of those who want to try new approaches. I will argue with Santorum’s appeal for “market-driven” solutions –which is going to mean many people are not insurable and that their premiums will rise and policies will be canceled when they get sick. And PPACA is simply not a government-run health care system as I have explained.

Santorum lays out his plan in “THE SANTORUM HEALTH CARE SOLUTION.”

“Priority number 1 = repeal ObamaCare,” which he describes as “job-destroying,” “heavy handed,” “cruel.” Nice rhetoric, but no facts to back it up.

He then ticks off a set of unoriginal antidotes, that pretty much echo the uninspiring “replace” long-promised by the Congressional GOP:

• Increase Health Savings Accounts and high deductible insurance plans
• Reduce costs through competition. Ironically Santorum wants to see this done through “increased transparency, electronic records, and health care literacy” –all of which are significant initiatives of the Obama Administration
• Allow the purchase of health insurance across state lines. This is one of the most hypocritical GOP positions, because it really means attacking states’ rights to establish their own rules. And there’s no serious evidence that this would have any meaningful impact on costs
• Letting individuals purchase health coverage with pre-tax dollars. First, this only benefits those paying significant taxes –i.e., those who don’t need the help. Second, it encourages inflation of health insurance costs. Finally, it erodes the tax base and worsens the deficit
• Medical liability reform. Again, another favorite of the GOP, that will do next to nothing to control costs and certainly isn’t “patient-centered”
• Block grants for Medicaid. Just another way to squeeze the poor

And that’s it.

Let’s face it, these proposals will not lead to “every American” having “access to high-quality, affordable health care.” In fact they really won’t lead anywhere productive.

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• The nature of the problem his company is striving to solve
• The typical use case for a veteran
• Differences between the needs of the military and those of civilians
• MEDfx’s role in the National Nealth Information Network
• How the VLER project is likely to evolve over the coming years

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The article is a little vague on exactly what aspects of the hospital’s own databases are being tapped. It appears that some elements of financial and medical records (such as insurance status) are being used, but others (such as whether someone is a smoker) are not. Outside consumer marketing agencies can match the hospital’s data up with all sort of other potentially useful information, such as income, household composition and credit worthiness.

Hospitals defend their use of these targeting tools by claiming that bringing more high-reimbursement patients in allows them to devote more resources to free or low-reimbursement care. But it’s difficult to determine whether that’s really occurring, or just a nice thing to say. At least theses marketing efforts do not appear to be focused on reducing access for those with weaker insurance or less profitable conditions.

Hospitals (especially not-for-profit ones) feel compelled to say they’re using these services to help everybody. But as a whole private practice physicians are less concerned about giving altruistic reasons for improving their case mix. Online doctor finder and booking services like ZocDoc and TopDoc ask patients for their insurance information, not just to help patients find in-network doctors, but also to help doctors finds the patients they prefer to work with.

It remains to be seen whether payment reform including Accountable Care Organizations and bundled payments will change the incentives for providers and result in the curtailment of the current cherry picking strategy.

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I’m pretty savvy about Medicare but did miss two questions (share of low-income Medicare beneficiaries and share of beneficiaries with multiple chronic conditions). At least I got all the policy questions right.

One nice thing about the quiz is that the answers provide direct links to Kaiser resources where you can learn more.

Well done Kaiser! I’d like to see someone organize a whole set of these quizzes on different topics (not just health care) for the 2012 elections.

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Some disappointing examples are noted:

• FDA recommended diabetes monitoring for patients taking atypical antipsychotics, but testing did not increase
• Warnings of drug/drug interaction weren’t heeded –at least for 18 months
• When FDA warned about prescribing drugs in certain populations (e.g., atypical antipsychotics for dementia) there was an across the board reduction in prescribing

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PPACA presents a fat target for opponents of an active federal role. It’s complex and ambitious, and even though at heart it is a very moderate (or even conservative) law, there are lots of hot button provisions to demonize. Health care is such an important emotional, personal and financial issue that people are justifiably nervous whenever something happens, and ready to listen to all kinds of claims.

Criticizing PPACA –whether over death panels, individual mandates, government takeovers, rationing or whatever– is fun and easy. It also obscures the fact that the health care system is drowning the country and really does need to be reformed one way or another. And that it’s very hard to do. As soon as PPACA opponents start listing out their “replace” ideas with any specificity they are going to be very vulnerable.

The Republican leadership knows this, and that’s why they haven’t issued any serious “replace” ideas. Now we hear from House Energy and Commerce Committee Chairman Joe Pitts (R-PA) that the replace ideas will come after the Supreme Court decision on PPACA’s constitutionality in June.

According to Pitts, here’s a taste of what’s in store: “giving the tax break for health insurance to the employee instead of the employer, medical liability reform, creating high-risk medical ‘pools’ and allowing insurers to sell their products across state lines.”

To which I reply, “That’s it? Those are tiny, insignificant tweaks.” Just to pick on these specific examples:

• Tax breaks don’t help people with low incomes –who are the ones who need help paying for health insurance
• Medical liability reform is a feel good measure that will have no appreciative impact on overall costs
• High-risk medical pools sound good but generally just stick government(!) with the bill for expensive patients
• Selling insurance products across state lines is just a way to trample on states’ rights to impose mandates

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PPACA was crafted to encourage smaller companies to provide insurance for employees by regulating the insurance market, establishing health insurance exchanges, providing tax credits for the smallest employers, providing grants for wellness programs and imposing penalties on some who don’t comply. We’ll see where all this leads as the Supreme Court considers PPACA’s constitutionality and Democrats and Republicans contest the 2012 elections, but small businesses would be wise to start planning for the full implementation of PPACA, which is less than two years away.

Kaiser Family Foundation has a good fact sheet on the topic. Key takeaways are:

• PPACA allows businesses to “grandfather” health plans in place as of March 2010. That was to address concerns that people would have to give up health plans they’re happy with now. Companies may wish to use grandfathered plans because such plans are subject to fewer requirements than the “Essential Health Benefits” that will be specified under PPACA. Most small businesses have at least one grandfathered plan. Theoretically these plans could be cheaper, but in practice I expect that most such plans will be abandoned over the next five years as market conditions change
• Health plans will have to guarantee that coverage is available and can be renewed. They’ll also have to offer coverage to dependents up to the age of 26. Importantly, plans won’t be able to base premiums on health status of a company’s employees. Instead they can rely only on age, smoking status, individual/family and location. They can provide substantial discounts for those engaged in wellness programs
• Essential Health Benefits (referred to above) will be decided on a state level, with federal input
• Health plans will be subject to minimum medical loss ratio (MLR) rules and will have to rebate overcharges if medical and quality improvement spending fails to reach 80 percent of premiums
• Plans will be assigned simplified ratings (bronze, silver, gold, platinum) to reflect their level of coverage relative to expected total costs
• Small businesses will be able to participate in state run or federally run health insurance exchanges
• There will be penalties for businesses with more than 51 employees if they don’t provide affordable coverage. Note that businesses with fewer than 50 employees are exempt from the penalties
• Substantial tax credits will  be available to low-wage businesses with fewer than 25 employees
• Businesses with fewer than 100 employees will be eligible for grants to launch wellness programs if they did not already have them in place

In short, PPACA has a lot of implications for small and mid-sized businesses. But employers with fewer than 50 workers won’t actually be compelled to do much. Their employees are likely to obtain insurance coverage through the individual market and Medicaid. In contrast, under state health reform in Massachusetts the mandate kicks in when employers have 10 employees, which is a big difference.

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• The similarities and differences between personalized medicine for the brain and overall
• The iSPOT study that focuses on biomarkers for depression and ADHD
• The importance of a standardized platform
• The business case for personalized medicine for the brain in pharmaceutical discovery and development
• How the next few years will unfold from a brain research standpoint

If you want to hear more from Evian, you can check out a video of his recent conference presentation at Stanford.

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So I was struck by an article today that mentioned a glut of nurses, even in places like California that mandate minimum nurse staffing ratios. The situation is blamed on the recession, which depresses demand as hospitals and other nurse employers seek to control budgets, and also increases supply as nurses delay retirement, seek more hours, or return to work when a spouse is laid off. I’m sure there’a lot of truth to this, but if there is really such a big shortage it shouldn’t turn into a glut so quickly.

I don’t think employers of nurses are quaking in their boots due to the prospect of a gaping shortage of nurses. Although they might not say so openly (since everyone loves nurses) the forward thinking hospitals are planning for the day when nurses comprise a substantially smaller portion of their costs than they do now. They’ll do it with better decision support systems, workflow tools and robots that will take over many routine and high-skill nursing functions. Hospitals may seem capital intensive now, but I really believe there will be even more substitution of capital for labor in the future.

So if you’re betting on a giant nursing shortage in the year 2025 my guess is you’re going to lose.

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The Leapfrog Group. March of Dimes and American College of Obstetricians and Gynecologists has taken the initiative to try to address this issue by getting the word out and having hospitals set performance. They’ve decided there’s no reason for hospitals to have more than 5 percent of births in the early delivery/no medical reason category, and have asked hospitals to report their results.

The good news is that it seems to be working. The rate dropped from 17 percent to 14 percent from 2010 to 2011, according to newly published figures.  More than 700 hundred hospitals voluntarily reported their rates to Leapfrog. It’s fascinating to scroll through and see the variability. A good number of hospitals are at or below the 5 percent target while some others are way up in the 20 to 30+ percent range. That can’t be random variation.

So why are these medically unnecessary early births occurring? Childbirth Connection has a good summary:

• Women’s lack of knowledge about the risks, benefits, and appropriate use of labor induction
• Lack of shared decision making
• A perception among women, caregivers and hospital administrators that induction is convenient and cost-effective
• Frequent use of screening tests at the end of pregnancy, despite lack of evidence of improved outcomes
• A belief that the best way to manage risks in pregnancy is to deliver the baby

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As I write this I’m well aware of the problems such a policy can cause including deterring people from needed care, increasing anxiety at a time of heightened stress, delaying clinical triage, and getting the amounts owed wrong. The biggest issue is the first one –for example even an insured patient may not have the $1000 or $2000 co-payment or deductible on hand. But that also shouldn’t necessarily be the hospital’s problem. Rather that’s an issue for the plan sponsor (often an employer), state or federal policy.

I do worry about big institutions such as hospitals acting inappropriately aggressively toward patients, but this problem already exists with post-treatment payments. If anything, taking care of the bill up front may reduce the interest and fees that can pile up, especially when a collection agency gets involved.

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Gingrich said he supported the measure because it didn’t make sense to pay for kidney dialysis and open heart surgery but refuse to pay for insulin or heart medicine. That’s logical enough.

But Medicare Part D was and still is a fiscally reckless program. Unlike Medicare Part A (hospital insurance) which is 84% funded by a dedicated payroll tax, Medicare Part D has absolutely no dedicated revenue source at all, beyond the very modest premiums paid by beneficiaries! And when the prescription drug benefit was put in place there were no attempt to offset the added costs by cutting elsewhere.

In other words, the government’s Medicare Part D costs of about $50 billion per year go straight to expanding the federal deficit.

Worse yet, Medicare Part D is available to any Medicare eligible person regardless of income. That means many seniors who don’t need another handout from the government are getting one.

You can’t be a conservative and be in favor of Medicare Part D. So, which is it, Newt?

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But one –Should physicians use email to communicate with patients?– should have been settled more than 10 years ago. It’s almost a joke that it’s still being asked, and at first I thought the question was about whether doctors and patients should still be using email as opposed to whether they should be trying it for the first time. Dr. Joseph Kvedar of the Center for Connected Health trots out all the well-rehearsed arguments that have been used over the past 15 years to encourage patients to use electronic messaging with their patients. And I agree with it all:

• Privacy concerns are overblown and not unique to electronic media
• Not every interaction needs to be in-person
• Doctors won’t be inundated with messages, despite their fears
• Patients feel more connected to their physicians when they can reach them online
• Electronic communications promotes efficiency
• Liability issues are mino

Dr. Sam Bierstock, founder of a health care-IT consulting firm, takes the con side of the argument. He’s probably an intelligent guy and knowledgeable about health IT. I’m guessing he jumped at the chance to write a piece for the Journal (and even have his picture published) –even if it meant taking a silly, losing position. Kind of like the Washington Generals, who used to play against the Harlem Globetrotters.

Bierstock concedes that “email can be useful for certain very basic patient-doctor communications” but then lays out a bunch of arguments that aren’t terribly persuasive:

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• Neglect of dental issues due to lack of coverage causes higher medical expenses, for example as dental infections spread to other parts of the body
• Hospital emergency rooms are seeing many dental cases (representing as much as 2.7% of ER volume) and are not well equipped to treat the problems, according to USA Today. In any case the expense is high
• Even well-off people with medical coverage often don’t qualify for dental insurance –e.g., because they aren’t part of a group–  and end up paying high fee for service rates to providers rather than benefitting from a plan’s purchasing power and network
• To the extent that we are moving toward a more integrated approach to care and payment (e.g., medical home, accountable care organization) it makes sense to bring the whole body under one roof

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The government does play a major role in the health care system. It’s a big customer, financier and regulator. The feds own and operate VA and DoD hospitals, and there are various county, city and state facilities, but this is a small share of the total.

Kaiser Family Foundation has an informative piece today (Betting on Private Insurers) that  looks at health care based on who’s managing the benefits. The conclusion: at least 73 percent of those covered are in private insurance arrangements, whether through employer coverage, individual policies, Medicare Advantage or Medicaid managed care. The rest are mainly in fee for service Medicare and Medicaid. And many fee for service Medicare patients have private Medigap and Part D drug plans. If anything, the Affordable Care Act is likely to boost the percentage managed by private entities. More individuals are slated to purchase commercial insurance on their own or through exchanges, and much of the growth in Medicaid will be in managed care.

Providers of health care are overwhelming private and likely to remain so. The government isn’t nationalizing hospitals nor forcing physicians out of private practice.

Sure, it’s arguable that many hospitals are so dependent on Medicare that the government influences them heavily without owning them. But I haven’t heard anyone say the government has taken over the defense industry even though many weapons makers can only sell to the feds.

I think it would be healthy to have a debate about the extent to which government should get more involved in health care delivery and benefit management. Maybe the VA model should be replicated and a public insurance plan be introduced to compete with the private health insurers. But none of this is part of the Affordable Care Act and therefore it’s laughable to frame “ObamaCare” as any kind of government takeover.

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