Archive for the ‘Uncategorized’ Category

Key Lessons Learned for the Healthcare Industry with Governor Mike Leavitt, Andrew Croshaw, and Ian Morrison

Friday, December 18th, 2020

In this Leavitt Partners Future Frame Series you will hear Governor Mike Leavitt, Andrew Croshaw, and healthcare futurist, Ian Morrison, discuss lessons learned in 2020 and the on-going implications for the healthcare industry in 2021.

https://www.linkedin.com/posts/leavitt-partners_leavitt-partners-future-frame-series-hear-activity-6745372376290074624-aXjZ

The future of employer sponsored insurance, a conversation with Health Evolution

Wednesday, December 9th, 2020

In this webinar, Ian Morrison hosted Health Evolution’s virtual gathering, The Future of Employer Sponsored Health Insurance: Implications for Healthcare Stakeholders with Elizabeth Mitchell, CEO, Pacific Business Group on Health and Barry Arbuckle, President & CEO, MemorialCare Health System.  

American Physicians Group Podcast with Don Crane

Thursday, September 24th, 2020

What does our healthcare system look like post-COVID? How is healthcare innovating to meet the many challenges? How will this pandemic impact the value-based care movement? APG President and CEO, Don Crane, talks frankly with Ian Morrison, author, futurist, internationally known consultant and speaker specializing in the future of healthcare and the changing business environment. Morrison gives his insight about the changes and challenges ahead for employer-sponsored commercial insurance, Medicare, and Medicaid.

Tuesday, May 19th, 2020

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Emergency Care

Sunday, November 13th, 2016

The Affordable Care Act has expanded coverage and increased demands on the health care system. In many states, patients without a regular source of care are defaulting to emergency rooms as their touch point in health care, even though coverage expansion holds promise to create more stable and appropriate primary care options. At the same time, in many states such as Texas, Ohio and Colorado, freestanding emergency rooms and urgent care centers are growing like wildfire, worrying critics that cherry picking will undermine the economics of emergency medicine for many community providers. Where are we headed with emergency care?

Emergency and Urgent Care

Across America there is a wide and growing array of ambulatory care options for urgent or emergency care. According to industry sources, there are more than 5,000 hospital emergency rooms, 10,000 urgent care centers, 5,000 ambulatory surgery centers, 2,800 retail clinics and more than 500 freestanding emergency rooms (a phenomenon we will focus on in detail below). This growth in options reflects a broader shift to the ambulatory environment enabled by technology (such as rapid recovery anesthesia) and by consumer preference for rapid treatment in convenient locations.

With the passage of the Affordable Care Act, emergency room activity seems to have increased across the country. Overall in the United States, the number of emergency room visits per 1,000 has increased from 350 to approximately 434 in the last 20 years. Nationally, the promise of the ACA was that providing health insurance would dampen the use of ERs because newly insured patients would have access to a regular source of primary care, but this promise has not been completely fulfilled.

Medicaid recipients are largely immunized from the higher out of pocket cost of ER visits experienced by exchange or commercially insured patients, and this may lead them to seek routine care in the ER more often.  While there is evidence that (over time) primary care options are put in place for the newly covered under Medicaid and through exchanges (see an excellent review by Deloitte by visiting the experience of most provider groups I talk to is that ER use is up, driven largely by Medicaid expansion. We are not going to litigate that particular argument here; suffice it to say there is scholarly research being developed to analyze both the short-term and long-term effects of coverage expansion on sources of care, and stay tuned for a definitive history five years from now.

I became interested in the changing landscape of emergency room use following a Martin Luther King Community Hospital board discussion. I have the honor to sit on the hospital board in Los Angeles and I am very proud of the work our CEO Dr. Elaine Batchlor and her colleagues have done in successfully opening a new community hospital in a unique public-private partnership with the county, the regents of the University of California, UCLA and an independent nonprofit community hospital board (a topic for a future column).

The hospital is doing really well and, in particular, its emergency room is providing this underserved community a vital element in a high-quality health care system.

Wally Ghurabi, a distinguished UCLA emergency room physician, is the chief of staff. Dr. Ghurabi’s group services not only the ER at Martin Luther King but also UCLA’s Nethercutt Medical Center in Santa Monica (thereby nobly treating the whole range of socioeconomic populations in Southern California). The hospital opened just over a year ago, but is now seeing a rate of 70,000 emergency room visits per year.

Dr. Ghurabi told me in an interview that this growth is bimodal. At one extreme is a significant group of patients who could be treated by primary care. At the other extreme, a significant proportion of patients are extremely sick – many with psychiatric and behavioral health issues, or with severe untreated diseases such as diabetes and hypertension, who have been attracted to the new hospital because of its emerging reputation for quality and service and because of its location in the heart of an underserved community with historically limited access to primary and specialty care.

I asked Dr. Ghurabi during our board conversation about freestanding emergency rooms. (California is the only state that outright prohibits the freestanding emergency rooms through the stringent regulatory environment for emergency room status.) Dr. Ghurabi is a veteran ER physician who has trained many residents and fellows in emergency medicine in the United States and has a keen understanding of all ER trends within California and the nation. In an interview, Dr. Ghurabi provided his perspective on what is happening across the country with urgent care and freestanding ERs.

Urgent Care

Dr. Ghurabi explained that urgent care centers are open usually from 8 a.m. until 10 p.m. (California urgent care clinics cannot keep patients over 23 and a half hours in the facility.) Typically, urgent care centers charge at rates that are a third of the emergency department rates. A facility fee is included in the single bill for services rendered in these facilities. They can be located almost anywhere, but typically the desired location is high-traffic areas. (Because this is episodic care, the service may be needed by patients only once every few months.) The socioeconomic status of the location is less important because the goal is volume.

Urgent care centers generally offer very basic on-site diagnostic services, such as plain film X-rays and minimal laboratory services, such as point-of-care testing, with no advanced imaging such as CT or MRI. Industry estimates indicate that 20 to 24 patients per day are required to break even. The regulatory barriers are relatively low as they need only the same licenses as any medical office or clinic. In terms of hospital referrals, they’re not engaged in high-referral patterns to hospitals unless they’re tied by ownership or geography to a specific health system or hospital partner. Urgent care centers are typically staffed by primary care physicians and nurse practitioners; formal emergency medical training is not required.

Urgent care centers are well received by consumers in almost every survey I have seen: Patients greatly value the convenience, short waiting time and speedy resolution of episodic care issues. In many parts of the country, urgent care is being systematized into franchise-like offerings. The market leader Med Express (which was purchased by Optum in 2015) operates, according to its website, in 15 states and has approximately 200 urgent care centers in those states. The clinics are open 12 hours a day, seven days a week to serve consumers. A relatively low percentage (perhaps as low as 2 percent to 3 percent) of visits actually result in a hospital admission compared with the 10 percent to 30 percent of a typical hospital ER seeing patients. The key driving force behind urgent care is convenience.

Freestanding Emergency Rooms

A thoroughly researched Health Affairs article by Harvard researchers estimated that there were 400 freestanding ERs operating in 32 states by December 2015. However, more recent industry assessments put the number at over 500. The Harvard researchers identified 21 states with regulations that allowed freestanding emergency rooms while 29 states did not have regulations that applied specifically to such EDs. Only one of those states, California, specifically precludes such

Texas, Colorado, Ohio, Minnesota and Arizona are the states with the most freestanding emergency rooms per capita. Harvard researchers estimated that if the rate of penetration of these early adopter states is emulated in areas where regulations provide for them, there could be as many as 2,000 of these facilities in the near future.

There are two basic types of freestanding emergency rooms: those affiliated with hospitals that are recognized by CMS as being part of a hospital billing number and therefore can be reimbursed for a facility fee under Medicare, and those that are independent and not recognized by CMS. The latter also tend not to accept Medicaid patients because they cannot bill for the facility fee.

Nationally, according to researchers, 54 percent of all freestanding emergency rooms are hospital affiliated while 37 percent are independent. However, in Texas only 22 percent are hospital affiliated, and a full 71 percent are for profit. In Ohio virtually all the freestanding emergency rooms are hospital based. In Colorado the split is 60 percent hospital and 40 percent independent.

Dr. Ghurabi told me that, from his perspective, freestanding emergency department are fundamentally different from urgent care in that they are open 24/7, 365 days a year. And while some have no beds (as in Texas), other states require a small number (typically two to four beds) to qualify for hospital-based charges.

Most freestanding emergency departments charge standard ER rates, and payers presently pay those emergency department rates. Physicians bill a professional fee, and a facility fee is collected (usually three times the professional fee). The facility fee can be collected by the owner, which can be a professional group, a sponsoring hospital or an investor group depending who is providing the technical services. In some states, new locations require certificate of need clearance where nearby hospitals can veto freestanding emergency departments by challenging the need.

Again, as with urgent care centers, the desired location is a high-traffic area because it is episodic care. But research has shown that these freestanding emergency departments are disproportionately located in affluent communities where a high percent of privately insured patients either live or work. Because the charges are so high, they don’t need high volume and depend more on high acuity. The break-even point is a remarkably low eight to 10 patients per day. Typically they offer more advanced diagnostic equipment, including X-ray, lab and CT scanner, which can be either inside or outside the building.

Freestanding emergency departments are much more complex to license compared with urgent care, requiring medical practice committees like a hospital. Referrals from freestanding emergency departments, though again relatively infrequent compared with typical hospital ERs, are extremely attractive to the hospital since almost every admission will be a commercially insured patient. Freestanding emergency departments require staff with formal training in emergency medicine.

Texas is the hotbed of freestanding emergency rooms. Adeptus, a for-profit publicly traded corporation, is the oldest and largest provider in the freestanding emergency department business. Under its First Choice Emergency Room brand, the company has nearly 100 locations (according to its website) in Texas alone, with 52 in metro Dallas (20 of which are in partnership with Dallas health system powerhouse Texas Health Resources) and 30 in Houston, seven in San Antonio, and five in Austin. Parent company Adeptus indicates in its latest 10 Q filing with the SEC that it also has active partnerships with HCA, Concentra, Dignity Health, University of Colorado Health System and Trinity Health in addition to their joint venture with Texas Health Resources. The 10 Q filing also reveals that over 90 percent of its revenue comes from commercial patients, with Medicare and Medicaid being a tiny sliver of revenues.

These data seem to support the critique that Dr. Ghurabi and many other ER professionals make of this freestanding emergency room phenomenon: While it is obviously a business that satisfies consumers (particularly commercially insured consumers) and seems to be incredibly profitable for investors and physicians participating in such practices, it is clearly an example of cherry picking through location.

A Question of Mission

This raises some fundamental questions about the future of American health care delivery. On one hand, we want to encourage innovation in health care payment and delivery that serves consumers and patients more conveniently and makes the health care system better, faster and cheaper overall. And we should encourage and celebrate that.

But if we are developing only consumer-friendly solutions targeted at affluent consumers with good health insurance, what are the consequences for those institutions serving less affluent areas, or for those institutions with complex, quaternary care, or for research and teaching missions, or for those essential community providers who deliver trauma care, burn units, transplantation, and complex chronic disease and behavioral health services?

I think we should be careful that freestanding emergency rooms do not become a metaphor for the health system more broadly. Namely, if the best way to survive and flourish economically and to serve most consumers with convenience and high quality is to avoid the poor, the sick, the vulnerable and the infirm, such practices challenge the mission of many health systems across the country and will heighten in stark relief the tension between market forces and mission-oriented health care.

 

Future of Medicaid – National Association of Medicaid Directors

Tuesday, November 8th, 2016

https://www.c-span.org/video/?418223-1/discussion-focuses-future-medicaid

Health care futurist and author Ian Morrison and state Medicaid professionals from Florida and Hawaii discussed the future of Medicaid.

“Looking Forward: The Future of Medicaid and the Health Care System” was a plenary session of the 2016 Fall Conference of the National Association of Medicaid Directors (NAMD). 

PEOPLE IN THIS VIDEO

  • Matt Salo Executive Director National Association of Medicaid Directors
  • Justin M. Senior Deputy Secretary Florida Agency for Health Care Administration->Medicaid

The Trump Healthcare Interview

Monday, February 15th, 2016

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Donald Trump is leading in the polls and could become the Republican nominee and maybe even President.  He has not been specific on healthcare.  The Healthcare Blog (THCB) asked Scottish-Canadian-Californian healthcare futurist Ian Morrison to conduct an interview with Trump, figuring that Morrison would have an in with Trump given Trump’s praise for Scottish and Canadian healthcare.  Note, this interview is a fake, but Donald Trump is real.  Think about it.

MORRISON:  Thanks for making time Mr. Trump, I was asked to interview you on healthcare because I am Scottish and your mother was a Scot.

TRUMP:  Yes she was, a beautiful person.  I love Scotland.  I own Turnberry, the best golf resort in Europe.  I built a magnificent new course near Aberdeen.  The Scots love me, I get along with the Scots.

MORRISON:  Actually, Mr. Trump, with all due respect, they think you are a bit of an asshole and were offended when you told them not to build a wind farm off shore from your new golf course because you thought it would spoil the view for your American visitors.

TRUMP: (Angrily).  Look, the problem with the Scots is they don’t win any more.  When was the last time you won…Braveheart, right?  When was that 1800 or something?

MORRISON:  1305

TRUMP: See. Losers for 800 years.  So don’t talk to me about the Scots winning.

MORRISON: So why did you point to Scotland and Canada as good example of healthcare.

TRUMP:  I saw it on a show. A….nd I thought that if Scotland and Canada do well…and they are both losers…then we are really bad at healthcare.  By the way, Canada are such losers we don’t even need to build a wall because they are not smart enough to come here illegally.  So I want to make America great again, and especially healthcare.

MORRISON:  So let’s turn to healthcare, you don’t like Obamacare?

TRUMP:  Let me tell you something.  Obamacare is a disaster.  The costs are going about 20, 30, 40 percent, the doctors are quitting it is a disaster, because of Obama.

MORRISON:  Mr. Trump those rate increases are what insurers asked for in some states, but reputable studies show that if consumers shop around on the exchanges they can secure a better deal. For example, in Nebraska some insurers asked for 15, 20, 30 percent rate increases but two new insurers entered the market at zero premium increases over 2015.  So isn’t it working?

TRUMP: Nebraska, do they even have a primary?   Look, everyone knows Obamacare is a disaster and we have to repeal and replace.  Everyone.  But I will do it.  I will get it done.  I will make American Healthcare great again.

MORRISON:  So you don’t think that covering 20 million uninsured people was a good idea?

TRUMP:  Look we are not going to let people die in the streets the way they are now.  So we  will repeal and replace Obamacare. Period.  And everyone will be taken care of.

MORRISON:  So you would be in favor of universal health insurance provided by the government like Bernie Sanders has proposed?

TRUMP:  I want to to debate Bernie so badly, because we would win.  Hillary is a bigger name so part of me wants her because it would be two great brands going head to head.  But Bernie, he is a socialist.  I make a lot of money.  I don’t like socialists.

MORRISON:  With all due respect Mr. Trump, you did not answer the question.  How are you going to take care of everyone after you repeal Obamacare?

TRUMP:  Look.  The way I do things I get the best people together in a room, I have a beautiful conference room at Trump Tower on 5th Avenue.  It’s a beautiful, classy room, Ivanka did it.  So I would get a few of the best people.  Not a lot,  just a few.  We’d take a day.  Figure it out.  And I’d sleep on it overnight and come up with a plan.  And then the next day we ‘d go ahead and get it done.

MORRISON:  Have you thought about who you would invite to the meeting to redesign healthcare.

TRUMP:  No I haven’t, not yet.  (Smiling)  I am kind of busy right now, running for President.  And by the way we are winning everywhere.  The polls ahead……..so far ahead.

MORRISON: You lost to Senator Cruz in Iowa.

TRUMP:  No technically…We actually won because Cruz defrauded Ben’s vote.  But I am not worried about Cruz…people say he’s a pussy.  I didn’t say that.  People call him that.  I like him.  But the people they come to my rallies.  They love me.  They say these things.  “Cruz is a pussy”, and I reprimand them for saying it, but what can you do?

MORRISON:  Back to the meeting to design the replacement of Obamacare, what kinds of best people are we talking about?

TRUMP:  Look we will get to healthcare, when we are finished winning all these elections.  But let me give you some examples.  And this isn’t final.  But, I would probably invite Ben Carson, nice man.  He’s a pretty good doctor and he’s black, so he’s a twofer, so Ben for sure.  Dr. Oz he’s in New York, great brand guy, and he’s making a fortune from the vitamins.  So he would be good.  And look New York has some great hospitals like Mount Sinai and, by the way I do fundraisers for all of them. They love me.  I do these fund raisers I get my friends to donate millions.  So I would get someone from the hospitals, probably New York Presbyterian, because I’m a Presbyterian.  Which by the way goes over big in the Bible belt.  They are very religious.

MORRISON:  So Ben Carson, Dr. Oz and someone form New York Presbyterian.  Anyone else?

TRUMP:  Ivanka….she is very fit, she has a beautiful body.  By the way, I have tremendous children.  They are very healthy because like me , they don’t smoke (never have), don’t drink and they work out.  So I would get Ivanka involved.  Maybe she would run the whole thing, we’ll see.

MORRISON:  Your children are a real credit to you and your wives, Mr Trump.  But back to healthcare what will Trump healthcare look like?

TRUMP:  Look we will get the specifics out later.  But let me tell you this.  We will get rid of Obamacare, we will make America great again, and…..we will make American Healthcare great again.  It will be huge, classy, unbelievable, it will have the best people…and by the way the utilization will be very low because there will be a gigantic wall around it paid for by the Mexican government.

MORRISON: Mr. Trump, thank you.  This has been incredible.

Dubai and Pete Seeger

Thursday, March 6th, 2014

In the United States we are having a national debate about inequality. The very rich are getting very much richer. And everyone is agonizing about the lack of upward mobility that is so central to the American dream.

Obamacare at its core is a simple attempt to address one dimension of inequality of income and opportunity. It provides subsidies (paid in part by the wealthy) to low-income folk so they can purchase high-deductible health insurance (that should work well, right?) and it expands Medicaid to include the working poor.

In the rich Persian Gulf states, money is no object for those countries aiming to build state-of-the-art medical care facilities for their citizens. But they are also starting to address bigger questions about providing health insurance to the entire population, including expatriates who live and work in their countries often on a temporary basis.

Visiting Dubai the day Pete Seeger died struck a chord with me: All rich countries have a moral obligation to consider the health and health care of all their residents. While providing health insurance may seem like an important step, it is only a partial step toward improving health and health care for all. Innovation in care delivery using inexpensive technologies may be the key to health for all. It’s what Pete would have wanted.

 

My Journey to Dubai

I was asked to give a talk to a leading group of hospital CEOs in the Arab world. They were coming together to attend a massive medical meeting (Arab Health 2014) in Dubai, and my client was holding a private event for some of the top leaders.

Since Dubai was on my bucket list, I jumped at the opportunity even though it was logistically challenging because the meeting was wedged between obligations in Monterey County, Calif., and Phoenix. (I may be the only guy ever who was in town for the Dubai Open and the Phoenix Open given they are held the same week.)

Logistically it was made easy because Emirates has a direct flight from San Francisco to Dubai that goes straight over the North Pole. Trust me, flying 15 hours first class on Emirates just once makes up for a lifetime flying in the back of the bus on United.

Not only was this a top 1 percent experience, it was a top 0.1 percent experience and a metaphor for the global economy. Business class is pulling away from economy and first class is unattainable, but if you are in it, it’s sweet.

Recent studies by economists at UC Berkeley and the Paris School of Economics show the widening gap at the top. As Annie Lowery of The New York Times succinctly put it after reviewing their work (Feb. 10, 2014):

“For now, it is a very good time to be very, very rich. The 1 percent are doing well. The 0.01 percent — they’re doing even better.”

 

Fantastic Wealth

Dubai is a metaphor for the global economy. Fabulously wealthy sheikhs shower generous incomes on the 20 percent of the population who are Emirati citizens. The other 80 percent of the population (mostly from India, Pakistan and Bangladesh for the construction and menial work, and Brits and other global travelers for the professional jobs) make better incomes than they would at home in the tax-free environment.

I got a chance to see a bit of Dubai and chat with leaders in the region in my three days there. Massive skyscrapers (including the tallest building in the world, the Burj Kalifa) rise from what was barren desert only 30 years ago. It is an urban dream of glitzy hotels and towering office buildings with an otherworldly quality: like Las Vegas without the cleavage.

The wealth is apparent in the over-the-top shopping malls, where Western ex-pats mingle with fully veiled Dubai matrons with kids in tow. The Dubai Mall boasts 1,200 luxury stores, an aquarium that rivals Monterey Bay’s, and a decent ice rink where I watched ice hockey practice. (They need to work on their slap shot.) The slightly older, but equally huge and fancy Mall of the Emirates boasts its own internal ski slope. Man over environment. Pete Seeger would be concerned about the global climate effects of making snow in 130 degree temperatures.

While new Dubai is a modern urban fantasyland, the older part of the city around Dubai Creek is a little less glitzy and home to the traditional gold and spice souks. There you see what life might be like for the armies of workers who come to work in construction — a lot grittier, a lot more third world. Not unlike the short ride from the Upper East Side to the Bronx, or Palo Alto to East Palo Alto, or Pacific Palisades to Compton.

 

Their Health Care Issues

So what is keeping their health care CEOs up at night?

Money is no object. As one observer told me: Money is no object. Gulf CEOs can buy the fanciest technology and they do. New modern facilities are being built around the gulf, including American-backed brand names like Mayo, Cleveland Clinic and Johns Hopkins. In Qatar, SIDRA aims to be the leading women and children’s research and clinical facility in the world. I joked with some American hospital CEOs when I got back that when I hear “money is no object” from them, it usually means they don’t accept Medicaid and they are not in an exchange.

Health care is a superior good. Economists agree that health care is a superior good, namely that a country will spend proportionally more on health care as national income per capita rises. Yet, most of the rich Arab countries such as the United Arab Emirates (UAE), Qatar, Kuwait, Bahrain and Saudi Arabia in particular, while they have very high per capita incomes (higher than the United States in some cases) spend a very low share of gross domestic product on health care.

Qatar, with all its wealth, spends less than 2 percent of GDP on health. While this will surely rise over time as the investments they are making become operational, it will not reach levels of the developed world for three reasons:

  • they have very young populations;
  • they have high fertility rates and therefore will remain relatively young; and
  • most importantly, 80 percent of the resident population are temporary workers who will leave before they reach the age of morbidity.

People are the problem. Even with deep pockets, the gulf states all struggle with getting enough trained human resources. While they can draw some top flight North American and European clinical leaders, they also have to tap resources from other parts of the Arab world, including Egypt and Iran, where well-trained physicians are attracted to the economic opportunities in the gulf. This creates problems for these other countries as they lose their own precious manpower, a problem exacerbated by the medical needs associated with countries embroiled in armed conflict such as Syria.

And then, when you attract the polyglot staff, how do you manage care delivery when your people may have been trained in 50 different countries? We have that problem here, too, but it presents an even greater challenge in the gulf.

Obesity is a huge problem… My enduring image of Dubai is the astonishing number of food outlets. Tempting food is everywhere. They may have brought in the Cleveland Clinic, but they also imported the Cheesecake Factory, Tim Horton’s Donuts, Applebee’s, California Pizza Kitchen and every global junk food brand. You can see it in the malls especially, with rich, sweet indulgences available every few paces (and there seems to be more eating than pacing going on).

As a result, the gulf has an alarming obesity problem that is reflected in extremely high rates of cardiovascular disease and diabetes. For example, World Health Organization data show that obesity rates in the UAE are twice as high as the Middle East as a whole; in most gulf states, over half of deaths in the 30-to-70-year age range are attributable to cardiovascular disease and diabetes, compared with just 30 percent in the United States.

…made worse by no walking. I get it; jogging in 130 degree temperatures is not healthy. Indeed, that’s why you see buff ex-pats jogging in the air-conditioned malls, darting past Louis Vuitton and running a long loop back to Chanel. But when I asked the hotel concierge if it was OK for me to walk the 2 kilometers to the Dubai Mall outside in perfect 70 degree weather, he looked at me astonished and hailed me a cab. (The cabs are cheap, plentiful and efficient.) So

you can’t walk even if you want to, and guess what, it raises the classic public health equation: Cheesecake Factory + Sitting on Your Ass = Diabetes.

Expansion of coverage. The sheikhs could just sit on their money, but the leaders in the gulf seem determined to do the right thing for their citizenry and increasingly for the expats too. While most gulf states have free health care paid by government for their citizens, many of the gulf states have expanded or are planning to expand coverage to all their citizens through employment-based mandates to provide coverage (paid by both employer and employee) analogous to systems in Switzerland or Germany.

For example, Kuwait and Saudi Arabia have had such a plan for some time. Abu Dhabi started its in 2006. And the gulf newspapers were all abuzz when I was there that Dubai’s plan started on Jan. 1, and will be phased in for all residents including guest workers by 2016. Comprehensive coverage costs between $150 and $300 per year!

Health care as economic base. Throughout the gulf, but particularly in Dubai, Abu Dhabi and Qatar, health care is seen as a potential economic base for the future. In regional economic terms it is a form of import substitution where the Cleveland Clinic comes to you rather than paying your citizens to fly to Cleveland (which most of the gulf countries will do for their citizens, by the way, few or no questions asked). Increasingly, though, gulf countries see health care as an economic base by attracting wealthy patients from elsewhere in the Arab world and beyond, as well as serving a large and growing domestic population.

For example, Dubai has an area known as Dubai Health Care City, where international standard health care facilities are being built, including assisted-living facilities and high-end retirement centers. (Actually, this might be a better option for U.S. citizens with modest retirements rather than spending down your assets to qualify for Medicaid and to get a bed in a long-term care facility in Arkansas.)

Leapfrog opportunities. Gulf countries are extremely wired (or rather wireless). They have huge Internet penetration, they have double the number of cell phone subscribers per capita as the United States, and they are extremely heavy users of social media (as documented in a wonderful 2013 study by Northwestern University and Harris Interactive for the government of Qatar). This platform represents an opportunity for the gulf to leapfrog over all our steam-driven, legacy-based, meaningless-use health IT systems to social, mobile and big data enablement of health care.

Indeed, Deborah DiSanzo, CEO of Philips Healthcare (my hosts in Dubai) believes the gulf states can be pioneers in this area. And she should know; in addition to her day job and outside board responsibilities like Project Hope, she is the steering board chair of the World Economic Forum’s project on Health Systems Leapfrogging in Emerging Economies. Watch as more affordable innovations from emerging markets such as India, China and the gulf get applied as solutions in expensive, mature markets like Europe and the United States.

 

Pete Seeger’s Take on Dubai

I feel a special connection to Pete Seeger, because my beautiful, talented, epidemiologist daughter spent two months on the Clearwater (Pete Seeger’s boat on the Hudson) cleaning up the Hudson and teaching kids about the environment. This was during the two-year period between college and grad school where she had what I called serial hippy-chick jobs including working in a pet store catering to the Silicon Valley elite and looking after injured rescue dogs in New Orleans.

She raved about and was inspired by Pete Seeger’s energy, commitment, compassion and concern for the less fortunate. And she marveled at his ability to get everyone to sing along and get along (even when he was being investigated by repressive regimes).

Pete dropped out of Harvard as an undergrad. (Is it just me, or do Harvard dropouts go on to greater things than those who graduated?) Then Pete traveled this land making music and mischief in the Civil Rights movement, the anti-war movement, the environmental movement and even lent a hand to Bruce Springsteen and Occupy Wall Street.

I thought of him in Dubai the day he died as I talked on my iPhone to my daughter about my adventures in the gulf.

I think Pete would say that many rich countries share a lot of problems like obesity, indolence and diabetes because we don’t take care of ourselves and each other and we need to eat better food but less of it.

He would be appalled by skiing on artificial snow in the desert but inspired that leaders can learn to cover all their citizens and all their residents, including guest workers. And he would point to the irony that if the sheikhs in the gulf can do it, why can’t the sheikhs in Washington and the state legislatures make it happen?

He would ask questions about what happens to the poorest folk — how are they being treated? Much in the way my friend and fellow futurist Joe Flower did in a recent column about the care for the poor in the United States in a post-reform world.

And finally, Pete would be inspired and amused by innovations like the smart phone holding the promise to change how we deliver care. As Pete once said: “Technology will save us if it doesn’t wipe us out first.”

Ian Morrison, Ph.D., is an author, consultant and futurist based in Menlo Park, Calif. He is also a regular contributor to H&HN Daily and a member of Speakers Express.

The Bridge from Volume- to Value-Based Payment

Friday, August 3rd, 2012

Health system leaders now have clarity about the work involved in moving to the new future. It requires clinical integration, deployment of sophisticated health care information technology (IT), clinical performance improvement, financial management to break even on Medicare rates, and intelligent business model migration from the first curve of paying for volume to the second curve of paying for value. (See “Let’s Get to Work!” in the June 2012 issue of H&HN magazine.)

Health system leaders are wrestling most with business model migration. They are uncertain about the pace of change of reimbursement reform, they are fearful of taking population health risk and many have nightmares about a big bad replay of the 1990s when hospitals bought doctors’ practices, health plans or both, and lost their shirts in the process.

This time must be different; we really cannot afford to fail.

Not the 1990s Anymore

There are five reasons why this time is different:

We have hit the wall on affordability. The average American household cannot afford the average premium, and even though the cost increases have been slowing, there are signs of the cost trend bouncing back.

We have much better quality tools. The tools of quality measurement and improvement are much better than in the 1990s. We have many more measures, more transparency, more quality leaders and, thanks to the American Hospital Association, the Institute for Healthcare Improvement, the National Committee for Quality Assurance and others, we have a whole host of opportunities to learn how to get better.

Care coordination systems have improved. We now have two full decades of innovation in care coordination and care management: from patient-centered medical homes, to readmission management, to large-scale-care coordination by teams of caregivers, to pioneer accountable care organizations (ACOs), to the use of sophisticated software and analytics in predictive modeling.

Physicians are changing. The recent Choosing Wisely campaign initiated by many of the specialty societies in partnership with Consumers Union signals an important step toward a renewed recognition that financial stewardship of clinical resources is an integral part of medical professionalism.

Large-scale sophisticated business systems are emerging. This time we have big players who bring scale, capital and sophistication to clinical integration and health care delivery redesign. Kaiser Permanente alone is a $50 billion enterprise. Many more mega-billion-dollar health systems are being formed in this round of consolidation among existing regional integrated delivery systems and from novel partnership formation — for example, Aetna’s Private Label ACO partnership arrangement with Aurora Health or CIGNA’ s ACO relationship with Tenet, or Optum’s multivariate relationships with delivery systems across the country.

All of this points to the fact that we are getting serious about moving to a new future. But what is the bridge?

 

Building the Bridge

Across the country, health system leaders and their advisors, partners and boards are starting to build the bridge. Harris Interactive surveys document rapid clinical integration across the country with 69 percent of hospitals owning a medical group (the sample was weighted by bed size to reflect the distribution of beds) and a full third of physicians are now in practices owned by hospitals (a number that could exceed 50 percent in the next three to five years if current trends continue).

Similarly, a recently released KPMG/Harris Interactive survey of leaders of the largest health systems, health plans, and pharmaceutical and medical technology companies underscores these trends and shows that larger systems are even further along in their path to clinical integration. (http://www.kpmginstitutes.com/industries/healthcare-and-pharmaceutical.aspx).

The KPMG/Harris Interactive study demonstrates clearly some of the elements of the bridge. A sample of more than 100 C-suite leaders drawn from the top 200 health systems cited the following elements as extremely or very important in building a business model over the next three to five years:

Aligning with physicians to integrate them fully in clinical redesign efforts

98%

Aligning with physicians to preserve and expand market share

94%

Improving quality to take full advantage of pay for performance incentives such as CMS value purchasing

92%

Innovative deployment of health information technology across the continuum of care

92%

Preparing the organization to accept more financial risk in stages

89%

Redesigning clinical care processes using lean, six sigma or other workflow redesign methods

88%

Rationalizing supply chain through standardization of clinical equipment and supplies including orthopedics, cardiovascular and oncology

87%

Focusing on managing readmissions

86%

Partnering with alternate site providers across the continuum of care

77%

Partnering with other organizations such as insurers to help manage risk

76%

Differentiating on quality and service to appeal to affluent, well-insured consumers

60%

Owning and operating alternate site providers such as home health care and skilled nursing facilities

43%

Owning and operating a health plan function

26%

Raising prices on commercial payers

24%

 

It is clear from the survey that integration with physicians is the first priority. It works for two reasons. On the first curve (paying for volume), you cement clinical relationships and volume of existing business. On the second curve (paying for value), you have a platform for migration to more integrated systems of care by redesigning care processes for a world of value-based purchasing. The other wonderful feature in the short run is that provider-based reimbursement allows hospitals to benefit from a change in ownership of clinical practices through higher facilities-based fees. (My good friend and fellow columnist Nathan Kaufman identified this trend in the first column of his series “From the Trenches.”)

The second key observation is that there seems to be less appetite for full risk bearing among health system leaders, with many more leaders preferring to migrate the risk function in stages (89 percent) or partner with health plans (76 percent) rather than outright owning and operating a health plan function (26 percent). This is the core of the bridge dilemma. Many health system leaders anticipate that in the long run, risk and reward will be tied to the triple aim of population health, improved patient experience and lower per capita costs.

Yet, there is no big hurry to jump off the dock. Indeed, in Harris surveys of both hospitals and doctors there is very muted enthusiasm for new payment models such as bundled payment, episode-based payment, global payments or even pay for performance. Private and public purchasers need to send big clear signals to the delivery system that we are moving to a world of accountable care systems delivering coordinated care across the continuum on a triple aim basis; at the same time, the delivery system will need to wean itself from the simple comfort of pay for volume and learn how to build a culture of accountable care.

The final big observation from these data is that none of this can happen without sophisticated health care IT and analytics to support care management, care coordination and population health. Health systems leaders get that and are making rapid progress even though the industry in general is about 20 years behind most other industries in its comfort with and deployment of IT infrastructure.

 

Barriers to Bridge Building

Bridges are hard to build, but done right, they last a millennium or two. There are significant barriers to bridge building. Here are some I have encountered:

Complexity of health systems. Large integrated health systems, particularly those that have academic missions intertwined with massive clinical systems, are extremely complicated enterprises. None more complex, as Jim Collins or other management gurus would agree. But this does not absolve us of the need to build the bridge.

“Best year ever.” I go to a lot of hospital board retreats, and I always ask the CEO: “How’s it going?” The last couple of years, they nearly always whisper quietly: “We had our best year ever.” Enough said. It is hard to change when things are so good. But go ask Jim Collins or Clay Christensen or Kodak, and they will tell you that is precisely when you have to change.

“Nobody told the specialists.” The wisest comment on health reform and the move to accountable care that I have heard was “Nobody told the specialists.” While Choosing Wisely clearly signals an important change in thinking among specialty society leaders, many rank and file physicians (particularly those in lucrative procedure-oriented specialties) are afraid of many of these changes and see them as profoundly harmful. They need to be engaged fully in the redesign discussion, however hard that may be. And they too need to see an economic bridge to the future, one that doesn’t involve either a default to what I have dubbed hamster care: alienated doctors on a treadmill of discounted fee for service, or conversely, everyone trying to do concierge medicine.

Anatomy, not physiology. Another great learning came from a physician leader in a large sophisticated health system that is on the path to true clinical integration. He told me that “we have the anatomy of an accountable care system, but none of the physiology.” True for many successful regional systems that are contemplating the path to accountable care.

The politics of purchasers: two ideologies. As we gear up for a very big election with sharp distinctions between philosophies, we also will face a big ideological choice among our private and public purchasers — illustrated by the recent pair of editorials in The New England Journal of Medicine, where two alternate visions were presented. (See E. Emanuel et al., “A Systemic Approach to Containing Health Care Spending,” and J. Antos et al., “Bending the Cost Curve through Market-Based Incentives,” www.NEJM.org, Aug. 1, 2012.) On one hand, the Journal describes a Berwickian future of accountable care systems pursuing a triple aim of coordinated care. On the other hand, the Journal presents a much more atomistic view in which patient consumers armed only with high deductible health plans use narrow networks and market forces to transform the delivery system. The election will have a major influence on which view prevails, as will intense budget debates to come. Make no mistake: The federal deficit is a health care problem at its core. Greater emphasis on atomistic views may derail some of our best efforts at care coordination and integration.

What happens if the math doesn’t work? The biggest single barrier to bridge building may be that we run out of money for the bridge. The math may not work. The combination of massive Medicare cuts and the sting of skinny networks may close down a lot of bridge projects, and health systems may simply hunker down in the present.

 

Bridge Building Techniques

 

Health system leaders are looking for tools to help them both today and tomorrow, to build solid foundations for the bridge in the present and to build a strong footing for the future. Here are some ideas that may help both today and tomorrow:

Develop continuum of care partners. Some leaders are establishing relationships with retail clinics. They provide a source of referrals today; tomorrow they may be part of a new chronic care delivery system. Similarly, leaders are building closer partnerships with home care, skilled nursing and assisted living facilities that can provide a vehicle for managing readmissions and improving throughput of acute care facilities in a volume-based world. Developing partnerships with alternate sites of care and community-based social services provides an enhanced care coordination platform for a future accountable care system.

Eat your own cooking. Many health systems that are embarking on a journey to accountable care and population health are starting that journey with their own employees. Health systems typically have above average health care users (we know too much and we are not nearly as well-behaved as we should be). By starting population health management pilots on the self-insured health system population, any savings goes straight to the bottom line.

Find some new friends. Bridge building is not an amateur activity. The equivalent of highly specialized civil engineers are required to build business models, to develop shared risk partnerships, to monitor and manage revenue cycle management migration, to develop population health infrastructure. In particular, most systems need adult supervision of spreadsheet migration. By that I mean: What exactly do the sources and uses of funds look like for each of the next five years? How do the spreadsheets synch with the unfolding market reality? And how will those spreadsheets be turned into operational performance?

Leaders and boards are wrestling with design and construction of the bridge. It is empowering to know that bridges can be built, and they can be built to last.

Ian Morrison, Ph.D., is an author, consultant and futurist based in Menlo Park, Calif. He is also a regular contributor to H&HN Daily and a member of Speakers Express.

 


 [ME1]Ian – I don’t get what you mean by the first and second curves of volume.