Author Archive

Hospital Medicine 2008: Hospitalists and the Future of Healthcare

Monday, May 17th, 2010

Future Tense: The Business Realities of the Next Ten Years

Monday, May 3rd, 2010

Future Tense is nothing short of a blueprint of the epochal forces that every businessperson must contend with-and vanquish-before this decade ends. In twelve chapters illustrated with informative, easy-to-read graphs and charts, IFTF principals Ian Morrison and Greg Schmid investigate the following fundamental issues that are transforming the climate of almost all businesses:

  • The older and more educated American consumer
  • The insecure and less loyal worker
  • The globalization of almost every local market
  • The decline of consumer brand loyalty
  • Failing institutions, such as unions and political parties
  • The public’s quest for accountability in businesses
  • Enabling technologies

Examining these seven major changes in store for American business, Morrison and Schmid take the abundant, concrete data available to IFTF and turn it into solid advice that can take any business into the next millennium.

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The Second Curve

Monday, May 3rd, 2010

Ian Morrison creates a revolutionary new business model that can be used no matter what the market upheaval. His theory is deceptively simple: you must ride the first curve-a company’s traditional business carried out in a familiar corporate climate-to the all-important second curve. The second curve is the future-the new technologies, new consumers, and new markets that companies must command to survive and thrive.

In the many companies Morrison profiles, leaders have learned to master both the first and second curves, to anticipate the rate and pace of change, to know when and how to jump from the first curve to the second, and whether and when to play both. This books sets forth all the crucial strategies and explains how businesses can apply them to rapidly changing situations.

“In a highly readable manner, Ian Morrison has pinpointed the key strategic problems facing our company and many others. His broad-ranging examples and insightful analyses are relevant throughout our organization.”
-Peter Bury, President and CEO Cable and Wireless Innovations, Inc.

“This is a book for anyone trying to figure out how to make money on the Internet, what country to invest in, or how to earn profits beyond the next fiscal year.”
-World Business

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Health Care in the New Millennium: Vision, Values, and Leadership

Monday, May 3rd, 2010

Morrison gives health care executives, doctors, and nurses a guided tour of what’s in store for health care in the coming years and explains…

  • Why our one-trillion-dollar health care industry has so many unhappy stakeholders
  • Why investor-owned health systems are failing
  • Why so few market-based reforms work
  • Why health care leaders need new visions of what is possible for the future

“I recommend this book to anyone searching for answers in the confusion of today’s health care world.”
-David M. Lawrence, chairman and CEO, Kaiser Foundation Health Plan, Inc.

“In this extremely useful book Ian Morrison challenges health care leaders to revisit health care values and build a better health system.”
-Gail L. Warden, president and CEO, Henry Ford Health System

“Everyone who wants to understand the American health care system, or wants to improve it, should read this book. It is packed with original insights, provocative analysis, and a wealth of new ideas.”
-Humphrey Taylor, chairman, Louis Harris and Associates, Inc.

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Government Run Health Care

Saturday, May 1st, 2010

About the time you read this column we will have Government Run Health Care. No it’s not what you think. While Obamacare has just passed in Congress, the full effect of the legislation will not be felt until 2014 and beyond. No, what I mean is that even if health care reform is repealed, or blocked in implementation, the public sector share of health spending will exceed 50 percent in 2010 for the first time.

Wait, you wonks say, the recent official CMS projections say that doesn’t happen until 2012. (See “Health Spending Projections Through 2019: The Recession’s Impact Continues,” by

Christopher J. Truffer, Sean Keehan, Sheila Smith, Jonathan Cylus, Andrea Sisko, John A. Poisal, Joseph Lizonitz and M. Kent Clemens, in Health Affairs, vol. 29, no. 3 [2010], 10.1377/hlthaff.2009.1074.) True, but read the fine print. That forecast assumes that Medicare follows current law and cuts Medicare physicians’ fees by 20 percent in March because of the sustainable growth rate (SGR) provisions. Since SGR is set to get its annual stay of execution extended for another year, if you follow the authors’ own math, then sometime in mid-2010 public payment will exceed private payment in American health care for the first time.

Demography and Recession

As the CMS projections show, this is a result of relentless demographic change, coupled to the lingering effects of the massive economic downturn, which has raised Medicaid burdens by a record annual increase of 3.3 million eligibles (to a total of 46.3 million), swollen the ranks of the COBRA subsidized, and reduced the total number of privately insured by 1.2 percent. But, this is no short-term phenomenon. CMS’s current law projection has the public sector growing more than the private sector as far as their eye can see (which is up until 2019). Beyond that, you don’t need to be an actuary or futurist to realize that the private sector is unlikely to make a late-breaking comeback in the fourth quarter because of the aging of the baby boom. (By the way, one of my working definitions of a futurist: an actuary who doesn’t like numbers).

Remember, the baby boom has just started to turn Medicare eligible. We are on our way! We boomers can’t wait to convert from the uncertainty and capriciousness of private sector health insurance coverage, especially those of us buying individual coverage from Anthem in California (as my family does), and get our hands on one of those Magic Kingdom cards that is Medicare, that guarantees we can see pretty much any doctor and Medicare will at least pay them something. Sounds pretty good to me, even though the benefit consultants and financial planners tell us we also will each need to save $500,000 for our lifetime out-of-pocket medical costs not covered by Medicare. That still may be a better deal than a lifelong relationship with Anthem, trust me.

Higher Taxes Are Inevitable

Republicans are not the mean spirited rubes that so many sneering progressive intellectuals make them out to be. They understand this math perfectly, and they do not want any part of the massive tax increases that this inexorable, demographically induced march implies.

Republicans were therefore not exactly big fans of the Obama administration wanting to expand coverage to the poor and middle class through government subsidies (albeit that the administration plans are in part financed by provider rate cuts in Medicare). Plus, all of the Democratic legislation expands Medicaid by 16 million enrollees. Medicaid is another publicly financed program, not particularly near and dear to the core Republican voter (or as the polls show, it is not particularly popular with Independents either).

The Republican Plan

So the demographic inevitability of higher taxes for health care motivates Republicans to fight any health care coverage expansion through public financing.

This partly explains what happened at the exquisite Kabuki Theater of the Health Care Summit at Blair House. The Republicans’ goal was to stop this rollercoaster; better yet, reverse it. Step 1 was to stop Obamacare. The Republicans had exactly the same cue cards—some Republican leaders read them better than others—but they all said “Start over, clean sheet of paper, step by step.” It could be a top-40 electro-pop lyric that would make the Black-Eyed Peas proud.

Step 2 is to propose sensible, reasonable, American alternatives. (By the way, clue me in here, who gets to decide what are sensible, reasonable, American alternatives?)

The Republican plan was estimated to reduce the uninsured by 3 million and this was achieved, as follows:

Say “free market” a lot. Government health care is bad, free market health care is good. (I graduated from Edinburgh University 200 years to the day after Adam Smith went there to write The Wealth of Nations, and we still see each other at alumni meetings. He would be appalled that the term free market was applied to anything in American health care. Even private sector health care bears little resemblance to a free market.)

Create high-risk pools at the state level so you can turbo-charge the death spiral in the insurance market. A high-risk pool makes health insurance cheaper for healthy people and more expensive for sick people. Whenever high-risk pools have been established at the state level they rapidly death-spiral out of control.

Provide tiny wee tax credits for “affordable insurance.” The polls show Americans like tax credits, particularly for small business. What the polls don’t always measure is that the tax credits would not be sufficient to pay for the insurance; getting a tiny wee tax credit toward a very big expensive health insurance bill doesn’t sound so good.

Create “affordable insurance policies” that don’t cover anything. We know how to make health insurance premiums cheaper. It’s simple: Limit what’s covered and raise the cost-sharing. But wait, isn’t that what everyone’s mad about?

Encourage consumers to buy “affordable insurance” from an insurance company in another state that has no consumer protection and no contractual relationship with local doctors and hospitals. Practically, insurance executives tell me, there really are no states with significantly cheaper policies that could be sold in other states, unless of course they are trying to eliminate consumer protection. Or maybe it’s because of the bargaining clout that an insurer in Alabama has over my doctor in Palo Alto, Calif.

Reform malpractice caps to reduce defensive medicine and let doctors focus on offensive medicine. Policy wonks dismiss malpractice as a driver of health care costs, but it is a big issue to doctors and to Republicans. (Personally, I believe the Obama administration missed a huge opportunity from the beginning by not embracing comprehensive medical malpractice coupled to patient safety reform.)

Increase personal responsibility. Successful surgeon senators advocate for “skin in the game”; community organizer presidents empathize more with $40,000-a-year families who can’t pay for food or gas, let alone health insurance. These families have more than enough “skin in the game.”

Borrow more money from the Chinese so we can cut taxes. Deficits would remain large and growing even if all these “sensible, step by step” plans were pursued. Therefore any tax cuts would have to be financed by borrowing from the Chinese, just as we have over the last decade.

The Democratic Plan

In the interest of being fair and balanced, we need to scrutinize the health reform legislation that just passed in Congress with the same degree of “vitriolic sardonicism” as Monty Python called it. Democrats will cover about 30 plus million of the uninsured (10 times the Republican number) and they achieve this as follows:

Expand Medicaid by 16 million because it is such a swell program. The bill expands Medicaid by 16 million enrollees. When did Medicaid become such a great program? Did I miss a class? I thought it was horribly inefficient from an enrollment point of view, and provided pathetic levels of reimbursement to providers to the point that most mainstream providers won’t accept Medicaid patients. Yet it has become the vehicle for half of the newly covered. Maybe that is why so many moderates liked the Wyden-Bennet proposal where people get a voucher. And there’s your answer to why the Wyden-Bennet plan had no traction: It’s pretty easy to stop printing little vouchers under a change in administration; it’s a little more difficult to dismantle an entitlement program for 60 million people.

Have taxpayers in the states with generous Medicaid programs subsidize the Medicaid expansion in the states with less generous Medicaid. I spent the week of the Kabuki Summit, not in Washington, New York or California, but in Oklahoma and South Dakota. And I heard about, and experienced directly, entire local state legislatures and majorities of individuals in the community committed to sending back Obamacare money to Washington if it passed, refusing to accept the rule of the federal government if reform passed, and pleas of “Liberty or death.”

Whoa! The delicious irony is that the greatest potential beneficiaries of Obamacare are the very states with the most tight-fisted Medicaid programs. Liberal California software executives and closet lefty Goldman Sachs partners would be paying increased federal taxes to support the Medicaid programs for the less than munificent taxpayers of Texas and Alabama. The Massachusetts voters figured this out in their vote for Scott Brown; they already had Obamacare and like it, so why did they need to pay twice?

Mandate that most other uninsured Americans buy health insurance that they can’t really afford… Under Obamacare you must have health insurance, unless you really can’t afford it, or you work for a very small business (where most of the uninsured are) or you are a Christian Scientist, or you take a free ride because you can do grade 1 arithmetic and figure out that paying the fine is way cheaper than buying insurance. Apart from those limited exceptions, you must have insurance.

And then subsidize them so they can. Did we tell you that we are subsidizing you to buy unaffordable insurance? (Ben Stein the noted economist, columnist and media celebrity, said on CNN after the summit that we should just give poor people the money to buy health insurance in the private market.) Here’s the conversation you would have with a typical uninsured family with two kids, making $40,000 a year:

“Hey folks. I am from the government. Here’s $12,000, but we would like you to buy health insurance with it.”

“This is Candid Camera, right?”

Regulate insurance companies to take all comers even though all comers are not going to come. There is this pesky little problem with private health insurance markets. Insurers want to make sure that the people who sign up are not just sick people. And if they sign up only sick people, they want to be able to charge what it costs to treat those sick people, plus a fee for administration. Come on now. Be reasonable.

Raise fees and taxes on stakeholders who will pass it on in higher costs to the end consumer. Tax drug companies, medical device manufacturers, insurers and providers. These taxes will be passed on immediately to the end user in higher prices.

Start the taxes now; add the coverage later so in the next 10 years it actually reduces the deficit. Gather in all the taxes, now, so you can pay for expanded coverage later. If you have new revenues for a few years before the costs start it makes it easier to make it budget neutral and in fact actually reduce the deficit. But…

In the long run, hold your breath and be prepared to borrow even more money from the Chinese. Once we get to a true run rate of the costs of reform, it may be difficult to say we are reducing the deficit because of reform.

We now know who really won the Kabuki Summit. Rahm Emanuel and the Democratic leadership in Congress have “persuaded” enough blue dog Democrats to vote for the good of the party for health reform with this parting comment:

“We know you are going to lose your seat over this, but you have to vote for this; otherwise we won’t have health reform for another decade, and then it’s too late. We’re sorry it didn’t work out for you, here. But we have some parting gifts for you. Thanks for playing.”

This is historic, important and directionally correct legislation that will change healthcare dramatically, when it is fully implemented in 2014. But even in the interim we will have Government Run Health care no matter what. We just have to learn how to make it all work better.

Ian Morrison is an author, consultant and futurist based in Menlo Park, Calif. He is also a regular contributor to H&HN Weekly and a member of Health Forum’s Forum Faculty Speaker Service.

Dr. T and the Canadian Medicine Show

Monday, March 1st, 2010

Health reform has largely been about expanding coverage to the previously uncovered and regulating unsavory health insurance practices. Now the hard part starts. We have to make the health care delivery system work better, so it is of higher quality and is more affordable than today; otherwise we will bankrupt ourselves in the long run. We need good ideas from anywhere we can get them.

International comparisons, such as the wonderful surveys conducted by Harris Interactive for the Commonwealth Fund, illustrate the substantial and rapid progress that countries such as Australia, Holland and the United Kingdom, in particular, have made in improving the performance of their health delivery systems and embracing many of the tenets of superior health care performance that most U.S. policy experts hold to be self-evident: ubiquitous use of electronic health records in primary care, pay for performance, chronic care disease registries and so on.

But even in the face of such fresh and compelling evidence, most Americans quietly do the nudge, nudge, wink, wink thing and say to each other: “Well, Britain or Holland might be OK for routine primary care, if you like waiting rooms, but where would you or your loved ones want to go when you needed complex, high-technology interventions such as pediatric cranio-facial reconstructive plastic surgery? You would want your child in a fancy American hospital, not in Canada or Britain. Right?” Well, maybe not.

The Story of Dr. T

Dr. T is an Ivy League–trained, sub-specialist reconstructive cranio-facial plastic surgeon who, after completing long years of training at the world’s greatest academic institutions (you institutions know who you are—all 300 of you—so I will not name them to honor Dr. T’s request for anonymity), spent a year in Canada at a large, prestigious pediatric academic health center.

I was lucky enough to be introduced to Dr. T and, based on my interviews with her, I offer a few of her key observations from practicing her craft on both sides of the border:

Quality of nursing care. Dr. T stressed the amazing quality of nursing care in Canada, compared with the most prestigious hospitals where she had worked in the United States. As she put it: “Nurses in Canada seemed more dedicated, more professional, more specialized, more vested in the care of the patients and more empowered, than their American counterparts.” She attributed the differences to leadership, specialization, preparedness and continuous training of staff.

For example, when Dr. T conducted a complex reconstructive plastic surgery operation in Canada that took several hours, she never once had to ask for a specific instrument to be handed to her, because the nurses knew, and had carefully documented, a workflow protocol for each surgeon that the chief OR nurse had developed. In contrast, in the prestigious U.S. academic medical center where Dr. T now practices, she had to spend hours orienting the team to the complex procedure they were about to conduct. In the American hospital, no dedicated RN scrubs for the case; instead, a floating surgical technician is assigned to that OR for that day. Like ships passing in the night.

Working at the tip of a very large referral pyramid. Dr. T is among the most specialized, highly trained, sub-specialty surgeons on the planet. When she was practicing in Canada, she and her colleagues were referred virtually all the complex cases of their type in the region, if not the entire country. In Pennsylvania alone, there are four pediatric cranio-facial plastic surgery centers, each competing for the same patients, and presumably operating with reduced volumes of truly specialized cases.

The benefits of a large concentrated referral pyramid are that outcomes improve through specialization of skills. This is the classic volume-outcome effect. The surgeons, OR team and nursing teams have dedicated staff that work on nothing but these complex cases.

In the United States, we have way too many facilities doing way too many complex cases, mixed in with the run-of-the-mill moneymakers. American specialists are often “amateurs” in the sense that they practice their true sub-specialty craft less than half the time. Because there are fewer specialists per capita and a nationwide health plan, Canadian referral hospitals can build large referral pyramids, create significant volumes, and organize dedicated high-performance teams to conduct complex procedures.

Administrative waste motion. When I talked to Dr. T, she was weary at the end of the day working in her American hospital. She was weary, not because she had just finished a long day in the OR. No, she was weary and frustrated, because she had spent three hours after the case was done googling for CPT codes to make sure she billed correctly for the complex multi-part procedure she had conducted that morning.

Her anxiety was not about maximizing revenue for herself or her institution. (I’m sure the institution would prefer her to be anxious about revenue cycle management, as the CFOs call it.) No, she was anxious that she would “commit heinous fraud on the insurer for billing inappropriately.” Although she spent seven years in surgical training, she admits she is a novice at coding, which can now dominate much of her time. What a complete waste of precious human capital.

Economic discrimination in clinical care. In Canada, if Dr. T received a patient referral, the first thing she would do would be to figure out the best way to take care of the patient. She would never even give the patient’s financial or insurance status a second thought because it is irrelevant to clinical decision-making in most of Canadian health care.

On her return to practice in the United States, Dr. T has been unpleasantly surprised by her clinical colleagues who perform “economic triage of patients,” in which specialists avoid taking cases because the insurance coverage is lacking. Dr. T spends two to three hours every day “fighting the system” (with insurers, her clinical colleagues and hospital administrators) to secure the approval for services that her patients need, whether it be an operation or simple therapy.

Rogue warrior practitioners. In Canada, Dr. T felt she was part of a team with her physician colleagues, the nursing staff and the hospital leaders. On her return to the United States, she feels more like a fellow combatant among the “Rogue Warrior Physicians.”

Pointless pluralism. In her Canadian hospital they had a “clunky electronic health record,” but at least it was standardized across the institution. (Canadians are behind even Americans in their pathetic deployment of EHRs). In her American hospital, though, they have 30 different health record systems, with each specialty service organizing its own clinical charting systems, none of which talk to each other. “I cannot even share my notes with the doctors across the hall,” she told me.

High performance in shabbier surroundings. When Dr. T went to Canada, the OR rooms and clinical corridors were a bit dingier, and she had to walk down the hall to access a shared printer. This is frustrating when you are trying to crank out research papers, on top of a full clinical load. (I can relate to the printer part at least. When I was a young health services researcher at the Vancouver General Hospital in Canada, I shared a subterranean, converted broom closet with two other colleagues. It was at the end of a former secure prison ward, converted to care for long-term geriatric patients. We had to drive 12 miles out to the university campus to access a computer, let alone a printer.)

While the built environment of some Canadian hospitals may be a little shabbier than the Shanghai Like Crane Fest that is the American academic medical center.  (Academic medical centers have been on a decade long orgy of new construction analogous to the Chinese office building boom).  But, don’t assume marble atria lead to superior clinical performance. Dr. T is nostalgic for the shabbier, high-performing Canadian setting. And instead of just sitting back and accepting it, she has joined her hospital’s quality improvement committee, and will dedicate even more of her precious time and skill to making her hospital a better place for patients. She doesn’t know whether to laugh or cry when she hears her educated colleagues insist we have the best health care system in the world.

Time to Lose the Ancient Anecdotes

Dr. T’s experience represents, as far as I can tell, the closest thing to a real-time, double-blind trial of cross-border, comparative high-tech, superspecialty care. Most pundits who opine on the good or bad of other countries’ systems are usually relying on ancient anecdotes about how their Aunt Betty in Winnipeg had to wait nine years for a hip replacement and that wouldn’t happen in Wisconsin. Yawn, yawn.

I am as guilty of this as anyone. But at least Canadian health care for me is not some obscure policy abstraction: It is the system where my sister and all of my wife’s family get their health care, and we have countless Canadian baby boom friends. All of our friends and family on both sides of the border are dealing with the same breast cancer, prostate cancer, knee replacement, hip replacement, heart attack and chronic care issues on a cross-border basis. So I live with the stories and the realities of the good and the bad on both sides of the border.

As I have written in this column before, all health care systems are an ugly compromise among cost, quality and access. There is no perfect system. But what is pretty clear is that we in the United States get about the worst bargain compared with most developed countries.

Canadian health care remains an annoying comparison to American health care because it is so close:

  • All Canadians live in American media markets. Canadians are subject to all the Viagra ads on American TV channels, even though the ads are illegal in Canada.
  • Canadian doctors are equivalent to American doctors. They pass the same exams and have pretty similar training. Although, Dr. T did point out to me that the Canadian system paid more attention to actually educating their medical residents and fellows rather than exploiting them as under-compensated service providers.
  • Canada now spends 7 percent of GNP less on health care than America does. Yes, you do have to wait a bit for a recreational MRI of the tennis elbow in Canada. But Canada could buy a lot of MRIs with 7 percentage points of GNP. At a 10 percent per annum lease rate, Canada could lease 84,000 MRIs with the difference, enough for every hockey team in the country. They wouldn’t do it of course, because they view it as a complete waste of money.
  • Canadians drive the same cars, eat the same cheeseburgers and eat even more doughnuts than Americans.

  • Canadians are different in values, however. They describe themselves as unarmed Americans with health insurance.

Lessons for American Health Care Organizations

In closing, I asked Dr. T to use her cross-border experience to synthesize her advice for the American health care system. Here’s what she told me:

Refuse to accept that medicine is a business like any other. For one, there is no other business where the customers don’t know what they are getting and for how much. If treating medicine as a business worked best, then why should governments interfere? Yet most countries, including all those that score much better than we do, accept that the best care comes from some government oversight. If we give in to the notion that the market knows best, even in the absence of a true health care market, we lose the ability to prioritize what really matters to us as citizens and physicians.

Get the incentives right. Dr. T has seen salaried academic surgeons and fee-for-service surgeons, on both sides of the border, and she believes that some combination of salary and performance incentives tailored to the specialty is essential to enhance quality, productivity and outcomes. I couldn’t agree more.

Build high-volume regional referral pyramids. Dr. T believes that large regional referral pyramids reduce costs and improve quality, with all the attendant benefits of specialization at the physician, nursing, OR team level. As a former regional planner, I admit she had me at “hello.”

Empower nurses. Dr. T believes nurses need to have a real stake in the organization and feel empowered that they are the central caregiver for the patient. In too many American hospitals, nurses are treated as just a cog in the wheel, or they diminish their own professional status by focusing on collective bargaining issues rather than on clinical leadership and professional development. I am married to a Canadian-turned-American former ER triage nurse-turned-nursing administrator who, when she first practiced in America, said to me: “Boy, do nurses ever kowtow to doctors down here.” Enough said.

Fix the financial matters. Dr. T needs to be relieved of the administrative nuisance and financial rationing that is plaguing American medical practice. Much of it, as Dr. T points out, is self-inflicted pluralism. Doctors need to accept standards, compromise on choices of systems and tools of the trade, and participate actively and enthusiastically in the kind of heavy-duty clinical re-engineering so effective at the Mayo Clinic, Cleveland Clinic and Kaiser Permanente, among others.

Be driven by outcomes… Canadian physicians in Dr. T’s experience embraced evidence-based medicine far more than her American colleagues. She was admonished after her first case in Canada for administering prophylactic antibiotics because it was not an evidence-based practice. As a consequence, patients with multiple resistance to antibiotics were rare in her Canadian hospital, but ubiquitous in her American hospital.

…Not just by incomes. Tommy Douglas, the former Saskatchewan premier who was the father of the Canadian health care system, was recently voted as the Greatest Canadian Ever in a national poll in Canada, beating out in a landslide: Wayne Gretzky, Bobby Orr and some pretty decent figure skaters. Tommy’s great quote was: “When people say, ‘It’s not the money, it’s the principle’ … it’s the money.”

Let’s hope there are lots more young Dr. Ts out there for whom medicine is about bringing compassion to the care of the patient, not just worrying about the money.

Ian Morrison is an author, consultant and futurist based in Menlo Park, Calif. He is also a regular contributor to H&HN Weekly and a member of Health Forum’s Forum Faculty Speaker Service.

American Healthcare: Caught in a Bad Romance

Thursday, February 4th, 2010

Insight comes from unlikely sources.  Lady Gaga nailed the health reform dilemma.  We have a healthcare delivery system that is an orgy of profligacy and excess that offers the false promise of making ugliness, disease and death all optional.  And, we the public love all of it, as long as it’s free, at least to us as individuals.  We want high tech, high quality, high expectations met, highly trained professionals delivering high standards, paid by someone else.  And the magic fairy that will pay for all of this? Health insurance. Give everyone an insurance card and they can have their everything and it will be free, or close to it.

But wait, isn’t the cost of insurance tied to the costs of care?  Doesn’t the sum of all healthcare costs for a covered population (plus administrative costs) divided by the number of people equal the premium.  Doesn’t the premium come out of my pocket as taxpayer, employee or individual?  How can I have everything, as long as it’s free?

Short answer is: you can’t.

We are caught in a Bad Romance with healthcare.

The brutal truth is that the average American household cannot afford the average costs of care.  With household income stagnant to declining at $50,000 a year and typical total healthcare costs at $15,000 per household, average people cannot afford the average costs of care.  Even if we were to fully accept the notion that rich people have to subsidize poor people (which still seems a bit of a stretch to some on the right) you would think that in a wealthy country like America, the average household could afford the average cost of care.  But as the healthcare debate showed both in Massachusetts and at the national level, nearly all of us need a subsidy to make health insurance affordable. (Say what?)

How can “affordable care” mean we need to subsidize nearly everyone?

Well, that’s a problem.  There are really not enough rich people to go and tax.  And those rich people are not having a good year.  The revolting people of Massachusetts were independent voters who are paying their taxes and mortgages and mandatory health insurance premiums and who when asked to step up and pay taxes for a healthcare bill that wouldn’t help them any, said no to big government.  (By the way, they also said yes to a telegenic, former nude centerfold who outhustled the dullest politician in America by a factor of 10 to 1).  And they baulked at being asked to pay federal taxes to subsidize the mean-spirited people of Texas and Alabama who really don’t want to be forced by the federal government to cover poor people through Medicaid expansion or insurance exchanges or worse yet a public option.

Health reform may be dead.  Sensible centrists like my friend and fellow futurist Jeff Goldsmith, the always sane and insightful Bob Laszewski, and my physician policy wonk pal Bob Wachter have all written eloquently on this blog about the possible political path forward.   I will not repeat their points with which I nearly always violently agree.

Nor do I particularly want to unleash a flurry of rehashed mini-essays from all of you regular contributors about how health refom should or shouldn’t go from here.  I know that each of you believe that your idea is the right one.  I get that. And I am in reverential awe of the time you pour into these pages.

We should all be very grateful to Matthew Holt for creating this blog.  His vision has created a meeting place for all of you out there who care deeply about healthcare and about politics and policy of healthcare.  (I should say by way of full disclosure that I had the pleasure of working with Matthew for many years, hired him from Stanford to join the Institute for the Future, and played some modest mentoring role in his professional development.  Matthew was also the inspiration of IFTF’s then dress code: “no shirt, no shoes, no salary”.)

So my plea to all you healthcare bloggers of America is this:  Please turn your attention to the central problem.  How can American healthcare delivery be better, faster, and cheaper in the future not more expensive and worse.  And please no ideas about giving people insurance cards subsidized by someone else (especially not the Chinese or my children) as in the current proposals.

This community must have some good ideas about how to get us out of this mess.  We are caught in a Bad Romance.

Ian Morrison is an author, consultant and futurist based in Menlo Park, Calif

French Lessons

Friday, January 1st, 2010

The French have the best health care system in the world. Just ask them. (According to them, they have the best everything in the world, from cheese to lifestyle.) Yet, the World Healthcare Organization and many other international comparative analyses actually do agree that the French are healthy and that the French health system is at, or close to, the top of the list in performance. Are there any lessons that we can learn from France?

Decoding French Culture

All health care systems around the world are a reflection of the values and culture of the country. So you can decode the health care system only if you try to understand the culture. On a recent visit, I did my best to immerse myself in the language and culture to try and interpret why the French seem to be so healthy and do so well in the health care comparison stakes. This involved a lot of wine and smelly cheese.

Here are some clues:

The country is in a superior location. France is geographically situated as a perfect hexagon (L’Hexagon, they call it) in the temperate zone of the northern hemisphere, which gives the country beautiful vistas, rich arable land and the finest products of the countryside. From the cheese of Normandy to the olives of Provence and all the wine in between, France has killer natural groceries. Even the poorest peasant (read “guy who just sold his little farm to some chinless Brit hedge fund manager”) knows what good organic food is (they call it biologique).

Even the chain supermarkets are filled with dead chickens with their heads still on. If you ask for ground beef (don’t ask for hamburger, they will know you are American), they actually take a piece of beef and grind it up in front of you. This is at the equivalent of Safeway. In most American supermarkets a pound of ground beef could conceivably be sourced from many different cows, in many different countries. So they eat better in France. While we subsidize big agro business to make high fructose corn syrup (the true weapon of mass destruction in our society), the French subsidize little farmers to grow chickens with their heads still on and to make an enormous variety of smelly cheese.

They have superior education. France has an incredibly meritocratic education system in which the top of the class moves up the educational hierarchy so that if you make it to the top you really are the smartest people in France. Since the French are the smartest people in the world (in their assessment) and their system is meritocratic, by definition anything that these smart people decide has to be the right thing to do. Very Descartes.

The French are smarter than the market. (Or so they think.) You see this everywhere in France: A spectacularly engineered, uniquely French solution is carefully crafted to deliver superior performance; but it is weird, idiosyncratic and completely lacking in export potential. Renault Espace mini-vans can be driven for hundreds of miles at fantastic speed, on a single tank of diesel, but I defy you to operate the parking brake. They don’t sell in America.

They have a superior lifestyle. The French believe their country and their lifestyle are superior, and it seems that much of the French economy is focused on lifestyle maintenance. This ranges from the billions of euros spent polishing French roads and villages, to the parades of guys in Paris who are dedicated to cleaning the streets and ridding the sidewalks of merde du chien.

My personal favorite lifestyle maintenance policies are the combination of regulation and subsidies that exist to maintain French eating habits. For example, in every Paris neighborhood there has to be at least one boulangerie open to sell fresh bread every day (this means a bakery can close Sunday or Monday but not both, and bakeries have to coordinate this with their geographic competitors). The price of a baguette is set by law!

Similarly, the French have a system of lunch money subsidy in which employers can give lunch coupons to employees that are tax deductible so that an employee can afford to go to some brasserie for moules frites and a carafe of wine for an hour and a half, every work day. The goal is to keep the brasseries open and not let McDonald’s get the business. But let’s face it, if you had a moules frites subsidy and a mandatory 35-hour week, you’d live a long healthy life, too.

They drink wine in moderation. French kids learn to drink wine at an early age, usually watered down. Decent Vin du Pays is cheaper than Coca-Cola in most restaurants and supermarkets. The French (like most Europeans) learn how to drink before they learn how to drive. In America, we unleash 15-year-olds on to the streets in SUVs so they can drive to Safeway with their fake ID, but they can’t have a glass of wine with a meal until they are 21. No wonder we have an entire generation of college graduates who are not sure what happened in college because of the Jäger bombs.

No stress: They don’t sweat the big stuff. In the early 1990s a colleague and I were giving a briefing in Paris to a big fancy French company explaining how because of globalization, the American wave of re-engineering would eventually hit France and require tough choices, a dedication to efficiency, and streamlining of business processes. An incredulous French executive barked back at me: “Why would we do that? It will ruin our life!” He had a point. While we in the United States have driven ourselves into a frantic Blackberry orgy of overwork over the last two decades, the French are still pretty chill.

They sweat the small stuff. The French do worry like crazy, but not about big things like war, their job, fidelity and so forth; they obsess over the small stuff. Every French movie has a scene where a bunch of people are sitting around eating in someone’s kitchen and the dialogue goes something like this:

“The peaches are not so fresh today, Jean Claude.”

“You are right, the peaches we had yesterday were much fresher, but they came from Auvergne. These peaches did not come from Auvergne, you know…”

This conversation goes on for another 15 minutes, and American audiences watching the movie have dozed off reading the subtitles, their popcorn strewn across the floor. But the French love worrying about this kind of stuff; it is like therapy for them.

They walk. Parisians walk. Take the Metro. Walk. When Madame goes to the village for the second time that day, for another fresh baguette for the evening meal, she walks. My wife noticed that all the under-30 women in Paris are in sensible but stylish flat shoes, ready for long hours on the pavement. Even though aging French Dolly Birds are still sporting high-heeled boots for the winter, they are still walking in them.

They walk upstairs. The average American MRI is larger than the average Parisian elevator. While we in the United States are supersizing our MRIs and hospital beds (even to the point of installing ex–Port Authority cranes to get the patients out of bed), the French make the elevators so small and claustrophobic that overweight people like me are forced to take seven flights of stairs to the apartment. (This happened.) Voilà, we are thin.

They use public transit. From the Paris Metro to the spectacular TGV (high-speed train), French of all socio-economic strata use public transport. The TGV hurtles through the beauty of the French countryside at 200 miles an hour, and you arrive relaxed. This sure beats hurtling through Trenton on Amtrak or schlepping through O’Hare. And when they get off the train? You guessed it: They walk.

They get naked in the summer. If you visit the beaches of St. Tropez in the summer, you will indeed encounter the topless Eurotrash tottering around on tiny heels, on the arm of the Russian mob oligarchs who now rule the South of France. But, mostly, you see naked middle-aged people. Way too much information. However, getting naked every summer in front of your Gallic peers is a powerful motivation to keep the BMI in check.

They smoke. Sure, they don’t smoke as much as they used to, and smoking is now outlawed in restaurants, bars and all public places, but you still see a lot of smokers, particularly young people, and they are thin. (This phenomenon is most pronounced in Croatia where young people look like they came from the United States in the 1970s, a full 30 pounds smaller. It’s like a time warp back into an episode of Charlie’s Angels.)

They take drugs. The French are the highest consumers of pills in the world. The pills are cheap because the French tightly regulate pharmaceutical prices for most products unless they are truly innovative. (Some cynics might say that innovative means “made by French drug companies”; see “They have superior education,” above.). The green crosses of French pharmacies are everywhere in France: from every block in Paris to every village in Provence. And pharmacists can prescribe many medications. France has lots of little special medications for the liver, and you will always see Monsieur popping a little pill or two after the cheese plate to aid the digestion.

They revere liberté, egalité, fraternité. The French like liberty as much as we do; indeed, they gave us a statue about it. But they are also big on equality and fraternity. The more contemporary term in Europe is “solidarity,” which is the recognition that certain key dimensions of society such as health care, education and transportation are collective goods that need to be supported by all, for the benefit of all. Over the last decade or so in the United States, we talked a lot about liberty. Fraternity, not so much.

Alors, you got it. The French are different from us. We won’t have the same health status as the French because our values and culture are different. We are a little too hard working, money-obsessed, frantic and unequal to have the French lifestyle. But, what about the French health care system? Is there anything we can learn from them that is translatable, given the wide cultural differences?

A Translation for America

T.R Reid’s excellent recent book, The Healing of America: A Global Quest for Better, Cheaper, and Fairer Health Care (Penguin Press, 2009), is a wonderful review of how many other industrialized countries provide health care that is less expensive and fairer. From his work, here are a couple of ideas we should think about that don’t actually require us to turn French.

Carte Vitale. The French have a ubiquitous electronic smart card called Carte Vitale that contains basic health information on the patient. It is really a portable electronic health record and insurance card. Doctors also swipe it through a card reader for billing purposes. There are no billing clerks in the doctor’s offices because it is all automatique, as Reid’s French doctor would say. It’s all very French proprietary technology. The French are big on smart cards and little card readers that they design and manufacture, but the basic idea is right: Everyone should have a card they carry about that with one swipe conveys the essential patient information and links to your health insurer.

Normally in the United States we embody the intelligence in the network, not in the card, but given the billions being spent on health IT, surely to God we can have a system in which at least the doctor knows you are allergic to penicillin and the billing part is taken care of. I really want to see an end to the pathetic U.S. ritual that takes place in most doctors’ offices: The receptionist takes your health insurance card and makes a copy of it, both front and back. In the age of Google this ritual is positively medieval.

Skin in the game and price transparency, French-style. As Reid explains, the French require insurers by law to reimburse doctors and patients within a timely manner (usually within three days). But here’s the good part: The French system expects patients to pay something at the point of care and, indeed, as Reid explains: “most French patients, in fact pay the full charge of treatment at the point of service.” There is a detailed price list in every office; you, the patient, pay with your own money at the point of care; you know what the deductible and cost-sharing will be, because the Carte Vitale knows; you put down you euros; you get the service; and what you are being reimbursed has to be paid to you by the insurer within three days.

Contrast this with the bizarre, gotcha, after-the-event, surprise you get when encountering American health care. You don’t know until it’s over what you just bought and for how much. It’s like the New Jersey freeways: The exit signs are after the exits.

So in conclusion, read T.R Reid’s book for more great insights on France and other health systems. There are countless lessons on how to make health care fairer and cheaper that we could easily adopt for American consumption. And if you really want to be as healthy as the French: Walk, eat cheese, drink wine, throw away your Blackberry and get naked in the summer…but, please don’t smoke. As the French cigarette labels say, Fumer Tue (Smoking Kills).

Ian Morrison is an author, consultant and futurist based in Menlo Park, Calif. He is also a regular contributor to H&HN Weekly and a member of Health Forum’s Forum Faculty Speaker Service.

Disinformation, Division, and Delaying the Inevitable

Wednesday, November 11th, 2009

Oh, boy did Obama get an earful this summer!  Whipped up by Sarah Palin, Glen Beck and Rush Limbaugh, gun-toting seniors turned out in droves to protest Obama Death Panels.  “Get the government out of my Medicare” became the clarion cry (say what?).

It reminded me of my old one liner:  “I grew up in Glasgow, Scotland.  In Glasgow, healthcare is a right, carrying a machine gun is a privilege.  Maybe America got it the wrong way round.”  Weirdly prophetic.

The age of disinformation is upon us.  Walter Cronkite is dead.  Mainstream news anchors are competent, Teflon vessels for synthesizing press releases.  Newspapers and investigative journalists are a dying breed.  Everybody with a computer or a cell-phone has become a blogging, tweet freak.  It is as if everyone in America has become a New York Times columnist, only without the brains or training.

And then came health reform.  Against the backdrop of mainstream media in disarray, we are supposed to be having a civilized debate about healthcare reform, that has turned into a national shouting match without any referees.  An old mentor of mine used to say “there’s no penalty for lying in the US.”  Loony positions persist, ideas long discredited are given new life.  Disinformation and lies are rampant.  Despite valiant attempts by the New York Times and other credible news and public policy organizations to do fact checking and “keeping them honest” comparisons, nobody believes the fact checking stuff unless it confirms your biases.

Making national policy in an ideologically divided country is tricky enough, but as media fragment and as we retreat into our Rush or Rachel corners, it is hard to see how the national shouting match becomes a national dialogue.

The Loony Right believes:

  • All the uninsured are illegal aliens or extra-terrestrials
  • Paying doctors to discuss End of Life Care options with their patients is a death panel
  • Government can’t run healthcare except for Medicare, Medicaid, the Veterans Administration, Tri-Care, the National Institutes of Health, the CDC and so on
  • Incremental expansion of coverage on the existing employer-based health system is socialized medicine
  • Obamacare is evil
  • The French are even more evil
  • The British are evil and godless

The Loony Left believes:

  • If we can’t have a single payer we need a public plan, and that
  • Public plans will automatically reduce costs without changing coverage or payment methods
  • Profits of insurance companies and drug companies account for all of healthcare costs
  • The Congressional Budget Office is a front for United Healthcare’s Ingenix division
  • Health industry lobbyists are running the government
  • Some people from Alaska are evil
  • The French are OK, but are turning evil because they are raising co-payments and deductibles to try and balance their budget
  • The British have free care paid by someone else (possibly the French).

As temperatures cool in the fall and deliberative bodies like the Senate Finance Committee finish their work, we may still have meaningful health reform that includes expansion of coverage and promising pilots on payment reform, and relief in the form of subsidies for many that have had no access to insurance coverage.  But it is but a small start on the path to transformation of healthcare delivery and payment.

The basic problem, as I try to emphasize over and over, is that the average American family cannot afford the average costs of healthcare.  Affordable insurance can only exist if we have an affordable delivery system.  There are not enough rich people to subsidize poor and middle-income people.  We are living beyond our medical means, and it will sink our collective ship.

Health insurance is viewed as a magic source of money that can pay for all the care that anyone could possibly receive to prolong life or ameliorate disability, disease, discomfort or disfigurement.  But, that endless source of money comes from all of us who pay premiums and taxes.  And we cannot afford it.

If we cannot have a rational dialogue about a 3% increase in annual healthcare expenditure to cover the uninsured, how do we imagine we are going to deal with the more difficult questions of making healthcare cheaper than it is today, or how we collectively consume less of it given an aging society and relentless scientific progress.

It is not going to be easy.

We are inevitably going to have to deal with the simple arithmetic of healthcare, namely:  healthcare costs equals the sum of healthcare incomes, which in turn equals the number of services we receive times the price of those services.

This means that we will have to have a long run change in the delivery system that:

  • Emphasizes primary care and prevention over procedural interventions
  • Expands the supply of primary care resources while restricting the supply and utilization of expensive and marginally effective high-technology interventions
  • Emphasizes palliative care solutions instead of expensive futile care at the end of life
  • Creates environments that encourage healthier behaviors and greater personal responsibility for managing personal health
  • Simplifies the administrative mess by standardizing payment, measurement, and review systems
  • Encourages medical technology innovators to produce new technology that is better, faster, and cheaper not more expensive and worse
  • Encourages competition based on the creation of risk-adjusted outcomes for whole populations and individual patients rather than paying for procedures based on provider preference.

I would call it the Bring Back Managed Care and Regional Health Planning in a Competitive Consumer Directed Framework that Pays for Outcomes not Procedures so We Can Ration Care Effectively and Fairly For All Americans Plan.

Catchy eh?  Do you think I should run for office? Or become French?

Ian Morrison is an author, consultant and futurist based in Menlo Park, Calif. He is also a regular contributor to H&HN OnLine.

Silly Season: Monty Python Policy Making

Monday, October 19th, 2009

Now we are down to the really fun part of healthcare reform, when they actually write the final bill and figure out ways to pay for it.  And to honor the 40th Anniversary of Monty Python’s Flying Circus’s debut, Congress and the Administration have entered the silly season where final policy is turned into law.

I love the American healthcare system, not because it is the best in the world, but it is the funniest.  The laughs keep coming.  Here are a couple of my latest favorites.

Taxing Cadillac Plans.

Many in the administration subscribe to the notion that we should tax, so-called, “Cadillac plans” as a way of raising money to pay for expanded coverage, and to discourage the sale of excessively expensive insurance.  Economist types like this kind of stuff.  And it allows you to tax those bastards at Goldman Sachs, right?  Well, it turns out that the reason Goldman Sachs have expensive benefits is that a) they are in New York, which has expensive healthcare delivery, and, b) they have little or no cost-sharing because they (presumably) don’t believe in “skin in the game” or capitalism.  Then Axelrod reminds everyone in the White House that the people with the richest health benefits in America (apart from the bankrupt automaker workers who actually make Cadillacs) are school teachers and firefighters.  Brilliant.   The economists are trying to nail Goldman Sachs bankers and it turns out, that the ones who would be punished by the tax are the hard-pressed schoolteachers of the Bronx and all New York firefighters.  So the public employees unions come out swinging: “unfair, not right, we fought for these benefits, and we will actually turn up at Congressional elections in 2010, when all the Twitter crowd stay home watching Rachel Maddow on election day, and never even get off the couch.”  Maybe, we should exempt the Unions… some say. OK, then there is a bit of problem because a lot of the revenue to pay for the coverage comes from the assumptions on revenue from the tax on rich plans, most of which are union plans.

Oh Shit, now what?  OK, why don’t we just have a Goldman Sachs only excessive health benefits tax?

Have you ever dealt with Goldman Sachs?

Here’s how the conversation would go with a Goldman Sachs banker whose benefits you are going to tax:

Goldman Sachs Benefits Manager to Goldman Sachs Banker:  “ Congress has passed an excise tax on expensive benefit plans, and because we are self-insured we are having to pass this tax on to you, so there will be a deduction in your paycheck.”

Banker to Benefits Manager:  “No it doesn’t work that way here. I am too valuable. I need to be grossed up.”

Benefits manager to Banker:  “What does that mean?”

Banker to Benefits Manager: “ Well, highly compensated people like me, when faced with an excise tax imposed on the company, with the intent of discouraging excess compensation that may end up in a net reduction in my pay, under those circumstances, we highly compensated people normally would get grossed up to make us whole again.”

Benefits Manager to Banker:  “Do you need an assistant?”

I am self-employed, nobody’s grossing me up.  But, Goldman bankers would get grossed up.  That’s the way they roll.  It sucks to be you and me.

Tax the Evil Insurers

Great new idea.

For profit health insurers are evil, right?  …..Check.

Non Profit Accountable Care Organizations like Kaiser and Group Health are good guys , right? …..Check.

So tax commercial insurers and give the Accountable Care Organizations a break to encourage the formation of Accountable Care Organizations, right?

No, actually we are going to do it the other way around.

The current proposals impose a tax on fully insured products, there is no tax on the self-funded part of the market, and here’s the really good part, most for profit commercial insurers are heavily concentrated in the self-insured part of the market and most non-profits insurers and accountable care organizations are disproportionately (or in the case of Kaiser, almost exclusively) in fully insured arrangements.

What this means is that the very things you are trying to encourage are undermined.  Industry estimates are that the effect of the tax is a 2-3% rate advantage to the self-funded plans over the fully insured plans causing a cavalry charge to self-funding.  (For example, Kaiser who has 3% of all commercially insured lives in the country, would pay 8% of the tax). The next effect, as Alain Enthoven and others have pointed out, will be to further pump up fee for service incentives, and hurt the small group and individual market which has the most problem paying for health insurance. Perfect.

It’s not like it’s too difficult to treat self-funded and fully insured exactly the same using premium equivalents.  Indeed, in other provisions of the Baucus bill in terms of clawbacks of fees for subsidized workers, the bill treats employers the same way whether they are self-insured or not.

Monty Python couldn’t make this up.

We know you should be treated the same, and we are treating you the same, over here, but we are not treating you the same when it comes to the tax, because we want to give fee-for service commercial ASO business a 2-3% rate advantage over Accountable Care Organizations so that we encourage the formation of Accountable Care Organizations.  Splendid.

It is straight out of the famous Piranha Brothers sketch, where an underling in the Piranha Brothers London gang (modeled on the notoriously violent London East  End Kray Twins) when asked if he was bitter  that the two gang leaders Doug and Dinsdale Piranha had nailed his head to a coffee table, declared:

“ I deserved it.  Doug and Dinsdale are lovely blokes.  They’re cruel but they’re fair.”

Expect a little more of the “cruel but fair” policymaking as the silly season moves ahead.

Ian Morrison is an author, consultant and futurist in Menlo Park, California.