Ian Morrison

My good friend and colleague Mark Smith M.D., M.B.A., president and CEO of the California Healthcare Foundation (on whose board I sit), said it best:

“The accountable care organization is like a unicorn, a fantastic creature that is vested with mythical powers. But no one has actually seen one.”

I have re-blogged and re-tweeted (twitter@seccurve) this so often I got all the credit for the line. Welcome to the Internet age. But in all fairness to me, re-tweeting someone else’s intellectual property is as close as most of us get to original thought these days.

And that, my friends, brings me to why chasing unicorns is so important. Rising health care costs is a national security threat greater than any other. It will kill the budget, the economy and, some even argue, the patients because of unaffordability, excessive iatrogenic interventions and profligate use of resources. We desperately need some big new ideas about how to practically meet Don Berwick’s noble triple aim of better care, better population health and lower per capita costs.

One of those big new ideas is the accountable care organization.

Well, actually it is not an entirely new idea. And many in health care can (and are) legitimately claiming to having been one for a long time: Kaiser, Geisinger, Mayo, Cleveland Clinic, capitated delegated medical groups of California and even a few network model HMOs (among others) can say they were doing this all along.

I gave a little after-dinner talk to an elite group of ACO thought leaders in Los Angeles (basically the talk is the rest of this column) and it was a combination of both a roast and homage to Dr. Eliot Fisher of Dartmouth (who was there, I may add) and whom I always describe as a national treasure, not only for leading the wonderful Dartmouth Atlas work, which in many ways was the intellectual underpinning of, and the compelling case for meaningful health reform, but also widely credited with coining the term accountable care organization. But, as Eliot would be the first to modestly admit, many others in that room that night (Enthoven, Shortell, Levine, Crosson, Margolis, O’Kane, Robinson and too many more to adequately acknowledge here) are all part of the intellectual and practical foundations of this re-emergence of the accountable care organization vernacular.

At their very best, ACOs could be a powerful, successful, re-tweet of Enthoven’s managed competition, which a lot of us thought was a pretty decent American compromise the first time around (see a previous column, “The New American Compromise”). At its worst, it could be a badly defined mish-mash of half-baked ideas and experiments that is an orgy of excess for lawyers and consultants. As one colleague noted to me, probably half of the 1,500 attendees at the 2010 ACO Congress in Los Angeles were lawyers and consultants (myself included) eager to arm themselves with a new PowerPoint for an assault on the dazed and confused delivery system. (Google “ACO video” and you will find a brilliant cartoon about this on YouTube.)

So, here’s my take on ACOs and what we have to do to make them work right. I frame my suggestions very simply and modestly, first as a central two-part problem, and second as Morrison’s 10 Laws. (When you are a futurist you’re allowed to make up your own laws.)

The Mutual Disrespect Problem

There is in American health care a central problem governing the organization of health care. I call it the mutual disrespect problem, and it has two important parts:

Part 1: Everyone thinks everyone else’s job is easy.

Part 2: Anyone can do what a health insurance company does.

There is in health care an astonishing degree of mutual contempt for the component parts of the system: doctors hate hospital administrators, nurses hate doctors, and everyone hates insurance companies, especially the patients and the government.

Which brings me to the second part, namely, that every stakeholder assumes that whatever insurance companies do, the stakeholder could do easily for themselves. I have written before that insurers will be asked to explain their own benefit to society (see my earlier column, “Explanation of Benefits”). Insurers are having an exceptionally profitable year financially through no particular genius on their part it seems to me (just check their earnings against estimates). Despite all that, they actually do things that other actors (particularly hospitals and doctors) are pathetic at or incapable of such as eligibility monitoring, enrollment management, administration of benefits and, some would say, predictive modeling, population health management, case management, technology assessment and, of course, risk management.

So it is important, before we embark on this path to accountable care that we all start with a little self-awareness and good old-fashioned humility about core competencies to manage the risk for, and outcomes of, care for a defined population.

And so to the 10 Laws.

Morrison’s 10 Laws of Accountable Care

Morrison’s first law: Any organization that claims to be an accountable care organization, is probably:

• not accountable for a defined population;
• doesn’t care for patients beyond a few isolated episodes; and
• is not very well organized.

With the obvious exception of the organizations in the introduction that have a legitimate historic claim to being proto-ACOs, most people who are announcing themselves as accountable care organizations are full of it. Indeed, sometimes the louder the claim, the weaker the evidence. (It’s a bit like national politics, no?)

Morrison’s second law: You can’t be accountable for the care of patients … unless you know their phone numbers. The way the ACO provisions are currently framed, patients who end up in an ACO will be assigned to them through an “attribution logic.” Personally, if I was running an ACO, I’d rather know patients’ phone numbers so I can call them up and harass them about what they are eating. If I am going to be accountable for their health expenses, then I would like to be a wee bit proactive about identifying and managing the risk that I am taking on. And a really good start would be knowing exactly who the patients are. By the way, most doctors (or hospitals for that matter) don’t have a clue what other providers their patients go to or what their patients are doing when they are not with them, so this is not a new problem. It is just that now there will be money attached, both positively and negatively.

Morrison’s third law: Patients in accountable care organizations should at least know they are in them. Even I, with my perverted sense of humor, could not make this up. Patients in ACOs will not know they are in them. Mercifully, the policymakers are onto this aberration, so expect amended regulations that will require notification of the patients, possibly as follows:

“Dear Madam, Sir or Occupant,

Congratulations! Our attribution logic engine has automatically assigned you to get (almost all of) your health care from an organization with a new name that doesn’t mean anything but that actually used to be known as your local hospital. It is an accountable care organization now and it will be great for your health.

Have a wonderful day.

The People at Medicare

P.S. They don’t know who you are either so you might want to give them a ring.”

Morrison’s fourth law: Patients in accountable care organizations should not be allowed to leave, just because they had a bad day. Under pressure from the freedom and liberty folks, no one had the juice to say that patients in ACOs have to stay with them. No, the patients can skate away whenever they like. Imagine the money-losing, non-compliant, frequent flyer congestive heart failure patient being dumped on your doorstep because the hospital a few miles away paid for the limo and subsidized the patient’s rent so they could move in next door. Extreme, you say? In 25 years of observing American health care, I can say that it is a lot easier to dodge risk than manage care. This one really worries me, and I think it needs to be fixed, through voluntary enrollment for one-, two- or three-year periods, but once you pick, you stay. This could end up being an ideological deal breaker.

Morrison’s fifth law: Accountable care organizations must “bend the trend”; otherwise, it is a massive distraction for busy professionals who don’t have a life already. Look, everyone is busy. And so unless we are prepared to get behind the notion of bending the costs curve through more accountable health delivery systems, it will be a massive distraction that diverts our attention away from simpler, more immediate end points of improvement like avoidable readmissions, medication errors or primary care redesign. We must commit to slowing if not reversing total costs growth.

Morrison’s sixth law: Doctors love fee for service. They just want more fee and less service. We policy wonks (especially the economists) love to talk about reimbursement reform: Change the incentives and the system will reform itself. We are always talking about the incentives for doctors (since their decisions drive most health care costs). So my colleagues at Harris Interactive had the brilliant idea of asking doctors how they feel about all that. The Harris surveys show that the majority of physicians are, on balance, somewhat satisfied with their current reimbursement method (namely fee for service). They just complain about the amount of the payment for the level of effort involved in providing the service. But when it comes to changing the method of payment, the same surveys show that physicians don’t seem to like any of the provider payment reform ideas now circulating, including pay for performance schemes, bundled payment or global episodic payment. A recent academic survey confirmed Harris’s numbers that only about 16 percent of doctors would be in favor of accepting bundled payment.

The wonks designing bundled payment have not quite thought through the likely bloody wars in every hospital when a sack of money is dumped on the desk to cover all the costs of a hip or knee replacement: the diagnostic work-up, the DRG payment, the surgeon’s fee, the rehab and the readmission risk. Fights over who gets what will be reminiscent of the second battle in Braveheart.

Morrison’s seventh law: Any successful payment reform requires that you buy the doctors off in the short run so you can “grind the bastards down” in the long run. This is an almost direct quote (including the profanity) of a prominent executive of the British NHS when I asked her why they had spent 30 percent net new money on the British Primary Care Pay for Performance scheme. Generations before, Aneurin Bevan, father of the British NHS, was asked how in 1948 he secured the cooperation of the British doctors in health reform; he reputedly said, “I stuffed their mouths with gold.”

A similar story could be told of the dawn of Canada’s medical insurance in Saskatchewan in the 1960s. And yet, we in the United States did not learn the lesson of history, so the doctors never got a permanent sustainable growth rate (SGR) fix in health reform, and still don’t, going into a “spend no more” Congress. Oops.

Morrison’s eighth law: One man’s waste is another man’s income. There is enormous waste in American health care: unnecessary care, redundant care, defensive care, inappropriate care, unethical care, excessive care, futile care and corrupt care. But one man’s waste is another man’s income. In Japan, they call waste muda. In Oklahoma, they call it margin. Extracting waste, at least in the short run, means someone’s income has to either go down or disappear entirely; in the long run, we can reallocate. Again, this is easy to say, hard to do.

Morrison’s ninth law: The high-value ACOs seen through a Medicare lens may not be high value seen through an all-payer lens. (In other words, if hospitals integrate locally to be accountable will they end up being market dominating?) There are really two important consequences of this law. First is that despite the great work of the Dartmouth Atlas it doesn’t tell the whole story about performance because to date the data have been Medicare only. Yet as I have written about before (see “If Bernie Madoff Ran Health Care”), because of the enormous variation in commercial insurance prices to providers in various parts of the country relative to Medicare, the hospitals and regions who show well or badly under Medicare numbers may not be as good (for example Sacramento) or as bad (say McAllen, Texas) as their Medicare-only Dartmouth Atlas shows. The easy solution is for Dartmouth to get an enormous grant from someone to put all the data together, to report it all out and let the boards of hospitals be truly accountable for analyzing, explaining and governing their stewardship of resources.

The second idea in this law, and one that regulators are confronting head on and fast, is that if health care providers consolidate locally in the name of accountable care organizations, will it lead to a concentration of market power and, in turn, even higher prices? Provider consolidation has been going on like crazy for a decade, and many argue that this explains the rising prices seen in many markets. The ACO trend could make this situation even worse without appropriate policy and regulatory oversight.

Morrison’s tenth law: The people most capable of managing the care of populations are the people least trusted to do it. Certain aspects, if not many, of managing the care of populations may be best done by a managed care organization. Yet surveys of doctors and the public reveal that managed care organizations are the least trusted, are the most deserving of more regulations, and are perceived by physicians to have done more to harm quality than almost any stakeholder, with the exception of malpractice lawyers and the government.

Looking Ahead

Despite my natural Scottish cynicism, I am incredibly excited that the health care marketplace is embracing accountable care, and that hospitals, in particular, are running as fast as they can to integrate with their physicians and figure out mutually beneficial ways to get higher performance for the communities they serve.

We should be deeply grateful to the leaders of the accountable care movement (past, present and future) for their tireless efforts to energize the health care field to achieve better health for populations, higher quality of care and lower cost. We salute you all.

ACOs are vaguely defined, conceptually fuzzy and badly constructed, both legislatively and managerially, and they are potentially profoundly unpopular with doctors and patients. But they may be our best hope to have an organized health care system that is accountable for our care.

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.

Healthcare reform is the new reality.  All stakeholders are reading the fine print, and the tea leaves, and trying to identify what it all means.  There are two big themes in the new law:  first, more people will be covered but at lower reimbursement; second, there are seeds of change to shift the game from pay for procedures to pay for outcomes.  All the rest is regulatory gobbledygook, aimed at making state insurance commissioners insane, and giving the alternate universe that is FOX News something to be against.

How do hospitals prepare for these fundamental changes?

Fifteen years ago, I wrote a book called the Second Curve:  Managing the Velocity of Change.  It was an embarrassingly simple premise:  most businesses and most industries are going along quite nicely on their first curve (the base business, the business they know how to run on a daily basis).  But they have a sneaking suspicion in their gut, that it will be replaced by a second curve: a new business, or a new way of doing business, that is radically different from the first.

The dirty little secret of futurism is that you cannot predict the future, and there is a natural human tendency to overestimate the impact of phenomena in the short run and underestimate the impact in the long run.  This causes multiple strategic errors:  companies jump too soon, walking away from all of the profit and revenue on the first curve, or even more fatal, they cannot build the second curve, and end up not making it in the long run as the forces of change make them irrelevant in a new world.  Or worse yet, the second curve puts them in direct competition with themselves or their best customers.  Oops, what to do?

The benefit of writing a book is that people who read it ask you to come and give a talk because they resonate to the premise.  The bad part is you to get to meet people who have even better examples of what you wrote than the ones in the book, and it’s too late to include them.

I gave a few hundred Second Curve lectures to many, many companies in many, many industries, and a lot of different countries over the last fifteen years.  I learned four big lessons that I didn’t fully appreciate, when I wrote the book.

•    Americans Love the Frontier.  Every group I ever talked to was eager to start the second curve.  I used to recommend as a strategy that CEOs give $50 million in start up money and a bunch of stock options to a bunch of crazy people in the organization to start the second curve. I thought it was an outrageous and provocative idea.  Yet, in every session, there would be instant volunteers.  Everyone wanted to be the future, even if it was risky, and even unlikely, and a little nuts.

•    Premature Extrapolation.  My old colleague, Paul Saffo, the celebrated technology forecaster and master of the bon mot once said:  “Never confuse a clear view for a short distance”.  I redubbed that classic insight as premature extrapolation.  Just because it is obviously going to happen doesn’t mean it has to start immediately. For example, in our work in the early 1990s for Pitney Bowes and the largest, most sophisticated postal services around the world, we built a forecast on the future of mail.  Based on research, surveys, and countless expert panels we developed a forecast that mail would eventually start to decline in use because the two main underpinnings of first class mail (bills and statements on the one hand, and direct marketing on the other) would migrate to electronic form.  But, our forecasts and scenarios also showed that in the US, there was a high degree of attachment to paper based mail in those two key areas.  We built careful monitoring systems with our clients so they could follow the true path of the first curve, even as they built the second curve.  Mail in America grew slowly but steadily until 2007!  If our clients had walked away from the first class mail stream, and bet the farm on the second curve too early, they would have walked away from nearly twenty years of steady, profitable growth.

•    Second Curves Take Time to Build. The key challenge of the second curve is that the business model is nearly always different from the first.  But, most importantly, it involves a different culture, and cultural change does not happen quickly or easily.  If you really want to have a different culture five years from now, you really should have started a couple of decades ago.  No kidding.

•    Most Leaders Can’t Deal with Strategic Schizophrenia. I was like Pollyanna when I wrote the book.  I extolled people to manage on two curves.  But, I had precious few examples beyond IBM, who actually successfully managed the transitions from adding machines to mainframes, then mainframes to PCs, then PCs to the internet, then the internet to consulting services.  Most organizations don’t do well managing on two curves.  Second Curve players (disruptive innovators, as Harvard’s Clay Christensen calls them) are easy to find.  But few know how to manage on two curves, because they are so different, they have different culture, people, heroes and incentives.

So, back to hospitals.

Expansion of coverage albeit at lower reimbursement, is something a hospital can handle, but, reimbursement reform is a new game.  The legislation includes important pilot programs to promote Accountable Care Organizations (that take full financial risk for the care of patients) and to encourage bundled payment experiments (where the fee for the hospitalization would cover immediate pre and post discharge care as well as the associated physician fees, and any risk of readmission).  These are but the beginning of a long inevitable path to changing the reimbursement system to reward value not volume.  We have only just begun.

The future, in the long run, may be very different, you have to prepare, and you must start now, because if you don’t, you’re toast.  But you will be in a world of strategic schizophrenia for some time to come.  Here’s my best guess of what to do:

•    Integrate for Accountable Care. Take the building blocks of accountable care (financial risk for the care of patients, integrated medical staffs dedicated to high performance, performance measurement and management across the continuum of care, and a business model to sustain it all) and bring them together.  Easy to say, hard to do.  But, this is your work.

•    Make it Cheaper. Any way you cut it, making healthcare services cheaper will be a good thing.  Cheap doesn’t mean inferior or nasty.  It means that it costs less.  Like Wal-Mart with its superior, high –tech supply chain that delivers everyday low prices, hospitals that get ahead of the curves on aggressive cost management will be well ahead in any future.

•    Make it Better. Be a maniac for measurement and performance improvement.  You have to constantly strive to measure and improve and everyone on your team needs to believe that, whether they work directly for you or not. Good morning Doctor, let’s chat.

•    Focus on Outcomes. The bottom line of healthcare is great health outcomes for patients and populations not profitable procedures, technically perfected for paying patients.  Good outcomes may be death with dignity; or return to health status; or living well with chronic disease. Lose the scalpel, focus on the patient and the outcomes they want.

•    Innovate on the Side. Successful second curves are built from pilots and experiments, often off to the side.  For example, IBM’s low-cost PC business was first built in isolation in Florida away from the dominant corporate culture.  So too, hospitals may have to pilot medical home initiatives and bundled payment experiments with small teams of innovators, to learn how to play a new game.

•    Flip the Switch. Constantly look to the future, build the culture and capacity for the second curve, and the business model for a different game, while doing your best to nurture the organization that brought you into the millennium.  But then, you, the leader, have to determine when to “Flip the Switch” and focus the entire organization on that new game.  That’s leadership.

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.

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.

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.

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.

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.

We have had a lot of talk about reliable, sustainable reductions in health care costs. “Bend the trend” has become the new mantra. So I joked to a friend that we need someone like Bernie Madoff in health care to pull off the seemingly impossible: consistent performance that “bend the trend” requires.

Convinced that someone else probably had the same idea, I went to the mother of all plagiarism prevention tools (Google) to see if someone else had used the metaphor. Well, of course someone had. Christopher Hayes of The Nation wrote a great piece saying that listening to Rick Scott (the once disgraced and now resurrected ex-CEO of Columbia/HCA, recently turned Obama health care reform opponent) was the equivalent of putting Bernie Madoff in charge of securities regulation. Funny.

But this column is not about Rick Scott spending big money to discredit health reform (maybe next time?). It addresses the more serious question (okay, not so serious): What if Bernie Madoff ran health care? What would health care look like?

Health care would grow every year, in good years and bad. Bernie Madoff was able to consistently grow in good years and bad. His investors got close to double-digit growth every single year for the last 20 years. Yet, health care has grown absolutely consistently since records began in the late 1920s at a rate about 2.5 percent above the GDP per capita. This makes Bernie look like a putz.

Clients would be very happy. People loved Bernie; they were very happy. Few complained about the service or the performance. My colleagues at Harris Interactive and the Harvard School of Public Health and I have been in partnership for over 20 years measuring public opinion and trying to make sense of it. Harris Interactive polls for 2009 show that 81 percent of American are very or somewhat satisfied with their ability to see a doctor whenever needed (compared with 79 percent in 1990); 81 percent are very or somewhat satisfied with their insurance benefits (up from 71 percent in 1990); and 58 percent are very or somewhat satisfied with their out-of-pocket costs for health care services (compared with 54 percent in 1990).

In addition, only 26 percent of Americans agree that “the health care system has so much wrong it that we need to completely rebuild it,” compared with 41 percent back in 1991, and down from its more recent peak of 37 percent in 2006. Bernie and health care were doing a good job, so why do we need all this change?

It would be hard to get in. “I know Bernie, I can get you in” was the mantra of the Upper Eastside elite. You had to wait to get in. So too for health care. A Harris Interactive poll, conducted for the Commonwealth Fund in 2005 among sicker adults, showed that 23 percent of Americans waited six days or longer for a doctor appointment the last time they were sick or needed medical attention, compared with only 3 percent in New Zealand, 10 percent in Australia, 13 percent in Germany, and 15 percent in the United Kingdom. Only Canada with 36 percent had a worse performance than the United States. Bernie would appreciate the barriers to entry.

Make the European jet set think that Americans have the best system in the world. Bernie had all the rich and famous of Europe, the Middle East and Russia convinced that he had the best system in the world. Bernie’s better off in jail than being pursued by the Russian mob around Manhattan, but they used to look up to him. So too for health care. Fox News is full of experts, like expatriate Canadians, telling tales of rationing and restriction in every health care system but the good ole USA.

Make sure rich and influential people think you are good. Bernie had all the rich and influential people infatuated with his success. In health care, every hospital I know is at the 99th percentile of consumer satisfaction, and most of the 4,000-plus U.S. hospitals are in the top 100. Even though studies show there is no correlation among all the rating and ranking measures, we see a lot of affluent, well-insured Americans believing that their local hospital is superior, and rarely do they check if there are any data to support this.

Poor people would subsidize rich people. Bernie took money from poor people’s pension funds to pay for reliable returns for the rich. Health care (as I explored in my last column) actually tends to subsidize the over-consumption of health insurance and health services by the rich at the expense of the poor and middle income folks, because of the regressive way we pay for health care and the tax deductibility of health benefits.

The people on the 19th floor would never know what the people on the 17th floor were doing. Bernie never let even his closest associates go from the main office on the 19th floor of the Lipstick building to the 17th floor, where all the shenanigans were going on. No one got to see the real books.

In health care, the folks at Dartmouth (with a little help from Atul Gawande) have emerged as the intellectual foundation of health reform. It is well deserved: They are national treasures. Based on their analysis of the threefold variation in the utilization of services amongst Medicare recipients across the country, Dartmouth researchers estimate we could spend 30 percent less on healthcare for the same or even better outcomes. Obama and Orszag are all about the Dartmouth Atlas. But, even with all this great research, we don’t know the full story because we are relying on lessons learned from Medicare data.

I constantly come across paradoxes in my travels. For example, why does a prominent hospital system in Northern California show up as so cost-effective based on Medicare data when so many of the health plans it deals with believe it is price gouging on commercial patients? Or why do the very-high-performance Medicare states, such as Wisconsin, have hospitals charging three times the Medicare rates to commercial insurers? Or why do Rand studies that show all-payer inpatient data on cost and quality show little or no correlation between costs and quality either way, except for the finding that for-profit hospitals tend to be cheaper and worse? (Bring back Rick Scott?) Health care providers love to obfuscate, so we need to know the whole story. Let’s do Dartmouth-style analysis with all the data and let the chips fall where they may.

There would be pay for referrals. Bernie would pay the feeder funds commission to bring him business. Atul Gawande’s brilliant New Yorker article “The Cost Conundrum” exposed McAllen, Texas, where south Texas rancher/surgeons were screwing the federal government to boost the local economy by paying for referrals.

There would be self-dealing. Bernie kept it all close doing his own fake trades and dealing with his feeder-fund partners who were on the take. Self-referral is rife in American health care, fueled by frustrated doctors in search of new income streams in imaging, oncology drug administration and routine testing.

Oversight and accountability would be brushed off as meddling. Bernie had his skeptics who went to the SEC and complained, but he brushed the critics and the regulators aside as meddlers in a marketplace that was benefiting people. Many in health care are resistant to more oversight, transparency, accountability and public reporting. We avoid this at our collective peril.

Hide behind community benefit and philanthropy. Bernie was loved not just for his returns but for his good work. He was the doyen of the Jewish philanthropy circuit in New York and Palm Beach; he was adored for his compassion. Hospitals have done a good job of leading with their community benefit face. Although, I have to say I still struggle with the notion that the gap between the chargemaster and what a payer actually negotiates is community benefit. I would relabel it as “the margin we would have gotten in a world of unlimited resources paid by people so stupid or rich that they didn’t bother to negotiate.” Doesn’t sound so good, though.

Don’t have really big accounting firms as auditors. Bernie used a solo guy in a strip mall to keep his books; no Big 4 here. Who does the books in health care? Are we sure we really know what’s going on? Where were the auditors in McAllen, Texas? Where were the board finance committees? How many physician corporations get properly audited? I don’t know, but given that health care is larger than the entire Chinese economy, there may be some interesting stuff going on.

Finally, you’d get found out, and it would leave your customers bankrupt. Bernie got caught. Many of his investors were wiped out. Innocent people were devastated, worthy philanthropies were annihilated and lives were destroyed. In some ways, too, health care is being found out. It is certainly no Ponzi scheme, but it is unsustainable. It will bankrupt the country. It already is bankrupting individual households: 62 percent of bankruptcies were related to medical costs in 2007, according to Harvard researchers.

If something seems too good to be true, it probably is. We need to reform the health care system, and we may need to make some hard choices and some sacrifices. After all, we don’t want to end up like Bernie and his clients.

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.

Charles Darwin turned 200 recently. By all accounts he nailed evolutionary biology first time around, in his The Origin of Species, showing how species evolve to survive in their unique environment. His work is still widely accepted (except for a few people here and there) as the blueprint for how evolution works. The core of his research stemmed from a visit to the Galapagos Islands, where he observed strange and unusual creatures, perfectly adapted to the unique environment in which they evolved. How would Darwin react to visiting American health care? He would surely feel his theory was vindicated, because health care is full of weird species perfectly evolved for a strange environment.

Here are a few examples of weird health care species that are thriving in their niche:

Catheterizers

Cardiac catheterization with balloon angioplasty is a procedure that saves a lot of lives, if done quickly after a heart attack, but there seems to be no benefit to a prophylactic balloon angioplasty done in patients who have no symptoms. Yet the catheterizers busily do these procedures all day long, even though they read the medical journals and go to the scientific meetings where all the evidence is laid out that the procedures they are doing don’t make much sense. They keep doing the procedures because they can, they are in the cath lab anyway, it doesn’t do much harm and they get paid for it.

Revenue Cycle Managers

Armies of consultants optimize revenues for hospitals and other large providers. They scour for opportunities to code, capture and charge more. By diligently pursuing every last dollar, they can justify their own fees and still boost the revenue of their clients. Doctors, too, find that the single best financial outcome from putting in an electronic medical record is increasing revenue capture. This is how we are going to use electronic health records to save money: by helping providers find more revenue. Say what?

By the way, the really smart consultants actually work for the providers and show them clever ways to increase revenue, then they apply the same skills to helping the health plans (which pay the bill) by teaching the health plans how to find ways to minimize the newly inflated invoices they receive. This species is thriving.

Medicaid Enrollment Form Fillers

About 150,000 of these creatures work in American health care. They fill out forms for prospective Medicaid enrollees and have a union-mandated productivity target of filling out two forms a day. To be fair, the forms are long and complex and require a lot of documentation. Until the recent market meltdown, it was easier to get a sub-prime mortgage than to get Medicaid.

Some would argue that the forms are long and complex to discourage people from applying, because if they apply successfully then taxpayers have to pay for the Medicaid benefit. The strategy seems to be working: About a third of the uninsured in many states are people who are eligible for public programs but who for a variety of reasons don’t apply. Yet we have a thriving number of people who administer the program and who are reluctant to embrace the automation that would make their jobs redundant. With the recent massive injections to Medicaid and the rising unemployment rolls, this species should do well.

Octuplet Manufacturers

There is a small group of multiple embryo in-vitro fertilizers, who despite professional guidelines and scientific evidence to the contrary, implant five, six, seven, eight embryos in “want to be” mothers, even when those mothers already have five, six, seven or eight children. The most highly developed of this species do the IVF work on a private, cash only, fee-for-service basis then send the impregnated mother back to Kaiser to have the babies and run up a large cost in the neonatal intensive care unit.

Repeat Testers

This species replicates the work done by fellow species members. It all seems like wasted motion, but actually it works really well. Doctors order tests that have already been done by other doctors on the same patients because they don’t know the tests were done, can’t access the results, don’t ask the patient, don’t agree with the tests that were ordered, don’t want to be sued for missing something, or are really eager for the ancillary revenue. This enables the species to thrive when their normal forage habitat (visit fees) are inadequate to meet income expectations.

Clinic Closers

Some children’s hospitals that have outpatient clinics with Medicaid reimbursement find it better to send patients to an affiliated federally qualified community clinic. Instead of getting paltry Medicaid reimbursement, the federally qualified clinic gets a fee that is three or four or five times more than the Medicaid fee.

NICU Runners

Prenatal care and normal deliveries are often not viable economically for hospitals. Many people in the baby business have to make it up on having a thriving neonatal intensive care unit that can bill a lot for very intensive care of low-birth-weight infants. Lack of investment in comprehensive prenatal care; rising numbers of births among teenage mothers, older mothers and obese mothers; and impressive and expensive neonatal care techniques creates continued demand for NICU services. Just make sure the NICU babies have some form of public or private insurance.

Large Molecule Makers

Pharmaceutical companies battered by generic substitution, growing cost-sharing for brand name drugs and blockbusters coming off patent are all in pursuit of a new environmental niche called biologicals or specialty pharmaceuticals that are developed through the tools of modern molecular biology rather than old-fashioned chemistry. Companies develop these large molecule drugs that are targeted at small populations and provide new therapeutic options for patients with previously untreatable diseases and symptoms, mostly in the cancer area.

Manufacturers have figured out a new pricing structure: They charge by the atom. Therapy for a year can cost tens of thousands if not hundreds of thousands of dollars per year. Because their drugs have large molecules, and they are promising improvements in treatment, they have set the price as high as the sky; no one wants to say no to improvements in care for dread diseases, no matter what the cost. Until now. The niche may be less viable as new policies encourage scientific studies comparing the comparative effectiveness of new technology against existing treatment, and as a new administration zeroes in on affordability of health care.

The combination of toxic incentives, Byzantine regulation, questionable ethics, lack of evidence and organizational dysfunction creates a rich series of environmental niches in which weird species can thrive. No one would design creatures like this, but they have evolved to survive in their unique environment. Left alone, like the Galapagos, these creatures will continue to prosper, but if the health care environment changes, particularly the reimbursement system, then all these creatures will have to evolve to survive.

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