Archive for the ‘The Health Care Blog’ Category

Covid-19: The End of the Game

Tuesday, May 19th, 2020

Back in the early 2000s I was on the board of the California Health Care Foundation and one day the German Minister of Health paid CHCF a visit as part of a learning tour of American healthcare. Mark Smith MD CHCF’s CEO invited me to join the meeting with the minister. She was a delightful person who didn’t speak much English, but because she was accompanied by her handler/translator we managed to communicate just fine. Mark and I tried to explain to the Minister how the American healthcare system worked, and we got to the point in the conversation about the money. The essence of the “game” we described was that commercial insurers (particularly self-insured employers) paid a significant multiple of cost (sometimes in excess of 300% of costs) in order to make the math work for providers. We explained that the game works only if these purchasers paid much higher prices. I don’t speak German, but I think she said: “What The F**k?!”. Exactly.

As we enter the Post COVID world, a key question is: Will healthcare simply restart this game? Or make it even more extreme, in fact, by providers turning to those commercial insurers and self-insured employers to make up the difference for the COVID “Elective Collapse Recession” that has so traumatized provider’s finances including hospitals, specialists, primary care, and dentists leading to job cuts, furloughs, salary reductions and bankruptcies of providers.

A number of recent articles have pointed to how the game works. In particular, the always superb New York Time’s columnist Sarah Kliff’s review of the Mayo Clinic and the other highflying institutions whose excellence is rewarded not by value based reimbursement but by high prices for commercial activity under a relatively benign payor mix (industry code for “don’t see a lot of poor people, uninsured or on Medicaid”).

Mayo is not alone. Every hospital I know plays a variant of this game. Some in less generous environments like Arkansas live leaner to the bone to make the math work, lucky to make 130% of Medicare on the commercial side. A tiny few, like my friends at the Benefis Health System in Montana, through passionate focus on operational excellence and a run lean culture, actually can make money on Medicare. But they are exceptional. Many if not most hospitals with more dominant market positions are able to generate in excess of 300% of Medicare on their commercial contracts including many of the country’s leading academic medical centers. And many titrate down their public payment patient mix to keep the game going. As I used to joke to hospital CEOs of financially struggling hospitals, “just move your hospital to the affluent suburbs”. Some did.

RAND has documented in studies of actual paid claims for commercial insurance that on average hospitals charge 241% of Medicare across the 25 or states covered in the analysis. I’m sure all these institutions make wonderful use of the money subsidizing research, uncompensated care, and the salaries of employed physicians especially academic doctors who are teaching the next generation. But all of these worthy activities are enabled from money derived from the game.

George Halvorson, former Kaiser CEO, proposed recently on The Health Care Blog an alternative funding scheme using a 20% payroll tax (paid equally by employer and employee) that would be used to fund a Medicare Advantage type program for All. (I proposed a similar solution twenty years ago in Healthcare in the New Millennium:  Vision, Values and Leadership, Jossey-Bass 2000, pp 231-2).  It might be a better alternative, but I am not sure we can get from here to there and especially by demanding high paying enterprises like Apple, Google and Facebook embrace a 20 percent payroll tax.

In the wake of COVID, hospitals have received one-time financial support from the Federal government to shore up both costs of care for the afflicted by the disease and for the financial damage of suspended clinical operations. Ironically, the share of non-COVID case-related reimbursement was distributed proportional to net patient revenue, in other words revenue gained in the game.

Absent a meaningful alternative like Medicare Advantage for All, to date employers have been complicit in the game and (while not exactly thrilled) have tolerated it for decades. Their coping mechanism has been to transfer the burden of rising costs and prices to their employees progressively over the last 20 years through the magic of high deductible healthcare. Sharing the pain with their employees and making them miserable in the process as workers face the weird reality of rising out-of-pocket costs, surprise bills, and denials of coverage.

Health plans see no real reason to change the game. They can make money on managing Medicare and Medicaid and are eager to do so, while commercial small group insurance is even more profitable. But the majority of Americans with private health insurance, over 60% by most estimates, are employees and dependents of self-insured employers including giant corporations such as Boeing, Disney and Walmart. Insurers typically charge on an ASO (Administrative Services Only) basis charging about 3% to manage networks and pay claims. But remember 3% of a big number is a big number. So plans are not exceptionally motivated to change the game.

All this works if self-insured employers rejoin the game post-COVID. But will they?

Ironically, employers have seen their health spend per employee drop dramatically in the Covid shut down by as much as 20-50%, but it is cold comfort if you are an in an industry that may have seen revenue plummet and you are now facing financial collapse and lay-offs: think airlines, hotels, hospitality and virtually all non-Amazon, non-Grocery retail.

Unemployment claims are up over 36 million, many of those jobs are not coming back in the next 12 months. In fact, I have gone as far as saying that January 2020 was the all time high in level of employer sponsored coverage never to be reached again. A full 10-40 million Americans are likely to migrate to Medicaid and the uninsured rolls in the next year as we stagger back to some kind of an economic recovery.

But as we return to a New Normal, employers are deeply concerned that they are going to be asked to pay higher prices in 2021 as providers try to make up losses. They fear greater consolidation in healthcare as weaker players capitulate and strong, regional health systems get even stronger with greater market power and control over primary and specialty care.  And they are concerned that some of the positive short-term regulatory relief (enabling telehealth and scope of practice easing) will be rolled back, post Covid. Let’s hope not.

Don’t be surprised to see employers step up to this moment and finally do what they have not done to date, namely massify their economic firepower and act in a concerted way to change the game. After all, they are the financial lifeblood for the entire healthcare system.

Employers could demand greater accountability for performance on measures of outcome, appropriateness, and demand a focus on ubiquitous technologically sophisticated primary care.

They could turbo-charge efforts to codify Centers of Excellence models as the means of accessing appropriate, high quality, elective services using mandatory or highly incentivized benefit designs to have patients patronize only select high performers. To date the Wal-Mart and PBGH Center of Excellence models have saved money not so much by price discounting but by reducing inappropriate care by 20-50%.

COVID is like high deductible health care. It is a blunt instrument that has reduced appropriate and inappropriate care in probably equal measure (we don’t know yet in the case of COVID-foregone electives).  But I don’t think employers will just go back to endorsing access to elective healthcare at ever escalating prices without asking some tough questions. 

If you are a plan or a provider. Don’t just assume that the game just comes back. There may be new rules.

Original source:

Médecins sans Hôpitaux (Doctors without Hospitals)

Wednesday, April 4th, 2018

There is lots of talk of disruption in healthcare particularly involving new entrants and weird combinations such as the CVS-Aetna merger, CIGNA and Express Scripts, Amazon Berkshire Hathaway and J.P. Morgan, and now Wal-Mart and Humana all claiming to transform healthcare. At the same time, we are seeing continued consolidation in the traditional healthcare industry with hospital systems merging at the local, regional and national level.

The rise of consumerism is affecting healthcare particularly the retail/primary care area where consumers are spending with their own money in a world of high-deductible healthcare.

The growth of digital health offers the opportunity to disrupt traditional care interactions in both the management of chronic conditions and in routine primary care. And there is a whole new set of patient decision-makers such as millennials who bringing with them different sensibilities in terms of access to services.

Doctors: Disruption and Discontent

Where are doctors in all of this change? One megatrend has been the increasing consolidation of physicians into larger group practices on the one hand and increasingly in employed relationships with hospitals on the other. Recently the American Medical Association (AMA) survey shows that approximately a third of physicians are employed directly by hospitals or by practices either owned wholly or in part by hospitals (Table below).

Source: AMA, 2017

Among the third of physicians that currently work for hospital systems there is strong anecdotal evidence and some survey evidence that there is considerable buyers’ and sellers’ remorse among those hospitals and physician practices. Indeed, there has been a “cooling of ardor” toward hospital owned physician practice by both parties. Some physicians are now realizing they have sold out “to the man” and have reduced autonomy and control. Conversely, some hospital leaders are realizing they are subsidizing the incomes of the employed physicians to the tune of tens if not hundreds of thousands of dollars per year per physician and experiencing declining productivity among the newly salaried doctors. Nevertheless these employed physicians are a core component of most health systems’ strategy going forward, as we explore below.

In 2011 my colleagues (at Nielsen at the time) developed a segmentation of physicians based on surveys of attitudes of physicians to practice arrangements and industry trends such as electronic health records, payment reform and evidence based medicine. At one extreme was a segment of Blazing Believers, those who had “drunk the Don Berwick Kool-Aid” in that they were willing to be on salary, believed in large group practice, believed in the use of electronic health records (EHRs) and evidence based medicine. Approximately 37% of doctors were in this category by 2016 rising steadily each year from 23% in 2012. At the other extreme were the independent resisters, think “cranky old surgeons from Texas” who were more likely to be in solo practice and less likely to be enthused about groups, salaried employment, EHRs and so forth. Resisters comprised approximately 30% of physicians the remaining third were split almost evenly between what we labeled optimistic intenders (12%) physicians that have not experienced integration but were open to it and a fourth category, reluctant objectors (20%) who had tried integration and did not like the experience.

Changing practice circumstances in combination with payment reform pressures, increased scrutiny of quality, heightened reporting requirements, and angst over the electronic health record have led to rising physician discontent. This is not new. A similar trend existed in the 1990s as managed-care took hold. The fever broke with the managed-care backlash and physician satisfaction bounced back and was relatively high in the early 2000s. Over the last seven years surveys show continued growing physician dissatisfaction with practice (not a majority of physicians to be sure but a significant plurality (40%) reportedly dissatisfied with practice).

Surveys also reveal high levels of burnout with the majority of all specialties and 56% of all physicians nationally responding they are burned out. More recently physicians have described to me that the more accurate term is “demoralization” reflecting the compounding effects of these broader changes that undermine the autonomy, authority, independence, and stature of physicians.

It is against this backdrop of change that we are seeing alternative models proliferate in terms of offering physicians new ways to practice.

Three Buckets of Physicians

In my travels I see many hospital systems with three buckets of doctors. The first bucket is the employed multispecialty medical group (usually split evenly between primary care and specialists) which has grown rapidly over the last few years both organically through recruitment, and through acquisition. In many markets across the country, from Oklahoma to Oregon, from Mississippi to Maine, these groups account for a third or more of all the physicians practicing in the institution and perhaps an even higher proportion of admissions and all clinical activity. A second bucket is the loyal medical staff most of whom practice in traditional solo, small group or single specialty group arrangements. In some cases these physicians are included in the clinical integration organization legal structure that enables activities such as care coordination, managed care contracting, and population health activities but often this second bucket are simply the loyal medical staff who practice exclusively in the health system. The third bucket is the community-based physicians some of whom maybe “splitters” working with competing health systems, some may be in more entrepreneurial mode operating independent surgery centers or in procedural oriented specialties such as orthopedics, ophthalmology, dermatology, or plastic surgery where they do not need to have a close full time relationship with the hospital. Most health systems are trying to drive more of the clinical activity towards the first bucket, but recognize the central importance of the other two buckets as key revenue generators for the foreseeable future.

My friend Daniel Varga M.D. Chief Clinical Officer for Texas Health Resources talks eloquently about the need for THR (and all health systems) to develop “economic docking opportunities” with all three buckets of physicians. And that makes good sense to me. However, increasingly health systems are not the only place that this third bucket or even the second bucket of physicians look for practice opportunities.

Increasingly, we are seeing publicly traded companies, as well as private equity and venture capital backed initiatives that are seeking to organize physicians in different ways then the traditional relationship with independent practitioners, small or large groups or hospital owned practice.

Here are some interesting examples of physician consolidators. Each has a very different approach to the marketplace.

One Medical is a nationally growing member-based primary care practice founded originally by Dr. Tom Lee a pioneering, highly trained physician MBA entrepreneur who created an innovative environment for primary care physicians to practice using high-tech, high touch medical care targeted perfectly to the Uber generation. Well-funded by elite venture capital investors including the prestigious Google Ventures and Benchmark Capital, One Medical is growing rapidly in the San Francisco Bay Area and in other sister markets such as New York, Washington DC, Boston, Chicago, Phoenix, Seattle, Los Angeles and beyond. Their new CEO, Amir Dan Rubin formerly CEO of the Stanford Health Care system and more recently executive vice president at Optum brings vast experience in managing leading edge provider systems at scale. Amir Rubin is building on One Medical’s vision to transform the patient care experience for primary care physicians and their patients leveraging technology and value based care, while growing employer sponsorship for membership for their employees. One Medical will continue to grow as it provide opportunities for young tech savvy physicians to practice the way they really want and for patients to get primary care on their terms.

Amir notes that, “One Medical is focused on transforming health care by delighting consumers with 90% Net Promotor Scores, delivering premier health outcomes, reducing the total cost of care, and engaging providers and technologists within an outstanding environment.”

Oak Street Health is a venture backed primary care service in Illinois and Indiana with growing footprint in the Midwest focused on vulnerable elderly populations. Their model as I understand it, mirrors the pioneering work of CareMore (a medical group that is now part of the Anthem family) that focused on providing coordinated care to frail dual eligible elders on a capitated basis. The revenue flow for such patients is enormous on a Per Member Per Month (PMPM) basis and with prudent management and population health and primary care concierge medical services, has the potential (as CareMore did in its day) to dramatically reduce unnecessary hospitalization and costs.

Core Institute is a private equity backed orthopedic, neurology and spine health practice based in Phoenix and expanding to other markets such as Michigan. Core’s model is a “focused factory” that improves quality and dramatically reduces costs in high volume orthopedics such as hip and knee replacement with a special focus on bundled payment opportunities. They also have a rapidly growing management and advisory services practice helping hospitals manage and optimize their orthopedic service lines.

Optum is the rapidly growing $91 billion revenue health services company buried inside the behemoth $200 billion United Health Group. Optum has built its own monster PBM and has stealthily acquired other physician practice and other healthcare delivery assets such as 200 Ambulatory surgery centers through their purchase of Surgical Care Affiliates, and 280 Urgent Care Centers through their purchase of Med Express. Optum has reportedly 20,000 affiliated physicians and has added to their portfolio recently with the acquisition of the former Healthcare Partners Practices that were previously owned by Da Vita with 2,000 employed or affiliated physicians. All of these delivery assets can be brought to bear on the 91 million lives served one way or another by Optum. In particular, 75 geographic markets have been targeted for OptumCare primary care driven practices (35 already penetrated) according to United Health Group’s most recent financial filings.

Investor Backed Ambulatory Services are growing in many states especially where there is no Certificate of Need legislation. A previous column ( focused on the future of emergency medicine highlighted there are 10,000 urgent care centers, 5,000 ambulatory surgery centers, 2,800 retail clinics and more than 500 freestanding emergency rooms in the United States. In addition, there are numerous micro hospitals and diagnostic imaging centers that either employ or partner with community based physicians. These new settings provide increased opportunities for physicians to practice without hospitals.

Physician Led ACOs are proliferating rapidly with one study found: “As of January 1, 2017, half of the 480 organizations participating in the government’s Medicare Shared Savings Program (MSSP) — which offers upside potential and downside protection for the 438 Accountable Care Organizations (ACOs) in what the Centers for Medicare & Medicaid Services (CMS) refers to as Track 1 — reported to CMS that they are composed solely of networks of individual physician or small group practices”. This study and others seem to show that “small is beautiful” with independent physician led ACOs apparently out performing ACOs on average. ( )

Physician Outsourcers such as Team Health, MedNax, AMN are for profit health service companies. They are not traditional healthcare providers and yet they organize tens of thousands of physicians. Team Health has 20,000 affiliated physicians and provides physicians for hospitals and health systems in several specialties especially emergency medicine, anesthesiology and hospital medicine. MedNax is a physician aggregator/outsourcer with revenues of $3.5 billion and over 4,000 employed or affiliated physicians focused primarily on pediatrics, obstetrics and anesthesiology (including through their well know Pediatrix and Obstetrix brands). For example, MedNax physicians represent over 20% of the nation’s neonatologists (1,125 of the estimated 5,300 neonatologists nationally according to company presentations to investor conferences). AMN is the largest healthcare staffing company with $2 billion in revenue that provides a wide range of healthcare workforce solutions including physicians recruitment, nurse staffing, locum tenens and healthcare workforce optimization services. All of these companies position themselves as providing diverse opportunities for physicians to practice the way they want.


So what does this all mean for hospitals and healthcare systems across the country?

• Looking for Doctors. At every health system board or management retreat I have been involved with in the last five years (and there are a lot of them all over the country) one common recurring strategic issue is attracting and retaining physicians. For the old hands out there, this is not exactly breaking news. This is how the game has been played for a century. But it is different now. All the consolidation, disruption, shift to the ambulatory environment, coverage expansion, physician demoralization, changing character of the labor force in terms of gender and lifestyle all combine to increase the challenge of recruitment and retention of physicians. Whether it is because of over priced housing markets in the Bay Area or Boston, or disinterest in taking call, or an overall shortage of physicians, or all the intervening opportunities described here, most health systems are having trouble attracting physicians. Except Kaiser of course.

• Doctors are Unsettled. While hospital based employment provides economic security and (in many cases subsidy) it is not for everyone. Whether it is burnout or demoralization there is no doubt that doctors are unsettled. And many of them are entrepreneurial and value autonomy over anything else (for many physicians, that’s why they went into medicine in the first place so they don’t have to work for a boss). The new plethora of practice arrangements especially with investor backing may represent an attractive option. (Actually making money in these investor backed ventures is a whole other matter as evidenced by the horrible financial history of Physician Practice Management companies in the 1990s).

• Not Either/Or. The healthcare outsources like AMN and Team Health work with health systems, the disruptors like CVS-Aetna will partner with health systems, the focused factories like Core Institute may build significant ambulatory operations and still partner with health systems. Like Silicon Valley learned decades ago you need to simultaneously collaborate and compete. Get used to it.

• But People will get Sick. No matter how successful disruptors and innovators are there will still be sick, vulnerable patients needing hospitalization. Your I-Phone won’t change your diapers, or turn you in bed at four in the morning, or bring together hundreds of highly-trained professionals, just for you, to deliver complex care like transplantation. And let’s not forget that complex care for the sick is where the money is in healthcare. Just 5% of patients account for 50% of costs and a lot of it quite frankly is not easily disruptible, no matter how many PowerPoints argue the contrary. We will need hospitals, doctors and nurses in our future more than ever as we age and get sicker as a society. But hospitals must understand that Médecins sans Hôpitaux will have an effect on their strategy and operations as physicians have more opportunities to practice in a wider range of settings.

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

Trump State of the Union

Sunday, November 13th, 2016

New POTUS Donald Trump doesn’t like the White House, it is drafty and was occupied by black people, and so he and his family have decided to stay in New York to run the country on Twitter.   The State of the Union address will be a live Twitter event from Trump Tower at 3.00 AM.  THCB has received the secret first draft from an anonymous POTUS speechwriter.


Thank you.  We won.  We won big.  It was huge.  And we would have won popular vote except for all illegals voting.  Hillary poor loser. Sad.

State of the Union is not strong.  Weak.  We don’t win anymore, but we will make America Great Again!

Priorities:  Jobs, Repeal and Replace Obamacare, Immigration and National Security.  Already working on them all.  I am doing this for you.

Jobs.  Will bully CEOs to keep manufacturing in US & throw tax breaks at them. Expect air conditioners to get expensive.  Sorry Florida.

China: You are currency manipulators dumping product in US.  Expect tariffs and then big increases in prices at Wal-Mart.  Sorry America.

Infrastructure.  We will build beautiful new bridges using American steel and coal.  Plans announced soon.  Good Jobs for hard hats.  Bigly!

Repeal and Replace.  Obamacare is a disaster.  Dr. Tom Price a surgeon will cut it out.  Will replace immediately with something amazing.

Replace.  Get rid of the lines.  it will be beautiful. So much great competition from amazing plans.  Much better than Obamacare.  Watch!

Immigration.  Working on Muslim registry plans.  But need Wall first.  NAFTA renegotiation includes Mexican funding the wall.  No games.

NAFTA.  Don’t trust the Trudeau kid…….a socialist.  So maybe Canadian wall too if they don’t behave.

Love riffing with world leaders without briefings.  Even our enemies are amazing people.  We get along. Great opportunities for Trump brand.

No Legal Conflict of Interest for POTUS, but stepping away.  Kids will run Trump brand I will have no involvement except for my name on it.

My children will not formally help me run the country, just Ivanka and Jared, informally.  I will see them and we will talk.  Great minds.

No Salary.  I will not take a salary as President.  And I will continue to not pay any taxes.  That makes me smart.

Cabinet handpicked for a diverse America:  Goldman Sachs, billionaires and Fox News contributors.  Successful people not affirmative action.

National Security.  Big issues to deal with.  Obama told me some of it.  Wow, we have great assets but huge challenges, I had no idea.

ISIS.  We will bomb the shit out of ISIS with Russia’s help and take their oil.  Know more than the generals, on this.  Need strong leaders.

Torture.  A general told me it doesn’t work.  Wow, who knew?  Maybe we keep it up our sleeve and let ISIS think we will do it.

North Korea.  If he tweets at me or tries something with the nukes I will respond big time.  That I can assure you.

Growing the economy.  Taxes on the wealthy will be cut massively.  Economy will grow at 4%. Lots of manufacturing jobs as a result. #MAGA

Role of the Press.  The failing NYT and WAPO need to support Trump policy.  Need to change libel laws to curb press criticism. Unfair.

On Democrats who Lost.  I want to be President for All Americans, but you lost and I won so now you have to do what I say.

God Bless You and God Help the United States of America.










The Trump Healthcare Interview: Part Two

Saturday, March 12th, 2016


Donald Trump is leading in the polls and has the best chance of becoming the Republican nominee and maybe even President. In February, THCB asked Scottish-Canadian-Californian healthcare futurist Ian Morrison to conduct an interview with Trump, figuring that Morrison would have an in with Trump given Trump’s praise for Scottish and Canadian healthcare (SEE HERE).  Fittingly, that interview was published on THCB on President’s Day, February 16th.  Since then Donald Trump has racked up impressive victories and more importantly has released some specifics of his healthcare proposal.  THCB thought it was time for Morrison to reach out to Mr. Trump again.

MORRISON:  Thanks for making time Mr. Trump, it is a pleasure to have a chance to follow up with you.

TRUMP:  You were a little rough on me last time, but I enjoyed it, I thought I did very well in the interview.

MORRISON:  Indeed you did, it was incredible.  Mr. Trump before we get to your healthcare plan, let’s just catch up on the race.  Since we last talked you have had some impressive victories in a wide variety of states from Hawaii to Mississippi.  Why do you think you have done so well?

TRUMP.  I’m winning everywhere, everywhere, and with all the groups: vets, high income, low income (we love the low-income).   I won Hispanics in Nevada? Hispanics, Trump?  They like me because I am a winner, and I’m winning everywhere.  I am winning by a lot.

MORRISON:  You did particularly well in the South, the so called SEC primaries, where Ted Cruz was expected to do well, particularly with evangelicals.  You won by more than 20 points in Alabama for example.

TRUMP: Well they loved me in South Carolina, I won big there and then I did the dog whistle to the Klan and that probably helped, in the South.

MORRISON: You mean being slow to disavow David Duke and the Klan before those southern primaries?

TRUMP:  It worked well, we had hats ready: “Make America White Again” but Corey (Trump’s Campaign Manager) told me it probably wouldn’t work in the General, but we trademarked them anyway, I couldn’t believe it was available, so we may use the “Make America White Again” hats later, we’ll see.  But now I disavow, I disavow, how many times do I have to say it.

MORRISON:  Mr. Trump are you a racist?

TRUMP: Look I told the New York Times Editorial Board the whole story on deep background.  Republican primaries are about getting angry, white people to turn up.  Those people are tired and angry at the Mexicans, the Muslims, and Obama (we still don’t know if he was born in Kenya).   So when we win, we can be nicer in the general election, because I get along with everyone.

MORRISON:  But in the meantime Mr. Trump you have called Mexican immigrants rapists and murderers and only “some of them are nice people”.  A set of assertions that are factually incorrect.  You plan to deport 11 million undocumented immigrants, separating families, and build a wall to prevent anyone from returning.  You also called for a temporary ban on all Muslims coming to the US, regardless of their circumstances or legal immigration status.  You stereotyped Jewish people as being “good at making deals”.  You have young black demonstrators forcibly thrown out of your rallies, urging supporters to rough them up.  And you criticized the Pope for being too political.  All of this sounds like you are a xenophobic, racist, bigot with fascist tendencies.

TRUMP:  Maybe that’s why I am winning……. Look I love immigrants.  I married two of them.   But they came here ……legally.

MORRISON:  Did Melania come on an H1B Visa like the ones you are trying to eliminate?

TRUMP:  She’s a supermodel.  They have special visas for supermodels and world class golfers.  Look Adam Scott just won my tournament at Trump Doral, he’s Australian, he can come in.  Rory from Ireland, in, no problem.  Supermodels, in, no problem, but they have to be a 10.

MORRISON:  Mitt Romney criticized you in a remarkable speech in Utah two weeks ago, basically arguing that you were unfit to be president; you weren’t much of a businessman; and that the party should vote for Rubio in Florida, Kasich in Ohio, denying you the delegates and leading to a contested convention in which anyone, maybe even Romney, might win.  So far that strategy seemed to have backfired on the Republican establishment with your victories this week.  How do you see it?

TRUMP:  Romney choked.  He’s a stiff who should have beaten Obama.  He begged me for his endorsement in 2012:  he would have gone down on his knees to get it, and now he turns on me?  But we won easily this week in a lot of states, and we had a great event in Jupiter with the Trump steaks, and the Trump water, and the Trump wine, and the Trump winning. So Romney is a loser.  I have a store worth more than Romney.

MORRISON:  What about Rubio and Kasich.

TRUMP:  We will win Florida.  Bye-Bye Little Marco.

MORRISON:  Why so much animosity towards Senator Rubio?

TRUMP:  He hit me with the hands thing.  He said I had little hands…and you know, the implication.  But, I’m a counter puncher, so I had to come back with the schlong at the debate.  I guarantee you there is no problem.  That I can assure you.  I would have pulled it out at the debate, but Melania told me to be presidential.

MORRISON: And Kasich?

TRUMP:  We win Ohio and Kasich goes bye-bye.  Then it’s me and Lyin Ted I can’t wait.

MORRISON:  You match up well against Senator Cruz?

TRUMP:  Look Cruz is not likeable.  He has no friends.  And he has a problem with the Goldman Sachs and Citi loans, so we will beat Ted.  We will win all the big ones: New York, New Jersey, California and we will wrap it all up by the Convention and then we can go after Hillary or Bernie.  It might be Bernie, because Hillary may get indicted and Bernie is winning so we may end up against Bernie.  We’ll see. Either way we win easily.  Bernie is a socialist Jew from New York who has never had a real job.  I am a very successful businessman.  I have built a terrific business.  I employ tens of thousands of people.  I’m a very good Christian (remember 2 Corinthians and the crackers). And, you know, they’re chipping away at Christianity. We’re not going to let that happen anymore..So you put me, a Christian businessman up against a Jewish socialist who do you think will win?

MORRISON: Which brings me to healthcare.  You recently released some specifics about your health plan.  Let me quote a respected conservative health care commentator Avik Roy who wrote in Forbes magazine about your plan: “It has the look and feel of something that a 22-year-old congressional staffer would write for a backbencher based on a cursory review of Wikipedia.” Mr. Trump a lot of pundits from the right and left have criticized your 7 point plan as a hackneyed rehash of old Republican ideas, none of which would work.  I thought Trump healthcare was going to be amazing?

TRUMP:  I told you last time.  We will repeal and replace Obamacare and it will be amazing.

MORRISON: But the 7 point plan didn’t seem very amazing, or new, do you want to talk about it and explain how exactly it would be amazing.

TRUMP:  Look this is simply a place to start the negotiation.  I told you already, it will be different when I win and I am President.  I get along with people and I will make a great deal on healthcare.

MORRISON:  So you are not a real conservative?

TRUMP:  Look I am a conservative, I like to conserve, I just don’t believe in free trade, and I like Planned Parenthood.  But with the health plan we start with the conservative ideas and then we will negotiate.

MORRISON:  You want to keep guaranteed issuance and in earlier interviews supported the individual mandate.

TRUMP:  I disavow the mandate, I disavow. But I want to keep the pre-existing conditions.  I told you I don’t want people dying in the streets. And the Trump healthcare plan will do all that.

MORRISON:  So what are the specifics?

TRUMP:  First, we get rid of the lines around the states.  Once we get rid of the lines then there will be more competition and the prices will fall so fast.

MORRISON:  Most healthcare analysts agree that this is impractical to implement given that health insurance is regulated at the state level.

TRUMP:  Once the lines are down, the prices will drop I guarantee there isn’t a problem..

MORRISON:  Just like your….

TRUMP:  Exactly.

MORRISON:  The second point in your plan is making health insurance tax deductible for everyone.  But only half of people pay income tax, and anyone who is self-employed or has employment-based insurance already has the benefit of tax deductibility, so it is just a tiny sliver of the population who would benefit.

TRUMP:  But it sounds good, to say everyone gets a tax break.  That’s why we are winning because we say things that sound good to the Trump voter, even if they won’t make much difference.

MORRISON:  Your next point is Health Savings Accounts.

TRUMP: It was really Ben’s idea, but I liked but.  I like Ben.  He is a doctor, so you have to listen to him about this stuff so we will do the Health Savings Account thing.

MORRISON:  But Health Savings Accounts have been around as described in your plan since 2003.  Ben Carson didn’t invent them.  20 million Americans already have them, how is this a new idea?  How is this amazing?

TRUMP:  Trump Health Savings Accounts would be a much better brand.  People would sign up in droves.  We would have hats.

MORRISON: You want to have increased price transparency for doctors, hospitals, and drugs and many people support that.  But again it is not a new idea and many groups and organizations from the Obama administration to industry leaders are already promoting this so

how is this amazing?

TRUMP:  The difference is we will get it done.  We will get them all around the table and get it done.

MORRISON: You are in favor of block grants to the states for Medicaid, but you and many other conservatives want to eliminate the lines around the states for regulation of health insurance.  Which is it?   Should states have more authority or not?

TRUMP: States should have more authority apart from the lines …we need to get rid of the lines.

MORRISON:  You also plan on saving healthcare dollars currently spent on illegal immigrants some $11 billion you estimate.  Will that money be used to pay for the wall?

TRUMP:  No, the Mexican government will pay for the wall, I can assure you, because of the trade deficit.  We have so much leverage with them on trade, and the Mexicans are bringing drugs into the country especially to New Hampshire where it is the number one problem.  I couldn’t believe the beautiful hills, and roads and the little towns and the nice people and the number one problem is heroin from Mexico. So we will build a wall and stop it.

MORRISON: Which brings me to a final point of your plan which is to increase free trade on pharmaceuticals and allow importation from other countries where pharmaceutical prices are much lower, like Mexico. Don’t you think that is somewhat ironic, given what you just said?

TRUMP:  No, we would bring in the drugs legally.  Like oxy.  And the prices would come down for oxy so no one would have to buy heroin from the Mexicans.

MORRISON:  While we are on pharmaceuticals, earlier in the race you claimed you will save $300 billion on the drugs spend for Medicare recipients, which is remarkable given that the total spend by Medicare on drugs is about $75 billion.  How could that possibly work?

TRUMP:  Carl.

MORRISON:  Excuse me?

TRUMP:  Carl Icahn.  He is a good friend, a terrific businessman and a fantastic negotiator.  He is tough.  So I am going to get Carl to lead the negotiation with China on trade.  But I will also ask him to negotiate with the drug companies for the drugs for Medicare.

MORRISON:  But what if pharmaceutical companies don’t want to reduce prices given they have strong patent protection and monopoly pricing power.

TRUMP:  Maybe we will use eminent domain.  We’ll see.

MORRISON:  What if that is rejected by the courts, what could you do to get drug companies to comply?

TRUMP:  Waterboarding….and more.

MORRISON:  Mr. Trump that truly is amazing.  Thank you.










The Trump Healthcare Interview

Monday, February 15th, 2016


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

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

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

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

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


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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

MORRISON: You lost to Senator Cruz in Iowa.

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

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

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

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

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

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

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

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

The Incredible and Wasteful Complexity of the US Healthcare System

Friday, March 11th, 2011

During the health care reform debate, we wrote that most people’s attitudes to it were “confused, conflicted, clueless and cranky.” A major reason was that the American health care “system” is fiendishly complicated and few people really understand it. As a result hardly anyone knows much about what is actually in the reform bill (but that does not prevent them from having strong opinions about it). Sadly, the reforms, whatever their merits, will make the system even more complicated, the administration more Byzantine and the regulatory burden more onerous.

System complexity

The American healthcare system is already the by far the most complex and bureaucratic in the world. We were once asked to spend ninety minutes explaining American health care to a group of foreign health care executives. Ninety minutes? We probably needed a few weeks. Most other countries have relatively simple systems, whether insurance coverage is provided by a government plan or by private insurance or some combination of these. But in the United States insurance coverage, for those who have it, may be provided by Medicare Parts A, B, C, and D, 50 different state Medicaid programs (or MediCal in California), Medicare Advantage, Medigap plans, the Children’s Health Insurance Plan, the Women, Infants and Children Program, the Veterans Administration, the Federal Employees Health Benefits Program, the military, the hundreds of thousands of employer-provided plans and their insurance companies, or by the individual insurance market. This insurance may be paid for by the federal or state governments, by employers, labor unions or individuals. Some employers’ plans cover retirees, others do not. The result is that the system is pluralistic, mysterious, capricious and impossible for most patients and providers to understand.

Administrative complexity

The administrative complexity is amplified by the multiplicity of insurance plans. About half of all Americans with private health insurance are covered by self-insured plans, each with its own plan design. Employers customize their plan documents, led by consultants who make a good living designing their plans and tailoring their contracts. As one prominent consultant told us recently, if all the self-insured plan documents were piled on a table they would not just exceed the 2,700 pages of Obamacare, they would probably reach the moon. For the rest of the commercially insured population, health plans may be traditional indemnity plans, Preferred Provider Organizations or Health Maintenance Organizations.

The coverage provided by different plans varies dramatically. They may or may not include large or small deductibles, co-pays or co-insurance. Beneficiaries may pay a large, small or no part of their health insurance premiums. Some plans cover dependent family members and children, others do not. The Medicare Part D pharmaceutical benefit plan involves a “doughnut hole,” which will disappear as health reforms are implemented. Surveys have found that few people fully understand their own insurance plans let alone the bigger picture. While health reform takes some steps toward standardization of insurance offerings and improving transparency, overall it is likely to increase complexity.

Physicians may be paid by salary, fee-for-service, or capitation, with “pay for performance” bonuses based on complicated metrics. In order to get paid, most doctors and hospitals have to use many thousands of codes to describe the care they have delivered. Doctors can spend hours a day doing this; hospitals employ tens of thousands of coders; insurance companies and government programs spend a small fortune entering and checking this coding. A substantial proportion of payment claims are disputed, further increasing administrative costs and the “hassle factor.”
Some insurance companies are for-profit, some are not-for-profit. Hospitals may be for-profit, not-for-profit charities or be run by federal government agencies such as the VA or the DOD or by cities.

The administrative complexity exists in the private and public sectors and in both for-profit and non-profit organizations. Medicare is relatively efficient because it has a simple criterion for eligibility – your age (although it also covers people with disabilities). But for many of us administrative complexity is rampant because health insurance is a function of our jobs or our income (or lack of it). Our insurance changes often (because our employers change their plans, because we change jobs or because our income changes), far more often than it does in other countries. As a result we have armies of people who sell insurance, keep track of who is eligible for what, chase, authorize or deny payments, and lob faxes, emails and assorted missives at us and each other. In Los Angeles County, 1,900 people work on nothing but MediCal eligibility with a union-mandated productivity target of completing two forms a day. There are an estimated 150,000 such eligibility workers across the country. The health reform bill proposes to expand Medicaid by 16 million so the number and cost of these workers will surely increase.

Regulatory complexity

Different parts of the health care system are managed or regulated by dozens of Federal government and state agencies, including the Department of Health and Human Services, the Center for Medicare and Medicaid Services, the Centers for Disease Control, the Veterans Administration, the Food and Drug Administration, and the Agency for Healthcare Research and Quality. One report claims that the health care reform bill will create 183 new agencies, including state insurance exchanges and a Medicare Independent Payment Advisory Board and the Center for Medicare and Medicaid Innovation.

And then there are the acronyms. If you don’t know them you will not understand much of the health policy debate: PPACA, DHSS, FDA, CMS, VA, CDC, AHRQ, SRG, MLR, HMO, PPO, PBM, COBRA, P4P, CER, EMR, HIT, DRG, FEHBP, WIC, CHIP, DSH, MMA, and many more.

We believe that this complexity is a major reason why we have (and this is very well documented) the most expensive, inequitable, inefficient and unpopular health care system of any developed country, with poor to mediocre outcomes. The problem is not the doctors or the hospitals but the system. Reimbursement, with its many thousands of points of public and private sector payment and the mindboggling payment rules, creates a bow wave of administrative costs and many perverse incentives. And these costs are the incomes of powerful interests who fight to preserve them.

The American “system” is exponentially more complicated than the systems in other countries – and the reforms will make it even more complicated. Unfortunately reform that would simplify the system is probably not politically feasible. A benign dictator might scrap the system and start over with a much simpler system. But in a democracy, with powerful interests and 17% of our economy involved, “you can’t get there from here.” We have to build on what we have, heaping complexity on complexity.
It is therefore no wonder that surveys find most people (including, it would appear, many members of Congress) understand very little about the health care system let alone health care reform. A recent Harris poll asked people which of 18 items are or are not in the reform bill. Modest majorities were able to give the right answer for only 4 of the items. And pluralities got the answer wrong on nine of the items. For example pluralities believed that the bill includes higher income taxes for the middle class, new ways to ration care, a new government run health plan, cuts in Medicare benefits, increased payroll taxes and “death panels”.

Of course, many millions of people followed the reform debate with interest and passion, but because the issues were so complicated, very few of them understood them. Which is why rhetoric often trumped substance, and misinformation often fuelled strong opinions. And why American health care is likely to be extraordinarily inefficient and expensive far into the future.

Humphrey Taylor is Chairman of the Harris Poll.
Ian Morrison is a healthcare consultant in Menlo Park, California.