Health system needs surge protectors
U.S. Army field hospital.
Adapted from Robert Whitcomb's "Digital Diary,'' in GoLocal24.com:
Rhode Island and many other states have more hospital beds than they need most of the time. So here and elsewhere, some hospitals are being closed or being turned into entirely outpatient operations. Consider the recent closing of the inpatient part of Memorial Hospital, in Pawtucket, with considerable local anger.
But what happens when a big epidemic, such as the current flu outbreak, or a sudden disaster, such as the Station nightclub fire, strikes? That Rhode Island, and the rest of New England, has an older demographic than most of America and thus a higher percentage of people who could get very sick, makes us particularly exposed.
Where do you put all these very sick and/or injured people in times of widespread medical emergencies? Instant hospitals under tents, such as on battlefields?
Our health "system'' needs surge protectors.
Suggestions appreciated.
Robert Whitcomb: Hospitals should be insurers, too
This piece first ran in the Huffington Post.
Steven Brill's latest book, America's Bitter Pill: Money, Politics, Backroom Deals, and the Fight to Fix Our Broken Healthcare System, has gotten a lot of attention in large part because of Mr. Brill's vivid anecdotes about the "jalopy'' of American health care. They're memorable stories, gathered with his famous work ethic and intense curiosity, though there's a bit too much about his own deluxe heart-surgery adventures at Manhattan's very expensive New York-Presbyterian Hospital, which comprises some of the narrative glue of this book.
(I found my own open-heart surgery a couple of years ago to be tedium interspersed by fantastical hospital "chargemaster'' billing. A doctor friend told me that the bills had little connection to the reality of the final total bill.)
Since we're all healthcare consumers, it would be nice, even in this post-literate society, if most adults read this book, to see how their money is being spent. Mr. Brill brings a lot of transparency to this all-too-opaque sector.
Mr. Brill is a rich entrepreneur and journalist and very much a member of the elite, luminaries of which he has easy access to. But he also displays strong compassion for the low- and middle-income people with whom he talks. Many of these folks have a brutal time paying for essential care (especially the unexpected kind) and navigating the obscenely complicated and contradictory U.S. healthcare "system''. His richly reported book provides a colorful, disturbing and occasionally encouraging look at our medical maze.
It's also a sort of thriller about the near-death saga of getting the Affordable Care Act enacted amidst relentless lobbying and political conflicts of interest. Then comes the Obama administration's efforts to recover from the disastrous launch of the HealthCare.gov website. Mr. Brill provides a heartening counter-example by telling us about the triumph of healthcare reform in -- perhaps surprisingly -- the Red State of Kentucky.
Most readers are at least vaguely aware of the institutionalized squalor of much Washington lobbying by some healthcare constituencies, and Steven Brill doesn't stint on telling us more about that. One recalls the famous line by Otto von Bismarck to the effect: "Like sausage-making, you don't want to see how laws are made.''
But there aren't many big surprises, except perhaps that you may find from reading this book that the profiteering by the pharmaceutical and medical-device industries -- for which the public pays much -- is even more extreme than you thought.
Meanwhile, there hasn't been nearly enough comment on his very good ideas to improve the ''system's'' egregious lack of coordination, reduce its gigantic costs and even improve medical outcomes, of all things.
In my view, his most interesting proposals are to encourage more hospital systems to get bigger (and hence to offer broader population-health care and better, most cost-efficient care of individual patients, especially the chronically ill) and to be insurance companies as well as care providers.
And in fact more and more systems have been getting into the insurance business in recent years. It may be the best way to incentivize both care coordination and cost control. Most of hospitals' and their clinicians' financial incentives to over-treat and over-test would disappear if the hospitals were also stuck with the claims costs!
Mr. Brill emphasizes what most people in the public don't seem to get: That hospitals with cost-plus "chargemaster'' billing, big operating profits and hugely compensated senior execs have driven much of the health-cost surge. That very much includes the "nonprofit'' hospitals, many of which are hugely profitable. "Nonprofit'' usually just means that things are arranged so that these enterprises don't pay most taxes.
It is the insurance companies, with relatively small profit margins, they get unfairly blamed for just about everything in U.S. health care. (Mr. Brill would also have done well to note that U.S. physicians are by far the highest paid in the world.) Hospital-insurer mergers don't mean that all independent insurers would go away. They'd still be needed (barring extension of Medicare to everybody) to cover bills from small, independent hospitals, independent physicians and some other clinicians.
Hospital system-insurer combined entities are well-positioned to collect and analyze data about patients to improve care and better allocate resources. Indeed, Mr. Brill says, the bigger the hospital system in a region, the better opportunity a system has to coordinate a patient's care in various inpatient and outpatient venues and cut costs through efficient, expense-saving "bundling'' in treating individual patients' injuries and illnesses over time. This includes treatment at the outpatient clinics that systems are increasingly establishing as the number of inpatient beds steadily declines.
Mr. Brill quotes Jeffrey Romoff, the chief executive of the big-foot University of Pittsburgh Medical Center system, which has an insurance company, on provider-payer marriages:
"All the incentives are aligned the right way. It's the beauty of being the payer and the provider at the same time. When the interests are not aligned, it's why seniors dying of cancer get chemo when they should just get hospice care.''
Obviously the hospital systems becoming insurers take on new processing costs, but think of how much money could be saved by cutting out the third-party middleman. For one big thing, the hospital-insurance combo doesn't worry about paying dividends to insurance-company shareholders or insurance execs' multimillion-dollar salaries. And the new combos might become a little more disciplined about the hospital execs' compensation.
Mr. Brill also suggests capping operating profits of hospitals (including "nonprofit'' ones) to, say, 8 percent. While he doesn't use the term "public utility'' I was reminded of the old-fashioned model of state regulators allowing about that percentage for electricity and natural-gas utilities. Maybe it's time to look at hospitals as public utilities, which they sort of are.
This doesn't address pharmaceutical and medical-device companies' astronomical profit margins, protected by Washington lobbyists who are even more effective than the insurers' and hospitals'. They drive up healthcare costs a lot. But the increased transparency and rigor in looking at the unimpressive medical outcomes associated with some heavily marketed medicines and devices will help constrain their pricing.
Mr. Brill also wants to cap salaries of hospital executives. I'm always leery of government micro-managing internal decision-making in nongovernmental organizations -- too clunky -- but the idea should be studied.
So let's hope that state and federal regulators don't put too many roadblocks in the way of many more hospital systems becoming insurers.
Extending Medicare to everyone might be the most cost-effective reform but economic constituencies, and ideology often divorced from macro-economic realities, in Washington will prevent that, at least for the foreseeable future.
But Mr. Brill's prescriptions could help a lot. Meanwhile, let us hope that the shrinking number of paid healthcare journalists, such as Steven Brill, do what they can to disinfect a system with all-too-often mediocre care and exorbitant costs that threaten to bankrupt America. More sunlight equals more reform.
Robert Whitcomb (rwhitcomb51@gmail.com) is a partner and senior adviser at Cambridge Management Group (cmg625.com), a healthcare-sector consultancy, a Fellow of the Pell Center for International Relations and Public Policy and overseer of newenglanddiary.com. He's a former finance editor of the International Herald Tribune, a former editor at The Wall Street Journal and former editorial-page editor at The Providence Journal.
Hospitals must help create new community networks
Health-system markets are being pushed toward a volume vs. value-payment tipping point. This is driven by the confluence of states’ moving Medicaid and state-employee health benefits to value-based (risk) contracts, corporations’ securing national contracts for high-cost care episodes and commercial payers’ creating tiered health insurance. Successful population-health (value-payment) programs, whether fixed-price bundled services for individual patients or comprehensive services for a specific population, as with ACO’s, require action based on these insights:
- Outcomes depend on patients’ behaviors over their lifetimes. Thus, patient and family participation must be increased. Success depends on getting “upstream” of medical-care needs.
- Broad local and regional communities, not individual institutions, can best allocate resources to improve the social determinants of health.
Indeed, improving community health depends more on the interactions among the parts than on individually optimizing the parts themselves. Hospitals and health systems have a time-limited opportunity to help develop community-health networks, the backbone organizations for improving population health.
To get started, leaders of hospitals, public- and private-sector social-service organizations, payers and representatives of the broader community must first frame the discussion from a policy perspective and then map linkages across the community.
Our experience with community health networks underscores the importance of social determinants of health, teamwork within/across collaborating organizations and accepting risk within global budgets. Sustained system thinking across the community’s health assets, shared insights, and much generosity and patience from every sector are critical factors for success and flow from visionary hospital leadership and community/political leaders. Case studies from Oregon and Connecticut, among others, show what can be done.
To get started, leaders would do well to convene a perspective-and-policy-setting discussion to frame context and mutual dependencies. Complex, foundational change is emotionally and organizationally disruptive. Thus establishing a fact-driven and respectful dialogue is an essential first step. We recommend that community leaders, especially hospital leaders, convene a community conversation and use linkage mapping as way to structure the conversation for progress. Based on readiness, one or more work streams would be selected to explore and improve the interactions between the parts.
This is a summary of an Oct. 13 presentation developed by a Cambridge Management Group team led by Marc Pierson, M.D., Annie Merkle and Bob Harrington for the Society for Healthcare Strategy & Market Development's Connections conference. Oregon State Sen. Alan Bates, D.O., provided invaluable information and insights from his work as both a primary-care physician and community/political leader enlisting colleagues in all sectors.