Inkwell: Authors and Artists
Brady Lea (brady) Thu 5 Dec 13 10:35
Here's a topic to discuss the changing state of healthcare. Helping facilitate this discussion is our own <bbear> aka Joe Flower, a 24- year member of The WELL and the host of the Writers conference here. (g writers.) Joe Flower, healthcare futurist and analyst, has long forecast the enormous changes healthcare is going through now â and has projected a strong, positive vision for where we are headed in the Next Healthcare, and how to get there, practically, in the system we actually have. Flower is on the speaking faculty of the American Hospital Association, a regular columnist for its H&HN Daily, and on the board of the Center for Health Design. He regularly appears as keynote speaker and thought leader at conferences throughout the healthcare industry and across the globe. He is the author of hundreds of articles, as well as his book Healthcare Beyond Reform: Doing It Right For Half The Cost, named by Strategy and Business Magazine as the best healthcare business book of 2012.
Brady Lea (brady) Thu 5 Dec 13 10:41
Joe, thanks for joining us here in Inkwell again. I'm looking forward to this discussion with you and other WELL members on the subject of healthcare. FYI, readers, you can follow Joe on twitter: @JoeFlower and you can find his website here: <http://www.imaginewhatif.com/>
Joe Flower (bbear) Thu 5 Dec 13 16:26
Healthcare is in chaos right now. It's not just the ACA website at healthcare.gov. It's not even the rolling disaster behind that with some 30% of people who think they have signed caught in some "dirty data" limbo that will give them no insurance as of January 1, and no way to know why. Even beyond that, the industry itself is in the middle of a phase change. It's like a caterpillar halfway through the process of becoming a butterfly. Split the chrysalis and what you see is formless goo, with no sign of the butterfly to come. Despite all that, I am an optimist. I believe that there are large forces coalescing now that will actually force this outrageously over-charging industry into a price crash and a true rationalization of costs. It won't be easy or painless, but it will be massively educational. Let's talk about why.
Jennifer Powell (jnfr) Thu 5 Dec 13 19:41
Glad to see you here, Joe.
Paula Span (pspan) Thu 5 Dec 13 20:05
I would so like that to be true. What do you think is going to cause this price crash?
Joe Flower (bbear) Fri 6 Dec 13 08:49
<scribbled by bbear Fri 6 Dec 13 08:50>
Joe Flower (bbear) Fri 6 Dec 13 08:56
This takes a little study. Take a look at what I find to be a most astonishing graph: <img width=100% src="http://www.imaginewhatif.com/wp-content/uploads/2013/12/HistoricalGlobalHealth SpendingByGDP.jpg">
Joe Flower (bbear) Fri 6 Dec 13 09:08
The right side of the graph shows what we all know: US healthcare costs roughly twice what it does in other medically sophisticated economies. What's astonishing is the left side of the graph. The US historically was one of the most expensive healthcare economies relative to GDP: We spent a bigger portion of our economy on healthcare than almost anyone else. But we didn't spend twice as much. Then something changed, and in a series of steep jumps, the US spending pattern leapt above that of other economies. What changed? Try to locate the year of that first big leap. It's between 1982 and 1983. What happened that year? Something very significant: DRGs, "diagnostic-related groupings." For the first time the US government adopted price controls for Medicare and Medicaid, and private insurers followed along, using DRGs as a guide to their own price setting lists. This is a fascinating paradox: Institute price controls to try to control the cost of the system, and the cost of the system leaps up. Each further leap in healthcare costs marks a time when the cost-control system was expanded further, such as to ambulatory care, to doctor's offices, and so on. Here's the punch line: Something about changing the way we paid for healthcare radically pushed up its cost. And now we are changing the way we pay for healthcare again.
Jane Hirshfield (jh) Fri 6 Dec 13 09:49
This is fascinating, Joe-- say more please about what you see in the current changes that will change that graph?
descend into a fractal hell of meta-truthiness (jmcarlin) Fri 6 Dec 13 11:33
I've taken to avoiding most mainstream media reports on the health care law implementation because I find them full of distortion, deliberate incitement to confusion and fear in the service of profit and extremely short-sighted. There are occasional exceptions but it seems to me to be very few. So I'm wondering what you think about the rollout so far?
Cindy Smith (clsmith) Fri 6 Dec 13 12:35
So, following the payment change logic, did providers change focus from cost controlled services to some other activities that made more money or what? Medical billing is almost incomprehensible to me at this point. Are docs capped for physician time but permitted an unlimited markup on supplies like those recently discussed aspirin and bandaids? Tell us more!
John Rottet (unkljohn) Fri 6 Dec 13 13:07
I just finished signing up for my insurance online in the marketplace about 10 minutes ago. It was easy and I had over 20 policies to choose from. I am retired and don't have much income, so my tax credit was pretty good. I could have gotten a Bronze plan for free. Or a Silver plan for $92 a month. I went with a Gold plan that is about what I am paying now for me and <zenrose>...about $430 per month. But my coverage is sooooo much better than what I had. A zero deductable policy that covers about 70% of the cost. I'm happy and will go get some much needed check ups in January!
Joe Flower (bbear) Fri 6 Dec 13 15:24
First let's notice something very interesting: medical inflation, the actual rise in cost for the entire system, is at the lowest point they have been 50 years. It's currently less than 4%. And it has been at about that level throughout the entire Obama administration. In other words, since before the ACA. So something else is going on that is keeping medical inflation down. At first this was thought to be just an artifact of the recession. But as it has continued over time and medical inflation has gotten even lower, more economists are coming around point of view that the causes are structural. They are rooted in how we choose healthcare, and how we pay for it.
Joe Flower (bbear) Fri 6 Dec 13 15:30
The usual way is "fee-for-service." You come in with a problem. The providers provide you with various services, tests, procedures, and drugs, all of which might help your problem. And then they can charge you for each item. The more items they do the more they can charge. And it's really up to them to decide how many and which items to do. Over time, we have not only gotten more and more services and test and drugs, the providers have also tended to drive up the complexity costs of the procedures, tests, and drugs. And they have slowly and steadily been able to drive up the price of each item, even when it is the same item. So now we get one dollar bags of saline solution being sold to the patient for $91.
Joe Flower (bbear) Fri 6 Dec 13 15:33
So there are basically two types of things to watch for in the system change we are seeing: one is any way of paying for things that is different from "fee-for-service". The second is any way that whoever is choosing a service or test, whether it is the patient, their family, or for instance the employer is able to have a choice and the information to make a choice to become a competent "shopper." Both of these are becoming quickly much more common than they ever have been before.
Ari Fertig (re-fertig) Fri 6 Dec 13 18:04
Thanks for this topic, <bbear>. I work at Health Care For All in MA and I meet a lot of people who don't understand the concept of moving away from a fee-for-service system. We recently passed a major payment and delivery system reform law in 2012. I give folks who do not understand what it means to move away from fee-for-service the example of a real Boston Children's Hospital program for kids with asthma. Under the old way of doing things, you had a lot of low-income kids who kept coming back to the emergency room for their asthma. Each time, they'd be treated, given their asthma medication, and sent on their way. This is really, really expensive. Under a new system, doctors were given a lump sum of money to keep a population of kids healthy overall. That meant that these kids were given a community health worker who came to their home and found out that in the summer there were no air conditioners and that exacerbated the asthma. And they didn't have good quality vacuum cleaners to clean up the dust. So they fixed that. And they made sure that the kids saw a primary care physician rather than the emergency room. What happened? Well, emergency room use went way down. The kids health improved dramatically. But also importantly, the number of days off of work the kids' parents took went down something like 70% (if memory serves) because they didn't have to shlep their kids to the emergency room. Under the health care system under "fee-for-service," health care providers get paid for what they do - selling asthma inhalers, emergency room visits, etc. They don't have the financial incentives to make sure the patient's health is taken care of. You can't write a prescription for a vacuum cleaner. But moving towards a system that rewards the value of care rather than the volume of care, we can make people healthier -- and save the health care system a lot of money. Anyway, that's how I explain it. How would you?
Joe Flower (bbear) Fri 6 Dec 13 21:18
That's actually a great example, Ari. The things that are most amenable to this shift in paying for healthcare are in fact the poorly-treated chronic conditions such as asthma, diabetes, COPD, cardiovascular problems and such. It's not about denying the clinicians money. It's about finding ways to pay for what we actually want the asthma controlled or even prevented at the least possible costs rather than endless useless ER visits and tests.
Joe Flower (bbear) Fri 6 Dec 13 21:24
> So I'm wondering what you think about the rollout so far? Astonishing incompetence. And more to come, as it seems something like 30% of the people who believe they have signed up actually have problems with the data files, so that the insurance companies will actually ot be able to sign them up properly. But really, that is a story about the ghastliness of government procurement processes, which insure that the companies that get the contracts are not the most competent at doing the task, but the ones most competent at threading the maze to get the contracts. It has nothing to do with whether the ACA is a good idea, or even whether it will eventually work. There is political difficulty ahead still with it, and the problems may actually cost Democrats some in the 2014 elections, but I believe that the law will survive until 2016, at which point it will be too entrenched to be dislodged.
Joe Flower (bbear) Fri 6 Dec 13 21:29
> So, following the payment change logic, did providers change focus from cost controlled services to some other activities that made more money or what? ... Yes, basically. The first cost controls in the 1980s were on inpatient services. So all of a sudden they figure out that they can do full head transplants on a roll-in, roll-out outpatient basis. Drive-through births. Ninety-second vasectomies. Then the controls were extended to all hospital-based services, even outpatient, and boom! All these free-standing clinics show up. And on and on. Every single fad and shift in the healthcare market of the past 30 years can be traced not just to new technologies and drugs, but to shifts in the cost control systems that dictate what can be done most profitably.
Joe Flower (bbear) Fri 6 Dec 13 21:30
And none of that is based on what is really best for the patient. And certainly not what is cheapest, but just the opposite: What can milk the most from the payment system.
Lena M. Diethelm (lendie) Fri 6 Dec 13 23:04
What really pissed me off was that they hired a *Canadian* company! Good Lord, there aren't any *American* companies who could do this & competently?
Joe Flower (bbear) Sat 7 Dec 13 08:27
But all that is a sideshow to the real change. Let me give you one more graphic: <img width=100% src="http://www.imaginewhatif.com/wp-content/uploads/2013/12/AnkleMRIPrices.jpg&quo t;>
Joe Flower (bbear) Sat 7 Dec 13 08:44
This shows ankle MRI prices at quality places in the DC area. Note that there is a number of prices in a range between $400 and $730, kind of like a normal price range. Then there are prices that range way above that, up to nearly $2200, 5.5 times the bottom price. This is normal in healthcare, and completely unknown in other businesses. It only happens in a fee-for-service system supported by insurance that divorces the chooser of a service from all exposure to price. Now consider "reference pricing." An employer which funds its own healthcare might say to employees, "Okay, here's the deal. On this item there are a number of quality choices at $730 and below. Our reference price is $700. Go to any one you want below that price, and we pay full freight. Go the $730, and you pay $30 co-pay. Go to the $2200 on, and you pay a $1500 co-pay." Most large employers are self-funded, and reference pricing is booming in popularity. Think what happens to those top prices when a big fraction of the private market goes to reference pricing. They will collapse. The California Public Employee Retirement System also funds healthcare for present public employees in California. In a pilot project by this one payer, it drove down the average price for knee replacements in California from $43,000 to $28,000. This is one payer's effect on the market in one year for one product.
Paula Span (pspan) Sat 7 Dec 13 12:40
Jane Hirshfield (jh) Sat 7 Dec 13 19:29
Last year I was told to get an ultra sound for something--I did. It cost a pretty penny. My doctor had said there were places I could try to get it done for less, especially outside the Bay Area, but I had NO idea how to find such places, or any posted fees. How does one? It's not like you can phone up every clinic in the state and ask what they'd charge for X or Y. (This will become moot for me personally as I switch into Kaiser, but remains an issue for others who don't have big employers doing the research for them--and I can't even tell how the employers find what's shown on that graph for every possible procedure an employee might need.)
Ari Fertig (re-fertig) Sat 7 Dec 13 20:18
Well, one of the main drivers of that difference in pricing is the market clout of the provider, it's not just that they are running in fee-for-service. http://www.boston.com/news/local/massachusetts/articles/2010/01/29/attorney_ge neral_says_clout_drives_up_health_costs/
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