Inkwell: Authors and Artists

    

I heard a story today asking why Kaiser's prices are so high when they're
doing all the right things: salaries, coordinated care, medical record
keeping.  Joe, could you comment on this story. The conclusion
struck me as totally weird and I wonder about the motive to posit
such a conclusion.

Could Kaiser Permanente's Low-Cost Health Care Be Even Cheaper?

  Today, it's a different story, says Mark Smith, head of the California
  HealthCare Foundation. The organization is no longer the bargain
  it used to be, he says, possibly because of what economists call
  "shadow pricing."

  "If your competitor takes $4 to make a banana and it only takes you
  $2 to make a banana, you price your banana at $3.95 and you pocket
  the rest," Smith says.
  ...
  Halvorson contends if all Americans got their care at Kaiser-like
  facilities, the U.S. would save hundreds of billions of dollars in
  health care costs. Others are less convinced. The cautionary tale of
  Kaiser Permanente, they say, is that even under the best circumstances,
  U.S. health care prices may still be untamable.

<http://www.npr.org/blogs/health/2012/06/25/155726049/could-kaiser-permanentes-
low-cost-health-care-be-even-cheaper>
http://tinyurl.com/7nrh848
  

    
> Could Kaiser Permanente's Low-Cost Health Care Be Even Cheaper?

UPMC here in Pittsburgh, a non-profit hospital/university chain,
probably made $500,000,000 -- 500 million -- in "profit" last year.

So Kaiser could make 400 million in profit and be cheaper, right?
  

    
There is a section in the book about a "virtuous spiral," which I
imagine Joe will be along to explain better soon.
  

    
I spent two hours today with representatives of the group planning
outpatient electronic medical records for our primary center.  It was
quite interesting . They're talking a good talk, but I'm remembering
how many implementations have been promised in the past ('Of course we
can do this and this and this for you') but were not carried out. 
These were mostly things I know via second-hand and third-hand storied
related to the previous inpatient medical records implementation at the
hospital.  I mentioned VISTA and
transparency/portability/interconvertability between our system and
others, and was very pleased to not have entirely blank looks in
response.  They're trying to prepare us for some internal data mining,
but linking up for outside data mining did not get a positive response.
 But at least I've made some progress being a squeaky wheel in the
process this time.
  

    

I think the more "squeaking" the better!
  

    
Good for you, Diane!
  

    
A discussion in another topic just reminded me:  can we get our
transparent, portable, data-mining-ready network of electronic medical
records without rescinding HIPAA?
  

    

"privacy", noun. An obsolete word that one can find in ancient texts
before we all became interconnected. The word was related to a false sense
of individuality and separateness that was one source of untold misery.
  

    
> You pointed out the growing shortage of primary care doctors. One of
the results of adopting your ideas would be an increase in demand for
such people. Might this be a problem of success? How can this issue be
minimized?

This is one of the most obvious results of the direction healthcare is
heading. Even as we need more primary care (because an expanded use of
smart primary care reduces costs, and because Boomers are getting to
_that_ age), more primary care docs are leaving the business because 1.
It's tough, and 2, they are Boomers themselves.

This means a seriously increased need for 
 o  ways to make the job of doctors more streamlined and efficient
(which I talk about in the book)
 o  more automation (labs, physician order entry, patient tracking,
etc.)
 o  better coordination (primary docs spend inordinate amount of time
chasing down lab results, trying to get a comment from other docs, and
so on)
 o  lifting the burden of trying to work with insurance companies off
of the shoulders of physicians and physician offices (more physicians
are coming on salary with medical systems, or becoming direct-pay, or
working in onsite clinics for employers, and so forth)
 o  more teamwork, supplementing primary care physicians with teams
that help them track patients, follow results, help the patients with
their insurance forms and so forth. The Vermont Blueprint example in
the book reduced overall medical costs by 12% while making people
healthier.
  

    
> thoughts re Kaiser. I've been a Kaiserite for close to 40
years, and love it, but I'd like to hear what you think.

I have been a Kaiserian for, um, 36 years I think. It is a very good
model, practicing good conservative medicine. In the 1990s it went
through a tough period when it thought it had to compete on price with
the new so-called HMOs by cutting services and cutting corners. The new
HMOs were really just cost-cutting structures that put a direct
conflict of interest right between the patient and the doctor, and were
nothing like a real staff-model HMO like Kaiser. Kaiser actually had a
bit of a doctors' revolt at this point (which is interesting, because
the docs are the for-profit part of Kaiser). As a result, Kaiser built
a new top corporate structure that gave the docs more influence. 

Since then, Kaiser has really gotten better. It has pioneered some
major initiatives to literally make Kaiser patients healthier. For
instance, as the result of a concerted project by Kaiser docs, Kaiser
patients now get 24% fewer heart attacks, 68% fewer major attacks
requiring surgery or hospitalization. That is one of a number of such
results. I find this remarkable.
  

    
>Why does Kaiser cost so much?
> ... a section in the book about a "virtuous spiral"

Jane has it. The link between doing things the right way (as I believe
Kaiser does) is not as direct and immediate as we might like. Kaiser
can save by, for instance, doing fewer unnecessary back surgeries and
knee replacements (as they have with me), and helping the patients
through physical therapy, pain killers and weight loss instead. But to
the extent that they do such surgeries, they have to buy everything
(cost of doctors, buildings, implants, pharmaceuticals, everything) in
the same market as everyone else, buoyed as it is by the
insurance-supported fee-for-service model. 

If more of the market were in their model, so that more of the market
was aggressively seeking for the lower-cost, higher quality way of
doing things, the prices of many of these things would fall — or there
would ba a range of prices for different models, as there are with any
other product on the market. 

In the meantime, Kaiser is providing very comprehensive services, in a
market that makes it very difficult to really lower your costs. I do
believe that over time, though, the Kaiser model will win out.
  

    
Hooray for squeaking, <debunix>. Clinicians really need to push back
on these issues around healthcare IT — usability, interoperability,
ability to mine the data.

VistA, which I think we have not mentioned it here before, is the
free/open source medical IT system developed by the Veterans
Administration, is highly considered, has thousands of add-on modules
developed by volunteers, and is the mostly widely-used such system in
the world.  

I do believe that it is quite possible to "data mine" medical records
without violating HIPAA. Usually you are looking for patterns in the
data (such as why is the fifth floor night shift an outlier on dosage
mistakes), which do not require identifying the patient at all. We
could actually link an awesome amount kind of non-identified
information together in way that would make all the information
gathered in the nation's health systems every day into a massive
queriable database on which we could run real-world retrospective
medical studies from anywhere in seconds — just like looking up a plane
flight on Kayak. How have patients weighing this much, with these
symptoms, in this disease stage, these other drugs and complications,
done with 5 mgs versus 10 mgs of this drug? Boom! There you are, 10,000
cases to compare.

But the way we are implementing data systems stands in the way of
mining this gold.
  

    
If I was King of Medical Records I'd just stick them all into
a public-key cryptosystem.  This has the useful property that
anyone can add to your records but only you can authorize
reading them.  Of course if you're in a coma or something,
that could be a problem, so everyone would have to be careful
to designate a couple of medical surrogates.
  

    
Glad to be joining in on the conversation, a bit later than I would
have liked. And thank you, Joe, so much for your work and for your
book. It is heartening to have such clarity amidst a system that's such
a mess.

Here's my question for you. I'm in New Mexico, and to my astonishment,
it turns out that New Mexico has a really good state insurance pool
for people who can't get private insurance. It's 112% of some number
for typical costs (don't know how they get that), and anyone in the
state who is rejected for private insurance or accepted but given
exorbitant rates can get it. Not only that, but if your income is low,
the state will pick up part of the tab. There's no pre-existing
condition clause or waiting period if you've had roughly continuous
coverage. And the coverage seems to be rather good.

Obviously, this doesn't solve all the problems you're addressing in
your book, but it does address one big one. So how on earth can a poor
state like NM pull this off? And if NM can do it, why don't other
states as well?
  

    
And a second question: What advice would you give to a young doctor
just entering the field? I have a very gifted former student who is now
a resident, I believe, and I'm curious what you might say to such a
person about how to navigate the crazy system we have and the changes
that lie ahead.
  

    
> How does a state like New Mexico manage to have such a good support
system for people who can't get insurance?

Excellent example, because what we hear all the time is: "It's the
cost! It's the cost! It's the cost!." And actually no, it's not the
cost. And "If you try that reform [whatever reform is being
contemplated] it will kill the insurance industry!" I don't know how
many times over the years I have heard the insurance industry claim
this, and it's just demonstrably not true. Demonstrably because in
every single instance, the very reform they are claiming will "kill"
them actually is already implemented someplace right here in our system
in the United States, and is working just fine, thank you very much.

New Mexico's Medical Insurance Pool has been around since 1988. It is
not paid for by taxes, but by assessments on the insurance companies.
It is one of several programs in the state to shore up the system,
including the Small Employer Insurance Program, the Health Insurance
Alliance, the State Coverage Insurance, and the "Insure New Mexico!", a
exchange-like portal offering all these things in one place, plus
information on private insurance plan.

The reality is that there are lots of different state solutions are
being tried, and it is not necessarily the wealthy states that are
trying them. Two of the most creative states doing the best in helping
their citizens, for instance, are Hawaii and Vermont. It isn't about
wealth, it seems to be more about whether the political culture is
focused on actually fixing the problems, or just on pandering to the
economic powers that be.
  

    
Wow! That makes me so happy to hear. I felt slightly guilty to be
costing the NM taxpayers money, so I'm very glad to hear that I'm not.
  

    
> What advice would you give to a young doctor just entering the
field?

I actually get phone calls and emails from doctors asking just that.
Doctors getting trained today are much more likely to expect to work
for a health system, to work in teams rather than alone, and to use IT
systems fully in all their work. They need to think about how the
health system is changing, and choose the part of the field, and the
way of supporting themselves, that really fits who they are, and why
they wanted to become a doctor, rather than just thinking about the
main chance. Some doctors really want to heal, and want to work with
patients. Others really think more like medical scientists, and would
just as soon not deal with patients at all, just their livers or
spleens. It is likely that the huge income gap between primary care and
specialists will narrow considerably over the coming decade, as it
becomes more important to attract and retain good primary care docs. So
the choice of career and situation is really more about personality,
and what they really are drawn to.
  

    
The SCOTUS decision just came out upholding the ACA. You've been
arguing that government-led reform isn't essential for the coming
revolution in healthcare. Can you give us a quick summary of that
argument, and then tell us about what difference the upholding of
reform *will* make?
  

    
If we are looking for really big change (and I am), what's the goal? I
would say: Better healthcare, at far less cost, for everyone. The ACA
is a good thing, and supports all those goals somewhat. The major
support is on the "for everyone" part, the tens of millions of
Americans who will have health insurance who otherwise would not have,
especially for people who really need it like yourself, but don't live
in states like New Mexico that help you meet that need.

The ACA has a number of provisions that support, in a number of ways,
the "better" goal and the "for less" goal. But these ways are mostly
experimental, small, underfunded, or pilot programs. The major thrust
of the bill, from the system's point of view, is to underwrite and
stabilize the existing private, insurance-supported fee-for-service
system, rather than to replace it with some other major way of paying
for healthcare.
  

    
The biggest effect of the law, from the system's point of view, is not
so much millions of new customers, as it is millions of new _paying_
customers. The overall costs of the high users among the formerly
uninsured will actually drop once they have insurance. But the major
cost-saving provision of the bill lies in the provision to reward
"accountable care organizations" (ACOs) that in one way or another take
on financial risk for the health of whole populations, rather than be
paid stritly fee-for-service. The support for ACAs is actually small,
only a small percentage of proven savings getting kicked back to the
providers, and under very tight rules. It would not by itself have had
much effect if it were not something that providers were willing to do
anyway. But the concept — that savings and better care result when
providers take on some financial risk for outcomes and overall health —
is revolutionary. Many healthcare providers have been plunging ahead
with versions of this idea well in advance of today's finding, betting
the future of their systems on the idea that, one way or another, being
at risk for outcomes shapes the future of healthcare.
  

    
What a cliffhanger! It is an historic decision, found on the narrowest
possible grounds, with a majority agreeing on the result, but not
broadly on the reasoning.

The principal effects of the finding, from the point of view of the
system: They have just avoided enormous chaos over the coming years.
It’s chaotic enough with the huge shift in underlying economic factors,
including especially the various ways of shifting some economic risk
from the payers and employers to the providers and the
patients/customers. This finding stabilizes the future of the system.
The affirmation, combined with the fact that a gridlocked polity in
Washington is unlikely to come up with any major change or repeal of
the law, and that the major parts of the law are self-funding, means
that everyone now knows at least the general outline of what the rules
are for the foreseeable future.
  

    
Is the stabilizing influence of the decision relative to overturning
the law, or to not having had the law in the first place? That is, will
having the law make things less chaotic than they would have been if
the law had never passed?

And my understanding is that you do think that the system would have,
or at least could have, evolved to cover everyone even if reform had
been knocked down. Can you say a bit about how that might have come to
be?
  

    
> Is the stabilizing influence of the decision relative to overturning
the law, or to not having had the law in the first place?

In the mid-1990s, after the Clinton attempt at reform turned out to be
where the rubber meets the sky, I predicted a number of times in print
that we would seriously revisit the question by the time I hit 60 or
so, because of the demographics of the Boomer generation. The system
was anticipating reform for years, and different parts of the system
attempting it, as in Massachusetts, and in various private efforts to
solve parts of the problem. Everyone was anticipating some kind of
reform. Remember that in the 2008 election, every candidate had to have
a health reform plan (even including Giuliani's "good luck with that"
version). So the system was already destabilizing.

Passage of the ACA destabilized it more, but provided a sketch of the
direction we might be going, and encouraged real reforms within the
system. The fierce political and legal opposition has tended to slow
down those reforms by adding to the chaos. Today's finding reduces the
chaos, and will embolden healthcare systems and health plans and
employers to move forward more boldly with their reactions to the new
environment.
  

    
> my understanding is that you do think that the system would have,
or at least could have, evolved to cover everyone even if reform had
been knocked down. Can you say a bit about how that might have come to
be?

Let's say I am a bit more on the "could have" side than the "would
have" side. For the last few years, we have been in a political
atmosphere in which government doing _anything_ to help _anybody_ has
been attacked as "socialist" and a waste of money — even if it doesn't
cost any money. But absent that atmosphere (which I believe to be
temporary), what we saw is that various states and even municipalities
saw that getting people covered one way or another is cheaper in the
end, and that it is a necessary support to hospitals. If you want good
hospitals, you have to find a way to pay for everyone who comes through
their doors. So various states, like Massachusetts, Hawaii, Vermont,
and your state of New Mexico, among others, were finding ways to get
more people covered. 

These changes were incremental and regional. The ACA, obviously, is
both huge and national. But it will still leave some 10 to 20 million
without coverage, ranging from undocumented aliens to people who just
refuse coverage, and pay the tax instead. The more people that stay
outside of any kind of coverage, the more difficult the transition to
the Next Healthcare.