Newtown, CT - May 17, 2013
Alamosa is a small community nestled in the San Luis Valley, surrounded by the Rockies, in Colorado. It's also the site of an operational implementation of chronic care bundles and offers lessons for the rest of the country. The total population of the San Luis Valley is less than 50,000, and the San Luis Valley HMO has a portion of that population under management. In other words, it's a small plan. However, a few years ago, under the auspices of a Colorado Health Foundation grant, we started working with Cindy Palmer, the HMO's CEO, to implement a bundled payment program focused on chronic conditions. The ivory tower dwellers would likely scoff at the notion...after all, isn't it already an ACO/HMO? Why not stick to total patient cost management? The reason is simple - total per member per year costs mean nothing to the line clinician managing a patient with multiple chronic illness. It means even less to the sole hospital in the valley protecting its occupancy rate. Bundles, however, with their transparent pricing and actionable information on avoidable complications are very meaningful to both clinicians and hospitals, let alone consumers. And so Cindy decided to invest in the needed infrastructure to break down the pmpy into meaningful units of inference and analysis, and to start creating incentives for primary care physicians to reduce a staggering level of avoidable complications. Today, the SLV HMO has a fully operational "engine" that consumes fee-for-service claims and converts them into chronic care bundles (not micro disease-specific episodes). The "engine" then continuously compares the paid actual amounts with the budgets and produces actionable reports back to the clinicians. They know, almost real time, which patients are incurring avoidable complications, for what, and the corresponding costs. They work with nurse case managers to focus on the more complex co-morbid patients, and focus on getting them under control. It's certainly not a perfect model, but it's working.
What this means to you - The two poles of health care cost accounting, individual services and total cost per member, are pretty useless, and yet that's what's in use today by almost all of the health plans in the country. Some have recognized that they need to shift away from that accounting to something more meaningful and have made the courageous decision to invest in the transformative IT platforms that will give them the new management tools so desperately needed. The early adopters will have these systems on line in the next 12 months. For others it might be several years. And for those who have yet to make a decision, you're looking at a decade. That means, for the most part, that only these early adopters will be able to move away from the FFS game to clinically nuanced payment and benefit design models. The others will talk the game, but they can't deliver. And the game is working, not just in Alamosa, but elsewhere. The importance of Alamosa, of course, is that it shows how even in a rural, one hospital region with a small health plan, these bundled payment programs are essential to the positive transformation of the delivery system and the improvement of care for patients. So if SLV HMO can do it, everyone else can, and hence the lesson for the country.
Sincerely,
Francois de Brantes
Executive Director
Health Care Incentives Improvement Institute, Inc.
w: www.hci3.org
Newtown, CT - May 17, 2013
Alamosa is a small community nestled in the San Luis Valley, surrounded by the Rockies, in Colorado. It's also the site of an operational implementation of chronic care bundles and offers lessons for the rest of the country. The total population of the San Luis Valley is less than 50,000, and the San Luis Valley HMO has a portion of that population under management. In other words, it's a small plan. However, a few years ago, under the auspices of a...
Newtown, CT - May 10, 2013
It appears as if we should get ready for a period of medical cost deflation, and to continue to fuel it - Several papers, summed up in a recent blog, show that the slowdown in health care spending is caused by factors other than just the modest economic growth of the past decade. This is a point that we've argued for a while, against the then conventional wisdom, and...
Newtown, CT - May 3, 2013
Lourdes is a little town nestled in the Pyrenees mountains, on the banks of the river Gave, to which, every year, about 6 million pilgrims travel - of those, perhaps a third are afflicted with one or more illness; some are young, very young; some are old, very old. This weekend, a little over 1000 of those pilgrims will be from the US, and among them are 200 who need serious care. That care is provided 24 hours a day by skilled physicians and nurses who come as part of the pilgrimage. And on site are dozens of other skilled...
Newtown, CT - April 26, 2013
There's something afoot, which many seem to deny. It's the type of popular revolution that always catches us by surprise - Economists are arguing that the current slowdown in medical costs is simply an artifice of the Great Recession, and that costs are bound to get back up to historical levels. All the deficit reduction plans have spending caps in place, triggering cuts and adjustments if trend rates are too high; and yet CBO projects that none would be applied for at least another decade. I find today's...
Newtown, CT - April 19, 2013
As the legend goes, the Gordian Knot was cut in half by Alexander, revealing the ends, curled inside - Our own problems often seem just as intractable. Where are the ends from which the solutions can take hold? However much we try, however much we examine the problems from all angles, we simply can't grab hold of a reasonable solution. And that's because, over time, the conflicts of interest have become so intertwined that very few of the incumbents, if any, want to unravel the thread that has become their...
Newtown, CT - April 12, 2013
Super-utilizers. It seems like a marketer's dream target audience, and, for some, it is. For most of us, it should be a target audience of a different sort - When Jeff Brenner first realized who these folks were, the solution seemed simple: deploy good care management close to where they live, and save Medicaid millions. As the story continued to unfold, as well counted in Gawande's Hot Spotters, the savings for...
Newtown, CT - April 5, 2013
The power of report cards is truly amazing, especially when it's on something for which everyone should get darn close to an A - Last month, with our friends from CPR, we published a report card, with little fanfare, on how well states are helping their residents understand the price they're paying for health care services. Two states got an A (NH and MA), and a bunch got an F (including my home state of CT). The report card,...
Newtown, CT - March 29, 2013
For anyone who has seen The Passion Of The Christ, the more chilling scenes involve the Devil offering the easy way out to Jesus - He doesn't take it, but we're not Him. Earlier this week, RWJF's Michael Painter recounted a personal journey in discovering the effects of payment incentives on provider behaviors and, more importantly, on patients. Mike reminded us that our goal should not be to "social-engineer" behaviors, but rather to let the natural good flourish by removing the temptation to be...
Newtown, CT - March 22, 2013
There's an old (therefore politically incorrect) saying that in the land of the blind the one-eyed man is King....or in the land of mediocre health care, the Kaiser - So sayeth and admits George Halvorson in an insightful article in the New York Times. And this brings us to a larger and more fundamental...
Newtown, CT - March 15, 2013
In most States, consumers are granted protection against unfair trade practices, such as bait and switch, or masked prices. This protection, however, doesn't extend to health care purchases - We all know that health care is consuming about 18% of the GDP, and yet, as frequently reported in CostsOfCare.org, it's virtually impossible to get a straight answer from any provider on the costs of the services/"products" they sell. This comes as a...
Newtown, CT - March 8, 2013
They call themselves the "Pioneers", but naming oneself such and being one is very different - When CMS was in process of issuing its final rule on what the "Pioneers" would be held accountable for, many of us expressed concern over giving these organizations too much of a pass. In fact, one of our...
Newtown, CT - March 1, 2013
"We've created a secure, prosperous island in an economy that is suffering under the weight of the riches those on the island extract. And we've allowed those on the island and their lobbyists and allies to control the debate, diverting us from what Gerard Anderson, a health care economist at the Johns Hopkins Bloomberg School of Public Health, says is the obvious and only issue: "All the prices are too damn high."
--- Steven Brill,...
Newtown, CT - February 22, 2013
Ninety tests and treatments out of thousands doesn't seem like a lot, but it is - And that's because, building on their important (albeit modest) initial work, the ABIM Foundation has gathered support from additional medical specialty societies to call out overused treatments that harm patients and contribute to the billions in excess spending in the US. The new list, released...
Newtown, CT - February 15, 2013
A confidence interval is a simple measure of significance. It tells us, with a degree of certainty, whether or not a measure, a benchmark, or a goal has been achieved or exceeded - For example, in a 2008 paper published in the AJMC, we showed with a degree of certainty that BTE-recognized physicians have lower costs of care and deliver higher quality than non-recognized peers. That certainty was further...
Newtown, CT - February 8, 2013
The Good, the Bad and the Ugly....now playing at a health care spectacle near you - We've known for a while that activating consumer-patients and engaging them in intelligent and thorough discussions with their clinicians can only lead to good results, and this month's Health Affairs is replete with evidence of such goodness. In particular, work from our friend Judy...
Newtown, CT - February 1, 2013
In her poignant book on her husband's fight with cancer, The Cost of Hope, Amanda Bennett reflects on the complete lack of price transparency in health care - It's a theme that we also often reflect upon and puzzles everyone outside of the industry. We're told that it's too complicated, that so many different...
Newtown, CT - January 25, 2013
20% - 54% - 91,000 - 10% - 7 - 790 - 10,400 - Respectively, the percent of household income used to pay for health care costs; the percent of American families for whom health care is unaffordable; the number of excedent preventable deaths from health care; the percent of dollars flowing from the private and public sectors in value-based payments; the number of States with adequate transparency laws; the number of A-rated hospitals for patient safety; and the number of clinicians recognized...
Newtown, CT - January 18, 2013
"Americans used to do big things together. We squared our shoulders and met our challenges. Now it's time to mobilize for a new national project: Fixing our health care system once and for all." The Incentive Cure, by François de Brantes and Bob Conte, illustrated by Kriss Wittmann and edited/researched by Jenna Sirkin.
For most of 2012, with the help of the talented people mentioned above, I've worked on a book to explain what ails the US health care system and what might cure...
Newtown, CT - January 11, 2013
With all the talk of medical homes, better care coordination, higher quality and lower cost, why are C-section rates in the US twice as high as recommended by the WHO, causing excess harm to moms and babies, and $5 billion in excess spending? What in the world are these medical homes doing if they're not even taking care of the basics? Some will argue that it's not about the medical homes, it's about the OB/GYNs and the moms. Others will argue that this is a too highly charged issue for plans or employers...
Newtown, CT - January 4, 2013
We too often think of an insurance contract as being between an insurer and an insured - and while that is true, there are two parallel and often uncoordinated parts to the health insurance contract. The first part is, in fact, between the insurer (whether an employer or a health plan - including Medicaid or Medicare) and the insured. And that contract creates terms under which health care services "consumed" by the plan member will be paid, the portion of the services paid for by the insurer and the insured,...
Newtown, CT - December 28, 2012
C...that's the overall grade for the CMMI's 2012 efforts to reform payment in Medicare - While the CMMI has been busy in 2012 launching a number of initiatives, the net impact on Medicare spend is negligible. Adding up all of the Medicare beneficiaries in the launched initiatives, we get to less than 10% whose care will mostly be paid with something else than straight fee-for-service (FFS). As such, 90% of all funds flowing, especially for professional and...
Newtown, CT - December 21, 2012
"I'm as mad as hell, and I'm not going to take this anymore", Howard Beale (Peter Finch), Network, 1976.
In his iconic role, Peter Finch expresses the deep frustration of the American public faced by a series of problems, and at a seeming loss for answers. And while he doesn't pretend to have the answers, Peter's character exhorts ordinary citizens to rise up in anger and to refuse to accept the status quo....
Newtown, CT - December 14, 2012
Percentages often mask reality even when they reflect it, especially when they're about the impoverishment of Middle America - A new report this week from the Commonwealth Fund includes a powerful infographic that reflects a percentage reality. We quickly see how in seven years the vast majority of Americans has come to devote more than 20% of family income to healthcare costs (...
Newtown, CT - December 7, 2012
A few decades ago, Signal Detection Theory came to life - Its purpose was simple (to detect a signal when there's a lot of noise) and has shown great relevance to the practice of medicine. A good summary of the theory and its application to healthcare can be found here, courtesy of Prof David Heeger, son of Nobel laureate Alan Heeger. The premise is straightforward: people make inferences and decisions based on information. Sometimes...
Newtown, CT - November 30, 2012
We should remember that knights could afford their knightly behavior. Even then, extrinsic incentives were in play -- A recent post by Bob Wachter reignites the debate about knights and knaves, and highlights the evidence to-date, for and against, the use of incentives to drive certain behaviors. Before slicing the shrubberies, it might be time to recast the debate in its...
Newtown, CT - November 23, 2012
From Maine to New Mexico, and Arkansas to Washington, the pace of change is accelerating - Now that the dust has settled on the elections, the realization has finally set in that we will be gradually moving away from the status quo. And for that, we should all give thanks. While some of the states whose leaders were in denial have been given more time to implement their health care exchanges, these functional markets for health insurance are being set up, ready to open for business in a little over a year. Millions of...
Newtown, CT - November 16, 2012
"Like many businessmen of genius he learned that free competition was wasteful, monopoly efficient. And so he simply set about achieving that efficient monopoly." Mario Puzo, The Godfather.
And so the story goes for most companies, including hospitals, whether for profit or not. Acquisitions and mergers have ballooned in 2012 and are forecast to grow again in 2013. The consequence of these consolidations has, in the past, almost always resulted in price increases for the private sector, and a...
Newtown, CT - November 9, 2012
One thing is certain now, the ACA is here to stay - and that means the move by Medicare and Medicaid towards value-based payments will continue to accelerate, and with it, the needed transformation of the incentives that power today's behavior of the delivery system - to always produce more services. However, we must also guard against the second foe of health care affordability, the inexorably higher pricing of health care services by the increasingly consolidating provider market - which is something that...
Newtown, CT - November 2, 2012
On the wake of Irene, the importance of transparency took center stage and was applied to Sandy - The Governors of Connecticut, New Jersey and New York learned the lessons from last year's debacle and set out to ensure that the utility companies that operate in their States be open and honest about what to expect and when. As such, while utility customers might not be happy about the power outages, they can log on to their utility's website, monitor the level of outages, report their own and get periodic...
Newtown, CT - October 26, 2012
How do we avoid continuously committing the seven deadly policy sins that undermine our ability to deliver the noble mission of health care? In an article this week Julie Appleby lists the seven factors driving up healthcare costs. They are: (1) paying for volume rather than value (greed); (2) an increasingly unhealthy population (gluttony); (3) desire for new technologies and drugs (envy); (4) tax breaks on insurance premiums...
Newtown, CT - October 19, 2012
I see fewer patients a day, spend more time with each, practice costs are down, and revenue is up - That's not a pipe dream, nor is it the statement of a physician in a "concierge" practice. It's from a self-described country doc in Appleton, Wisconsin, and he and his colleagues are practicing in a reengineered environment. The walls are the same, the patients are the same, but the processes used to support the care management teams have been completely rethought and redesigned. Not in a rip and...
Newtown, CT - October 12, 2012
In the 1960s and early 1970s, deaths from car accidents rose to a peak of about 54,000 per year. They've never been that high since - and there are far more drivers and cars today than there were then. So what happened? In short, two books. One by Ralph Nader, "Unsafe at Any Speed", and one by the National Academy of Sciences, "Accidental Death and Disability-The Neglected Disease of Modern Society". These prompted a national outcry which resulted in Congress passing legislation on seat belts...
Newtown, CT - October 5, 2012
It's time for a Consumer-patient's Right To Pricing Information Act - A 2011 Government Accounting Office report on Health Care Price Transparency concluded that: "meaningful price information is difficult for consumers to obtain prior to receiving care". And when you consider that, according to the 2012 Kaiser Family Foundation survey of employer health care coverage,...
Newtown, CT - October 5, 2012
It's time for a Consumer-patient's Right To Pricing Information Act - A 2011 Government Accounting Office report on Health Care Price Transparency concluded that: "meaningful price information is difficult for consumers to obtain prior to receiving care". And when you consider that, according to the 2012 Kaiser Family Foundation survey of...
Newtown, CT - September 28, 2012
The Empire strikes back - Financial suicide isn't at the top of a health system's CFO's list of priorities, and yet that's what we seem to expect them to do by entering into voluntary agreements that will decrease revenue, reduce occupancy, and force all kinds of nasty restructuring that no one wants to do unless they have to. As a CFO from a large renowned "ACO" told me: "I have a five year financial plan that includes very high occupancy rates at a brand new facility, and I intend to...
Newtown, CT - September 21, 2012
Blockbuster, Circuit City, and Kodak share a root cause to their decline and failure: they forgot that incentives drive function, and that function drives form - Why do we need a roll of film when we have digital cameras or smartphones that can automatically upload pictures to social media? Why do we need to go to a "big box" store when we can move through Amazon's web pages? Why do we need to spend time and fuel getting and returning DVDs when the mail carrier can bring it to our doors? The form didn...
Newtown, CT - September 14, 2012
Healthcare, we are often told, is different, and shouldn't be compared to other industries. The Institute of Medicine begs to differ - In a recent report, the IOM went to great lengths to compare healthcare to other industries and, indeed, healthcare is different. A third of what we spend doesn't improve anything, clinicians don't work in teams centered around...
Newtown, CT - September 7, 2012
Why is there always a tendency to go for the "or" instead of the "and"? Policy experts, physicians, health plan leaders and many in the industry shape their positions and strategies as alternatives. And yet decades of experimentation in healthcare should have taught everyone by now that there isn't a single alternative that will work. We need a combination of efforts that will dovetail with each other, some working for some areas of care and some providers and some working for others. After all...
Newtown, CT - Aug 31, 2012
Ready? Set?....Whoa, hold on, and think before you sign on the dotted line - Two months ago, at the end of June, hospitals, health systems and other organizations submitted applications to the CMMI for the Bundled Payment for Care Improvement (BPCI) pilot. The program was launched a year ago, and, since then, hundreds of potential applicants have received two years' worth of Medicare claims for their market area, and performed various analyses to determine if they want to file a formal application. Many walked away...
Newtown, CT - Aug 24, 2012
It's usually dangerous when we confuse the talkers for the doers - A recent paper published in the British Medical Journal had an innocuous enough title: "When Financial Incentives Do More Good Than Harm: A Checklist", and yet it set off a firestorm of reports across the US that concluded (because of an accompanying editorial by physicians advocating a single-payer system) that incentive programs such as P4P are ineffective, at best, and...
Newtown, CT - Aug 17, 2012
It takes a bridge to cross a chasm, and that's why we named it Bridges To Excellence - In 2002, a group of employers that included GE, Verizon, UPS, Ford, P&G, and Raytheon decided to take the IOM's report on the Quality of Health Care in America to heart. In Crossing the Quality Chasm, the authors of the report pointed to the toxicity of the payment system as one of...
Newtown, CT - Aug 10, 2012
It's tough to be good when you're encouraged to be very very bad - and two recent investigative reports highlight the very very bad behaviors of physicians from coast to coast. In California, the supposed mecca of ACOs, a creative entrepreneur, self-proclaimed a "Robin Hood of physicians", decided that the best way to negotiate with "greedy plans" was to...
Newtown, CT - Aug 3, 2012
18% -- that's the portion of the GDP that's collected in taxes, and it's also the portion of the GDP that's consumed by national health expenditures. No wonder we have a problem. Now, of course, the government pays only about half of healthcare expenses, but that's still a chunk of change and has been growing. The result: budget deficits. If half the government's spending is on entitlement programs, that doesn't leave...
Newtown, CT - July 27, 2012
Why aren't patients protected as well as diners or workers? Across the US, municipalities send out their public health inspectors to ensure that diners are protected from serious harm or injury that can be caused by poor hygiene and other practices. These inspections result in restaurants receiving a grade, alerting the diners of potential health safety hazards. All businesses with more than a handful of employees are equally subject to...
Newtown, CT - July 20, 2012
What will it take to have the rug pulled out from under the RUC? With CMMI moving evermore aggressively to institute value-based purchasing contracts with willing health systems, practices and hospitals, the arcane, opaque, and self-serving process in which fee schedules are proposed and adopted by CMS via the RUC needs to go. For those who aren't familiar with the process, the RUC committee, staffed by members of specialty societies, sits around in closed meetings and decides which fees for what services should increase and by...
Newtown, CT - July 13, 2012
Two recent books summarize the massive potential for improvement in the delivery system and lead to this observation: It's the incentives, stupid! The Pittsburgh Regional Health Initiative and the ThedaCare Center for Healthcare Value have each published a set of best practices from delivery system reengineering. In Potent Medicine, John Toussaint illustrates the real measurable improvements in cancer care, primary care,...
Newtown, CT - July 6, 2012
Joey Chestnut's win offers us a lesson on the power of intrinsic and extrinsic incentives - it took 68 hot dogs and buns to win, and the crowd went wild. The other contestants faded away and the championship belt and $10K check went to Joey. It might be interesting to look at the fate of the champions and runner ups of prior years, although we can offer a guess....they're probably stented to the hilt and stomach stapled, and that...
Newtown, CT - June 29, 2012
Uncertainty carries a significant cost - it makes estimates more difficult, increases the potential business risks of any venture, and since most of us have a tendency to overestimate losses rather than gains, uncertainty is a big brake on forward motion. And yet, despite the uncertainty of the Supreme Court's decision on the ACA, hundreds of provider organizations and dozens of health plans had taken their cue from the long...
Newtown, CT - June 22, 2012
Sometimes it's useful to consider the theories of Nobel Laureates - in his seminal work on Game Theory, John Nash exposes a situation in which an equilibrium can be reached where neither party can gain more than the other. The Nash Equilibrium should be what we strive for when considering the design of new payment programs, a situation in which neither the...
Newtown, CT - June 15, 2012
There are only ten Commandments. Everything else is pretty much a guideline - During the next two weeks, hospitals, physicians, and others will decide whether or not to apply to the CMMI's Bundled Payment pilot. Many, including some that participated earlier this week in the Bundled Payment Summit, have concerns about the design of the pilot proposed by CMMI. They fear the risks can be high and the reward dependent on the pure luck of the draw. We've shared those concerns and expressed them publicly. Yet on Wednesday,...
Newtown, CT - June 8, 2012
In the mid 1960s, Frederick Herzberg laid out an important theory: the factors that lead to job satisfaction are different than the factors leading to job dissatisfaction - his paper on motivating a workforce would become the most widely read paper in the Harvard Business Review...ever. Herzberg's insights are often forgotten today, at a time when they are most relevant, especially as we design...
Newtown, CT - June 1, 2012
As the proverb goes, the person who says something cannot be done should not interrupt the person doing it. Nine months ago we were almost interrupted by an out-of-date and misleading report that said that bundled payment had not been and could not be implemented. That was wrong then and even more so today. In a report released this week, co-authors Michael Bailit and Megan Burns detail the results of a comprehensive review of private sector...
Newtown, CT - May 25, 2012
On May 11th 1944, a few weeks before the allies land in Normandy, my grandfather (and namesake) dies in a concentration camp in Austria, of aggravated pneumonia, in an environment in which there was little to no value given to a human life. One of the enduring and endearing features of the US healthcare system is that it has, so far, refused to put a value on a human life. As we all fire up barbecues this weekend, and celebrate the beginning of summer as much as the memory of all those who died defending freedom, we should remember...
Newtown, CT - May 18, 2012
Organizations that currently dominate an industry have, as the theory goes, survived a process of brutal evolution. How is it, therefore, that they can sometimes be so incompetent? Let's examine the evidence. A benefits consulting and health care analytics company sends corrupted files, twice, and acknowledges they knew the files were corrupted. A large health insurance company spends months trying to load a claims file on a FTP server, to no avail. Another laments it doesn't have the resources to manage two bundled payment...
Newtown, CT - May 11, 2012
Clay Christensen's seminal work on innovation offers important lessons for healthcare - The most important is that disruptive innovations will force the centralization of skills to become decentralized. In other words, many aspects of care and care decision-making will be pushed down from the current center of skills - hospitals - to the outer edges of skills, the consumer. That seems hard to believe for the many...
Newtown, CT - May 4, 2012
It's good to know that sometimes things work out like you hoped they would - in a new report we released today we show that practices recognized under the NCQA Patient-Centered Medical Home recognition program, and those recognized under BTE's Diabetes recognition program have lower overall costs of care per patient than their non-recognized peers. We've shown...
Newtown, CT - April 27, 2012
What happens when you use a product for a purpose other than the one it was designed for? If you're lucky, it might work. But most often you get bad results. There are two current examples that offer important lessons in that respect. First are DRGs. They were designed and introduced for a very specific purpose - to cap the facility costs for hospital stays. And the designers had an option either to create a cap for every possible stay, or to group like stays together and create a single payment for all those like stays. They...
Newtown, CT - April 20, 2012
Sometimes, what's more important is who's not on a list than who's on it - Last week CMS released the list of the 27 initial organizations that have made the cut for the ACO Shared Savings program. This follows a list of...
Newtown, CT - April 13, 2012
Health care utilization continues to be flat, yet total healthcare expenditures continue to rise by close to 4%, keeping healthcare at 18% of GDP. Time to unleash the price slayers - The most recent report from the Altarum Institute shows that while use is flat, healthcare prices are either equal to or greater than prices...
Newtown, CT - April 6, 2012
What does it take to activate a consumer? Impact on the wallet and information on cost and quality - it's a super simple formula, and one that every employer in the US has understood for decades. In the 1990s, the formula was very effectively applied to HMOs (lower co-pays and heavy premium subsidies + NCQA accreditation), but as the market moved away from that simple product approach, the formula was put on a shelf. Pricing information on specific procedures or even units of service was close to impossible to pry out of health...
Newtown, CT - March 30, 2012
There's one simple lesson that keeps eluding many in our field: It's the design, stupid! Poorly designed incentive programs usually garner poor outcomes. For example, when CMS launched the Premier demo a decade ago, they tied marginal benefits to a tournament-style incentive program. The result, as reported in this week's NEJM, is underwhelming. The researchers' conclusion? It's the design, and they caution CMS on its...
Newtown, CT - March 23, 2012
Close to $200 million. That's the added "tax" imposed on Pittsburgh residents by the city's too numerous hospitals (a.k.a. UPMC) - Pittsburgh, Cleveland, Cincinnati and St. Louis have about the same number of people living in and around each city, but the combination of lots of hospitals with lots of hospital beds and long lengths of stays puts Pittsburgh in a category of its own compared to the three others. In our...
Newtown, CT - March 16, 2012
Dr. Hammond, like many independent physicians, is trying to do his best to make ends meet and continue to serve his patients - And unlike many physicians, Dr. Hammond has received several Bridges To Excellence recognitions, attaining level 2 recognition for Diabetes and Cardiac care, Level 3 for office systems and, as a result, a BTE Medical Home recognition. There are very few doctors in the country that have achieved this level of excellence. Yet,...
Newtown, CT - March 9, 2012
"Assuming technical risk and offering a warranty is an effective way for providers to reduce information asymmetries" - this powerful insight by Michael Hicks of Pinnacle Partners summarizes the way in which health care can be transformed in a manner similar to other industries. We all know that defects are bad. They're bad because they cause harm and they're expensive. By extension, bad quality increases costs. It's a simple concept and one that consumers have come to understand in all aspects of...
Newtown, CT - March 2, 2012
On Wednesday, potential CMMI Bundled Payment applicants received their 70 plus files of Medicare claims. In addition, CMS awarded its contract to build a public domain episode grouper - Another page has turned. For the first time in our history, providers now have access to two years' worth of Medicare claims data, which should help them analyze their past performance, and, if they're forward-thinking and courageous enough, to apply for the CMMI Bundled Payment pilot. With our colleagues from Brandeis University,...
Newtown, CT - February 24, 2012
Dutch auctions, inventory funding, public domain source code, conversational blogs ....healthcare - these aren't words that are usually associated together, and yet they are. A recent GAO report illustrated how even in the controlled pricing domain of Medicare, implantable medical device (IMD) prices were all over the place. Hospitals engaged in bundled payments, like Baptist in San Antonio, have...
Newtown, CT - February 17, 2012
Following the First World War, the French built the Maginot line to protect themselves from another invasion. The Germans simply went around it - Faced with a potentially disruptive force, incumbents react in one of two ways: they innovate or they protect. We see both happening today at a breathtaking pace. Let's start with the basics, the campaign by the American Board of Internal Medicine to encourage Medical Specialty Societies to voluntarily identify five procedures that are commonly overused....
Newtown, CT - February 10, 2012
Over ten years ago, the Nobel Prize in Economics was awarded for work done on information asymmetries, a topic that was first brought to the attention of health care industry leaders in the 1960s by Kenneth Arrow - and fifty years later we continue to suffer from information asymmetries in healthcare, mostly due to the continued opacity in price and quality. In a recent blog post, Uwe Reinhardt...
Newtown, CT - February 3, 2012
If, as recently reported by the CBO, high touch care management and payment reform work, why aren't they being widely deployed? This is our collective $500 billion question, because that's roughly what would be saved if you add up the impact from these interventions. With that much at stake, public and private sector payers should be rushing in. Some are, but many aren't. Our work suggests that incentives matter and impact behaviors, so let's examine who would significantly benefit (or not) from these...
Newtown, CT - January 20, 2012
Something's going on, and passing it off to the Great Recession is no longer holding water - The CMS's report on the growth of health care spend in 2010, and the Altarum Institute's estimates of 2011 both continue to provide good news for all: price growth has significantly slowed. For the first time in decades, healthcare price inflation is not much greater than...
Newtown, CT - January 13, 2012
Each quarter we highlight field activities and opinions from experts in our Newsletter, Improving Incentives - in this latest issue, you'll read about the launch of a new bundled payment initiative in Wisconsin, led by the Robert Wood Johnson Foundation's Aligning Forces for Quality...
Newtown, CT - January 6, 2012
As we start 2012, it's appropriate to reflect on the distance travelled in 2011 and the distance to be travelled these next twelve months - First, the leadership at the Innovation Center has yielded tremendous dividends in shifting the industry's mindset from volume to value-based payment. The responses to the various initiatives - ACO Pioneer, Bundled...
Newtown, CT - December 22, 2011
Consumers understanding that avoidable complications are costly, ever-improving information on the quality and cost of care, and smart apps that help consumers find the care they need - If these are on your Christmas wish list, then Christmas has come early (and you can ask for more routine things that won't have your family shaking their heads). Last week, our friends at the Consumer-Purchaser Disclosure Project held an audio conference during which Shoshanna Sofaer presented some...
Newtown, CT - December 16, 2011
PepsiCo recently announced that it would waive employee costs for having certain surgeries done at Johns Hopkins. Perhaps it should consider Stockholm as well - Employers are increasingly designating Centers of Excellence for more routine elective procedures such as total knee replacements (TKR) and minimally invasive cardiac procedures. And some are establishing reference prices for preventive procedures such as...
Newtown, CT - December 9, 2011
There's an important principle of organizational change that, to date, has been mostly ignored: Form follows function, and function follows incentives - so the key is really to focus on the function (e.g. delivering highly coordinated care to reduce avoidable complications) and then determine what set of incentives will cause that function to occur. The form of the organization best suited to deliver that function (or set of functions) will then follow organically. The "social engineers" have...
Newtown, CT - December 2, 2011
A Perspective by Bohmer in this week's NEJM identifies four habits of successful high value health systems, that can be summarized into two management principles -- organizations (large and small) need relevant and timely feedback loops on their performance, and effective managers are provided with clear boundaries for their management, accounting and accountability. These principles have been in place in successful companies in all other industries for...
Newtown, CT - November 25, 2011
For every pro, there always seems to be a con (and vice versa), which can lead to inaction - The recently released final regulations for Accountable Care Organizations have, more than others, elicited strong comments from both pros and cons. In a BNA-sponsored paper, Lara Cartwright-Smith, Jane Hyatt Thorpe, and Sara Rosenbaum articulate many arguments as to why the final ACO regulations strike a good balance, and provide an...
Newtown, CT - November 18, 2011
Rockford, IL, is one of three original PROMETHEUS pilot sites and today we report on findings from that implementation - Last week Health Affairs released a qualitative review of three implementation sites, relating the impressions of the evaluators, gleaned from a few phone interviews and a couple of site visits. This week we release a comprehensive qualitative and quantitative report on one site, with more to follow in the coming months. It describes in detail...
Newtown, CT - November 11, 2011
It's really pathetic when a reputable research organization sacrifices the integrity of their work for the sake of a few cheap headlines - And yet that's what RAND did this week. They issued a press release with this title: Bundling Payments To Curb Health Care Costs Proves Difficult To Realize. Now, I don't know about you, but to the casual and not so casual reader, that headline implies that bundling payment to contain health care costs doesn't work. And, in fact, that's the erroneous conclusion drawn...
Newtown, CT - November 4, 2011
Today is the day - By close of business, the window to file a letter of intent for the CMMI Bundled Payment pilot will be shut. The preliminary numbers are very strong and if the final rush holds, the Innovation Center will have quite an announcement to make early next week. Of course, an LOI does not an Application make, nor does it guarantee participation. But the overwhelmingly positive response to the request shows how much closer we've gotten to the proverbial tipping point....
Newtown, CT - October 28, 2011
Why do smart professionals who individually get an A, collectively get a D - the grade given the US in the Commonwealth Fund's latest scorecard. It's mostly because they've turned into piece workers, focusing on their individual tasks and not on the patient's total care. They (and their patients) have become the victims of Taylorism, decades after the rest of the sectors of the economy...
Newtown, CT - October 21, 2011
It's taken more than 30 years, but Jerry Solon must be smiling from heaven - In 1967, Dr. Solon published a paper in which he describes a novel way to measure the use of services, one that would be more consistent with the way physicians treat and manage a patient's condition or illness. He called it the analysis of an episode of medical care. Two years later he published another...
Newtown, CT - October 14, 2011
There's nothing more infuriating than hearing hospitals complain that lower costs for those who pay for health care means lower revenues to them and potentially fewer jobs - it's infuriating because while their bank accounts have gotten fatter, and their buildings have gotten shinier and bigger, the average income of an American family has decreased by 7% in the last decade. And as we reported recently, much of that decrease was caused by higher healthcare premiums...
Newtown, CT - October 7, 2011
As episode of care payment (a.k.a. Bundled Payment) becomes more prevalent, private and public sector payers will have to work through member benefit issues - in particular when bundled payments are prospective budgets against which FFS claims accumulate. This and other internal plan operations issues reveal the antiquated nature of the claims and benefit platforms that have inflated US healthcare spend. For every problem, however, there are solutions, and ...
Newtown, CT - September 30, 2011
Our third-quarter newsletter comes out at an important time in the transformation of the U.S. health care system - A few weeks ago, CMS' Innovation Center launched the boldest and broadest pilot program in the agency's history. Hospitals, physicians, health plans, and coalitions around the country have a unique opportunity to prove that they are willing to walk the walk. Delivering high-value...
Newtown, CT - September 23, 2011
Earlier this week, Andy Webber and his team at NBCH hosted a webinar on the CMMI Bundled Payment Pilot - Valinda Rutledge, who is heading up this important effort at the Innovation Center, reviewed the different models available to potential applicants, and I was struck again by the significant flexibility of the program. There is a downside to having too many options; it can sometimes lead to analysis paralysis. Last week we unveiled a simple...
HCI3 Update from the Field - Newtown, CT
Fall is a few days away and it's time to plant the bulbs that will come out in Spring - Many of those bulbs should be the Letters of Intent by Applicant-providers and other conveners for the Bundled Payment Pilot, and they will come out in the early Spring of 2012 when CMS awards the pilot status to those who have successfully filed applications and received high enough...
Newtown, CT - September 9, 2011
As we approach the sad tenth anniversary of the September 11th 2001 events, we must take pause to consider the path traveled since and the path we must travel from now on - On September 11th 2001, I was in Kentucky, with one of my sons, waiting to present to hospitals in Anthem's network that participated in its quality improvement and incentives program. The talk was focused on the Leapfrog Group's efforts and the imperative for hospitals across the country to report on these few important measures in a very public...
HCI3 Update from the Field - Newtown, CT
The day the CMMI announced its Bundled Payment pilots, there were two tectonic shifts - the first shook the East Coast of the US, and the second will continue to shake the health care industry for years to come. In launching what could be the largest shift in mode of payment in the history of Medicare, CMS has sent a definitive signal to hospitals, physicians, and other health care providers that the day of value-based payment has come. The four models currently included in Phase 1 cover inpatient stays...
HCI3 Update from the Field - Newtown, CT
Hallelujah! - Today, Rick Gilfillan and Valinda Rutledge announced the CMMI's rollout of a national pilot to pay a bundle of services for a comprehensive episode of care. The plan is simple and elegant, broad and appealing, and builds on the successes of current CMS and private sector efforts. It's a huge step in the right direction and the CMMI should be commended and...
HCI3 Update from the Field - Newtown, CT
Positive deviants can be defined as organizations whose results are significantly and positively better than others - and a study published in the Annals of Internal Medicine a few months ago by Leslie Curry and colleagues at Yale, identifies some key characteristics of these positive deviants. The study focused on hospitals that had shown to be in the top 5% of performance in AMI survival rates for at least two consecutive years, and...
HCI3 Update from the Field - Newtown, CT
The time gap between knowledge acquisition and formal dissemination of that knowledge in peer-reviewed journals is maddeningly long - especially in an environment in which solutions are desperately needed today. This week we found out that some of our research will be published in early October in the American Journal of Managed Care. The study reveals what we've known and seen in our work for some time, namely that much of the variation in episode costs within a plan's network comes from the...
HCI3 Update from the Field - Newtown, CT
In a week in which gloomy news has been followed by gloomier news, we were privileged to witness how payment reform efforts are having a really positive effect - some of our implementation partners got together earlier this week to share some lessons learned from rolling out episode of care payment, and they were truly encouraging. First, the focus on managing a patient through a complete episode is prompting physicians and hospitals to communicate. They're sharing best practices; they're finding...
HCI3 Update from the Field - Newtown, CT
Trajectories can be changed, and will be changed if everyone truly steps up to take a swing - two studies released this week provide a bleak picture of our current and future well-being if the status quo remains. First, an issue brief from the Commonwealth Fund on a recent OECD report shows that the US continues to outpace every other nation in spending on health care....
HCI3 Update from the Field - Newtown, CT
18 months and counting - that's the amount of time CMS has to launch the national episode of care pilot. In a new report released earlier this week by the Center for American Progress, Harriet Komisar, Judy Feder and Paul Ginsburg outline some important recommendations for CMS to make this pilot a true success. At a meeting on Monday to...
HCI3 Update from the Field - Newtown, CT
A number of papers in this week's NEJM remind us of our challenges and opportunities - and do so in an adult and constructive dialogue that is quite refreshing given the imbecility currently reigning over the debt ceiling discussions. Mike Chernew and Katherine Baicker remind us that even in the best of circumstances, the growth in Medicare spending will have to require some increase in allocation of general revenues (and therefore...
HCI3 Update from the Field - Newtown, CT
Every quarter we release more in-depth news from the field - and this quarter is no different. In this newsletter we introduce several columns from our Board members. The Lawyer's Brief reviews some of the issues that providers face when initiating clinical collaboration. The Physician...
HCI3 Update from the Field - Newtown, CT
When the CFOs of many of the country's hospital systems got together this week at the HFMA's annual conference, the talk was all about the conversion from volume to value-based payment - that's more than just a small shift and shows how significantly the 2009 debate on health care and the 2010 passage of the ACA has changed mindsets. There are two reports that the HFMA has released this week that are important to read. The...
HCI3 Update from the Field - Newtown, CT
Turning data into actionable information is hard but essential in the effort to transform practices - and many times, it doesn't take a huge organization to do it. A case in point is the work Dr. Brenner did in NJ to identify "hot spots" - areas in the community that were responsible for the majority of ED and other hospital admissions. Similarly, our continued work with practices across the country to achieve...
HCI3 Update from the Field - Newtown, CT
How can we move away from the status quo if we bake it into the design of new programs? We can't and shouldn't. Which is why I encourage everyone to carefully read the recent letter from the Consumer-Purchaser Disclosure Project to CMS on the proposed regulations for ACOs, a letter to which we've signed on. The point made is simple: it doesn't matter...
HCI3 Update from the Field - Newtown, CT
When does "no we can't" become "no we won't" - when the technical and operational barriers to implementing an innovative or disruptive program have been removed. At that point, what's left is the unwillingness to innovate or disrupt, not the ability. Many employers over the years have been met with "no we can't" from their plan administrators, and then spent the following years creating the prototypes, figuring out the operational bugs, and then presenting the solutions...
HCI3 Update from the Field - Newtown, CT
There's an interesting contrast between what most of us think is right and what consumers want - Atul Gawande's recent commencement address to the graduating class of the Harvard Medical School perfectly encapsulates what most of us know to be true: that practicing medicine the right way is a team sport. The number of known treatments corresponding to the...
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