PBS Documentary: U.S. Health System: The Good News

PBS's recent documentary on communities in the United States that are providing high quality health care at a lower cost is inspiring and worth checking out. They highlight several communities across the nation, including Grand Junction, CO, Group Health in Seattle, and physician practices in Everett, WA. Communities are doing great things, but in isolation. This documentary shows us that we are capable of providing high quality care, efficiently and cost effectively. Hopefully, medical communities across the nation will adopt practice patterns that are similarly responsive the health needs of the population.

Check out the documentary here.

BWC

Ezekiel Predicts the End of Insurance Companies by 2020

Ezekiel Emanuel boldly proclaims that insurance companies will be extinct by 2020 in last week's New York Times article. He believes that Accountable Care Organizations (ACO) will push them out of the market. It will be interesting to follow his prediction over the next 8 years to see if he is correct.

Emanuel explains that ACOs will eventually bear all the financial risk for patient care when they are implemented which will eliminate the need for insurance companies. ACOs, which will be composed of groups of doctors, other providers, and hospitals, will work together to provide the full range of patient care. Eventually, he sees patients paying a flat rate directly to ACOs, who, in turn, will provide all services needed. The advantage of the ACO model is that it incentivizes providers to keep the patient healthy and focus on prevention, rather than provide care only at the point of illness. Additionally, it will integrate care for the patient, creating better collaboration between different providers.

At the moment, 60% of insured citizens under age 65 in the U.S. are insured through their employer. In these cases, the financial risk falls on the employer, not the insurance company. This leaves the insurers there to help with processing claims and to provide negotiating power with hospitals and doctors. However, ACOs will charge a flat premium, which should reduce the amount of administrative work required to process and file insurance claims on a case by case basis. In situations where insurance companies take on financial risk for patients’ health – such as small businesses and individuals – they have enough market power to cherry pick healthy patients, charge high premiums, and deny patients’ claims. When ACOs start being implemented, insurance companies will be competing with ACOs for these patients. This will infuse better competition and should reduce the need for patients to hassle with insurance companies over coverage.

Emanuel also breaks down the difference between ACOs and HMOs in a very concise manner. First, ACOs and HMOs are similar such that patients are members of the organization and members pay a flat fee. In other words, payment is not done on a fee for service manner in either of these models of care. However, Emanuel emphasizes that ACOs will be local groups of providers, not large national corporations like many HMOs, so ACOs will be able to better respond to local patient needs. Also, ACOs will be financially incentivized to keep patients healthy rather than only getting paid to treat the sick. Lastly, he points to the advancements in electronic medical records as well as the science of care integration as improvements since the HMOs’ day.

Personally, I am not fully convinced that insurance companies will be extinct by 2020. It may be that I do not understand ACOs to the depth that Emanuel does. But, maybe in the end, ACOs will become large enough that they will just take over coverage responsibilities as well. Time will only tell.

BWC

Why Doesn't Pay-for-Performance Work?

Why doesn’t pay for performance work? It seems that by defining health outcomes and financially incentivizing physicians to meet those targets, we would see improved health. However, since the United Kingdom (UK) has implemented pay-for-performance incentives, the evidence that this change improves health status is negligible.

Researchers from the National Primary Care Research and Development Centre have been tracking health outcomes for asthma, diabetes, and coronary artery disease since implementing a pay-for-performance model in the UK. They found that health outcomes for asthma and diabetes improved, but only in the short run. In the long run, the rate of improvement leveled off. For heart disease, the results were even more disappointing as they did not even show improvement in the short run.

A study from the Department of Public Health Sciences, looking at intermediate outcomes of diabetes under pay-for-performance did not provide any better news. In fact, their results were not able to show a statistically significant difference in physicians’ ability to meet performance targets after rewarding physicians based off of performance.

The researchers also collected data from patients asking about perceptions of access to care, continuity of care, and the interpersonal aspects of care. The pay-for-performance method had no effect on any of these indicators either.

Performance based payment works in other fields, but for some reason it does not work in health care. This may point to the need to better define quality in health care, particularly in primary care. Maybe looking at HgA1c targets is fine on the individual level, but for population based diabetes control, this is not the answer? Perhaps, physicians are not incentivized by payment as much as economists would like us to believe? I am not sure what the problem is, but these results point us away from pay-for-performance as the silver bullet for improved quality in primary care.

BWC

References:

Stephen Campbell, et al, "Effects of Pay for Performance on the Quality of Primary Care in England," The New England Journal of Medicine 2009; 361: 368-78

Stephen Campbell, et al, "Quality of Primary Care in England with the Introduction of Pay for Performance," The New England Journal of Medicine 2007; 357: 181-190

Pooja Vaghela et al, "Population Intermediate Outcomes of Diabetes Under Pay-for-Performance Incentives in England from 2004-2008" Diabetes Care 2009; vol 32, no. 3

Public vs. Market

I am taking a class at Harvard School of Public Health this term called "Health Care Issues: Public vs. Market."  It is a cumbersome title, but defines the topic and scope of the course well.  Essentially it applies the debate between free markets and government intervention to the Affordable Care Act (ACA). Our first policy memo (which kind of blends into an essay in my case) was about our personal thoughts on the public vs. market debate.  Are there times when government intervention in health care is necessary and if so, when and how?  I offer up a few suggestions.

-------------------

MEMORANDUM
To: Speaker of the House
From: Jason Kroening-Roche
Re: Public vs. Market in Health Care Reform
Date: January 30, 2012

            We are at a significant turning point in the history of healthcare in this country.  With the passage of the Affordable Care Act (ACA)in 2010 and the upcoming elections in November 2012 the debate about marketsand government in health care is intense.  In this memo I will explain thebenefits of competitive markets and then explain why the health care market differs. I will finish with a discussion of the ACA and how it addresses theseissues.
            Competitive markets have been the foundation of an Americaneconomy that is the largest in the world.  Competition for profit spursinnovation, contains prices, and gives the consumer choice.  Innovationresults when companies consistently push the envelope with new technologies,products, and production processes in an effort to expand their market share andmaximize profits.  Competition alsoworks to keep prices for consumers low.  Companies search for new, moreeconomical methods of production and reduce inefficiencies in their businessmodels.  Southwest Airlines, for example, has repeatedly reduced operatingcosts by eliminating “frills” and shortening turnaround time between flights inorder to keep their prices competitive.  Lastly, markets give the consumerchoice.  In truly competitive markets, many businesses provide the same orslightly variable products from which the consumer can choose.
            Health care differs from perfect markets in several ways, however. First, many view health care as a human right and believe access tohealth care should not be based on employment status or ability to pay. Second, health care is an unpredictable need and often catastrophicallyexpensive.  An insurance market is a viable solution.  The twoclassic problems in the health insurance market, however, are moral hazard andadverse selection.  Moral hazard is the principle that after obtaininginsurance, patients will seek care they do not need, because it is free at the“point of sale.”  Adverse selectionis the principle that patients know more about their state of health thaninsurance companies and therefore will buy insurance only when they need it. This leads to the third pitfall of a competitive health care market.  Competitive markets assume perfectinformation.  The informationasymmetry in health care is undeniable and unavoidable, both between insurancecompanies and patients (adverse selection) and between patients and theirproviders.  Patients often do not know their medical needs and rely on theprovider (i.e. physician, hospital, etc) for advice, often in times ofemergency and stress.  These issuescannot be addressed in a competitive market for health care and thus requiregovernment intervention.
            The ACA contains solutions to many of these challenges that makesense.  First, the ACA provides access for an estimated 32 of the 50million people in the US for whom the current system was failing, increasing equityin a way the market cannot.  Previously, affordable health insurance was availableonly through Medicare, Medicaid, and employer-sponsored insurance, incentivizedthrough tax subsidies to companies who provide insurance for their employees.  Second, companies were not mandated toprovide insurance to employees, nor individuals to carry it.  This created equity and adverseselection issues, especially for the individual market.  The ACA now implements a mandate with subsidiesfor persons unable to afford to buy insurance on their own.  Third, the ACA places an emphasis onquality and transparency.  Regulatingquality measures gives consumers more information and power to make rationaldecisions about where they will seek care.  The insurance exchanges promote transparency whenindividuals are choosing a coverage plan. These are important interventions to improve information symmetry.

            Inconclusion, markets have been extremely successful in this country.  However, the health care market needsgovernment intervention to correct market failures and there are many models toachieve this.  Working within thecurrent system, however, the ACA does a good job ensuring greater access andequity, mitigating adverse selection, and protecting consumers from informationasymmetry.  I recommend it for yoursupport.

Why are Students Shying Away from Primary Care?

Primary care in the United States is in a state of crisis. Fewer medical school graduates than ever are choosing primary care as their specialty. The American Academy of Family Physicians (AAFP) states that there has been a 51.8 percent decrease in graduates going into primary care since 1997. With the current trajectory, this will leave the country with a shortage of 40,000 primary care physicians by 2020. Couple this with the aging baby boomer population and the system may crumble all together. It is universally accepted that primary care is the backbone of the health care system. It is these providers who serve as the gatekeepers into the system and are ultimately charged with protecting the overall health of individuals and the population.

Drs. Bach and Kocher make the argument that large medical school debt is pushing students into more lucrative fields to pay back their loans as quickly as possible. Their solution is to make medical school free, but then charge people for specialty training. They believe that this would incentivize students away from sub-specialization. As a medical student who will accumulate around $200,000 of debt to be educated (and who is married to a medical student with similar school loans), I clearly understand the financial constraints that this places. However, debt is only a portion of the entire story for why students are not choosing primary care fields. By putting all our focus on the debt issue, it will distract us from finding the real reasons why students are not going into primary care.

Medical students are not exposed to the wonderful sides of primary care medicine. In a general medical practice, the problems are often complex and the solutions are challenging, so it takes months or even years to attack the issues effectively. Students come in and out of primary care services on a month-by-month basis, so seeing any long term solutions to improving and promoting overall health is nearly impossible. Also, primary care physicians across the country are seeking innovative ways to improve patient care. This work is exciting, intellectually demanding, and extremely difficult to implement. We do not get exposed to this aspect of care because often times these projects take years to develop. Another issue is that in the academic setting, primary care is highly disrespected. This should not be that surprising considering academic centers are filled with super sub-specialists who do not fully appreciate how difficult it is to care for the whole patient, rather than a small part. Lastly, primary care, at its core, is about relationships. By being placed temporarily on a service, any relationships formed are superficial and casual.

Focusing solely on debt is a flawed solution. There are many programs for loan-forgiveness if students go into primary care fields. The debt argument looks dramatic on paper, but the real issues for why students are not going into the field are much deeper. Those are the areas on which we need to focus our attention; provide students with the chance for continuity of care, involve them in clinical innovations, and show them firsthand that the field is respectable and worth pursuing.

BWC

Response to Op-Ed: http://www.nytimes.com/2011/05/29/opinion/29bach.html?_r=2

Renegotiating Reimbursement: Good Policy or Good PR?

Yesterday Partners Health Care, Massachusetts largest health system, voluntarily disposed of its current contract with Tufts Health Plan and renegotiated a new four year agreement that is expected to lower the health reimbursements they receive by about $105 million dollars over the next four years.

This is significant.  In a conversation I had with a Partners executive two months ago he shared that the Partners negotiating team often leaves their contract meetings with groups like Tufts feeling "proud" of the deals they are able to strike with health insurers.  My impression was that Partners, with the largest market share of any hospital system in Massachusetts, knows it can throw its weight around and does quite willingly.

Not any more.  Partners' decision to rework its contract with Tufts, following a similar renegotiation last year with Blue Cross Blue Shield that is estimated to save $240 million dollars, was likely due to the following.

• Altruism: although not likely the biggest factor, Partners CEO Gary Gotlieb did state that one reason for accepting smaller increases in reimbursements going forward is the growing burden of health care costs on families and businesses.
• Government pressure: the political environment in Massachusetts, and in many areas of the country, is such that all hospitals understand that costs must be cut voluntarily or else the government is likely to do it for them.  With Massachusetts congress toying with rate setting as a way to control out of control medical costs, hospitals would rather be a part of a pre-emptive solution.
• ACOs: Partners was recently announced as one of 32 Pioneer ACOs set to begin this year.  As part of the agreement, ACOs commit to generating at least 50% of their revenue from business models similar to that of the Pioneer Medicare program.  This can only be accomplished through agreements with insurers, employer health plans, and/or Medicaid (called "Participation of Other Payers" in the CMS Pioneer ACO Fact Sheet).  As part of Partners' new agreement with Tufts, approximately 70% of the patients in the plan will now be reimbursed via a global payment structure, shifting significant risk to Partners and forcing them to find ways to contain costs for all their patients, not only the Medicare population.  This is exactly the goal of the ACO, and to the extent that Partners' participation in the Pioneer program is influencing this new agreement with Tufts, the ACO model is succeeding.

Whatever the reasons, I applaud any move by hospital systems to voluntarily forego future payment.  Additionally, I applaud any move toward global payments and the taking on of risk by hospital and physician groups.  However, scale must always be kept in perspective.  While $105 million dollars is no small amount, with an annual budget of over $8 billion dollars and capital expenses totaling $3.2 billion dollars over 5 years, it doesn't seem like so much.  Additionally, there has been little talk of where the $105 million dollars in "cuts" to Partners bottom line will come from.  The hope is that money will be saved through care coordination and a focus on the high utilizers or perhaps a reduction in capital investments year over year.  I imagine that if savings do not materialize, however, chronically underfunded mental health and substance abuse programs will instead be on the chopping block, and this would be an unwelcome result.

Despite my significant skepticism of the hospital market environment in Massachusetts and at the risk of being duped by what may turn out to be simply a PR move, I am encouraged that, whether it be altruism, the political environment, government policies, the market at work, or some combination of these, the system appears to be working.  At least for today.

An ounce of prevention is worth a pound of cure....or is it?

Is it possible that Benjamin Franklin could be wrong? I tend to trust in the wisdom of this renowned polymath. He was a statesman, scientists, printer, inventor, author, philosopher, and diplomat. The only person I have ever known who is more knowledgeable in a wider variety of topics than him is the great Jason Kroening-Roche. However, could Franklin be mistaken such that prevention is not cheaper than the costs of cure? Intuitively speaking, preventing something today is less costly and should save a lot of time, energy, and money compared to dealing with the aftermath of full on disease manifestations. Joshua Cohen, however, makes a convincing counter argument against the cost saving effects of prevention, at least on the population level. Maybe an ounce of prevention is actually worth just an ounce of cure.

As an aspiring primary care physician, I often find myself making arguments in support of primary care on the grounds that prevention is cheaper, both financially and generally. Cohen does not reject prevention altogether, but he argues that our preventative efforts are neither as cost-saving nor cost-effective as we are inclined to believe. Smoking cessation, colorectal cancer screening, and flu immunizations are good preventative measures that protect a lot of people at a relatively low cost, but many diseases, which are not as common in the population, do not yield significant benefits from a cost standpoint.

Cohen and his team did a systematic literature review to look at the overall cost-effectiveness ratio (in terms of $ per QALY) of prevention versus treatment for existing conditions. The lower the ratio, the better as that indicates less cost for one quality adjusted life year (QALY) gained. His results are surprising. He found that the cost-effectiveness ratios for prevention and treatment were relatively the same (see graph above). He makes the argument that cost of treatment of disease is nearly as prudent as investing financially in prevention. He does state that preventative interventions, particularly those aimed at high risk populations, do in fact save money, but broadly generalizing that prevention is cost-effective or cost saving is not always the case.

I am intrigued by this article and found it surprising, but I have a couple criticisms. First, what is cost-effective and what is not is a value judgment. He may not think that spending $29,000 for one QALY on combination anti-retroviral therapy is a sensible investment, but I do. Next, he includes secondary prevention efforts as treatment. It seems that a lot of secondary prevention efforts would in fact prevent many diseases from coming to full fruition. He uses the example of an intracardiac defibrillator which cost $52,000 per QALY. However, there are many secondary prevention efforts, like statins for patients after they have a heart attack to prevent a recurring event, which yield good results at a low cost. I would be interested in seeing his analysis if he included secondary prevention and primary prevention together and compared it to tertiary measures. Lastly, Cohen does not tell us how he discounts the future costs of treatment or the future benefits of prevention. This could have a large effect on the cost effectiveness ratio depending on what discount rate he used.

I am not quite ready to discount Franklin’s wisdom on prevention as of yet, but Cohen has at least made me stop and reconsider my argument.

Reference:

Cohen, J., Does Preventative Care Save Money? Health Economics and the Presidential Candidate, New England Journal of Medicine, 2008; 661-663

BWC