Ten Trends to Ponder for 2014

By Clive Riddle, December 20, 2013

These aren’t necessarily the top ten trends for the coming year, because the ranking of trends depends on the position of the stakeholder – in other words – in the eye of the beholder.  But below are ten trends worth pondering as one positions oneself for the year ahead:

Private sector co-opting of public healthcare policy.  Consider a number of the trends discussed below. What they have in common – an overarching theme – is that the private sector has co-opted public healthcare policy, and may have achieved a greater impact than the public sector in doing so. The ACA begat Medicare ACOs – but the commercial ACO arrangements are generating a groundswell of activity. The ACA’s centerpiece is the public exchange launch of 2014, but the private sector is paying an awful lot of attention to private exchanges. Ten years ago, HSAs and High Deductible Plans were policy driven – now they are market driven. The Stimulus drove Meaningful Use, but now that it’s become meaningful, the private sector is leveraging what to do with this new framework.

Commercial ACO Collaborations become commonplace. Soon health plans and provider networks may stop issuing press releases with each new collaboration because they are so commonplace, they just aren’t news anymore. Unlike their Medicare counterparts that are standardized arrangements, the commercial collaborations are customized, any one might argue about how many of them meet the definition of a true Accountable Care arrangement. Or perhaps they will simply erode the definition to the point where we end up calling them something else.

Private Exchanges Exceed Expectations While Public Exchanges Fall Short.  While public exchanges can drive much bigger numbers due to sheer numbers of the uninsured and underinsured, and the availability of subsidies, 2014 will find the level of impact and implications falling short of expectations as not as many of these population opt-in as expected, at least for now. This will also mean the dire predictions of ongoing glitches and budget shortfalls may not be as bad as predicted, because there will be fewer numbers for now compared to initial rosy projections. Meanwhile, private exchanges may very well exceed initial expectations for enrollment and levels of interest as 2014 takes shape.

Defined Contribution Drives Private Exchanges.  Defined contribution health plan arrangements were the buzzwords at the dawn of this millennium, but got left aside in the rush to account based and high deductible health plans in the consumerism movement. But now the stars are aligning for the return of the prodigal defined contribution son, as the driver of how most private exchanges are designed, and the driver of private sector interest in 2014 and beyond.

Is Everyone in a High Deductible Plan? There a lots a surveys with varying reported levels of HDHP penetration in the commercial sector – but this much can be agreed upon – all the percentages keep trending up… and up. Unfortunately, the account based plans that were supposed to accompany the HDHPs are missing in many employer sponsored plans, or at least the employer contribution is. Never the less, the trend for HDHP growth will continue.

Innovation, Transformation and Integration are the Words of the Year.  Like the old 80’s episodes of Pee-Wee’s Playhouse, with the word of the day that set off buzzers, Innovation, Transformation and Integration are the words for 2014… although they will in many cases, be words but not action at this point in time. But if your organization doesn’t yet have a Chief Innovation, Chief Innovation or Chief Integration Officer, look for them in 2014.

EHR Tipping Point Drives Innovation. Of course lots of physician practices still don’t have EHR. And a number who do aren’t all that interoperable. But still, the point has been reached where there’s gobs of stuff you can do with the level of electronic data and transmission that is now being generated – and this is going to continue to stimulate a plethora of new applications and solutions in a range of environments.

Analytics Extends Its Reach.  Analytics has become huge for so many sectors – healthcare may actually be a laggard. But make no mistake – analytics is where the action is in healthcare for 2014 if there is any hope in taming the beast of operational inefficiencies, resource management, and explosive costs.

The Further Evolution of Population Health.  Ten years ago the definition of Population Health was commonly held to be “the health outcomes of a group of individuals, including the distribution of such outcomes within the group” and was more prevalent in policy and academic circles. 2014 finds the scope and role of population health expanding and evolving, with strong involvement from the private sector.

Consumer Engagement Just Needs More Consumers to Get Engaged. In 2014, we will see the tools are there – apps, websites, outreach programs, incentive programs, plan design, you-name-it. The challenge we find ourselves in for 2014, is a number of surveys continue to demonstrate that large blocks of consumers remain unengaged, uninformed and fairly clueless about the delivery or the business of healthcare.

Pwc Top Healthcare Issues in 2014

By Claire Thayer, December 12, 2013

This week, PwC’s Health Research Institute (HRI) released its annual report on their top health industry issues. Trending as HRI’s top 10 issues for 2014 are:

• Price transparency is growing as purchasers – consumers and employers – are demanding and receiving more information on cost and quality
• Employers are exploring new health insurance options through private exchanges
• New regulation aims to eliminate counterfeit medications in the drug supply chain
• States are turning to managed care to help contain Medicaid long-term care costs
• All healthcare companies need to rethink their roles and business models in the new health economy
• Healthcare companies will need to change their rules on innovation — embrace “fail fast” approaches
• Social, mobile, analytics, and cloud technologies are driving new health industry business models
• Corporate venture capital is picking up the slack as traditional venture funding slows for pharmaceutical start-ups
• Technology is redefining the healthcare job market
• Drugmakers must rethink their clinical trial research methods, embracing alternative approaches

To explore all of these important issues, start here!  Want to learn more, these and other key trends and issues impacting the business of health care throughout 2014 will be discussed at the 12^th Annual Future Care Web Summit, scheduled for January 23, 2014 – the webinar is at 1:00PM.

Humana’s Vipin Gopal on Advancing the Frontiers in Predictive Modeling

By Clive Riddle, December 10, 2013

Vipin Gopal, PhD, Vice President of Clinical Analytics for Humana gave the opening plenary presentation last week during the Seventh National Predictive Modeling Summit in Washington, DC, providing an excellent overview of the current and future state of predictive modeling in healthcare.

Vipin summarizes the state of predictive modeling from his and Humana’s perspective as follows:

• They have seen rapid evolution as a discipline over the past decade
• There is newer and better software, data sources, hardware
• There are a lot more applications
• They have a deeper understanding of their members
• There are now more efficient and effective delivery mechanisms for model output
• Predictive Modelers will make a broader and deeper impact for in the coming years

Vipin offers as advice, these guiding principles for organizations deploying predictive modeling functions:

1. Establish a set of "quick wins" to drive early results and build momentum
2. Show results to bolster the business case behind making further investments
3. Focus on the issues that have the most direct impact on the business
4. Ensure that effort is placed on key strategic issues and pressing challenges
5. Address challenges with underlying data
6. Clean and streamlined data is an enabler for the creation of more effective and comprehensive analytical models

Vipin advocates that leading-edge analytics should encompass these themes:

• Focus: Are we solving the right problems?
• Nimble: Rapid analytics to respond to business needs
• Cutting-edge Methods: State-of-the-art problem solving
• Tools: Leverage advancements in the analytics marketplace
• Optimize: Maximize output of analytic resources
• Integrate: Systems approach to data, analytics and action
• Real-time: Closing the feedback loop with the most recent data

What are the key components of predictive modeling in healthcare, according to Vipin? Three things that should all work towards improved outcomes, high engagement and reduced costs: (1) Integration of Data,

Action, and Analytics; (2) Infrastructure incorporating Consistent, comprehensive datasets, Cutting edge analytic tools, and Deployment to action; and (3) Talent (predictive modeling staff and outsourced vendors.)

Vipin notes that past modeling work primarily relied on claims data, while current work aggregates multiple data sources to create an integrated view of the member for consistent and rapid analytics.

So where are we headed with data sources? Vipin reviewed these Next-Gen sources:

• Text Based (EMR; Nurses’ Notes; Call Center Transcripts)
• Devices (Remote monitoring, Smart Phones)
• Online Data (Social Media Data, Web Footprint)

And where are we headed overall? Vipin sees a broad range of applications, including Clinical, Marketing, 

Financial, and Fraud Detection. He sees us mining deeper data sources, driven by a need to know our consumers better, while deploying more efficient delivery mechanisms that incorporate real-time alerts and mobile devices.  The “Holy Grail” in all of this? Vipin says it is predicting and influencing consumer behavior; and we need to do this in an environment in which there is a proliferation of models and we hopefully will simultaneously see efforts to have them work in unison!

MCOL Blog | Fraud, Waste & Abuse Continuum in Healthcare

By Claire Thayer, December 6 , 2013

This week, Verisk Health posted a blog that identifies these three specific opportunities to help control costs and eliminate fraud, waste and abuse in healthcare:

1. Tracking Durable Medical Equipment (DME)
2. Assessing Lab National Coverage Determinations
3. Improving Payment Accuracy on Modifiers 59 and 25

There's an interesting supportive infographic on the Verisk Health site that shows fraud, waste and abuse existing on a continuum and the level of intent a provider has to deceive – here’s a screen shot identifying the behaviors within the FWA continuum:

More details on these payment accuracy solutions are here.

A Stitch In Time…Will Cost A Lot of Money

By Kim Bellard, December 5, 2013

It almost seems like piling on to pick on hospital pricing anymore, following such incisive articles already this year such as Steven Brill’s Time article “Bitter Pill” or Elizabeth Rosenthal’s “The $2.7 Trillion Medical Bill” in the New York Times, but there just continue to be more examples of how irrational health care charges are in the U.S. health care system. 

Jillian and Joseph Bernstein just published a study in JAMA Internal Medicine, focusing on the difficulty in getting hospitals’ prices for electrocardiograms (ECGs) – and comparing that with the ease of obtaining those same hospitals’ prices for parking.  This followed a study published earlier this year that looked at the difficulty of getting hospitals to quote prices for hip replacement.  The Bernsteins were testing the hypothesis that perhaps hip replacements included too many variables, thus making quoting prices difficult, and so chose the more standardized ECGs. 

The results will probably not surprise anyone.  They contacted twenty Philadelphia area hospitals to ask for the two kinds of prices.  Nineteen of the hospitals were easily able to provide the cost for parking, but only three could come up with a price for the ECG (and don’t you want to know what hospital couldn’t even quote its own prices for parking?).  It’s also interesting to note that the three ECG prices they got ranged from $137 to $1200, almost a tenfold difference.

The authors conclude that “hospitals seem able to provide prices when they want to; yet for even basic medical services, prices remain opaque.”

Meanwhile, Ms. Rosenthal of The Times was at it again, this time in “As Hospital Prices Soar, a Stitch Tops $500.  The article points out not only simple stitches that cost $500 in ERs but also IV bags that cost under $1 but for which hospitals charge $137, or $20 neck braces for which that hospitals want $154.  And these are not the most egregious examples cited. 

Few people pay full charges, of course – except for the people without insurance, who are probably least able to pay them – but the hospitals build their charge structures due to what one physician told The Times was the Saudi sheikh problem: “you don’t really want to change your charges if you have a Saudi sheikh come in with a suitcase full of cash who’s going to pay full charges.”  That’s what passes for pricing strategy in U.S. hospitals?

The Times attributes the seemingly unfettered hospital pricing to increasing market dominance, using Sutter Health in California as a prime example.  Indeed, a recent study in JAMA found that price increases – not increased demand or aging of the population – accounted for 91% of the increases in overall health care costs since 2000, with market consolidation blamed as one of the key drivers of these price increases. 

We’ve been waiting for patients to care about prices for some time, especially with the advent of high deductible plans, and there is some evidence perhaps that is starting.  A survey by TransUnion Healthcare found that 55% of insured consumers have started to pay more attention to their medical bills in the past year, and that 67% claim they want to know not just how much services cost them directly but also how much their insurance is paying on their behalf. 

The TransUnion survey also found that, when it comes to choosing providers, consumers rated “makes it easy to see the cost of services” right below “world class specialists and technology,” and – amazingly -- above high quality scores or proximity to home.  Even more interesting was that the survey found some correlation between consumers’ perception of quality of care with their satisfaction with the billing experience, a fact to which one hopes providers are paying close attention. 

Ironically, health plans now are expressing some concern over exactly what type of transparency they support.  AHIP, their trade association, indicated that calls for an all-payer claims database, which would facilitate comparisons between providers and across payors, could backfire, raising the spectre of lower paid providers demanding higher reimbursements once they started seeing what other providers were being paid.  Having once led transparency efforts for a large health plan, I can affirm that this concern is very much on the minds of provider contracting staff.

At the same time, many physician specialty organizations, including the AMA, continue to balk at many forms of transparency.  Lately they have questioned the wisdom of a proposal to make public the Medicare payments to physicians, something the Wall Street Journal, among other organizations, has long been pushing for.  They worry that the data could be confusing or misleading to consumers, although it’s hard to see what could be more confusing or misleading to what we’re doing now.

Still, not everyone is a fan of transparency, at least not as it has been attempted so far.  The ever-quotable, always insightful Uwe Reinhardt, writing recently in JAMA, throws cold water on many previous efforts.  In his words, “[T]he idea that American patients should 'shop around for cost-effective health care' so far has been about as sensible as blindfolding shoppers entering a department store in the hope that inside they can and will shop smartly for the merchandise they seek,  In practice, this idea has been as silly as it has been cruel." 

Reinhardt does think that health IT can change the game by more easily making pricing available to consumers, citing such innovators as Healthcare Blue Book and Castlight Health.  He likes the reference pricing approach (which I discussed recently), which involves setting a uniform payment limit and making providers compete for anything they want to try to charge above those limits. 

Of course, simply disclosing costs is only a necessary, but not sufficient, change to bring about true competitive pressures for pricing.  We’re moving to ICD-10 codes, and a cottage industry has emerged to find the funniest examples.  For example, there are separate codes for being struck by a turtle, orca, or duck, not to mention for walking into a lamppost.  You know that in back offices of provider organizations and health plans, diligent bean counters are coming up with prices for each of these. 

If we merely made visible the existing pricing structures, which are built for billing and diagnostic accuracy rather than for consumer understanding, it’d be liking going to Dr. Reinhardt’s metaphorical department store and finding that each item showed the cost of every party involved in the manufacture, marketing, and distribution of the item, plus costs for a variety of additional variables based on the consumer’s needs.  No exactly an Amazon one-click kind of experience.

Despite the big challenges ahead for it, I do believe that, whether it is AHIP, AMA, AHA, or any other providers making a living in the current arcane system, there is a danger that if they don’t get on the transparency bus, they may get run over by it.  The Saudi sheikh strategy can’t last.

Physicians: Unhappy Campers in Affordable Care Act Land

By Clive Riddle, November 22, 2013

Jackson & Coker, the healthcare staffing company, has just released survey results on current physician views of the ACA, in their 33-page report- Survey: Physicians on the Affordable Care Act. The results shouldn’t be that surprising – physicians aren’t happy campers in this brave new world.

Jackson & Coker highlighted these findings from their survey, which yielded 3,072 self-selected practicing physician respondents from a survey were emailed to subsets of a database totaling 277,778 physicians, which included physicians who have been placed by Jackson and those who have not:

• 80 % believe those patients with current coverage will wind up paying higher healthcare costs
• 765 said overall healthcare costs would go up due to the new health reform law
• 73% said patients would have less choice in picking their doctor
• 66% said they would have to spend more time on administrative duties
• 61% said their opinion of the law has changed for the worse
• 60% said the quality of patient care would be negatively impacted
• 57% said the law would have a negative impact their treatment decisions for patients
• 56% support repealing or defunding the law
• 44% said they would not participate in the Exchange

The general population’s view of the Act often boils down to political perspectives. Physicians would not seem to be immune from red and blue polarization. Indeed, a Mayo Clinic study published in the Journal of General Internal Medicine June 25, 2013 issue: Specialty, Political Affiliation, and Perceived Social Responsibility Are Associated with U.S. Physician Reactions to Health Care Reform Legislation, addressed this issue, and concluded “significant subsets of U.S. physicians express concerns about the direction of U.S. health care under recent health care reform legislation. Those opinions appear intertwined with political affiliation, type of medical specialty, as well as perceived social responsibility.”

The Mayo Clinic authors reported that “(41 %) believed that the ACA will turn U.S. health care in the right direction and make physician reimbursement less fair (44 %). Seventy-two percent of physicians endorsed a general professional obligation to address societal health policy issues, 65 % agreed that every physician is professionally obligated to care for the uninsured or underinsured, and half (55 %) were willing to accept limits on coverage for expensive drugs and procedures for the sake of expanding access to basic health care. In multivariable analyses, liberals and independents were both substantially more likely to endorse the ACA …respectively), as were physicians reporting a salary …or salary plus bonus … compensation type…..Those who agreed that addressing societal health policy issues are within the scope of their professional obligations …, who believe physicians are professionally obligated to care for the uninsured / under-insured …, and who agreed with limiting coverage for expensive drugs and procedures to expand insurance coverage …., were all significantly more likely to endorse the ACA. Surgeons and procedural specialists were less likely to endorse it.”

But beyond the impact of political persuasions and social viewpoints raised in the Mayo Clinic study, it would seem some fundamental business interests are driving the Jackson & Coker results, that boil down to these three things:

1. Concerns about impact on reimbursement levels
2. Issues regarding access to participation in applicable plans
3. Concerns about “hassle factor” of administrative requirements

MedPage Today this week published an article that seems to support these points: Docs Unhappy With ACA Exchange Plans resulting from their press coverage of the AMA’s Interim Meeting Conference. They cite Steven Larson, MD, board chairman of the California Medical Association: “the patients nor the physicians know if they're in network or not," and state “it has been a common complaint thus far, as plans have been slow to report or update provider networks for exchange plans.” With respect to reimbursement, they note “some providers have reported rates as much as 70% below what commercial plans pay, with negotiations starting at Medicaid payment levels.”

The MedPage Today article cites another survey from last month with similar results: “the Medical Group Management Association reported 55.5% held an ‘unfavorable’ or ‘very unfavorable’ view of the impact the ACA's health insurance exchanges on them,” and concludes “with these stories starting to mount, the fear is that patients -- with their insurance card in hand -- either won't be able to find a doctor who is seeing patients with that plan, or will have to travel great distances to find someone who does.”

Certainly, as with the Exchange website enrollment, much needs to still get sorted out with respect to the status of provider networks with participating Exchange plans across the country.

Taking a look at new paths to coordinated care

By Claire Thayer, November 20, 2013

This easy to view slide show gives a quick snapshot of new approaches to analyzing patient data to improve patient care outcomes and lower overall hospital readmission costs.

 

Highlights of this simple interactive tool include an estimate of per patient costs to health care system by time of discharge, percent of patients suffering from preventable readmissions, as well as an example of how IBM Patient Care and Insights supports the community involved in patient care for hospitals, home health and payer organizations. View more below or click here to register for free access to this tool. 

Patient Engagement Health Literacy

By Krista Burris, November 12, 2013

The importance of patient engagement is buttressed as healthcare transitions to outcomes-based models where patients’ involvement in their health is necessary to achieve the objectives of care delivery transformation. Empowering patients with tools and resources that enable individuals to better manage their healthcare needs is a promising approach to encourage patient accountability in improving their own health outcomes. However, the notion of patient engagement relies on the idea that once patients become engaged, they are well-informed enough to know how to interpret and act upon the health information presented to them; in other words to maximize the value of having patients engaged in their health, they actually have to have a good enough understanding of their health conditions, terminology, and treatment in order to make the appropriate decisions around their health needs.

The IOM defines health literacy as “ the degree to which individuals have the capacity to obtain, process, and understand basic health information and services needed to make appropriate health decisions.” According to a National Assessment of Adult Literacy report, it is found that approximately 36% of US adults have basic or below basic health literacy, resulting in an economic burden of $106 billion to $238 billion annually.[1] The same report found that low-health literacy rates are almost double for underserved populations with approximately 62% of minorities, 53% of the uninsured and 60% of Medicaid beneficiaries having limited health literacy.

Given that individuals with low-health literacy tend to have poorer health outcomes and create costs in the system through the misallocation of resources (for example: more likely to forgo preventative care while more likely to be hospitalized)[2], there are implications with respect to the coverage expansion provisions of the ACA that will bring millions in this demographic into the system. The virtue is that these individuals become somewhat more captive facilitating outreach and education efforts. The challenge is how to implement patient education policies efficiently to reduce the administrative burden of increasing demand with somewhat static supply in an already taxed infrastructure.

This is where I believe the unprecedented government and private market collaborations to foster efficiencies and innovations become hopeful. There is an incredible amount of effort in the digital and technology space to leverage the existing social and cultural norms of the mainstream including those in the low-health literacy demographics. For example, mHealth technologies that leverage the 91% mobile (56% smartphone) penetration rates among US adults[3] making access to patient & health information, biosensors and tracking that use smartphone technology, and communication with providers nearly automated.

I recently started working with a non-profit start-up that does SMS patient education by disease condition, appointment, event, and medication reminders, as well as group messaging, all designed and tailored for low-income individuals. Early results are showing a positive impact on improving attendance of a chronic-disease self-management program through event reminders, and we will have more information on the improvement of knowledge and outcomes, along with the engagement aspect of the technology in early- to-mid 2014.  

Patient engagement, though relatively early in its life-cycle, has shown promising results which lends itself to continued exploration and investments to determine how to best leverage effective approaches moving forward.  

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[1] Vernon, JA. Trujillo, A. Rosenbaum, S. DeBuono, B. “Low Health Literacy: Implications for National Health Policy” 2007.
http://sphhs.gwu.edu/departments/healthpolicy/CHPR/downloads/LowHealthLiteracyReport10_4_07.pdf. 

[2] National Network of Libraries of Medicine. “Health Litercy”. 2013.
http://nnlm.gov/outreach/consumer/hlthlit.html>.

[3] Smith, A. “Smartphone Ownership 2013” Pew Internet and American Life Project. 2013.
http://pewinternet.org/Reports/2013/Smartphone-Ownership-2013/Findings.aspx. 

It’s a Narrow World After All

By Kim Bellard, November 6, 2013

The promise of the Affordable Care Act is that everyone can obtain affordable coverage (this is not to be confused with the promise that if you like your plan or your doctor, you can keep them, which, as is becoming more widely known, is not and never was quite true).  Buried in that promise is the fact that choices – of health plans and of providers in those health plans – are going to be more restricted than most people expected.

This fact was crystalized in a recent op-ed in The Wall Street Journal by Edie Littlefield Sundby.  Ms. Sundby has been fighting stage 4 gallbladder cancer for seven years, costing her insurer – United HealthCare – over $1 million.  She has nothing but praise for United, except that the insurer is pulling out of the individual market where Ms. Sundby lives, thus forcing her to obtain new coverage through the exchange.  The problem is that none of her choices in the exchange would allow her to keep her existing provider relationships.

Tone-deaf once again, the White House blamed everyone but themselves, or the regulatory structure set up by Obamacare, for the situation. 

Let’s face it: the “new normal” for health plans may be narrower networks.  An analysis of the exchange filings by McKinsey & Co. found that 47% of the plans offered were HMO or other closed network plans, compared to less than 14% of enrollment in such plans for employer plans (according to the most recent Kaiser Family Foundation/HRET survey).  Moreover, the providers in the exchange networks may not include some of the most respected ones. 

For example, Watchdog.org compared the US News & World Report’s list of top ranked hospitals, and found many were opting out or were just participating with a small number of the plans in the exchanges.  CNN, PWC, The Wall Street Journal,  The New York Times, the Los Angeles Times, to name a few, have all come to the same conclusion. 

To add insult to injury, the provider finder search tools on most of the state run exchanges appear to leave something to be desired, making it hard for consumers like Ms. Sundby to figure out how to decide which plan might be best -- or the least worse -- for their situation.  I doubt many expect that healthcare.gov is likely to be any better.

At least there’s more choice of health plans, right?  Not so fast.  It’s true that if you live in an urban area, you’ll probably have multiple plans from multiple carriers to choose from, but if you live in a rural area, maybe not so much.  An analysis by The New York Times found that in 58% of the 2,500 counties served by the federal exchange only one or two carriers were available, with only one carrier as an option in about 20% of those counties.  Granted, these rural counties may not have had many choices before ACA, but this barren marketplace is not quite what President Obama presumably envisioned.   

Not everyone thinks the reduced choice is a bad thing, especially in regards to choice of providers.  Avik Roy proposes that the narrower networks will force providers to compete on price, and concludes that “[T]his is, in general, a good thing.”  Let’s hope so.

Booz & Company researchers Sanjay Saxena and Nate Holobinko, reach similar conclusions.  Their conjoint analysis of interviews with 20,000 consumers led them to conclude that health care consumers are, in fact, highly price sensitive.  Contrary to conventional wisdom, consumers valued lower price over broad networks, and inclusion of high quality health systems was more important than having their own PCP in-network.  Consumers also don’t necessarily view the most well-known hospitals – e.g., academic medical centers or other flagship institutions – as “must have” providers; other respected local health systems could also suffice (although consumers like the aforementioned Ms. Sundby might disagree). 

Of course, responding to a survey is not quite the same as acting in real life, conjoint analyses notwithstanding.

The trend towards narrower networks is part of, although not synonymous with, a move towards paying providers more for how well they provide care rather than simply how much care they provide.  This is variously called pay-for-performance, value-based purchasing, or outcomes-based payment.  McKinsey & Co. believes such approaches can save over $1 trillion over the next decade, although they acknowledge the magnitude of the transition required to achieve those savings. 

Some might object that many of these payment approaches leave the consumer out of the equation, as they can result in ever-more arcane cost/quality/outcome contractual arrangements between insurers and providers, making price transparency more difficult.  One alternative approach is “reference pricing,” under which the payor sets fixed payment levels for drugs, procedures, or bundles of services, and encourages consumers to shop.  If they find providers who can deliver at the set price, fine, but if they choose a more expensive provider, they pay the difference between the reference price and that provider’s price.  That tends to get their attention.

CalPERS has been testing the approach for several years, and reports some striking results.  The number of enrollees using lower-priced hospitals for orthopedic procedures increased 21% in the first year, and those using high priced facilities fell by 34%.  Better yet, many hospitals saw the writing on the wall, and dropped their prices to get closer to the reference pricing.  CalPERS claims $6 million in savings for the first 2 years. 

Of course, the approach relies on having a choice of providers, adequate price transparency for the impacted services, and engaged consumers.  Failure in any of those components is likely to lead to failure to change behavior – and some deeply disgruntled consumers.   Let’s not forget that, according to Gallup, 20% of the uninsured still don’t know about the mandate, 27% don’t know about the exchanges, and 25% still don’t intend to buy coverage, so expecting them to know the prices for, say, hip surgery is perhaps optimistic.

Reference pricing will require a lot of work to make it successful on a broad scale and is itself likely only an interim step, but between it and narrow networks as a strategy, I’ll take reference pricing.

While I understand the rationale for the narrow networks, I think they will prove to be a dead end, for two reasons.  The first is that, as we should have learned from the 1990’s, ultimately consumers will balk at the restrictions.  The second is that market consolidation, which I’ve written about previously, will make such narrowing difficult in many markets. 

In the more perfect health care system to which we should be aspiring, we should be encouraging consumers to find the best providers, as long as that “best” is based on value.  It’s hard to argue that this choice should be geographically limited, and I think it will become increasingly hard to argue that having a contract with a specific carrier should be a limiting factor in choice of the best provider either -- as long as the provider actually offers the best value. 

Still, whether it is narrow networks, value-based pricing, PCMH, ACOs, or any of the myriad of other experiments being tried, whenever people start talking about the potential savings offered by various approaches, the elephant in the room (or maybe the ox in the room, as I discussed in Gore Someone Else’s Ox, Please) is from which providers the money is going to come.  Public officials in general, and Congress in particular, appear helpless against the forces of lobbyists and/or the fear of lost jobs in their district.  We need only look at the history of Medicare’s “sustainable growth rate” mechanism, or, in another context, weapons systems that even the Pentagon doesn’t want but which represent defense contractor jobs, to illustrate this type of lack of will.  Screams of pain from health care providers will be hard for them to ignore, especially when they start trotting out potentially impacted employees and, more powerfully, patients.

We need to be tougher but also smarter and more targeted.  When it’s the demonstrably poorer performing providers which start losing significant revenue, or even start going out of business, that’s the kind of narrowing of networks I can buy into.

Checking out 16,275 Patient Health Apps

By Clive Riddle, November 1, 2013

The IMS Institute for Healthcare Informatics, part of IMS Health, this week released  their report: Patient Apps for Improved Healthcare: From Novelty to Mainstream, which examined all 16,275 apps directly related to consumer patient health and treatment (out of a total 43,689 health care apps,  of which 7,407 are for health care professionals) available from the Apple ITunes store.

Murray Aitken, executive director of the IMS Institute for Healthcare Informatics had this to say after releasing the report: “The movement toward digital therapeutics is clear. Mobile health apps have the potential to drive a disruptive shift in patient engagement and healthcare delivery. Harnessing the power of apps has become a focal point of innovation, yet barriers remain to their broad and systematic use by providers and patients. Development of clear evidence on the benefits of driving positive behavioral changes and improving health outcomes will be key to breaking through the barriers.”

The IMS analysis involved categorizing apps based on providing one or more of these functionalities:

• Inform:  Provide information in a variety of formats (text, photo, video)
• Instruct:  Provide instructions to the user
• Record: Capture user entered data
• Display: Graphically display user entered data/output user entered data
• Guide:  Provide guidance based on user entered information, and may further offer a diagnosis,  or recommend a consultation with a physician/a course of treatment
• Remind/Alert: Provide reminders to the user
• Communicate: Provide communication with HCP/patients and/or provide links to social networks

Here’s some key points from their 65 page report:

• More than 90% of healthcare apps reviewed by the IMS Institute scored less than 40 out of a possible 100 for functionality, based on 25 screening factors.
• While 10,840 of the 16,275 apps reviewed can provide and display information, less than half of those can also provide instructions and approximately 20% can also capture user-entered data.
• More than 50% of available healthcare apps have been downloaded fewer than 500 times.
• Five apps account for 15% of all downloads in the healthcare category
• Patients over the age of 65 are among the top users of healthcare resources, yet  only 18% of the elderly U.S. population use smartphones, compared with 55% of consumers age 45-54

The report identifies these four issues that must be address, ”in order for apps to move from novelty to mainstream”:

1. There must be recognition of the role apps can play in healthcare by payers and providers, as well as regulators and policymakers.
2. Security and privacy guidelines and assurances established among providers, patients and app developers.
3. A systematic evaluation of apps to inform their appropriate use.
4. The effective integration of apps with other aspects of patient care.

Survey on Consumer Engagement and Health Tracking

By Clive Riddle, October 25, 2013

Partners Healthcare’s Center for Connected Health, commissioned Harris Interactive to survey 2,000+ consumers on health engagement and tech driven tools to monitor health and wellness, in conjunction with the launch of the Center’s new Wellocracy program.  They found that almost half of respondents (48%) say they have trouble staying motivated to live a healthy life, and less than a fourth (22%) are very confident that they can keep track of their own health.

Joseph C. Kvedar, MD, the founder and director of the Center for Connected Health tells us, "there are dozens of activity and health trackers on the market today, and literally thousands of health apps available for consumers. Yet, instead of getting people moving towards a healthy lifestyle, most feel paralyzed by all these choices and the technology can be dizzying. "We know that if we give people -- young and old -- insights into their health and help them understand how lifestyle choices impact quality of life, they feel more accountable, engaged and live a healthier, more active life. Integrating 'self-health' tools like activity and nutrition trackers and sleep monitors into our daily lives, we can learn from our own behaviors and make positive changes to take charge of our health. We're taking these devices and apps, personalizing the experience and helping people figure out the right health technologies, the right strategy and the right inspiration to get on the right track to health and wellness."

Here’s finding the Center has shared from the survey results:

• 68% of consumers agree that encouragement from friends and family is important for them to achieve health goals
• 65% of consumers believe that using a health tracking device, website or app would be beneficial,
• 32% felt these tools would help them stay motivated to meet health and fitness goals
• 31% believe the tools would provide accountability
• 27% felt the tools would help them stay in control of their health

• 86% believe that feeling informed about their own health is empowering
• 59% of women and 56% of men aged 35-44 reported that it is hard to stay motivated to live a healthy life
• 52% and 51%, respectively of women and men aged 35-44 wished they could make better use of technology to keep track of their health
• 55% of women and 49% of men aged 18-44 believe that easy tracking  is essential to achieving health-related goals
• 48% of women and 42% of men aged 18-34 reported that encouragement from family and friends is essential
• 42% of women and only 20% of men aged 45-54 reported that support and tools from their healthcare provider is essential
• 19% of women and 17% of men aged 35-44 are very confident in their ability to keep track of their own health
• 25% of women and 21% of men aged 55 and over are very confident in their ability to keep track of their own health

• 56% of all consumers  have never used any type of health tracking device, app or website
• Adults aged 18-34, were most likely to use diet (23%) or fitness apps (26%) on their phones
• 7% of adults aged 55 and over reported ever using a diet app and only 3% have used a fitness app on their phone
• 35-44 year olds were the age group reporting the highest use of digital activity pedometers (19%)
• 5% of adults aged 18 and over reported ever using a sleep tracker

While these results are encouraging for engagement initiatives, we need to remember that they survey indicates more than half of consumers have never used any such tool – even a website.

To Delay or Not to Delay

By Kim Bellard, October 15, 2013

It’s fair to say that the implementation of the Affordable Care Act – ACA or, as it is most commonly come to be called, Obamacare -- has not gone exactly smoothly. 

The Administration had weathered several earlier storms as it moved forwards with various aspects of implementation – e.g., coverage for contraception, the delay in options through the exchanges for employees of small businesses, and the delay in the employer mandate, to name a few -- and I’ve touched upon some of these previously (see, for example, Sebelius Says or Tell Me the Good News Again from earlier this year).  The recent snafus with healthcare.gov, the consumer portal for the 36 state exchanges run by the federal government, may prove to be the proverbial straw that breaks the camel’s back.

The portal went live October 1, as planned, but that was pretty much all that went according to plan (see Clive Riddle’s earlier post).  Consumers complained – and continue to complain -- about long waits, pages not loading, inability to create accounts, and even numerous typos or grammatical errors.  User-interface experts were baffled at the portal’s requirement that users create accounts before being able to research their health insurance options, especially since the account creation process proved to be one of the most problematic. 

Some reports indicate that the federal government spent over $600m on the site – over 6 times the budgeted amount – and other reports fault HHS for their late start, reliance on multiple vendors, and lack of effective oversight over the huge IT project.  One IT company which did not work on the portal but which does claim to focus on building software for government blames the healthcare.gov mess on the federal procurement process, which they say rewards companies who are good at the procurement process rather than at the desired task itself.  They may have something there.

Coming as it did just as the federal government shut down due to Congress and the President not able to agree on spending limits, to many the portal fiasco symbolized the federal government’s inability to do anything right.  It shouldn’t surprise anyone that recent polls suggest only 5% of the American public approve of the job the government is doing.   All this distrust has given new ammunition to critics of Obamacare.  House Republicans were already waging a battle to “defund” Obamacare, and the problem with healthgov.gov was like throwing them red meat. 

The defund battle seems to have quieted -- for the moment -- but this notion of delaying the individual mandate has gained some currency.  CNN anchor Wolf Blitzer, who is generally seen as keeping a neutral perspective, surprised many observers by saying the problems with healthcare.gov supported the Republicans’ desire to delay the law for another year.  After all, CBO estimated that such a delay would save the federal government some $36b between 2014 and 2018, due to fewer people covered through Medicaid/CHIP and to lower expenditures on subsidies. 

I even saw Jon Stewart skewer Secretary Sebelius on The Daily Show about the topic.   Despite declaring herself a “recovering Insurance Commissioner,” Sebelius seemed totally unable to articulate why delaying the individual mandate wasn’t the same as delaying the employer mandate. 

Normally I think Mr. Stewart is smart, as well as extremely funny, but this is a case where he misses the point (as Stephen Stromberg has ably pointed out in The Washington Post).  I’m already dubious that the penalties for not buying coverage are strong enough to overcome fiscal and other inertia from most of the uninsured – especially the highly desired young and healthy ones – but delaying the mandate begs the question.  The mandate itself is not the point: assuring access to coverage is. 

Let’s say we delay the mandate, but keep the requirements that insurance companies must accept all comers, regardless of health condition.  We can ask people in New York or New Jersey what to expect, as those states required guaranteed issue with no mandate in the individual markets many years ago, only to see a virtual collapse in their individual markets, with limited options and the most expensive coverage in the nation.  Replicating that nationally would be a disaster.

Or we could delay both the mandate and the guaranteed issue provisions, continuing the nation disgrace of millions of Americans not able to qualify for or afford coverage.  After all, the supposed interim step offered by Obamacare – high risk pools – have long ago run out of money.  All those millions of Americans who want coverage, and who are among those overloading healthcare.gov, would have to wait at least another year for an opportunity to get coverage, continuing to hope that they won’t be hit with significant medical expenses and fearing that such a delay would prove to be indefinite.

The many critics of Obamacare must forget that addressing the very real need of those uninsured Americans is the main purpose behind ACA. 

In case anyone is worried I’m too sympathetic to the Administration, let me repeat that I think ACA is a badly designed, poorly written, and fiscally scary pierce of partisan legislation.  The problems with it are more than just the “glitches” the Administration would have us believe, although they may not (yet) quite qualify as the “train wreck” that critics are so fond of characterizing it as. 

ACA doesn’t address costs or structural reform in any meaningful way, it has (inadvertently, due to the Supreme Court ruling on state flexibility) perpetuated or even accentuated the uneven access to coverage for our poorest citizens (e.g., see a recent New York Times analysis), and it will be the death of employer-based coverage.  That latter may not be a bad thing, long term, but whose bright idea was it to apply the health insurance tax to only to insured plans, thus further spurring the shift to self-insurance or to dropping coverage?  That “recovering” Insurance Commission doesn’t seem to have learned much from her stint.

Much as I hate to admit it, I think the critics who fear that once consumers start getting subsidies there will be no going back have a valid point.  I’m just not convinced that is an excuse to wreck the law.  Instead of debating whether we should delay or defund, shouldn’t we be trying to fix and improve ACA?  Those millions of Americans without coverage deserve at least that.

Frankly, I don’t understand why more of the people who are desperately waiting to obtain affordable coverage aren’t beseeching their Congressmen not to screw up what they were hoping was going to be their big chance.  Maybe they can’t get through to them because they’re still stuck at healthcare.gov, or maybe no one is answering the phones or emails in Congress because the staff has all been furloughed.  Surely it’s not that Congress doesn’t care about them…is it?

Turning webinars into valuable content

By Claire Thayer, October 14, 2013

A previous blog post discussed ways to engage your audience with content marketing. A few ideas include: videos, infographics, white papers, survey results, articles, case studies, and webinars as tactics to educate current and prospective customers about your business solutions.  One of the webinar platforms we use here at MCOL for our HealthcareWeb Summit events is ReadyTalk. Bo Bandy, PR and Marketing Communications Manager at ReadyTalk posted a recent blog item on benefits of using webinars to generate content and identified 19 pieces of content that can be generated from each webinar in her blog post 1 Webinar = 19 Pieces of Content. 

Here’s a screenshot of some of the assets related to a webinar that can easily be repurposed into individual pieces of content.  Read Bo’s entire blog here for a look at the 19 recommendations.

Every webinar has components that must be created but can than later be re-purposed. Those include:

• Abstract
• Emails
• Registration page
• Slide Deck
• Polls
• Chat
• Q&A
• Twitter stream
• Archive page
• Recording
• Emails
• Transcription

So, if you are one of the 59% of marketers who do webinars...click to continue

Health Insurance Marketplace Opening Week Enrollment

By Clive Riddle, October 11, 2013

The opening bell sounded, and public exchanges were open for business on October 1st amidst much noise about startup glitches. Health Insurance Marketplace News, in its current issue, provided the following infographic providing opening week enrollment and volume statistics for selected exchanges:

The newsletter also provided these links to releases from these exchanges with further details about their opening week activity, and the length of time the infographic data represented for each exchange:

Press Release, Covered California

Data through October 5, 2013

Press Release, Connect for Health Colorado

Data for October 1st and 2nd 2013

Press Release, Access Health CT-stats 10/8

Data through October 8, 2013

Press Release, Hawai'i Health Connector 10/2

Data through October 2, 2013

Press Release, New York Health Benefit Exchange 10/8

Data Through October 8, 2013

Press Release, Washington Healthplanfinder 10/7

Data through October 7, 2013

Taking a deeper  look at Covered California for example, we compiled the following additional statistics from their release:

• Average wait time: 15:08 *
• Average handling time: 16:48
• % Applications only partially completed: 62.6%
• Number of Californians determined eligible for coverage: 28,699
• Small Business Health Options Program businesses registered as of 10/8/2013: 430
• *Average wait time was reduced to less than four minutes by Friday, 10/4/2013

It will be quite interesting to see what data becomes available for the full month of October, after month end.

Consumer Surveys: Finding a Doctor, and Finding Out About Electronic Medical Records

By Clive Riddle, October 4, 2013

Two studies released this week examine aspects of consumer-physician relationships.  The American Osteopathic Association conducted a survey on consumer physician selection. AOA found that “word of mouth” is still the reigning tool for physician selection even in this digital age. Once consumers have selected a doctor, their physician’s may not be doing all that much to communicate with them or educate them about digital health records, Xerox concluded in their fourth annual study on electronic medical records.

The AOA survey found the top five resources adults utilize when selecting a physician for themselves or a loved one  to be:

• Word of mouth, i.e. family, friends, coworkers (65.9%)
• Insurance provider directory (51.9%)
• Physician rating websites, i.e. Vitals, Healthgrades (22.8%)
• Hospital website (10.8%)
• Consumer review websites, i.e. Yelp (10.5%)

Here’s an interesting finding  about younger adults that embrace the digital age more than they order counterparts:  “when selecting a physician for themselves, younger adults are much more likely to use “word of mouth” than older adults (77.1% among 18-29 year olds, 64.6% among 30-49 year olds and 59.8% among 50-79 year olds).”

Regardless of the tools used, the AOA survey found the most important factors in the selection decision to be:

• Acceptance of insurance plan (83.3%)
• Bedside manner/empathy (60.5%)
• Proximity of office to home, work or school (57.4%) 
• Convenient office hours (42.9%)
• Medical specialty (37.5%)

The AOA survey also addressed de-selection, with the top reasons for leaving a doctor being:

• moved out of the area (34.7%)
• didn’t feel physician was a good fit (33.9%) 
• changed insurance provider (21.2%)
• physician retired or moved (19%)

Meanwhile, Xerox found that “only 29 percent of those who have a doctor have been informed their medical records will be converted to digital format. While this shows a 13-point improvement from four years ago, the survey results continued to show that the majority of Americans (83 percent) have concerns, such as security, about EHRs and less than one-third (32 percent) want their medical records to be digital (compared to 82 percent and 26 percent in 2010, respectively).”

Here’s the infographic Xerox released with the survey results:

Complimentary White Papers

By Claire Thayer, Spetember 30, 2013

Several new informational white papers have been posted to the MCOL web site with topics including document automation, use of best of breed platforms, compliance challenges with health care reform, core system modernization, payer ratings, executing on the individual mandate, provider reimbursement, staying competitive with health reform, social business systems, managing social content, ways health plans are using twitter to engage members and several more! All white paper are available for free, require brief registration, and include complimentary MCOL Basic membership.

See all the white papers here or check out the list below

White Papers from Oracle

• Building an Agile Communications Strategy
• Four Trends Driving Document Automation
• Company’s Annuity Operations Increases Scale and Gains Efficiencies Using Straight Through Process (STP) and Best of Breed platforms
• Compliance Challenges Associated with Health Care Reform: Managing Data, Documents, and Product Development for Market Advantage
• Core Systems Modernization: Harnessing the Power of Rules-Based Policy Administration
• Enterprise Rating Agility Improves Payer Response to Healthcare Reform
• Executing on the Individual Mandate: Opportunities and Challenges for Healthcare Payers
• Navigating Alternative Provider Reimbursement Models of the Future
• Redefining Quality Customer Service with On-demand and Multi-Channel Document Delivery
• Staying Competitive Through Healthcare Reform: How Billing Can Help

White Papers from IBM

• Where do you land in the capture continuum?
• Intelligent imaging leadership guide
• Intelligent Imaging for Improved Banking Performance and Profitability
• The Paper Free Office
• Social Business Systems
• Managing Social Content

White Papers from MCOL

• Measuring Health Care Business Social Media Activity 2012
• Case Study: Three Ways Health Plans are Using Twitter to Engage Their Members

“Health Care Productivity” is an Oxymoron

By Kim Bellard, September 26, 2013

It has long baffled me when politicians and others trumpet job growth in the health care sector, while at the same time bemoaning rising health costs, as if there was no connection. Some Rust Belt cities like Pittsburgh and Cleveland have bet a large portion of their economic future on their growing health care industries, and some economists attribute much of the nation’s recent economic revival on the growth in the health care sector. But job growth in itself is not always a good sign. An insightful piece by Robert Kocher suggests that the situation is even worse than I already suspected.

Kocher concluded that productivity is actually dropping in health care, with hiring outstripping output. He figures that the health care workforce has increased 75% since 1990, with almost all of the growth coming from non-doctor workers. There are 16 non-doctor workers for every doctor, and only 6 of those have a clinical role. As Kocher says, “[T]he problem with all of the non-doctor labor is that most of it is not primarily associated with delivering better patient outcomes or lowering costs.” So what the heck are they doing?

Health care professionals would be quick to note that there are ever-more administrative demands, driven by the multiplicity of payors, health care plan designs, and the number of hoops through which they are expected to jump in order to justify payment. Fair enough; it is hard to think of many other industries in which there is so little standardization. Payors want more standardization from providers in how the deliver care, providers want more uniformity from payors in coverage and requirements, and patients are stuck in the middle with neither side listening to them very well.

The latter, at least, may be starting to change. Hospitals are now facing big Medicare penalties for poor scores on HCAHPS, and physicians have to be looking forward to that future. There are some signs that hospitals are paying more attention, such as reported for California hospitals. One of the initiatives mentioned was simply to ensure patient rooms are cleaner. It’s sad that in 2013 it takes the threat of penalties to make this a focus.

Providers may be going overboard on trying to improve patient satisfaction by focusing on amenities. The New York Times’ recent article “Is this a Hospital or a Hotel?” discussed this issue, and included a series of photos that dare the reader to determine which is which. I know I had a hard time distinguishing them. Is this really where our health care spending should be going, and is this improving productivity – or patient care?

Perhaps this kind of focus on amenities partially explains both our high costs and the productivity issues. Ironically, it’s not at all clear that patient satisfaction is directly tied to quality. A recent study found statistically significant correlations between the two, but with only a weak association. Another study from Johns Hopkins similarly found that patient satisfaction does not necessarily reflect the quality of surgical care patients receive.

Moral of the story: patient satisfaction is important, but we shouldn’t let it be a substitute for better empirical measures of quality and outcomes.

A crucial component of improved standardization – and, with it, increased productivity -- is with the data. HITECH is most commonly known for being the stimulus for EHR adoption, but it also spurred the development of health information exchanges (HIEs), which are critical for the sharing of all that desired electronic information. Progress certainly has been made, with HIEs now funded in every state, but a recent report by HIMSS Analytics reminds us that the war is not yet won. Although 73% of surveyed hospital IT executives indicated they participated in an HIE, only 20% indicated that it had improved patient safety, and only 12% believed it saved time for clinicians. The biggest challenge, voiced by 49%, was that other organizations were not sharing data robustly; 64% admit to still relying on faxing to get around this problem.

It is typical health care: spend lots of money – billions in this case – but do not use it to drive ruthlessly towards improving care or cutting costs. To make things worse, providers aren’t able to eliminate the old, paper-based processes, which means work flows can’t become more uniform, and all those new costs become additive.

I have a hard time believing Walmart, Apple, or GE have this much trouble transmitting and using data across their supply chains.

Indeed, David Cutler – former health aide to President Obama – argues that health care will be much more like Walmart once the effects of the information technology “revolution” is more fully realized. He likens health care to the retail industry of the early 1980’s, full of solo practitioners and lacking useful information technology. As companies like Walmart and Amazon have demonstrated, he sees the future as being made up of larger, more integrated institutions, and able to drastically cut administrative expenses through more effective information technology.

Cutler also believes the patient has to become more central -- connected to the most appropriate health resources and providers via technology and finally becoming a more equal contributor in his or her own care.

The lack of a patient-centered system is one of the key barriers Michael Porter names in a recent blog (and article). As he and co-author Thomas Lee say, “[P]roviders are organized and reimbursed around what they do, rather than what patients need.” This is not exactly news to anyone, but it is nonetheless a profound insight. The seemingly haphazard, provider-centric structure of our health care system goes a long way towards explaining both our high costs and the difficulty in improving productivity.

Porter’s solution is that health care must focus on value; again, hardly a unique proposal, but one that is hard to argue with. Porter outlines the barriers he believes is preventing our system from improving value. In addition to the previously mentioned provider-centric structure, he also cites the following barriers:

• Free-agent physicians operate independently, rather than as part of an integrated team.
• Patient volume is fragmented, making every patient a special case.
• Massive cross-subsidies in reimbursement for individual services have distorted care and stalled care integration.
• No participant in the system has good information about patient outcomes and the cost of care.
• Information technology has often made care integration and value improvement harder, rather than enabling it.

Today’s health care “system” simply has too many entities pursing too many distinct goals, and limited ability to measure what is happening. None of these entities is particularly happy with the current situation, and most would agree that there’s too much waste in the system. Porter believes we can get to a value-based system, but it will take some radical changes in delivery systems, payment, and measurement. His article even includes a nifty infographic to illustrate. I hope I live long enough to see that future realized.

Cutler compared health care to 1980’s retail, and I would extend this to say that the productivity gap in health care is akin to what happened when personal computers became more widespread in offices in the 1980’s and 1990’s. Economists kept wondering where the productivity gains were. It wasn’t enough to simply add computers to existing business practices; business had to truly re-engineer their processes to take advantage of the new capabilities in order for productivity to soar, as it started to do in the late 1990s. Health care is not there yet.

Maybe the problem with productivity in health care – or even measuring its productivity – is that we’re too vague about exactly what we want to have happen. Process measures and patient satisfaction measures are all well and good, but what matters is what actually happens with the patient. When we can track that more effectively, maybe we can finally start identifying and attacking productivity more effectively.

Annual Census Report on Health Insurance Coverage: What Will this Report Look Like After 2014?

By Clive Riddle, September 19, 2013

The U.S. Census Bureau has just released their annual report: Income, Poverty, and Health Insurance Coverage in the United States: 2012. This year’s 88-page report was “compiled from information collected in the 2013 Current Population Survey (CPS) Annual Social and Economic Supplement (ASEC). The CPS-ASEC was conducted between February-April 2013 and collected information about income and health insurance coverage during the 2012 calendar year.”

The key takeaway? “The percentage of people without health insurance coverage declined to 15.4 percent in 2012 ─ from 15.7 percent in 2011. However, the 48.0 million people without coverage in 2012 was not statistically different from the 48.6 million in 2011.”

Here’s some summary figures compiled from the report:

	2011%	2012%	2011#(mil)	2012#(mil)
Uninsured	15.7%	15.4%	48.0	48.0
Private Coverage	63.9%	63.9%	197.3	198.8
Public Coverage	32.2%	32.6%	99.5	101.5

Here’s the respective demographic from each category with the greatest improvement in percentage change in uninsured from 2012 over 2011, compiled from the report:

• Family Status: unrelated subfamilies -5.3%
• Race: Asia -1.7%
• Age: under age 25 -0.5%
• Nativity: foreign born naturalized citizen -0.9%
• Region: Midwest -0.8%
• Work Experience: Did not work at least one week -0.9%

Finally, here’s a breakdown of the percentage of the total population covered by more specific coverage categories for 2011 and 2012; the totals add up to more than 100% due to dual coverage:

	2011%	2012%
Employment based	55.1%	54.9%
Direct-purchase	9.8%	9.8%
Medicare	15.2%	15.7%
Medicaid	11.5%	11.3%
Military	4.4%	4.4%
Uninsured	15.7%	15.4%

The big question is, what will this report look like two years from now, when the 2014 data is compiled?

mcol White Papers on Social Content

By Claire Thayer, September 16, 2013

There's a variety ways to implement and integrate social content management and social business applications.  Developing an overall strategy early in the process is an important component to the overall success of the implementation.  We recently posted a complimentary white paper on this topic which might be of interest: "Managing Social Content - to maximize value and minimize risk." If you’re looking to learn more about social business technologies, the Social Business Systems white paper explores the following: How enterprises are determining the right areas in which to invest in social business; Why social business technologies can be the best way to promote collaboration between sales and marketing departments; Which social business technologies and delivery mechanisms return the best results for various industry segment; How setting up a reward scheme can dramatically improve cross-organizational buy-in; and Why detailed recordkeeping must be integral to your social business operations. These and other informational white papers are available on a complimentary basis on mcol.com.

Canaries in the Coal Mine for Employer Coverage

Kim Bellard, September 10, 2013

Many of you have probably heard about the old practice of putting canaries in coal mines as an early detection measure for lethal gases.  If the birds started dying, it was time to get the miners out.  We may be nearing that point with employer health coverage.

Within the past few weeks, several large companies have made some interesting announcements about their health plans.  IBM and Time Warner announced that they were moving their retiree coverage to private exchanges, and in the process essentially changing their plans from a defined benefit approach to defined contribution.  They join other major corporations like GE, Caterpillar, and Dupont in such an approach. 

Retiree health coverage is a dinosaur of employee benefits, a hold-over from a time when employers could afford to be more paternalistic – partly because health coverage was far cheaper and partly because people didn’t live as long.  Among the large employers most likely to offer such retiree coverage, its prevalence has dropped from 66% to 28% over the past 25 years, according to the latest Kaiser/HRET survey.  It’s only going to decline further, faster.

The recent rise in these private exchanges offer a new way out for employers, letting them more gracefully take a step back from their provision of health benefits, and not just for retirees.  That same Kaiser/HRET survey found that, among all large employers (200+ employees), only 9% were considering offering their employee health coverage through a private exchange.  However, the number was 29% among the largest employers, those with 5,000 or more, and they tend to be the first-movers. 

Clive Riddle recently reported on the Towers Watson/NBGH annual survey, and mentioned the interest in private exchanges.   Drilling down a little more into those results, only 28% of these large employers thought it likely that employers would move to a defined contribution approach over the next five years, and only 24% expected employers to put their coverage in a private exchange in that same time period – but the plurality were neutral in their responses.  Only 24% and 30%, respectively, thought it unlikely that they’d try these approaches.  Employers were significantly less likely to say they’d take these actions with their own health plans, which may just indicate they’re simply waiting to see what other employers do, but even so 15% were considering private exchanges for 2014.

Most chilling, only 26% are very confident they’ll be offering health benefits in ten years; in 2007 the comparable number was 72%.   

The TW/NBGH survey also reported that 42% had already increased contributions for dependents relative to single coverage (with another 19% planning to do so in 2014), and 20% had implemented spousal surcharges for spouses not taking coverage from their own employers.  Another 13% had this planned for 2014.  A recent survey from Mercer reported that 6% of firms with 500 or more employees imposed such surcharges on such spouses, while another 6% took more drastic measures, excluding spouses who could obtain coverage through their own employer.

U.P.S. is an example of this strategy.  Last month it announced that it was dropping spousal coverage for its white collar workers whose spouses have an option of coverage through their own employer.  U.P.S. isn’t the first company to take this action, nor will they be the last (The University of Virginia made a similar announcement; in fact, on the same day as U.P.S. did), but they are one of the largest to go public with this action. 

Large employers have complained for decades that they shouldn’t have to subsidize other employers by covering those employers’ employees who happen to be married to one of their own employees, and that is a valid complaint.  If more large employers follow U.P.S.’s approach, as I would expect, it would shift more of the burden on smaller employers, and on the public exchanges. 

Another vulnerable target is part-time employees.  Wegman’s grocery chain recently made news by cutting back its health coverage for part time employees.  Not many firms choose to coverage part-time employees (according to the Kaiser/HRET survey, only 25%, and that was when part-time meant less than 40 hours per week, not ACA’s 30 hours).  Ever since ACA passed there has been persistent suspicion that employers would cut back employees’ hours to get them below that 30 hour per week mandate requirement to offer coverage (see some pro versus con opinions), so we’ll have to see how quickly that 25% statistic drops.  

Health Affairs’ most recent issue focuses on the implementation of ACA, under the theme “Navigating the Thorns that Await the ACA.”  It had two articles on what will happen with employer coverage under ACA.  One study, by Thomas Buchmueller and colleagues, looked at whether employers would drop health coverage.   Their conclusion was probably not to any large degree, at least in the aggregate – their predictions ranged from a decline of 1.8% to an increase of 2.9%. 

Meanwhile, a second analysis, by Daniel Austin and colleagues, analyzed the impact of increases in employer premiums would have on employer coverage and on exchange participation, and concluded that even contribution increases of as little as $100 could cause 2.25 million to switch from employer coverage to the exchanges – and cost the federal government $6.7b in increased subsidies. 

No disrespect to Dr. Buchmueller, but I’d have to lean more towards Dr. Austin’s results, and suspect that they will be, if anything, understated.

The success of employment-based health insurance has been due, in large part, to its tax preference, which allowed employers to seemingly “pay” for most of the cost of the coverage and thus assure a risk pool with a cross-section of ages, genders, and health status.  Public subsidies that will be available through the public exchanges will lessen the tax preference advantage, and the guaranteed issue of health insurance will also chip away at the “job lock” that has kept some employees in their employer plan. 

Still, it all boils down to risk pool; if there are not enough healthy people enrolled – be it through public exchanges, private exchanges, or employer plans – costs will skyrocket and the coverage will face the prospect of a death spiral. 

Employer coverage isn’t going to disappear overnight, and there may be a lengthy transition period when employers use private exchanges to distance themselves, to lock in their contribution levels, and to avoid mandate penalties.   Dependent coverage is most at risk, between the desire to not subsidize working spouses and the lack of meaningful affordability requirements for such coverage. 

Of course, ACA could be repealed or drastically revamped due to many implementation issues, but, failing that, I think employers are going to be watching each other closely in order to make sure they’re not going to be the last one to leave the party.