Doing Different Differently

By Kim Bellard, January 28, 2016

I was all set to write about bacteriophages, then I realized that what appealed to me about them was as an example of attacking mainstream problems with non-mainstream solutions. So I decided to write more generally about how organizations are trying to encourage that.

Let's start with IBM. Big Blue is trying to reinvent itself as a company that uses "design thinking" to develop products and services.

Their design principles emphasize "making users your North Star," using collaborative multidisciplinary teams, "restless reinvention," and a continuous loop of "observe/reflect/make."

So far, about 10,000 employees have gone through the design bootcamp, and around 100 products have been developed using design thinking. Those are drops in the bucket for IBM, but the approach is an audacious and long overdue attempt for IBM to stay relevant in a millennium in which Apple has reminded companies about the importance of design.

Or take Microsoft. If there is any doubt that Microsoft is well on its way to doing things differently, look at the Surface Book or Surface Pro, each of which has won rave reviews. CEO Satya Nadella has been shaking things up ever since he took over two years ago.

One of Mr. Nadella's actions was to break up Microsoft's Research group, which had been kept separate from the day-to-day action. Bloomberg reports that Mr. Nadella has insisted that the research teams work hand-in-hand with the product teams to get new ideas into actual products quicker.

Mr. Nadella has emphasized, "we need to be open to new ideas, and Microsoft Research is where they will come from." This attitude led to Skype Translator becoming an actual product within three months of Mr. Nadella learning about the underlying research.

Venture capitalist Anshu Storm has a theory -- "stack fallacy" -- that he believes explains why so many big companies fail to innovate. The theory posits that many companies suffer from the "mistaken belief that it is trivial to build the layer above yours." 

He cites how Apple has built great devices but also has missed on simple apps, or IBM's classic blindspot about letting Microsoft own the OS layer that ran their PCs.

In his view, "Product management is the art of knowing what to build." The trouble is that too many companies focus on the how and not enough on the "why."

For example, think about hospitals. They're trying hard to position themselves as patient-centered health systems, but no one who has been in a hospital can believe that hospitals see patients as the customer. Hospital gowns? Waking patients up in the middle of the night to take vitals? Corridors upon winding corridors?

We need the health care experience to be less like health care and more like things we actually like. Nick de la Mare suggests that hospitals (and schools) "should be more like theme parks," and that designers should be aiming for "magical experiences."

That's the attitude we need to be taking as we try to innovate; it's not just doing more, but really rethinking the overall consumer experience. I was particularly struck by Mr. de la Mare's caution: 

The trick is to deploy technology strategically and sparingly, since new tools tend to introduce unintended complexities....A hospital patient may feel similarly overwhelmed by impersonal and bureaucratic processes that seem to serve the health care provider at their expense. Just because we have the technology to do something, doesn’t mean we should.

There is cool innovation going on within health care. David Chase, for example, raves about how Zoom+ (which I've written about before) has revamped the ER experience, and there is no shortage of other health care companies hoping to be disruptive (e.g., Becker's list of 30).

There is plenty of incremental innovation going on, and health care sure can use it, but I continue to be on the lookout for breath-taking innovation -- innovations that surprise, excite, and delight.

This post is an abridged version of the posting in Kim Bellard’s blogsite. Click here to read the full posting

Henry Loubet on Three Immediate Trends Impacting 2016 Healthcare

By Clive Riddle, January 15, 2016

What’s in store for 2016? Henry Loubet, Chief Strategy Officer for Keenan, tells us “The business of health care has experienced both evolution and revolution through the decades. Innovation and transformation are driving dramatic developments in the health care industry at a rapid pace these days. While the major insurers' merger and acquisition activity will draw plenty of speculation about the health care landscape, I believe there are other, more immediate trends that will influence policy and financial decisions in 2016.”

Henry Loubet

Here’s three trends Henry points to for 2016:

The 2016 Election could potentially hold transformative Affordable Care Act impacts, with a new President and approximately 470 seats in the House and Senate to be decided. We don't know who will ultimately occupy those offices or whether the partisan balance will spell the possibility of the ACA being modified or repealed. Even with a strong Republican shift, there are significant barriers to repealing a law that now provides health insurance to millions of Americans. Some elements that would be easier for Congress to change about the ACA include risk corridors reimbursement, Cadillac Tax modification or deferral, or provisions affecting Medical Flexible Spending Accounts (FSAs) and Health Savings Accounts (HSAs).

Disruptive start ups will continue to alter how health care is delivered as more members of the Millennial generation become health care consumers and entrepreneurial purchasers. Companies like Oscar, Zenefits, and Omada Health all appeal to those who are most comfortable functioning in a connected environment. These organizations have realized growing valuations as they've acquired market share at unprecedented rates. Their approach to care access should make telemedicine more mainstream, promote adoption of wearable devices for wellness and condition management, and expand utilization of "minute clinics" and other alternative treatment venues.

Not frequently discussed, but a growing area for health care is the application of non-occupational medical, pharmacy, and wellness/condition management principles to workers' compensation. Inflationary increases in occupational medical have prompted steps toward implementing drug formularies, preferred provider networks, and wellness/population health management as risk management strategies to reduce paid claims as well as the incidence and severity of workers' compensation claims. Though maybe not in 2016, we will be monitoring whether the line between occupational and non-occupational medical becomes less distinct or eventually eliminated.

Henry’s comments originally appeared in in MCOL’s December-January 2016 issue of ThoughtLeaders

“Fateful Eight” Trends to Watch in 2016

by Clive Riddle, January 8, 2016

With apologies to Quentin Tarantino, here are a “Fateful Eight” collection of trends to watch in the business of healthcare for 2016, in no particular order:

1. Prescription drug slice of the cost pie

While the overall healthcare cost trend has been relatively fit and trim for more than a decade, prescription drug costs are consuming a growing portion of the healthcare cost pie, and threaten to send the entire cost structure back to more obese levels.  Watch for a continued shift in priorities and resources towards managing this sector. A December MCOL e-poll on managing prescription costs, co-sponsored by Keenan, found that 41% of respondents felt the prospects for managing prescription costs going forward will be somewhat difficult and challenging, and 56% felt the prospects will be very difficult and challenging. 71% would place a higher priority on dedicating new or additional resources in managing prescription costs, compared to dedicating resources to managing other components of health care costs, and another 16.5% would place the highest priority in this regard.

2. Aftermath of health plan consolidations

There really can’t be the same level of mega health plan mergers in 2016 to follow up on the 2015 Aetna-Humana; Anthem-Cigna; and Centene-HealthNet deals, because we’re running out of separate mega health plans to merge with each other. But 2016 is a key year regarding health plan mergers none the less, as regulatory review of these deals gathers steam, individual health plan markets shake out, and the merged mega plans unveil a more detailed vision of health plan life post-merger.

3. Onward march of health system m&a

But merger and acquisition activity will still flourish in 2016, on the health system side, particularly as systems continue paths towards integration as they acquire and manage more and more medical group practices.

4. Private sector embrace of two ACA concepts

For all the political pushback the ACA continues to experience, its noteworthy that two ACA concepts have morphed over into the healthcare private sector with gusto.  Private health insurance exchanges and commercial accountable care arrangements have both evolved from the ACA primordial stew to become significant private sector initiatives that will play in increasing role in 2016.

5. Pay for Value Initiatives

But as significant as the rise in public and private accountable care arrangements have been, the biggest action in the provider reimbursement and care delivery arena is cast in the wider net of pay for value. While encompassing a range of type of initiatives, all things pay for value will be what to watch for in payer-provider relationships in 2016.

6. Healthcare Political Theatre

It’s a presidential election year. ACA opponents will continue pushing back on all possible fronts. While public opinion polls show the country is still quite divided on the ACA, polls also show it is slipping some in relationship to priority of other national issues.  But this won’t stop healthcare from being a featured actor in political theatre for 2016, casting ripples of uncertainty for the prognosis of the healthcare environment post-2016.

7. Quiet but big adoption progress for all things mHealth

Perhaps all the big things that can be said for the moment about mHealth have been said. While 2016 might not be the year that big new, new shiny things will be touted to change the face of healthcare forever, a more quiet revolution will take place in 2016 as more and more consumers continue to adopt various apps and technologies that are out there already, just waiting to gain traction.

8. The ever growing burden of consumer cost sharing

The ever upward spiral in the burden of consumer cost sharing is not news. Perhaps though, this growing burden might relate to the parable about the frog in the frying pan, who just sits there if the temperature is just increased one degree at a time. While things aren’t boiling over yet, the pace of marketplace and regulatory reactions to this issue should pick up in 2016.

Oh, And It Is Also An EHR

By Kim Bellard, December 18, 2015

You wouldn't -- I hope -- still drive your car while trying to read a paper map.  Hopefully you're not holding up your phone to follow directions on its screen either.  Chances are if you need directions while you are driving, you'll be listening to them via Bluetooth.  Or maybe you're just riding in a self-driving car.

But when it comes to your doctor examining you, he's usually pretty much trying to do so while fumbling with a map, namely, your health record.  And we don't like it.

A study in JAMA Internal Medicine found that patients were much more likely to rate their care as excellent when their physician didn't spend much time looking at their EHR while with them; 83% rated it as excellent, versus only 48% for patients whose doctors spent more time looking at their device's screen.  The study's authors speculate that patients may feel slighted when their doctor looks too much at the screen, or that the doctors may actually be missing important visual cues.

Indeed, a 2014 study found that physicians using EHRs during exams spent about a third of the time during patient exams looking at their screen instead of at the patient. 

As one physician told the WSJ, "I have a love-hate relationship with the computer, with the hate maybe being stronger than the love." 

The problem is that we forget that the record is not the point.  Figuring out what is wrong with a patient and what to do about it is the point.

Let's picture a different approach, one that doesn't start with paper records as its premise.  Let's start with the premise that we're trying to help the physician improve patient care by giving him/her the information they need at point of care, when they need it, but without getting in the way of the physician/patient interaction.

Let's talk virtual reality.

Picture the physician walking into the office not holding a clipboard or a computer or even a tablet.  Instead, the physician might be wearing something that looks like Google Glass or OrCam. There might be an earbud.  And there will be the health version of Siri, Cortana or OK Google, AI assistants that can pull up information based on oral requests or self-generated algorithms, transcribe oral inputs, and present information either orally or visually. 

When the physician looks at the patient, he/she sees a summary of key information -- such as diabetic, pacemaker, recent knee surgery -- overlaid on the corresponding portion of the patient's body.  Any significant changes in blood pressure, weight, and other vitals are highlighted.  The physician can call up more information by making an oral request to the AI or by using a hand gesture over a particular body part.  List of meds?  Date of that last surgery?  Immunization record?  No problem.

The physician can indicate, via voice command or hand gesture, what should be recorded.  It shouldn't take too long before an AI can recognize on its own what needs to be captured; the advances in AI learning capabilities -- like now recognizing handwriting -- are coming so quickly that this is surely feasible.

Building better EHRs is certainly possible.  Improving how physicians use them, especially when with patients, is also possible.  But it's a little like trying to make a map you can fold better while driving.  It misses the point. 

We need a whole different technology that subsumes what EHRs do while getting to the real goal: helping deliver better care to patients.

This post is an abridged version of the posting in Kim Bellard’s blogsite. Click here to read the full posting

I'm Shocked, Shocked

By Kim Bellard, October 22, 2015

Some new research on the effect of physician practice arrangement has on spending offer some disappointing -- but not entirely surprising -- results.

Take physician groups. The death of the independent physician practice, working solo or in a small practice, has long been predicted. Honestly: would you rather be treated by a doctor practicing alone, or by one at the Mayo Clinic? Physician groups allow for things like development of best practices, administrative efficiencies, and, in this era of Big Data, larger data sets that can be used to improve patient care. When it comes to physician groups, bigger would seem to be better.

If physician groups are good, the theory goes, then integrating them clinically and financially with hospitals, such as through partnerships or common ownership, should even better.

The AMA says solo practice physicians now are only 17% of all physicians, down from 40% in 1983, and that physician ownership of their practice has declined from 76% in 1983 to just over 50% now. Our health care system, it would seem, is destined to be made up of large physician groups, many of which will be owned by hospitals.

Too bad both larger groups and hospital ownership apparently end up costing us more.

A new study in Health Affairs found that as physicians concentrate in larger groups, prices tend to go up, at least for the 15 high volume, high cost procedures the authors looked at. It might seem that whatever savings might be gained by becoming part of a group are not being passed on to consumers (or their health plans), and/or larger size allows groups to bargain for better reimbursement rates from payors.

An earlier survey, by one of the lead authors of the new study, found that more competition among physicians did, in fact, result in lower prices, at least for office visits. The moral appears to be, if you don't want to compete with them, join them!

Then there is the hospital ownership effect. A study in JAMA Internal Medicine found that increased hospital/physician financial integration led to greater spending, primarily in outpatient care and almost entirely due to higher prices, not higher utilization. The AHA protests that the study "is not reflective of the changes happening in today’s health-care market," citing newer value-based payment arrangements and hospital price increases that are at historically low levels.

Maybe the AHA is right. Maybe once we move more fully into the wonderland of value-based payment arrangements everything will work out: better quality for same or lower costs.

I've lived through DRGs, RBRVS, capitation, global capitation, staff model HMOs, IPAs, and an array of cost/quality incentive programs -- each of which was supposed to be the next magic bullet -- so I'm not holding my breath that payors will finally be able to outsmart providers when it comes to controlling revenue.

Don't get me wrong: I've long been a believer both in large physician groups and in clinical integration. But I worry that those strategies to improve health care delivery are now being used more as tactics to maintain and even improve revenue.

As I've written before, when you have to create a new model that is supposed to be patient-centered, and providers demand to get paid more just for participating it in, it's a pretty clear indication that our health care system isn't about patients but rather is about the providers.

The problem isn't the structures themselves but rather their focus.

This post is an abridged version of the posting in Kim Bellard’s blogsite. Click here to read the full posting

Can Slick Trump Sick?

By Kim Bellard, September 24, 2015

Health insurance is getting some love from investors.  A lot of that money is going to companies that make it easier to deal with health insurance, but some is going to start-ups -- like Oscar, Clover Health, and Zoom+ -- that actually hope to reinvent the nitty-gritty, often grimy business of providing health insurance.

Oscar, of course, has long been a media darling.  Google just put in another $32 million that ups their valuation to $1.75b.  All this for a company that only has 40,000 members, is offered only in New York/New Jersey (with plans to expand to California and Texas), and which in 2014 lost $28 million on $57 million in revenue.  But never mind all that; they've got a nice website.

That's not really fair, of course.  They've focused on using technology to improve the customer experience, are ahead of the industry curve on use of technology like fitness trackers and telehealth, and are working to use data to match patients with the best physicians for their conditions.

Clover Health, which just raised $100 million in a funding round through some impressive lead investors, has a somewhat different strategy.  It focuses on the Medicare population, putting their primary emphasis on using data to improve patient outcomes.

Clover uses their algorithms to identify high-risk patients, sends nurse practitioners to their homes to develop personalized care plans, and continually loops in new data to update patient profiles. So far Clover (headquartered in San Francisco) is only available in six New Jersey counties, but they claim to have 50% fewer hospital admissions and 34% fewer readmissions than the average for Medicare patients in those counties.  Most of their competitors would claim to have similar efforts for high-risk patients, so we'll have to see if their model scales.

Then there is Zoom+, or, rather, "Zoom+ Performance Health Insurance."  It is the outgrowth of ZoomCare, a network of retail clinics in Portland (OR).    Zoom+ claims to be "the nation’s first health insurance system built from the ground up to enhance human performance," and thinks of itself as "Kaiser 4.0."

Hmm.

Zoom+ has focused heavily on the user experience, wanting "health care to be more like visiting an Apple store," according to Fast Company Design's profile of them.  Zoom+ features not just cool retail centers but also mobile capabilities, a Personal Performance Path, and a Zoom+ Guru, among other services.  It is not your mother's health insurance, and right now can't be yours either unless you happen to live in Portland.

I'm all for reinventing health insurance.  I'm all for making the customer experience much, much better in health insurance and in health care generally.  But I do worry that some of these upstarts may be taking advantage -- perhaps inadvertently -- of one of the underlying problems with health insurance: risk selection beats execution.

Health insurers can market features that are more likely to appeal to younger, healthier customers, like snazzy websites, fitness trackers, or training advice.  None of those are only of interest to "healthy" people, but, it doesn't take much of a shift in the risk profile to have noticeable impacts on costs.

Health insurance needs more consumer-focused technology, more effective use of data, and more focus on promoting health.  However, I'm not getting too excited until I see a health insurer that does away with provider networks, refuses to be complicit in outlandish provider charges, and offers a plan of benefits that consumers can actually understand.

This post is an abridged version of the posting in Kim Bellard’s blogsite. Click here to read the full posting

Will Health Plan Start Ups and Provider Sponsored Plans Fill the Competition Gap?

By Clive Riddle, September 18, 2015

The AMA recently released a special analyses of commercial health insurance markets that found the "combined impact of proposed mergers among four of the nation's largest health insurance companies would exceed federal antitrust guidelines designed to preserve competition in as many as 97 metropolitan areas within 17 states," and that "all told, the two mergers would diminish competition in up to 154 metropolitan areas within 23 states."

Art Caplan, a professor at NYU and a correspondent for NBC News, responded to a recent New York Times editorial, Regulators Need to Scrutinize Health Insurance Mergers, with a humorous post in The Health Care Blog, entitled Merge Away!!!. Here’s the heart of Caplan’s argument: ” Blocking these deals is a terrible idea. The mergers should be allowed to continue. In fact they should proceed until there is only one private insurer left. Only, at that point should the government step in, declare the last company standing to be required to merge with Medicare thereby letting the free market produce what many reformers have only been able to dream of—a single payer system.”

Will the mega mergers result in a vacuum of competition, and perhaps a default single payer system, or perhaps as some noted healthcare pundits have wondered out loud: where health insurance becomes the new cable television provider? Or will emerging players fill the void left in the coming competition gap? This did occur in the airline industry – where the post-merger environment after established airline joined forces didn’t prevent the emergence or growth of carriers like Southwest, Jet Blue, Virgin America  and many others.

Two potential candidates to fill the health plan competition gap are provider sponsored plans and well funded health plan start ups. Provider sponsored plans have always been around, but with today’s environment is much more conducive for their long-term prospects: the growth in Medicaid strengthens the prospects of regional provider backed Medicaid plans; the proliferation of ACOs that can serve as health plan incubators; the emergence of value based payment systems and clinical integration that nudge health systems closer towards the purchaser end of the spectrum.

And then there’s the potential of VC backed health plan start ups. Everyone continues to write about Oscar Health. Here’s a typical headline from last month: Oscar's losses are huge but investors don't care - How one insurance startup with only 40,000 members is worth $1.5 billion.

Oscar Health has been held up as the disruptive innovator embracing tech and customer service for health insurance, in the manner the Uber entered the personal transportation scene. Now this week, you can add this headline to Oscar’s mantle: Google Backs Startup Oscar Health Insurance - Internet company’s growth-equity fund makes $32.5 million investment.

And Oscar isn’t the only VC darling health plan startup. Fortune magazine this week, in their article How this startup is trying to upend health insurance, profiled Clover Health, who just announced a $100 million round of equity and debt funding to expand its presence. Clover is focusing just on Medicare Advantage, and like Oscar, has started small. Founded in 2014, they currently operate in only six New Jersey counties. Also like Oscar – their vision involves embracing technology in a more disruptive means than the traditional health plan approach.

It should be a reasonable wager that Clover and Oscar won’t be the only VC backed startups making news a year from now.

Public Exchange Subsidies – A Snapshot with Distant Clouds

By Clive Riddle, September 11, 2015

Two item of note occurred this week with respect to public exchange subsidies and enrollment: CMS released their June 30, 2015 Effectuated Enrollment Snapshot, and federal judge Rosemary Collyer in an unprecendented ruling that congress has standing for litigation, has allowed United States House of Representatives v. Burwell et al, U.S. District Court for the District of Columbia, No 14-1967 to move forward. 

So the attempts to chip away at health insurance marketplace subsidies did not die with the Supreme Court ruling on King v. Burwell, and another cloud, albeit distant for now – as it will undoubtedly wind through an appeals process assuming it succeeds at Collyer’s level – hangs over the head of public exchange subsidies. 

But in the meantime, CMS has provided a current picture of what these subsidies entail. CMS announced  that “Of the approximately 9.9 million consumers nationwide with effectuated Marketplace enrollments at the end of June 2015, about 84 percent, or more than 8.3 million consumers, were receiving an advanced premium tax credit (APTC) to make their premiums more affordable throughout the year. The average APTC for those enrollees who qualified for the financial assistance was $270 per month. There were 7.2 million consumers with effectuated enrollments at the end of June 2015 through the 37 Federally-Facilitated Marketplaces (including State Partnership Marketplaces) and supported State-based Marketplaces (collectively known as HealthCare.gov states) and 2.7 million through the remaining State-based Marketplaces.”

Here is an infographoid MCOL will release next week, mapping the average subsidies by state:

CMS notes that “the ten states with the highest rate of consumers who received financial assistance through APTC were: Mississippi (95.4%), Wyoming (92.2%), North Carolina (91.6%), Florida (91.3%), Alabama (90.9%), Louisiana (90.7%), Georgia (90.0%), Arkansas (90.0%), Wisconsin (89.6%), and Alaska (88.8%). The states with the lowest rate of consumers who received APTC are: District of Columbia (10.2%), Minnesota (54.8%), Colorado (55.3%), Hawaii (61.4%), New Hampshire (62.8%), Vermont (64.2%), Utah (65.6%), Kentucky (69.8%), Maryland (70.7%), and New York (71.4%).”

With respect to enrollment by metal plan, CMS shared that 1% were enrolled in Catastrophic plans (63,174); 21% in Bronze plans (2,096,542), 68% in Silver plans (6,761,363); 7% in Gold plans (695,377); and 3% (332,624) in Platinum plans.

The issue of inappropriate marketplace enrollment has been increasingly raised by various parties. CMS released data regarding enrollment data matching initiatives, noting “During the time period from April 1, 2015 to June 30, 2015, enrollment in coverage through the Federally-facilitated Marketplaces was terminated for about 306,000 consumers with citizenship or immigration status data matching issues who failed to produce sufficient documentation of their citizenship or immigration status. In addition, during the same time period, about 734,000 households with annual household income inconsistencies had their APTC and/or CSRs for 2015 coverage adjusted. Overall, as of June 30, 2015 the Marketplace has ended 2015 coverage for approximately 423,000 consumers with 2015 coverage who failed to produce sufficient documentation on their citizenship or immigration status and has adjusted APTC and/or CSRs for about 967,000 households.”

More About Us, Less About Them

By Kim Bellard, September 1, 2015

Something Amazon just did is worth those of us in health care paying attention to.  It was the layoff of "dozens" of engineers at Lab126, Amazon's hardware development center, as first reported by The Wall Street Journal.  These were the first layoffs in the division's history.

Lab126 is responsible for Amazon's consumer devices, including their very successful Kindle e-reader and the new Fire TV. What makes this is a cautionary tale for the rest of us is that even Amazon -- which is noted for their prowess with their online consumer experience -- can't necessarily get the physical consumer experience right.  I think Wired captured the problem best, asserting that Amazon's consumer devices would have been more successful "if Amazon focused more on consumers, and less on consuming."

Now perhaps the relevance to health care may be clearer.

Consumer devices are all the rage in health care.  The global mHealth market is predicted to be $49b by 2020, with some 73 million units shipped in 2015 and an eye-opening CAGR of 47.9% expected from 2013 to 2020 (although other analysts already see slowing demand).

At the core of Amazon's devices is the goal to, well, get consumers to buy more stuff from Amazon.  
So I wonder: what is the goal of consumer devices in health care?  Are they intended to help us achieve better health -- or to consume more health care services?  I hope for the former but I fear it may end up being the latter.

I was struck a couple of weeks ago by an opinion piece in JAMA: "Obstacles to Developing Cost-Lowering Health Technology."  It's authors, doctors Kellerman and Desai, note that:

The inventor’s dilemma is that creating a product that improves health is not enough; the product must also be able to generate a healthy return on investment. In the United States, the surest way to generate a healthy return on investment is to increase health care spending, not reduce it.

Think about the terminology used in health care.  It speaks volumes about the underlying culture and its attitudes towards us.  Health care providers call us "patients."  Health plans call us "members."  Medicare and Medicaid call us "beneficiaries."    The name for one of the newest fads -- "patient centered medical homes" -- serves to remind us that we're not normally considered the center of our health care, and that the focus is on our medical care, not our health.

At least "consumer-directed health plans" pay lip service to us being in charge.

I'm all for people and organizations making money in health care, but I don't like to be seen as some kind of ATM for them either.  The health care industry needs to realize that we don't really want to be its customers, don't want to need to consume their services, and certainly don't want to have to be unduly patient about it when we do. 

What we want is to be healthy.  Give us the devices, services, and experiences that make that as simple as possible and then you can call us whatever you want.

This post is an abridged version of the posting in Kim Bellard’s blogsite. Click here to read the full posting

Independent Pharmacy Accountable Care Organizations

By William DeMarco, August 26, 2015

The competition for Pharmacy Services has become brutal as large chain stores such as Walgreens and CVS, as well as big box stores like Target and Walmart, attempt to develop exclusive service contracts with large insurance carriers and Pharmacy Management Companies (PBMs). At the same time, employers are faced with rapid increases in specialty drug costs for diseases such as Hepatitis and similar chronic illness drugs that may cost as much as $50,000 to $75,000 per year.

For example on July 24th the FDA approved a new class of cholesterol lowering drugs known as PCSK9. Many health plans were anticipating a price point of $10,000 per year, but the approval came with a recommended $14,600 annual price target. This would translate to a $6.71 per-member, per-month (PMPM) for Commercial and a $15.16 PMPM for Medicare, depending on the patients other conditions according to a Prime Therapeutics public analysis released in June.

While the clinical side of this evaluation proves these targeted drugs do work, the cost to public and private payers is changing the landscape of how employers deal with these services.

PBMs initially established a very good solution for a very complex problem by integrating costs, necessity and quality with outcomes. However, the mark up on PBM services and ability for PBMs to buy wholesale and resell retail has made some employers believe there may be better options they should consider.

In addition, the generic substitution strategy that saved employers millions in the early 1970s has worn away and generic prices are climbing - making the spending for both specialty and routine pharmacy a very large concern.

One solutions being attempted in several areas around the country is the development of an Accountable Care Organizations (ACO) like network of independent pharmacists.

In this segment of the delivery system, most pharmacies are owned by one or more families and are often one man drug stores, or represent small chains covering one or more counties. These pharmacies offer personalized service and a tradition of being a patient advocate - often providing answers to their customer's questions regarding medications, looking out for adverse reactions and communicating with the physician when a question of dosage or reaction occurs.

Organizing these smaller entities into a network with contractual obligations to a central agency that acts as a Management Services Organization (MSO), which in turn, contracts with purchasers, has employers intrigued and supportive because many of these hometown stores can also be an advocate for the employer - a resource needed more and more as value based payment emerges.

These independents not only offer dispensing, but also agree to offer Medication Therapy Management (MTM) to help the patient reconcile drugs, vitamins and even nutrition that may be playing a part in their drug therapy. Many of these stores can also offer medical appliance and durable medical equipment at less than the hospital outpatient cost. In addition, as a local provider, they are predisposed to working closely with PCPs to help introduce alternative drug therapies that may be less costly to the patient and the employer, but are just as effective as standard therapies.

Even if this connectivity is missing electronically, one can still work with purchasers to make sure the patient is adherent and getting their 30 day supply refilled on time. This can be a mutual responsibility between payer and pharmacists. The savings of substitution, the ability to control use of specialty drugs as necessary, and the coordination of care to assure adherence are all part of this new model.

Where does the PBM fit? The PBM can still process drug claims for the employer and share this with the pharmacy MSO, but it relinquishes control of the network to the employer. The employer may decide to run two networks—one of independents (the high performance network) and one of the big box and chains (the general network). If the employer really wants to test the effectiveness of the networks, they could also pay 100% of the high performance network prescription and MTM fees and 80% of the non-high performance network. This gives employees the choice but also incents new business to those who have little preference, but want to save money. It secures the patients for the local pharmacy, which creates competition for the chain stores.

Drug stores as care outlets versus retail vendors can make a very big difference in areas of managing drug costs and adherence. The leading cause of readmission to a hospital is non-adherence to drug therapy - which puts people in the ER. This is a classic example of a Preventable and Avoidable Cost (PAC) that could be better managed on an outpatient basis by having care coordinated by the pharmacists and the PCP.

While the cost of pharmacy will continue to rise as medical research promotes more effective drugs, we know employers and health plans can better manage utilization and patient experience at the delivery point of care, and that is, for many, the local home town pharmacist.

Pharmaceutical Industry in Transition

By Clive Riddle, August 7, 2015

KPMG has just conducted a survey of pharmaceutical and medical device companies, finding “their biggest commercial challenges coming from payers, surpassing hurdles posed by regulators, declining access to healthcare providers, and the move toward specialty drugs.”

Based on these findings, KPMG’s Bill Shew, Alison Little and Peter Gilmore have released a twelve-page report:  Change in pharma? Not optional; 10 Integrated imperatives for pharmaceutical commercial transformation.  Page two contains just these 35 words, in large font – which sums up the situation for pharma: “The pharmaceutical industry is caught between a blockbuster-driven past and a future  comprising precision medicine, curative therapies, and payment for outcomes. The years of consistent  double-digit growth and unconstrained pricing power are fading into memory.”

Author Alison Little tells us "life sciences companies face increasingly high demands from payers to prove the value of their products in terms of improved patient outcomes and lower costs. This requires not only clinical and analytical rigor, but increased focus on account management and strategy. This is a significant part of the commercial model for the pharma, biotech and medical device sectors, which need to evolve to compete in the future.  These are dramatic changes in bringing drugs to market and are far removed from the blockbuster model of marketing drugs with large direct-to-consumer advertising budgets and extensive physician detailing. Newer brand name drugs are treating much more complex medical conditions and have more stringent handling and administration requirements than those a decade ago. Pharmaceutical and biotechnology companies need to consider 'beyond the pill' services to help with patient engagement and helping them adhere to treatment."

Their report cites challenges for the industry including a paltry one percent annual growth rate for top 25 life sciences companies in 2014, down from double digits five years ago; and that seventy percent of recent brand launches underperformed analyst forecasts.

Without further adieu, here’s The ten “Imperatives for Commercial Transformation” they elaborate on, in their report:

1. Use commercial tactics, not clinical data, to differentiate new products
2. Elevate pricing and contracting within the organization
3. Take a more holistic approach to stakeholder mapping and prioritization
4. Base sales models on a collaborative approach to improving outcomes
5. Play a larger role in the industry transformation from “volume to value”
6. Support providers in improving quality and patient satisfaction
7. Leverage data and analytics to enhance commercial strategies
8. Allocate commercial resources optimally across markets and brands
9. Evolve performance metrics and incentives to reflect new realities
10. Drive the transformation agenda throughout the enterprise\

The author’s sum up where the industry needs go from here:  “Pharmaceutical companies need to transform their commercial models so that they can continue to thrive. In our evolving healthcare ecosystem, power centers are shifting, quantifiable outcomes are expected, and companies must demonstrate value for every healthcare dollar spent. We are approaching a tipping point when pharmaceutical companies, no matter the size or therapeutic focus, will no longer be able to view commercial transformation as an aspiration. Instead, they will need to recognize that it is a critical imperative.”

The Most Difficult Part Of The Patient-Centered Medical Home

By Clive Riddle, July 31^st, 2015

The medical home transformation for primary care, incorporating a team approach, technology, elements of care coordination and much more, has been a significant driver of change and innovation this decade. In the about to be released August issue of Medical Home News, the Thought Leaders Corner asks the question:  What was the most difficult part of the patient-centered medical home transformation that you experienced or observed? Here’s what the panel shared in their responses:

Sam JW Romeo, MD, MBA, of Tower Health & Wellness Center in Turlock, CA says  “having surveyed many organizations nationally for accreditation as a Medical Home, including the USAF primary care centers, the two hurdles (difficult parts of the PCMH) that are most prominent are: (1) payer emphasis on case management, and (2) cultural transformation needs within the medical profession. With regards to the case management emphasis, the payers want to save money first and foremost (‘quarterly reports’) more than provide care for patients.  They create the economic incentives and support structures to minimize, for example, hospitalization and ER use and, if per chance, they transform the provider to be more patient centric vs disease centric, whoopee!!  This transformation, however, is not often seen. With regard to the cultural change requirements, there is the ‘upstream’ challenge of providers being trained in medical schools and residencies to care for diseases in patients and not patients with or without disease.  The PCMH transformation requires providing patients with prevention (beyond immunizations and screening and the typical PQRS measures), wellness and lifestyle support, along with the care of disease.  The PCMH care model includes coordinating all of a patient’s care needs.  These needs include caring for the whole patient, i.e., body, mind and spirit, and this is not often in evidence.”

Joseph E. Scherger, MD, MPH, Vice President, Primary Care at Eisenhower Medical Center  and the Marie E. Pinizzotto, MD Chair of Academic Affairs at the Annenberg Center for Health Sciences in Rancho Mirage, CA states  “the most difficult part of adopting a PCMH model is changing how physicians and other providers work.  Implementing a care coordinator is not hard.  Having an advanced IT system is part of modern medicine.  But getting providers off the treadmill of many brief visits and spending time in longer visits with complex patients and doing population care coordination is a difficult paradigm shift.”

R. Scott Hammond, MD, FAAFP, Family Practice, Westminster Medical Clinic and Clinical Professor, University of Colorado School of Medicine, in Westminster, CO shares that  “Westminster Medical Clinic was early to the PCMH movement, being recognized in 2009.  Our biggest challenge was trying to understand exactly what we needed to do to satisfy NCQA standards.  At that time, there were few tracks to follow. I do not believe that is an issue now, as NCQA has improved and clarified their implementation guide. In retrospect, the most difficult part of transformation was sharing our vision of the PCMH with our entire staff and changing the culture of our practice to meet the patient-centered principles of the PCMH.  Only then were we able to operate as a collaborative team. This was also the most rewarding part of the journey.”

Mary Takach, BSN, MPH, Senior Program Director, National Academy for State health Policy, in Washington, DC opines that “The biggest challenge is exercising patience in the PCMH model and not pulling the plug after the first year or even the second year if there is no return on investment.  This is difficult for policymakers on both the public and private side -- especially for those under pressure to deliver balanced budgets.  Waiting for practice transformation to take root and move the dial on desired outcomes requires firm resolve and belief that the current system is broken and that transforming primary care delivery is the right direction to go.”

Nancy Meisinger RN, MBA, PCMH CCE, Director Of Practice Transformation, Delaware Valley ACO in Radnor, PA feels that “the concept of population management and proactive outreach to patients vs. waiting till they come into the office for a visit is often a difficult concept for the offices to put into practice in a systematic way.  In order to be effective it involves consistently documenting preventative and chronic care services within the EHR and maximizing the use of the clinical decision support tools.  Training of staff and use of protocols so that the process is as systematic and accurate as possible can be a challenge no matter what size patient panel the office manages.”

Amy Mullins, MD, CPE, FAAFP., Medical Director, Quality Improvement, American Academy of Family Physicians in Leawood, KS tells us  “much like patients, patient-centered medical homes are all different and the process to become one presents different challenges to different practices.  However, looking from a broad national view, physician engagement has proven to be a challenge for many.  Physicians are smart, busy, and highly motivated individuals who want to do what is best for their patients and eliminate any unnecessary work. To increase their engagement you need to prove to them that PCMH transformation will not only benefit their practice, but will positively impact the health outcomes of their patients.  Once physicians are engaged, the challenge shifts to empowering care team members and integrating the patient in team-based care, which is integral to the patient-centered medical home.”

David Tayloe, MD, FAAAP, Goldsboro Pediatrics in Goldsboro, NC is of the opinion that “educating providers about community resources has been, and continues to be, the most difficult step in transition to the patient-centered medical home.  Many children are at-risk for poor outcomes because of social determinants of health (poverty, parenting, education, substance abuse, abuse/neglect, mental health issues of caretakers).  These children need support within the community from various agencies.  Primary care providers must identify these children and refer them to necessary support services.  Many primary care providers are not aware of the support structure available in their communities.”

Jaan E. Sidorov, MD, FACP, Chief Medical Officer, medSolis and Author, Disease Management Care Blog, in Harrisburg, PA  says “changing established workflows is often underestimated.  There's a tempo to patient ‘throughput’ and the diversion of patients into new pathways involving other clinicians requires new space, hand-offs, duties, policies, and templates.  Unless carefully planned, patients' additional waiting times in office can balloon or they'll be waiting at home for a call that is hours late.  Increasing ‘stops’ in an episode of care doesn't increase work linearly, it complicates it exponentially.” 

And finally, George Valko, MD, Gustave and Valla Amsterdam Professor of Family and Community Medicine and Vice-Chair for Clinical Programs and Quality, Department of Family and Community Medicine, Sidney Kimmel Medical College of Thomas Jefferson University, and Medical Director, Jefferson Family Medicine Associates in Philadelphia, PA shares that “sfter deciding to pursue becoming a PCMH, I think the initial application for recognition and all that it entails, was the most difficult.  To me, it was a forest vs. trees analogy -- the whole process, using the NCQA in our case, is quite overwhelming. However, while sifting through the standards and elements, it became clear that we, and most others, were meeting many of the requirements already.  And, if we were not already meeting some requirements, many were activities we should have been doing in any case.  Now, ongoing improvements to become a true medical home, including changing the culture of a practice, doing outcomes measurements, and creating a medical neighborhood are and continue to be time consuming and costly.”

You can check out Medical Home News at www.MedicalHomeNews.com.

Snapshots of the Mega-Mergers

By Clive Riddle, July 24, 2015

With Anthem and Cigna’s merger announcement, the dance card has been filled out. Here’s what they had to say about their deal:  

“Anthem will acquire all outstanding shares of Cigna in a cash and stock transaction and Cigna shareholders will receive $103.40 in cash and 0.5152 Anthem common shares for each Cigna common share. The total per share consideration equates to approximately $188.00 for each Cigna share based on Anthem's closing share price on May 28, 2015, valuing the transaction at $54.2 billion on an enterprise basis.”

So let’s take a look at the mega-health plan profiles, before and after these mergers, understanding that the “after” picture will undoubtedly change due to regulatory required divestures in certain markets:

    

Here’s a couple of edited graphics from by the plans that provide some additional insight into their merged companies:

It will be interesting to see how long the regulatory hurdles take for these three deals, and how many regulatory concessions, including specific market divestures, are required.

Nag On My Shoulder

By Kim Bellard, July 15, 2015

We seem to like to have help with our health.  In addition to doctors, we might have a case manager, a health coach, a pharmacist, a personal trainer, or a nutritionist, to name a few.  But we soon may be able to have all of their expertise whispering in our ear 24/7.

Whether that would be a good thing or a bad thing remains to be seen.

The Wall Street Journal recently profiled an interesting company called OrCam.  OrCam's origins were in helping visually impaired individuals.  A small wearable camera processes surrounding images -- faces, steps, even handwriting -- on the fly and informs the user, almost as if they were seeing the objects directly.  Now OrCam is testing what they bill as a digital personal assistant -- Casie -- to add even more value.

I can see all sorts of potential for health care.

The WSJ article gives the example of you walking down the street, and Casie recognizes the face of one of your Linkedin contacts.  

If OrCam can recognize your Linkedin contacts, I would bet that it can recognize a donut, or a cigarette, and remind you about the health risks before you get either in your mouth.  
Such a digital assistant might also notice you haven't taken your morning pills.  Lack of adherence to taking medication has been labeled a $300b problem.

Maybe it could be trained to look at that rash on your arm and offer an informed diagnosis, taking teledermatology to the next level.

Pack a portable ultrasound into the device -- this technology is already here -- and suddenly whole new worlds of things your digital assistant could help you with really open up, especially if paired with a Watson type of AI.

Ideally, one would like to be able to tell your digital assistant how you are feeling, much like you might tell your doctor or try to do with an online symptom checker, and get a diagnosis.

Fitness trackers are all the rage, but the attrition rate on the use is terrible; a third stop using after six months.  Perhaps something like Casie could have better luck keeping you engaged.  

Smart glasses have faced adoption resistance for a variety of reasons: people think current models look goofy, there are concerns about privacy when everything in sight is suddenly a picture/video, or perhaps it has just been lack of a perceived killer app. 

OrCam addresses the first objection by being a fairly inconspicuous clip-on, and the second by deleting audio and video content after it has been processed and analyzed, sort of like Snapchat does for messages.  

And maybe digital health assistant will be the killer retail app.

I think the concept of "augmented reality" raises the bar for digital assistants.  Instead of just warning you about eating that donut, the digital health assistant might flash a picture of you with an extra thirty pounds just to re-enforce the risks it poses. It'd be like the health care version of "scared straight."

OrCam is a reminder that our digital future doesn't necessarily lie in smart phones or smart watches or even smart glasses. This is why companies like Facebook and Google are pouring so much money into virtual reality -- not just to escape reality but to augment it.

People talk about "the digital doctor," but what really makes that concept interesting is that it may not involve a doctor at all.  I just hope my digital assistant knows when to be quiet and when to make me listen.

This post is an abridged version of the posting in Kim Bellard’s blogsite. Click here to read the full posting

Jurassic Park: Rise of the Health Insurers

By Kim Bellard, June 26, 2015

If you want to see dinosaurs fighting, stalking, and even mating, you don't need to go see Jurassic World.  Just pick up the business pages and see what is going on with the big health insurers, who seem intent on getting even bigger.

Whether anything actually comes of all the merger mania, or whether such mergers prove good for consumers, remains to be seen.

Everyone seems to be in play.  The Wall Street Journal reported that Anthem has made overtures to Cigna, while United is interested in Aetna, with Humana still attractive to Aetna and Cigna.  You can't make this stuff up. It would be ironic if Humana was one left standing in this game of musical chairs, but many feel their assets are too inviting to be left out. 

One conventional wisdom is that these kinds of mergers/acquisitions have to do with scale. Bigger means more lives to spread such costs over.  The other culprit often cited is a desire to gain more clout with providers,

The trouble is, no matter how big health plans get, if they face markets where there is, in essence, only one provider with which to negotiate, size doesn't really matter. Bigger isn't always better.

You can make dinosaurs bigger, but that doesn't make them more agile or better prepared to deal with new risks.  I'm wondering when we're going to see not bigger health insurers, but truly different models for them.

We've seen true integrated provider/health plan models like Kaiser, Group Health Cooperative, or Geisinger for decades now, and they're generally successful in their core markets, but that model hasn't proved easily replicable. 

We've also seem health system building their own health plans, such as Intermountain Healthcare, Sentara, or UPMC.   We've even seen health plans buying/building their own health systems, such as UPMC's bitter rival Highmark Health.

If Anthem buys Cigna or United buys Aetna, it wouldn't be all that interesting, nor would it be novel.  Those are dinosaurs getting bigger but not evolving.  

If Humana and HCA got back together, that would be interesting.  That would be provider/payor integration writ large, and maybe produce something new. 

And if, say, CVS or Walgreens chose to merge with a health insurer, that would something even more unique.  I don't know how they'd change the health insurer, but it might be fun to find out.

Honestly, though, what I'd really love to see is a company from an entirely different sector, hopefully one with a strong consumer focus, buy into the health insurance business.  Maybe Humana should get back together with the Virgin Group, or perhaps Walmart would be interested in taking over a Medicaid managed care or Medicare Advantage plan.  Wouldn't you love to see Walmart take on the health care supply chain?  I bet they could squeeze better value out for its customers.

Jurassic World seems to be raking in the money despite being just another sequel about rogue dinosaurs.  Let's hope we see something with health insurers that isn't just another sequel as well.

This post is an abridged version of the posting in Kim Bellard’s blogsite. Click here to read the full posting

Some Things to Know and Ask in the Aftermath of the CVS/Target Deal

By Clive Riddle, June 19, 2015

Here’s some things to know in the aftermath of the announced CVS/Target deal . We can start with this list of deal points that the two companies provided in their press release announcing the acquisition and strategic partnership:

• CVS Health will acquire Target’s pharmacy and clinic businesses for approximately $1.9 billion.
• CVS Health will acquire Target’s more than 1,660 pharmacies across 47 states and operate them through a store-within-a-store format, branded as CVS/pharmacy.
• A CVS/pharmacy will be included in all new Target stores that offer pharmacy services
• Target’s nearly 80 clinic locations will be rebranded as MinuteClinic,
• CVS Health will open up to 20 new clinics in Target stores within three years of the close of the transaction. The new clinics will be part of CVS/minuteclinic’s plan to operate 1,500 clinics by 2017
• CVS Health and Target plan to develop five to 10 small, flexible format stores over a two-year period following the deal close, which will each be branded as TargetExpress and include a CVS/pharmacy

Two new videos posted in HealthShareTV help explain the deal in simpler terms:  CVS, Target Merger Might Boost Health Of Both Companies and CVS Health Taking Over Target's Pharmacy, Clinics for $1.9 Bn.

Two new healthsprocket each list five reasons behind the motivations for the deal:  Fortune Magazine: Five reasons Target's deal with CVS Health makes it leaner and meaner and USA Today: 5 reasons why Target sold pharmacy biz to CVS. The two lists differ some – but what they have in common mentions foot traffic and that Target wasn’t in a position to excel at pharmacy.

One way of framing the deal from Target’s perspective, is that it’s just a part of their larger picture to streamline and focus. For example, in April they announced finalization of closure of all Canadian Stores. The big picture was their $2 billion restructuring plan announced in February which has included rounds of corporate layoffs from March through this week, with the Minneapolis / St. Paul Business Journal reporting that the “Minneapolis-based retailer, Minnesota's fifth-largest employer, has now cut 2,360 jobs in the U.S., 17,600 in Canada and 350 in India this year.”

A key statistic to note, is that sources cite only 5% to 7% of Target customers use the store’s pharmacy services. Thus -the difference for the two companies is that Target customers come to purchase consumer goods, and some incrementally purchase prescription and health items as long as they’re going to be at Target; while CVS customers come to purchase prescription and health items, and some incrementally purchase consumer goods as long as they’re going to be at CVS.

Does this signal a trend for chain supermarkets, or other big box retailers such as Costco, that offer pharmacy services? If more retailers do shed or partner their pharmacy services , what are the implications for the retail clinic industry? 

Positive Trends in the Land of Retail and Workplace Clinics

By Clive Riddle, May 29, 2015

Last month, the Robert Wood Johnson Foundation commissioned Manatt Health to issue an excellent 25 page report:  The Value Proposition of Retail Clinics, in which they remind us that “since first emerging on the health care landscape more than 15 years ago, retail clinics are now a common feature, with 10.5 million visits occurring annually at more than 1,800 retail clinics.

The report emphasizes the potential for current and future collaborations between retail clinic organizations and health care systems, noting “to date, more than 100 partnerships between retail clinics and health systems have been formed, linking care between retail sites and primary care medical homes, expanding after-hours care options and enabling health systems to provide patients with alternatives to emergency departments (EDs). In fact, one study estimated that up to 27 percent of ED visits could be handled appropriately at retail clinics and urgent care centers…”

With respect to the growth and scope of the retail clinic market, just this month CVS  Health’s MinuteClinic announced they  “will open more than 100 new clinics this year and anticipates surpassing 1,500 clinics by 2017,” and they have reached  the cumulative “25 Million Patient Visit Milestone.“

With respect to partnerships during the past month, California Healthline discussed: ”Kaiser-Target Partnership Sign of Times” and CVS Health announced clinical affiliations with Ochsner Health System in Louisiana and the University of Mississippi Medical Center, including their Center for Telehealth.

Meanwhile, on the workplace onsite clinic front, Towers Watson this week released their 2015 Employer-Sponsored Health Care Centers Survey report, which polled  137 U.S. employers in which 105 currently offer employer-sponsored health centers, and 15 are planning to offer by 2018, and represent 4.6 million employees.

Here’s some highlights of Towers Watson’s onsite clinic findings:

• 38% of large U.S. employers with onsite health facilities plan to add new centers over the next two years,
• 66% expect to expand or enhance the already broad services they offer by 2018
• Wellness programs are already available at 86% of the centers
• Lifestyle coaching to promote and reinforce behavior changes is currently offered at 63% of the centers
• Half of employer-sponsored health centers now offer some type of pharmacy services, up from 38% in 2012
• 35% offer telemedicine services, with another 12% planning to in the next two years.
• 40% have two to five centers
• 56% have had onsite health centers for over five years
• 55% are open before 8:00 a.m.; 32% are open after 5:00 p.m., and 16% are open on weekends
• 64% outsource managing staffing and services at the health centers
• 23% run the centers themselves
• 18% use local or regional provider groups or health systems
• 75% employers with onsite health centers calculate their ROI, up from 47% in 2012

One free resource for those monitoring activities in this sector, the Workplace & Retail Clinic Bulletin, offering free twice monthly e-newsletters.

What are the implications of the upward spiral occurring in the specialty drug cost trend?

By Clive Riddle, May 1, 2015 

What are the implications of the upward spiral occurring in the specialty drug cost trend?" That was the question asked of experts in the current issue in MCOL’s ThoughtLeaders. A running theme in their responses was that this will further drive the value-based payment movement. Our ThoughtLeader Dr.  Peter Kongstvedt also takes us a “wonk on the wild side: predicting policy implications including more legislation. 

Here’s some excerpts from their responses in ThoughtLeaders: 

Vicky Parikh,  MD, MPH, (Executive Director, Reliance Health and Executive Director, Mid-Atlantic Medical Research Centers) frames the discussion, and points to further cost-sharing as the consequence – “Specialty drugs can cost more than $600 per treatment, $4,000 or more a month and can reach expenditures up to $100,000 a year. By 2020 the overall spending for specialty drugs could potentially reach $400 billion, or 9.1% of national health spending. In 2009, .12 cents out of every dollar spent went to specialty drugs. Now, that amount has risen to .32 cents out of every dollar. But what does the increase of prices for specialty drugs have to do with anything, when most individuals have a health plan that pay for medical expenditures? Employer based health plans could cause employees to see a change of benefits, increasing deductibles and overall shifting of the more expensive bills being passed towards the employee.” 

Jeremy Nobel,  MD, MPH, (Northeast Business Group on Health,  Executive Director, NEBGH's Solutions & Innovations Center and Faculty, Center for Primary Care, Harvard Medical School)  sees the trend hastening value-based purchasing – “The upward spiral on Specialty Pharma costs will likely accelerate the pace at which patient-centered care will reshape the healthcare marketplace from ‘volume-based’ to ‘value-based.’ Facilitated by highly personalized care coordination, back-stopped by advanced analytics, and rewarded with a host of outcomes-based payment mechanisms, providers and systems that can adjust to that ‘new normal’ will become dominant players. From a purchaser perspective, the traditional focus on reducing costs of "components of care" and managing unit price through volume discounts for everything from drugs to hospital days, to office visits and diagnostic tests, needs to move rapidly and comprehensively towards a focus on ‘total cost of care’ with a payment model that rewards cost reduction as long as quality benchmarks are maintained. And with the inevitable market entry of new medications like the PCSK9 class of drugs targeting extremely common conditions like hypercholesterolemia, the current Rx cost/value management mechanisms for Specialty Pharma will ‘fall short’ quickly.”  

Cyndy Natyer, President, CyndyNayer.com and Founder/CEO of Center of Health Engagement) also looks to value – “My goal is to shift the conversation to what is the value of the drug, and if it can prevent high cost conditions from becoming higher costs, then a higher priced drug may well be worth the negotiated spend…On the other hand, some of the drugs in the specialty arena are going thru yearly increases of thousands of dollars without new technology or formulations. In this case, the price escalation without better outcomes must be considered when negotiating the price of the drugs. We are even seeing many-hundred-percent increases in some common drugs, not specialty, for common chronic illnesses, again with little or no attribution to new technology in the drugs. In each case, I'd like to think that we will not simply deny a drug to a patient because of the cost, and that we would not waste valuable time demanding that folks fail on the drugs we know will not suit them because they are cheaper.” 

Constance A. Wilkinson (Member of the Firm, Epstein Becker & Green, P.C.) and Alan J. Arville (Member of the Firm, Epstein Becker & Green, P.C.) also go down the value-based path – “Manufacturers (and payors) will continue to pursue a value-based purchasing strategy, such as an outcomes-based approach, to support the value proposition of the drug. Such arrangements build in financial incentives or penalties for manufacturers that are contingent upon negotiated performance standards (typically based on quality or health outcomes). There are particular challenges in implementing this approach for federal health care program beneficiaries due to the potential implications to manufacturer drug price reporting under those programs, and the attendant financial consequences.” 

Peter R. Kongstvedt, MD, FACP (Principal, P.R. Kongstvedt Company, LLC) sees policy implications - “The two most significant long-term implications of rising specialty pharmacy drug costs are to create the pressure for another round of "health reform" and on international trade policy. These are obvious choices, I know, but let's look closer and take a wonk on the wild side ("...and the wonks go doo, da-doo, da-doo, da-doo doodoo, doo, da-doo, da-doo, da-doo doodoo..." *). [* Apologies to the late and sorely missed Lou Reed.] 

Peter explains that “there are really two broad types of specialty pharmacy though: manufactured drugs that are one or perhaps two molecules, regardless of how they are manufactured or delivered; and compounding pharmacy drugs. Compounding accounts for a surprising amount of the specialty pharmacy cost increase, but because it uses drugs manufactured by others, it can be managed with through tough negotiations, the use of a single compounding pharmacy, strict adherence to medical guidelines, preauthorization, a closed formulary, and benefits design. That leaves us with the manufactured molecules that have the long term implications.”

Peter sees the trend accelerating cost-sharing, which in turn will accelerate legislative reform of cost-sharing, and even pricing. “We will bypass all but one of the short term implications related to the existing approaches to managing costs such as preauthorization, drug utilization review, step therapy, formulary control and the like, as well as the counter-measures used by the manufacturers. But one of the most common approaches is increased cost-sharing, and that's the one that could get us to another round of health reform. Increased cost-sharing for specialty pharmacy is not quite the same as upping the PCP office visit copay by $10. It now often includes separate deductibles and coinsurance being applied only to specialty pharmacy coverage, which for a lot of people is both good news and bad news. The good news is that cost-sharing goes away when they hit their annual out-of-pocket maximum, which may occur in the second month of coverage; the bad news is they are slowly going bankrupt because most people don't have $6,600.00 (2015 single) / $13,200.00 (2015 Family) of spare cash every year in their savings or under the couch cushions. This brings us to Health Reform II: The Next Act…..Multiple states are now considering "cap the copay" bills that would require state licensed insurers and HMOs to markedly limit cost-sharing; for example, one Oregon bill under consideration would cap cost-sharing at $100 per month.”

Peter warns that “’Cap the copay’ and similar laws are like mowing the lawn to get rid of dandelions - it only appears to solve a problem that is actually growing. Specialty pharmacy costs, and really all healthcare costs related to pricing, in reality grow faster when richer coverage is required. Eventually those very real and ever-rising costs will force us as a society to once again grapple with national health policy about how we finance health care goods and services. Payers were first in the reform barrel. Pricing is likely to be next, though it may be confined to one sector, and specialty pharmacy or drug manufacturers overall seems to have raised its collective hand to be called on next.”

Looking for the Future in the Past

By Kim Bellard, March 25, 2015

I don't get smartwatches.

Yes, I know; they're all the rage. Apple unveiled its Apple Watch earlier this month, to generally good if not entirely ecstatic reviews. Not to be outdone, Google announced a collaboration with TAG Heuer and Intel for a "Swiss Smartwatch." Samsung and Sony are close behind with their own versions.

Poor Fitbit, which held the early lead in wrist wearables, is now desperately trying to broaden its product line, including the new Surge. They must feel a little like Garmin or Nikon did when mobile phones began to incorporate GPS tracking and digital phones.

I have to wonder why the focus on the wrist. It isn't the ideal place to track, say, your heartbeat, your sleep, or your steps, and as a result fitness trackers have been faulted about their accuracy.  I'm not sure who is clamoring to add more features to a watch.

It's as if Timex and Casio, not to mention TAG Heuer, are conspiring to create a demand so that they don't go the way of Kodak.

It's not that I think they are a bad idea. If you want to wear one, more power to you, and I hope it helps you with your health goals. My problem with them is that I think they are an example of our trying to create the future by looking in the past.

Shouldn't we be developing truly new technologies and uses for them?

I can't help but think about EHRs in this context. Health care providers insisted on being subsidized for what would be normal business process improvement investments for any other industry. What we got for all the federal spending were products that physicians don't really like, that more often hinder than help with patient care, that patients rarely have access to, and that can't easily share data.

We need tools that are more collaborative, more interactive, and more proactive.

Congress is already starting to ask what it has gotten for its $35b HITECH investment, even holding hearings to demand answers. EHRs used to have bipartisan support and now have fairly bipartisan disappointment.

We don't even have an agreed upon way to figure out if providers have the same patient, much less share their data about that patient. The financial services industry solved similar customer-identification problems decades ago. They did it because it made business sense.

In theory, that kind of change will happen once we make that big move to "value-based" care, but as long as our baseline is our current level of spending, I'm skeptical. We need approaches that attempt not just to reduce increases in spending but that aim to take big chunks out of spending. There's no shortage of waste, duplication and unnecessary care that could be eliminated.

Smartwatches, EHRs, or proton beam therapy, to name a few examples, are not likely to help accomplish that.

I want to see those kinds of new technologies in health care, not a smartwatch. Technologies that help change how we think about "health" and how we treat problems with it. I challenge health care technology gurus: show us something not just that we haven't seen before; show us something we hadn't even thought of before

As Alan Kay famously said: "The best way to predict the future is to invent it."

This post is an abridged version of the posting in Kim Bellard’s blogsite. Click here to read the full posting

PwC’s Health Research Institute Gives Us Five

By Clive Riddle, March 20, 2015

Many institutions are pausing to write and reflect on the ACA at this five-year anniversary mark, underneath the pall of the SCOTUS’ King vs. Burwell shadow. PwC’s Health Research Institute has just weighed in with a nice 22-page report : Healthcare reform: Five trends to watch as the Affordable Care Act turns five.

The report lays five key trends on us that they contend the ACA has fueled after five years:

1. Risk Shift: Raising the stakes for all healthcare players. The ACA added force to new payment models that reward outcomes and penalize poor performance such as high rates of readmission and hospital-acquired conditions.
   
2. Primary care: Back to basics. Experimentation in new payment models and expansion of insurance coverage are making primary care once again the critical touch point.
   
3. New entrants: Innovators in the New Health Economy. New entrants are rushing into the market to meet the demand for lower-cost, consumer-oriented care options in the post-ACA era. More than 90 new companies have been created since 2010, according to HRI analysis.
   
4. Health insurance: From wholesale to retail. Rapid enrollment in the ACA's public exchanges has demonstrated the potential of retail-style health insurance and spawned renewed interest in private exchanges.
   
5. States: Reform's pivotal stage. States have emerged as key players in the reconfigured healthcare landscape, as the ACA gave states notable discretion in how the law could be implemented.
   

Ceci Connolly, managing director of PwC's Health Research Institute, tells us "the five trends have led to the creation of more than 90 new companies that have entered the sector since 2010. The ACA has opened gates for savvy investors and start-ups to take a piece of the $2.9 trillion industry."

And if that isn’t enough, they give us these five takeaways on what stakeholder should consider going forward:

1. Revisiting strategies to emphasize saving over spending and quality over quantity, to serve more consumers effectively and demonstrate affordability.
   
2. Watching closely as the reimbursement pendulum swings from fee-for-service to accountable care.
   
3. Innovating to meet the demands of the new healthcare consumer.
   
4. Pursuing opportunities to enhance consumer choice and engagement in selecting health benefits.
   
5. Working with states as they continue to shape the future landscape.