Five Healthcare Prognosticators That Resonated for 2022

By Clive Riddle, January 13, 2022

We recently provided our own view into 2022, Scrolling Through the Roadmap of 2022 Healthcare Trends, With Sixteen Selected Stops.  Now we’ve scrolled even further to see what others are saying about the coming year in healthcareland. We found five recent prognosticators from different perspectives that resonated, to share with you.

Doctor Marc Harrison, the CEO of Utah’s Intermountain Healthcare provides an excellent outline of 5 Critical Priorities for the U.S. Health Care System in Harvard Business Review. His national agenda includes:

1. Focus on Improving Health (“One of the most striking aspects of Covid-19 is that it often exploits underlying chronic conditions such as diabetes, heart disease, and obesity. With these chronic conditions already at epidemic levels in America, the U.S. population has been ripe to be ravaged by Covid-19.”

2. Tackle Racial Disparities (“The Covid-19 pandemic has starkly illuminated the profound racial disparities in health care, and these must be rapidly addressed to achieve health equity.”)

3. Expand Telehealth and In-Home Hospital Services (“In health care, we’ve long asked people to come to us for help. We need to change that thinking entirely and become more consumer-centric. We need to care for people closer to their home.”

4. Build Integrated Systems (“Another important confirmation from the pandemic is that integrated health care delivery systems — those that offer their own health insurance plan or do so via a partnership with an external insurer — are better suited to adapt and align incentives to rapidly changing circumstances.”)

5. Adopt Value-Based Care (“The widespread acceptance of value-based care — under which providers, including hospitals and physicians, are paid on the basis of capitation and patient health outcomes — would accelerate the adoption of the above priorities.”

Cigna shared The 4 Biggest Health Care Trends of 2022 and How They Impact America’s Employers:

1. Behavioral Health Care: More Need, More Availability, and More of a Focus for U.S. Employers (Cigna saw a 27% increase in outpatient behavioral health visits in 2020 over 2019, and the trend has continued throughout 2021)

2. Working Toward Health Equity: The Role Employers Play ("Health disparities don’t stay at home when we go to work." say Cigna's Kimberly Funderburk, VP and GM for government & education)

3. Drug Costs Continue to Spark Concern for Employers (Cigna reminds us that specialty medications accounted for more than half of pharmacy spend in 2020, although only 2% of the population utilizes these drugs)

4. Virtual Care Provides Ease, Flexibility, and Can Help Foster a Healthy Workforce (Cigna notes that Pre-pandemic, less than 2% of outpatient behavioral health and medical claims were for virtual visits. Today they make up nearly 25%)

Silicon Velley’s Bessemer Venture Partners offers these 2022 Healthcare Predictions, telling us “opportunities are emerging for leaders to build the connective tissue between the physical and digital worlds in healthcare”:

1. 2022 is the year where IaaS meets digital health

2. An increased focus on hybrid care

3. As the digital health field becomes more crowded, clinical outcomes will become a key competitive differentiator

4. The great resignation poses a breaking point for the supply of clinicians

5. A tech-enabled renaissance for the independent clinician (“Emerging new platforms and tools are helping clinicians become more independent and run successful businesses by enabling flexible hours, additional revenue streams, or owning their audience.”)

6. Value on investment alongside return on investment (“Increasingly, benefit managers are now looking at social factors as well when making purchasing decisions. They are beginning to place a premium on benefits that support diversity, equity and inclusion, as well as employee satisfaction and productivity.”)

7. Teenage years for digital health

In Forbes, Dr. Anita Gupta is a C-Suite Leader from Johns Hopkins School of Medicine penned The Future Of Health: Three Healthcare Trends For 2022:

1. ESG Strategy Focused On Innovation (“The life science industry is moving toward a model of social impact focused on ESG (environment, sustainability, governance) and customized therapies for specific patient populations.”)

2. Data Analytics To Accelerate Biotechnology Innovation (“As our understanding of genetics and disease continues to evolve, the life sciences industry relies on data analytics more than ever before”)

3. Consumer-Facing Telemedicine And Digital Care Solutions (“Finding more consumer-facing solutions that are hybrid models, including both face-to-face and telemedicine, could be the future, while making telemedicine more mainstream and improving consumer access”)

And finally, GE Healthcare published this tech perspective on The Future of the Healthcare Workforce: 5 Predictions For 2022:

1: Innovation to Reduce Burnout Will Continue

2: Clinicians Will Separate the Wheat From the Chaff When It Comes to AI (“the healthcare industry will become increasingly selective about its AI. Clinicians will seek out tools that limit their time in front of a screen and reduce the number of clicks required to input data. Tools that don’t reduce the workload will be ignored.”)

3: Technology Will Help the Workforce To Reduce Healthcare Inequities

4: Telemedicine Will Become Even More Integral to Healthcare Delivery

5: Precision Health Will Revolutionize Healthcare Delivery

Scrolling Through the Roadmap of 2022 Healthcare Trends, With Sixteen Selected Stops

By Clive Riddle, January 6, 2022

2022 will offer a complex, challenge-filled healthcare landscape, that can’t be navigated with a roadmap viewable on a device screen without a whole lot of scrolling involved. So get ready to slide your finger or mouse downward a few times to bring these sixteen selected healthcare trends for 2022 into view.

Pandemic Permanency – The healthcare industry and the general public will continue to evolve through a similar process to the stages of grief – starting with denial and ending with acceptance – that COVID-19 will not go away in 2022, even though it may become more manageable in daily life and variants may become milder. A spectrum of measures and behaviors that initiated during the past two years may further modify with time, but will not fully disappear in 2022, or beyond for that matter.  

Advancing Health Equity – health equity awareness and programs launched during the pandemic to fund equity initiatives and create positions to manage these activities, will gain significant momentum in 2022, including increased deployment of analytics to identify specific healthcare inequities and driving factors behind them.

Increased Utilization - Deferred care during the pandemic due to reduced availability of non-COVID related services, as well as deferral due to cost considerations and economic hardship will now impact 2022 as deferred care gets addressed. While utilization increased in 2021 compared to 2020, the spike will be more material in 2022 as some care continued to be deferred in 2021.

Healthcare Pricing Inflation – Provider financial losses and cost increases experienced during the pandemic will drive greater provider price inflation, which along with increased utilization that will drive greater health plan premium inflation during 2022.

Employer and Public Payer Pushback on Price Increases – Employers and government are facing their own significant pandemic-driven cost and funding pressures, and are in no position to easily absorb material provider and payer price increases. There will be a range of responses, including renewed interest in greater employee cost sharing, greater degrees of bidding and changes in plans, benefits and provider networks, and CMS measures to reduce overall payment to providers and plans.

Stepped-Up No Surprises and Price Transparency Enforcement: There are already material numbers of providers and payers seeming to not be in compliance with the new regulations. Patient, employer and public payer pushback on price increases and unhappiness with levels of patient out-of-pocket costs will drive political demand for much greater and highly visible enforcement of compliance issues with No Surprises Act and Pricing Transparency requirements.

Increased Payer-Provider Contracting Tensions – The always fraught-environment between payers and providers will become even more frayed, as pricing inflation and cost pressures mount in the midst of employer and public payer pushback. Even with value-based payer-provider collaborations designed to mitigate such rifts, high-stakes contract negotiations and terminations will become more prevalent.

Increased level of risk assumption in value-based agreements – The one safety valve in a higher pressure payer-provider environment will be greater assumption of risk, a direction that an increased portion of providers have been gravitating towards during the past several years. The shift will continue and accelerate during 2022.

Reduced SDoH investments due to cost pressures – While compelling cases can be made on the ROI for funding appropriate Social Determinants of Health initiatives, payer and provider cost pressures will drive budget cuts, and items involving more indirect and longer-term return on investment are more vulnerable. However, as health equity is more in the spotlight for 2022, SDoH activities that are the most directly linked to improving health equity may have relatively better odds of retaining or obtaining funding.

Network coverage issues with remote workforce – As remote work in various sectors of the economy continues to gain a greater permanent foothold - beyond the pandemic period – employers and payers relying on narrower network coverage will have to develop permanent solutions.  A menu of approaches will be more widely deployed, including use of out-of-area telehealth services before authorizing in-person services out-of-area, and greater use of sub-contracted national networks or companion products.

Continued Medicaid and ACA Marketplace growth – Medicaid enrollment will only continue to grow in 2022, as additional states implement ACA Medicaid expansion, and ACA Marketplace enrollment for 2022 appears strong due to a variety of factors. Of course, 2023 may be a different story, if the anticipated mid-term election shift to Republican-controlled both houses of Congress occurs, and their sentiment is strong to revisit further ACA rollbacks or repeal.

Provider Workforce Erosion – Beyond the general pandemic driven labor shortages throughout the economy, healthcare will experience a greater workforce erosion in 2022 as physician, nurse and other clinician burnout due to the pandemic and other factors accelerates, combined with the chilling effect on potential new workforce entrants, impacting staffing shortages and productivity. On top of this, provider cost pressures and consolidations will spur layoffs in some markets, with some clinicians choosing to early retirement or switch careers as a result.

Continued adoption and advances in AI: Announcements on healthcare artificial intelligence technology offerings and adoption abound with a dizzying array of applications. If 2021 wasn’t already anointed the year of healthcare AI, 2022 might be crowned as such.

Increased Payer and Provider Stake in Tech Ventures – Strategic investment from health plans and health systems will further proliferate in a spectrum of healthcare tech platforms - not to mention startup ventures or acquisitions solely owned by a provider or plan. The term payvider has grown into greater use describing payers that have acquired or launched significant provider offerings, and vice-versa, What do we call the increasing number of three-headed players wearing provider, payer and tech-platform hats?

Continued high level of M&A – Looking beyond tech ventures, payer and provider M&A transactions involving other payers and providers will certainly not diminish in 2022, as stronger providers acquire those weakened by the pandemic, and larger payers seek continued growth through acquisition in Medicaid and Medicare Advantage markets. A number of venture backed plans, many with tech platforms, will have a particular need to seek growth through acquisition of smaller plans, or seek to be acquired themselves.

No major healthcare legislation – With mid-term election occurring in the fall and little potential for bipartisan action existing previously, the political appetite for tackling health policy legislation would seem to be quite suppressed for 2022.

That’s all folks! This may just be scratching the surface, but it is the end of road for now. Best wishes to all navigating healthcare through 2022!

The Eisenhower Principle

By Kim Bellard, December 17, 2021

I’ve finally come to understand why the U.S. healthcare system continues to be such a mess, and I have President Dwight Eisenhower to thank.

I’ve been paying close attention to our healthcare system for, I hate to admit, over forty years now. It has been a source of constant frustration and amazement that – year after year, crisis after crisis – our healthcare system doesn’t get “fixed.” Yes, we make some improvements, like ACA, but mostly it continues to muddle along.

Then I learned about President Eisenhower’s approach to problems:

That’s it!  All these smart people, all these years; they didn’t know how to solve the problem that is our healthcare system, so they all took the Eisenhower approach: enlarge the problem.  Let our healthcare system get so bad that not addressing it no longer is possible.

If, indeed, there is such a point.

The actual Eisenhower quote is more nuanced than the above version. It was: Whenever I run into a problem I can't solve, I always make it bigger. I can never solve it by trying to make it smaller, but if I make it big enough, I can begin to see the outlines of a solution.

I guess we’re not yet at the point when the outlines of a solution are clear (Bernie Sanders notwithstanding).

Instead, we’ve been chipping away at the problem, trying to make it smaller. For example:

• Employer-sponsored health insurance tax preference (WWII)
• Hill-Burton Act (1946)
• Medicare/Medicaid (1965)
• Federal HMO Act (1973)
• Stark Physician Self-Referral Law (1989)
• DRGs (1983) & RBRRVS (1992)
• CHIP (1997)
• Medicare Modernization Act (2003)
• Affordable Care Act (2010)

I could add a plethora of non-legislative efforts, largely private sector driven.  Each was well-intentioned, each was expected to make a dent in a problem, and each was subsumed into the maw of our healthcare system. 

But we still pay way more than any developed country for our healthcare system, for health outcomes that put us, at best middle of the pack. Yes, some of the best care in the world can be found here, but most people shouldn’t expect to receive it

One might have thought that a global pandemic would make the problem big enough. Yet still the outlines of a solution continue to elude us. It seems there is no health problem so big that we can’t turn into a political issue, not even a pandemic.

Even before the pandemic, we were facing epidemics of chronic diseases, such as diabetes and obesity, as well as gun violence, opioid addiction, and mental health. In Gen Z’s lifetimes, much less those of millennials or Baby Boomers, the problems in our healthcare system have grown from huge to unfathomable.  When it comes to healthcare, we’ve let the problem get big enough. It’s been enlarged to the point it is hurting us, our economy, and our futures.

Yet here we are, still fumbling for solutions.

By now, we shouldn’t just have shadows of solutions. By now, the problem is so big that solutions should be crystal clear to everyone. But they’re not.

We shouldn’t be surprised. We’re very good at kicking the can down the road.

Our infrastructure is aging, brittle, and outdated, but even the recent Infrastructure and Investment Jobs Act is much smaller than it really needed to be. The racial wealth gap is a consequence of shameful historical patterns, yet continues to widen; it is not survivable for a democracy.

We’ve learned only half of Eisenhower’s adage: we’ve got the letting the problem get bigger part down, but we’ve forgotten the part about how/when to come up with solutions.

Where’s Eisenhower when we need him?

This post is an abridged version of the original posting in Medium. Please follow Kim on Medium and on Twitter (@kimbbellard)  

The State of Telehealth as We Slide into 2022

By Clive Riddle, December 10, 2021

A HHS 34-page study released this week by ASPE (Office of the Secretary for Planning and Evaluation) entitled Medicare Beneficiaries’ Use of Telehealth in 2020: Trends by Beneficiary Characteristics and Location says the bottom line on telehealth in the first year of the pandemic was “Medicare telehealth flexibilities mitigated declines in in-person visits during the pandemic in 2020, but there is also evidence of disparities by race/ethnicity and for rural populations.”

The ASPE report found that “the share of Medicare visits conducted through telehealth in 2020 increased 63-fold, from approximately 840,000 in 2019 to 52.7 million. States with the highest use of telehealth in 2020 included Massachusetts, Vermont, Rhode Island, New Hampshire and Connecticut. States with the lowest use of telehealth in 2020 included Tennessee, Nebraska, Kansas, North Dakota and Wyoming.”

Other key findings included:

• Despite the increase in telehealth visits during the pandemic, total utilization of all Medicare FFS Part B clinician visits declined about 11% in 2020 compared to levels in 2019.
• Most beneficiaries (92%) received telehealth visits from their homes, which was not permissible in Medicare prior to the pandemic.
• Prior to the pandemic, telehealth made up less than 1% of visits across all visit specialties but increased substantially in 2020. Telehealth increased to 8% of primary care visits, while specialty care had smallest shift towards telehealth (3% of specialist visits).
• Visits to behavioral health specialists showed the largest increase in telehealth in 2020. Telehealth comprised a third of total visits to behavioral health specialists.
• While data limitations preclude clear identification of audio-only telehealth services, up to 70% of these telehealth visits during 2020 were potentially reimbursable for audio-only services.
• Black and rural beneficiaries had lower use of telehealth compared with White and urban beneficiaries, respectively. Telehealth use varied by state, with higher use in the Northeast and West, and lower in the Midwest and South.

At the same time, CMS released a Medicare Telemedicine Data Snapshot Overview, highlighting claims data between March 1, 2020 and February 28, 2021. In the CMS telemedicine world, they provide these definitions of services that they summarize in their snapshots:

• Telehealth Visits: Routine office visits provided via video (requires synchronous, real-time audio and/or video communication) with new or established patients. In this snapshot, we group audio-only telehealth in this service category.
• Virtual Check-ins: Short patient-initiated communications with a healthcare practitioner via telephone or other telecommunications device to decide whether an office visit or other service is needed.
• E-visits: Non-face-to-face patient-initiated communications with a healthcare practitioner through an online patient portal.

Here’s a peek at two of the seven sections they provide in the overview; they also provide a link to the entire data snapshot file:

Last week, RAND released a new study published in JAMA:   Assessment of Patient Preferences for Telehealth in Post–COVID-19 Pandemic Health Care, which ‘found that people who preferred video visits were more sensitive to out-of-pocket costs than those who preferred in-person visits, as a $20 increase in cost was associated with more people switching from video visits to in-person care.”

RAND reports that “when faced with a choice between an in-person visit or a video visit for a nonemergency health issue, survey participants generally preferred in-person care. Those who were younger, had higher incomes, and had more education were more likely to opt for video visits. Experience with telehealth was associated with a preference for future video visits. Just 2% of those who previously had a video visit were unwilling to do so again…. About 34% of participants did not see any role for video visits in their medical care. These people were generally older, had lower incomes, lived in more-rural areas, and had lower education levels.”

Last month, GoodRx, in collaboration with the American Telemedicine Association released a new report: The State of Telehealth, examining the role the COVID-19 pandemic has played in reshaping virtual care and patient-provider interactions. The report is based on a survey of over 1,000 patients and more than 600 healthcare providers. The key takeaways summarized in their report are:

1. The COVID-19 pandemic spurred telehealth use, and now both consumers and healthcare providers find value in virtual visits. Both report increased interaction and better outcomes.
2. Many consumers find value in a hybrid model of care, which combines both in-person visits and telehealth.
3. No-show rates for telehealth visits may be a pitfall for providers.

Other findings in their report included:

• About 40% of consumers reported they interacted more with providers because of telehealth appointments
• 40% of consumers noted that they spend more time with their providers
• Over 70% of providers said continuity of care was better or much better with telehealth
• More than 40% of providers reporting it was better than in-person care
• Before the pandemic, 17% of consumers had used telehealth
• Now, over 60% of consumers plan on using a hybrid model that combines in-person and telehealth visits
• More than 80% of providers plan to continue offering telemedicine to patients
• 60% of providers said telehealth has improved medication adherence and resulted in better conversations about healthcare costs with patients
• 45% of providers indicated that no-show rates for telehealth appointments were higher or much higher than that of in-person rates

A mission statement must be more than a PR tactic

By Dr. Seleem R. Choudhury, December 2, 2021

Each one of us has deeply held beliefs that motivate us to action.  This is part of what it is to be human.  It is embedded in our humanity to pursue virtue, or a habitual and firm disposition to do good. Our character is inextricably linked with virtue, because good character is built through the practice and habituation of virtues (Newstead, Dawkins, & Martin, 2019).  

It is no wonder, then, that mission-driven organizations have become so desirable to today’s workforce. Working for a mission-driven organization offers a powerful avenue for the exercise of virtues through the expression and implementation of positive contributions to society (Maciariell, 2006).

I recently transitioned from NYC Health and Hospitals to Adventist HealthCare. During this transition process, it became abundantly clear that the organization’s mission is a determining factor before working in any organization. Both organizations have mission statements that align with my personal values and virtues. NYC Health and Hospitals, the largest public health care system has the mission “to extend equally to all New Yorkers, regardless of their ability to pay, comprehensive health services of the highest quality in an atmosphere of humane care, dignity, and respect,” and Adventist HealthCare, is a faith-based health system providing Christ-centered care to meet the need of quality and accessible healthcare for the local community by “extending God’s care through the ministry of physical, mental and spiritual healing” (NYC Health and Hospitals, 2021; Adventist HealthCare, 2021).

The importance of a compelling mission statement

At its best, an organization’s mission “defines and upholds” what an organization stands for (Craig, 2018). Several studies suggest that there is a positive correlation between mission statements and organizational performance. In fact, the highest performing organizations are often the ones with more comprehensive mission statements—speaking to corporate philosophy, self-concept, public image, and financial performance (Kadhium, Betteg, Sharma, & Nalliah, 2021; Bartkus, Glassman, & McAfee, 2006; Rarick & Vitton, 1995; Desmidt, Prinzie, & Decramer, 2011; Ranasinghe, 2010).

The mission statement of a healthcare organization is an essential strategic tool that captures an organization’s “enduring purpose, practices, and core values” (Trybou, Gemmel, Desmidt, & Annemans, 2017; Bart & Hupfer, 2004). Individuals are attracted to an organization as their personal motivation aligns with the mission and intrinsic factors meet individual interests. A compelling shared mission keeps everyone’s focus on the greater primary purpose and goal of the work they are doing. It also provides guardrails and direction for decision-making in times of unpredictability or conflict (Ansary, 2019). Collaborating between leadership and staff on how to unite and put into practice the organization’s mission is a sign of a truly mission-driven, successful and healthy organization (Trybou, Gemmel, Desmidt, & Annemans, 2017).

Finding the “why”

Simon Sinek, leadership guru and founder of SinekPartners, states: “The value of our lives is not determined by what we do for ourselves. The value of our lives is determined by what we do for others” (Sinek, 2014).

A mission statement should articulate why you are doing what you are doing.  For example, NYC Health and Hospitals is “committed to the health and well-being of all New Yorkers” (NYC Health and Hospitals, 2021). This statement expresses the importance of community and how being part of a community can make us feel as though we are a part of something greater than ourselves. NYC Health and Hospitals’ why is to create a healthy community.  By starting there, the how of building a healthy community—social-connectedness, overall well-being, satisfaction in life, work, and play—all become clearer (Caulfield, 2015). 

Adventist HealthCare’s mission focuses upon faith, desiring to “extend God’s care through the ministry of physical, mental and spiritual healing” (Adventist HealthCare, 2021). It is faith that “gives people a sense of meaning and purpose in life,” or as discussed above, their why (Moll, 2019). A faith-based care approach understands the wholeness and health of a person through the ministry of physical, mental, and spiritual healing. 

Relationships are important to humans and a mission that supports connectedness speaks to the why. Close connection to the people, activities, etc., that we love yields feelings of happiness, contentment, and personal satisfaction with our lives (Sharry, 2018). There is more than sufficient scientific evidence to show that involvement in social relationships have a benefit upon health (Umberson & Montez, 2010). In healthcare, a mission statement’s emphasis on relationships, whether through community or faith, creates a connection and gives the organization a strong why.

The benefit to organizations

A clear, inspiring mission statement is essential to the health of an organization. Without it, strategic planning of any kind is impossible (Alegre, Berbegal-Mirabent, & Guerrero, 2019).  Mission statements also show the intent and purpose of an organization, providing a roadmap and an element of predictability concerning whether opportunities should be pursued or services offered, and making expectations clear for executives and staff within the organization (Salehi-Kordabadi, Karimi, & Qorbani-Azar, 2020). It also determines what criteria would be most effective to measure achievement (Bryson & Alston, 2005).

Furthermore, the mission imbues the work of every single employee with meaning and purpose. It helps them see how their job fits into the bigger picture and gives them a why that will inspire them (Sinek, 2009). This inspiration is a core component of organizational performance. Data shows that the design of mission statements are crucial for organizations’ growth, profitability, and shareholder equity.

However, studies also indicate that “almost 40 percent of employees do not know or understand their company’s mission” (McMillan). This suggests that leaders must embrace the task of helping employees view their work in light of the mission and understand how it contributes to the organization’s larger efforts.

A mission statement is essential to communicate the purpose and goals of an organization, and is crucial to success in effective strategic management (Hieu & Vu, 2021; Bart, Bontis, & Taggar, 2001). To be effective and inspiring, it should define the basic question of why the organization exists and what it hopes to achieve. A strong mission statement is a guiding light for the strategy and operations of the organization, attracting individuals whose virtues and motivation aligns with the organization, and paving the way for organizational success.

Reference

Alegre, I., Berbegal-Mirabent, J., & Guerrero, A. (2019). Mission statements: what university research parks tell us about timing. Journal of Business Strategy.

Bartkus, B., Glassman, M., & McAfee, B. (2006). Mission statement quality and financial performance. European Management Journal, 24(1), 86-94.

Bart, C. K., & Hupfer, M. (2004). Mission statements in Canadian hospitals. Journal of Health Organization and Management.

Bart, C. K., Bontis, N., & Taggar, S. (2001). A model of the impact of mission statements on firm performance. Management decision.

Beaton, E. E. (2021). No margin, no mission: How practitioners justify nonprofit managerialization. VOLUNTAS: International Journal of Voluntary and Nonprofit Organizations, 32(3), 695-708.

Bryson, J. M, Alston, F.K. (2005). Creating and implementing your strategic plan, San Francisco: Jossy-bass.

Craig, W. (2018). The importance of having a mission-driven company. Forbes.

Desmidt, S., Prinzie, A., & Decramer, A. (2011). Looking for the value of mission statements: a meta‐analysis of 20 years of research. Management Decision.

Hieu, V. M., & Vu, N. M. (2021). Linking Mission Statements Components to Management Effectiveness. Webology, 18(Special issue on Management and Social Media), 39-48.

Lilja, T. M. (2021). Far Away on an Important Mission: Considerations on Branch Manager Regulation. Copenhagen Business School, CBS LAW Research Paper, (21-03).

Maciariell, J.A. (2006). Peter F. Drucker on Mission-Driven Leadership and Management in the Social Sector. Journal of Management, Spirituality & Religion, 3(1-2).

McMillan, A. Mission and Vision Statements. Reference for Business.

Newstead, T., Dawkins, S., Macklin, R. and Martin, A. (2020a), “We don’t need more leaders – we need more good leaders. advancing a virtues-based approach to leader (ship) development”, The Leadership Quarterly, pp. 1-11.

Newstead, T., Dawkins, S., Macklin, R. and Martin, A. (2020b), “The virtues project: an approach to developing good leaders”, Journal of Business Ethics, pp. 1-18.

Ranasinghe, D. N. (2010). Impact of formality and intensity of strategic planning on corporate performance. In Proceedings of International Conference on Business Management (Vol. 7).

Rarick, C. A., & Vitton, J. (1995). Corporate strategy: Mission statements make cents. Journal of Business Strategy.

Salehi-Kordabadi, S., Karimi, S., & Qorbani-Azar, M. (2020). The Relationship between Mission Statement and Firms’ Performance. International Journal of Advanced Studies in Humanities and Social Science, 9(1), 21-36.

Trybou, J., Gemmel, P., Desmidt, S., & Annemans, L. (2017). Fulfillment of administrative and professional obligations of hospitals and mission motivation of physicians. BMC health services research, 17(1), 28. https://doi.org/10.1186/s12913-017-1990-0

Umberson, D., & Montez, J. K. (2010). Social relationships and health: a flashpoint for health policy. Journal of health and social behavior, 51 Suppl(Suppl), S54–S66.

Breaking Up Is Good to Do

By Kim Bellard, November 16, 2021

Last week General Electric announced it was breaking itself up. GE is an American icon, part of America’s industrial landscape for the last 129 years, but the 21st century has not been kind to it. The breakup didn’t come as a complete surprise. Then later in the week Johnson and Johnson, another longtime American icon, also announced it would split itself up, and I thought, well, that’s interesting. When on the same day Toshiba said it was splitting itself up, I thought, hmm, I may have to write about this.

Healthcare is still in the consolidation phase, but there may be some lessons here for it.

As unique as each of their stories is, the thing that each breakup has in common is that the hope is that investors will see greater value as a result. It’s not about the products or the customers; it’s about the returns.

Healthcare knows about that.

Healthcare has been a hotbed of acquisition and consolidation. Hospitals buy hospitals; health insurers buy health insurers, pharmaceutical companies buy pharmaceutical companies, digital health companies buy digital health companies, private equity firms buy physician practices. But we’re also seeing things like CVS buying Aetna or UnitedHealth Group buying DaVita Medical Group (and trying to buy Change Healthcare).

Still, though, when I see conglomerates like GE, J&J, or Toshiba breaking up, what I think about most are not those kinds of healthcare conglomerates, but, rather, hospitals.

Hospital systems are big. It probably won’t come as much surprise that a for-profit chain like HCA has annual revenues of $59b, but it might that “non-profit” UPMC has annual revenues of $23b. Mayo Clinic and Cleveland Clinic also report double digit billion dollar revenues. We’re talking about big businesses.

But are hospitals anything other than healthcare conglomerates? They fix your heart over here, they implant a new hip over there, they deliver your babies, they attack a variety of your cancers in a variety of ways, they put various kinds of scopes inside you, they take detailed images of you, and, Lord knows, they do all sorts of lab tests, all while running the meter on you to ensure they can charge you as much as they are allowed.

I can see the argument that you’ll need imaging and lab tests whether you are getting a bypass or having a baby, but it is not at all clear that doing bypasses makes a hospital a better place to deliver babies. Being the best cancer hospital, or even just a good cancer hospital, doesn’t mean it is good at doing a cholecystectomy. Service lines are businesses; it’s hard enough to ensure quality within a service line, much less across them. More isn’t necessarily better.

Michael Farr, head of Farr, Miller & Washington, told WaPo: “More effective CEOs said, ‘Wait a minute, I need to make sure this is strategically and logically integrated with everything our core business is doing.’” He was speaking of the GE divestiture, but how many hospital CEOs are having that same examination? How many of them could truly define their “core business,” other than offering a bland “patient care”? Which patients, which care, in what places using what services?

Increasingly, hospitals want to be all things to all patients in all places, just as industrial conglomerates wanted to serve all customers in all industries. That worked well for a long time, but no longer. That time is coming in healthcare too. Hospitals, and all healthcare companies, need to truly define, and focus on, their core business.

Healthcare has too many conglomerates. Time for them to break up.

This post is an abridged version of the original posting in Medium. Please follow Kim on Medium and on Twitter (@kimbbellard)  

A Trio of Value Based Care Surveys Indicate Technology Opportunities to Address Administrative Challenges

By Clive Riddle, November 10, 2021

The Guidehouse Center for Health Insights has just released analysis of an executive survey in conjunction with HFMA, the 2021 Risk-Based Healthcare Market Trends, that found health systems appear to be going big into risk sharing in 2022, with these percentages of respondents planning to advance into upside/downside risk sharing, professional capitation or global capitation for:

• Medicare Advantage: 59%
• Commercial Contracts: 52%
• CMS APMs: 49%
• Managed Medicaid: 36%
• Direct Employer Contracting 33%

Guidehouse's Richard Bajner tells us "We’re seeing increased interest from providers to own the premium dollar through risk-based arrangements. On the other hand, large payers have been more aggressive in building and even investing directly in primary care assets to gain control over the flow of care and better manage services delivered to members, compounding the need for payers and providers to align closely on market strategies. These moves have led health systems to gravitate toward programs more favorable for risk-based collaborations—or payvider models — such as Medicare Advantage, managed Medicaid, and self-insured models."

Guidehouse also share that “provider respondents to the survey cited data integrity, reporting, and the cost of technology (36%) as the No. 1 internal challenge in pursuing increased levels of risk. While half of respondents are building these capabilities in-house, 30% are partnering with payers to support risk-based capabilities and 21% are outsourcing services to a third-party organization.”

Avalere has just released their fifth annual outcomes based contract findings from a 50 question survey of  51 health plans and PBMs, indicating 56% have executed an outcomes based contract for prescription drugs. They also found 12% of payers reported having more than 10 OBCs currently in place, with another 6% of payers have 5–10 OBCs. This total 18% with 5+ OBCs decreased from 25% in 2020, although the portion with 10+ contracts increased from 2020.

Avalere’s Sarah Butler tells us “the significant increase in payers who have more than 10 OBCs in place is showing us that some payers are successfully executing these agreements. At the same time, however, the decline in payers that have tried 1 OBC indicates fewer new entrants in this space.”

Avalere reminds us that "OBCs typically include an agreement between health plans and drug or device manufacturers that ties product reimbursement to specific clinical, quality, or utilization outcomes. Although innovative contracting approaches, such as OBCs, aim to align cost with value, successful implementation and adjudication of an OBC or other type of value-based contract requires significant investment into infrastructure that can support outcomes tracking and coordination among entities involved. Therefore, while some payers may have successful experiences with OBCs, some payers may face significant administrative burden and have limited success in controlling costs."

Speaking of administrative burdens, the Medical Group Management Association (MGMA) recently released their 12-page Annual Regulatory Burden Report, finding that 91% felt the overall regulatory burden on their medical practice over the past 12 months has increased.

The Medicare Quality Payment Program (MIPS/APMs) ranked third (behind Prior Authorizations and COVID-19 workplace mandates) out of nine regulatory issues with regard to physician burden level, with 6% responding MIPS/APM were not burdensome; 6% slightly burdensome; 16% moderately burdensome; and 71% very or extremely burdensome. 79% said the move toward value-based payment (in Medicare/Medicaid) has increased the regulatory burden on their practice, and 70% said the program has not improved the quality of care for their patients, or been successful to date.

It should be noted survey responses were "from executives representing over 400 group practices. 70% of respondents are in practices with less than 20 physicians and 10% are in practices with over 100 physicians. Over 80% of respondents are in independent practices." Regulatory burdens might be anticipated to be greater with independent practices, and those with less than 20 doctors.

92% responded that CMS’ feedback was not actionable in assisting their practice in improving clinical outcomes or reducing healthcare cost related to the MIPS cost performance category, and 88% said the same for the MIPS quality performance category. 93% said positive payment adjustments do not cover the costs of time and resources spent preparing for and reporting under the program.

With respect to APMs, 80% said Medicare does not offer an Advanced APM that is clinically relevant to their practice, but 63% would be interested in participating in an Advanced APM if it was clinically relevant and aligned with their quality goals.

These findings would suggest an opportunity for value based care enabling applications that are designed to achieve program goals but also simplify participation and potentially reduce administrative burdens.

Dental and Vision Plan Satisfaction in 2021

By Clive Riddle, November 4, 2021

It’s time to see things eye-to-eye, and tell the tooth, about the state of vision and dental plan satisfaction. Setting Dad jokes aside, J.D. Power has just separately released their  2021 U.S. Dental Plan Satisfaction Report and their 2021 U.S. Vision Plan Satisfaction Report.

The J.D. Power Dental report tells us “overall customer satisfaction with dental plans increases slightly in 2021, driven by a combined 48-point increase in claims and reimbursement satisfaction (on a 1,000-point scale)  and customer service experience.” UnitedHealthcare Dental ranks highest with a score of 806. HumanaDental ranks second (793) and Aetna Dental ranks third (791).

Their vision report tells us “after a decrease in overall satisfaction in 2020, vision plan satisfaction is rebounding as doctor visits increase. Overall satisfaction is 769 (on a 1,000-point scale), an increase from 760 in 2020. Additionally, 5% more members visited their vision providers within the past six months compared with the same time in 2020.” UnitedHealthcare Vision ranks highest in customer satisfaction with vision plan insurers with a score of 825. Aetna Vision (816) ranks second and Davis Vision (775) ranks third.

The 2021 U.S. Dental Plan Satisfaction Report is based on responses from more than 1,203 dental plan members. The 2021 U.S. Vision Plan Satisfaction Report is based on responses from more than 1,110 vision plan members.

Both reports measure customer satisfaction applicable plans based on five factors (in order of importance): cost; coverage; communications; customer service; and reimbursement. coverage; cost; communications; customer service; and reimbursement.

Here are summaries that J.D. Power provided:

Medicine May Be an Art, But AI May Be Artists

By Kim Bellard, October 28, 2021

Six hundred years ago, Swiss physician/scientist/philosopher Paracelsus disclaimed: “Medicine is not only a science; it is also an art.” Medicine, most people in healthcare still believe, takes not just intelligence and fact-based decision-making, but also intuition, creativity, and empathy. This duality is often cited as a reason artificial intelligence (A.I.) will never replace human physicians.

Perhaps those skeptics have not heard about Ai-Da.

Named in honor of famed 19th century mathematician/ programmer Ada Lovelace, Ai-Da is “the world’s first ultra-realistic humanoid robot artist.” She was created in 2019, and uses AI algorithms to create art with her cameras/eyes and her bionic arms. She can draw, paint, even sculpt, and had her first major exhibit — Ai-Da: Portrait of the Robot — this summer at London’s Design Museum.

Lest anything think Ai-Da is a one-off, I’d also point to Xiaoice, a Microsoft-built, China-based AI chatbot that is “a poet, a painter, a TV presenter, a news pundit, and a lot more.”

There are other AI artists besides Ai-Da and Xia. If AI-produced art isn’t impressive enough, earlier this year AI was used to finish Beethoven’s famous unfinished 10th symphony, synthesizing all his other works and his notes, and using them to create something he might have written. The completed symphony had its world premiere earlier this month.

Healthcare certainly hasn’t been ignoring AI. Every day it seems there are more announcements about AI-powered innovations, as well as funding for AI-based companies with a health focus.

Just week, researchers at the University of Utah Health/Rady Children’s Hospital reported they’d used AI to parse massive amounts of genetic data to diagnose rare pediatric disorders, in a way humans never could have. AI is already also increasingly important in drug discovery, and numerous health systems are implementing their own AI-based initiatives, such as a Stanford University Medical Center/Microsoft project on medical imaging datasets and a Mayo Clinic/Google AI algorithm for treatment of brain diseases.

Last year alone the FDA approved 100 AI/ML (machine learning) devices, with radiology being the big leader, according to a Politico analysis; as Dr. Eric Topel likes to say, it is the “sweet spot of AI.”

Lenovo’s Sinisa Nikolic believes: “AI is set to transform the future of healthcare,” although he offers the usual cautions: “In all aspects of healthcare, you will always need human-human contact and interaction. Humans have empathy; machines cannot replace that. AI will help us be better, stronger, and healthier.”

Not everyone is as conservative. Kai-Fu Li, author of AI Superpowers, predicts: “I anticipate diagnostic AI will surpass all but the best doctors in the next 20 years.”

Healthcare has come a long way with its acceptance of healthcare, from initially rejecting it, of course, to the now common mindset that, yes, it could be a great help, helping automate common tasks and augmenting clinicians. But crossing that line between augmenting and replacing is hard for many to accept.

We can accept AI being good at the “science” part of medicine, but we’ve yet to be convinced it could be good at the “art” part of it. But, as Ai-Da and other AI artists are illustrating, it’s something we’re going to have to face.

Ai-Da’s website warns: “If Ai-Da does just one important thing, it would be to get us considering the blurring of human/machine relations, and encouraging us to think more carefully and slowly about the choices we make for our future.”

Let’s hope healthcare thinks carefully — but not too slowly — about the choices AI offers us for the future.

This post is an abridged version of the original posting in Medium. Please follow Kim on Medium and on Twitter (@kimbbellard) 

What Collaborative Health Systems, athenahealth and Milliman Found, Sifting Through CMS ACO Performance Data

By Clive Riddle, October 22, 2021

Collaborative Health Systems has announced their affiliate Accountable Care Coalition (ACC) of Southeast Texas, Inc. generated nearly $64 million in shared savings under the Next Generation Accountable Care Organization (ACO) Model for performance years 2017 through 2020, according to CMS performance year 2020 data. CHS, reports that in 2020, the ACC of Southeast Texas achieved the following outcomes:

• Served more than 18,000 Medicare beneficiaries across southeast Texas;
• Achieved an overall savings rate of 12.2%, the third highest of all Next Generation ACOs; and,
• Generated $30 million in shared savings – a 70% increase from performance year 2019.
• Achieve a 94.6% overall quality score
• The network has experienced a 20% decrease in inpatient discharges per 1,000 and a 29% decrease in ER visits per 1,000 since 2012.

The Accountable Care Coalition of Southeast Texas has participated in the Next Generation ACO initiative since the program's first performance year in 2016. Performance year 2021 represents that last year of the Next Generation ACO Model. Collaborative Health Systems will be managing four Direct Contracting Entities with a presence across 24 states. CHS currently manages two Next Generation ACOs, one Direct Contracting entity, eight MSSP ACOs, a Care Transformation Organization, and three Independent Practice Associations. CHS is a wholly owned subsidiary of Centene Corporation.

Meanwhile, athenahealth reports their ACO clients "earned a total of $143 million in savings in the 2020 Medicare Shared Savings Program (MSSP)", and among their ACO customers, "81% generated shared savings and 100% avoided losses. In addition, athenahealth’s ACO customers achieved an average quality score of 97.8% for 2020 and earned an average shared savings of $22.59 per member per month (PMPM), which compares to an average of $16.23 for all other ACOs participating in MSSP."

Milliman researchers recently published results of their analysis of ACO characteristics determined to be strongly predictive of MSSP gross savings, comparing current ACO performance analytics to a previous study conducted in 2015.

Milliman researchers found that the drivers of recent success are quite different and, in some cases, the opposite of what they were in 2015. With Pathways to Success, CMS endeavored to reshape the MSSP by adjusting incentives, encouraging greater accountability in ACOs, and offering options specific to each ACO’s ability to take on risk. Their analysis gives early indication that these changes are rewarding ACOs for attained efficiency levels, possibly enhancing the attractiveness of the program. Furthermore, the authors also see evidence of at least some correlation between tracks with downside risk and higher gross savings, supporting CMS’s case for accountability as a policy priority, though voluntary track selection may also be playing a role. Lastly, the authors see some indication that ACOs strongly emphasizing primary care are having greater success than their peers.

The Milliman team involved in this study will be presenting their findings in a new HealthcareWebSummit webinar: Key Drivers of ACO MSSP Results - What Predictive Analytics Can Tell Us, to be held Thursday, November 18^th, 2021 at 1PM Eastern.

Developing Excellence in Primary Care

By Dr. Seleem R. Choudhury, October 13, 2021

Nearly half of all Americans suffer from at least one chronic disease, and that number is growing (American Association of Retired Persons; Fried, 2017; Tinker, 2017).  Chronic diseases—including cancer, diabetes, hypertension, stroke, heart disease, respiratory diseases, arthritis, obesity, and oral diseases—can lead to hospitalization, long-term disability, reduced quality of life, and death.  Additionally, chronic diseases often require a long period of supervision, observation, or care (Rothman, & Wagner, 2003). To make matters more complicated, many patients have multiple morbidities, creating particular challenges for healthcare providers (Braillard, Slama-Chaudhry, Joly, Perone, & Beran, 2018).

As Reynolds, et al, explain in their 2018 article, “the defining features of primary care (including continuity, coordination, and comprehensiveness) makes this setting suitable for managing chronic conditions” (Reynolds, Dennis, Hasan, Slewa, Chen, et al., 2018).  High-performing primary care teams keep the “quadruple aim” of primary care—enhancing the care experience, improving the health of the population, reducing costs, and improving the work-life of the team—at the forefront of their work (Haverfield, Tierney, Schwartz, Bass, Brown-Johnson, et al, 2020). Studies repeatedly bear this out, demonstrating that an integrated approach with an aim to improve the quality of life of patients—as well as those caring for them—can enhance chronic disease outcomes and management.  As the healthcare industry continues to evolve, it cannot afford not to invest in primary care.

Bodenheimer’s Building Blocks

Current literature discussing characteristics of best primary care practices supports three well-proven methods:

1. Patient-Centered Medical Home (PCMH) standards from the National Committee on Quality Assurance (Hahn, Gonzalez, Etz, & Crabtree, 2014),
2. the Peterson Center on Health Care’s “America’s Most Valuable Care: Primary Care” (Peterson Center on Health Care, & Stanford Medicine Clinical Excellence Research Center, 2014), and
3. the Building Blocks framework commonly known as Bodenheimer’s Building Blocks. (Bodenheimer, Ghorob, Willard-Grace, & Kevin Grumbach, 2014).

Each of these models is similar, often reinforcing one another yet each with its unique benefits.  Inspired by a conversation with Tanya Kapka, MD, MPH, FAAFP, a leader in healthcare transformation, this article will focus on four specific areas within Bodenheimer’s Building Blocks: Engaged Leadership, Data-Driven Improvement, Empanelment, and Team-Based Care (see graphic). These four blocks are foundational in the quest for clinical excellence in primary care.

 

Block 1: Engaged leadership

One of the most commonly cited reasons for failed PCMH change efforts is a lack of leadership support (Qureshi, Quigley, & Hays, 2020).  Active, engaged, supportive leadership is not a new necessity, nor is its importance limited to healthcare. The role is critical in Comprehensive Primary Care transformation (Altman Dautoff, Philips, & Manning, 2013). Leaders are the ones who drive and inspire change.  Without a leader to champion the change and navigate teams through its complexities, then the aspiration for developing excellence will never be attained.

Block 2: Data-Driven Improvement

 Evidence of what constitutes quality care is always evolving; this is a good thing for patients and the health of our communities. This necessitates that providers regularly re-evaluate and change their practices in order to stay current (Agency for Healthcare Research and Quality, 2018).  This, of course, assumes that this evidence will lead to improved patient care and outcomes.  The challenge is typically about finding a balance regarding data. When making choices about care practices, too much data becomes daunting, too little leads to uncertainty. The goal is to hit a sweet spot where all members of the team feel like they have enough data to make informed decisions to enhance clinical excellence (Coppersmith, Sarkar, & Chen, 2019).

Block 3: Empanelment

Empanelment is a foundational strategy for building or improving primary health care systems by linking patients to a primary care provider. This strategy is a “critical pathway” for achieving optimal outcomes, effective universal health coverage, and population health management (Bearden, Ratcliffe, Sugarman, Bitton, & Anaman, 2019). To effectively promote patient engagement or, in some circumstances, patient re-engagement, the care team must remain coordinated, data must be up to date, and patient coordination and communication consistent. These elements are essential for excellence in primary care (McGough, Chaudhari, El-Attar, & Yung, 2018).

Block 4: Team-Based Care

The concept of a team approach in primary care is not new. However, it is often assumed that it is occurring. And though team-based care may occur, few organizations effectively and regularly evaluate its success and consider how their care teams might become even higher-performing.  Namely, organizations should assess whether the required knowledge, skills, and abilities are present on the team (Larson, 2009), the team members are in their optimal roles (Luig, Asselin, Sharma, & Campbell-Schererand, 2018), and the team is striving for improvement together (Shukor, Edelman, Brown, & Rivard, 2018).

The identity of High-Quality, Comprehensive Primary Care, mid- and post-COVID

The past year and a half of providing care in a pandemic has starkly highlighted the importance of primary care. “During a pandemic, primary care is the first line of defense. It is able to reinforce public health messages, help patients manage at home, and identify those in need of hospital care” (Krist, DeVoe, Cheng, Ehrlich, & Jones, 2020).

At the onset of the pandemic, primary care was forced to transform from a person-visiting-a-clinic modality to a telemedicine program (Jaklevic, 2020). Interestingly, healthcare systems and primary care practices had tried to coax this change prior to the pandemic, but many experienced resistance.  The reasons for this resistance were complex and varied, yet literally overnight these changes occurred (Nittari, Khuman, Baldoni, Pallotta, Battineni, et al, 2020; Kaplan, 2020). Some would say the change occurred too quickly.

Initially, these programs demonstrated success with continuity of care, improved or plateaued outcomes, and reimbursement from payers (Rosen, Joffe, & Kelz, 2020). However, cracks present within team cohesion before the pandemic combined with overnight forced change highlighted vulnerabilities and tension in teams that were inadequately lead, staffed, managed, and skilled. It is evident that while teams with the aforementioned gaps struggled or continue to struggle today, high-performing teams pre-pandemic continued to transition successfully (Contreras, Baykal, & Abid, 2020).

The characteristics of high-quality primary care in the midst of COVID and post-COVID requires providers to get back to basics. Providers need to set their sights on the quadruple aim of enhancing the care experience, improving the health of the population, reducing costs, and improving the work-life of the team, as well as ensuring that the foundational building blocks of the Bodenheimer model are firmly in place.  

Health systems must invest in the primary care infrastructure. This begins with team leadership that endorses engagement and satisfaction, sufficient and easily-accessible data, the appropriate application of a patient panel that promotes appropriate ratio of patient acuity that leads to population health management in and out of the clinic, and a fully staffed team that fosters cohesion, camaraderie, and continual desire to improve.

Read more from Dr. Seleem Choudhury at seleemchoudhury.com

Reference

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Bodenheimer, T., Ghorob, A., Willard-Grace, R., & Grumbach, K. (2014). The 10 building blocks of high-performing primary care. Annals of family medicine, 12(2), 166–171. https://doi.org/10.1370/afm.1616

Braillard, O., Slama-Chaudhry, A., Joly, C., Perone, N., & Beran, D. (2018). The impact of chronic disease management on primary care doctors in Switzerland: a qualitative study. BMC family practice, 19(1), 159. https://doi.org/10.1186/s12875-018-0833-3

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A Nice Development in HDHPs: More Reduced Cost Sharing For Targeted Conditions

By Clive Riddle, October 7, 2021

AHIP and the Smarter Health Care Coalition have released survey results that found ‘most health insurance providers and many large employers have taken advantage of new regulatory flexibility to cover more chronic disease prevention services on a pre-deductible basis.”

The survey took aim at finding out how many plans targeted changes after the 2019 change in IRS guidance for HSAs/HDHPs. The survey report noted that “until recently, HSA-eligible health plans were restricted in covering care that wasn’t considered preventive before a consumer satisfied their plan’s deductible. But in July 2019, the Internal Revenue Service (IRS) issued Notice 2019-45, guidance which expanded the list of preventive care benefits to include many items and services used to manage chronic health conditions. Now, plans and employers may offer 14 additional items and services pre-deductible, including insulin and other glucose lowering agents, glucometers, inhalers, statins, and others.”

The good news? "Most respondents modified their HSA-eligible health plans to cover more chronic disease prevention services on a pre-deductible basis: 75% covered additional services without applying a deductible in their fully insured products, and 80% in their self-insured products."

How far did respondents go in reducing or eliminating cost sharing for targeted conditions? 44% of fully-insured and 4% of self-funded plans applied changes in all contracts, 26% of fully insured plans and 38% of self-funded plans did so in most contracts, and 30% of fully insured and 58% of self-funded plans did so in some contracts.

What chronic conditions were most frequently targeted? The survey report tells us that “Health insurance providers targeted a variety of chronic health conditions with two conditions targeted by almost all plans: diabetes (96% of plans in both fully insured and self-insured products), and heart disease (targeted by 73% in fully insured products and 74% in self-insured products).”

We compiled the results for fully-insured plans of the conditions targeted by more than 60% of the plans, to provided this graph of the top conditions that will have reduced cost sharing:

The Latest No Surprises Act Interim Rule and the Ignored Problem of Hospital Based Physicians

By Clive Riddle, September 30, 101`

A second interim final rule for the No Surprises Act: “Requirements Related to Surprise Billing; Part II,”  has just been issued, which CMS has summarized as including the following provisions:

• A process that takes consumers out of the middle of a payment dispute between providers and health plans;
• Requirements for health care cost estimates for uninsured (or self-pay, meaning you have coverage but choose not to have your care billed to your health plan) individuals;
• A payment dispute resolution process for uninsured (or self-pay) individuals; and
• Expanded rights to external review (what individuals with job-based or individual health plans can use to dispute when certain claims are denied payment, as described below).

Earlier this month, two other interim final rules were issued that take effect January 1st:  an interim final rule on consumer protections against surprise billing, and a proposed rule to help collect data on the air ambulance provider industry, which the DOL states “ban surprise billing for emergency services and ancillary care at in-network facilities, and limit high out-of-network cost sharing for emergency and non-emergency services, such that it cannot be higher than if such services were provided in-network.”

The DOL helps explain this latest interim final rule now “details how the total payment to an out-of-network provider or facility will be determined. In some cases – based on the law – state law or application of a state All-Payer Model Agreement will determine this amount. Where neither applies, the rule sets forth the federal process that will apply for determining the amount. When a payment dispute for items/services that fall under surprise billing protections occur, either a provider, facility, or air ambulance provider or plan/issuer may initiate a 30-day open negotiation period. If open negotiation fails, either party may initiate the federal independent dispute resolution process. This rule details how this process initiates, what is eligible for this process and how independent dispute resolution entities should consider factors when determining a payment amount.”

The DOL adds that the new rule “outlines key requirements related to uninsured (or self-pay) individuals (self-pay individuals are individuals who have coverage but do not choose to have their care billed to their health plan or issuer). When individuals schedule an item or service with certain providers and facilities, those providers and facilities will be required to inquire about the individual’s health coverage status, and if the individual wants their care billed to their health plan or issuer. The provider or facility must provide a good faith estimate of expected charges for the care they are scheduling for individuals deemed uninsured (or self-pay). An uninsured (or self-pay) individual may also request a good faith estimate, without scheduling an item or services. The rule also establishes a process for uninsured (or self-pay) individuals to initiate a payment dispute resolution process if they are ultimately billed substantially in excess of the good faith estimate they received.”

CMS provides a summary of the open negotiation and arbitration process and deadlines, and provisions for good faith estimates of charges for uninsured or self-pay individuals that are set in the rule.

The root problems of surprise medical billing are significant, and date back to the dawn of modern managed care, particularly with the advent of PPOs that weren’t as subject to coverage regulations as HMO policies. While the No Surprises Act and the subsequent final rules go a long ways in addressing the issue, they are silent to one of the root causes: the impact of state corporate practice of medicine laws on the services provided by hospital based physicians.

Surprise Medical Bills typically involve out-of-network providers, and the source of surprise can be two—fold: (1) the magnitude of the bill reflected in balance billing; and (2) if the service was determined to be out-of-network or non-covered, when the patient perceived it to be in-network or otherwise fully covered. The scenarios that comprise one or both of these surprises are various, although often involve emergency services when use of out-of-network providers is necessitated. But a common thread in many cases involves services rendered by hospital based physicians (emergency medicine, anesthesiologists, radiologists, pathologists, and hospitalists are the most common such specialties.)

While typical HMO policy coverage of a treatment would apply to all services rendered for that treatment, including hospital based physician (HBP) services, PPO policy coverage at the preferred benefit level for in-network hospital services often doesn’t extend to HBP servicews provided by non-participating providers. In such situations, the HBP services by non-participating physicians were subject to balance billing, the same as when services are determined to be totally non-covered. And of course, retail rates have historically applied to balance billing, as opposed to standard contracted or reference based pricing rates.

The average consumer is typically not aware that services rendered at hospitals by HBPs are subject to separate billing by HBPs, or that the HBP might not elect to contract with the same plans as the hospital (although numerous hospitals require such participation in their HBP arrangements.) Of course, hospitals in states not subject to corporate practice of medicine laws often contract and bill for HBP services, making this issue moot. But for the many states subject to corporate practice of medicine laws, the issue remains.

The No Surprises Act transfers some of the financial pain experienced by patients potentially to the provider. But in corporate practice of medicine states, this pain could be better avoided by a carve-out for allowing corporate practice for HBPs, at least regarding health plan contracting, so that such services would be subject to falling within the hospital bill. The consumer surprise is often that separate bills for HBPs exist. A carve out, with a requirement that hospitals assume billing and payment responsibility for HBP services in applicable states, could be a more fundamental step to addresses this issue in combination with the No Surprises Act.

Not Your Father's Job Market

By Kim Bellard, September 24, 2021

If you, like me, continue to think that TikTok is mostly about dumb stunts, or, more charitably, as an unexpected platform for social activism, you probably also missed that TikTok thinks it could take on LinkedIn. 

Welcome to #TikTokresumes.  Welcome to the Gen Z workplace.  If healthcare is having a hard time adapting to Gen Z patients – and it is -- then dealing with Gen Z workers is even harder. 

TikTok actually announced the program in early July, but, as a baby boomer, I did not get the memo.  It was a pilot program, only active from July 7 to July 31, and only for a select number of employers, which included Chipotle and Target.  The announcement stated:

TikTok believes there's an opportunity to bring more value to people's experience with TikTok by enhancing the utility of the platform as a channel for recruitment. Short, creative videos, combined with TikTok's easy-to-use, built-in creation tools have organically created new ways to discover talented candidates and career opportunities.

The Wall Street Journal is also watching the trend: “Video résumés are fast becoming the new cover letter for a certain breed of young creatives…For some brands, soliciting video résumés on social media is a way to meet more young, diverse job candidates.” 

As it turns out, even Gen Zers have misgivings about the idea.  A survey by Tallo found them fairly evenly split. A bigger concern, though, was the possibility of bias: Nagaraj Nadendla, SVP of development at Oracle Cloud HCM, raised the same concerns in TechCrunch: The very element that gives video resumes their potential also presents the biggest problems. Video inescapably highlights the person behind the skills and achievements. As recruiters form their first opinions about a candidate, they will be confronted with information they do not usually see until much later in the process, including whether they belong to protected classes because of their race, disability or gender.

Lest you think this is not important to your organization, that Gen Z’s needs don’t really matter, Morten Peterson, CEO of Worksome, writing in Fast Company, calls Gen Z the “new disruptors,” pointing out: “The overwhelming majority of today’s graduate pool come from Generation Z and will do so for the next decade at least.”  

And they vote with their feet.  Research from Amdocs found they, along with Millennials, are much more likely than Baby Boomers or even Gen X to have considered leaving their job within the last year:

Every industry is having a hard time recruiting, and keeping, workers these days, and healthcare is no exception.  Between normal burnout, pandemic-related burnout, vaccine mandates, and the lure of jobs that offer more opportunity for remote work, most healthcare organizations are struggling to have enough staff.  When the current Baby Boomer doctors, nurses, technicians, and aides retire, there better be Gen Z replacements ready to step in.

Some healthcare organizations are already starting to use TikTok for marketing,  others are trying to combat misinformation, but most healthcare organizations are probably not just behind the curve when it comes to recruiting workers using TikTok; they may not have yet realized there is a curve.  If, as NYT said, one page resumes are gong the way of the fax machine, well, in healthcare those fax machines haven’t gone very far. 

RecTech Media’s Mr. Russell said it: “video is eating the world.”  Healthcare’s world too. 

TikTok resumes may not take off.  Tallo’s survey found it low on the list of sites Gen Zers felt comfortable posting a resume on (perhaps not coincidentally, Tallo’s site was rated the highest, followed by LinkedIn).  Video resumes more generally may not become the norm.  Those bias concerns with video resume are real and must be appropriately considered. 

But Gen Zers are different, and healthcare organizations, like other organizations, better be thinking about how to best recruit them.

This post is an abridged version of the original posting in Medium. Please follow Kim on Medium and on Twitter (@kimbbellard) 

On the Journey of Cost Containment - China’s DRG Development and Implementation

By Rong Yi and Wendy Liu, September 16, 2021

Diagnosis Related Groups (DRGs) was first introduced in the US in the 1980s as a payment methodology for Medicare. After decades of development, implementation and operational improvement, it remains one of the most dominant payment mechanisms by government and private payers, and is also widely used as an analytical and measurement tools in the healthcare industry.

Health policy researchers in China started exploring the DRG methodology in the late 1980s. At the time, coverage and benefit levels varied significantly by employment status and place of residence. Structured claims data with standardized codes were not available back then to support deeper analysis, although the feasibility of implementing DRG was studied in the early-to-mid 1990s[1].

In 2009 China’s State Council issued a set of sweeping healthcare reform proposals[2], laying out the foundation of the new basic social health insurance scheme, which is in existence today.  Included in the proposals were emphasis on equity, efficiency and quality in public hospital management, as well as investing in information technology for the healthcare sector. DRG research and development took off since then. As China went through rapid economic growth, significant urbanization and aging of the population, healthcare expenditure keeps rising steadily. There is a strong need for cost containment. Core to China’s basic social health insurance scheme is coverage for inpatient services. It is not surprising that DRG is prioritized as a payment methodology.

In the past 20 years, several independent research teams have developed and piloted their own versions of DRGs – BJ-DRGs, C-DRGs, CN-DRGs, CR-DRGs, to name a few. Hospital information system vendors, insurance companies working as third-party administrators for local social health insurance bureaus, and other technology companies invested and competed in hospital management system solutions based on these various versions of DRGs. In October 2019 the National Social Health Insurance Bureau rolled out CHS-DRG, the official version for national adoption. The diagrams below highlight a number of key milestones in the exploratory phase and the roll-out of the national standard.

CHS-DRGs’ grouping relies on the ICD-10 diagnosis codes[3] and ICD-9-CM-3 procedure codes on hospital inpatient discharge records. Similar to the DRG methodologies used in other parts of the world, CHS-DRGs also looks for secondary diagnoses, secondary procedures, complications/comorbidities, and sometimes individual factors (gender, and birthweight for neonates) to determine the severity of a hospital admission.  There are 618 DRGs in the current methodology, falling into 26 Major Diagnostic Categories (MDCs). 229 are surgical DRGs.

It is worth pointing out that the implementation of the CHS-DRGs national standard allows for local flexibility to reflect differences in data quality and readiness. For instance, where data is not of reasonably good quality or has small number of cases, consolidation of existing DRGs would be permitted. Local flexibility is a practical approach to implementing a sophisticated and data-driven methodology such as the DRGs.  After all, China is vast geographically. There are more than 34,000 hospitals, more than 954,000 community health facilities, and almost 16,000 specialized public health facilities, with a total of 8.8 million hospital beds at the end of 2019[4] . Different localities and facilities are at different stages of health information technology adoption. According to an industry report[5], during 2017-2018, only 39% hospitals implemented electronic medical record systems.

 

Looking Ahead

DRG is not only a grouping methodology and a payment mechanism, it also has significant impact on the management and operations of a healthcare system. As it relates to hospital inpatient services, the core to China’s basic social health insurance, its impact can be wide and deep.

On the data front, as more and more cities implement DRG, it is reasonable to expect that hospitals and other healthcare facilities will increase in their adoption of electronic medical records systems. An emphasis on standardized, quality and accurate coding of diagnoses and procedures has already become apparent amongst the hospitals that are running DRG pilots. We see both pros and cons of this digitization trend.

• Pros – more structured and standardized data becomes available which will help the entire healthcare ecosystem measure and compare cost, quality and value of healthcare service. For commercial health insurance, insurance brokers, drug and device manufacturers, and telehealth, structured data is particularly important to business success.
• Cons – DRG implementation requires resources and expertise, which could create further polarization of healthcare facilities in that better endowed facilities will be moving on a faster track in terms of finance and management than others

In other countries that introduced DRGs to replace an existing fee-for-service payment system, it is expected that DRG based payments can help reduce the inefficiencies associated with excessive (and sometimes unnecessary) provision of services (especially diagnostic tests) and drug prescribing, as well as long hospitalizations. It is also expected that perverse incentives may arise with the introduction of DRGs in different countries, such as providers cutting down on necessary services, or prematurely discharging patients from the hospital, or cherry-picking of patients[6]. 

There has been anecdotal reports on gaming of the DRG system. For instance, patients were discharged earlier than medically appropriate due to length of stay limitations introduced by the DRG pilots[7]. There are also concerns with respect to upcoding to receive higher DRG payment.  Given the newness of DRG implementation, well-documented empirical evidence on gaming of the system is not available.  It remains to be seen whether the implementation of DRG would result in lower care quality or whether low-value care would be “squeezed” from the inpatient setting to the outpatient setting.

If DRG implementation can lead to successful cost containment in the inpatient setting, it would benefit both the government and private payers. A very important type of commercial health insurance product in China is high deductible hospital inpatient coverage. Better cost containment could potentially lead to fewer claims reaching the deductible. 

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[1] Numerous articles referenced a collection of feasibility studies conducted by the Beijing Hospital Management Research Institute in 1994 titled “Articles on the Feasibility of DRGs in Hospital Management in Beijing”.  The articles cannot be retrieved online. The Beijing Hospital Management Research Institute is now under the Beijing Municipal Health Commission Policy Research Center (http://www.phic.org.cn/zzjg/lsyg/), one of the main contributors of China’s DRG research over the years.

[2] http://www.gov.cn/jrzg/2009-04/06/content_1278721.htm

[3] China uses the ICD-10 WHO version with its own modifications. The latest version is called ICD-10 GB/T 14396-2016. The implementation of the modified ICD-10 WHO code set started in 2001.

[4] http://www.nhc.gov.cn/guihuaxxs/s10748/202006/ebfe31f24cc145b198dd730603ec4442.shtml

[5] “2020 China’s Electronic Medical Record Adoption and Future Trends”, chyxx.com

[6] Bredenkamp, Caryn, Sarah Bales, and Kristiina Kahur, eds. 2020. Transition to Diagnosis-Related Group (DRG) Payments for Health: Lessons from Case Studies. International Development in Focus. Washington, DC: World Bank. doi:10.1596/978-1-4648-1521-8.

[7] For instance, https://news.dayoo.com/guangzhou/202108/17/153828_54021117.htm, and https://china.huanqiu.com/article/44O20Ko4h3f

Telehealth Going Forward: More Measured, and Featuring Primary Care, Behavioral Health and Chronic Care

By Clive Riddle, September 10, 2021

The Center for Connected Medicine has just released a new report conducted in partnership with KLAS Research:  The Intersection of Value and Telehealth: Survey Findings on Adoption and Utilization, which tells us that “more than a year after many hospitals ended their COVID-19 shutdown of non-emergency care, the use of telehealth for patient visits is leveling off at 20% or less of all appointments.”

The study also found that “more than 80% of survey respondents said one-fifth or less of their organizations’ appointments were being conducted virtually….and of the small number of hospitals and health systems reporting 30% or more of patient volume as virtual, many said they expected that number to decline as the pandemic wanes.”

A previous CCM/KLAS report found 77% of organizations were measuring and analyzing use of telehealth by patients, while “the new survey found 92% reported measuring and analyzing at least one metric” and “about a quarter of respondents reported measuring health outcomes for patients using telehealth in the latest survey, up from 12% who said they were doing so in the 2020 report.”

Here are seven takeaways from their report’s key findings: 

• There are now fewer telehealth appointments as a percent of total appointments compared to earlier in the pandemic
• Primary care and behavioral/mental health are the service areas most likely to be using virtual care.
• Chronic care management is the service area most likely to be expanded in the future.
• The number of health systems measuring telehealth usage and patient satisfaction has increased
• The top two barriers to advancing telehealth are patient access to technology/broadband and uncertainty around future reimbursement levels.
• One-fourth of respondents reported gaps in telehealth integration with their electronic health record system
• Patient portals and digital front door solutions are the most commonly cited means by which patients access telehealth services.

The 2021 Medicare Trust Fund Report by The Numbers

By Clive Riddle, September 2, 2021

What is the state of the Medicare Trust Fund, by the numbers? $900 billion in income and $926 billion in  expenditures provided for the 62.6 million Medicare beneficiaries, with the Part A fund projected to be depleted in 2026, and current running at 4.0% of GDP that will increase to 6.5% before the end of this century.

Earlier this week, the 255-page 2021 Medicare Trust Fund report was released, which of course found that  in 2026  for Medicare Part A, “the fund's reserves will become depleted and continuing total program income will be sufficient to pay 91 percent of total scheduled benefits.”

The supplemental trust fund accounts - Part B and Part D, are "adequately financed into the indefinite future because current law provides financing from general revenues and beneficiary premiums each year to meet the next year's expected costs. Due to these funding provisions and the rapid growth of its costs, SMI will place steadily increasing demands on both taxpayers and beneficiaries."

The fund projections "have been significantly affected by the pandemic and the recession of 2020. Employment, earnings, interest rates, and GDP dropped substantially in the second calendar quarter of 2020 and are assumed to rise gradually thereafter toward full recovery by 2023, with the level of worker productivity and thus GDP assumed to be permanently lowered by 1 percent even as they are projected to resume their pre-pandemic trajectories. In addition, the Trustees also project elevated mortality rates related to the pandemic through 2023 (15 percent for those over age 15 in 2021, declining to 1 percent by 2023) as well as reductions in immigration and childbearing in 2021-22 from the levels projected in the 2020 reports, with compensating increases a few years later."

The report projects that for total Medicare expenditures as a percentage of GDP will increase from 4.0 percent in 2020 to 6.5 percent by 2095.” Here’s a graph of Medicare percent of GDP provided in the report, historical and projected, for this century:

Setting aside fund projections for now, perhaps the item of more immediate interest in the report is the Medicare fund snapshot for the year just completed, providing a view of the $900 billion total fund income, and $926 billion total fund expenditures for 2020, provided for the 62.6 million Medicare beneficiaries:

We compiled the fund benefits for 2020 and 2019, excluding Part C (Medicare Advantage, etc) to provide a comparison of percentage of benefit expenditures by category before (2019) and during (2020) the pandemic. The big change is in the “Other” category, which as the report footnotes “Includes the impact of the Accelerated and Advance Payments Program, which was significantly expanded during 2020 due to the COVID-19 pandemic. Total payments of $107.1 billion were made from the HI trust fund and the SMI Part B trust fund account.” Thus the $99.9 billion increase in “Other” from 2019 to 2020 is explained by these pandemic program payments.

I Am Dr. Groot

By Kim Bellard, August 26, 2021

All I can think about is robots. Most of the recent publicity about robots has come from Elon Musk’s announcement of the Tesla Bot, or the new video of Boston Dynamic’s Atlas doing more amazing acrobatics, but I was more intrigued by Brooks Barnes’s New York Times article Are You Ready for Sentient Disney Robots?

One of the things that Disney has long included in its parks’ experience were robots. It has had robots in its parks since the early 1960’s, when it introduced “audio-animatronics,”. Disney has continued to iterate its robots, but, as Mr. Barnes points out, in a world of video games, CGI, VR/AR, and, for heaven’s sake, Atlas robots doing flips, its lineup was growing dated.

Enter Project Kiwi.

In April, Scott LaValley, the lead engineer on the project, told TechCrunch’s Matthew Panzarino: “Project KIWI started about three years ago to figure out how we can bring our smaller characters to life at their actual scale in authentic ways.” The prototype is Marvel’s character Groot, featured in comic books and the Guardians of the Galaxy movies.

By 2021, they had a functioning prototype. Mr. Barnes reported that his interactions with the would-be Groot were quite remarkable. It spoke to him, reacted to his initial non-response, and, eventually, “I wanted to hug him. And take him home.”

Groot is only the beginning. Mr. Barnes said: He is a prototype for a small-scale, free-roaming robotic actor that can take on the role of any similarly sized Disney character. In other words, Disney does not want a one-off. It wants a technology platform for a new class of animatronics.

If, as Elon Musk believes, “the economy is, at the foundation, labor,” then there may be no sector in which this is more true than in healthcare (especially long term care). Tech companies may be failing in healthcare because they think adding a tech layer will “fix” things, but our current system isn’t going anywhere until we address labor — its costs, its supply limitations, its productivity output. The pandemic almost broke our healthcare workers last year, and the recent surge is overwhelming them again.

Healthcare could use more robots.

Yes, there are robots in healthcare. People often point out to robotic surgery, which has not managed to reduce costs, improve quality, or remove the human component. There are also delivery robots (often used in hospitals), “patient simulators,” even companions, but, honestly, we need more robots like Hanson Robotics’ Grace, specifically aimed for healthcare. “I can visit with people and brighten their day with social stimulation … but can also do talk therapy, take bio readings and help healthcare providers,” Grace “told” Reuters.

It’s not there yet; it would need considerable evolution to play a significant role in our healthcare system, but, with the right investments, it will get there. And, yes, eventually there will be robot doctors, powered by AI.

Mr. Panzarino brings up the field of human-robot interaction (HRI), and asserts that, of all the companies, industries, and academic centers working on it, “the most incredibly interesting work in this space is being done in Imagineering R&D.” Again, as the Disney Institute preaches, focusing “on the details that other organizations may often undermanage — or ignore.”

I wish healthcare was leading HRI.

Healthcare needs to change its customer experience from passive to interactive. If Disney recognizes the need to stay “fresh and relevant,” that is all-the-moreso in healthcare. Healthcare thinks it is in the care business, but it must also recognize it is in the experience business — and that its experience currently is pretty woeful (often literally). It’s undermanaging and often ignoring the details that make up that experience. And when does technology in healthcare ever “disappear”?

Robots alone aren’t going to change all that in healthcare, but the level of attention — to detail, to relevancy, to customer experience — that Disney brings to its robotics efforts could go a long way.

 This post is an abridged version of the original posting in Medium. Please follow Kim on Medium and on Twitter (@kimbbellard) 

Utilization Drop in 2020 May Have Not Been as Much as Feared, and 2021 May be Seeing a Spike

By Clive Riddle, August 19, 2021

Analysis of California Health Plan data indicates 2020 physician encounters and inpatient days didn’t plummet as far as some worried earlier in the pandemic, due to deferred care, although as all aspects of everyday like opened up more in 2021, a spike in utilization was evidenced.  These findings are a preview of the complimentary webinar presentation:  California Health Plans By the Numbers: Key California Health Plan Data and Trends, to be held this Wednesday, August 25^th at 10AM Pacific.

California health plan physician encounters per member per year dropped from 2019 to 2020 in all three segment populations: Commercial from 5.1 to 4.4, Medi-Cal from 4.4 to 3.7. and Medicare from 8.4 to 8.4. But all three segment have increased in 2021 through June (5.4, 4.2, and 10.7 encounters respectively), with Commercial and Medicare surpassing 2019 levels. The 2021 jump is even more pronounced compared to the first six months of 2020.

California inpatient days per 1,000 members experience was somewhat similar. Comparing 2020 to 2019, Commercial dropped to 162.0 from 173.0, and Medicare dropped to 676.9 from 708.4. However, Medi-Cal days per 1,000 increased in 2020, to 356.1 to, 327.5. This was likely somewhat due to effects from a marked increase in new Medi-Cal members in 2020 (927k net new members in 2020, almost a 10% increase.) 2021 days per 1,000 increased over 2020 levels for all three segments, and 2021 Medi-Cal and Medicare days were materially higher than 2019.

Come join us this Wednesday to find out more!

China’s Commercial Health Insurance Market

By Rong Yi, PhD, Principal, China Healthcare Analytics Practice, Milliman, Inc.; August 10, 2021

China is large and complex economically, demographically, and geographically, and is also going through rapid changes at paces rarely seen in history. In this blogpost we provide a very high-level overview of China’s rapidly growing commercial health insurance market. Before delving into health insurance, let us provide some context in comparative light to set the stage.

Economy, Population and Public Health Insurance

China used to be one of the poorest countries in the world. After forty years of rapid economic growth, it has now become the second largest economy in the world. Measured by purchasing power parity (PPP), China’s real GDP exceeds that of the US by almost 16% (24.27 trillion USD vs. 20.94 trillion USD)[1]. China also has the world’s largest population, at 1.4 billion, making its GDP per capita roughly 16% of that of the US.[2]

 

China’s population growth has slowed down noticeably since the past decade, and is projected to have negative population growth after 2030, and by then 25% of its vast population would have reached retirement.[3]

China’s healthcare expenditure has been increasing in keeping with the economic growth and aging of the population. As of 2018 it accounted for a little above 5% of its GDP. It is reasonable to expect this trend to continue in the coming years. For instance, JP Morgan predicts that China’s healthcare expenditure will reach almost 7.9% in 2026[4].

Rapid economic growth also brings about rapid rate of urbanization. According to China’s 2020 Census, 63.9% of China’s population resides in the urban area, up from about 20% forty years ago^[5]. There are 18 cities with more than 10 million residents. Of these, 4 cities have more than 20 million residents. Healthcare facilities and other resources concentrate in these select metropolises.

More than 95% of the Chinese population has government-sponsored health insurance, known as the Basic Social Health Insurance (BSHI), which are further divided up into two groups based on employment status and urban/rural resident status. Funding of health coverage comes from the central government, local governments, employers, and the participants, and the level of funding varies by geographic area.

BSHI’s benefit design varies significantly by geography. Core to the BSHI coverage is inpatient services. Within inpatient services coverage, different areas may have different deductibles, copays, coinsurance and benefit cap. For urban employees, around 85% of covered services is paid by the BSHI. For the unemployed residing in the urban area or the rural residents, the percent coverage can be significantly lower[6]. In areas where the local economy is better off, outpatient services, outpatient prescription drugs, and sometimes chronic diseases (such as hypertension, diabetes, and dialysis) that require routine outpatient management and monitoring are also covered. The Chinese government has made it a policy priority to lower patient liability. In the past 15 years, the average out-of-pocket has gradually decreased from around 56%[7] in 2006 to slightly under 28.4% in 2019[8]. In comparison, out-of-pocket spending in the US during the same time period also has been gradually declining, from 13.5%[9] in 2006 to 11%[10] in 2019.

Commercial Health Insurance

From 2011 to 2020, the premium income of China's health insurance increased rapidly from 69.2 billion yuan to 817.3 billion yuan, with a compound annual growth rate exceeding 30%[11]. Whether the commercial health insurance market may continue to grow at this rate remains to be seen, however, it is a broad consensus that China’s commercial health insurance market still has a lot of room to grow in the foreseeable future, owning to the following factors:

There are four main types of medical insurance products[12].

 Coming up next…

In the coming months we will discuss China’s new product designs, market solutions and technological innovations that may be of reference for the US healthcare market, as well challenges that China’s healthcare market is facing which may need expertise from outside of China to help with.

Caveats and Acknowledgements

This blogpost has been created for MCOL. Views and opinions expressive in the above are those of the author’s and do not necessarily represent that of the Milliman as a whole.

Wendy Liu contributed to the article. Guanjun Jiang provided peer review.

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[1] Retrieved from https://data.worldbank.org/indicator/

[2] ibid, 1

[3] http://www.stats.gov.cn/tjsj/tjgb/rkpcgb/

[4] https://am.jpmorgan.com/sg/en/asset-management/per/investment-ideas/china-health-care/

[5] ibid, 1

[6] China National Health Security Administration Annual Summary Report for 2020, retrieved from http://www.nhsa.gov.cn/art/2020/6/24/art_7_3268.html

[7] ibid, 1

[8] China Ministry of Finance, http://sd.mof.gov.cn/zt/dcyj/202011/t20201103_3615823.htm  

[9] ibid, 1

[10] Retrieved from https://www.cms.gov/Research-Statistics-Data-and-Systems/Statistics-Trends-and-Reports/NationalHealthExpendData/

[11] http://www.gov.cn/xinwen/2020-12/16/content_5569978.htm

[12] Strictly speaking, critical illness insurance products are more akin to life insurance in that a lump sum payment would be made in the event of a claim, which is quite different from the other three types that are reimbursement policies.