Steve Case’s New Venture: It’s Not Revolutionary – Yet

The Washington Post covers AOL founder Steve Case’s new venture, Revolution Health. They describe it as “A Big Ticket Start-Up With a Nonprofit Vibe,” which seems to be a polite way of saying that the group is disorganized and having trouble pulling itself together. But they have big dreams:

Ambitious banter (“building a company that can change the world,” Case says) injects the place with a nonprofit vibe, which attracted the likes of Brad Jacobs, a physician and former researcher at the University of California at San Francisco who is Revolution Health’s senior medical director.

“I can be much more true to consumers’ needs here than in an academic hospital setting,” Jacobs said.

The problem is that they’re not dreaming big, at least judging by what’s on the screen. It’s WebMD redux, presented in a visually unexciting way. It’s not something you want to touch, feel, and interact with.

I want this venture to be dynamic and exciting, and to bring new energy to the world of online health. So far, that isn’t happening. When it comes to health, that most intimate of functions, you want a virtual space that radiates something unique, not something with the aesthetic vibe of a claim form.

I had my objections to AOL during the mid-90’s, as did a lot of techies and “early adapters.” It seemed to be more of a “cage” than a “portal,” designed to limit rather than foster free and open access to the Internet. (Eventually customer demand forced them to change.)

That said, Case and company were brilliantly successful in creating a warm, navigable, and comfortable “user space” for AOL. I had hoped Revolution Health would do the same for health care, but so far it’s flat and uninteresting. It doesn’t invite users in by hooking them based on points of interest, excitement, or need.

There are many visually and conceptually exciting things that can be done with this concept. I hope they act in a bolder way, and soon, to bring in some new design ideas.

There may also be a conceptual flaw in the way Case et al. are going about it. There seems to be a strong bias toward the “consumer-driven health” model, where people buy health services the way they do other “products.” Here’s the problem: The health industry’s been pushing consumer-driven health for years and “consumers” haven’t been interested.

I could go on at length about why I think that is: sociology, economics, etc. But suffice it to say that healthcare’s an economy where the supplier – the physician – also controls demand. it’s hard weaning people away from that. (Just ask my Joe Paduda and the others among us who have been having this debate for years.)

That said, studies also show that people will make better decisions given the right information – but getting the “right information,” and “information that’s right,” is key. And there are ways to array and present that information that make it much more navigable, friendly, and useful.

A key aspect of the site is the ability to select physicians based on what other Revolution Health users have to say about them. Problem #1: Months after their creation, I wasn’t able to find a single allergist within five miles of me who had a single user rating (and I live in Los Angeles.)   That can be fixed, but it takes time and a critical mass of subscribers.

Problem #2: I wouldn’t choose a physician solely based on what a self-selected group of untrained people say about them. I’m not sure many people would. There are better ways to profile physicians, and Revolution Health should tap into them.

Case is a creative guy, and he has the able to keep attracting talented people to this venture. It’s still early enough for them to step back and re-design their product from the ground up, tapping into the deepest wellsprings of creativity they can find.

I think that would be a terrific idea.

More Evidence I Was (Unfortunately) Right About The “Massachusetts Miracle”

Reuters files an update about the Massachusetts health reform law as reality starts sinking in:

“Now comes the tricky part, say policy experts and people involved in Massachusetts’ law: designing affordable plans for the many uninsured people whose earnings put them only slightly above the poverty line.”

Here’s one problem:

“A state board created to help arrange coverage is reviewing those standards following estimates that the average uninsured individual would need to pay $380 a month for health coverage.”

Officials say that is too high.”

A Boston health administrator explains the obvious:

“‘The penalty in the first year is the loss of your personal tax exemption. For a working poor person that can range from nothing to $150 a year. Why would you buy health insurance at a cost upwards of $3,000 a year if you’re relatively healthy and the penalty is likely to be $150?’ he said.”

Here’s what I wrote at the time (and I felt like a voice in the wilderness, as politicians and bigshots congratulated and high-fived each other):

The fine for not participating in year 1 is $150. Premiums will be in the thousands, even with subsidies – and that’s for the healthiest pool of candidates, young adults. (Others are guessing $2,400, but I’d be willing to go as high as $3,000.) So participation in Year One will be limited to people who have every reason to believe they’ll get $2,000 or $3,000 worth of care out of the system. They’re likely to be pretty sick folks.

So, as a refresher, here’s what happens next. The insurers will have horrible underwriting experience as only the sickest buy this coverage. Then they’ll raise their rates even more in year 2. Lower-income people will have the chicee of paying usurious rates or becoming tax refugees, to all intents and purposes.

It’s supposed to be satisfying to say “I told you so.” Not in this case.

The Market for Primary Care IT

As reported earlier here in The Sentinel Effect, there are interesting R&D and investment opportunities in primary care IT. This opportunity is complicated somewhat by the fact that there are only half as many primary care doctors in practice now as there were ten years ago.

That means the potential customer base has shrunk, but at the same time – as the California HealthCare Foundation observes – the need is greater for those docs that remain. The CHCF’s news item is based on a Wall Street Journal profile of a primary care doc who’s using technology in an attempt to run a profitable “micropractice.”

Primary care physicians don’t make very much money in this country, which is a sign of the inverted economic priorities in our healthcare model. (HMOs were, ironically, an idealistic concept when they were first being designed. It was thought that under this model the HMO would have a financial incentive to keep people well. An increased role for primary care, with better reimbursement, was a hoped-for but never realized side benefit.)

Smaller potential market, exponentially greater need. And as we wrote earlier, U.S. primary docs lag well behind their European counterparts in access to IT and health information. Our conclusions?

• The remaining market is big enough to be profitable for somebody.
• The need is substantial.
• Healthcare reform, if any, will increase that need.

Primary care IT needs to move into the 21st Century.

Chinese Health Insurance Pilot – To Share Risk Is Glorious

The dismantling of China’s communal farms led to considerable cost-shifting from the state (specifically, state enterprises) back to the individual.  In response, Harvard Professor William Hsiao has been piloting health insurance at the village level there.

One interesting goal of the project is to attack the problem over-medication, which is rampant in the Chinese system.  Physicians make a profit from selling medications, and medication usage is (unsurprisingly) high under this system.  The WHO reported that markups for drugs ranged from 40% to 80%, and another study of influenza patients found that 61% of the medications they were prescribed were unnecessary.

There’s more detail in the Wall Street Journal (subscription required).  Hmm, do they need a cheap IT system?

Health Data Privacy: The Coming Disaster

I feel like one of those people who kept saying there was going to be a catastrophe in the Gulf when that Category 5 storm hits. I know I keep harping on the need for health data security (and therefore the opportunity), but here are two more pieces of relevant information.

The New York Times writes that a GAO study indicates “the Bush administration has no clear strategy to protect the privacy of patients as it promotes the use of electronic medical records throughout the nation’s health care system, federal investigators say in a new report.”

Meanwhile, hospital CIOs report (in an admittedly imperfect but interesting survey) that they expect to greatly increase spending on clinical systems – systems that will contain even more personal information than is currently in any large-scale database.

The Times elaborated:

In the report, the Government Accountability Office, an investigative arm of Congress, said the administration had a jumble of studies and vague policy statements but no overall strategy to ensure that privacy protections would be built into computer networks linking insurers, doctors, hospitals and other health care providers. (emphasis mine)

… In 2004, Mr. Bush declared that every American should have a “personal electronic medical record” within 10 years …

Is anybody listening? The personal electronic medical record is a good idea – but eminently hackable under current conditions. Even today’s medical records contain enough information to do serious damage, and I’ve reported on a staggering series of data losses.

This issue is both a policy concern and an entrepreneurial opportunity. Who will address it first – private-sector tech innovators, or policy makers?

Or will the problem just linger on, unaddressed, until one day Americans find themselves flooded with breaches of privacy regarding their health history?

Sorry to sound alarmist, but look at it this way: Do you wonder to spend your time wondering who will be the first to post your medical records online?

Our Online Seminar On Auditing Managed Care

Here’s one from the Dept. of Shameless Self-Promotion. We’ll be giving an online seminar this Thursday for medical management, claims, and insurance professionals. Here’s the info:

MedMetrics Offers Free Audio Conference On Evaluating the Effectiveness of Your Managed Care Programs – How to Conduct an Electronic Audit

Published 02-13-2007

Presented by Richard Eskow
Sponsored By WorkersCompensation.com

Bend, OR (WCNPC) – The effectiveness of Workers Compensation managed care programs is increasingly being questioned. Do managed care programs actually result in better outcomes? Do they save money? Provider networks, case management, utilization review, and other medical management techniques have been implemented throughout the industry in a broad-brush, �one size fits all� fashion.

How can payers know its managed care vendors � or internal departments � are working effectively and getting positive results? How can the effectiveness of a medical management vendor or department be measured? What is its impact on claims? How can payers use that data to report back to clients (internal or external), and to improve their effectiveness?

In this seminar, Mr. Eskow will review techniques for conducting an electronic audit of medical management programs. Mr. Eskow also address practical issues of gaining access to vendor data, common mistakes in data interpretation, and how to convert data into useful information that can be converted to a medical/claims business strategy.

This complementary audio conference will be held February 22, 2007 at 10 am Pacific, 11 am Mountain, 12 noon Central and 1 pm Eastern times. Please respond to this e-mail to register. Include your name, title, name of your company and telephone number. Two days before the seminar you will receive course materials and conference access information by e-mail.

Richard Eskow, a seasoned senior-level workers compensation medical management consultant, is a MedMetrics Data Action Team Associate. Other MedMetrics D.A.T.A. consultants are Kimberly Wiswell, Lynne Poppe, and Janet Jamieson, PhD.

Health Knowledge Systems and Eskow & Associates are affiliated with MedMetrics, the sponsoring organization.  For further information or to enroll, email Karen Wolfe at karenwolfe@medmetrics.org.

300,000 More Records Lost! When Organized Crime Gets Organized – Look Out

We learn today of yet another massive loss of health records. Backup tapes containing data on 300,000 health plan subscribers were stolen from an office of managed care negotiators Concentra Preferred Systems. The thieves were looking for more readily disposable loot, according to the Louisville Courier-Journal:

Thieves who stole the tapes also broke into five other businesses in the building, taking cash, pharmaceuticals, and other readily disposable items. Because of that, police have said they don’t believe the thieves were sophisticated criminals seeking the computer tapes. “We have absolutely no reason to believe that the information that was on the tapes, or the tapes themselves, were the intended target of the thieves,” (Wellpoint spokesman Jim) Kappel said.

Many of data losses happen the same way. Thieves steal other items and pick up something containing confidential data – a laptop, tapes, diskettes, etc. – along the way.

Unfortunately, there are smart people in the organized crime business. They don’t let opportunities pass by for long. One of these days word is going to get around that there’s a hot market for identity data, and that you can contact “X” if you pick up anything with computer records on it. “X” and his friends will take it from there, fencing the data to illicit techies who can decipher the data and sell it to the organized identity theft market.

While it’s an interesting mental exercise to apply entrepreneurial creativity to criminal enterprises, I’m not worried about giving the bad guys ideas. They’ll think of it themselves, just as they have with everything from movies to the constituent chemicals for methamphetamines.

Now it’s time for the good guys to start thinking – or, more specifically, those who want to “do well by doing good.”

Denial Management

The Wall Street Journal reports on the growth in “denial management” software. (Subscription required, or you can read a summary here.)

Doctors and other health providers use these tools to combat denials and reductions in reimbursement from insurers.

The “denial management” niche is likely to spawn new consulting and service opportunities, as well as growing demand for software.  The above chart from software vendor Athenahealth shows strong five-year growth.

This gives me an interesting tech idea …

Once Again, Health Records Lost

From the Baltimore Sun:

Up to 130,000 former and current patients at St. Mary’s Hospital in Leonardtown have recently been notified that a laptop with personal information was stolen from the hospital in December. Just last week, Johns Hopkins officials reported the loss of thousands of employee and patient records.

We keep reporting on this ongoing problem. There’s going to be an initiative to prevent this kind of catastrophic data loss, either through a private-sector product that protects health data or through government mandate.

Insurance companies that cover health organizations are at risk. So are the organizations themselves. And individuals are being exposed to a number of unpleasant possibilities, from identity theft to blackmail.

Who’s going to step up and address this issue?

Mass Board May Drop Drug Coverage From Its ‘Universal Coverage’ Plan

Some readers thought I was overly hard on the Massachusetts “universal coverage” plan when it was first announced. I suggested then that it might be as much a “mirage” as a “miracle.”  I thought that the politicians and others who authored this bill spent too much time congratulating themselves, and too little time considering the obstacles left unaddressed by their work product. That includes Democrats and Republicans, as well as business and labor leaders both left and right.

Now the governing board created by the plan is discussing whether to drop the requirement that drug coverage be included in their plans. This is, on the face of it, absurd. You can’t have “universal insurance” without pharmaceutical coverage.

From an underwriting perspective, this idea’s equally wrong-headed. Conditions that could easily be arrested or cured with medication will go untreated until plan participants are forced into hospitals or other high-cost care. The result is bad for the patient and bad for the system.

These discussions are an acknowledgement of what I forecast when the plan was announced: The costs of enrollment are going to be so high that many people will opt to take the penalties rather than sign up, especially in year 1. That creates adverse selection (enrollment of only the sickest), which in turn would most likely lead to soaring premiums in year 2.

At this point, I can’t think of any good options for the Health Connector board. If they insist that drugs be covered, they’ll face compliance and cost problems. If they allow plans that exclude drug coverage, they’ve essentially failed in their mission to provide universal coverage — and they’re created some very real health delivery and financing problems now and in the future.

The best thing they could do is go back to the drawing board by convening a high-level group to lay out realistic options for the public.

I wish the politicians and others had spent a little more time analyzing the problem and a little less time patting themselves on the back before this plan was rolled out.