Presenting the “Cavalcade of Risk”

The Cavalcade of Risk is a “blog carnival,” or anthology of posts on a common topic or theme. It’s our turn to act as host. We have a rich bouquet of posts this month, so let’s get right to it:

Eric Turkewitz points us to a news story about risky recommendations from New Rochelle’s educators, as well as to a risk averse insurance company (is there any other kind?), in Hey, She’s Only 5 Years Old!!!. He also presents Conseco Insurance Scandal Follows Movie Plot, pointing out the similarities between the plot of a Francis Ford Coppola movie and the real-life allegations of bad faith against an insurer. (Guess whose behavior mimics that of the movie villain …) You’ll find them in New York Personal Injury Law Blog.

Rita Schwab has an observation to fuel the paranoia (or is that keen perception?) of those who feel … watched. She writes this in Copier Surveillance: “Yet one more bit of electronic surveillance to worry about in our high-tech society – photocopiers!” Apparently somebody can see those embarrassing “copies” of your anatomy you made after work. And you thought nobody was looking … Or course, Rita has a more serious point to make. It’s at MSSPNexus Blog.

Bob Sargent presents Title Insurance & Sleeping Roads posted at Insurance Agents E&O – Flood Exposure, saying, “Municipalities’ efforts in Vermont to reclaim ‘sleeping roads’ have impacted landowner values and resulted in title insurance claims. While critics claim that title insurance is overpriced and even unnecessary, much of the cost goes to the prevention of claims, and claims do occur.”

We have a lot of health-related submissions this month. egon looks at health reform from the provider side and comes out strongly for single payer coverage in National Health Insurance In America – Part 1 and Part 2, posted at InsuranceHelpHub.com.

Henry Stern, LUTCF argues against mandatory HPV vaccination for young women in BS Update, posted at InsureBlog. He cites researchers who suggest that it could actually increase the risk of cancer.

Jason Shafrin finds a surprising angle on the Federal children’s health program for the uninsured. He writes, “Should the popular State Children’s Health Insurance Program (SCHIP) be renewed? Not according to the House Black Caucus.” It’s in Reauthorizing SCHIP, posted at Healthcare Economist.

David Williams presents Upgrade or downgrade? posted at Health Business Blog, saying, “In their zeal to protect consumers, regulators are forcing people to overinsure.” He cites the Massachusetts experience to do so – but then, regular readers of The Sentinel Effect will know that I consider the Massachusetts reform effort fundamentally flawed.

Guardian rates three popular web-distributed auto policies in Reviewing Popular On-Line Auto Insurance Quote Services » Insuranceonyourterms.com at insuranceonyourterms.com, asking: “Which one fared best?”

At Cato@Liberty, Michael F. Cannon celebrates the fact that there are Fewer Uninsured! than originally estimated. There are only 44.8 million, according to new figures, and they’re mostly healthy. So “don’t worry, be happy,” suggests Mr. Cannon … (granted, I’m paraphrasing a bit. I recommend that you read it yourself.)

Also from Cato@Liberty, Sigrid Fry-Revere presents Mandatory HPV Vaccines: Who Benefits? She writes that “the lure of government mandates has turned Merck, if it wasn’t already, into an unethical company.”

Michael F. Cannon looks at the affordability of health coverage in Cato-at-liberty » Health Insurance Do-Nots, also at Cato@Liberty.

And some really smart (and not bad-looking) guy at The Sentinel Effect takes a look at the possibility of a coming health privacy meltdown in Privacy, Crime, and Disaster: The Achilles Heel of Health Reform? He cites the story of two officials who have resigned in protest over the government’s failure to adequately address privacy concerns, and offers suggestions for both would-be reformers and career criminals …

We had a number of submissions in the area of private investment, too:

John presents Hedge fund investing guide 101 posted at OhCash.com, observing that “hedge funds have become a new craze among the investors who are looking for higher net returns and to diversify their investment portfolio.”

Silicon Valley Blogger overcomes his aversion to irritating stock picker Jim Cramer – which makes him a better man than I – in order to summarize Cramer’s latest book. You’ll find it in Mad Money Mayhem For Stock Pickers at The Digerati Life.

Matthew Paulson posts cautionary words about aggressive credit card company solicitation of students, leading to the possibility of excessive debt. The post is Students Borrowing Money Through Credit Cards at Higher Rates, at Getting To Graduation.

Bryan C. Fleming also examines the danger of interest, this time when online institutions promise that you’ll be the one earning it. Too good to be true? Check out 6 Percent Online Savings Accounts, posted at Bryan C. Fleming.

Larry Russell argues against “active” investment strategies in Passive index investment strategies are superior, because they narrow the range of outcomes and lower your risk. it’s posted at THE SKILLED INVESTOR Blog. He argues that “passive, index-oriented investment strategies tend to be superior, because they narrow the range of outcomes, and thus, they reduce the total investment risk associated with your portfolio. Active investment strategies increase your risk, while lowering your expected net return.”

Ranjan addresses investment strategies with apparent reluctance inHow to Add Value To Your Money, posted at Musings on Money.

Lastly, Jon Coppelman makes some observations about the risk of multitasking in The Delusions of Multitasking. It’s in Workers’ Comp Insider. John suggests that all using all our new high-tech capacity to do a hundred things at once is actually dangerous.

Nonsense. Why, I’m composing this on my wireless-enabled laptop as I drive to the airport and I’m … hey! look out! aargh!

< …. >

Privacy, Crime, and Disaster: The Achilles Heel of Health Reform?

Health IT is being treated as an integral aspect of reform across the political spectrum, from Bush and Gingrich on the right to Clinton and Edwards on the (relative) left. But the proliferation of confidential health information in digital form has already created the risk of a major privacy disaster, and large amounts of this data are lost with embarrassing frequency.

So, what is the Federal government doing to protect this information? Not enough, according to the Director and Assistant Director of the Health Privacy Project. They’ve resigned in protest from a government-funded IT working group.

The Health Privacy project is a subcommittee of the American Health Information Community (AHIC). AHIC was created by the Federal government “to advise the Department of Health and Human Services on market-driven ways to better use information technology to improve health care and cut costs,” writes eWeek magazine.

eWeek observes that “From the start, the subcommittee seemed an afterthought. Though AHIC held its first meeting in October 2005, the Confidentiality, Privacy, and Security Workgroup, or CPS, was only instituted in the latter half of 2006. ”

A GAO Report rapped HHS for failing develop a comprehensive policy for health privacy issues, while another GAO report found that Medicare patient data is at risk.

This frequent loss of data should be of concern to insurance companies that provide E&O, liability, and other related coverages. It’s only a matter of time before somebody’s personal data is revealed and a lawsuit results. And then there’s that disaster I alluded to earlier.

What do I mean by a “major privacy disaster”? As I’ve been reporting for some time (here, here, here, and here), losses of health data occur with alarming frequency. A major disaster could occur if this information got into underworld hands, where it could be used for crimes such as the following:

1. Identity theft
2. Use of false identities to obtain prescriptions that medical records indicate were written for a patient with that name
3. Blackmail of individual with compromising medical histories
4. A black market in false insurance cards and certifications of coverage
5. Cyberterrorism
6. Thousands (or hundreds of thousands) of personal medical records are posted on the Internet as an act of random vandalism

OK. I started this piece as a critique of government efforts so that I could offer recommendations to government and industry. Instead, I’m coming up with new and creative suggestions for evil criminals.

Believe me, if I can think of it so can somebody else.

So what’s to be done? Here are some suggestions:

1. Ramp up R&D in privacy technology for healthcare
2. Improve underwriting for E&O and liability insurance to address exposures for data loss or theft
3. Start a major government initiative in health privacy

If these things don’t happen soon, our country may look back with regret at a lost opportunity to mitigate risk … and prevent disaster.

Clinics in the Workplace and the Communist Experience

The Kansas City Star is the latest newspaper to cover the growing trend toward onsite health clinics for large employers. They cite a Watson Wyatt study that indicates 23% of large and midsized employers operate onsite clinics and 6% plan to install one in the coming year.

The Star piece goes further than other recent coverage in citing objections to the clinics based on concerns about confidentiality and the disruption of the care relationship between employees and their regular physicians. I doubt either concern will slow the growth of these clinics, however, and I suspect neither will ever become a serious problem.

I was part of a World Bank/USAID group helping Eastern European countries convert their health care systems from Communism to a Western social insurance structure. One of the greatest challenges these countries faced was the fact that so much health care delivery had been provided through onsite clinics in the workplace under the Communist system.

The employers that provided this healthcare – and other social services – were state-owned and operated, of course. They tended to be large industrial enterprises. As these countries decommissioned these unprofitable companies, and/or sold them to private investors, the clinic system was suddenly dismantled. Large groups of employees had to find new ways to obtain healthcare.

Not that I’m saying this is a Communist plot. On the contrary. It seems like a good idea. It’s unlikely that workplace clinics could ever supplant traditional healthcare delivery the way they did in Eastern Europe, or that an economic trend away from large and midsized employers could ever threaten to disrupt the delivery of healthcare.

It’s just an observation.

From an investment point of view, I can only identify one substantial political risk for the owners of clinic management companies. That’s the possibility that the U.S. will move away from both employer-based healthcare and the insurance model. In my opinion, that’s not reason enough to avoid investment in this area.

A Doctor’s “Pay For Performance” Anxiety

The debate over paying physicians for performance is a fascinating one with many unspoken (and often unconscious) overtones. With my social science background, I’m probably overly inclined to believe it can work. I’ve had to learn the barriers and ‘right-size’ my expectations. Physicians, with their ingrained self-confidence, tend to be overly resistant. The truth, I suspect, is somewhere in the middle.

This piece is worth reading as a smart, concise, and articulate summary of a contrarian position of “pay for performance” metrics and bonuses in healthcare. It’s written by Richard Reece, MD, a Minnesota physician who objects to P4P on the following grounds:

• Patient behavior is a major influence on medical outcomes.
• There are 2,000 guidelines out there, which only confuses and overwhelms doctors. Which should be followed? How is it practical?
• Hospital care may work under a P4P model, but it won’t work in the physician setting.
• Surgeries and technologies don’t eliminate the etiology, so medical interventions can’t be measured under a model that punishes them for recurrence.
• The sedentary nature of modern society propagates illness.

Dr. Reece’s piece (no pun intended there) is well worth reading. His objections are valid. Still, I don’t believe he poses any insurmountable obstacles to physician-oriented P4P, especially if measurements focus on those factors a physician can control.

Dr. Reece himself points out that physicians “only follow preventive and treatment guidelines 50 percent to 55 percent of the time.” He adds that “doctors could do a much better job communicating with and educating patients, deploying the Internet (for example) to reach patients when they are outside of the immediate care setting.”

Great. He’s just identified two measurement points for physician P4P. It is difficult to measure physician performance, for reasons Dr. Reece describes well. But it still can be done. Dr. Reece shows us two highly workable performance indicators. Nevertheless, he concludes it’s a bad and unworkable idea.

As I say, it’s a fascinating debate with many unspoken overtones.

Send in the Wonks …

… don’t bother, they’re here.

(The latest “blog carnival,” or online anthology of blogs by us “health wonks,” is hosted this month by Joe Paduda.)

The Power of Numbers: Health Economics, Single-Payer, and Massachusetts

When I came out against the Massachusetts health reform law a year ago I felt I had put myself out on a limb. The orgy of self-congratulation in Massachusetts spread from left to right, and even left/progressive commentators and bloggers were lavishing it with praiseful phrases like “exciting” and “model for the nation.”

Mitt Romney and his Democratic opponents had a symbolic victory to use in their next campaigns, while labor leaders could boast to their membership that they “get things done.” It was Governance by Press Release.

But numbers don’t lie.

The numbers built into the Massachusetts plan – and the hard realities behind the numbers that weren’t in the statute – pointed to an inevitable conclusion: Insurers might profit in the short term from a forced march of state residents into their plans, but underwriting results would eventually be disastrous.

Or they’d anticipate danger and price their products accordingly. Care would be available but not affordable, putting lower-income state residents in a bind. The net result: Either financial hardship or a new tax penalty for lower-income residents of Massachusetts.

Why? Because only the sickest would choose the higher cost of enrollment over the lower cost of paying the tax penalty, especially in Year One. Then the hard work would have to begin – the work that should have been done before the law was enacted.

Well, it’s the morning after. I’ve written about the Tylers, the owners of a diner who may have to close their business as a result of the law. I’ve linked to other news stories that cover the slow awakening now going on among lawmakers and officials responsible for the plan.

It’s morning in Massachusetts. Time to shake off the hangover and go to work.

So, does that mean I’m a hard-left critic of any appeasement with the public/private system? The forces of numerical law that predicted to Massachusetts’ problems don’t point that way, either.

As I wrote in “The Invisible Scalpel” and “Friendly Fire,” the U.S. has a health economy that’s unique in the world. It’s larger than the entire economy of Great Britain.

It’s had more than fifty years to grow into an system (in the systems theory sense) that includes health insurers, hospital reimbursement systems based on maximizing gain, and physician treatment behaviors that have grown up around payment structures rather than health. (Not to mention a mix of physician specialties that developed in part based on expected income – and a hundred other factors.)

Could we convert to single-payer overnight? I don’t see how, unless we created a program of Marshall Plan proportions to handle the shock of radically transforming this massive economy.

To those who have written me or blogged to say that I’m an “insurance company plant”or a “hard-right shill” I would respond: this isn’t me talking. Again, it’s the numbers.

Other single-payer proponents have been far more friendly – and enlightening. I’ve had an ongoing friendly correspondence with Nicholas Scala of Physicians for a National Health Plan. PNHP is an invaluable source for health data and information on international health systems.

I can agree with Nick and other single-payer advocates on most goals: affordable and practical coverage for every American. Ready access. A system that is “user-friendly” and dedicated to improving health outcomes.

I’m not even opposed to single-payer care per se. My biggest objection as such is that “single-payer” is a means, not an end, and I think many of us – on all sides of policy debates – tend to get overly attached to the means.

If I could prove to single-payer advocates that there’s a better way to meet the same goals, why should we have to argue? Conversely, I’m open to being persuaded that theirs is the best way to meeting our common goals – but I’m not there yet.

I just don’t think we have a plan to get there from here. That’s why I’ve provisionally endorsed the concept behind the John Edwards plan (though it’s important that he provide more detail soon).

Free-choice programs aren’t boondoggles for the insurance industry if they force insurers to compete with the public system, as under the Edwards plan. Instead, that requires private payers to either a) outperform the public system, b) provide a plan that some people will pay more to join, or c) wither away as a result of market forces.

Single-payer advocates say they can’t achieve “a.” Let’s see if they’re right. As for “b,” there is concern this will create adverse selection against the public system. Let’s look at that from a legislative perspective. And if “c” occurs — well, then everybody’s happy.

And we’d have done it by the numbers.

High And Low-Tech Communications: Patients’ Minds Are The Forgotten Medical Device

Claims adjusters have a public image as hard-headed, cynical, worldy-wise business people. (Think Edward G. Robinson in Double Indemnity, if your memory stretches back that far.) Workers’ comp adjusters understand something, however, that health execs and policy types often overlook: the “soft factors” of patient belief and comprehension have a dramatic impact on case outcomes.

Comp claim adjusters – at least the good ones – develop an understanding of patient psychology because it’s in their best financial interest to do so. A patient who’s frightened that he won’t get good care may get a lawyer, driving claim costs up. A patient who’s angry she can’t get appointments scheduled may delay her return to work. A patient who’s confused may not recover effectively.

A smattering of recent articles and developments shine light into different corners of the “patient’s mind” issue.

Writing in Medscape, Keith J. Petrie et al. (free enrollment required) review recent litererature regarding “the influence of illness perceptions on outcomes in patients with medical conditions.” The more interesting citations address the influence of disease perception on outcomes, as well as the effect of beliefs about need for treatment and their impact on treatment compliance (e.g. taking medications for AIDS treatment). Their conclusion – that “illness perceptions have been shown to have important associations with outcomes in a range of acute and chronic illnesses” – places a burden on physicians to communicate effectively with their patients.

The San Francisco Chronicle looks at a new initiative to provide “health care consumers” (I still can’t warm up to that term) online, searchable data on on quality of care and patient satisfaction by type of treatments for California hospitals:

While a dizzying array of hospital report cards already exists, the developers of the Web site CalHospitalCompare.org (www.calhospitalcompare.org) say it’s the most comprehensive site for people to use when making decisions about where to receive health services.

“There is no other Web site … that combines data from this many sources,” said Dr. R. Adams Dudley, project director for the Institute for Health Policy Studies at UCSF, which collected and analyzed the data for the site.

I used the site to compare two nearby hospitals and found it easy to use and readily navigable, unlike many other “health consumer” sites. The main reason for that is that it’s reporting very little about each hospital. All it tells you is how care was rated in three simple areas – quality, timeliness, satisfaction – in a way that easily lets you compare hospitals by type of condition.

Sites like this are a model for more complicated ventures, and could ideally create “feedback loops” that force hospitals to improve in areas where they’re deficient. In that sense, HHS Secretary Mike Leavitt was right when he said that “our goal isn’t just to digitize healthcare data, it’s to create a ‘system’ out of a sector. We can’t do that without healthcare IT.” But I start to worry when politicians start to talk about “aliging incentives to choose high quality, low cost providers.” It’s the right idea, but I get concerned about execution.

On the low-tech side of the spectrum, Gloria Mayer at Healthleaders discusses the impact of poor literacy on health outcomes in chronic conditions. These conditions are significant cost drivers in health, and our system is designed to concentrate more on high-tech and high-pharma solutions than it is to the more prosaic, but sometimes far more cost-effective, “human touch” efforts that impact both cost and outcome.

Sensitivity to literacy issues is important, whether you’re considering instruction sheets for surgical aftercare, pamphlets on your newly-diagnosed condition, or hospital signage. (Lost, confused, and frightened patients may not return for needed ongoing treatments.)

Conclusions?

1. Patients’ minds can be used to improve outcomes.
2. “Provider profiles” need to factor in the doctor’s ability to communicate to the patient in a way that is clear, reassuring, and leads to better compliance. (Short of patient surveys, duration-of-care and other markers can be used to measure a doctor’s “bedside manner” and its impact on treatment effectiveness.)
3. When it comes to searchable online data, simpler is better.
4. Literacy management in health may not be as glamorous as searchable “health care consumer” websites, but it may do just as much good in the long run.

Told Ya So

Yet more evidence that, sadly, I was correct in my predictions for the so-called “Massachusetts Miracle.” It had a PR campaign so effective that even some savvy and skeptical bloggers were suckered by it. Per Boston’s WCVB television station:

The state’s landmark health insurance plan continues to face daunting questions of affordability.NewsCenter 5’s Amalia Barreda reported Monday that on July 1, every adult resident of Massachusetts is required to have coverage, but the price of the policies may be beyond what many people can pay.

The WCVB piece talks about the Tylers, a couple who owns a diner called Ed’s Place (pictured above).
The gist? The costs of state-mandated healthcare may force them to close the business. Now, lawmakers are absolutely right that the Tylers should not be going without healthcare. The only problem is that they didn’t bother figuring out how to make it possible without driving them out of business.

There are potential solutions out there. Time to work on them with a little more forethought and hard work than Massachusetts bothered to do.

The last time I reported on this I said I hate to say “I told you so.” Enough, already: I told you so. Now, let’s see if Massachusetts lawmakers can step up to the plate and find a more workable solution.

My goal is not to point fingers, but to point out problems. Now that they have plenty of them, we should all be willing to offer constructive suggestions. Here’s one: include Medicaid in the program. Premiums will be more affordable, and families like the Tylers might have another option besides bankruptcy or tax evasion. At the same time, ease the requirements on working families like the folks who run Ed’s Place.

It will take some work, but it can be done.

Can the ‘Wisdom of Crowds’ Predict a Flu Pandemic?

This is clever:

The University of Iowa on Thursday unveiled an electronic market that asks about 100 physicians, nurses, epidemiologists, researchers and public health officials to predict when, where or if an avian flu pandemic will spread around the world, the Des Moines Register reports (Jordan, Des Moines Register, 3/1).

The Iowa Health Prediction Market will put a $245,000 grant from the Robert Wood Johnson Foundation toward creating the Avian Flu Market using the not-for-profit Program for Monitoring Emerging Diseases — the International Society of Infectious Diseases’ online global reporting system (Fox, Reuters/Yahoo! News, 3/1).

The Des Moines Register gives further detail:

– About 100 doctors, nurses, epidemiologists, researchers and public health officials from around the world will act as traders in the market by gathering information and making predictions.

– Traders buy or sell shares based on their answers to yes/no questions that include whether the H5N1 virus will appear in North or South America by July 1, whether more than 300 cases of H5N1 are confirmed worldwide by July 1, and whether there is any human-to-human spread of the virus by July 1.

– Traders can invest all their money – each member has $100 in an account provided by the U of I – in a popular answer or buy cheaper shares in a less-likely scenario to increase the possible payout. When the market closes July 1, administrators will credit traders according to the accuracy of their predictions.

Traders will be recruited through the Program for Monitoring Emerging Diseases, an online global reporting system run by the International Society for Infectious Diseases that rapidly distributes information about outbreaks.

The Avian Flu Market and the U of I’s Influenza Prediction Market, which has successfully predicted when the flu bug would hit Iowa, are spinoffs of the Iowa Electronic Markets, which have gained national attention for accurate predictions in presidential elections.

They don’t just do avian flu at the Iowa Health Prediction Markets. They’re working on regular flu, and the mumps too. Incidentally, the Iowa Electronic Markets just started traded in the 2008 elections today.

Some of these ideas are just trendy, and some are really smart. This one? I’m betting it’s really smart. In fact, if the model continues to be effective, I can think of all sorts of opportunities to use this approach in the private sector, can’t you?

Medsoft – not Microstory. MS Buys Medsoft, Builds Health Division

Esther Dyson writes in the Huffington Post about Microsoft’s purchase of Medstory, a health search engine that can be personalized to your own health profile. She acknowledges that the personalization function isn’t there yet, but it’s a great idea.

The Medstory concept reflects the bandwagon I’ve been on for a long time – one which led to the formation of Health Knowledge Systems, although I haven’t had time to move that aspect of it forward as I would have liked (and that effort’s focused in a different direction – post-injury or illness, with corporate and insurance entities as the end payers).

The idea is this: the design flaw in the Internet as it currently exists is that there’s too much information, not too little. The notion of a “cyberspace commons” for all users is wrong, and we need to shift our thinking toward a “personalized commons,” or a “digital lens” that allows us to see only the information we need to see.

The best place to start is where Medsoft started – with the individual. But there are others who need “lenses,” too – physicians, pharmacists, regulators, journalists, researchers, academics, IT professionals …. the list is endless. Each of these populations needs its own set of lenses, and each is its own market.

Is Microsoft the right vehicle for building these multiple platforms, and does it have the will to take Medsoft to the next level? Only time will tell. Within the world of the “personalized commons” alone, we’re only taking baby steps.

As TheStreet.com reports, the web/health interface is hot again. As for Microsoft, Steve Ballmer’s comments in TheStreet.com’s piece reflect the opportunity and the risk. Opportunity? Hell, it’s Microsoft! Ballmer says the area is “longer term and less visible” than other priorities – and they’ve got 600 people on it.

The risk? It’s Microsoft. They’ve got a lot of things going on right now. The quotes from Ballmer and the head of the health group concentrate on hospital systems, which is fine – but it’s also the most complex area of the health care IT landscape, and one with less impact on healthcare as an overall system – clinical, epidemiological, economic, social, and informational – than others.

Will Microsoft find the will and vision to redesign the healthcare landscape, or will healthcare eventually become part of its business systems division, with a few modules like Medstory on the side?

More, as they say, will be revealed.

(Esther also talks about the limitations created by lack of robust privacy protection systems in healthcare – something else I’ve been prattling on about ad nauseum for some time now.)