Archive for the 'The Business of Healthcare' Category

It’s More Than an Electronic Health Record — Call It a “Health Information Highway”

March 3, 2009

(cross-posted at The Huffington Post)

The stimulus package includes a great deal of money for healthcare information technology, or health IT. Much of this funding is directed toward “wiring” doctors and hospitals with electronic health records, or EHRs. Why should anyone care, other than health software vendors and other industry insiders?

Here’s why: Because the digitizing of medical records could have a far more profound effect on health — and on our economy — than most people realize. The president said the recovery plan will “invest in electronic health records and new technology that will reduce errors, bring down costs, ensure privacy, and save lives.” All that and much more is possible. With a new HHS Secretary and health czar, and a White House health care summit scheduled this week, this is the right time to act.

“Electronic health records” don’t sound like a particularly exciting or innovative idea. But neither did “a network that could quickly reroute digital traffic around failed nodes” in case of military attack, or “dynamic routing protocols to constantly adjust the flow of traffic” between computers. Yet those were the modest original goals of ARPANET — which evolved into the Internet as we know it today.

Paradoxically, computerizing the health system in this country could make it much more humane than it is today. But that calls for a broad vision of health IT as an “information highway” that stores information, looks for problems, and eases the many routine interactions that make up the health system. A well-designed “health highway” would have features like these:

A common set of programming specifications for coding, storing, sharing, and manipulating health information. Just as XML (eXtensible Markup Language) allowed web designers to create sites that interact with one another, a health markup language or “HML” could allow systems used by doctors, hospitals, patients, and others to easily “talk” with one another.

The ability for systems to “look for” adverse medical reactions together. Certain harmless drugs become deadly in combination with other drugs, or when a person has other medical conditions. One way this technology could be used is to automatically look for these interactions every time a prescription is electronically “written.”

Personal convenience. A doctor recommended minor surgery for me last week. What if her office had been able to schedule an appointment for me on the spot, send me a before-and-after personal care plan (tailored to my medical history), pre-authorized the treatment — and checked my health plan to tell me how much it was going to cost me?

More privacy than we have today. I began tracking health privacy breaches a couple of years ago, but had to stop — because they’re too frequent. Laptops get stolen with medical information on them, storage disks get misplaced, or computers get hacked. (I wrote a paper about potential criminal uses of stolen medical data, but decided not to publish it …) A comprehensive health IT system would include better protections for health data.

Tools for primary care doctors to manage your health. US and Canadian primary care doctors – the ones who should be managing your overall health — have historically lagged behind their European counterparts in some vital IT capabilities. Health reform depends on stronger primary care – and health IT can help.

Automatic claim submission. Why shouldn’t the health IT network automatically submit my claim after I’ve received medical treatment? Why shouldn’t it tell me how far I’ve gone in meeting my deductible, and share any other financial information I might need? Our current system is too clerical, too bureaucratic, and too difficult to navigate.

For that matter, why should I have to fill out the same forms over and over — not only each time I see a new doctor, but when I fill out multiple forms in the same doctor’s office? This is a pet peeve of mine. And after I’ve had to write down my birthday four times during one doctor’s office visit — then I need to tell them my age, too! (I want to ask, if I just gave you my birthday can’t you figure out how old I am? Well, a computer can …)

The government can’t create systems to do all these things, even with the dollars that have been budgeted. But that shouldn’t be necessary. A comprehensive strategy should lay the foundation for a boom in private initiatives. If the Internet’s any example, people will meet these needs… and hundreds of others nobody’s thought of yet. That won’t just help us save money and improve healthcare. It could also create a new mini-boom in the technology and service sectors of our $2 trillion health economy.

And that sounds a lot like a stimulus to me.

An “electronic health record” may sound dull. Software based on paper-based objects seem inert. But that’s what Facebook was originally — an electronic version of the “facebooks” given to new college students so they can get to know one another. Whenever anything is digitized it becomes dynamic, changeable, active. It acquires the ability to interact with other things. It becomes less like a paper form, and more like a gateway.

Or a highway.


Plan for Uninsured in Florida Goes South (plus, Defending My Opponents)

August 11, 2008

This is one of the most predictable health insurance stories we’ve seen so far in 2008:

A report from the Center on Budget and Policy Priorities, a nonprofit policy research group in Washington, D.C., concluded that Cover Florida, a health plan recently implemented to provide coverage to some of Florida’s 3.7 million uninsured, is not likely to succeed …

Why was the failure of Cover Florida inevitable?  Because it avoided the tough questions.  Like so many political creations, it tried to please everybody.  It tried to reduce the number of uninsured without spending any real money, imposing any rules – or goring anyone’s ox.

Here’s a simple rule of thumb:  If the private sector could solve the problem of the uninsured on its own it would have done so already. It didn’t need Gov. Charlie Crist or the Florida Legislature to encourage it.

Cover Florida attempted to incubate inexpensive insurance plans that low-income Floridians could buy for $150 a month and up.  But economics is, in its own way, as inelastic as physics.  A plan that costs that little, and that receives no government subsidies, simply can’t provide very much coverage.

Besides, $1800 per year is a lot of money to lower-income people – more, in fact, that they can afford.  Most uninsured Floridians are in lower income brackets, and people in these brackets are rational economic actors like everyone else.  To the extent that they’re aware of Cover Florida, they’ll look at the premiums and find them unacceptably high.  Or if they get past that, they’ll look at the out-of-pocket costs and see that this plan won’t protect them from the risk of financial catastrophe …

… which is, after all, the original concept behind the invention of “insurance.”

Here’s the bottom line:  There was no way Cover Florida could provide a meaningful cost/benefit choice for uninsured Floridians.  Not without introducing something new into the equation: new revenue sources, new processes … new something.  And any plan like this will have low participation, which means adverse selection.

Gov. Crist made sweeping claims for Cover Florida:  “Competitive negotiations” would produce “an affordable, quality insurance product for Florida’s uninsured citizens.”  They would have “a robust set of benefits” with “no mandates for participation and no tax dollars.”

Sounds too good to be true … and it was.  A similar program called Health Flex had already failed in Florida, which raises this new initiative to the old definition of insanity as “doing the same thing over and over and expecting a different result.”

The problem of the uninsured will never be solved by “press-release policymaking.”  There are more than 40 million uninsured Americans, and sometimes it seems as if politicians have uttered a buzzword for every single one of them.

I’ll close with a defense of people I’ve disagreed with over the years:  Those of us who are health policy wonks have had more than our share of internecine battles.  I may think the folks at the Cato Institute are unrealistic about the free market, or that too many Democrats turned “shared responsibility” into an onerous burden for the working poor, or that some single-payer advocates are so inflexible it becomes counterproductive.  And they may all think far worse of me (if they think of me at all.)

But these sorts of policy debates need to happen if meaningful change is ever going to take place.  Everybody I’ve just named is willing to look past the bromides and feel-good cliches in order to fight the difficult fights.  They’re all willing to confront tough issues and struggle with hard choices in order to come up with real solutions.

I’ll take that over political happy-talk any day.

(Original reporting from the Orlando Sentinel via CovertheUninsured)

Stop Thief!

July 8, 2008

A Harris Interactive poll suggests that public awareness of health privacy concerns is on the rise, according to a report in Modern Healthcare.  The poll is described as an “online interactive” survey, however, which raises concerns about sampling validity.  That caveat aside, it’s interesting to note that there appears to be increasing public awareness of health data theft and data security issues – which, as we have written here before, are rampant.  (We’ve been following health privacy concerns for some time now.)

The poll also suggests that data thefts could be undermining public support for Electronic Health Records (EHR), which is another reason to get this problem under control before it escalates any further.

The Modern Healthcare article also reports that Booz Allen Hamilton was awarded a $450,000 grant in order to

…do an “environmental scan” to get its arms around the problem, then convene a meeting to gather ideas on how medical identity theft should be addressed, and then to write up an action plan recommending ways to deal with the problem.

I would’ve liked to have that contract, and I could’ve done it for a lot less.  We haven’t begun to explore the full implications of rampant health data theft – and we shouldn’t, at least in a public forum.

Still, I suspect the real solution to this problem is going to come from an imaginative entrepreneur, not a Federally-funded study.

(via CHCF’s iHealthBeat; image courtesy Medical Informatics Insider)

A Billion Here, A Billion There: California HMO Figures Are a Challenge for Free-Market Health Advocates

June 24, 2008

If the Free Market can cure all the ills in our health economy, why are we seeing billion-dollar expenditures for non-health items – even as prices soar and buyers rage? It looks like somebody has taken the Invisible Hand off the wheel.

The California Medical Association, which has its own ax to grind, is publicizing state data about HMO expenditures.  (Remember HMOs?  They’re the organizations that were going to improve outcomes while cutting costs.)  According to data from the Department of Managed Health Care, California HMOs spent about $6 billion last year in administrative expenses – including seven-figure salaries for a number of CEOs.

Meanwhile large plans like CalPERS are facing 8% increases, while individual enrollees – the linchpin of consumer-oriented free market policies – are seeing increases in the 10% range.

If the market is really “rational,” as we’re always being told, why aren’t buyers forcing these overhead costs down?

Sen. Sheila Kuehl is quoted as saying that her bill, which mandates that plans spend no less than 85% of premiums on direct health costs, would have resulted in $1.1 billion more being spent on medical care.  I need to read Sen. Kuehl’s bill in detail, but here’s my problem with the principle:  The easiest was to get to that ratio is by increasing premiums, not reducing administrative expenses. Unless the bill prevents that, that’s the likeliest outcome – especially since market forces don’t appear to be doing the trick.

In the abstract sense, I don’t care how much profit HMOs make, if they’re getting the right results.  If they can provide better health care at a lower premium cost, and make a 20% or 30% profit margin – great!  Everybody wins.  The problem is that there’s no indication that they can.

For balance, total California health spending is in the hundreds of billions, so we’re talking about marginal figures.  But marginal or not, you save a billion here and a billion there and pretty soon you’re talking real money.

And a number of the state’s HMOs fall within Sen. Kuehl’s margins, including CIGNA at 94.3 percent, Inland Empire at93.1 percent, and Kaiser at 90.6 percent.  Community-based LA Care clocks in at an impressive 97.1 percent.

But the question remains:  If the market can’t get these escalating costs under control – even with administrative expenses in the $6 billion range – how can it be the stand-alone solution of the future?

Tier 4 Drugs: An Industry Response

April 14, 2008

Ezra Klein spoke with Robert Zirkelbach of America’s Health Insurance Plans regarding Tier 4 medications. Mr. Zirkelbach’s response hits a few points:

National Conversation

That we need a “national conversation” about “whether drugs that cost ten or a hundred times as much as current treatment options are producing better outcomes.” (Whatever your opinion of Hillary Clinton, I’m not particularly grateful for the insertion of the phrase “national conversation” into the political lexicon. A little less talk, a little more action, as Elvis would say.)

In this case, I would say we don’t need a “conversation” about better outcomes. We need data. It’s a research question, not a political one. If these therapies are better than the alternative, then we need a conversation – but it has to be about our level of willingness to provide insurance that pays for the best available treatment. That’s a debate worth having, and it’s also where we need some of that transparency Jonathan Cohn calls for.

Generic Alternatives

Mr. Zirkelbach says we should encourage “generic versions” of Tier 4 drugs. But, as Ezra points out, they’re not likely to be available.

Comparing New and Current Treatment Options

Lastly, Zirkelbach suggests “we need a national system in this country that compares new drugs with the treatment options currently available in the marketplace.” That’s a good point. Even under single-payer coverage, we would still need to do cost/benefit analyses on very expensive therapies – and not just for pharmaceuticals. The more information that’s made publicly available, and the more education and debate that ensues, the better.

I still say there is a point at which insurance” becomes a misnomer. What that point may be is somewhat subjective, but in theory it’s this: When the coverage being provided no longer protects individuals from severe financial harm as a result of loss.

And I’d add this thought to the “national conversation”: When plan designs are no longer made to change behavior, but simply to transfer high-cost items back to the insured party, that’s risk transfer and not benefit design. As a result, the insurance concept is being subtly modified – and arguably undermined.

Tier 4 Meds: When Is Health Insurance Not Insurance?

April 14, 2008


Is health insurance even insurance anymore? The high cost of intensive drug therapies is being shifted back onto patients – and not because the procedures are considered “experimental.”

The New York Times’ Gina Kolata wrote a piece today about a new kind of financial catastrophe striking Americans who have – or think they have – health insurance. The problem is with so-called “Tier 4” drugs, which are typically prescribed for severe medical conditions. These medications are extremely expensive, and insurance companies have been exempting them from the usual rules (like fixed copays and out-of-pocket limits) that protect their members from financial shock. As a result, people who think their they’re protected financially are being hit by huge drug bills.

Patients aren’t bearing more of the cost for these medications because they’re experimental – a reason that’s often used for denying certain treatments. They’re bearing more of the cost because they’re expensive, at least as far as some quick research today could determine. And, as Jonathan Cohn of The New Republic observes, the political debate isn’t even addressing this part of the problem.

How bad is it? Take one breast cancer patient in the Kolata piece, for example, who lives on Social Security disability and has Medicare coverage:

(Her insurer) declined to say what Tykerb might cost, but its list price according to a standard source, Red Book, is $3,480 for 150 tablets, which may last a patient 21 days. Wellcare requires patients to pay a third of the cost of its Tier 4 drugs.

That’s nearly $400 every three weeks. Or, how about the MS victim whose Kaiser coverage changed unexpectedly, so she didn’t find out until she picked up her usual prescription?

Now Kaiser was charging 25 percent of the cost of the drug up to a maximum of $325 per prescription. Her annual cost would be $3,900 and unless her insurance changed or the drug dropped in price, it would go on for the rest of her life. “I charged it, then got into my car and burst into tears,” Ms. Steinwand said.

Ezra Klein’s not sure how Tier 4 drugs are designated. (But he got curious about it, too. See his post and my reaction.) Ezra writes:

(Kolata’s) article vaguely implies that Tier Four is simply composed of costly drugs that insurers are dumping on patients. My understanding of the situation is that Tier Four is actually composed of largely experimental and unproven treatments that don’t seem to offer benefits in line with their cost. If it’s the former, then this really is, as the article seems to suggest, a cruel and crazed practice. If it’s the latter, then it’s exactly what we need to be doing.

I wish Ezra was right, but he’s not. Here are a couple of examples of the logic used to transfer these costs to customers. Blue Cross and Blue Shield of North Carolina says Tier 4 drugs are “medications classified by BCBSNC as those which require special dosing or administering, are typically prescribed by a specialist and are more expensive than most medications.” That’s it: nothing about “experimental.” And the UPMC health plan, affiliated with the University of Pittsburgh health system, says this:

The fourth tier is for specialty drugs, which are high-cost medications and biologicals, regardless of how they are administered (injectable, oral, transdermal, or inhalant). These drugs also have the highest level of copayment. These medications are often used to treat complex clinical conditions and usually require close management by a physician because of their potential side effects and the need for frequent dosage adjustments.

These two descriptions are typical of the way insurers describe Tier 4 drugs. Defenders of the Tier 4 system will say that health premiums will become unaffordable if these costly treatments, which can exceed $100,000/year, are paid by insurance. There’s some truth to that. But here’s the problem with that argument: The function of insurance is to protect individuals from expenses they can’t afford. Once you start withdrawing that protection, it’s a misuse of language to describe the product you sell as “health insurance.” It needs to be called “health cost offset,” or “selective health cost mitigation,” or something else that doesn’t promise more than it can deliver.

If costs have become so high that the private health insurance system can’t provide affordable coverage that protects people from financial harm, then the entire system needs to be re-envisioned. Remember: In all the debate about “universal healthcare,” most politicians are really talking about “universal health insurance.” But if it isn’t really “insurance” anymore, what are they offering voters?

(Kevin Drum has also written about this issue)

Are ‘Medical Googlers’ Really A Problem?

December 12, 2007

After dozens of ventures to create health sites for health consumers, most people still seek medical information through Google. That surprises some tech investors. What’s more, the very act of searching ticks off at least one doctor, and probably many more.

Dr. Scott Haig is aggravated by “Susan,” a patient he considers a “medical Googler” (as he writes in TIME Magazine and as covered in the New York Times). ” We had never met,” he begins, “but as we talked on the phone I knew she was Googling me.” Sounds a little defensive to me. That clackety-clack typing sound he heard could have been her making notes on the conversation, or Googling her health condition, or any number of other less personal activities. (Presumably she Googled him before she placed the call.)

It is rude to surf the Net while you’re on the phone – I’ve been busted for it myself. But no need to jump to conclusions.

Dr. Haig goes on to describe Susan’s irritating personality and seemingly inept parenting – as if those two were inevitable and inseparable characteristics of the “medical Googler.” But guess what? Studies indicate more than 130 million Americans sought medical information online last year. Are they all obnoxious jerks?

Dr. Haig’s reaction is indicative of a deeper trend that troubles many doctors: Patients are arming themselves with medical information and making their own decisions. In the abstract, that’s what they should do. But in practice, it results in a shift away from the doctor-centric model – physician as priest – that many practitioners understandably find more comfortable. And there are risks, which technology has been slow to address.

But here’s the bottom line: They’re here, they’re search-engine is near, get used to it.

If Dr. Haig’s description is accurate, Susan sounds like the kind of annoying patient doctors have had to tolerate since the dawn of the profession. Her ‘Googling’ doesn’t make her who she is – and she won’t change.

But physicians like Dr. Haig will have to adapt – or spend the rest of their careers in a state of heightened aggravation. The ‘Medical Googler’ (and her descendents on newer platforms) are the wave of a future that’s already here.

health wonk review: the daily double

May 30, 2007


It’s my turn once again to host the Health Wonk Review, and this gang has gone absolutely wild! Apparently it was Daily Double Week for the Review, with Joe Paduda heading the list of contributors who offered dual postings. That left us with 24 entries, so let’s get right to it (and if I’ve overlooked your entry drop me a line):

Joe Paduda says there’s a “pre-lash” against consumer directed health plans – that’s a backlash before something happens, says Joe. Then, ever helpful soul that he is, he recommends some fixes to help CDHP purveyors from feeling the sting of the lash.

David Harlow of the HealthBlawg looks at the new IRS position paper on EHRs, and follows up with a discussion of binding arbitration between nursing facilities and their residents. Nice double-down, dawg.

Roy Poses, MD summarizes the new information coming out about Avandia and possible cardiovascular risk, following up with some lessons learned and observing that some reports suggest the FDA may have known of the risk for seven years and done nothing.

Bob Laszewski offers an invaluable guide to the Democratic Presidential candidates’ health plans, with some interesting observations about the politics involved. He also notes the lack of detailed plans on the Republican side, and suggests that may be a miscalculation. (Bob didn’t submitted two posts, but I thought they were both valuable.)

I (Richard) looked at those various reform plans and offered some advice for employers in a changing environment, in a post called Health Reform: What Should Business Do?

Jon Coppelman analyzes Massachusetts’ low comp rates – a boon for employers – looking at who’s subsidizing this good news and the factors that might change the situation going forward. A valuable resource for comp mavens.

David E. Williams only offered a single submission – but it’s called Double For Nothing. He compares wait times in the US with those under other national systems. He observes that, while critics of health reform point to the waiting lists common in other systems, we’re not doing very well in this country either.

Matthew Holt takes on free-marketer Amy Ridenour with a singularity of purpose here.

Vince Kuraitis of theHealth e-CareManagement blog has an interesting post about disease management going mobile (wasn’t that a Who song?) and being distributed on a retail basis. That’s the kind of story that piques my interest from the perspectives of investment, social behavior, and technology.

Henry Stern, LUTCF, CBC presents Insurance going to the dogs (and cats)? posted at InsureBlog, saying, “When Fido (or Fluffy) need medical care, do you reach for his/her insurance card? Surprisingly, a lot of folks do.” Why did I have my cat spayed? I don’t mind paying for her coverage, but those dependent premiums were killing me.

Shaheen Lakhan presents Defining Malpractice During an Emergency Evacuation posted at GNIF Brain Blogger. Interesting issue – is failure to evacuate during an emergency a form of malpractice? Med mal insurers, take note: This could be you next time.

Jason Shafrin presents Will Medical IT increase cost? Is slow adoption better? posted at Healthcare Economist. This is an important topic for economic analysis, since the Democratic candidates’ health platforms are predicated on a decrease in cost via IT.

Read the rest of this entry »

Health Reform: What Should Business Do?

May 30, 2007


A lot can happen between today and next November, but as of now Democrats stand a decent chance of taking the Presidency and solidifying their hold on Congress in 2008. The three major Democratic Presidential candidates have now revealed some or all of their proposals for health reform. (There’s a good summary here.) How should businesses be preparing for the possibility of change?

1. Recognize that change isn’t inevitable, but is possible.

Democrats may be underestimating the level of resistance reform plans will meet. So far each plan has something to commend it, but none is visionary or inspirational enough to draw the kind of public support that can’t be eroded by well-funded campaigns like the “Harry and Louise” ads of the 90’s or the AMA’s “no socialized medicine” efforts in the 1950’s. Still, the possibility of change under a Democratic administration is there, and many business people understand that the right kind of health reform could improve their bottom line and make them more competitive globally.

2. Study the plans and participate in the dialogue.

Business leaders should inject themselves into the reform dialogue in a meaningful way. That means studying the plans and finding one to support. Many have signed on with Andy Stern and the SEIU. Business leaders should also look carefully at the plan put forward by Sen. Ron Wyden, which would take employers out of the health financing business altogether. That’s a radical shift for larger businesses, but one worthy of consideration.

3. Find the details you support and promote them.

Sen. Clinton calls for a Best Practices Institute. That’s a good idea worthy of widespread support. So is her call for IT upgrades (a call that’s common to all the plans, but which she initiated first.  Obama has upped the ante by calling for $7 billion more in development than she has proposed.) Edwards was the first to call for public/private competition, which should drive down costs for employers and individuals. These details can dramatically affect the impact of reform on the business community.

4. Understand the potential impact of reform on your business.

Large employers are more likely to benefit from health reform that reduces the cost of coverage they already provide their employees. Reform plans would very possibly change the mix of plans they can offer, reduce the cost of catastrophic care, and place a greater emphasis on wellness. Large employers should look at their own health costs and model the impact of these changes – as a planning exercise, and for common sense. They should also avoid multi-year deals for insured coverage or reinsurance on a self-insured plan.

Small employers may be required to provide coverage under health reform, and should be preparing for this possible additional expense. The specifics of reform will determine who will be hit in the small business community, and how hard, and nobody’s offering that detail yet. I predict a boom for the PEO industry if small businesses are hit with a mandate – that is, assuming a mandate of that kind doesn’t become a last-minute boon for the Republican Party.

We’ll provide more detail on these plans as it becomes available – although the candidates have very little reason for making that detail available. Politically speaking, the devil’s in the details – so the less said, the better. It will be up to business leaders (and those in labor and elsewhere) to push discussion to a more detailed – and more meaningful – level.

Will PHPs Succeed or Fail? It’s All About Execution … Which Means Investment

May 24, 2007


Highmark (Blue Cross Blue Shield of PA) is offering an online Personal Health Record portal, or PHR. As reports:

Available through a secure page at, the Pittsburgh-based insurer will automatically populate PHRs with relevant claims and administrative data that includes dates of service, diagnoses and treatments, medications and other information.

The PHR includes tracking technology that enables users to keep records on certain health status measures, such as blood glucose, blood pressure, cholesterol level and weight. Other recordkeeping functions include medication tracking, immunizations, physician information, treatment history and allergies. Members also can enter additional information in their PHR, which is printable to share with clinicians.

Highmark further will offer PHR users personalized plans for improving their health. The PHR includes links to educational materials.

There are a lot of factors to consider in good web portal design – including variations in literacy rates, ease of access, generational/cultural differences in how people interact with a screen, identifying the “teachability moment” in health education, and much more. That doesn’t even touch the issue of content. Execution will determine the success or failure of the PHP concept.

There’s a good opportunity for the right team to build the content and develop design templates for PHPs. The question is: Where is that team? There’s an investment opportunity out there for the right partners …

(courtesy iHealthBeat – California HealthCare Foundation)