Health Care Anew

“If you don’t know where you’re going, you might end up somewhere else.”

I suspect that is one of many late decisions that should have been made before detailed planning got under way.

The Obamacare web site story is common in both the public and private sectors.

One reason, I think, is that management positions at the upper levels of such organizations tend to be occupied by people who graduated from college before computers.  They think of computers as black boxes that require trained specialists to run them and so instead of doing the arduous work of thinking through what they want the computer to do and resolving the issues involved in making it happen, they just dump the matter into the lap of the nerds and hope for the best.

Salespeople for IT contractors may know that projects are poorly conceived, but are not likely to put contracts at risk by telling potential customers that they haven’t done their homework.

Sometimes things work out smoothly anyway, but often they don’t.  The Obamacare web site is one that didn’t.

Perhaps the next generation, computer literate from birth, won’t have these problems.

 

 

 

Too soon old, too late smart is the old saying.  It applies to me when it comes to Accountable Care Organizations (ACOs).

ACO’s are provided for in the Affordable Care Act, a.k.a. Obamacare.  I assumed they described an organizational structure that could be held accountable for cost and quality because it included all the major components of care (particularly doctors and hospitals).  I was puzzled by the kinds of organizations that elected to be included, as well as by the kinds that did not, but thought that was just part of the fuzziness that typically characterized public programs.

I was particularly mystified when I learned that the Henry Ford Health System in Detroit (where I worked during the 1990’s) had not elected to be an ACO.   HFHS is a fully integrated system that includes hospitals, a salaried medical staff and a good-sized HMO.

Inquiring into that with a friend who still works there, I learned that the term ACO actually describes a financial scheme directed at providers that are financed primarily by fee for service.  If they elect to join, Medicare identifies the patients that are using them for primary care.  If those patients end up costing Medicare less than average and if certain quality goals are met or exceeded, providers get part of the savings.  If they cost more and fail to meet quality goals, providers get financially penalized.  Providers can elect different levels of reward and penalty, based on how much risk they are willing to expose themselves to.

So it is a game of sorts and providers decide whether they want to play or not.  Quite a few have taken the challenge but many have not.

The obvious intent is to incentivize providers to improve quality and control cost.  The organizational implications are presumably that efforts to do that will lead providers to more highly integrate the elements of care so that they can be held “accountable” for cost and quality.

We’ll see if it works.

 

Culture Change

I find culture change a fascinating thing to watch.

When my career began some sixty years ago, one of the unwritten but cardinal rules was that hospital administrators did not interfere in clinical matters.  Those were the province of the medical staff.

Although the subject has been too sensitive to address directly, the situation has gradually been changing.

A short Associated Press article in the October 15 issue of The Boston Globe deals with it, albeit indirectly.  The federal Centers for Medicare and Medicaid recently reported that while chief executives at nonprofit hospitals earned an average of $600,000 a year in 2009, and some earned as much as $3,000,000, there was no relationship between earnings and 30-day outcomes for patients with heart attacks, heart failure or pneumonia in 2008.

Dr. Ashish Jha, a health policy professor at the Harvard School of Public health was quoted as saying that these results were “a little disappointing” and that to not hold chief executives accountable for whether patients live or die within 30 days of treatment “doesn't quite make sense.”

Dr. Jha doesn’t seem to realize that it is still possible for hospital chief executives to get fired for meddling in things like that.  The Associated Press apparently doesn't either.

But the bland, matter-of-fact tone of the report suggests that the day may be in sight when executives could get fired for not doing so.

My, my.

The Health Care Market

The form of a competitive market in health care may be emerging.

An article in the September 19 issue of The Boston Globe reported that Walgreen, the drug store company, was converting its health care benefit to one of defined contribution.  Defined contribution means that the employer pays a fixed amount towards the cost of the employee’s health insurance.  The employee then selects and buys an insurance policy and pays the difference if the policy selected costs more than the employer pays.

Walgreen employees will buy their health insurance through an exchange that includes as many as 25 insurance companies.  The exchange will be set up and run by consultant Ann Hewitt, who also performs this function for Sears and Darden Restaurants, which operates the Red Lobster and Olive Garden chains.  Presumably, one purpose of this arrangement is to help employees make informed and responsible decisions about which insurance policy to select.

The Walgreen benefit manager was quoted as saying “I think the only way to drive down costs in the health care space is to have the consumer buying the health care be knowledgeable and educated and understand what they are buying.”

The assumption seems to be that insurance companies will compete in the exchanges by trying to offer an attractive package of benefits and holding their premiums down by negotiating the prices they pay providers and controlling the rate at which services are utilized.  Providers will be able to accept that only if they gain effective control of both cost and the utilization of services. 

Up until now, providers have not shown much inclination to do either one and people don’t like it when insurance companies get involved in controlling utilization.  We will see whether under the defined benefit approach, insurance companies can find a way to cause providers to get serious about both.