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Category: The Business of Health Care

Who’s Running Your Company: You or Your Client?

By Alan Ying, MD

Venture capitalists like to use the word “traction.” It sounds all glamorous, like an ad showing a Range Rover toughing it out up some impossible incline. But when I hear a company talk about ‘early traction’ in its pitch, I’m always leery of the “First and Worst” effect.

My first customer at my first company was a grandfatherly CIO at a big hospital. Of course I wanted to please him, and was enthusiastic about doing so. But I was also very focused on taking over the world with our software. I told him, “We’ll change anything you want about the product, as long as it’ll be good for all our future [gazillion] customers.”

Of course, The Grandfather wanted lots of one-off customizations that would really only be good for him. I told him that all the time we spent doing custom work for him was going to make us less profitable, and less likely to be able to sell the product to other people. And to survive long enough to do any improvements to the product at all, we needed to be profitable. He seemed to think that made sense, and begrudgingly agreed.

In the end this arrangement was a win for both of us. Our product was a home run for his hospital. We got an evangelical reference customer, and his hospital helped make our product better. The precedent we’d set with The Grandfather gave us the courage to refuse other customers who wanted one-off changes. Sure, we could have done this for one or two hospitals, but by the time we got to hospital 300, it would have been a mess.

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The Irrelevance of the Supreme Court Decision on Obamacare

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By Dave Chase

When I’m not writing pieces here, my “day job” is working with healthcare providers recognized as Disruptive Innovators who are reinventing healthcare and slaying the healthcare cost beast as a byproduct. In some cases, these are entrepreneurs. In others, they are pioneers within existing healthcare providers.

Even though this is the month that the Supreme Court is supposed to rule on the constitutionality of Obamacare, it is striking this fact rarely that ever comes up in discussions with healthcare providers.

Philip Betbeze described this in a HealthLeaders Media piece entitled “Disruptive Healthcare Innovations Trump SCOTUS Worries“   when he asked senior executives about their perspective regarding upcoming the Supreme Court decision.

But when you ask one question, you might get an interesting answer about something else entirely. That’s the way my sources for this off-the-record conversation surprised me. They agreed they are much more concerned about disruptive innovation than what nine people in black robes are going to say at an indeterminate date sometime this month.

The roundtables, set up for me by the good folks at Premier Inc., which is holding its annual “Breakthroughs” conference here in Nashville this week, revealed that these leaders fear less what the government may do in response to whatever decision the Court makes, and more what nontraditional competitors may do to their resource and capital-heavy healthcare delivery systems.

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Even Aetna CEO Admits: We’re Toast

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By Joe Flower

I’ve been saying it for years (and in 3D and Technicolor in my new book Healthcare Beyond Reform): The Standard Model of Healthcare (the traditional unmodified fee-for-service, commodified, defined-benefit payment system) is broken and doomed. It’s fascinating to hear that even the CEO of Aetna, Mark Bertolini, said exactly that recently at a major healthcare technology conference — and that Forbes, a bastion of business and the private approach to everything, would publish an article on his remarks.

At Health 2.0 last fall, Bertolini said that he no longer thinks of Aetna as an insurance company, but primarily as an information company. This time, he made these main points:

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Dispatch from Washington

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By John Irvine

In its wisdom, the Supreme Court of the United States may decide to overturn the Obama administration’s health reform legislation.

The Supreme Court of the United States may decide not to.

Mitt Romney may unseat Barrack Obama and wrest the Presidency away from the Democrats. Or he may not.

In a way, these things may not actually matter.

There may be uncertainty on Wall Street and in the media about the fate of the Affordable Care Act (ACA) and the upcoming presidential election, but the mood in the crowd gathered at the 9th session of the World Health Care Congress last week in Washington was  curiously upbeat.

There was a sense that health care is making progress.

And that is a good thing.

Innovations like accountable care organizations (ACOs), scientific management principles like cost containment and quality improvement and the movement for better health information technology will make their presence felt, regardless of what happens in the courts and on Election Day.

Unlike TEDMED, which brought together official Washington, the tech industry, entertainment and medicine — at the Kennedy Center last week, the World Health Care Congress is a meeting pretty much limited to health care industry insiders at larger firms.

As is generally the case, the speakers list read like a who’s who of very important healthcare names. Kaiser Permanente CEO George Halvorson, Intermountain CEO Charles Sorensen, Aetna CEO Mark Bertolini, Economists Ezekiel Emanuel and Jonathan Gruber, former OMB Director Peter Orzag, TEDMED curator (Priceline.com) Jay Walker talked about the power of the Internet to fundamentally rewire the way people think. Verizon CEO and NantWorks Founder Patrick Soon-Shiong were on hand to talk up a new collaboration. Xerox CEO Ursula Barnes introed the tech giant’s push into healthcare. Journos like Health Affairs Editor Susan Dentzer and NBC correspondent Nancy Snyderman provided media star power.

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Health Care Law Supporters Ought to Be Sentenced to Serve as Governors

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By Sen. Lamar Alexander

During the debate two years ago over the health care law—which I called an historic mistake because it expanded a health care delivery system we already knew was too expensive, instead of taking steps to reduce its cost two years ago—I suggested to our colleagues on the other side of the aisle who were supporting it that, if they voted for it, they ought to be sentenced to go home and run for governor and see whether they could implement it over an eight-year period.

Governors have long wrestled with the rising costs of Medicaid, paid for partly by the states according to rules set in Washington, and the question of how to deal with public education, especially higher education. Some 30 years ago, when I was a young governor, I was still struggling with the fact that at the end of the budget process, we had money either to put into higher education or into Medicaid – but the rules from Washington said it had to go to Medicaid.

I remember going to see President Reagan and asking: ‘Why don’t we just swap it, Mr. President? Let the federal government take all of Medicaid. Let the states take elementary and secondary education.’ That didn’t happen, and gradually, the increasing Washington-directed costs have distorted state budgets so much that now 24 percent of the state budgets go to the Medicaid program.

Because of the health care law, we are going to add 25.9 million more Americans to Medicaid, according to the Medicaid Chief Actuary.

Our former governor, Governor Bredesen, a Democratic governor, estimated that between 2014 and 2019 the expansion of Medicaid would add $1.1 billion in new costs to the state of Tennessee.

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Can Health Care Be Bought and Sold on eBay?

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By John Goodman

We’re not quite there yet. But there is a new website that is getting close.

A small, emerging online service called MediBid is creating an actual market that puts doctors together with patients who need care.

Here’s the best thing about it. Patients who use this service can cut their health care costs in half. No, that’s not a misprint. Patients who obtain care through MediBid pay about half as much as BlueCross pays. Ditto for all the major employer plans as well as the other big insurance companies. Patients frequently pay even less than what government pays under Medicare.

Here’s the worst thing about it. Once ObamaCare kicks in, entrepreneurial ventures like this one will probably be nipped in the bud. That’s because the Obama administration doesn’t believe that patients can or should be able to buy care in an open marketplace. In fact, once they get through implementing the 2,700-page bill with 159 regulatory agencies and 10,000 pages of regulations, patients are unlikely to ever see a real price for any type of care.

At least for the time being, however, a market for medical care is emerging. Here’s how it works.

Patients who are willing to travel and able to pay cash, can request bids or estimates for specific medical procedures. They fill out medical questionnaires and they can upload their medical records. The patient’s identity is kept confidential until a transaction is consummated. MediBid-affiliated physicians and other medical providers respond by submitting competitive bids for the requested care.

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Why Can’t the ICU Be More Like a Cockpit?

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By Peter Pronovost, MD

In the world of patient safety, we’re constantly reinforcing the importance of teamwork and communication, both among clinicians and with patients. That’s because we know that patient harm so often occurs when vital information about a patient’s care is omitted, miscommunicated or ignored.

Yet for all we do to improve how humans work together, clinicians compete against an environment in which there is very little teamwork or communication among the technologies that they need to care for patients. And there’s little that clinicians or hospitals alone can do about it.

Take, for example, the plethora of alarms from cardiac monitors and other devices that compete for clinicians’ attention. Vendors act as if we are in an alarm race, with each making their devices’ beeps more annoying but no clear prioritizing of the most important alarms. A study on one 15-bed Hopkins Hospital unit a few years ago found that a critical alarm sounded every 92 seconds. As a result, nurses waste their precious time chasing an ever-growing number of false alarms—or becoming desensitized to false alarms and ignoring them. Across the country, this has had tragic consequences, as patients have died while their alarms went unheeded. (Read a 2011 Boston Globe series about this issue.)

In most other high-risk industries, such as aviation and nuclear power, technologies are integrated. They talk to each other, and they automatically adjust based on feedback. Indeed, because of systems integration, pilots fly a small amount of a flight, and even in some treacherous situations, they hand over the reins to the autopilot. Although Southwest Airlines or the U.S. Air Force can buy a working plane, you cannot buy a working hospital or ICU. You must put it together yourself.

There are many other examples of how health care is grossly under-engineered. Consider these:

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Can CMS Be a Venture Capitalist?

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By PAUL LEVY
Paul Levy 1

Lisa Suennen, a venture capitalist, writes this post about the provision in the national health care reform act that created the Center for Medicare and Medicaid Innovation (CMI). This agency has $10 billion to “research, develop, test and expand innovative payment and service delivery models that will improve the quality and reduce the costs of care” for patients covered by CMS-related programs. Lisa notes, “What is great about CMI is that they have the authority to run their programs much more like a business would without many historical governmental constraints. ”

I don’t want to be a stick in the mud, particularly as my able friend Don Berwick takes charge of CMS, but I want to point out that previous efforts by the government to be innovative in other fields have failed because:

(1) Venture funding embodies risk-taking. Government usually does not do this because there is a political imperative never to be blamed for misspending taxpayer money. The bureaucracy, therefore, systematically eliminates ideas that are untested.Continue reading…