Everything You Need to Know About Health Care Reform, Thanks to a 25 Minute Video, Courtesy of Managed Care Magazine

Thanks to Managed Care Magazine, the Disease Management Care Blog can post this interesting 25 minute interview with Princeton healthcare economist Uwe Reindardt.  Suitable for desk-bound meal-break viewing by overachieving DMCB readers, the modest and insightful Dr. Reindardt gets it mostly right:

No, the slowdown in the U.S. rate of health care costs cannot be ascribed to passage of the Affordable Care Act.  It started wayyyy before Obamacare was passed and is more likely due to the economic slowdown and increased consumer cost-sharing.

Accountable Care Organizations remain an "iffy" experimental proposition because they "don't go all the way like Kaiser."

Republican proposals to let health insurers sell their products across state lines are hardly a health reform panacea, because prices (and therefore premiums) are not a function of where the insurer is domiciled, but where the care is rendered.  Texas insurers would still have to pay New York prices.

Americans use fewer pills, occupy less bed-days and see fewer doctors, but we pay more because providers can charge more.  Despite being relatively small vs. the behemoths like Aetna and Cigna, regional hospitals have considerable market power that translates into take-it-or-leave it local single seller monopsonies.   Europeans, in contrast, have lower prices because their system is dominated by single purchaser monopolies.

We're headed toward a three-tier system comprised of 1) the indigent safety-net public programs, 2) the middle class "reference pricing" "networks" where consumers pay the difference if they want to buy up and 3) "boutique" health care for the 5%.

There's reason to be optimistic about the next five years thanks to a sluggish labor market (making it easier to impose networks and even more cost sharing) and innovation (computational capacity is putting meaningful quality measurement within reach, while techy gizmos are making self-care simultaneously cheap and fun). 

Plus, there's reason to be of good cheer.  Compared to the U.S. education and the legal systems, health care is far more efficient and consumer-friendly.  Stop beating up on yourselves.

(The DMCB didn't quite agree with Dr. Reinhardt's views on worksite wellness.  He finds the notion counterintuitive and intrusive, preferring that insurers own wellness.  He neglects to mention that the employers who invest heavily in wellness are typically self-insured and that employers have an arguable stake in improving the quality of their human capital.)

A Generic Ready-To-Go Accountable Care Organization (ACO) Press Release

Is your health care organization about to launch an "accountable care organization" involving a commercial insurer? Welcome to the club, says the Disease Management Care Blog.  Now that you've joined the hundreds of other providers in this latest craze, the first thing you need to do is to get your public relations folks to fashion a press release.

The DMCB feels your pain.  Having to explain just how actuarial cost trend "accountability" really works to a public relations department that already has trouble telling the difference between diabetes and dialysis is bad enough.  You don't understand it either!

The DMCB to your rescue with a generic press release.  It's been reading a lot of these lately and has discovered that the ideal announcement 1) uses a lot of jargon and 2) offers no details on how the ACO will actually work.

Feel free to copy, cut and paste to your organization's letterhead as needed.

PRESS RELEASE

Media Contacts: Lotta Jargon
The Titan Clinic
noidea@monopolycare.com

Titan Clinic System and Behemoth Insurance Collaborate to Create Accountable Care Initiative

ROSY GLASSES, WT  – Aug 7, 2015 – Behemoth Insurance (NYSE:TBTF) and the Titan Clinic System have initiated an epic collaborative accountable care initiative that will epicly initiate expanded patient-centered access to a triple-aim focused and consumer-centric health care initiative. This collaboration will drive health outcomes, utilize the patient centered medical home neighborhood, maximize self-care, prevent chronic conditions, achieve wellness, reduce medical costs, lower admissions, improve quality of life, grow community partnerships, measure patient satisfaction, invent shared savings, boost consultant employment levels and return honor to the sport of badminton.

Titan is a modern not-for-profit hospital and physician organization that is not the same as a 1990’s physician hospital organization (PHO) that coordinates, manages, disseminates and monetizes care resources and technology to maximize bottom-line tax-free surpluses. A pioneer in specialist-dominated medicine, Titan discovered that it had 5 primary care clinics all along. This insight led it to to buy another 40 to refer a patient base of 500,000 patients within a 3 hour driving radius to Titan.

"Titan’s CEO, Ivan Bigego, is a nationally recognized speaker on the topic of accountable care, which is why we think the Clinic is a good fit for our insurance company,” said Behemoth’s Chief Executive Officer Max Gains. “We believe this arrangement offers an opportunity for us to market that we improve health care quality, lower medical costs and help our patients lead healthier and more productive lives.”

"This accountable care program will coordinate a preexisting suite of integrated services that support and rebrand the electronic record, care management informatics and aligned reimbursement methodologies that we invested in years ago." declared Ed Vertising, Chief Marketing Officer of Titan.

"We're pleased to be part of the Behemoth family of nation-states," noted Dr. Ego. "By relabeling the services we've been providing all along, we can minimize disruption for both our patients and physicians." he said.  "They won't notice a thing," he added.

“Like Facebook’s business model, claiming to enhance the patient care experience to the advantage of our organization will result in a strong patient-centric and outcomes-based cash flow,” noted Behemoth’s Board Chair Garner Shekels.

Just Because You Build It They Won't Come: What ACOs, PCMHs and Population Health Advocates Need to Know About Poverty and Emergency Room Use

Thinking about an ER visit.....

As part of a research requirement that it had to fulfill prior to medical school graduation, the young Disease Management Care Blog conducted a patient satisfaction survey. To its surprise, the DMCB discovered patients cared less about high touch primary care and more about access to high tech specialists.

It naturally ignored the income implications and became a general internist.

Fast forward to its job as a Medical Director in a not-for-profit physician-led managed care insurance plan.  No matter how much we "polished" the primary care network, emergency room utilization remained persistently high.

The CEO naturally ignored the DMCB's conclusion that there was little that could be done and assigned another medical director to the task.

Fast forward to Uncle Sam's Healthcare Fantasy Land, where ACOs and medical homes caring for patients with universal insurance will, thanks to the enlightened efficiencies of primary care, save gazillions of dollars by steering patients away from emergency rooms and hospitals.

All three scenarios came together when the DMCB read some research by group of Philadelphia docs who wanted to better understand why patients with low socioeconomic status kept ending up in emergency rooms and hospitals.

Best of all, to do this, they used a novel methodology: they found some patients and.... asked!

Their report appears in the latest issue of Health Affairs.

64 hospitalized patients with low socioeconomic status were approached to participate in a "qualitative" research interview (here's one example of how it's done). The patients were selected because they had been hospitalized via the ER multiple times, were between the ages of 18-64 years, were uninsured or on Medicaid, lived in a poor ZIP-code region of the city. 24 said no, leaving 40 subjects who agreed to have their interviews recorded. A rigorous analysis followed, with two "coders" who listened to the recordings and independently developed themes or ideas. They then circled back to the patients for confirmation.

Two themes emerged:

1) Convenience/Access: Even if they have access to primary care, the emergency room and inpatient setting remains the more convenient option.  That's because walk-in is available 24/7 and all testing as well as specialty care is available during a one-time visit.  Zero dollar primary care co-pays don't make up for the hassle, time and expense of calling ahead for appointments, arranging transportation (even if vouchers through Medicaid are available) or being referred for separate testing as well as specialty consultation.

2) Technology: Based on personal experience with their primary care docs, the emergency rooms and hospitals were perceived to have more technically proficient providers who were better able to achieve the correct diagnosis and render the correct treatment in a timely fashion.

A subset of patients seemed to come from chaotic life circumstances. Those patients found hospitals offered what the researchers described as "respite" and social "support."

The presence of Medicaid insurance had little to do with the attitudes described above.

The DMCB's take:

While subjective qualitative research is viewed with disdain by researchers, policymakers and journal editors, occasionally, good studies like this comes along.  This article sheds important light on a potential Achilles heel of accountable care organizations (ACOs) as well as the patient centered medical home (PCMH).

That Achilles heel? Just because you build it, these 40 patients - and millions who live in poverty like them - won't come.

What's more, they are making rational decisions.

The authors point out that system solutions include co-locating multiple services (primary care, labs, x-rays and specialists), improving the quality of primary care and, when possible, mitigating any social challenges. The DMCB agrees, but is unaware of any ACOs or medical home initiatives that, outside of the usual process measures, specifically address these patients' special concerns.

The DMCB's suggestions:

Advocates for ACOs and the PCMH need to get real, lower expectations and recognize that a key solution to the problem of health care overutilization by persons in poverty is to stop politicians and health care leaders from medicalizing poverty. 

That being said, one possible solution for ACOs and PCMHs serving fragile patients with poverty is high intensity biopsychosocial intervention.  It sounds expensive but full time community-based care management with low case loads and lots of physician support may help ameliorate some of the dysfunction.  It's probably less expensive than all those hospitalizations.

Finally, this may be an opportunity for nimble population health management service providers.  If any are already out there serving this population, the DMCB would like to know about it.

Image from Wikipedia

What Can World War Z Tell Us About Accountable Care Organizations?

Unable to resist the allure of another zombie movie, the Disease Management Care Blog saw World War Z.  While the gruesome scenes of chomping and stampeding hoards of infected undead were cinematic eye candy, the DMCB was undeterred.

It was naturally thinking about accountable care organizations and how they compare to zombies.


                                     Zombies                           ACOs

Premise:                      Undead                           Unproven

Spread via:                   Bites                                 Hype

The Hero:                 Brad Pitt                         Donald Berwick, MD

Why Worry:         The U.N is in charge             C.M.S. is in charge

Initial Response:      Offshore boats                  Offhand hope

Best managed
by..........                  Fleeing                            Fleeing

DMCB spouse
perspective........          Gore                             Bore

Confronted by
hoards of attacking                                   Refer to PCPs, wait
undead you.....        Toss grenades           years for shared savings

Diet:                         Bared brains                    Shared gains      


Image from Wikipedia 

Sure, Accountable Care Organizations ACOs Can Save Money, But Can They MAKE Money?

ACOs at work.

According to this Bloomberg news release, some of Medicare's Accountable Care Organizations (ACOs) are already achieving cost savings. Mt. Sinai and Coastal Carolina are reducing emergency room visits while Hackensack is reducing costs.

All three institutions are using two key ingredients:

1) information technology-based risk stratification to identify the persons at greatest risk and

 2) dedicated full-time nurses who perform telephonic and in-person outreach, coordinate care and provide patient coaching that, in turn, is tailored to that risk.

To the DMCB, the good news is that ACOs are using the two approaches that define modern-day disease and population health management. That industry's success will be Mt Sinai's, Coastal Carolina's and Hackensack's success.

The bad news is that the news release only addresses half the question: did any savings exceed the institutions' cost of the risk stratification and the nurse-FTEs? If the early answer is no, then avoided ER visits and reduced costs could turn out to be much like Governor Christie's lap band: so far so good but it's still risky and could ultimately be all for naught.

And on an unrelated note, this just-published New England Journal article makes note of "not made in America" health care innovations from overseas that could hold important lessons for the United States. In particular, the authors point out that Germany's DRG hospital payment system includes 30-days of post-discharge care and includes the physician payment. Readmissions within that 30 day window are, with a few exceptions, not covered and physician payment is possible because docs are often employees of the hospitals.

"Interesting!" says the DMCB, but is reminded that Germany is hardly a model for reducing inflationary cost trends.   It also specifically recalls hearing Germany's Minister of Health, Daniel Bahr, express impatience with his country's DRG system just last week. He criticized it for not advancing enough quality in his keynote address at the HauptKongress in Berlin.

Medicare, Accountable Care Organizations & Medical Homes: Experimental, Potential or "Essential?"

Time to measure some
new Medicare office drapes?

One major and longstanding criticism of CMS' numerous innovation and demonstration projects is that they seldom lead to any meaningful reform of the core Medicare program.  In response, the Affordable Care Act created an "Innovation Center."  Despite legions of lobbyists, a 'third rail' dread afflicting our political class and a powerful Medicare voting bloc, the intrepid folks in the Center promise to deliver insights that will advance quality, lower costs, increase access and spare all sacred cows.

Naturally, the thousands of health care experts who regularly read the Disease Management Care Blog have their doubts.  As a result, they're unlikely to be moved by Karen Davis and colleagues' "Medicare Essential" proposal appearing in the May issue of Health Affairs.

Assuming that the most wildly optimistic Accountable Care Organization (ACO) and medical home pilot programs projections are fulfilled, Dr. Davis et al propose the creation of a new "Medicare Essential" program that would co-exist with standard Medicare and Medicare Advantage.

"Essential's" essential purpose would be to finance ACOs and medical homes.  Given the authors' enthusiasm, the DMCB is surprised that their Health Affairs paper isn't also recommending measuring drapes for the program's new offices.
 
In "Medicare Essential," Parts A (hospital), B (providers) and D (drugs) would be combined. There would be a single overall deductible, followed by low co-pays for primary care and higher co-pays for specialty and emergency room care Preventive care would have first dollar coverage. Pharmaceuticals would be governed by a single national formulary with low co-pays for generics as well as for preferred brands and condition-specific/value-based drugs. Persons in the "Essential" program who are receiving care in ACOs or medical homes (financed with capitation, bonuses, gain sharing and monthly fees) would naturally have even lower co-pays.
 
Using "modeling by the Actuarial Research Corporation" and, as the DMCB understands it, transferring all savings back to the beneficiary, monthly out-of-pocket costs for the average Medicare enrollee could be reduced from the currently level of $427 to $354.  As an added bonus, if the patient used an ACO/Medical Home, the out of pocket would be further reduced to $254.

Case closed, right?

The DMCB isn't too sure.

Don't Measure Those "Essential" Medicare Program Office Drapes Quite Yet: While Davis et al should be commended for sending the savings back to the patient instead of Uncle Sam, their optimistic actuarial "research" projections can't be based on any consistent, statistically significant and real-world published proof.  That's because there is no consistent, statistically significant and real-world published proof that ACOs and medical homes save money.  Come back, says the DMCB, when you have an analysis based on some real numbers.

Behavioral Economics: Furthermore, we don't know if monthly beneficiary savings of $73 to $173 are enough to move market share away from Medicare and Medicare Advantage to "Essential."  That's doubly true if ACOs and medical homes, despite their quality, are viewed by patients as another way to impose a restricted network.

Disease Management Playbook: Advocates for the earliest versions of disease management likewise used official sounding projections to confidently project huge benefits for the Medicare program. When reality rudely intruded, the industry's fall was spectacular and almost fatal.  With friends like Dr. Davis similarly doubling down with huge ACO and medical home promises, who needs enemies?

Reinventing A 3rd Wheel? Many Advantage plans have similar co-pay arrangements and are already investing in ACO-like and medical home programs in their networks. They are likewise more than able to leverage out-of-pocket expenses to incent beneficiary behavior.

Suppose You Gave An ACO Party and Nobody Came? The last time the DMCB looked, many parts of the country lacked fully functional ACOs and medical homes. Dr. Davis says beneficiaries will respond by demanding local access to the Essential program and therefore turbocharge additional health reform. The DMCB is unaware of any published data that supports that notion and, furthermore, wonders if the local lack of these programs will translate into even more variation in the U.S. health care system.

A Thursday Three-fer: Diabetes Predictive Modeling, The Threat of Ambulatory Care Write Offs and It's the National Debt, Stupid!

At Risk?

Diabetes Predictive Modeling: Evidence Based, Peer Reviewed and Open Domain:

As Accountable Care Organizations, Patient Centered Medical Homes, care management vendors and managed care organizations continue to grapple with health care costs, they want to know who is at greatest risk in the coming months.  When it comes to diabetes mellitus, John McAna and colleagues (one of whom is the Disease Management Care Blog) is riding to the rescue with their American Journal of Managed Care paper "A Predictive Model of Hospitalization Risk Among Disabled Medicaid Enrollees." 

While the data were based on two states' Medicaid claims data sets, the research may be generalizable to other populations.  Factors that most strongly predicted a future hospitalization were increasing age (especially more than 65 years), a prior pattern of repeated hospitalizations (especially 3 or more) and the Charlson Comorbidity Index. The good news is that all the independent variables and their odds ratios are not-only evidence based, they're available for use by your actuaries and statisticians as quick as you can download the paper (after signing in) at the bottom of page 4.

Rumored Ambulatory Care Write-Offs: An Achilles Heel of Integrated Delivery Systems and ACOs?

In its recent travels, the DMCB was informed by two credible and astute physician-leaders that hospitals that have recently acquired outpatient physician practices are typically "writing off" ambulatory care bills because a) contesting small fee disputes are relatively costly and b) the threat of Medicare "overcharge" or RAC audits is existential.  That's significant because those small charges add up into millions and can mean the difference between a profitable outpatient clinic system and a loss leader.

It's Not the Economy, It's Not the GDP, It's the National Debt, Stupid:

The DMCB also recalls repeatedly hearing that it was President Nixon who first called attention to the growing fraction of the nation's gross domestic product going toward health care. The problem was that no one knew what was the "right" percent of GDP.  Mr. Nixon thought 7% was too high. If 7% isn't, in retrospect, bad, why is the current level of about 18% so bad?  What's so different?

The answer: it really is different this time.  What's bad is that health care is responsible for the lion's share of the separate problem of the growing national debt, which has been directly linked to national security.  Yikes.

An Update On Population Health Management: It's Working!

CMS, MA Plans & Disease Management?

It's a good day when Health Affairs has nice things to say about population health management (PHM).  After all, Health Affairs is one of the bedside reading options for inside-the-beltway health care elites. So, when hostility to Ver. 1.0 disease management turns into a reasoned summary of Ver. 2 PHM, that's not only evidence of PHM's success but waning anti-vendor ideology. While the ultimate success of PHM is a function of market demand, this kind of endorsement can't hurt.

Using the Care Continuum Alliance's definition of PHM, researchers from America's Health Insurance Plans (AHIP) and Brandeis University conducted a written and then telephonic survey of 42 out of 72 larger Medicare Advantage (MA) Plans. While the results were interesting, what caught the Disease Management Care Blog's eye was that.....

Disease and case management are "routinely used." These programs are made up of nurse hotlines, telephone visits, increasing access to social services, meeting patients' psychosocial and providing care coordination. An accompanying infographic says "100%" offer "teaching chronic disease self-management."

Health risk assessments are also used "universally" and target self-identified individuals with outreach designed to educate and/or enroll in programs that reduce risk factors.

Care managers for the frail elderly are available in "100%" of plans. A second infographic points out that home safety, in-home visits and community services referrals are among the top used interventions. And, as testimony to a lingering sense of skepticism over remote home monitoring, the infographic says that was only used in 56% of plans.

Unlike Medicare fee-for-service (FFS), hospital readmissions have been a top concern of the MA Plans for years. They know there is no single "silver bullet" and have long relied on a combination of nursing, social services, home-health visits, medication reconciliations, follow-up care coordination programs and home visits. Survey respondents were convinced their programs were "effective."

In other examples of MA Plans being light-years ahead of Medicare FFS, if providers need data, MA Plans will make it available. If payment reform is necessary, MA Plans will make deals involving global risk arrangements, bundled payments and shared savings.

Evidence? Regretfully, say the authors, there is a lack of "systematic evidence" supporting PHM's effectiveness.  They also believe that there is conflicting evidence on whether MA Plans achieve better outcomes versus Medicare FFS.

The Disease Management Care Blog's take:

While skeptics continue to believe that Medicare Health Support "proved" that "disease management" doesn't work, the MA Plans correctly surmised that MHS only proved that early versions of disease management in Medicare FFS settings doesn't work.  The MA Plans have figured out how to improve on disease management.

While published data may be lacking, the people who run MA Plans are not dunces.  They have internal data showing that it works, or they wouldn't be using it.

While the Medicare Advantage program is controversial, the Health Affairs post suggests the MA Plans are useful laboratories for seeing what can be of benefit in the care of Medicare-eligible seniors.  If ACOs flop, perhaps CMS will go back to the future with their MA Program for ideas on what can work.

ACO Market Dominance: What's Happening At the Local Level?

ACOs and insurers discuss terms

The Disease Management Care Blog likes to think of itself as having achieved "critical mass." Now that its readership has climbed into the thousands (and Twitter is now well beyond 600), medical meeting organizers want to issue press credentials, medical journals are sending it embargoed previews and spammers are working particularly hard at getting maliciously-linked comments posted. The best upside for the DMCB, however, is its email correspondence with smart professionals who have insights that run contrary to the mainstream's confirmation bias.

Here's a gently edited email from one astute observer that the DMCB wanted to share:
 
While policymakers extoll the clinical integration virtues of ACOs and the PCMH, what goes unmentioned is that these vehicles often involve provider consolidation. While coordination of care and wasteful utilization might improve, does this mean that those entities could also amass considerable market leverage or become quasi-monopolies? Could that drive up costs?

I was at an specialty provider conference in early March where it was cited (in an admittedly unscientific member poll) that 25% of institutions surveyed had themselves been part of a consolidation or site of service change, mostly from community private practice to hospital-based setting. If physicians are not being employed outright, they're entering into professional services agreements (PSAs).  Since this has to increase negotiating clout with insurers, the other locally competing providers are responding with an in-kind physician arms race.

Given this dynamic, what will happen when a system has a become a very efficient ACO and controls primary care with a locally dominant medical home network? Even if they fail to show any cost savings, will their ability to command favorable contracts be the key to economically surviving? Darwin would be proud of these long-beaked birds.

Are our federal and state governments prepared to reconcile the twin needs of integration and competition? I can’t help but think that regulators will be outmaneuvered by these increasingly powerful health care entities and that an unintended consequence of reform will be the increasing price points and the return of sticker-shock health care inflation.

Need an example of what is going on at the local level? Check out St. Luke's in Idaho and their ongoing battle with Trinity. St. Luke’s is a CMS designated ACO (on page 33) and is buying up assets left and right, employing physicians, and doing so in almost a direct anticompetitive way. I think that currently St. Luke's is doing a lot of forward thinking things, but if St. Luke prevails and Trinity does indeed go out of business as they state they will, it will leave a monopoly in that mostly rural state. When that happens, St. Luke's can set the price point.  Will they use that power to coordinate care or maximize revenue?

Believers in ACOs and the PCMH would do well to take a look at the Trinity perspective.

Physician Survey Shows Docs Prefer ACOs for Their Market Clout, Not Quality

Physicians climb aboard the ACOs

Talk about spin.

Deloitte has released its 2015 Survey of U.S. Physicians that examines attitudes about health reform and the current practice environment. A random sample of 20,472 physicians from the AMA's master file of physicians were invited to participate.  While only 613 (a 3% response rate) surveys were returned, the DMCB thinks the results are intuitively credible. 

What was interesting was how the Deloitte writers chose to report the data.

Most interesting was the description of physician attitudes about accountable care organizations (ACOs).

Here's Deloitte's word-for-word reporting:

"Physicians report that accountable care organizations (ACOs) will be successful to some extent in achieving improved quality (introduction of performance reporting and benchmarking, 37% better identification and closer management of high-risk patients, 28% and improved population health, 21%) and reduced costs (use of lower-cost treatment settings and providers, 21%)."

Exsqueeze me, but this makes the DMCB believe that a majority of respondent physicians do not believe ACOs will be successful in performance reporting and benchmarking (63%), better high risk patient identification and management (72%) or population health (79%). A similar large majority (79%) do not believe cost savings will be be achieved.

So, asks the DMCB, if the numbers are so dreary, why are physicians apparently flocking to work in ACO settings?

Says Deloitte:

"However, physicians currently working in ACOs diverge from those not in ACOs in their views on capitation bundled payments and Medicaid reimbursements. Three in 10 physicians currently working in ACOs chose to work in an ACO environment with high-quality, evidence based care standards."

So only a minority (30%) of physicians are attracted to ACOs' claims that they offer high quality and evidence-based care settings?

That's right.  Read on.....

"Physicians identify the trade-offs between larger (e.g., large medical groups, health systems, hospitals, and health insurance plans) versus solo practices. Larger practices are perceived to be better placed to secure superior third-party payer contracts and offer the greatest financial success potential, whereas solo practices are perceived to offer greater clinical autonomy. Larger work settings offer better conditions for contracting with third-party payers (89 percent of all physicians feel this way) whereas clinical autonomy was a valued feature of and more likely to be a feature of solo practices (81 percent of all physicians)."

In other words, when it comes to the grand convergence of physicians and ACOs, it's not about quality and efficiency.  It's all about giving up clinical autonomy in exchange for income preservation and the market dominance that leads to local negotiating clout.  

The finding - albeit in an imperfect survey - that few docs who work in these settings have faith in the promise of increased quality or efficiency does not bode well for ACOs.

Stay tuned! 

The End of Power Health Care?

Corporate titans enjoying
the good old days.

While Moses Naim's The End of Power devotes only a few pages to medicine, it's still provocative and worthwhile reading for anyone involved in the delivery of health care.

As the Population Health Blog understands it, the book's central thesis is that traditional "power" is being disrupted by the three modern trends of "more," "mobility" and "mentality."

We live in an unprecedented era of more (relative) widespread wealth, have an astonishing ability to move goods, services, information and ourselves around the globe (mobility) and are far less likely to adopt the cultural and intellectual assumptions and norms of established society (mentality).

Despite the depressing narrative of the "elite 1%," the irony is that governments and corporations have far less ability to command and control the 99%. This has big implications for world affairs, democracy and U.S. power.

Wow.

Big themes like this naturally prompt the excitable Population Health Blog to speculate about the implications of Naim's more-mobility-mentality for health reform in the United States.

It should be no wonder that policymakers, politicians, academics and regulators are promoting a large and concentrated i.e. powerful version of healthcare delivery.  These cognoscenti argue that huge integrated delivery systems, accountable care organizations and regional providers can "rationalize" health care with standardized protocols, less variation, efficient service lines, alignmment of incentives, optimum capital deployment and assumption of insurance risk.

Mr. Naim cautions that the power-play may not succeed. The PHB extrapolates:

1. While pundits can argue whether the Affordable Care Act's insurance options are as good as they should be, we're devoting a lot of wealth toward health care. More individuals have higher levels of resources to put into their care than they've ever had before. And they know it.

2. While that wealth is being tempered by out-of-pocket expenses, network exclusions, service limitations and other trade-offs, consumers still have relatively abundant choices on not only when, but where to see that doctor, have that surgery or take that pill.  By the way, information is not only cheaper (thanks to the internet) but no longer monopolized by the health professions. 

3. Whether it's a one-on-one recommendation to have a procedure or a proposal to build a new hospital wing, gone are the days when a professional expert's opinion was automatically accepted. Stakeholders are demanding evidence, seeking justification, asking for alternatives and are relishing the "gotcha" moments.

Where do these healthcare versions of more-mobility-mentality take us? Greater access to resources means higher expectations. Mobility means consumers will use exercise choice to cross country, state or even national borders to access care when they choose to do so.  And mentality translates into higher levels of individual consumerism.

Instead of protocols with less variation, patients will want the care to be personalized. Service lines will be judged less on efficiency than on local notions of value. Provider incentives based on "outcomes" and "upside risk" will have zero value proposition for their wealthy, mobile and skeptical customers.  Capital won't necessarily flow toward non-performing assets and year-end savings won't materialize just because policymakers wish it so.

Accountable care organizations and integrated delivery systems will still have huge competitive advantages. That being said, their chances competing successly against smaller competitors and access to capital will be increased if

1) their protocols are flexible,

2) variation is not only welcome but warranted,

3) patients have a good reason to choose their service lines,

4) incentives are broadened, and

5) this new and different level of complicated risk is realistically priced.

And that's assuming that the health provider policymakers, politicians, academics, regulators and CEOs realize that they're not quite in charge anymore.

Success Ingredients for Spread of Accountable Care Organizations

Mixing up some ACO

No matter what you think about the long-term sustainability of accountable care organizations (ACOs), the Health Affairs Blog argues 2015 will be a short-term watershed year.

The Disease Management Care Blog agrees. As preliminary results like these get reported in 2015, other ACO wannabes will either jump in and create a tipping point, or decide to stay on the sidelines.

According to Leavitt Partners' David Muhlestein, some of the under-recognized ingredients that could influence this include:

Judgments on Generalizability: never mind the marquee brand institutions, it will be results in smaller regional ACOs that lead other physician-hospital organizations to "go" or "no." If the ACO wannabes decide they can replicate other similar systems' success, we'll see more ACOs. If there is no success, the silence could be deafening.

DMCB says... we need more detail.

Whither the Sustainable Growth Rate: years of fee-for-service Medicare payments to physicians may end up being replaced by "value" based payments linked to bonuses. If - and that's a big if - that happens, that could further encourage physicians to join groups. which could prompt the creation of additional ACOs.

DMCB says.... and you thought the SGR was only about physician payments.

Medicaid: It turns out the states may turn to ACOs to increase quality and control costs for their indigent populations.

DMCB agrees.... Governors may see ACOs as a way of mitigating the economic and political risks of expanding Medicaid.

Employers: if ACOs' care coordination and savings are successful, large employees may seek commercial insurers that offer ACOs. Commercial insurers are unlikely to say no.

DMCB says.....never mind Washington DC, how will this play in Peoria?

Of Medicare Shared Savings Program (MSSP) ACOs, Start-Up Costs, Preliminary Financials and Data Support

The Disease Management Care Blog didn't know there was a "National Association of ACOs" either, but they've just released results from a "web" survey of the organization member ACOs that are participating in the Medicare Shared Savings Program.  You can read more about the Program here. 

Of the total number of 123 MSSP participants, 35 anonymously participated in the survey. Their covered beneficiary numbers ranged from 5,100 to 78,000.

Among the findings:

Start up costs in the first year of operation averaged $2 million, with a range from $300,000 to $6.7 million.  With continued operations, the average cost over two years was $3.5 million. Total capital needs averaged $4 million.

While Medicare has yet to release any formal financial results, the ACOs' estimated results showed that 13 guessed they would break even. Nine will gain an average of $1.3 million and six will lose $1.3 million.  Six had no estimates, while other gains and losses ranged from positive $9 million to negative $10 million, respectively.

The biggest problem? "CMS data and learning to access it and process it."  This required pricey information technology with an average of $413,000 internal and $443,000 external costs.

The DMCB's take:

Running an integrated delivery system or physician-hospital organization as part of an ACO is a very expensive and capital intense enterprise.  Given the additional costs of new technology, electronic records and personnel, some of the ACOs may not be able to afford the loss of millions of dollars.  It remains to be seen how Medicare will handle the downside of hospital lay offs or clinical program discontinuations among some of the MSSP participants.  Will members of Congress have to get involved on behalf of their local constituents?  Stay tuned!

As the disease management industry learned, it's one thing to "save money," it's another to save money in excess of fees plus program costs.  $3.5 million over two years is a lot of money to make up before you break even, making the DMCB wonder if cheaper programs (such as population health management) with a more modest scope (such as reducing readmissions) may have a better long term value proposition. Once again, stay tuned.

And the Disease Management Care Blog predicted there'd be problems with the data feeds here.  Recall that one of the problems with the Medicare Health Support program were "execution" problems with the timely provision of utilization data from CMS.  ACOs - and the Medicare beneficiaries they're taking care of - deserve better.