| 6 May 2016
Dear Interested Reader,
Inside This Week’s Letter
April was an unusually busy month of travel for me. I cherish the opportunities that I have to get out and talk with the people who are still playing the game. Retirement is interesting when there is a mix of reflection and activity. It is a relief to no longer have sixteen and sometimes eighteen hour days and live with a responsibility that can call you to action at anytime of anyday, no matter what your plans were before the call came.
Years ago, back in my days as a second string college football player, our university attempted to get better by hiring a big time coach. They hired Paul Dietzel from Army who some may remember had led LSU to a national championship in 1958 before breaking his contract to go to coach at Army which in those days was a prestigious position. Coach Dietzel did not sense the shift that was already underway that would eventually move the service academies out of the top echelons of college football. Things did not go well for him at Army and he jumped at the opportunity to come to South Carolina to make the Gamecocks great again.
He redesigned us in every way including changing our logo from a placid rooster to a fighting war bird pictured with feathers flying and equipped with spikes on it legs to damage its opponents. It did not make much difference. We lost our first game by a lopsided score to LSU in Baton Rouge where I sensed 75,000 cajuns wanted their ex coach’s head to be put on a pole and paraded around town. How ironic that Pepsodent Paul debuted on the turf of the people a had rejected. At the end of the year we were 1-9 and history will show that Coach Dietzel never recaptured the magic of his LSU days.
Dietzel did bring with him one very unusual assistant coach who certainly looked strange on a football field. I can remember the first time I ever saw Lou Holtz in the athletic field house. I thought that he might be a tennis or track coach. That thought did not last long as he began to push men almost a foot taller and eighty pounds heavier than he was around on the field with his strident commands to get moving. He talked about the things every coach talks about but in a way that was different and thought provoking. The next year Lou left Carolina for his first head coaching job at William and Mary on his way to fame at Notre Dame and I decided that it was time to get going with my medical education and passed on my last year of eligibility. This coming fall will be fifty years since my first “retirement”.
I tell the story to say that Lou is still my role model of sorts. He no longer coaches but shows up on TV as a commentator to talk about the game he once played (he really did play) and to make observations based on his experience leading others in championship efforts. That’s what I try to do with my little trips and my reports to you. I do not play the game any longer but I can’t let it go. I love to learn what is new and I am eager to offer commentary that might be interesting or useful to you or someone you know as you approach the real problems that you confront today. Today’s letter is a report on my experience last week in Washington and I look forward to reporting to you next week on my observations and experience meeting with some terrific folks in Chicago this week who have gathered from around the country to talk about the nuts and bolts of moving from “volume to value”.
I hope that you are developing the habit of checking strategyhealthcare.com mid week just to see what is there. For a couple of months now a new posting is up sometime on Tuesday. What you read there may sound familiar, but I hope, like a good ratatouille, the notes there taste better as leftovers after the flavors have had a chance to meld and get more interesting with the passage of a few days. My objective is that these more focused articles will be useful to you. That way I can have my fun on Friday and harvest something more refined the next week.
I am not alone in Chicago. I brought the Red Sox with me. At the end of the letter I leave you with some comments about both the election season and the baseball season.
One Foot on a Sinking Dock the Other in a Tippy Canoe
Last week I attended a meeting in suburban Washington that was an exercise designed to examine strategic moves in the finance of Medicare that could support the goal of the Triple Aim. I interpreted comments made by some of the attendees during the opening conversation to indicate that my sense of the Triple Aim was quite different than theirs. “Variation” is an inherent part of everything related to healthcare. Given that most of the people in the room had impressive resumes in healthcare leadership, either as clinicians who led organizations, healthcare regulators, insurance company executives, healthcare economists or as as leaders of academic medical centers, the fact that there was variation was not an initial reason for concern but at some point in a discussion we need to develop some consensus. If we do not eventually negotiate shared goals how can we find the path forward if we are headed to alternative destinations?
There was general consensus on one leg of the Triple Aim. Everybody includes better care for the individual in their personal definition of the Triple Aim, although I did have the feeling that there was some variation in the definition of “better”. Are we looking for “way better”? How about a little better? Could we go for “just about the same”? Over the two days of meetings I heard only a couple of references to the description of the six domains of quality as presented in Crossing the Quality Chasm used to define any component of what better care might be in reference to individuals or populations. You know what I mean, care that is patient centered, safe, timely, efficient, effective and equitable. In retrospect it is too bad that that we did not learn until after the meeting of the report this week that the annual count of avoidable deaths from medical errors has topped 250,000 making medical errors the third leading cause of death in the country.
There was equal variation in opinions about cost or “total medical expense”. Again on one end of the thought spectrum the idea was keep it close to the annual increase in GDP. I had the impression that this was the majority position. Does that mean not more than a point or so above GDP? Perhaps just a “hair above”? Does it mean flat with the GDP and absolutely no higher? Others seem to suggest that we should aim at the GDP and thereby flatten increases in the cost of care and put it in a relatively fixed position with the growth of the economy locked in at about 18% of GDP. I heard no one directly advocate for “bending” the growth of cost to a number less than GDP.
I guess I was a not very vocal proponent for actually reducing the bite healthcare takes out of our collective resources. I feared being laughed out of the room if I suggested a goal of reducing the cost of care enough to allow the transfer of resources to the support of other societal investments. No one dared or perhaps even thought of the idea of suggesting an objective like reducing the medical costs enough, say 10%, to establish healthcare spending at 16% of GDP. My thought was that if the room was a representative biopsy of healthcare leadership from across the country, there was little enthusiasm for taking on cost with much vigor. Could it be that our collective effort to reduce costs will follow the trajectory of our efforts to improve safety and reduce the number of deaths annually from medical errors? If so we can expect to see both costs and medical deaths rise together. We do have data that reveals that poor care is expensive.
Finally, the third leg of the Triple Aim, healthier communities where everyone has access to the care they need, may have been amputated. I am not saying that there were no comments made that attempted to make us feel collectively guilty for the plight of the underserved. There were vocal advocates for the underserved. They asserted that the delivery system, and especially individual physicians, were poorly positioned to rid our communities of the disparities that currently exist in healthcare. There was agreement that collective investments from outside healthcare should be made in job training, education, better public transportation, better housing with better neighborhood parks and cultural amenities, and that there should be better access to nutritious food sources if we are going to have healthier communities without healthcare disparities. One got the distinct impression that the poor and others who are currently underserved should not expect a resolution of their plight in the foreseeable future.
It is true that effectively making a dent in the problem of health care disparities on the way to improving the health of the community will require collective investments that are beyond the reach of most physicians or even large delivery systems. What those comments do not include is the connection of our inability to make those investments to the cost of care. Healthcare is not asking the fundamental questions. What part of the problem are we? What can we do that might make things better? How can sources outside of healthcare collectively invest more in our communities and keep up with all of the other “asks” in the public budget if we are spending 18% of GDP on “repair care”?
Of the 18% of GDP that is consumed by healthcare, my estimate is that less than 5-10% is truly invested in prevention or population health, and much less than that is focused on issues that will reduce disparities. I get this rough number from my familiarity with the estimates in Vermont that arise from their thinking about turning the whole state into one large ACO. I have long agreed with the old IHI adage that “some” is not a number and “soon” is not a date. Without more specific goals with estimates of what will be required to achieve the third leg of the Triple Aim by some specific target date, I doubt that we will get there before the ultimate “Judgement Day”.
The introductory comments to the “war games” excited me when I heard that the objective was the Triple Aim. As the first hour of discussion introducing the exercises came to an end I had to admit to creeping realism and a growing cynicism. I kept my self righteous thoughts to myself. What was going through my mind that perhaps I did not have the courage to point out was that the goal was not really the Triple Aim, but rather a revision which I described as “two heavily qualified hopes and one impossible dream”. Based on that I was ready to wordsmith the goal to read:
Care for most of us in the future that is about as good as some of us can find now, health that gradually gets better for more people sooner or later, cost that continues to finance the system without much change as long as can be afforded by transferring more resources from other concerns, …for at least eight five percent of people most of the time… with the hope that our grandchildren might be smart enough to do better.
After I got over the reality test that I experience frequently whenever I leave my position in the comfort of an affluent community in rural New Hampshire that I fully recognize is a long way from the mainstream, I really enjoyed the exercise and learned a lot. At the end of the exercises on the second day the whole group reflected on what was learned. Below is my random list of lessons learned or reinforced.
- CMS alone can not achieve the Triple Aim.
- Medicare Advantage is growing rapidly and this should be encouraged.
- “Choice” remains a huge roadblock to more efficient and effective care.
- Even Medicare produces bimodal care that has less equity than one would expect.
- Physician, hospital, and health system autonomy is as big or even a bigger barrier to the Triple aim than patient choice.
- CMS has been wise to reach out to other payers to create a long term strategy to try to eventually move all of the delivery system to risk based population models.
- People are using concierge medicine as a threat to fend off delivery system transformation.
- Fee for Service will be hard to kill and will persist for many years even within bundled payment mechanisms and ACOs.
- Funds for the teaching and research missions of academic medical centers should be carved out of the dollars spent for healthcare delivery and put into separate budgets or finance systems.
- We need more vigorous partnerships between healthcare providers and institutions with the communities they serve, if we are going to improve the health of communities. There is not really much incentive now for that to happen.
- Despite resistance, alternative payment models are becoming the shared objective of CMS and many, if not most, payers. It is only a matter of “how much time”. The goal is 50% of healthcare finance in APMs with risk by 2018.
- The ACA may go, but APMs are here to stay and grow despite the mixed results of the various Medicare and Commercial ACOs.
- The underserved and marginalized will remain underserved and marginalized for a long time. DSH hospitals and the funding of Medicaid will continue to be afterthoughts in most local medical economies until the initiative to address these concerns is taken away from local and state government.
- Primary Care compensation will improve but specialty compensation will not fall without a fight that would have few survivors.
- We are not yet ready to make difficult decisions together and as a result by the time we are, there will be fewer options.
I apologize for the long list with negative overtones but one of the objectives was to try to see where we are headed in time to change the direction in which we are traveling, if we are headed toward disappointment. I keep thinking of more items to add to the list, but there is more on it now than can be addressed in many years. As we moved through several scenarios that looked forward at least a decade, if not further into the future, it became clear that we have made some progress and that there are those who are earnestly working to mitigate the less than rosy picture that I have described. I feel that one huge benefit to the exercise was to realize that we have overcome a lot of resistance and there is some momentum for change. That momentum is jeopardized by endlessly renegotiating many of the things we thought were already settled.
The exercise was interesting. Participants were loosely matched between their “fantasy role” in a make believe market and the role they play everyday in the real market where they live and work. My group was composed of people acting like the organizational leaders in a typical community where the market had great variability. Our imaginary market was in a “red state” that had not accepted the Medicaid expansion of the ACA but had lower than average Medicare costs. There was significant cost shifting from relatively expensive commercial insurance to provide comfortable incomes for providers and institutions, even though there was a persistent large uninsured population.
I was cast as the CEO of the local DSH hospital and its associated public clinic system. A surgeon and medical school EVP played the role of the CEO of the local AMC. A CEO of an integrated delivery system played the role of the CEO of a similar organization. A former executive from a large national insurer played the role of the CMO of a large national insurer seeking to come into the market. The CEO of a large state exchange played the role of the leader of a vocal employer coalition that was demanding lower costs. A healthcare economist acted as the state secretary of health whose mission it was to keep taxes low so that the governor could get reelected. A Lean specialist was the leader of a large and profitable primary care practice that valued its independance. You have seen this movie before. Other groups played out responses to the same national issues in markets that were different but were probably modeled on places like the upper midwest. Still another group bore resemblance to environments from either coast that are heavily influenced by world class academic medical centers.
Prior to the exercise I had not discovered the work of the The Health Care Payment Learning & Action Network (LAN). You will have a much clearer glimpse of the future that CMS and large national payers are advocating if you spend a little time on their website. The LAN was created to drive alignment in payment approaches across the public and private sectors of the delivery system. The LAN is a collaboration between CMS and commercial payers. Its goal is to have 50% of all patients, not just Medicare recipients, in risk based products by 2018. The LAN has an impressive “guiding coalition” with a long name, the Alternative Payment Models Framework and Progress Tracking Work Group or just “the Work Group”. It was charged with creating an alternative payment model (APM) Framework (“the APM Framework”) that could be used to track progress towards payment reform. That work has been done. The graphic representation of that work is pictured below. |
| | An expanded second chart reveals more. I doubt that you can easily read it but I hope the graphics will encourage you to explore the website and read the various white papers that explain the vision and the work. Look carefully under columns 3 and 4. If you squint you will see 3N--risk based programs not linked to quality. Under column 4 you will see--capitated payments not linked to quality. I for one support the goal of moving payment toward risk and capitation but I feel that we will be back to “gate keeper” models if we do not include quality as well as performance risks in the finance systems of the future.
I have long thought that capitation coupled with big data to insure that there were adequate resource for the capitated population (capitation sums would include social adjustments for disadvantaged populations) was the finance system that best served the Triple Aim. I think that there should be penalties or bonuses determined by measured quality and patient reported outcomes and satisfaction. These adjustments to the capitation models of the 70s, 80s, and 90s would go a long way toward rewarding care that would be aligned with the Triple Aim.
It is easy to imagine that a practice, a hospital or a health system could be slotted into this schema at a level determined by a combination or provider choice and competency. There also might be criteria for eligibility based on prior performance. Whatever the outcome, I salute the effort that has been applied so far and it will be interesting to track what happens going forward.
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| | The Work Group has developed a working definition of person centered care. They reasoned that payment reform is an important means of accomplishing “the larger goal of person centered care”. They write:
The Work Group believes that person centered care rests on three pillars: quality, cost effectiveness, and patient engagement. [It is]: high quality care that is both evidence based and delivered in an efficient manner, and where patients’ and caregivers’ individual preferences, needs, and values are paramount.
Their definition is a little different from the way clinicians look at patient centered care. Remember that the group is primarily composed of executives from insurance entities, employers and patient advocates. Most are not and have never been clinicians or the managers of delivery systems. These are the people who pay us in the provider community and use our services. The Work Group really has two different customers, patients and providers. Its recommendations must be balanced between the needs of both. This definition that includes both patients and providers makes further sense because the HPC-LAN Work Group is a collaboration of public and private payers. In a very direct articulation of purpose this collaboration between CMS and insurers states:
The Work Group is committed to the notion that transitioning the U.S. health care system away from fee for service (FFS) and towards shared risk and population based payment is necessary, though not sufficient in its own right, to a value based health care system.
That sounds very much like a challenge or warning to those individuals and institutions who prefer fee for service. They say:
Financial incentives to increase the volume of services provided are inherent in FFS payments. The management of complex patients with a need for medical management are systematically undervalued in FFS systems.
We are moving into a world where increasing clinical complexity must be recognized as a source of expense and frustration for clinicians whose work in these areas is neither appreciated or supported financially.
The work group states in their excellent executive summary:
To ignore the needs of clinicians and institutions is not conducive to the delivery of person centered care because it does not reward high quality, cost effective care. By contrast, population based payments (including bundled payments for clinical episodes of care) offer providers the flexibility to strategically invest delivery system resources in areas with the greatest return, enable providers to treat patients holistically, and encourage care coordination. Because these and other attributes are very well suited to support the delivery of high valued health care, the Work Group and the LAN as a whole believe that the health care system should transition towards shared risk and population based payments.
After the coalition states their intent they expound on their foundational principles:
- Changing providers’ financial incentives is not sufficient to achieve person centered care, so it will be essential to empower patients to be partners in health care transformation.
- The goal for payment reform is to shift U.S. health care spending significantly towards population based (and more person focused) payments.
- Value based incentives should ideally reach the providers that deliver care.
- Payment models that do not take quality into account are not considered APMs in the APM Framework, and do not count as progress toward payment reform.
- Value based incentives should be intense enough to motivate providers to invest in and adopt new approaches to care delivery.
- APMs will be classified according to the dominant form of payment when more than one type of payment is used.
- Centers of excellence, accountable care organizations, and patient centered medical homes are examples, rather than Categories, in the APM Framework because they are delivery systems that can be applied to and supported by a variety of payment models.
These seven bullets get a little wonky toward the end but I appreciate the Work Group’s intention of being transparent at all levels. The list as a whole returns us to Dr. Robert Ebert’s pronouncement from more than fifty years ago. We are still searching for an operating system and a finance mechanism that meets the needs of the population.
What we have learned is that we may need several aligned operating systems and supportive finance mechanisms to serve multiple populations whose needs differ in a variety of dimensions including the geography and the services available. It feels a little like building the transcontinental railroad. One team began in San Francisco and built East, the other started in Omaha and built West. The project eventually came together in Utah.
Where do we go next? Is it more important to build the delivery model (operating system) or conceptualize the optimal finance mechanisms? Both jobs are hard and if I learned anything at all at the “war games”, it was that if we hope for a better future that includes the goal of the Triple Aim, we must do both and there must be different options negotiated and ready for choice in each market.
More than ever I am a delighted spectator and commentator as the real game will be played out by those who will live and work and provide care in the product of their collective efforts.
Chicago is A Great Town for Walking
I love downtown Chicago. It gets my vote any day over NYC, Philly, New Orleans, and Houston. When the weather is good I would put it in contention with the West Coast jewels, Seattle, Portland, San Francisco, and San Diego. Chicago is flat with wide streets, curteous people and amazing architecture in every direction. Lake Michigan, the Navy Pier and Millennium Park are all nice spots to pass on a long walk.
I must say that before my last two visits to downtown Chicago (some visits I am just at a meeting near O’Hare and that is not special at all) have occurred since Donald Trump was running for President. The Trump tower is impressive. If you have never seen it, just check out today’s header. Some people tell me he does not own it. They say that he just rents his name to the real owners. Who knows for sure? I think there are a lot of questions about him that so far have not needed to be answered but now deserve consideration.
What Mr. Trump has accomplished as a businessman and as a candidate has been unconventional but at this moment appears successful. He did identify and connect with a significant part of the electorate that wants change. I for one am open to hearing and considering his thoughts on healthcare and hope that they build more confidence in me for him than his recent attempt to articulate foreign policy.
I am hoping that for a majority of Americans substance matters. I am willing to say that winning in a crowd of 17 perhaps requires bending credibility a little. Unfortunately we prefer brief clips of information in a sound bite over more considered substance. Taunts yield more than theories about how to approach the real problems of our day. Now is the time for him to move from taunts to an in depth discussion of his strategy for success and his ideas about how to effectively deploy and execute those strategies within the civility that befits our history and sense of decency. Mr Trump we are all ears. Tell us something that is germane to the issues that does not relate to body parts or your opponent’s physical appearance or personality. We are capable of processing more than you have offered us so far. I am all ears.
Tuesday was a dreary and disappointing day in Chicago for the Sox, but on Wednesday Buchholtz seemed to come out of his coma and after giving up a first inning homer, pitched his first win of the year. Last night Big Papi and Little Dustin led our sluggers to a second win over the revitalized White Sox. For the moment they are in first place! I hope it is still so in October. The challenge for this weekend is for the Sox to sweep the once proud (arrogant) Yankees in the Bronx. Wouldn’t that be nice! Apologies to my daughter-in-law and other Yankee fans, but I think that you are looking at a tough year. I know how that feels.
No matter what happens to the Sox this weekend it looks like the weatherman is predicting that my walks will be either in or between showers. I hope the weather will be nice where you are and that you get out in it whether in rain or shine.
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| Be well, stay in the game, and pass along a little info about what is on your mind. Like your parents, I care about what you are doing and would love to hear from you!
Gene
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