Heartland Health Research Institute

HHRI

515-868-0920

A Documentary Film about Medical Errors

By: David P. Lind

Documentary Film about Medical Errors - To Err is HumanDuring the last two decades, I have spent considerable time researching key factors that influence and impact healthcare costs, primarily due to my work with employers who relied on our guidance and strategies to obtain employer-sponsored health coverage.

It was through this work that I increasingly became familiar with the name, Dr. John M. Eisenberg. I would soon learn that Dr. Eisenberg was not only a physician dedicated to his profession, but was highly distinguished throughout his career while advancing evidence-based research in healthcare at the policy, practice and management levels. One of the many accomplishments he had in his short life was serving as director of the Agency for Healthcare Research and Quality (AHRQ), formerly known as the Agency for Health Care Policy and Research.

Without a doubt, Dr. Eisenberg was a worldwide pioneer on patient-safety issues, as he authored more than 150 articles dedicated to policy and scientific initiatives relating to the safe delivery of quality care that Americans trust they receive. Unfortunately, this passionate man who truly made a dent in our healthcare-related universe, died from a brain tumor in 2002 at the age of 55. Dr. Eisenberg was essentially a rock star within the medical world, as he was highly respected by his peers. In fact, the National Quality Forum (NQF) annually recognizes individuals and organizations that improve patient safety and healthcare quality through the establishment of the John M. Eisenberg Patient Safety and Quality Awards. These awards are being presented at NQF’s Annual Conference on April 7-8, 2016, in Washington, DC.

This past February, within a week after the Des Moines Register published their editorial on lethal medical errors – an editorial that was prompted by the release of our Silently Harmed white papers – I received an email from an organization, Tall Tale Productions, located in Chicago. The author of the email, Mike Eisenberg, mentioned he had recently read the DMR article and consequently downloaded one of the Silently Harmed papers. Mike is Dr. Eisenberg’s son.

Mike, inspired by his father’s work, plans to direct a feature documentary on patient safety, tentatively titled, To Err is Human, using the same name from the seminal book released in 1999 by the Institute of Medicine. Expect to find stories of patients and families who were adversely impacted by medical errors, in addition to interviews with patient safety-experts who continue Dr. Eisenberg’s work. Tall Tale Productions is in the final stages of their campaign to raise money to underwrite the cost of this important film. To learn more about how to contribute to this documentary, you can contact Tall Tale Productions.

Seldom do I tout particular causes within my posts, but I made an exception this time. Patient safety is paramount to us all.

To stay abreast of healthcare-related issues, we invite you to subscribe to our blog.

 

Diagnostic Mishaps

By: David P. Lind

DiagnosisOver 40 years ago, our family owned a 1975 Ford Granada that was very temperamental, dying at stoplights and stop signs for no particular reason. Much too often, we would take the car to the local Ford dealership, only to learn the cause of this problem could not be correctly diagnosed. Other than trading in the vehicle for a more reliable model, it seemed that running stop lights would be our only other viable option!

Since the release of our Silently Harmed white papers, one particular section has brought a great deal of intrigue and discussion from many people who have reviewed this paper and provided feedback. The section, ‘National Data on Common Adverse Events,’ addresses seven common adverse events found within our hospitals. Not mentioned within the seven, is misdiagnosis events, which are also very common – and harmful.

Indeed, according to the journal BMJ Quality and Safety, at least one in every 20 adults (about 5 percent) who seeks medical care in a U.S. emergency room or community health clinic, may walk away with the wrong diagnosis. The analysis estimates that 12 million Americans a year could be affected by such errors.

Of those mistakes, about half – or 6 million – could potentially cause harm, according to patient safety expert Dr. Hardeep Singh, who is the first to provide robust population-level data on the impact of the problem in outpatient settings. Patients with conditions as varied as heart failure, pneumonia, anemia and lung cancer could have serious problems that remain unrecognized by a doctor.

Other safety experts laud this finding as ‘hard evidence’ about the frequency of such mistakes. Some even argue that 5 percent is the minimum because these numbers overlook other error activity.

In 1997, the National Patient Safety Foundation (NPSF) commissioned a phone survey reviewing patient opinions about medical mistakes. Of the people reporting a medical mistake (42%), 40% reported a “misdiagnosis or treatment error,” but respondents did not separate misdiagnosis from treatment errors. Respondents also reported that their doctor failed to make an adequate diagnosis in 9% of cases, and 8% of people cited misdiagnosis as a primary causal factor in the medical mistake. Loosely interpreting these facts gives a misdiagnosis range of 8% to 42%.

The reasons why outpatient doctors misdiagnose patients can vary widely. Time with patients is more limited than ever and their symptoms are often complex and evaluated in what is described as “a fairly chaotic outpatient environment.” Many doctors lack the support and technical help that could free them to use consistent clinical reasoning. Adding more people to insurance coverage, a premise of the Affordable Care Act, can also stress the care delivery infrastructure, perhaps compounding an already fragile environment.

Just as Silently Harmed has attempted to grasp the number of hospital medical errors within each of the seven midwestern states, putting a population-level number on outpatient diagnostic errors can be a step toward generating greater awareness and resources to address the problem.

For patients, this important analysis should be a reminder that the doctor is not always right. Patients can play a key role in their own care by offering doctors a complete list of symptoms and a full-health history at the first visit. After the exam, they should be proactive about following up.

Unlike owning and operating a defective automobile, receiving a correct medical diagnosis from our trusted provider is critical to our physical and mental wellbeing. When it comes to our health, trade-ins are not optional.

To stay abreast of healthcare-related issues, we invite you to subscribe to our blog.

Tepid Improvement in Patient Safety Progress
But Massive Savings Are Possible

By: David P. Lind

Healthcare Cost Savings - Tip of the IcebergAs our healthcare delivery system evolves, we must reach beyond the endless discussion and distractions over who pays and how much. The cost, compliance, coverage and political discussions are no doubt important, but these are inextricably linked to the safety outcomes of medical care we expect to receive – but, in too many cases, do not.

The patient safety dialogue has been buried from the general public under many other pressing national concerns:  the general economy, global terrorist activities, general elections later this year, immigration, Middle East unrest, gun control – as well as countless other issues.

In addition to covering more Americans, the premise of the Affordable Care Act (ACA) was to initiate new care delivery models that would eventually make healthcare more affordable and achieve better outcomes. The hope is that our healthcare ‘system’ is now on the path to recovery – we just need to give the initiatives time to work.

But is it really that simple?

If the Centers for Disease Control (CDC) were to include preventable medical errors in hospitals as a category, it would be the third leading cause of death in the U.S. – behind heart disease and cancer. Quite simply, the numbers for those seriously and fatally injured are massive. National estimates indicate that between 6.6 million to 11.5 million patients are seriously harmed in our hospitals – EACH YEAR. For those fatally harmed, the annual estimated range is 98,000 to 440,000 deaths.

Are improvements being made, and if so, by how much? The short answer is Yes, but…

The federal Agency for Healthcare Research and Quality (AHRQ) released a report in late 2015 indicating that hospitals have averted many types of preventable injuries (such as infections and medicine reactions) during the period 2011 – 2014, using 2010 as the base year. During this four-year period, officials examined 30,000 medical cases and, from this, extrapolated the number of complications that were possibly avoided. The cumulative results appear to be downright impressive: 2.1 million fewer incidents of harm, 87,000 fewer deaths and about $20 billion in healthcare savings.

No doubt, this is encouraging news. On the surface, the general public (and media) appear to have only tepid concerns about patient safety issues, most likely because the federal government, hospitals, grant-receiving medical provider collaborations, academia and other organizations are “all over” this national problem.

But these improvements only represent the proverbial ‘tip of the iceberg.’

Even Dr. Richard Kronick, director of the AHRQ, commented that these findings have yet to be fully understood and improvements most likely came from “low-hanging fruit.” In other words, these are the relatively easy problems. Problems in the past that should’ve been averted in the first place, but were not.

Loaded with curiosity, I decided to compare these improvements to national estimates of medical errors to understand how much progress was really made during this four-year period. Using the conservative estimate of 6.6 million patients harmed annually in hospitals, the 2.1 million averted conditions reported by AHRQ during the cumulative four-year period equates to an eight percent improvement. By using the high-end estimate of 11.5 million harmed patients annually, this reported improvement is under five percent. Keep in mind, that 2.1 million was a cumulative amount over four years, while the 11.5 million is EACH year.

As for preventable hospital fatalities, using the conservative 98,000 annual estimate that came from the Institute of Medicine in 1999 (which is now widely considered as being grossly low), about 22 percent of fatalities were averted. The high-end 440K estimate translates to a five percent fatality aversion.

Employers must understand that by averting preventable injuries, the potential cost savings are enormous, dwarfing the $20 billion reported by AHRQ. The cost savings per hospital-acquired condition found in the AHRQ report is almost $9,500. If we use this number, the potential annual cost savings by having all 6.6 million preventable injuries averted would be $63 billion annually. Should 11.5 million preventable injuries be averted, the savings would be estimated around $109 billion annually. This savings would translate into a sizeable benefit to communities, employers, employees and taxpayers. But this projected savings does not even approach the social costs associated with preventable medical errors.

Yes, progress in patient safety improvement is inching forward. But to move the needle beyond this anemic pace, this issue must become a top priority for the general public to force the care delivery system to be more transparent, effective, efficient and, most importantly, safe.

To stay abreast of healthcare issues, we invite you to subscribe to our blog.

‘Silently Harmed’ Released
Medical Error Estimates in Iowa and Six Heartland States

By: David P. Lind

Learning of Medical MistakeWe kickoff our HHRI website by introducing a new family of white papers, Silently Harmed – Hospital Medical Errors in the Heartland.

Do you know how many patients are harmed in hospitals each year due to preventable medical errors? You would think these critical metrics would be painstakingly reported by hospitals on each given procedure, wouldn’t you?

Unfortunately, they are not. If accurate information is available, it has yet to be found.

To most Americans, preventable medical errors1 in our hospitals is largely an unknown problem. The United States does not have a bona fide national strategy to confront preventable adverse events (PAEs). Nor do we have an independent central coordination group, similar to the Federal Aviation Administration (FAA), to align all of the various organizations involved in patient safety for reporting and investigative purposes. There is a great deal of talk and frenetic activity generated around PAEs, but if progress is being made, it appears to be glacial. Voluntary reporting of patient harm caused by PAEs is not widely practiced and is, in large part, not shared with the public. When it comes to the number of patients seriously or fatally harmed, the best that our country can muster are estimates – national estimates.

But what about estimates for just Iowa and its six neighboring states?

U.S. Hospitals on the SurfaceAgain, we know very little about the number of PAEs for each state. In fact, even the harmed patient is often unaware that a PAE happened while being hospitalized. This lack of knowledge is the purpose for Silently Harmed, a family of white papers released today by Heartland Health Research Institute (HHRI). In addition to estimating the number of patients seriously and fatally harmed in Iowa, Silently Harmed also provides estimates for the six other midwestern states that border Iowa: Illinois, Minnesota, Missouri, Nebraska, South Dakota and Wisconsin.

It is fair to say that national estimates on PAEs are imprecise. In fact, estimates vary widely from many sources, causing a great deal of consternation for health public officials, patient safety advocates, healthcare providers, and many other stakeholders. Below is a brief outline of national estimates that we used for each of the seven states. Future blogs will address the results found in each of them.

Estimated Patients SERIOUSLY Harmed in U.S. Due to PAEs

Silently Harmed offers a range of national estimates on patients seriously harmed in our hospitals due to PAEs. As described in Silently Harmed, the low-end estimate is that 6.6 million patients are harmed, with a high-end estimate of 11.5 million patients. Using the mid-range annual estimate of 8.7 million harmed patients, this number is equivalent to the population of New York City. As summarized below, every four seconds, one patient is harmed in the U.S. due to a preventable mistake, meaning the mistake could have been avoided. During the 25-minute average commute time to work in this country, 417 patients are harmed, or about one in every four hospital admissions.

Seriously Harmed in the U.S.

Thankfully, we do know the annual number of hospital admissions for each state. Based on that metric, we have calculated estimates for hospital patients seriously harmed in each of the seven midwestern states. The estimates for the U.S. do not include outpatient settings, such as doctors’ offices, nursing homes, outpatient surgeries, etc. Because of this, one might correctly argue that this is a conservative estimate. Care-quality also varies wildly in different parts of our country, so using a national estimate will not include quality-adjusted care for Iowa or any other Heartland state. Without having accurate data on quality outcomes that can impact patient safety for each state, we avoided applying any quality metrics.

Estimated Patients FATALLY Harmed in U.S. Due to PAEs

What are the national estimates of patients who were fatally harmed by mistakes within U.S. hospitals? You guessed it, these estimates also vary widely. Silently Harmed uses the often-cited estimate of 98,000 lives from the Institute of Medicine’s ‘To Err is Human’ report from 1999. This number has now proven to be the low-end estimate, while 440,000 fatalities from the Journal of Patient Safety serves as the high-end estimate. Finally, assuming a mid-range estimate of 250,000 annual fatalities is true, the graphic below provides the following averages regarding preventable fatalities in the U.S. due to PAEs.

Fatally Harmed in U.S.

Social and Economic Costs of PAEs in U.S.

The costs resulting from preventable adverse medical outcomes are staggering. In addition to costs that are a result of medical errors (beyond the cost of care that would otherwise occurred), the social costs alone are about a third of the total U.S. healthcare spending. Social cost is determined by the “value of a statistical life,” a term used by economists. This value is typically used by federal regulatory agencies when making policy decisions about trade-offs people are willing to make regarding additional wages in riskier jobs. Depending on inpatient injuries and fatalities due to PAEs, social costs can range in the U.S. from $93 billion to $2.4 trillion annually. The social and economic implications to PAEs are, to put it mildly, massive.

Seriously Harmed Estimates in U.S.

Each ‘Silently Harmed’ white paper is available for download, at NO CHARGE. To learn more about estimations for a particular ‘Heartland’ state, you may start here.

1 According to the Institute of Medicine, a medical error is a preventable adverse effect of care. Examples include an inaccurate or incomplete diagnosis or treatment of a disease, injury, infection, or any other ailment.

To stay abreast of healthcare-related issues, we invite you to subscribe to our blog.

Are Medical Registries on Vacation?

By: David P. Lind

Medical RegistriesAccording to a published study in the Journal for Health Care Quality, few medical “registries” exist to allow doctors and hospitals to compile and share their results with one another. One of the co-authors of this study, Dr. Martin Makary, a noted surgeon at the Johns Hopkins School of Medicine, stated on National Public Radio, “For 99 percent of people in America, when they go in to have surgery, the outcome of that operation is not measured. Nobody’s keeping track.”

Makary indicates that a registry collects data on disease and outcomes from different centers. But, when he attempted to gain access to the outcomes from other centers, he was unable to. This prompted Makary and colleagues to investigate if other diseases beyond his work (pancreas islet transplantation) are being tracked in national registries and available to the public.

According to Makary’s study, 154 registries were identified, and a tremendous amount of variation exists between the different medical specialties, with only 18 percent having any form of auditing for data verification. Such results are absolutely abysmal!

Healthcare patients and payers justifiably demand a great deal more accountability from those providing the care. Efforts to improve our care appear hollow without implementing rigorous requirements to PUBLICLY report these key metrics. Voluntarily reporting seems to be more about convenience and less about a societal moral obligation. But transparency will work if closely tied to accountability.

One must reasonably ask: Why is our current reporting ‘requirements’ deemed acceptable?

To stay abreast of healthcare issues, we invite you to subscribe to our blog.

 

A New Employer Mindset Needed To Avoid Repeating Healthcare ‘Time Loop’

By: David P. Lind

Time LoopIn the 1993 movie, “Groundhog Day,” actor Bill Murray plays a Pittsburgh TV weatherman who finds himself in a comical time loop while covering the annual Groundhog Day event in Punxsutawney, PA. Murray’s character wakes up each day to relive February 2 and eventually learns how to use his prior-day experiences to make a difference within Punxsutawney. But it takes him many, many attempts and frustrations before he realizes he must re-examine his life and priorities before he can make desired progress.

I was recently approached by a very large Iowa organization interested to know my ‘take’ on the next phase of employer-based health coverage. Specifically, I was asked how to break the endless cycle of doing the same things over and over again to control health costs – as current attempts seemingly do not move the cost needle.

This particular organization assuredly represents most employers when it comes to the frustration of offering health coverage to their workforce. Much like the Murray character, employers continue to relive their renewals, year-after-year, only to repeat past practices that invariably result in a similar and familiar fate. A handful of these annual activities typically include the following:

  • Changing insurance companies or third-party vendors, including pharmacy benefit managers, wellness vendors, insurance brokers, etc.
  • Increasing employee cost-sharing components, such as deductibles, co-payments and out-of-pocket maximums
  • Limiting (or expanding) provider networks
  • Embracing consumer-driven health plans
  • Converting to a new financial mechanism to pay for coverage, such as self-funding, partial self-funding and a host of other hybrid funding arrangements

To avoid repeating similar (and predictable) results from these practices, employers should take a page from Murray and re-examine their priorities. Here are three ‘takes’ that I shared with this particular organization:

  1. Employers Must Recognize and Accept that Preventable Medical Mistakes is a HUGE Problem

    Employers should not assume employees and their family members will consistently receive safe and appropriate care from the local provider community. Even the best and most prestigious hospitals are not immune from committing these errors. Preventable mistakes are VERY costly, both in lives and in money. According to the Robert Wood Johnson Foundation, poor quality-of-care costs employers at least a third of the single-health premium. In Iowa, this would conservatively amount to $1,850 per employee each year. The social costs due to preventable medical errors dwarf this amount.* Just as importantly, eliminating preventable mistakes will also result in employees and family members living healthier and more productive lives.

  2. Insist that Patient Safety becomes a PRIORITY

    In the past, employers have relied on healthcare providers and insurance companies to control costs and quality, assuming that patient safety was naturally baked into the services we purchase. Yet, employers unknowingly pay for medical errors – albeit at the lower-negotiated fee available through insurers – but such discounted ‘savings’ are eventually negated due to paying for undocumented preventable mistakes. Employers and employees (not insurers) are the ultimate payers for this wasteful and unnecessary cost through higher insurance premiums. And, because of this, they must insist that new health plans deny payment for preventable medical errors. At the very least, this should be a minimum requirement. Few private plans attempt to do this, primarily because they have scant metrics to detect these errors. How would they know?

  3. Require public TRANSPARENCY from local providers

    The word ‘transparency’ has become an overused word – especially within healthcare. But for the ultimate payers of healthcare (employers and employees) to determine the value they receive from the ‘investment’ they make, the provider community must enter the 21st Century and demonstrate their value by publicly reporting comparable and usable safety information. This should also be a minimum requirement.

Offering and paying for expensive health insurance coverage year-after-year is the ‘Groundhog Day’ confronting frustrated employers. Unless a new mindset takes hold in the employer community that can forever alter our perpetual ‘Groundhog Day,’ very little will change in our ‘town’ of Punxsutawney.

*Additional details to follow over the next month.

To stay abreast of employee benefits and healthcare issues, we invite you to subscribe to our blog.

The ‘Wisdom’ of Healthy Living

By: David P. Lind

Healthy Living sign with mountains backgroundIt appears that some things never seem to change – especially when it comes to living a healthy life.

I recently picked up a monthly periodical that was entirely dedicated to the wisdom of living a healthier life, including in-depth insight about nutrition, weight control, hypertension, heart disease, emotions, chronic ‘tiredness’ and a host of other factors affecting our physical and mental well-being.

Interestingly, the publication spent over half its content on just one person, Vic Tanny, who, at the time, was considered to be America’s greatest crusader for obtaining better health and moving the U.S. into a more physically-fit nation. Tanny, I learned, founded the Vic Tanny Gyms.

Vic Tanny? I was not aware of this man, nor his efforts.

All articles within the publication effusively portrayed Tanny with such glowing accolades concerning his numerous accomplishments that it left this reader wondering if the publication was more of an infomercial than well-balanced journalism. One example: “Vic Tanny has wrought more changes in the concept of the gymnasium in twenty-five years than all the physical educators of the preceding two thousand years combined!”  Wow!

Tanny is also full of confucianisms that reflect on how we must approach our lives to receive two of the greatest blessings – good health and good intellect. He passionately links our fortunes of good health to what we eat, the regular exercise our bodies require, and our emotional health – all directly linked with one another. Here are just a few examples of the philosophy he shares about health:

We have been guilty of neglecting our heritage of strength, allowing our national physical fitness to degenerate by lack of physical activity.

The modern diet creates flabbiness and obesity, especially if overeating is combined with insufficient exercise. It may safely be asserted that obesity is a disease.

Exercise is essential to human life and health. Daily exercise, properly taken, would restore many semi-invalids to health.

We cannot buy health; we must deserve it.

It seems reasonable to believe that if people exercised their entire bodies as constantly and vigorously as they habitually use their minds, their physical and mental strength would endure equally.

Vic Tanny

Vic Tanny

Tanny was not talking about the problems of today – 2015 – but sounding the battle cry one-half century ago!  The particular periodical that I was reading, Wisdom Magazine, was published in May, 1961. Similar in size to LIFE Magazine, Wisdom first appeared in 1956, typically featuring world-renowned Yousuf Karsh photos of famed intellectuals and artists on both covers and on the main inside feature. The articles were full of rich content about art, biographies, business, education, government, history, law, literature, medicine, music, philosophy, religion, science, world affairs – you get the picture. Wisdom Magazine truly fulfilled its promise of being “The Magazine of Knowledge and Education.” Unfortunately, Wisdom met its fate in 1964 and is no longer published.

The world has greatly changed in 54 years, yet, when it comes to the health of Americans, the problems we face today with diet and exercise are nothing new – only the numbers change. In 1960 America, 54.2 percent of adults were not overweight or obese, yet by the year 2000 (40 years later), only 29 percent met this measurement. Conversely, over 14 percent of Americans were either obese or extremely obese in 1960. Today, this number is about 35 percent.

Tanny was on to something back in the 1940s – 1960s. As for Tanny?  His legacy is primarily known as being the American pioneer in the creation of the modern health club. His clubs, however, folded in the mid-1960s, with many locations becoming part of the Bally Total Fitness Clubs.

Tanny died in 1985 at the age of 73 due to – heart failure, precisely the fate he wished for Americans to avoid.

To stay abreast of employee benefits and healthcare issues, we invite you to subscribe to our blog.

 

 

The ‘Cost’ Diversion Stuck in the Middle

By: David P. Lind

Clowns-in-Healthcare-300x199Recently a song came on the radio that I have heard countless times in the past. But this time, it struck me in an odd sort of way. The song, ‘Stuck in the Middle with You,’ was a 1972 classic written and performed by Gerry Rafferty and his group, Stealers Wheel. The lyrics that jumped out at me?

….Clowns to the left of me,
Jokers to the right, here I am,
Stuck in the middle with you.

So what does this have to do with employee benefits? Well, most likely, not a darn thing!

However, when I think about our continued healthcare woes in this country, the song clearly resonates in the right side of my brain.

We are stuck in the middle of the same confusion eminating from the past. In my view, very little seems to change in healthcare. We appear to only re-label past concepts and initiatives and masquerade this as ‘progress.’

So what are these concepts and initiatives?

Managed care, integrated care, bundled payment for care, value-based care, accountable care, patient-centered care – get the picture? If these concepts are so important, and I believe they are, WHY weren’t they emphasized decades ago? Have we erroneously assumed that we were ALREADY receiving these wonderful ‘care’ packages from the bloated premiums (and taxes) we have been historically paying? In one word, yes!

We often confuse action with progress. The busier we appear to be can only indicate that meaningful improvement is being made, right? But if we are making progress in receiving quality care at an affordable cost, many national experts would agree this progress is glacial at best.

As a country, we remain so fixated on cost and coverage issues – necessary components to be sure – but we lose sight when these issues are most divisive with policymakers, political parties and the general public. This ‘diversion’ will only result in political gridlock. Gridlock is a great friend to the status quo, in addition to those who stand to prosper while little is accomplished. Obamacare has polarized the political process to the point that little can be accomplished in Washington due to a healthy dose of gridlock – a battle that has, at best, reached a stalemate.

Self admittedly, I also perpetuate this focus on cost by keeping it a focal point in many of my blogs – using our annual study results as the crutch. By taking our focus away from the real drivers of cost – unhealthy lifestyles, lack of accountability, poor care coordination, little transparency in cost and medical outcomes, patient harm due to preventable medical mistakes, healthcare waste – we allow the diversionary tactics to succeed at keeping the status quo intact for the foreseeable future. We are led to believe that to ‘fix’ our healthcare system, we must address cost, coverage and compliance components through insurance (and create mythical faceless villains to advance agendas) – all reliant on the political process – and gridlock.

Republicans want to repeal and replace Obamacare, yet offer few realistic specifics. Democrats appear to protect and defend Obamacare, and hint that “some changes need to be made,” – but what are they? Both parties are unwilling to address the key drivers because the huge elephant in the room continues to underwrite the cost of the status quo. Since 1998, four of the top seven spending lobby organizations represent the healthcare industry. Between the four, almost $1.2 billion has been spent ‘educating’ those who are elected. Gridlock causes uncertainty, but not for those who gain from this uncertainty.

The masquerade of containing medical costs has successfully distracted meaningful focus from the value we should be receiving in healthcare. Our country continues to play a high-stakes game of Poker, but in doing so, the deck has been stacked in favor of those players who control the game. We know healthcare is big business, and key players obviously feel entitled to our premiums and tax dollars.

In his televised farewell speech to the nation in January 1961, President Eisenhower openly argued that our country has a looming ‘military industrial complex’ that will suck up our money and resources if we fail to contain it. The same can now be said about our medical infrastructure – except this is so much bigger – and infinitely more serious.

We must reach beyond the endless discussion and distractions we have about who pays and how much. The cost, compliance, coverage and political discussions are no doubt important, but these are inextricably linked to the quality and safety of medical care we expect to receive, but in too many cases, do not. Cost is not the problem, it is merely the undesired outcome of the issues that we do not have the political courage to solve. By not having the public outcry for these changes to be made, we can only expect to receive the same pitiful results.

The national fixation on cost and coverage is perhaps the most successful diversional tactic used in our card game by the clowns on the left and the jokers to the right.

So here we are, stuck in the middle with each other.

To stay abreast of employee benefits and healthcare issues, we invite you to subscribe to our blog.

Health Systems Becoming Payers?

By: David P. Lind

Think Outside The BoxWhen it comes to healthcare, the government, employers and consumers demand more value. To provide this value, healthcare providers and payers increasingly negotiate payment contracts that are laden with payment incentives to reward higher quality. But is this approach working?

Not yet. It is much too soon to reach a consensus on any given delivery model that consistently controls costs and enhances quality of care. Payers and providers need to agree on quality metrics to use when determining bonuses or penalties and decide the details of shared savings agreements. This may be easier said than done.

Accountable Care Organizations (ACOs) are one of many initiatives emerging from the Affordable Care Act (ACA), with somewhat mixed results. ACOs seem to be a move in the right direction when it comes to care coordination efforts. However, I’m very skeptical about contractual arrangements between providers and payers that claim to solve a more deeply-rooted issue that fundamentally plagues our care delivery ‘system’ – disparate work environment cultures that do not foster a patient-centered mindset. Ultimately, it is the ‘culture of care’ that must be addressed before we can make inroads on quality and cost components.

Due largely to the ACA, there appears to be greater cost and reimbursement pressures on health systems to move toward ‘population’ health management – spurring health providers to think differently about their business models.

One initiative gaining interest is for health systems to launch their own health insurance plans within the markets they serve. According to a 2013 report by The Advisory Board Company, a Washington, D.C.– based research firm, 34 percent of 100 hospitals surveyed said they already own health plans, while another 21 percent indicated they plan to launch a health insurance plan by 2018. This is a small sample size, yet the results are, nonetheless, revealing.

In his recent book, ‘America’s Bitter Pill,’ Steven Brill writes that “Hospitals are already consolidating. It is happening all over the country…let’s let them continue. More important, as they continue, let’s encourage them to become their own insurance companies…so they can cut out the middleman and align these incentives. Let’s harness their ambition to expand, rather than try to figure how and when to contain their ambition.”

As the healthcare system continues to shift from fee-for-service care to value-based payments that bundle care in one sum amount, the financial risk associated with patient care may shift from insurers to providers. In other words, hospitals may eventually look more like insurance companies. But to do so, it will be in the best interest of hospitals and health systems to control the costs by pursuing long-term patient wellbeing.

So, can this work?

Health systems first need to hone their delivery skills to produce higher-quality outcomes BEFORE considering a whole new revenue source. Wearing too many hats without having laser focus on their core business objectives (e.g. delivering safe, quality care) will only cause greater problems than we already have today.

In our 2015 survey, we ask Iowa employers to sound off about hospitals having a greater incentive to control health costs (and ultimately premiums) they would charge to employers. Those results will be revealed in the next few months.

In theory, Brill’s comments may make sense, but can large health systems CONSISTENTLY deliver affordable care with (badly needed) high-quality results? To date, they haven’t been very successful. Like ACOs, this too will require more time to assess the desired outcomes, and – just as importantly – the unintended consequences that may follow.

One thing is for certain, in addition to covering more Americans, the premise of the ACA was that it would spur new approaches for care delivery models by thinking outside the box. Our fingers remain crossed.

To stay abreast of employee benefits and healthcare issues, we invite you to subscribe to our blog.

The Illusion of Getting ‘Bigger’

By: David P. Lind

Sometimes Size MattersAmerican culture is all about the belief that “bigger is better.” Heck, just stop by the local convenience store and you will find patrons walking away from the cash register with a ‘Big Gulp’ beverage. (No wonder obese Americans now outnumber overweight Americans.)

We seem obsessed with having the biggest ‘something’ – whether it is a city, town square, tallest building, largest (and most expensive) house or maybe a huge bicycle fortress crossing the state during late July. No doubt, it can be enticing to claim something enormous.

In both the hospital and health insurance industries, the fixation on growth is being taken to a whole new level. Nowadays, growth does not necessarily occur organically, such as through offering newly-innovative products and services that provide added value to customers. As customarily assumed, growth is intended to drive down costs, increase negotiating leverage and ultimately boost profits.

Controlled, organic growth seems to be much too slow for investors and today’s conventional wisdom of doing business. Enter acquisitions and mergers of competitors.

Insurance companies are making headlines with eye-popping takeover bids. For example, UnitedHealth Group, the nation’s largest health carrier, with expected revenue this year of $143 billion, has made a move to acquire Aetna, the nation’s third largest health carrier. The second largest carrier, Anthem, Inc., is pursuing Cigna Corp. They just made a takeover offer of $47.5 billion – which was subsequently rejected as being too cheap. If this isn’t enough, Aetna is reportedly interested in buying Humana, the fourth-largest carrier in the country. Big is better, right? After all, lobbying does matter a great deal in healthcare.

The impact on various markets across the country will most certainly affect local competition, and because of this, such takeovers will face rigorous antitrust scrutiny by the U.S. Justice Department for anti-competitive reasons. The reality is that healthcare markets are local, so unless a larger carrier gains a larger percentage of insureds in a given market, certain markets will not be impacted.

Hospitals have also made a myriad of moves in the recent past through mergers and acquisitions. Physician practices are gobbled up in Pac-Man fashion. Hospitals are concerned that larger insurance oligopolies will gain more clout by keeping provider payments lower – yet increase prices of insurance products to purchasers – employers and individuals. It appears the new arms race is not so much about nuclear bombs, but rather, healthcare purchasing clout. The hunger to grow escalates when the other side expands – a never-ending treadmill of activity.

So what does this mean for healthcare customers like you and me? Through sleight-of-hand, carriers and providers provide the illusion that patients are the focus in this post-ACA environment. But unfortunately, due primarily to the complexities inherent in healthcare, the public continues to buy into this perpetual illusion that care will somehow get better and become less expensive because our best interests are the center of this activity. The illusion continues.

Let’s be honest, it’s about the bottom line – healthcare is in the money business.

Third parties develop websites on price information coming from aged-claims data that usually are at least two years removed from the unknown prices now being used. Patient engagement is critical within healthcare, yet, according to research conducted by Nielsen/Harris Interactive Strategic Health Perspectives, patients with chronic conditions who have significant out-of-pocket exposure are increasingly feeling disillusioned by our healthcare ‘system.’

As mentioned in previous blogs, gaining the ‘public trust’ is the fundamental business in which the health provider community should be operating. But customers who feel hopeless about their healthcare most likely will not have the trust to use transparency tools to make optimal healthcare decisions – even when more relevant tools eventually become available.

Growth by acquisition and mergers will not gain public trust. If consumerism has a chance to work in healthcare, we must allow it to work by agreeing that, when seeking non-emergency care, consumers are entitled to receive accurate cost information about their out-of-pocket exposure. This information can be provided through the collaboration of providers and carriers. If they are unwilling or unable, other third parties can fill this role. Without a doubt, the healthcare and health insurance worlds are in a full state of disruption – complacency is NOT an option for those who wish to survive.

Further, consumers must have access to quality metrics about the provider care they seek. Gaining a consensus on quality metrics will be no easy task, but it is the right course to take when rewarding those providers who perform the care we assumed we were receiving in the past.

Mergers and acquisitions may be great for owners, stockholders, corporate executives and the M&A consultants who promote such activities. But it only prolongs the REAL work that is needed for healthcare to become safe and affordable to all.

Bigger is not better. Smarter is better.

To stay abreast of employee benefits and healthcare issues, we invite you to subscribe to our blog.