David P. Lind Benchmark Archives - Page 2 of 4 - Heartland Health Research Institute

Healthcare Costs and Wages in Iowa
the Faceless and Nameless Among Us

Posted on: 07.12.16 By: David P. Lind

Whether it is a morning jog or perhaps a bike ride, I find great pleasure in determining the measureable progress I have made both in distance and time.

The same can be said about reviewing data from our past studies that cover a longer period of time. Doing so helps gauge a better understanding of trends occurring within benefits, specifically as it relates to health insurance components. As we are keenly aware, what we pay for our health insurance and the healthcare we receive continues to nip at take-home pay and the ability to afford other necessities, such as food, clothing, housing, etc.

A recent study commissioned by 25 local Iowa United Way associations indicated that for almost a third of Iowans (31 percent), the income they receive does not allow them to cover the basic costs of living. In fact, two parents working full-time in this state would need to collectively earn $23.34 per hour over a 40-hour week to cover basic household costs. With cities, counties and states debating what specific minimum wage amount should be acceptable (and affordable), this topic will not go away anytime soon.

Knowing that components of health insurance plans, such as premiums, deductibles and out-of-pocket maximums continue to push northward, this also impacts family budgets and whether they have adequate health coverage. By ‘adequate,’ I am referring to cost-sharing responsibilities that may overwhelm lower-earning Iowans. According to the Kaiser Family Foundation, Iowa happens to have a lower-than-average rate of uninsured (six percent). Nonetheless, even those who do have coverage continue to experience higher cost-sharing arrangements that may cause people to seek less care – which is a plausible reason we see moderation in the growth of health cost spending.

With this in mind, I want to take a quick look ‘back’ on trends for a few health insurance cost components confronted by Iowans with employer coverage. Covering a six-year period (2009 – 2015) from our annual ‘Iowa Employer Benefits Study^©,’ we learn that the average weekly wage from the Iowa Workforce Development (IWD) rose annually by 2.6 percent, while premiums increased during that same period by 9.2 percent prior to any plan designs changes made to lower the increase. Altering plan designs typically result in higher cost-sharing for employees, something that employers are reluctant to do. After alterations, the average annual premium increase was 5.5 percent, still over twice the weekly wage increase.

In addition to premium inflation, Iowan’s with employee-only coverage have experienced increasing deductibles by eight percent annually, from $1,061 to $1,662. The total cost-sharing exposure Iowan’s pay for medical costs (e.g. out-of-pocket maximums) increased by 6.1 percent annually from $2,210 to $3,151. Finally, employees with single coverage have contributed 6.2 percent more annually through payroll deduction for their cost of the employer-sponsored coverage.

Here is a summary of the six-year history.

As payment responsibility for medical costs continues to shift from employers to employees, a new dynamic of patients becoming the ‘new payer’ profoundly impacts the receivables for the provider community, specifically hospitals. Though not new information, this fact can and will change how financing options may evolve from providers to help patients navigate their financial obligations and ensure that patients are well educated about the cost of their care. Insurance companies, for their part, may also explore innovative financial solutions to help their insureds assume payment responsibilities – possibly a foray into a new market of opportunities.

Trends found in this six-year period will most likely continue well into the future, and the evolution of how we pay for our healthcare will require off-the-beaten-path solutions to establish new funding mechanisms for an increasing number of patients.

Over time, the compounding of these trends will affect more Iowans, revealing that many will no longer be faceless and nameless, rather, they may become us.

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

Posted on: 02.15.16 By: David P. Lind

We 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?

Again, 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.

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.

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.

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.

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

Posted on: 01.13.16 By: David P. Lind

In 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:

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.
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?
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.

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The ‘Cost’ Diversion Stuck in the Middle

Posted on: 11.04.15 By: David P. Lind

Recently 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.

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The Illusion of Getting ‘Bigger’

Posted on: 06.30.15 By: David P. Lind

American 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.

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Medical-Error Fatalities in Iowa? Here’s a Calculated Guess – Up to 4,300 Iowans Annually

Posted on: 04.15.15 By: David P. Lind

…Yes, an’ how many deaths will it take until he knows
That too many people have died?
The answer, my friend, is blowin’ in the wind
The answer is blowin’ in the wind.
Bob Dylan, Blowin’ in the Wind

In healthcare, we have oceans of data but only puddles of useful information. The data comes in various forms, typically from healthcare providers who care for us and from the insurance vendors who enroll and cover us. Without question, the data generated within our healthcare system is abundantly voluminous.

During the last year, I have spent time writing and presenting about preventable medical errors. I recently was asked by two individuals (one representing the insurance industry and the other employed within the healthcare provider community) to render a guess about specific medical error data within Iowa borders – relating to the number of patients who were lethally harmed. I assured them that I could not find anything local – only national estimates were available. With this said, national patient safety experts, such as Dr. Ashish K. Jha, Dr. Peter Pronovost, Dr. Don Berwick and Rosemary Gibson, among many others, confirm that patients harmed in our country is nothing short of a national epidemic.

In a strange way, this request was similar to the Wizard of Oz being asked to provide a heart, brain and invoke courage. But in this particular case, I was asked to unearth local data about the medical errors found in Iowa. I suspect not even the Wizard could provide this treasure trove of critical public information!

But, out of curiosity, what IF we backed into these numbers using national estimates? After all, national data on medical errors are estimations that emanate from available (but imperfect) empirical knowledge.

Yes, many types of national and local organizations are working diligently to make our healthcare delivery system safer. But until we have a true measurement on the actual prevalence of medical errors to serve as a starting point on a local and national basis, how can we possibly improve or assume progress is being made? For example, are we measuring ‘process’ rather than ‘outcomes’? Are study methods rigorously evaluating improved care in a transparent way? To legitimately improve quality outcomes, we must measure what matters most, not just what is most convenient. Easier said than done, but many times we confuse activity with progress, which only prolongs egregious results.

From information found in past studies, reports and evidence, we do know that about 25 percent of all patients are harmed in our country by medical mistakes. The Institute For Healthcare Improvement estimated 15 million medical mistakes occur in our hospitals each year. In 1999, the Institute of Medicine (IOM) released ‘To Err is Human,’ suggesting that perhaps as many as 98,000 Americans die in our hospitals each year as a result of preventable medical errors. In 2013, another report was published in the Journal of Patient Safety conveying that up to 440,000 Americans die in our hospitals due to these mistakes.

So which number is most accurate – 98,000 or 440,000? We simply don’t know. Dr. Lucian Leape, a physician and professor at Harvard School of Public Health and a pioneer on patient safety, was a key contributor to the IOM estimates. Dr. Leape has since acknowledged the 440,000 estimate is more likely to be accurate.

Using federal and state data from the Kaiser Family Foundation website, total hospital admissions in the U.S. during 2012 was 34.8 million. Of this, Iowa had about 340,000 total facility admissions, a number substantiated by Iowa Hospital Facts.

By calculating the death per admissions nationally, using 98,000, 440,000 and an arbitrarily-selected mid-point of 250,000 lives, we can then use each ‘conversion’ factor to determine what the estimated fatalities are for individual states based on each national estimate.*

The slide below illustrates the estimated number of medical error fatalities for Iowa and five neighboring states, using the three national estimates. When factoring the 98,000 fatalities as reported by the IOM, Iowa would have an estimated 959 lives lost annually within our hospitals due to preventable medical errors. This number is similar to the population of the city of Lansing, Iowa. If national fatalities are about 250,000 lives annually, a calculation of 2,444 patients die annually within Iowa, or about the size of the city of Kalona. Finally, the 440,000 estimate equates to about 4,300 Iowans dying annually due to hospital medical errors – roughly the size of the city of Jefferson.

Within the slide, due to the larger populations of Minnesota, Missouri and Illinois, Iowa compares favorably with lower-estimated fatalities. However, the estimated fatality numbers found in Iowa are greater than those found in the less-populated states of Nebraska and South Dakota.

If any of the guesstimates are correct in the next 10 years, Lansing becomes the size of Norwalk, Kalona the size of Marshalltown and Jefferson the size of Ankeny. Isn’t it time to start reporting, measuring and documenting ‘actual’ data and stop guessing and theorizing? Unfortunately, we live with faceless statistics when it comes to medical errors.

Bob Dylan had it right. How many more lives have to be lost before we do the right thing?

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*CAUTIONARY NOTE: Using the same national factor for every state assumes that outcomes from each state are equal to one another, which is a BIG assumption. Thanks largely to the Dartmouth Atlas of Health Care, we do know that care-quality varies wildly in different parts of our country, state and even across town. Healthcare, like politics, is all local, but we don’t know whether using a national norm is better or worse than the Iowa ‘norm’ because fatality metrics due to medical errors within each state are elusive. Therefore, quality-adjusted care was not baked into these estimates.

Healthcare Patients Want ‘Good Value’ for the Money

Posted on: 04.08.15 By: David P. Lind

…we are now entering into a new era in healthcare that appears to alter our behaviors toward the care we are receiving…

Similar to national data, Iowa spending on healthcare and insurance premiums has risen at historically lower rates in the last three years. However, according to the Kaiser Family Foundation, only three percent of Americans said health costs are “going up slower than usual,” and 52 percent said costs are “growing faster than usual.” The other 35 percent say costs are about the same.

The amount that Iowans with employer-based health insurance pay for premiums has risen 167% in the last 14 years, while Iowa weekly wages have risen about 40%* and general inflation 43 percent. As we know, our incomes are suppressed by increasing health premiums, which certainly impact take-home pay and, ultimately, our capability of making consumption trade-offs for other priorities, such as food, shelter, education and retirement savings.

In addition to the premium cost, Americans are asked to pay increasingly more of the medical care they seek, through higher deductibles, copayments and out-of-pocket maximums. With lower-relative income, finding the financial resources to pay is problematic for many employees, causing them to put off receiving care or incur more medical debt.

In a recent Wall Street Journal article, Drew Altman, president and CEO of the Kaiser Family Foundation, wrote that Americans with health coverage care about:

Their premium costs, or the share of premiums they pay if they have employer coverage;
Their deductibles and other forms of cost-sharing, especially when deductibles have been rising steadily;
Their drug costs;
Whether they can go to the doctor or hospital they want without having to pay more;
The hassle and red tape in healthcare and health insurance. People care about getting information to be informed about their health and make smarter insurance and healthcare decisions;
Seniors care a lot about Medicare and sometimes vote on this issue.

Most people would agree to this list.

However, Mr. Altman then mentioned that “Americans don’t care as much as experts do about improving quality and eliminating unnecessary care. In general, people think that quality is good and they want more care not less.”

Perhaps this was true in the past, but we are now entering into a new era in healthcare that appears to alter our behaviors toward the care we are receiving. One prime example is a recent study that says cost is not the most important determinant of the care we seek – it is quality. From this report, when patients are provided hospital safety score grades and cost information together, they will choose safer hospitals 97 percent of the time, REGARDLESS OF COST.

Of course, this may also depend on WHO pays…the patient or a third party.

Making sure that such report cards reflect the most relevant performance measurements will be extremely important – if not critical – to the patient. Unfortunately, we don’t have this luxury at the present time. A March article on the Johns Hopkins Medicine website reports that national rating systems on the quality and safety of hospitals are too confusing because each will stress different measures from each other – sometimes providing a wide variation of grades on the same hospital (study source: Health Affairs).

In my blog last August, I wrote that the Urology Department at Cleveland Clinic received a top score by the U.S. News & World Report, yet received the lowest possible score by Healthgrades for prostatectomy outcomes. This type of reporting will only serve to confuse the general public before seeking care.

As healthcare delivery and payment initiatives continue to morph, look for quality and safety measurements to emerge with the cost component. The convergence of reliable safety and quality information with ‘real-time’ cost information can eventually catapult the healthcare industry into the 21^st century.

Until then, many hurdles must be successfully cleared in order to achieve the desired value we all want.

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*2014 data from the Iowa Workforce Development is not yet available, and therefore, excluded.

Provider Incentives – From Pacifiers to Training Wheels

Posted on: 02.11.15 By: David P. Lind

Imagine boarding a plane to take a trip. Your expectations are to land safely and on time at your final destination. After all, you’ve already paid the ticket price with that particular airline.

Further imagine that AFTER you have arrived safely and on-time, your selected airline requires a bonus – or incentivized payment – from you because they performed their work to your expectations. Perhaps you provide a ‘tip’ upon arrival at the gate, or promptly receive an ‘add-on’ fee to your credit card.

What if this new type of payment approach also occurred within other industries? For example, you take your car in for routine maintenance and servicing. In this scenario, you pay the vendor not only the cost for the work but also a small incentive bonus because it was performed to your satisfaction.

Or, consider the employer who works with a benefit consultant and pays the contractual fee charged by the consultant. At the end of the contract period, the employer is invoiced a ‘bonus incentive’ because it was somehow determined that he/she received quality ‘outcomes’ throughout the contract period.

Wait! Under the aforementioned scenarios, the airline, auto-mechanic and benefits consultant are ALREADY getting paid to provide ‘presumed’ quality services to their customer. Why should these vendors be paid an incentive – don’t they have ample motivation to fulfill their promises to customers? That motivation can be in the form of repeat business, enhanced reputation, customer referrals and a host of other incentives – including business survival! Shouldn’t the inclusion of quality service be part of the ‘base’ price paid to the vendor?

Absolutely! Quality should be included, and, in most industries, it is the minimum threshold in which the vendors perform their services to the public.

But in today’s healthcare world, we are frantically searching for payment incentives to boost care-quality based on several factors that include disease management, patient satisfaction and safety, along with hospital re-admission rates. Such incentives are provided through the Medicare Hospital Value-Based Purchasing Program, in addition to new payment deals arranged through private accountable care organizations around the country.

One may reasonably ask this simple question:
“Why do we need to incentivize provider behaviors to do things they SHOULD already be doing?” These incentives are touted to be ‘cost saving’ or ‘cost neutral’, but shouldn’t quality and safety already be baked into the existing bloated prices for the care we receive?

Great question!

Revenue earned by today’s health providers is largely derived from third-party payers, such as government and private insurers. Because of this, provider revenue and subsequent behaviors are insulated from the end user – you and me – who seek care. By default, you and I are merely sideline spectators watching others determine how a nice chunk of our economy will eventually become priced for the services we seek. By not having a marketplace that allows for a true transactional buyer-seller relationship, incentives to push the ‘right’ provider motivations are in-vogue.

A huge trend in this country is to replace traditional fee-for-service reimbursement with incentive-based payments that encourage higher quality care and lower costs. Medicare, due to its sheer size, is taking the lead by boldly moving half of all Medicare payments in this direction by 2018. Private payers are also following with various experimental reimbursement methods.

Understanding the true motivations and behaviors of healthcare providers is obviously important to ensure that proper incentives are given. It does, however, seem quite paradoxical that we spend so much time, effort and resources to develop new toys to either motivate or pacify one-fifth of our economy to do what they should have been doing for years.

The reimbursement process has become a perpetual cat-and-mouse game between the payers and providers. And, you can be assured that ‘innovative’ payment incentives will proliferate into the unforeseeable future. Unfortunately, as the past has proven many times, unintended consequences eventually erupt from well-intentioned incentives, resulting in rather nefarious outcomes.

Perhaps someday, this mature sector can graduate from pacifiers to training wheels?

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What is Your Cultural ‘Pie?’

Posted on: 10.22.14 By: David P. Lind

Full Disclosure: This particular strawberry rhubarb pie was NOT made by Deb.

My wife, Deb, makes a scrumptious strawberry rhubarb pie. In fact, I really think she could win a blue ribbon at the Iowa State Fair with her recipe. OK, I must admit that I am just a tad bias – but it’s true!

Carefully measured sugar, flour, salt, butter and eggs are added to freshly-harvested rhubarb and strawberries. The pie crust is prepared to ensure the quality and appearance of the pie will not be compromised. How can the tartness of rhubarb and the sweetness of sugar make this pie so delectable to one’s palate? I have come to the realization that my taste buds must be suffering some sort of culinary schizophrenia – especially when a scoop of vanilla ice cream is added on top!

Using consistent ingredients, coupled with the desire to make the same tasting pie each time is a great recipe for success. Unique and positive experiences eventually result in an ongoing trust that the pie will be equally pleasing to the palate in future interactions.

What a powerful and priceless combination – creating a positive experience for the consumer and, consequently, earning their trust.

Developing and maintaining an organizational culture designed to elicit trust is similar to baking a consistently-prepared strawberry rhubarb pie. It takes the right ingredients and level of determination and commitment to use the same tried-and-true process without compromise.

The idea for this particular blog originated after I finished reading a recently published book, “Think Big, Start Small, Move Fast.” Written by three insiders from Mayo Clinic’s Center for Innovation, this excellent book is about developing and implementing a new culture of transformative innovation for not only healthcare organizations but for any organization that desires to adapt to, and possibly disrupt, the future environments and markets in which they operate.

According to former Mayo CEO Dr. Glenn Forbes, a desired culture must be imbedded into the DNA of the ENTIRE organization. “If you’ve communicated a value but you haven’t driven it into the policy, into the decision making, into the allocation of resources, and ultimately into the culture of the organization, then it’s just words.”

Of all health care organizations, one would think that Mayo could rest on their laurels and continue down the path of excellent care to their patients. After all, Mayo is all about the effective care experience for their patients. Simply put, Mayo practices that the patient comes first – at all times.

It started 150 years ago with William Worrall Mayo and his two sons, Will and Charlie. It continues today because of the consistent ingredients the organization has passed down generation-to-generation, with the same passion to serve each patient today and tomorrow. Similar to the pie, each slice is consistently processed and delivered. Each bite allows the customer to trust that the next slice will be no different.

Mayo continues to search for new ways to accentuate their tried-and-true culture so that they will be prepared to address the needs of the future. This never-ending quest serves as a great lesson for other organizations, both inside and outside of healthcare. When the public sees and feels that the organizational values are consistently customer-centric and baked within the culture of that organization, trust will inevitably endure.

So what beliefs, values and behaviors are reflected in your organization? What are the desired attitudes and behaviors that you wish to seek in the people you hire? Does your organization desire creativity, safety, collaboration or innovation?

Whatever the desired culture is for your organization, hopefully it is a positive one that permeates beyond the workplace setting and soundly resonates with the public.

Just like Deb’s strawberry rhubarb pie!

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Fixing Core Issues ‘Upstream’ will help Reduce Healthcare Costs

Posted on: 10.01.14 By: David P. Lind

I’m far from being a political junkie. In fact, watching sausage being made is more gratifying than watching the legislative process in Washington D.C. – especially when it comes to health policy issues.

In late July, I attended a healthcare symposium arranged by the Iowa Association of Health Underwriters. Jesse Patton and his team did a wonderful job of mixing local with prominent national presenters. One particular speaker, Grace-Marie Turner, president of the conservative-leaning Galen Institute, gave an informative presentation and followed up with this question to the audience: “What fresh ideas and a new vision might you have for lawmakers to consider regarding healthcare reform (presumably following the 2014 and 2016 elections)?”

Grace-Marie asked an interesting question, and this one got me thinking.

Regardless of our political leanings, we can all agree that the Affordable Care Act (ACA) is very complex and the long-term outcomes are uncertain. We can agree that the path we are on is unsustainable for many caustic reasons. We have little systematic health policies, just band-aid approaches that mask symptoms of gigantic problems undermining our economic (and physical) well-being.

In addition to covering more Americans, the ACA has attempted to address the ‘downstream’ activities of ‘Our Health Care River,’ basically determining who should pay and by how much. This discussion is extremely divisive because it becomes muddled by partisan philosophies so toxic that any potential progress is quickly thwarted. As a result, the common good of all U.S. citizens becomes a pawn within the political playground. We have been down this road countless times and it is extremely difficult to accomplish anything of great substance. It is so much easier to disagree than to agree. And, as a consequence, we all lose.

We have become so fixated on cost (and access) issues that we lose sight of the primary source of this cost — the healthcare we receive from those providing it.

Unfortunately, very little policy-making attention has been spent ‘upstream,’ which is the primary reason we are drowning in high healthcare costs (and insurance premiums) in the first place. Upstream problems should be a non-partisan issue. Because of this, we must agree on some fundamental issues that impact what we eventually pay downstream. So what are the core issues that will allow both political parties to find common ground and begin the change process? Here are a few…

We must:

Have complete transparency in medical costs and outcomes.
Address poor coordination of care among providers.
Identify and fix the reasons why recommended care is alarmingly low.
Remove the waste and inefficiency baked within our healthcare costs that we eventually pay “downstream.” When you factor in the loss of productivity due to medical errors, this equates to at least a trillion dollars annually – at least 40 percent of all health costs!
Develop and implement approaches to unmask and eliminate the medical mistakes that occur each year in our hospitals – which result in hundreds of thousands of needless deaths. In addition, 10-to-20 fold more are seriously harmed due to medical mistakes – in just our hospitals. Eradicating simple medical mistakes from our healthcare delivery system will provide safer care while eroding medical malpractice claims.
Identify and resolve the misalignment of payment to healthcare providers. This has created perverse incentives that result in overtreatment, undertreatment, and other unintended consequences that we can no longer afford. We can all agree that fee-for-service payment measures must be replaced with sensible payment policies that promote incentives for performing the right care at all times.
Address our unhealthy lifestyles which create additional pressure on an already dysfunctional healthcare ‘system.’ I know, this is easier said than done – but it is the truth. Developing a ‘social conscience’ about living healthier is a good start.
Not allow lawmakers to be unduly influenced by lobbyists who compromise the well-being of our citizens. Washington (and state) lobbyists have perpetuated the ‘medical industrial complex’ that continues to eat up more of our gross domestic product.

Does this sound impossible to you? Perhaps, but maybe not. For heaven’s sake, we put a man on the moon 45 years ago – and we did it by using technology from the 1960’s! We just need to have the political will, and frankly, a backbone to confront the brutal facts.

There are many other core issues that might be considered, but the above list is a good beginning on finding common ground. By addressing these issues, the cost to our system will drop markedly, making the political decisions downstream more manageable, and consequently, more favorable for agreement from both sides of the aisle. In fairness, the ACA attempts to address a few of these initiatives upstream, but most health experts agree that such programs will most likely have marginal consequences to the real problems occurring upstream.

Because our spotty health outcomes do not discriminate between classes of people within our country, policymakers must ‘think more like a patient’ and engage their efforts into reforming the core topics above. After all, policymakers are patients too. Carefully-derived factual data can guide and persuade policymakers to address these core issues. But it may take a “patient-like” mentality to properly motivate elected officials to do the right thing for all citizens.

If we continue our past practices in healthcare ‘policy’, we will replicate what baseball-great Yogi Berra was credited for saying: “It’s like deja-vu, all over again.” Our nation can no longer afford to continue down this dangerous road.

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