The inflection point in the healthcare value chain

In 1965 there were 4.6 workers for every beneficiary on Medicare. In 2030 that number is slated to be 2.3 workers and 10,000 baby boomers will be retiring every single day through that same time period. The healthcare value chain is the system of resources that an organization uses to drive its outputs as well as the inputs throughout accompanying organizations. Locating the points of integration within the chain highlight where new technology and service delivery options can reduce the friction of delivering healthcare as the reduction of worker contributions per beneficiary looms large.

Healthcare historically has operated from the top-down. From enterprise-based technology to the location of service delivery to consumer literacy, all of these concepts are centralized throughout the interaction points in healthcare. Merger and acquisition activity only strengthen that structure.

End-User Technology

Enterprise technology as a rule is feature rich (especially from a healthcare billing perspective) and user-experience poor. Once health information technology adoption became a requirement as part of Meaningful Use in 2009, enterprise technology became the back-bone of data capture for the majority of healthcare workers. Those same technology stacks got published to another set of end-users(patients) to manage their healthcare experience too. To Epic’s credit, they have still been able to construct one of the better user-experience’s despite operating on MUMPS. There is something to be said for technology that actually works.

While the central repositories of health information (ERP, HR, EMR, Practice Management, etc.) should be enterprise in nature, the tools used to capture that information should not be. Mass data capture exists at the most valuable intersection point in healthcare, the patient and healthcare provider interaction. Data capture to-date is the most significant point of inefficiency within the patient-provider relationship and is ripe for disruption. Aligning the patient-provider interaction with effective data capture and trust is a critical balance along the healthcare value chain.

Service Location

The physical constructs of healthcare are centralized as well. That is, healthcare settings are constructed around significant property, plant, and equipment assets locally and regionally. To be sure, innovation has to continue within Centers of Excellence (cities). There is significant strength in diversity within an ecosystem and there is no more diverse system on this planet than the United States healthcare system.

Routine primary care services don’t demand that diversity though. Neither do several other high-volume procedures and services. The majority of healthcare is occurring outside of a hospital or physician office. Right-sizing healthcare service delivery incentives to drive infrastructure (we’ve touched on capitation providers previously here) around the core competencies of the service provider builds durability and quality into the more repetitious services in the system. Health systems generating additional revenue streams based on models of convenience (right place, right time) only expand our GDP consumption. We are still in the top half of the first inning in the transition to value-based reimbursement.

Consumer Literacy

Peter Kaufman talks about the importance of leveraging large sample sizes to make quality decisions. Giving employers and consumers access to meaningful data is challenging given how the healthcare system was digitally constructed and the nascency of data science on health data in general. That said, the largest employers in the country (Haven, Wal-Mart, GE, etc.) do have access to large sample sizes of data (large employee bases) and many are creating delivery models by partnering directly with Centers for Excellence. That transition is the type of leading indicator that represents the innovation in consumer literacy that is possible with access to quality outcomes data. Information is the only demarcation.

When you look at the friction points in the value chain of a traditional health system relative to the likes of ChenMed, Iora Health, and others, the labor expense comparison is striking. Most every hospital in the U.S. spends over 50% of their budget on labor. Contrast that with zero billing staff at these capitation-based organizations and the disruption points take shape. While hospitals and primary care settings structurally are suited to very different delivery models, the underlying fundamentals transcend setting.

Warren Buffet challenged the managed finance industry to prove better outcomes through their model of increased friction (transactions, comprehensive services, and expenses) and it would be interesting to see a similar study in healthcare with clinical outcomes data relative to the cost to provide those outcomes across different organizations. Capitation vs. traditional service delivery, cost and outcomes data are the answers. We finally have large enough sample sizes of both.

Real change happens from the ground up. Microsoft and Google both benefit from different dynamics within their businesses and both were started from the ground up. Microsoft understands how to build, deliver, and support enterprise-grade software. Google understands how to bring information to people in an organized way very efficiently. The healthcare industry has been constructed around Microsoft-like concepts from technology to service locations to consumer literacy. With that underlying enterprise infrastructure now in place, consumer-oriented technologies that organize outcomes and cost data at the local level will create the most efficient value chain for the patient-provider relationship. Organizing information at the local level that is representative of the payer, provider, and social class of the individual consumer (hopefully with some 46Brooklyn-style analytics) will produce non-linear results for the executors of that technology.

Centralization of services and information ultimately gives way to dissemination as Moore and Metcalfe have already proven in many other industries. The patient-provider interaction is where the most value is created in healthcare. The question becomes, what businesses have the technology back-bone to circumvent the operators that are extracting value from the system through centralization and can supplement the reduction in contributions per beneficiary looming over the next decade?

Healthcare technology, please don’t revert to the mean

silver MacBook near black corded headphones and assorted items

A combination of cognitive dissonance, Stockholm’s syndrome, and poor incentive structure have been a burden to the consumer healthcare experience, that is until the democratization of healthcare data. The decision-making power that patients now possess with access to “their data” is creating an environment that is not your father’s healthcare system. Information is really the only demarcation. So, what does the landscape look like for patients interested in evaluating healthcare products and services through the use of technology alongside their data?

Evaluating the quality outcomes of hospitals and healthcare providers alike is akin to checking references for any other product or service. The Leapfrog Group is a non-profit watch dog that provides a hospital-based Consumer Reports-like comparison tool across domains from maternity care to medication safety to inpatient care management. Particularly if you are an expecting mother, (the lion’s share of hospitalizations are for child birth), this tool is a great resource. They are the gold standard in evaluating hospital-based patient outcomes. The Centers for Medicare and Medicaid (CMS) also provide a hospital compare tool that offers critical KPIs, one of them being hospital-acquired infections (HAIs). The fundamental challenge with CMS data is it’s retrospective and based on Medicare patient data only.

Like healthcare quality data, healthcare pricing data continues to be a black-box. However, check out the most transparent healthcare provider in this country’s website, The Surgery Center of Oklahoma. Click on their website, click on the procedure you are looking for, and voila! Hat Tip to Dr. Kevin Smith for going against the grain and providing a glimpse of the possibilities in our healthcare system. The state of Virginia also offers a tool that provides information on claims paid by health insurance carriers throughout their state. Basically, claims data affords consumers a retrospective look at what insurance carriers paid healthcare providers for particular tests, procedures, etc. CMS carries the biggest stick in the payer world and offers some of the best tools for transparency as well. Change, especially in healthcare, happens with the industry leader (healthcare’s largest payer) using its critical mass to demand pricing transparency. What does it say about the implications of pricing transparency when the providers of healthcare services begin to sue the federal government over transparency requirements? Pricing transparency is the preeminent last mile in healthcare and the technology needed to disseminate that information is taking shape.

Service cost transparency is the most important financial aspect of making informed healthcare decisions. Though not to be discarded on the financial front are the cost and quality of prescription drugs. There are a litany of tools that provide incentives to consumers to fill their Rx. Blink Health, WeRx, and GoodRx are great for discounts and cost estimation at local and regional pharmacies. Online pharmacies such as (Costco and Sam’s Club work as well) work for the procurement side of the business. “Authorized Generics” are another way to reduce your expenses and increase your odds of a quality product. Then there are pharmacies that take quality a step further in ensuring what you are putting in your body is the real deal. Valisure is a little-known mail-order pharmacy start-up that actually tests samples of the products it’s receives directly from the manufacturer. This FDA website can also lend a hand if you want to see if a particular drug manufacturer is on the naughty or nice list. Given that 80% of the active ingredients in all U.S. drugs, brand or generic, are coming from manufacturers overseas and 90% of our drug supply is generic, verifying the drug manufacturer’s standards is sound policy.

From quality and cost, we arrive at decision-making during the course of care that combines both of those concepts. Choosing Wisely is an organization that compiles recommendations from a spectrum of medical societies and offers consumers a SWOT analysis across many of the procedures, tests, and diagnoses that can be proposed treatment options. Whether a particular test, procedure, or treatment protocol is appropriate based on the presenting conditions is challenging even for healthcare professionals. And considering some estimates put healthcare spending waste at 25%, it’s worth a look.

Alas, using technology to actually navigate data exchange and communication. There are more tools on the market today than you can shake a stick at for managing your personal healthcare data. Electronically managing personal health records effectively is a key part of transitioning care from one provider to the next, understanding the underlying conditions that drive treatment plans, and allowing your care team to support you. Apple Health Records(Android is beginning to toe the line as well) has developed a great tool that aggregates your clinical data across different care settings using the FHIR API with several of the leading Electronic Medical Records (EMRs). The quality of the patient facing technology that providers offer is a key piece for patients to manage their information. Direct Messaging capabilities within a patient portal, for instance, give consumers portability and standardization when transferring their C-CDA to a referring physician and vice-versa. Being able to use a smart device to interact with the care team and manage personal health information are key indicators of a quality patient experience.

These technologies and many others are leading indicators that the healthcare consumer experience is catching up with other industry. Those that cater to smart devices will prevail. We’ve touched on the federal government trying to do its part through technology, the growth in payment parity of telehealth visits is another great example of bringing healthcare to the consumer and incentivizing providers to adopt that service setting. The days of yore are fleeting. The challenges with healthcare consumer engagement become presenting information to consumers in a way that makes them give a darn and improving consumer literacy around how the healthcare system is constructed. Stringing together a lattice work of tools is a great starting block. Shunning Stockholm’s Syndrome will take a generational time-horizon but rest-assured the generations that grew up at the precipice of the transition from analog to digital are up to the task.

What’s a guy (or gal) have to do to get a fiduciary for a health insurance broker?

Employers spent an estimated $738B on health benefits covering roughly 170 million Americans in 2018. Half of US employers use a health insurance broker to put together a package of health benefits that will best suit their employees. Tony Robbins does an Unshakeable job of analyzing the ways individual American consumers should be shopping for fiduciaries in the financial advisor sphere (Hint: RIAs). In the healthcare benefits space, there is no face of the franchise for employers to follow when they are doing their due diligence on whether their healthcare broker follows a suitability or fiduciary standard. However, there are organizations emerging and benefit delivery strategies creating market pressures on insurance companies to follow fiduciary vs. suitability standards.

The reality is there is no free market in most of healthcare: a combination of regulations limiting supply, concentration of providers in local markets, and consumers’ lacking confidence in their ability to choose medical services gives healthcare operators tremendous power. That said, shopping for and managing health benefits is one of the few areas employers can build durable competencies. Having an emergency appendectomy while on vacation in Mexico doesn’t really offer that same luxury.

As with previous posts, the systems and incentives that governor how health insurance brokers are compensated drive the bus. ERISA was constructed as a means of standardizing how pension plans are administered and regulated. The Dodd-Frank Act was a sweeping over-haul of the financial sector post-2008. Even the people (healthcare providers) providing healthcare services have checks and balances in place to deter unsavory business practices. Thank you, Stark Laws. Healthcare is still a business and deterring organizations from reducing referral leakage is similar to deterring an account retention program in the vendor world. That’s not good for business. And in theory, Clinically Integrated Networks(CINs) make a ton of sense for patient outcomes and cost containment!

While debating the impact of these or any laws is always a lively discussion, the bottom-line is that these types of legislation are deliberately addressing conflicts of interest. More importantly, these types of consumer protections should be inherent within the process of employers selecting health benefits. For example, health insurance companies can impose fees upon health insurance brokers due to referral leakage within their customer base (employers). This article offers some perspective on how the health insurance system can be constructed and the reasons that a health insurance broker wants to retain their customers within their current benefits packages at all costs. The anecdote of the real-estate agent representing both the buyer and seller is not off-base regarding the business models of certain health insurance brokers. Incentives, baby!

The 750,000 workers that organizations like Haven represent have the clout and critical mass to shift how healthcare is delivered across large employer-sponsored beneficiary populations. Organizations like Haven are providing our nation a petri-dish for employers to contract for healthcare benefits in the 21st century. As evidence, 60% of self-funded workers in the United States are covered by self-funded insurance premium pools as of 2017 and migrating towards contracting directly with healthcare providers as shown in Figure 10.1:

Self-funded insurance pools and direct contracts with healthcare service providers are just a couple of the ways that employers can reduce the aforementioned conflicts of interest when dealing with their health insurance brokers.

As for the non-Haven employers of the world, improving literacy on the best practices for evaluating healthcare benefits will create material impact to a lot of small to medium sized firms bottom-lines. As the above info-graphic suggests, significant opportunity exists in getting the left-side of the employer by size distribution curve to better health benefits literacy and to allow purchasing power to trickle down. Small to medium sized businesses are the lion’s share of businesses by volume and represent a significant portion of the employed population in the United States.

Figures B and C highlight why U.S. employers are re-evaluating their health benefits strategy:

Similar to the due diligence that Unshakeable calls for, Health Rosetta has developed a playbook to make sure an employer’s health insurance broker puts the company’s interests ahead of theirs. They even have a formal certification process that health insurance brokers can go through to become a certified Health Rosetta agent. For some perspective, it’s estimated that only 110 out of 100,000 health insurance brokers in the United States were Health Rosetta Certified at the time of that article (February 2019). Early adopters are the visionaries anyways!

Amongst those 110 brokers though are organizations like EPowered Benefits, Employee One, and Bernard Health. They are some of the early birds buying into being a fiduciary of their client’s health benefits selection process. With healthcare being the #1 employer in the United States, our healthcare spending per capita at 2x any other OECD country, and patient outcomes not keeping up with our spend, let’s posit the opportunity for disruption in healthcare benefits spend is ripe.

The question becomes, who can pen a New York Times best-seller outlining the blue print for employers to work with fiduciary vs. suitability standard health insurance brokers? And just as important, who can do that and have the clout of a Tony Robbins to get consumer protections put in place for employers as they choose their benefits packages? For now, check out Health Rosetta’s website, certified agents, and disclosure forms to help verify that your health insurance broker follows a fiduciary vs. suitability standard.

To capitate or nah, that is the question!

One look behind the curtain of organizations like ChenMed, Iora Health, and Oak Street Health and the signs of disruption in the way that healthcare is delivered permeate. To start, they don’t employ billing staff and every patient has a multi-disciplinary care team assigned to them. Appropriateness of care and waste are two concepts that can be cast across healthcare systems that are ripe for disruption. Our steady trend towards healthcare consuming 20% of U.S. GDP creates a necessity to act and the aforementioned organizations serve as testaments to that end. Healthcare Centers of Excellence (CoE) are not quite part of the mainstream lexicon but they are slowly shaping how employers, payers, and healthcare providers think about delivering services to their patients and employees.

Performance-based, prospective-payment reimbursement models (capitation) push healthcare players to take on risk and establish relationship-based approaches to care delivery. When this concept is addressed correctly, quality care at an affordable price becomes a natural by-product. And surprise, behavioral economics suggests that up-front payments with strings attached can have greater impact on behavior (appropriateness of care and waste) than retrospective adjustment of Fee-for-Service (FFS) payments. Incentives, baby!

Relationship-based healthcare puts a patient’s health literacy at the center of the patient experience as much as the clinical outcomes. When patients are engaged not only within the four walls of an organization but more importantly the 95% of time they spend outside of the organization, a rising tide lifts all boats. Multi-discipline teams increase medication adherence, care plan understanding, and the social interactions of patients during their activities of daily living. Further, relationship-based healthcare creates group consensus in the decision-making process for individual care protocols, a.k.a. appropriateness of care. 

HMOs of the 1990s, the Affordable Care Act (ACA) in 2010 to include Accountable Care Organizations (ACOs), and MACRA through the vehicle of Alternate Payment Models (APMs) circa 2015 have all been jockeying towards better care at a lower cost. While the concept of capitation is not new, the data are now at a scale and quality to bear out best practices for delivering capitated models in a durable fashion across many healthcare settings. However, when you drill down a couple of layers into these data lakes, it’s clear that not every healthcare delivery network is created equal. Physician-led APMs tend to provide quality care at a lower cost because of their ability to shop around for the best referrals, cheap diagnostic testing, etc. Hospital-based systems on the other hand tend to reduce their top-line revenues by providing patients options outside of their health system, especially when they are Clinically Integrated Networks (CINs). APMs have a tendency to be zero-sum games for hospital-based providers.

CMS’ program make-up highlights some of these structural challenges; over 70% of ACOs across the country are still operating in up-side risk only payment models and hospital-led ACOs make up the majority of ACOs nationwide. Upside-risk only models take on the benefits of a risk-based contract without the liability of over utilization or under-performance. In essence, not only do the majority of hospital-based systems reduce their top-line revenue by participating in ACOs and APMs, the incentive structures (risk-based models) are not properly aligned to create behavior change. One look at the fact sheet below provides very compelling context:

That being said, primary care is the foundation of a successful ACO. As such, hospital-based systems have been acquiring primary care groups at an unprecedented pace since the passage of the ACA. Given that most estimates peg about 75% of our healthcare spending on chronic conditions, primary care was a logical place to start disrupting care delivery models.

Research from McKinsey suggests there are several variables that interweave to create effective APM organization structures. The following are some of the high-level tenants:

  1. Density and scale
  2. Strategic leverage
  3. Skin in the game
  4. Focus on the forest rather than the trees
  5. Calibration of risks and rewards
  6. The right mix of incentives, motivation, and feasibility
  7. Accounting for consumer behavior

Outpatient healthcare providers are inherently afforded more autonomy and flexibility in creating networks of care extenders that create care plans down to the individual level. That extensibility is what allows community-based physicians to build competencies around the tenants that McKinsey and Co. suggests vs. hospital owned groups. To boot, behavioral economics in the form of prospect theory and loss aversion are subtly working against the adoption of these models within the hospital system space. I would be re-missed without acknowledging the work of some organizations that have made fully-capitated models in hospital-based systems a badge of honor. At the tip of the spear, Kaiser Permanente. There are very prominent institutions right behind Kaiser as well and these crowds are delivering healthcare the right way in one of the most complex systems know to man.

Getting a nudge from some of the larger employers in the United States certainly doesn’t hurt. Both GM and Wal-Mart know a thing or two about cutting out the middlemen that we touched on in our last post. As more large employers are beginning to contract directly with CoEs and push healthcare delivery networks towards full-capitation, CINs are looking towards the Kaiser’s of the world to understand how they’ve been able to effectively deliver fully capitated care. Show me the data!

With data now at a point where Metcalfe’s law can stratify capitation-based best practices across organizations interested in taking on risk, is it any wonder that organizations like United Healthcare now own the actual healthcare providers? If insurance companies core businesses can be completely cut-out of the equation, they have to reinvent where they fit into the supply chain.

Ultimately, critical mass is the key to capitation becoming the disruptor that our healthcare spending needs. By directly contracting with health systems, employer-sponsored health plans can let the gravity of their critical mass (155 million Americans) naturally wring out waste and use multi-disciplinary teams to evaluate the appropriateness of care through the vehicle of capitation.

The pharmacy benefit manager and private equity firm will see you now

The #1 cause of personal bankruptcy in the United States is medical debt and healthcare is officially the largest employer in the United States of America. When anyone with a heartbeat can take on a mortgage or apply for a college loan, bubbles happen. Similar to the principles that underlie The Giving Pledge trying to stem the tide of inequality, it is going to take that kind of power to change the entrenched interests of an industry like healthcare. In this article we will explore those challenges in-depth and more optimistically in part II of this series, shed light on the delivery reform and cost containment measures that are offering hope.

U.S. healthcare is marching towards $4 Trillion (with a T) in annual spend. The market forces at play are unique to only healthcare. In 1966 (the year of Medicare’s inception) every Medicare beneficiary was supported by roughly 4.6 workers. By 2030 that number will be roughly 2.3 workers per beneficiary. To boot, 10,000 baby boomers are coming onto Medicare’s bankroll every day for the next decade or so. On one side we have the second largest generation of American patients (baby boomers) retiring at an unprecedented clip and living longer than ever. On the other side, pharmacy benefit managers, private equity firms, health insurance companies, and even healthcare delivery systems are catalyzing healthcare spending growth. This is happening through ambiguous pricing structures and kickbacks for everything from medications to out-of-network service coverage.

The aforementioned pharmacy benefit managers (PBMs) are significant players in a big cost bucket of healthcare expenditures, medication formularies. PBMs act as intermediaries between drug manufacturers, health insurance plans, and employers. Imagine an employer having to understand not only the patent schedules of particular compounds but also the dosing and utilization of those compounds within your employee/patient populations in order to negotiate your prescription costs. To be sure, not every PBM acts like Bernie Madoff. In theory, they provide leverage to employers during negotiations with manufacturers by using their knowledge of patent and utilization data to negotiate better drug formularies.

Because of the ambiguity of the above process, check out this website and this recent NY Times article for some moral hazard. As with any oligopoly, the heart of the issue is around the system that has evolved and incentives being in the wrong places.

At the same time, private equity firms are scooping up healthcare providers and vendors alike. Three of the physician practice marketplaces largest EHR software providers (GE Centricity, Athena Health, and Greenway Health) are now owned by private equity firms. Starboard Value forced its way into one of the largest hospital medical records providers board room this past April, Cerner. Within the healthcare delivery space, 3 private-equity firms own 2/3 of all emergency airlift helicopters in the United States. It’s one thing to create efficiencies and another to control the supply chain of life-saving transportation options. This issue is like the aforementioned drug manufacturers who corner the market on specialty drugs for rare diseases. Supply and demand, baby!

To compete, healthcare systems are consolidating patients’ options for care delivery. One key metric that epitomizes this consolidation is the rise of hospital discharges attributed to individual health systems in small and medium metropolitan areas. There has been an aggressive uptick with a select few organizations managing the bulk of discharges in defined geographies over the past 20-30 years with no indication of those trends slowing. Further, it is not only horizontal but also vertical consolidation that is taking place. Vertical consolidation allows health systems to realign their revenue streams throughout the healthcare supply chain as patient preference for place of service shifts along with technical capabilities to outpatient settings. Outpatient settings generally provide more affordable care across a number of procedures and with hospital margins where they are, new revenue streams are critical to long-term viability.

The final cost bucket covered here are the health insurance plans and brokers that mediate insurance between employers and health plans. Health plans as a result of the Affordable Care Act have to get creative to increase revenue in order to operate within the Medical Loss Ratio. Health insurance brokers operate as middlemen between the health plans and employers. They act as advisers to employers shopping for health insurance for their employees. This system has created an environment where price gouging by both parties ultimately lands at the feet of insurance premiums. With 50% of health insurance coverage in the U.S. being employer-based and employer premiums rising 5% like clock-work, we will cover how these aspects of the system can be disrupted in a future post.

These broad systems are creating the confounding factors playing into the steady march of healthcare towards 20% of U.S. GDP. Always start with the bad news first. In a previous post, we posited the impact the Medicare Advantage model is having on the health and well-being of patients within the Medicare system. In part II of this series, we will unpack the viability of fully capitated payment models and also how organizations such as ChenMed, Oak Street Health, and Iora Health are using those models to deliver effective care.

Finally, blaming the people who operate within the systems that have evolved is a fool’s errand when you are trying to create change. Challenging the systems and incentives that are in place that allow for capitalism to run free in a system that is built upon the mantra “First Do No Harm” is a much better approach. The amount of information that’s come online in the healthcare space in the past 15-20 years has created an enormous opportunity not only to manage disease better but also identify areas of waste, a la 46Brooklyn. A parting thought, when the largest retailer in our country finally stands-up and calls people to the mat on gun control, it’s amazing how people start to listen. Who is going to take that stand in the healthcare space?

P.S., The Price We Pay is set to hit the shelves in about a week and does an Unshakeable like job of educating people on where healthcare originate and the models of care that are providing optimism for affordable and quality care. That book, this podcast, and my current occupation are the foundation for the content of this post. Lastly, if you are a small to medium-sized business trying to manage how to find quality and affordable healthcare for your employees, check out Health Rosetta to find an independent insurance broker.

Why are self-pay charges still a black box?

Recently, my significant other got into a grappling match with my power drill. Let’s just say, drill bit-1 and wife-0. This piece is a bit more opinionated and much more personal than usual (I hope). With both HIPAA and current employment in mind, let’s tap dance into describing an emergent healthcare experience and offer some context for making that experience one to remember.

We are very fortunate to have a collection of 4 small to medium sized healthcare providers in Atlanta (Emory, WellStar, Piedmont, and Northside) that obligates those providers to offer great care at a competitive price. The Atlanta healthcare market represents capitalism at its finest. At the facility we attended, we were treated promptly and discharged with a few stitches and a wounded pride within about 90-minutes. This aspect of the experience put on full display the beauty of American healthcare. You have an emergent event, you are seen promptly, and discharged with no complications. Thank you EMTALA and not living in Canada, ay!

Our family (2 humans, 2 canines, and a feline) is part of the generation that can take a chance on a High-Deductible Health Plan (HDHP) coupled with a Health Saving Account (HSA). That decision necessitates choices about how we get care and ultimately pay for that care. This was not a life or death situation so we could make those logical decisions. With that in mind, I asked our patient care coordinator for an estimate of our charges and what the cash price would be as opposed to going through insurance. We are fortunate not to have chronic illnesses currently and do not anticipate hitting our deductible for this year, the main driver for choosing a HDHP with an HSA. The estimate we received was given after all services had been rendered and we were preparing to walk out the door. See Exhibit A.

Exhibit A

Fast-forward a week, after proactively reach out to the billing department to settle our debt, the challenges associated with navigating our healthcare system came front and center. The front-line billing associate I dealt with obviously wanted this task off of her desk and it’s tough to blame her. Her task queue fills up with or without our emergent healthcare event. Unfortunately for her, the difference between the point of service estimate we received (after services were rendered) and the final charges was materially different. Like a 54% difference along with a slew of changes to their initial coding scheme. See Exhibits A and B.

Exhibit B

Thankfully, the art of negotiation is alive and well in the American healthcare system, especially as a self-pay patient. When you walk-out the door as a self-pay patient, hospitals expect to receive about $.20 for every $1 that is owed. This might be not be obvious to those who do not live and breathe healthcare but every hospital bill you receive is up for negotiation as a self-pay patient. They are for those that are insured as well but that’s for another conversation. The bottom line is that hospitals welcome the opportunity to get $.25 on the dollar for that $23-dollar Ibuprofen tablet (See Exhibit B).

Why does the process of getting accurate information have to be so painful though? As the first generation tasked with truly bending the cost-curve through vehicles like HDHPs, how can healthcare organizations provide the same value in experience as the monetary value that we provide once the bill comes? If a healthcare system charges a premium ER visit for 6 stitches and some OTC pain meds, then make the self-pay patient experience as seamless as possible.  

Something to consider, retail health clinics are simply going to create the infrastructure to capture these minor emergent event revenue streams if consumer preference and transparency are not being met in the traditional healthcare setting. It’s similar to how Athena Health and several other web-based, ambulatory electronic medical records providers came in and turned the Nextgen and Allscripts licensing-model worlds upside-down. Scale your strengths until the entrenched competition has to pay attention and by the time they do, it’s typically to late.

So, the last mile for hospital organizations is creating transparent communication before, during and after care is rendered. Healthcare has a vast supply of checklists for their staff to follow, as they should. Whether it’s pre-op, post-op, dietary restrictions, ADEIT, etc, etc. What about a checklist for patients and patient care coordinators in minor, acute healthcare events?

How can we align agenda’s better and help to create a little more health literacy out there?

Maybe this is a start:

  • Explain the impact of going through insurance and not going through insurance
  • Explain what charges, if any, could potentially spring up from the event post-discharge  
  • Follow-up with the patient to understand how they are doing (crazy concept):
    • Are they in pain?
    • How are the stitches holding?
    • Does the hospital think follow-up visits will be necessary?
  • Recommend signing up for your patient portal (I’ll refrain from mentioning vendors because that cuts the list of the aforementioned health systems in half. 2 run Cerner and 2 run Epic).
    • Patient education around acute foot lacerations
    • Access to the X-Rays that we paid for
    • Electronic copies of our bills
    • Medication refills, as/if needed

Could we find the billing manager or director of revenue cycle services at this organization and make the case that we should be billed at a level 2 visit? Sure. Could we find the ER manager and discuss the lack of transparency into their existing processes for minor acute care events? Maybe this post is that vehicle. Time is a finite resource and the amount spent lobbying to have our bill changed would undoubtedly end up costing more than the bill itself. That is not the point for us, thankfully.

It’s fantastic that healthcare organizations are beginning to inject patient care coordinator resources into the point of care. One more checklist and some training on the patient personas that will inevitably walk through your doors will create a better experience for your consumers. Imagine this, one of our canine’s cut his ear three weeks prior to my wife’s event and that required stitches as well. Our veterinarian team followed-up with us 3 times after his procedure to check on Beck. Next day, 1 week, and 10 days post-op. All that for our dog and $500 which included a teeth cleaning! We are still waiting on a phone call from this local healthcare provider to ask us how we are doing.

A case for blockchain, and ADEIT:

Why is it that black hats are happy to hand over our healthcare data in exchange for Bitcoin? There is probably utility in understanding why the people stealing our healthcare data leverage blockchain technology as a mechanism for capturing revenue for their “services”. And if data breaches don’t justify the means, how about our ability to make quality healthcare decisions? As the health IT ecosystem pulls structured information out of unstructured narratives to support a variety of analyses and user needs, a format for such metadata context will prevent information loss that can hamper the completeness clinicians need for sophisticated decision-making. In a previous post, we covered the centralized databases that house patient information across our healthcare system. Now that we have over 95% penetration of Electronic Health Records in United States hospital settings, what technologies exist to exchange health information more effectively from those centralized systems and what are the higher order consequences of the technologies that will allow us to do that?

The Office of the National Coordinator (ONC) laid out a 10-year roadmap in 2014 that established some of the major guard-rails for healthcare data exchange to be successful in the United States. From HITECH through the 21st Century Cures Acts, the standards being mandated to allow for data exchange across provider organizations are becoming more unified, thank you Graham Grieve. Direct Transport Protocol is a standard that health information platforms allow for Consolidated Clinical Document Architecture (C-CDA) exchange between provider organizations. It’s a mandate by ONC at this point. However, the ultimate owners of healthcare data have no consistent means of managing their healthcare information across the healthcare continuum. What technologies will allow us to begin shifting workflows with the patient at the center?

The opportunity for immutability, availability, and security are tremendous with blockchain. From micro-payments to credentialing services, the information that a payer, provider, or patient needs to effectively communicate and manage care can be facilitated through blockchain technologies.

Let’s take the patient experience for example. Health literacy and care plan understanding are two of the biggest drivers of an overall healthcare experience. Said another way, information is the most critical driver of our overall experience. Removing barriers for patients to focus on getting better as an experience only benefits providers if by nothing else than the contracts they’ve absorbed from payers. From HCAHPS to CGCAHPS, ADEIT is not just lip-service within the core values of healthcare providers nor their reimbursement models. Blockchain can facilitate access to information that will push our outcomes more in align with the goals set out by MACRA and the lot as a result of better patient experience. 

For providers too, wouldn’t it be cool to verify your credentials across healthcare organizations with a couple of clicks? What about reducing the friction of enrolling every single provider across 20 different health plans? Revenue Cycle Management (RCM) providers offering credentialing and enrollment services would be able to leverage provider data across insurers instantaneously. Oh, the humanity!

Quietly, there are organizations recognizing the importance of planting the seeds for this technology to be leveraged at scale in the future. Zocdoc allows end-users to quickly find real-time appointments with providers in their surrounding areas that accept their insurance as “in-network”. We go to the movies and have Uber pick us up at pre-scheduled times, why not healthcare too? The Synaptic Health Alliance is moving towards Provider Data Management (PDX) as a stepwise function of this kind of technology. And, even HHS is running some versions of this technology for contract procurement processes within their HHS Alternative initiative. Along these veins, the down-side risk of instituting blockchain within procurement processes, provider data management, and patient scheduling is a strategic glide path to patient and provider generated health data.

First do no-harm, that is why the aforementioned processes are ripe for innovation through blockchain. Additionally, the pure economics of this technology make a tremendous amount of sense. Talk to any healthcare CFO in the country and reducing labor expenses is probably at the top of their list. Considering hospital labor expenses make-up over 50% of most hospitals’ budgets, it’s a fair place to evaluate. The bottom-line is the opportunity to reduce frictional healthcare expenses is immeasurable with blockchain. This is where higher order thinking really becomes part of the conversation though. After all, being both productive and humane is a very delicate balance in the healthcare arena.

Finally, blockchain technology affords us the flexibility to phase in adoption across siloed processes, a la PDX. Higher order thinking on the downside should be centered around topics like; the data requirements to communicate a patient’s longitudinal health record given the energy consumption to verify new hashes today. Ensuring privacy within private blockchains let alone public ones and verifying the accuracy of new transaction data, to name a couple more. These concepts and others are critical to administering a blockchain based on integrity. Let’s do it right the first time. How about it Meaningful Use?

So, what is the most extensible, backwards compatible, and cost-effective of the current technologies to begin building our nation’s public and private networks? This crowd takes a pretty good run at which specific type provides us the most leverage long-term. To bag a line from someone that actually has something to say (If Pulp Fiction isn’t in your top 5, we should talk), information is really the only difference between our experiences in the world.

Office of National Coordinator, can we get a blockchain?

In 2008, 9% of US Hospitals had some form of an electronic health record system (EHR, EMR), today over 96% of US Hospitals have an EHR system. The arms race in healthcare information technology adoption since The HITECH Act has created a patch work quilt of systems to communicate our nation’s healthcare data. The double edge sword of a free-market system. This is not much ado about nothing, it’s critical that patient’s and providers can effectively communicate and access their health information. To be sure, we’ve come further with clinical data capture and exchange in the past 10 years than anytime since the days of Hippocrates. Our pre-eminent challenge in 2019 is the extensibility and backward compatibility of the software technologies underpinning our current healthcare systems. The frameworks some of these programs were built on are literally from the 1960’s. Blockchain technology as a concept (decentralization) only makes sense given the time sensitivities of emergent healthcare events alone; however, second and third order thinking is critical to executing the implementation of this concept into healthcare.

EHR software in healthcare today operate more like North Korea than they do Switzerland. So, is it even realistic to begin incorporating a decentralized model into ever-expanding workflows dependent upon centralized models? To centralize or decentralize, that is the question. Cerner and Epic dominate the large health system EHR space with Epic specifically starting to sink its teeth into the lion’s share of new adoptions. The interesting part of this is our nation’s defense systems (VA and DOD) will be working on their $16B adoption of Cerner’s health records over the next decade or more while the rest of the major free world hospitals seem to be looking towards Epic. There are others that operate in the smaller hospital marketplace, but most hospital beds in the future will be covered by Cerner and Epic. Given those centralized databases are not going anywhere for the foreseeable future, the interplay here has to be the middleware systems (Redox, Crimson, Mirth, etc.) that are the plumbing for these disparate systems interactions across the U.S. healthcare ecosystem.

Another feather in the blockchain cap, innovating for usability is not the only place that healthcare research dollars are required to be spent. Vendors not only have to develop towards the most productive workflows for end-users but also adhere to the ONC/CMS standards (MACRA, HIPAA, LOINC, ICD, etc.) for privacy that are imposed upon them, and for good reason. Unfortunately, the certification criteria alone for EHR and complimentary systems have taken immeasurable human capital (Google Physician burn-out coinciding with onerous EHR workflows). Talk about unintended consequences! Blockchain as a technology offers significant benefit to managing the integrity of our healthcare information. Having instantaneous access to an immutable account of your longitudinal history through a token or the like is akin to how our banking system operates today. What’s a guy got to do to get a stateful piece of end user software around here?

Here is the uptick, the FAANG gang and the like are looking towards this massive part of our nations GDP as an opportunity, as they should. While it’s certainly been tested before, the HITECH Act has finally created the opportunity for some of the most effective business operators in human history to start accessing, aggregating, and stratifying personal health information across the United States and other developed nations.

Several EMR vendors are creating marketplaces to open their software packages up to third-party developers to create tools for patients and providers to gain better access to information. It’s a start. Think of these marketplaces like you would your iTunes or App Stores. To be sure though, like the limitations that any oligopoly imposes on consumer marketplaces (think Microsoft, Android, and iOS restrictions), these organizations filter third-party app developers access accordingly.

Salesforce is highly touted as the world’s #1 CRM, which it is. Amazon is the world’s #1 e-commerce retailer, which it is. These same organizations though are quietly starting to build enterprise healthcare software systems and infrastructures for managing vast amounts of healthcare operator’s business processes. There is no reason to think that these organizations cannot continue to innovate and impose their will on the healthcare ecosystem. Apple in its own right is making access to that information easier than ever before for end-users and will only continue to drive the socialization of personal health information through its applications. Today, there is no for our health and wellness data. Who is going to be the first organization that begins to think outside the box and deliver an aggregated longitudinal history to our mobile devices?

Blockchain technology provides a host of pros and cons. We will dive into those aspects in part II of this series on the current and future states of technologies that are enabling healthcare information exchange. From data availability, Patient-Generated Health Data (PGHD), and immutability to voluminous clinical data, verification of new transactions, and privacy. Thank you, General-Data Protection Regulation.

The concepts that define block-chain are nowhere more critical than in our nation’s healthcare system and it’s going to take the likes of the FAANG gang to revolutionize how we manage and exchange our personal healthcare information. Let me leave you with this, there is a high degree of probability that my most personal information was one of the 80 million or so records that Blue Cross decided to dump into the stratosphere in 2015. Throw some credit monitoring and credit freezes into the mix and we’re back in business though. So, at this point, why can’t we just allow consumers to use the tools that we use for all other aspects of our lives to more effectively manage our personal health information?

Why can’t all health plans pick us up and take us to the gym?

If we look at the bell curve of adopting healthcare delivery models in the United States, rest assured we are still early adopters of the quality variety in 2019. Take the Medicare Access and Chip Re-Authorization Act (MACRA) which has been the flavor for Medicare Part B’s quality reimbursement programs since 2015. The Merit-Based Incentive Payment System (MIPS) and Alternate Payment Model (APM) are the two reimbursement tracks within MACRA that have emerged as the primary payment mechanisms of Medicare Part B services. Roughly 45% of all Medicare spending comes from Medicare Part B so the implications of the success of its delivery systems cannot be overstated. Picture this though, the same people that quizzed Mark Zuckerberg about privacy concerns on those congressional committees are from the same cloth as the ones who helped construct our existing healthcare delivery models and are creating the frameworks for future healthcare delivery.

Kahneman and Tversky would unduly appreciate the fallacies that operate within the regulatory bodies that design, create, and manage these programs. However, there is one Medicare delivery system that is gaining momentum and look no further than our friends in the Little Havana region for a picture of that model working well. Medicare Advantage (MA) enrollment has doubled in the past 10 years without as consistent of a change in nomenclature as its Part B brotheran (See the evolution of Meaningful Use if you have interest). Could the MA model’s architecture be the blueprint for future healthcare interactions across consumers, payers, and providers? 

Medicare Advantage plans are capitation-based models that operate within a finely defined demographic of Americans. Despite Medicare Advantage being a supplement to traditional Medicare, three major players and several others provide Medicare beneficiaries coverage from the private industry. To be sure, a single payer healthcare system is very difficult if you are looking to retain efficacy, competition and openness in the marketplace. The healthcare operations within states, payers, and healthcare systems are successful based on a significant amount of regional and local dependencies. Side note, blockchain stands to be a boon to the healthcare industry if we can pull the nation’s healthcare backbone software languages into this century. But I digress.

Coupling the rise of electronic clinical documentation with a litany of reimbursement models has created one of the largest randomized trials on healthcare outcomes in the history of man. Now that Electronic Medical Record Systems abound in the U.S. healthcare system, the network effect and aggregation theory are reducing the asymmetry of effective models for managing populations. These evolutions have prompted employers and health systems into realizing the significant power they possess, supply and demand. So, where is all this going?

We are in the herd adoption phases of healthcare organizations recognizing the value of the data that they own. Why else is the rise in data breaches so exponential? While protecting patient information is critical, executing on leveraging that information to administer better and more cost-effective care is still very much in the early adopter phases. Look no further than the relationship between record labels, Spotify, and Spotify’s subscribers for an analogous scenario to summarize what the majority of healthcare payment models still represent.

On a micro-level, consumer spending power is aggressively increasing as we become more liable for costs through High Deductible Health Plans. I’ve previously mentioned that some healthcare organizations are aggressively skating towards NPS scores and the consumerization of healthcare. As healthcare provider outcomes data continues to come online through an internet connection near you, the power consumers have over understanding who their healthcare providers are, what their track records are, and where they get their care grows every day. As these market pressures continue to collide, our examination of the overall healthcare experience will only increase.

As an aside, the cost buckets that make-up our healthcare delivery system will start to encounter literate healthcare consumers, oh my! To that end, at the top of the list of scrutinized cost buckets should be our good friend, The Medical Loss Ratio (MLR). I am not saying Martin Shkreli is operating our countries health plans, but to say that health insurance organizations could also use a nudge towards humanity would be an understatement. In time, private insurance companies will have no choice but to toe the line on profitability.

The Medicare Advantage model is showing promise operating within those market pressures of consumer preference (demand), services and data (supply). By engaging patient populations, producing quality outcomes, and bending the cost curve, these plans are able to provide dental care, gym memberships, transportation, human interaction (what a concept), healthy food options, etc. Those social determinants of health that were neglected for so long yet are proven to be more magnitudes more impactful on healthspan than actual medical care. Quality experiences and value-added benefits create brand awareness that foster mindshare. Take Uber and Lyft for instance, what percentage of people pick up the phone and call a taxi anymore? Are the same folks organizing their entire lives electronically willing to continue sitting in waiting rooms for routine, elective, and/or care management services? Mindshare people!

Access to care is still an issue within some of the Medicare Advantage narrow-network plans. However, the amount of data we have and will continue to gather around this model will allow us to evaluate how these value-oriented architectures stress-test at the local and regional levels. Right now, today, healthcare systems have the power to work directly with employers and consumers, cut out the middleman, and offer an uptick in patient experience.

The United States is built on an idea-meritocratic system of innovation. That’s what sets us apart from the rest. Capitalism works when executed effectively and what Peter Drucker said is more applicable to healthcare than any other industry, the goal is to be both productive and humane. Medicare Advantage plans are jockeying towards that balance and health systems are in the catbird seat.

Patient Experience is a real thing, finally

The HITECH Act created an immense opportunity for healthcare providers with the appropriate tools and culture to thrive by engaging with their patient populations. There are example after example where organizations are skating quickly towards who the payor is becoming, the patient. Couple the rise of mobile devices with the advent of organizations like The Leapfrog Group, Accountable Care Organizations (ACOs), and the creation of Health Savings Accounts (HSAs), and it’s now incumbent upon health systems to provide a quality patient experience before, during, and after care. It takes a village to do healthcare right. With the patient quickly becoming a larger payer of the reimbursement pie and Uncle Sam incenting for quality care, the organizations that enable patient satisfaction through quality patient-provider relationships and technology are ultimately the ones who will be rewarded with delivering care in the future.

A quick detour down memory lane. I mentioned previously the HITECH Act, from that was born Meaningful Use (a.k.a., MU or more recently, Promoting Interoperability) and a series of alternate payment models (APMs) which began to aggressively tie reimbursement payments to quality outcomes. Prior to MU, healthcare providers were not required to document patient visits electronically, at least in order to get reimbursed by CMS. So, engaging with patient’s electronically surrounding their care was far and few between dating back to Hippocrates. Rome was not built in a day and to expect that healthcare organizations were going to instantaneously know how to drive patient NPS scores as a result of legislation is crazy talk.

The aforementioned payment and outcomes models have aggressively shifted the business dynamics of healthcare. Patients are becoming more financially responsible for their care through high-deductible health plans (HDHPs) and healthcare providers more financially responsible for reducing utilization. Unfortunately, the data show that financial incentives are a stop-gap measure to prompting engagement in healthcare. Engagement happens when patients and their support systems have consistent lines of communication with their provider, understand their care plan, and can easily access resources for help. The proverbial Nudge towards behavior change.

To be sure, it’s very difficult to do healthcare correctly. Considering the true determinants of health and our health literacy, it’s not hard to understand where the greatest potential for impact rests. However, given the realities of collecting self-pay balances, healthcare organizations are steadily realizing that increasing patient-provider communication, verifying a patient’s understanding of their care plan, and efficiently exchanging medical histories across healthcare eco-system’s leads to higher patient engagement. I pay my bills on time when I understand the costs, quality work is provided, and communication is consistent, how about you?   

Further, it’s clearer now more than ever that healthcare is not immune to consumerization, it just took longer to arrive. If anyone reading this has worked in or is a frequent flyer of healthcare, they know technology adoption happens over longer time periods and information assimilation is more asymmetrical than any other industry. After all, efficacy is pretty important when your outcomes are another person’s life. So, how can healthcare organizations skate towards the rise of the new consumer and payer more effectively?

Providing care to patient’s is the highest of callings and one of the most difficult professions in the world. The relationship that a patient develops with their healthcare provider(s) (Doctor, Nurse, Tech, etc.) is the single greatest driver of their overall experience. By that virtue, culture is the singular most important aspect of any organization’s success. Seth Godin outlines three pillars of being indispensable (Generous, Dignified, and Humane) all of which make-up what anyone should ask for in a healthcare provider, in addition to talent. Side note, everyone is dispensable. Hiring individuals who embrace empathy inherently is critical to creating and sustaining culture. However, hiring for empathy is undoubtedly a very difficult thing to do. Really, how can you measure for something like empathy? Will the New England Patriots please stand up?

The type of care you are receiving also has tremendous impact on the patient experience. Different support systems will be in place for the varying degrees of care provided. I.E., going in for lip injections will not require the same amount of follow-up as say, a co-morbid 65-year-old. Whereas, now that millennials are becoming parents, the requirements on pediatric facilities to take a multi-modal approach to engagement with parents is even more critical. The millennial generation is the first generation to grow-up in the digital era and you can believe the right text message, at the right time, to the right person (a tongue in cheek on a famous healthcare mantra) will continue to evolve and drive patient satisfaction. The quality organizations are those who understand who their patient population is and play into those strengths.

So, culture is a linchpin for creating a quality brand. What does an effective technology adoption strategy look like for engaging with patient populations? As an up and coming consumer of healthcare, it’s unfortunate that HITECH created mismatched agendas and did not require a common programming framework for healthcare software programs from the jump. The nation’s healthcare communication channels (EMRs, HIEs, Patient Portals, etc.) are a patchwork quilt at best right now. However, as I alluded to earlier, text messaging seems to be the most preferred way of communicating with patient’s today. Much like our banking industry allows us to access our money from pretty much any terminal in the country, text messaging is ubiquitous across telecommunications carriers. The question then becomes, how can we take better advantage of the technology that virtually every patient has in their pocket today?

To be sure, there are numerous other quality communication tools built within the patchwork quilt that are paramount to organizations communicating longitudinal patient histories, scheduling appointments, getting consent forms signed, etc. The patient portal is to patient engagement what the glove is to the hand in baseball. And, despite all the misgivings about data-blocking, Epic is really the only EHR vendor that creates a unified patient experience as long as you operate within their community of providers. Other organizations (disclosure, I currently work here =)) have realized the importance of communicating across multiple healthcare eco-systems and developed vendor-agnostic patient portal tools to satisfy that demand.

Building a care setting with healthcare providers that give a darn and are enabled to communicate with their patients efficiently through technology is going to be extremely attractive to the next generation of healthcare consumers. Consumers who will be armed with their own money (HSAs and HDHPs), the best mobile device in history (thanks to Moore’s Law), and are beginning to make-up the largest population of healthcare consumers in US history. So, who is going to create an technology enabled environment with healthcare providers that give a, Nudge?

P.S. I get it, expecting your doctors to be on text threads and monitoring patient communications through portals with every single patient is not realistic. But, that’s why there are 2-3 healthcare workers for every provider in this country.

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