May 31, 2019

The Weekly Gist: The Cernuous Bougainvillea Edition

by Chas Roades and Lisa Bielamowicz MD

You can keep your Kentucky Derby, your Stanley Cup, your NBA Finals. For us nerds, the granddaddy of them all when it comes to tense, dramatic, competitive action is the Scripps National Spelling Bee. And boy, was this year’s event a doozy. Running late into last night on ESPN, the competition ended with an unprecedented 8-way tie for the championship. That’s right, eight kids between the ages of 12 and 14 thoroughly thrashed the dictionary in this year’s 92nd annual bee. For the record, here are the eight words that sealed their historic joint victory: auslaut, erysipelas, bougainvillea, aiguillette, pendeloque, palama, cernuous, and odylic.

But can they spell “healthcare”? (Hint: it’s one word, not two…)


THIS WEEK IN HEALTHCARE

What happened in healthcare this week—and what we think about it.

The Empire Strikes Back, healthcare reform edition

The past few weeks have seen a flurry of activity by policymakers at the state and Federal level aimed at increasing transparency, encouraging competition, and lowering prices for care. There’s new evidence this week that the healthcare industry is not taking these initiatives lying down. The Washington Post on Wednesday reported that President Trump’s planned Executive Order requiring hospitals and insurers to reveal their secretly-negotiated contract rates was met with such ferocious opposition among industry interests that it may be dropped altogether. Both the hospital lobby and the insurance lobby appear to believe that making negotiated rates transparent would cause prices for care to rise, not fall, because all parties will seek to get the best deal being offered by others for the same services. “There is good transparency and bad transparency,” said an insurance industry spokesperson. “This is bad transparency.” Meanwhile in Connecticut, the insurance giant Cigna so stridently opposed that state’s proposed initiative to implement a “public option” plan in the individual and small-group market—reportedly even threatening to leave the state altogether—that lawmakers dropped the plan just a week after agreeing to it. There may be cracks in the industry lobbying front, however—Axios reported today that hospital groups representing rural and safety net hospitals may not join their industry colleagues in opposing calls for “Medicare for All” by some Democratic Presidential candidates. Those providers may stand to benefit from upending the traditional third-party payer dynamic that dominates healthcare. All of this week’s lobbying maneuvers are a good reminder that, for all the interest and enthusiasm among policy advocates for sweeping reform of our ailing health system, industry players have much to lose and can be counted on to fight back when they see their economic interests at risk.

The good news? We’re still #1. Here’s the bad news…

Industry groups hoping to sell the public on the merits of putting the brakes on reform might find an unreceptive audience, according to a new poll by Gallup out this week. For the 48th consecutive time since 2005, survey participants cited healthcare as among their top three financial worries, and for the second time in three years said that healthcare was more of a problem than any other financial concern. Responding to an open-ended question, 17 percent of those surveyed said that healthcare costs were their top concern, ahead of college expenses, housing costs, retirement savings, and taxes. Healthcare has been tied for first in every Gallup survey on the topic since 2014, so it’s little wonder that politicians on both sides are gaining traction with likely voters by promising aggressive measures to address the rising cost of care. As we’ve noted before, the failed attempt in 2017 to “repeal and replace” the Affordable Care Act was the last gasp for the “deficit hawk” framing of healthcare (long favored by former House Speaker Paul Ryan (R-WI) and others), in which healthcare policy proposals were centered around Federal and state budget sustainability. In today’s populist political moment, healthcare has been reframed as a pocketbook issue, and “bending the cost curve” has become a consumer-spending initiative, rather than a deficit-reduction measure. The focus is now squarely on how much consumers pay out-of-pocket for care—an amount that has made healthcare even more worrying to families than high taxes and low wages.

Investing in a new “front door” for patient engagement

Interest continues to grow in new models of primary care delivery that enable greater patient engagement and allow insurers and employers to reduce downstream referral costs. The latest news on this front comes from Nevada, where investor-owned hospital chain Universal Health Services (UHS) has agreed to take a minority stake in Seattle, WA-based Vera Whole Health, a health-coaching and onsite clinic provider that works with employers to better manage employee health. Coupling Vera’s clinic model with its own Prominence health plan, UHS is launching Prominence Care Centers in Reno and Carson City, aiming to “provide a full-service, face-to-face care model that features health coaching and patient engagement while generating healthcare savings”, according to a press release from the hospital chain. UHS operates more than 350 hospitals and behavioral health facilities across 37 states and may look to implement the model beyond its Nevada footprint, according to ForbesWe’re bullish on the idea of health systems building consumer loyalty by investing in robust, membership-like primary care services, particularly when coupled with a risk model that allows the system to reduce unnecessary and costly emergency care and hospital utilization, and instead focus on better care management and care coordination. It will be worth watching to see whether this latest partnership captures that potential, and whether other large integrated systems follow suit.


GRAPHIC OF THE WEEK

A key insight or teaching point from our work with clients, illustrated in infographic form.

The growing allure of hospital employment 

Undoubtedly one of the most significant trends of the past decade has been the steady migration of physicians from independent practice into employment arrangements with hospitals and health systems. The graphic below, based on survey data from the physician recruiting firm Merritt Hawkins, shows why we should expect hospitals to continue to dominate physician employment for the foreseeable future. On the left, results of a recent survey of final-year resident physicians. Over the past decade, the proportion of surveyed residents who expressed a preference for hospital employment grew from 22 percent to 45 percent. Meanwhile, the share aiming to be employed by a group—either single- or multispecialty—went from 39 to 36 percent. The data also show a precipitous drop in resident interest in owning their own practices, either solo or with a partner—dropping from 25 percent to just 9 percent. Nearly all those surveyed preferred entering into salaried employment—not surprising given the burden of medical school debt. But there’s a growing interest in being paid on straight salary, while a shrinking percentage are interested in productivity-based payment. Little wonder that employment holds such allure for new doctors; the data on the right show the starting base salaries for all positions filled by Merritt Hawkins in 2018. Although primary care doctors continue to be paid less than their surgical colleagues (and are over-represented in the survey data), all of these starting salaries are attractive—particularly to doctors who bear substantial educational debt. One cautionary note for doctors looking for secure employment: nurse practitioners and physician assistants increasingly look like a good bargain for employers in the market for clinical talent.


THIS WEEK AT GIST—ON THE ROAD

What we learned this week from our work in the real world.

Losing the race to innovate primary care?

Lisa:
Recently, at a health system’s physician leadership forum, I had a long conversation with a primary care doctor who saw a common thread between my discussion of consumer value and his goal of innovating his primary care practice. This doctor was working to rally support to launch “direct primary care” (DPC) in one part of the system’s market. He had begun to shop the model, in which patients or employers pay a monthly fee for an expanded array of services and access, to a handful of nearby companies. In scoping the services, he found several start-ups who could partner bring DPC to the market but was having trouble finding other health systems who had launched it independently. I also had trouble coming up with a system that had built a DPC offering and was broadly marketing it to consumers and employers. Sure, I could think of a handful of health systems and large physician groups who had partnered with employers to offer onsite care or expanded access, but most of those felt like one-off initiatives. Most of the real innovation in primary care—whether telemedicine-focused offerings, concierge-like services, or care models targeting complex and aging patients—is happening in the start-up sector. While most start-ups focus on one specific segment or service, health systems are positioned to figure out how they can work together to serve different consumer needs, and how to assemble a network that can deliver a range of primary care solutions at scale. But health system primary care innovation is often measured by its performance under current system economics (downstream referrals, stand-alone profitability in fee-for-service payment) rather than its contribution to consumer value and loyalty. Traditional providers who are slow to bring real access and primary care innovation to market run the risk of losing patient relationships to disruptors and competitors.

Should our health system start an “innovation center”?

Chas:
In two separate conversations this week with health system executives, the topic of how to kick-start innovation has come up. I’m sensing growing frustration among hospital leaders, who are finding it difficult to move their organizations past traditional fee-for-service models and recognize that the risk of being disrupted by non-traditional entities is real. The question I’m hearing is: what’s the best organizational model for “self-disruption”? In particular, there seems to be some interest in starting separate “innovation centers” or “innovation hubs”, located outside the management structure of the traditional health system, with free rein to pursue new clinical and payment models, partner with innovative start-ups, and figure out what solutions hold most promise for the future. In some cases, these “skunk works” units are even charged with a venture capital-like role, investing in small start-ups that might eventually be acquired by the health system or taken public.

There’s something to be said for carving out space for experimentation and innovation, to avoid the risk of new ideas being smothered by the inertia of the larger organization. But I have a different concern, something that I’ve seen play out repeatedly with these off-to-the-side innovation centers. When a new idea is vetted, developed, and ready to “import” into the traditional health system, something gets lost in translation—operators in the health system’s business units don’t know how to fit new technologies or care models into their existing way of doing things. Innovations seem to “appear out of nowhere”, and their adoption is often resisted by those in the “real business”. (In particular, the fatal moment for new innovations is often when it comes time to ask doctors to change the way they practice.) Rather than develop innovations outside the business, I’d prefer an approach that builds innovation into the day-to-day work of traditional operators. Follow an 80/20 rule: keep 80 percent of processes, accountabilities, and incentives the same, but carve out 20 percent of operators’ roles for developing innovation inside their business units. “Growing” innovative ideas in the field, rather than in the contrived, laboratory-like setting of an innovation center, seems a better way of ensuring that new approaches are implementation-ready, and not doomed to remain interesting experiments with no real impact on the larger business.


ON THE GIST TURNTABLE

Give this a spin, you might like it.

“A maximalist Brian Eno for the medical marijuana age” is what Rolling Stone recently called Stephen Ellison, better known as Flying Lotus. That’s as good a description as any for the musician/producer/rapper/auteur from Los Angeles, who sits at the center of a loose network of beat culture innovators, connecting artists from Kendrick Lamar to Thundercat to Kamasi Washington. FlyLo, as he is sometimes known, is out this month with his sixth studio album, a sprawling, David Lynch-inspired fusion of free jazz, electronica, and hip hop entitled Flamagra, and it’s another whirlwind aural tour around the brain of one of the 21st century’s unique musical geniuses. Weighing in at nearly 70 minutes, the album is a 27-song flipbook of sounds, beats, raps, and sketches, with guest work from Solange, George Clinton, Anderson .Paak, and Herbie Hancock, along with longtime FlyLo collaborator Stephen Bruner (Thundercat). While not as propulsive as his 2014 release You’re Dead!Flamagra rewards repeated listens, and is best taken in as one, coherent statement. Ellison is the grand-nephew of free jazz legend Alice Coltrane, and this latest release builds the case for his body of work as a continuation of that legacy, updated for the hip hop era. Best tracks: More (feat. Anderson .Paak); Black Balloons Reprise (feat. Denzel Curry); Post Requisite (fair warning: surreal, NSFW video).


WHAT WE’RE READING

Stuff we read this week that made us think 

A jarring report on a children’s heart program 

Since 2016, pediatric cardiologists at North Carolina Children’s Hospital have questioned the hospital’s cardiac surgery outcomes, asking in department meetings, “Would I have my children have surgery here?”, while still referring patients to the program, according to a must-read New York Times investigative report. The thoroughly-researched investigation uncovered a pattern of poor outcomes, lack of transparency, and inaction by hospital leaders—much of it substantiated by secret recordings made at department meetings. The hospital’s cardiac surgery program, part of Raleigh, NC-based UNC Health Care, continued to operate for years despite concerns about safety, junior surgeon turnover, low volumes and lack of resources. (The hospital does not have a cardiac ICU or a cardiac intensivist.) The program’s mortality rate appears to be more than double that of the average pediatric cardiac surgery program. But the hospital is one of a small fraction of programs that does not submit data to the gold-standard Society of Thoracic Surgeons (STS) outcomes registry, so actual performance over time is not publicly known—nor was it made available to inquiring referring cardiologists.

The situation at UNC highlights structural issues endemic to healthcare quality and safety, perpetuated by a defensive culture and a flawed payment system. UNC administrators failed to follow through on promised safety investigations, and implicitly threatened staff cardiologists who considered referring elsewhere with staff cuts, should surgery volumes fall—creating a culture in which speaking up in the face of serious quality concerns is frowned upon. Compare this to the culture of the Toyota Production System, where any concerned worker can stop a production line if serious problems occur. Or commercial aviation, where recently all Boeing 737 MAX planes worldwide were grounded until their safety could be ensured. Further, despite research showing a strong correlation between program volume and outcomes, hospitals are reluctant to walk away from low-quality, high-margin lines of business—even if lack of scale jeopardizes outcomes. According to the Times, two-thirds of all pediatric cardiac surgery programs operate within 25 miles of another similar program. It takes a population of 500,000 people to provide enough volume for one pediatric cardiologist—and several of those are required to support one surgeon. Regional centers of excellence that put safety and quality ahead of institutional prestige and financial performance should be the norm, especially for programs that require very specialized expertise.

Price discrimination on aisle two

Most parents of small children would tell you that there is one Tylenol (acetaminophen) product for infants and a different one for older children. But a story on NPR reveals that these two varieties of Tylenol are exactly the same medicine, at the same concentration, put into two different bottles—but sold at dramatically different prices. Infant Tylenol was three times more potent than the children’s version until 2011, when the formula was changed at the urging of the Food and Drug Administration to prevent overdoses. Today both versions contain 160 mg/5 ml of liquid Tylenol. But the price differential remains: Infant Tylenol is now sold at $4.99 for a one-ounce bottle; the children’s bottle also costs $4.99, but for four ounces of liquid. A company representative justified the 300 percent price difference as due to a harder plastic bottle and dosing syringe for the infant version (unlikely, as a quick Amazon search shows that a similar oral syringe costs a mere 11 cents). There is no special dosing information on Infant Tylenol either. Both versions say to “ask a doctor” for children under 2. Johnson & Johnson, the maker of Tylenol, has gotten away with blatant overcharging for nearly a decade, showing just how difficult healthcare prices are for consumers to evaluate—even for the simplest things. When it comes to our health, or that of our children, most of us are just in the habit of following labels and instructions, and not asking questions.

Sorry, but there’s no magic to 10,000 steps a day 

Though we have long relegated our Fitbits to a dusty drawer, there was a time when we walked around aimlessly in the evening in pursuit of that magical 10,000 steps per day. It turns out that goal wasn’t based on science at all, but instead had its origins in a marketing campaign for a Japanese pedometer. A new paper in JAMA attempts to actually measure what level of step activity is needed to increase longevity, evaluating four years of pedometer data from over 17,000 older women (average age of 72). Researchers found good news for those of us who have trouble hitting the lofty 10,000 step goal: participants who walked an average of just 4,400 steps per day had 41 percent lower mortality compared to those who walked an average of 2,700 steps. There was a further steady decline in mortality up to approximately 7,500 steps, after which gains tapered off. While it’s hard to argue against physical activity, the 10,000 steps goal is an example of pseudoscience that has been perpetuated by media, fitness gurus, and healthcare organizations, with insurers like UnitedHealthcare even incorporating it into their benefits plans. The goal can be frustrating for individuals who can’t regularly hit it, often leading to less activity rather than more. While the new study is far from conclusive, activity programs oriented around lower levels of moderate activity likely present a better option for improving the health of a population.


Thanks for taking the time to read this week’s edition! No matter how busy the week, or what else we have going on, it’s always the highlight of our week to write the Weekly Gist for you, and to hear your comments and suggestions. So keep them coming! And if you’re so inclined, please share it with a friend or colleague and encourage them to subscribe.

And of course, let us know if we can be of assistance in any way. You’re making healthcare better—we want to help!

Best regards,

Chas Roades
Co-Founder and CEO
chas@gisthealthcare.com

Lisa Bielamowicz, MD
Co-Founder and President
lisa@gisthealthcare.com