January 11, 2019

The Weekly Gist: The Mirror in the Bathroom Edition

by Chas Roades and Lisa Bielamowicz MD

We’re back! After a much-needed break, we’re so excited to pick up where we left off and return to the regular Friday routine of the Weekly Gist. But the year is off to a strange start. As day 20 of the government shutdown draws to a close, Washington is an eerie place to be. Many of our neighbors are stuck at home and missing paychecks, and our morning commutes have become unsettlingly speedy. We hope an end is in sight.

Even the news in healthcare seemed slower than usual, but that could just be the “JPMorgan effect”—all the newsmakers busy swapping business cards, doing deals, and having meetings…in hotel bathrooms?

Wow. Hope everyone had a great time.


THIS WEEK IN HEALTHCARE

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

The next era of healthcare reform begins in earnest

Democratic policymakers across the country kicked off 2019 with a flurry of new proposals to build on their healthcare momentum coming out of last year’s midterm elections. In Congress, newly-elected Speaker of the House Nancy Pelosi (D-CA) signaled her intention to hold committee hearings on the several variants of “Medicare for All” being proposed by Democratic lawmakers, while the incoming chairman of the House Budget Committee, Rep. John Yarmuth (D-KY) formally requested that the Congressional Budget Office (CBO) provide analysis of single-payer reform proposals. In Washington state, Gov. Jay Inslee and Democratic legislators announced a proposal for a new “public option” to be sold on the state’s individual insurance exchange. Dubbed “Cascade Care”, the plan would “make sure we are offering our citizens a plan that looks like Medicare,” according to one lawmaker. In Colorado, Democrats in the state General Assembly proposed their own versions of a “public option” health plan, looking to send newly-elected Gov. Jared Polis legislation to sign. And in California, incoming Gov. Gavin Newsom took up the mantle of healthcare reform, announcing proposals to restore the individual insurance mandate, provide coverage to undocumented adults through Medi-Cal, the state’s Medicaid plan, and expand the state’s authority to negotiate with pharmaceutical companies. Newsom also sent a letter to the Trump administration asking for waiver authority to pursue single-payer coverage statewide—a request almost certain to be denied.

Meanwhile, New York City Mayor Bill de Blasio announced a new plan to spend $100M to ensure that every city resident could receive medical treatment, regardless of ability to pay. “Everyone is guaranteed the right to healthcare,” said the mayor in a news conference. The new proposal will bolster the public coverage system already in place, adding a new hotline, assigning primary care doctors to those who might otherwise seek “charity care” in the city’s public hospitals, and extending coverage to younger, lower-income, and undocumented New Yorkers via the city insurance plan—an approach modeled on a similar, largely successful initiative undertaken earlier in San Francisco. Just as the Trump administration is looking to waiver-driven innovations at the state level to further its vision of Republican healthcare reform, it’s now clear that Democrats will also have a range of blue-state reforms to draw from as they renew their push for national, universal coverage. We are entering a new round of healthcare reform debate as the 2020 elections approach, with many more proposals and initiatives to come.

Price transparency off to a bumpy start

Americans have gotten their first look at hospital chargemasters, and they don’t like—or even understand—what they’re seeing. As part of a rule created under the Affordable Care Act (ACA) in 2010, and finalized by the Centers for Medicare & Medicaid Services (CMS) last year and went into effect on January 1st, every hospital must now publish annually a machine-readable, itemized list of charges for every service or item they provide. As news outlets and policy analysts have gone in search of these newly-published “price lists”, they’ve discovered that the data are largely incomprehensible and meaningless, and do not reflect what any patient pays for services. The trade publication Modern Healthcare attempted to distill the data from one provider, Sacramento, CA-based Sutter Health, into an easier-to-use format, which only served to highlight how useless such information is to consumers. Even if it were more user-friendly, the prices listed do not reflect the steep discounts most insurance companies negotiate for their enrollees, nor what any individual might pay given their own benefits structure.

Responding to criticism that the new requirement only adds to consumers’ confusion in the name of increasing transparency, CMS Administrator Seema Verma this week urged hospitals to move beyond the baseline requirement of making chargemasters available to the public, and to provide tools and resources that simplify the data and help patients understand their own financial obligations. She pointed to three health systems, Denver, CO-based UC Health, Rochester, MN-based Mayo Clinic, and Salt Lake City, UT-based University of Utah Health, as examples of organizations that have already invested in consumer-friendly cost-estimation tools. Verma pointed out that while there is no legal requirement to provide such tools, and indeed no penalty for not complying with the new transparency rule, hospitals should follow the lead of these organizations and provide assistance to patients in navigating the complexity of hospital pricing. We agree. Publishing hard-to-find, hard-to-understand, hard-to-use information is not a winning strategy for health systems. While it’s necessary to comply with Federal regulations mandating price transparency, it’s certainly not sufficient, particularly in a healthcare marketplace in which consumers face extraordinary challenges in paying for care.

CVS announces its first “Health Hub” 

Most of the news coming from the JPMorgan Healthcare Conference in San Francisco this week conformed to the expected public relations scripting (or industry pabulum—glad there’s consensus that health systems need to double down on cost management). But we were intrigued by details provided by CVS Health CEO Larry Merlo on the company’s integration strategy now that the merger with insurer Aetna has closed. Merlo articulated a strategy that will ramp up healthcare delivery in CVS stores with the goal of reducing spending on medical care and improving health for Aetna customers. The retailer aims to keep patients healthy outside of the hospital, provide care at lower-cost locations, manage episodes of care, and develop new treatments for chronic diseases like heart failure and cancer. CVS previously said it would be testing and refining its “Health Hub” concept stores with expanded healthcare capabilities in early 2019, and Merlo announced that the first location will open in Houston next month, and described what the concept will include. Health Hubs will have more space devoted to clinical and pharmacy services versus retail, offer chronic disease screening and management services, and deploy “care concierge” staff to help troubleshoot issues from insurance coverage to wellness. (We’re already planning a field trip to the Houston store when it launches, so stay tuned.)

The vision of Health Hubs Merlo laid out is not surprising, and includes exactly the service profile we’d expectCVS appears to have a plan to rapidly roll out, refine and scale their expanded clinical offerings, and as the in-store space conversion from retail to healthcare suggests, fast-forward its transformation from a retailer to a healthcare company. While 2018 was the year of mega-mergers, we’re predicting that 2019 will be the year of “mega-integrations”, with the companies involved in big vertical and horizontal combinations moving to rapidly integrate and deliver value from scale. Traditional providers should expect market-driven companies like CVS to pursue an aggressive timeframe for execution and assume that “Health Hubs” and the like will quickly become a key part of care for Aetna enrollees and other patients.


GRAPHIC OF THE WEEK

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

Scaling the “specialty care business” across the health system

Over the past month we’ve been sharing our framework for helping health systems rethink their approach to investment in delivery assets, built around a functional view of the enterprise. We’ve encouraged providers to take a consumer-oriented approach to planning, starting by asking what consumers need and working backward to what services, programs and facilities are required to meet those needs. That led us to break the enterprise into component parts that perform different “jobs” for the people they serve. We think of each of those parts as a “business”, located at either the market, regional or national level depending on where the best returns to scale are found (and on the geographic scale of any particular system). So far we have described how a consumer-oriented health system should be organized at the market level, with expanded access and senior-care businesses providing lower-cost care in an outpatient setting for many services that were previously delivered in an acute-care hospital, and how the profile of the local hospital needs to change in response.

This week we shift our attention to health system services that can be scaled at the regional level, starting with specialty care, the medical and surgical specialty services that comprise many hospital service lines. Today nearly every community hospital is a “jack of all trades” with the same portfolio of services: obstetrics, cardiac care, orthopedics, and cancer care are the marquee service lines. Incentives, both market-based and internal to the health system, have encouraged this. Hospitals build services aimed at capturing the same handful of profitable (and usually procedurally-focused) DRGs. And many health systems reward local hospital leaders on the profitability of the hospitals they run, creating no incentive for those leaders to shift profitable volume to other hospitals in the system, and often resulting in redundant, inefficient, and sub-scale specialty care services.

We believe many specialty care services could be improved by moving care “up and out” of the community hospital. As we described before, a large portion of routine surgical care could be moved “out” of the hospital to lower-cost outpatient centers, supported by short-stay capabilities and expanded home health. At the same time, more complex specialty care should move “up” in the health system and be concentrated in regional “centers of excellence”, where expensive talent and expertise can be scaled, and systems can aggregate the volume needed for highly-efficient operations that lower the cost of delivering complex specialty care.

While the center of excellence model is not new, it’s often little more than a marketing slogan. Few systems have deployed it for operational efficiency, redirecting specialty care patients to high-volume-centers—and shuttering their low-volume or sub-standard local programs. Even fewer have invested in the infrastructure needed to effectively coordinate care between a regional center and local providers: telemedicine for effective provider collaboration and consultation, effective information sharing, and strong local care management support. One question inevitably arises: will patients travel for care? As individuals bear a larger portion of the cost of care, they do seem to be willing to travel longer distances in pursuit of better value. Understanding how the consumer “travel radius” changes with higher levels of financial accountability, and how that radius differs among services, ought to rank high on the priority list of systems looking to determine what business to consolidate at regional centers.


THIS WEEK AT GIST—ON THE ROAD

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

What we talk about when we talk about “care transitions” 

Lisa:
I flew home to Texas two days before Christmas to spend the holidays with family, the same day my 96 year-old grandmother was admitted to the hospital for shortness of breath. The past year has been rough for “Granny” as I’ve written about before, and this was her third admission in six months for what we assumed was another exacerbation of worsening congestive heart failure. But a day later Granny spiked a fever, suggesting something else was going on, and she was put on broad-spectrum antibiotics while her doctors looked for a source of infection. Fortunately, she responded well (although there were conflicting messages about whether pneumonia or a urinary tract infection was the problem), and she was sent home four days later after receiving good care from an outstanding staff working hard over the holiday.

Things got complicated a few days later when Granny saw her wound care specialist for a longstanding diabetic foot sore. Her doctor, part of her care team for over a decade, was immediately sure that the ulcer was the source of infection and furious that she was discharged in this condition. Did she have a wound care consult, he asked, and what did they say? Unable to access the record from her admission, Granny’s care aide and my mother (via phone) provided what information they could. Her doctor determined she needed IV antibiotics—but my mother soon found out that Granny’s assisted living facility would not allow her to receive them there, even if administered by home health. There was no choice but to admit her to a skilled nursing facility (SNF)—but then questions arose about whether Medicare would pay for the stay, since she wasn’t admitted directly from the hospital for the same diagnosis.

Eventually, Granny was admitted to a local SNF. All of the change made her confused—where was she being taken now? Didn’t the doctors say her infection was under control and she could go home? Had she missed Christmas entirely? This stress made her an even more agitated patient, and we were alarmed a few days later when my mother found her dozing in a chair near the nurse’s station. According to staff, she kept trying to get out of bed on her own—and their “fall prevention solution” was to leave her in a plastic chair in the hallway where unit clerks could keep an eye on her—treatment bordering on inhumane. We mobilized and insisted on changes that made us feel she was safe. Two weeks later, she’s still there, solely for antibiotics, bored, lonely and asking to go home.

While every one of the issues in this (admittedly long) personal story was distressing at the time, what I came to realize is that Granny’s care is in many ways a best-case scenario. She has an attentive (and local) daughter who spends days managing her care, and the financial resources to hire help—and not be bankrupted by a postacute stay. Four of her grandchildren are healthcare professionals, able to engage with her doctors and troubleshoot issues. It’s alarming to consider the outcome for a similar patient with no family support. Frankly, there’s a decent chance they would already be dead. We tell health systems that the most critical problem to solve for future success is finding a better care model to manage aging patients with multiple chronic conditions. Granny’s care illustrates just how far we are from that model today. Better clinical coordination and institutional care is vital—but we also need housing and social care that better integrates with clinical needs, and those can’t just be available for the lucky few who can pay out-of-pocket. Systems are now feeling the beginning of the “payer mix shift” as Baby Boomers move from commercial insurance to Medicare—but we are still a decade or more away from the peak of the “clinical mix shift”, when Baby Boomers reach their peak healthcare spending years in their 80s. The future sustainability of the health system rests on our ability to build a better way to manage transitions of care and support elderly patients with chronic disease than what’s being done for Granny today.

Can insurance startups “unbundle” health systems?

Chas:
We’ve been having an ongoing dialogue with several of the insurance industry disruptors who’ve been getting a lot of attention (and funding) lately, hoping to learn a little more about what they’re working on and discuss potential opportunities for collaboration. There’s quite a bit of diversity among them, despite the fact that the investor community seems to lump them all together. Some are more focused on innovations in the individual insurance market, others are looking to disrupt the group market, and some are placing a bet on the Medicare Advantage and Medicaid managed care businesses. Yet they are more similar than different. Common across all of them is the view that care management matters, and that incumbent insurers are falling short by not taking a more activist approach to “population health”. They are also all investing in digital tools and consumer strategies, to ensure loyalty and engagement among enrollees. But there’s a third aspect to most of their business models that’s the trickiest, and the one I’ve been most interested in learning about: narrowing specialist and hospital networks to ensure better performance at lower cost.

Here’s the challenge as I see it: to get rates from providers that allow premiums to be competitive, the insurance startups need to be able to steer business to them. From the health systems’ perspective, the more exclusive the relationship the better—I’ll give you better rates if I get more of your volume of patients. Here’s the problem: the more exclusive the relationship, the more heavily the insurer is forced to bet (implicitly) that their health system partner is better at “networking” than they are—that the system is actively managing its doctors and services at a performance standard the insurer couldn’t if it tried to find “best in breed” services and specialists across systems. Yet to achieve better control over cost, it’s probably in the insurance startup’s interest to “unbundle” the health systems, using analytical tools to identify best performing specialists and service lines and manage enrollee referrals accordingly. The other obvious solution for the startups is to put its exclusive partner or narrow network of partners at risk for performance, betting that the incentives will be strong enough to encourage the system to deliver higher value. But if the large incumbent insurers haven’t been successful in either “unbundling” health systems or sharing risk in a way that results in significant savings, how successful can the disruptors be? This is the aspect of innovation in insurance I’m most interested in tracking over the coming months and years.


ON THE GIST TURNTABLE

Give this a spin, you might like it.

It’s only January, but we’re willing to go out on a limb and say that the most unexpected, incredibly cool album of the year will be released by a heavy metal band from Mongolia. If you don’t already know what we’re talking about, then turn off whatever you’re listening to and check out the work of The Hu, a foursome of Mongolian musicians who specialize in khoomei (throat singing), the traditional Mongolian vocal technique of producing two sounds at once. They call what they’re making “huunu rock”, from the Mongolian word for human. Using historically-accurate instruments from the days of Genghis Khan, including the horsehead fiddle, Jew’s harp, and Mongolian guitar, and sporting a look that combines the ferocity of nomadic steppe warriors with the menace of a death’s-head biker gang, The Hu have already garnered millions of fans worldwide on YouTube. Their aim is to create a connection to the proud past of the Mongol people, to focus attention on the importance of nature and spirituality, and yes, to kick some serious ass. The throat singing alone is astonishing and otherworldly (for more of that, check out the band Huun Hur Tu, who became international stars in the mid-90s with their folk music from Tuva, a republic in the Russian Federation). The combination of that exotic sound with the drive and power of heavy metal is like nothing we’ve ever heard. Look for their debut album, Gereg, later this spring.


WHAT WE’RE READING

Stuff we read this week that made us think.

Are readmissions penalties good or bad? 

In recent months CMS’s Hospital Readmissions Reduction Program (HRRP) has been under growing scrutiny, with two high-profile studies questioning whether readmissions penalties have been effective in reducing costs and improving patient outcomes. Here’s a quick summary of the program and recent research and discourse: part of the ACA, HRRP was launched in October 2012 and imposed payment penalties for hospitals who had excessive (i.e. higher than average) rates of readmissions for three common conditions, acute myocardial infarction (AMI), congestive heart failure (CHF), and pneumonia. CMS has largely hailed the program as a success, and a MedPAC report released last summer claimed that the program has reduced readmissions for target conditions roughly 3 percent with no effect on mortality, while saving the government $2B annually.

Two recent high-profile studies question these findings. Writing in JAMA last month, Harvard researchers asserted that mortality for two target conditions rose after HRRP implementation, making the claim that the penalties may have rewarded providers for changing care in ways that proved harmful to patients. Unsurprisingly, the news that readmissions penalties might be bad for patients—fueled by a New York Times op-ed by study authors—sparked a flurry of media coverage. And just this week, research published in Health Affairs questioned whether the program actually lowered readmissions rates at all, claiming that lower rates could largely be due to changes in coding for patient diagnoses and severity that rolled out at the same time as HRRP. Taking these factors into account, authors found no difference in readmissions rates between HRRP hospitals and a control group.

Working through analyses by researchers and economists, it becomes clear that it is impossible today to definitively answer the question of whether readmissions penalties are effective or harmful. Penn researcher Dr. Atul Gupta lays out many of the confounding factors. Studies looking at the correlation between readmissions rates and mortality evaluate different patient outcomes at different timepoints, making comparison difficult. Many studies lack a real “control” group, simply comparing hospitals who lowered their readmissions rates to those who did not, with both likely changing their behavior. And most importantly, several other Medicare policy and market changes occurred at the same time as HRRP rollout and very likely affected the target population characteristics and hospital behavior. Here are just two examples: Medicare’s Recovery Audit Program, or RAC audits, dramatically lowered the number of one-day inpatient admissions, likely raising the average severity of those patients who were admitted. And growing Medicare Advantage enrollment may have also increased severity of the target populations, siphoning off healthier patients. At this point, principled researchers and policy experts can merely cite mounting conflicting data to call for more analysis before expanding the readmissions program further.

An ambitious new plan for the NHS

This week England’s National Health Service (NHS) unveiled its “Long Term Plan”, outlining how the venerable but ailing system intends to allocate the increased funding it was promised as part of the Brexit process. Over the course of the next five years, the NHS is slated to receive an additional £20.5B (about $26B) in funding, which reflects an annual increase of 3.5 percent per year, as part of a Brexit “settlement” announced by British Prime Minister Theresa May last year during the celebration of the NHS’s 70th anniversary. The plan sets ambitious goals for the NHS, aiming to save almost half a million lives over 10 years by deploying a variety of strategies: widely expanded genetic testing, heavy investment in community-based management of chronic disease, a big bet on “social care” and “social prescribing” to address non-clinical drivers of health status, a “digital front door” to the NHS using telemedicine, and a reorganization of structures and incentives to increase the integration and accountability of healthcare providers. In part, the plan reflects a shift from the competition-oriented approach implemented in the last major round of NHS reforms, betting instead on strategies that look more like “accountable care on steroids” than “unleashing market forces”.

Two major questions will confront the NHS immediately as it begins to flesh out details and implement the new plan. The first is access. Given years of chronic underfunding, the NHS faced extraordinary difficulties in maintaining access to services (especially emergency department care) last winter and will likely see even worse wait times and access problems this year. The current strategy of setting rigorous wait time targets for emergency visits and procedures has not worked, and the new plan is mostly silent on the issue. The second (and related) issue is staffing—the NHS is desperately understaffed, and with an aging patient population, the current backlash against immigration that triggered the Brexit vote could not have come at a worse time. Particularly as the system looks to expand community-based care, and bolster services that can reduce the load on its straining hospital system, more healthcare-sector workers will be needed. Yet reducing immigration will constrain their availability, particularly for lower-skilled labor. It’s worth watching how the NHS navigates these challenges, and monitoring the rollout of the Long-Term Plan—both for American conservatives who view the NHS’s problems as a cautionary tale and for progressives who are crafting single-payer reforms. Our healthcare systems face strikingly similar challenges, and we have much to learn from each other’s successes and shortcomings.

Should obese patients bear responsibility for their poor health?

Almost every time we talk about risk-based payment or care management with a group of healthcare leaders, someone asks this question: “How can providers be successful if patients won’t take responsibility for their smoking/lifestyle/eating habits/other bad choices?” This week was no exception, with a health plan leader asking how healthcare costs could be managed if patients don’t take control over their behavior, specifically obesity, which makes “everything more expensive”. That same day, we happened across this excellent article in The Atlantic that provides a first-person perspective on just how hard it is for a morbidly obese patient to “take accountability.”

Tommy Tomlinson is a columnist at the Charlotte Observer who has been obese all of his life, and now weighs 460 pounds. He describes in excruciating detail what it’s like to navigate the world at that weight—and the painful cycle of losing, and then inevitably gaining back the weight, his entire adult life. He addresses straight-on what many thin people think when they meet him: just “eat less and exercise”. He points to how research is beginning to reveal that the bodies of obese individuals may work against even the strongest willpower. One example: obesity experts evaluated long-term weight loss of contestants from the television show “The Biggest Loser”, who lose large amounts weight using a strict diet and exercise regimen. Investigators were shocked to find out that as they lost weight, contestants’ metabolisms slowed to the point of making weight loss nearly unsustainable—and kept slowing even as they gained weight back. This and other studies suggest that formerly obese patients may never be able to “eat like a normal person”, having to perpetually exist in a “near starvation” mode to keep the weight off long-term. Something in our DNA protects us from withering away in times of scarcity and perceives any weight loss as a threat, kicking in survival mechanisms that fight even healthy weight loss.

There is no question that patients need to be engaged partners in care management efforts, and many of us make less-than-ideal lifestyle choices. But often questions about the challenges of individual responsibility seem like easy excuses for not doing the hard work of population health—and with obesity in particular, are laced with bias, judgement and stigma. Tomlinson’s article (like this New York Times piece by the excellent reporter Taffy Brodesser-Akner, who describes her lifelong weight challenges through the lens of Weight Watchers’ rebranding) shows what it’s like to live obese—and should be required reading for medical students. Managing obesity, addiction and many other “lifestyle determinants” of health requires long-term, intensive behavior change support. Or in the words of an overweight cardiologist whom we met at one of our presentations last year, “As an obese man, I know that the advice I give in the office as a doctor, telling patients to ‘eat less and exercise more’ and providing no support beyond that, probably does more harm than good.”


Thanks for taking time to read this week’s edition! We’re thrilled to be back to work and looking forward to connecting with many of you across the course of the year. Please send along your thoughts, comments, and reactions, and don’t forget to share the Weekly Gist with your colleagues and encourage them to subscribe!

Most importantly, please let us know if there’s anything we can do to be helpful in your daily work. 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