May 17, 2019

The Weekly Gist: The Westeros Couch Gag Edition

by Chas Roades and Lisa Bielamowicz MD

It’s the last time we’ll mention it, we promise, but this weekend brings the series finale of Game of Thrones, a show that we’ve watched over the years with a mixture of awe, revulsion, and enjoyment. And lately, disappointment. Strangely for a show that’s dragged on for so many seasons, we’re left wishing the writers had just a few more episodes to stretch out what has been an infuriating and rushed wrap-up of the show’s many, many storylines.

Short of a M*A*S*H-style ending, with all of the characters boarding helicopters amid the rubble of King’s Landing, we’re not sure there’s a satisfactory finish in store. What we’re really rooting for? A final scene where the remaining cast members scramble toward the Iron Throne and all sit down at once, in the time-honored tradition of the Simpsons’ Couch Gag. Now that’d be an ending.

Bye, Westeros.


THIS WEEK IN HEALTHCARE

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

Launching the first “public option” insurance plan

On Monday, Washington Gov. Jay Inslee signed into law the nation’s first “public option” health plan, to be sold on the state’s individual health insurance exchange, starting during next year’s open enrollment period. Inslee, who is also a candidate for the Democratic Presidential nomination, characterized the new plan as a “way for our state to push back” on the Trump administration’s efforts to roll back the Affordable Care Act (ACA). The plan, called Cascade Care, is not quite the same as a true, government-run plan of the type proposed by some during the drafting of the ACA; rather, it creates a category of private insurance plans that will cap provider and facility rates at 160 percent of Medicare reimbursement, with the goal of lowering premiums for consumers who shop on Washington’s insurance marketplace. The public option plan is meant to exert competitive pressure on other plans in the market in an attempt to drive premiums down, but experts expect the new plan to produce only a modest 5-10 percent savings for consumers. In 2018, average premiums on Washington’s exchange rose 38 percent, resulting in lower overall enrollment levels. Other states, including Colorado and Connecticut, are considering similar “public option” plans. It’s notable that Washington’s approach is explicitly built around reducing payment to hospitals and doctors—any serious efforts to lower premiums will almost certainly have the same impact. As the politics of healthcare continue to heat up, we’d expect more such proposals to gain traction across the country.

Taking the lead on long-term care

In other healthcare news from the Evergreen State, Gov. Inslee also signed a law this week that will provide a new long-term care benefit for state residents starting in 2025. In the furthest-reaching legislation of its type nationally, the new Washington law puts in place a payroll tax of 0.58 percent starting in 2022, and creates a year-long, $100/day allowance for state residents that can be used to pay for nursing home fees, at-home caregivers, and other long-term care needs. Family members who are full-time caregivers can also receive compensation. Like other states, Washington spends a growing portion of its state budget on paying for long-term care for aging residents, putting a heavy burden on the finances of its Medicaid program that’s expected to worsen as the Baby Boom generation ages. In addition to nursing and caregiver services, the new benefit can also be used for in-home meals, housing repairs, and other services that impact health status. As with its “public option” plan, Washington has taken the lead on another healthcare coverage issue that will eventually need to be addressed nationwide: the fact that seniors are entering retirement entirely unprepared for the amount they’ll need to spend on long-term care. Medicaid currently pays for two-thirds of nursing home care and 60 percent of all long-term care costs, and no state is currently prepared for the amount of spending that will be required over the next 25 years. Almost no one buys long-term care insurance, which is unaffordable for most. Any serious attempt to expand coverage over the next few years must take on this critical issue.

One Medical founder launches new primary care venture 

Tom Lee, MD, founder of primary care startup One Medical, has launched a new membership-based primary care practice targeting more complex, less affluent patients. The new venture, Galileo Health, offers two levels of membership. Basic membership offers patients digital access to treatment for common issues, prescription renewals, and medical record consolidation for $59 annually. For $139 per year, patients also get access to basic lab tests, specialist referrals, and physician consultations for complex conditions. Galileo is meant to work with, but not replace, a patient’s existing doctors. Also, unlike One Medical, Galileo does not bill insurance—all services are included in the membership fee. With this new venture, Lee joins innovators like ChenMed, Iora Health and Oak Street Health in building a direct primary care model targeted toward complex patient populations like Medicare Advantage enrollees and Medicaid beneficiaries. Like those companies, Galileo will probably require direct relationships with health plans to pay for or supplement the member contribution. The company appears to be deploying a team-based care model, but one that relies much more heavily on its digital platform. Lee’s new venture bears close monitoring to see the extent to which a digital platform can supplement (or even replace) traditional face-to-face provider interactions for complex patient populations.


GRAPHIC OF THE WEEK

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

Looking ahead to the next 25 years of Medicare spending

In perusing the excellent work of the Peterson-Kaiser Health System Tracker project, we recently came across an analysis (depicted on the left, below) of Medicare spending patterns broken down by age of beneficiary. Based on 2014 data, the analysis shows how much was spent per capita in traditional Medicare fee-for-service on beneficiaries of each age. (The analysis excludes Medicare Advantage data, and also doesn’t include beneficiaries aged 65, for whom a full year of spending data wasn’t available.) What’s interesting is how spending patterns differ across age cohorts—inpatient spending peaks at age 92 and then declines, spending on physician services peaks at age 85, skilled nursing and hospice spending ramp up quickly for much older beneficiaries. To see how these patterns might play out if applied to the Baby Boom generation, we combined the Peterson-Kaiser analysis with our earlier look at generational aging. The result is the chart on the right, below, which shows how each bucket of spending will increase over the coming 25 years given aging of the population.

A couple of interesting observations from this (admittedly imperfect) analysis. First, the sheer size of the baby boom generation will drive a huge increase in Medicare spending over the next 25 years. And a full third or more of the total Medicare spend on Baby Boomers isn’t even captured here—that will come via payments to Medicare Advantage plans. Second, inpatient care drives a huge amount of the total spend. It’s clear that an urgent priority is finding ways to shift spending from the light grey bars (inpatient) to the other segments—we need to pull forward the shift from inpatient to other settings from where it was in 2014’s population. Recall that this is traditional Medicare—strategies like accountable care organizations (ACOs) and other care management/population health reforms will be critical here. Finally, in addition to changing the trend with innovations in care delivery models, we should expect technology and pharmaceuticals to play a role in inflecting the shape of this graph. Whether that impact will produce a net savings or a net increase in spending remains to be seen.


THIS WEEK AT GIST—ON THE ROAD

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

The false promise of “no regrets” investments 

Lisa:
At the end of my meeting last week with a health system executive team, the system’s COO asked me a question: “Your concept of Member Health describes exactly how we want to relate to our patients, but we’re not sure about the timing. Could you give us a list of the ‘no regrets’ investments you’d recommend for health systems looking to do this?” We frequently get asked about “no regrets” strategies: decisions or investments that will be accretive in both the current fee-for-service system as well as a future payment and operational model oriented around consumer value. The idea is understandably appealing for systems concerned about changing their delivery model too quickly in advance of payment change. And there is a long list of strategies that would make a system stronger in both fee-for-service and value: cost reduction, value-driven referral management, and online scheduling, just to name a few. But as I pointed out, the decision to pursue only the no-regrets moves is a clear signal that the organization’s strategy is still tied to the current payment model. If the system is really ready to change, strategy development should start with identifying the most important investments for delivering consumer value. It’s fine to acknowledge that a health system is not yet ready, but I cautioned the team that they should not rely on the external market to provide signals for when they should make real change. External signals—from payers, competitors, or disruptors—will come too slow, or perhaps never. At some point, the health system should be prepared to lead innovation, introduce a new model of value to the market and define and promote the incentives to support it. Real change will require disruption of parts of the current business and cannot be accomplished with “no-regrets investments” alone.

Discovering an appetite for innovation in rural healthcare

Chas:
Recently I had the pleasure of keynoting a conference for critical access hospitals (CAHs) hosted by Providence Health & Services in Missoula, Montana. The meeting brought together executives, board members, and physicians from across Montana’s robust community of nearly 50 CAHs, plus others from rural health provider organizations. Interesting bit of history—Montana is the birthplace of CAHs, a model that originated in the 1980s to address the difficult funding and resource challenges faced by small remote hospitals serving rural communities. Given the state’s vast geography and dispersed population, it’s little surprise that rural hospitals are an essential part of the healthcare infrastructure of the state. (Montana’s also a gorgeous state, and Missoula is a terrific town—you should definitely pay a visit!) My visit with the CAH community was timely, coming in the same week that Montana’s governor signed the state’s Medicaid expansion renewal into law. The group was buzzing with that news, but what most struck me about the dialogue was the appetite among rural providers to hear more about the plans of healthcare disruptors—CVS, Amazon, Walmart, and so forth—as well as the more obvious topics of payment and workforce shortage. We don’t often think of rural healthcare when we talk about “disruption” or “consumerism”, but the new models of care emerging from these nontraditional players hold real promise for remote communities. The strategies of labor substitution (relying heavily on less expensive, non-physician talent), technology substitution (greater use of telemedicine and remote monitoring to augment expensive workers), and site of care shift (doing things in less expensive settings) will surely be an important part of solving the nation’s rural healthcare crisis. I’d expect rural healthcare to be an early proving ground for, and wellspring of, innovative ideas for the rest of healthcare.


BINGE WATCH ALERT

We would’ve worked harder, but we watched this instead.

If you’re like us, as soon as the credits roll after the last dragon dies (along with the last shred of credible plot development) on this Sunday’s series finale of Game of Thrones, you’ll be off in search of another show to fill the void. And not just any series, but something you can really sink your teeth into—an immersive world full of interesting characters. Well, you’re in luck! Here are three replacement candidates, each with the perfect combination of existing episodes to binge and more to come soon:

Deadwood (HBO)—This brilliant show originally aired on HBO from 2004-2006, only to be canceled abruptly amidst production overruns and lagging ratings. Set in 1870s South Dakota during and after the annexation of the Dakota Territory, it follows the evolution of Deadwood from mining camp to bustling town, populated by a range of colorful characters based on real-life residents. Standout performances from Ian McShane (as the town’s bawdy saloon owner) and Timothy Olyphant (as the sheriff who struggles to maintain law and order), as well as the show’s superb writing, make the show a must-watch. Catch up by May 31st, when HBO will air a long-awaited movie based on the series, catching up on the town as South Dakota achieves statehood.

The Expanse (Amazon Prime)—Sci-fi space opera done right, this show originally aired on the Syfy channel for three seasons before being canceled last year, only to be picked up by Amazon for a fourth season. All three seasons, based on the popular books by James S. A. Corey, are now available to stream in advance of the next season’s release later this year. Set in the 23rd century in a colonized Solar System, the show explores political intrigue and tension between Earth (now ruled by the United Nations), Mars (a former colony of Earth and now locked in a Cold War with the home planet), and the Belt (a loose affiliation of colonies in the outer system built around extractive mining of asteroids). It’s a fun but thoughtful treatment of some familiar sci-fi tropes—think Game of Thrones but in space.

Warrior (Cinemax)—New this year on Cinemax and now seven episodes deep, this show takes the original concept for the 1970s show Kung Fu, which was created by the late Bruce Lee but controversially “borrowed” by Warner Bros., and gives it the full prestige cable treatment. Set in San Francisco in the late 1800s during Chinatown’s Tong Wars, the series tells the story of a new Chinese immigrant who falls in with one of the city’s violent gangs. Produced by Bruce Lee’s daughter, the show features plenty of well-choreographed kung fu sequences, along with a compelling storyline and a fully-realized version of gold-rush era San Francisco. Be warned, this is a “Skin-emax” show, and a Chinatown brothel and its denizens play a featured role. But if you have a taste for martial arts action, this show is well worth checking out.

Happy watching!


WHAT WE’RE READING

Stuff we read this week that made us think.

Walmart implements a narrow network for diagnostic imaging  

Starting last March, retail giant Walmart now requires that its employees use a select network of 800 diagnostic imaging providers, or face additional out-of-pocket costs, according to an article this week from Kaiser Health News. Lisa Woods, Walmart’s senior director of benefits design, said high error rates in imaging studies were the driver for establishing the program, with the perspective that “a quality MRI or CT scan can improve the accuracy of diagnoses early in the care journey.” The network was created in partnership with New York-based Covera Health, a technology company that has amassed information on thousands of imaging facilities nationwide, and uses independent radiologists to evaluate a sample of studies to determine facility and radiologist error rates. According to the article, while many employers have steered employees to lower-cost imaging networks, Walmart is the first to do so based on quality of the studies.

Whether this network will be effective in achieving its stated goal—reducing misdiagnoses that lead to unnecessary care and surgery—remains an open question. Poor-quality imaging undoubtedly leads to repeat studies, which carry significant costs. But many other factors (clinical judgement, incentives, patient preferences) contribute to the decision to perform surgery. Defining imaging “quality” beyond the blunt measures of repeat rates, technical adequacy and radiologist sub-specialization is highly complex, and requires correlation with pathology and clinical outcomes data—a high bar for an outsourced analytics provider. Despite Walmart’s goals, it will be difficult for imaging providers to differentiate their services solely on quality. The high variability in imaging prices is well-documented, and choice of provider is largely made by consumers, for whom imaging is a commodity service. Without an activist employer or payer to steer them, consumers will likely continue to choose their imaging providers based on their doctor’s recommendation and out-of-pocket costs.

The sad tale of a rural hospital on the brink

Not only did we spend time with rural healthcare providers this week (see above), we were also captivated by a long article in the Washington Post that profiles one remote community in Oklahoma struggling to keep its hospital’s doors open. Understanding the financial challenges of rural hospitals is one thing, but the article brings the statistics to life, telling the stories of people like Tina Steele, the CEO of Fairfax Community Hospital in Fairfax, OK, who wrestles with a balance sheet with only hours of cash on hand, James Graham, the hardworking country doctor who is always on call, for everything, and Donna Renfro, the head nurse and a second-generation employee of the hospital, who works 16-hours shifts at low pay to keep the hospital staffed. Most moving are the stories of local residents who rely on the hospital for all of their care, literally from birth to death, and now find the most important asset in their community on the brink of closure. Hospitals like Fairfax are now closing by the dozens nationwide, or else find themselves at the mercy of predatory investors or “entrepreneurs” who promise new riches and quick turnarounds but often leave communities worse off than before. Kudos to the Post for highlighting this story—it’s one we need to hear much more about, especially as so much attention is being paid to the flashier healthcare narratives of disruption and innovation. Rural healthcare could use a heavy dose of both, urgently.

Using AI to prevent serious patient emergencies in the hospital 

Hospitals have long used “command centers” to centrally manage and allocate staffing and capacity. A recent Stat article caught our eye, profiling systems using these central management or monitoring units (CMUs) to monitor for and quickly react to serious patient events, demonstrating how artificial intelligence (AI) could provide the ability to predict and prevent them before they happen. For several years, Cleveland Clinic has centralized its system telemetry management in an offsite CMU, publishing results in 2016 showing that the CMU’s monitoring of over 99,000 telemetry patients accurately alerted local unit nursing staff of 79 percent of heart rhythm abnormalities within a one-hour window, and provided advanced warning of 27 cardiopulmonary arrest events. While effective, the model is dependent on clinician staffing for real-time rhythm interpretation. Cleveland Clinic is now using AI to analyze and integrate large amounts of patient data, including lab results, subtle heart rate and rhythm changes, and cardiac repolarization (the return of the heart to its resting state after a beat), aiming to develop predictive capabilities well before an event occurs. Cleveland Clinic is confident they have created an algorithm that is able to identify very ill patients and is now looking for external partners to test it in real time and validate results. As we’ve written before, some technology start-ups have developed AI-driven clinical applications on aggressive timelines, potentially sacrificing clinical diligence for rapid returns. Cleveland Clinic’s model of developing AI applications with academic rigor, then turning to tech partners to scale is a model that promises principled integration of AI into care delivery.


Thanks for joining us for this week’s edition. We’re humbled and grateful for your comments and suggestions—keep them coming! And if you’re new to the Weekly Gist, may we suggest passing it along to a friend or colleague and encouraging them to subscribe, too? The more, the merrier!

Most importantly, if there’s anything we can do to be of assistance in your work, please don’t hesitate to get in touch. 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