Health Care Cooperatives- We're Missing the Point

We shouldn't have been surprised.

The primary focus of the health care debate is now centered on what level of government involvement is justified to deliver health care in our country. It's the same debate we've been having for the past 100 years.

While the lines-in-the-sand are now very visible, Senator Kent Conrad, D. ND; Chair of the Senate Budget Committee threw out a new idea to try "bridge the gap"(chasm) that has evolved between the two sides of the health care public policy debate. His effort was obviously a compromise in an attempt to make certain the reform efforts continue to move forward.

On the one side we have those in support of a "public option" that is supposedly built on the principles of improving availability, improving quality and efficiency, and challenging provider consolidation (read driving down prices). On the other hand we have those that feel any (and I mean any) involvement by the government is on the road to single payer/socialized medicine.

Neither side is willing to move- and we believe both sides could use some real bi-partisan compromise in their positions.

Conrad's idea is based on the concept that instead of a national public option, states could set up independent "cooperatives"; non-profit entities owned by their members to deliver health care services to the community or population. The idea was based on his personal experience with cooperatives in his home state of North Dakota, and was one idea submitted to bridge the gap that exists today. It's generated a lot of discussion in the political camps- and Chuck Grassley (R, Ia) has indicated some intrigue with the idea as a public option is out of the question and a show-stopper from his perspective.

Unfortunately, we're missing the point again. Our health care system is in the mess it is in because of the way it is organized and paid-for. It has evolved into a fragmented mess and until there is some level of organization and collaboration between doctors, hospitals, health plans, and yes, our political leaders, its going to continue to be a fragmented mess that costs a lot of money.

There are many economic arguments against introducing 50 new health care cooperatives into a landscape that is already fragmented. There are many social arguments against introducing a broad-based public option into the health care market. And, there are many more economic and social arguments against leaving the system alone and let it continue to operate the way it is today.

The debate should not deteriorate (as it has done before) into health plans vs. the world, doctors vs. the world, or government vs. everyone else. We cannot let this deteriorate into a public relations message with the winner being whoever has the most money- or screams the loudest. This is a social issue that needs to be resolved for the good of our economy and the legacies we will leave our children. The discussion should be about what is best for the American people. And, the outcome should a solution- not a compromise based upon political strategies.

Get with it guys and gals. You may only have one shot at this. Let's do it right.

Risk Segments and Funding Alignment- A Requirement for Reform

When the whole health insurance idea was introduced in the 1930's the concept was pretty simple. The idea was to insure employees and protect them from the expenses of catastrophic health events. Even though the use of the term "insurance" in its purest definition was still a stretch- the primary focus was to protect individuals from the generally predictable hospital and doctor events existing in the population. Our reimbursement methods and funding (premiums and benefit design) were established and have evolved based on these original principles.

McKinsey recently issued a really interesting study showing how the risk categories in our population have changed over the years (primarily in the last 20 years) and how our methods to pay for the care and design benefits to represent these new risk categories have not changed at all. We've posted the study on our site- and you can grab it by clicking here.

This study indicates that today over 60% of our health care costs are now not even related to the categories for which our health care system was originally designed. In addition, over 30% of our costs are directly related to the management of chronic conditions (of which a significant portion is directly related to the lifestyles we lead).

In order for us to really reform our health care system we'll also need to look "outside of the box" to design reimbursement structures that represent the risk categories that have developed (and are very real) over the years. More importantly- benefit structures for individuals should be redesigned to reflect the needs of these new categories which will ultimately benefit our overall health care model. Consumer Directed Health Plans (high-deductibles/savings accounts) were a start, but they merely shifted the costs to the individual with some tax benefit. We really need to start to look at redefining benefit structures themselves to represent the needs of the population and to provide the incentive people need to take care of themselves in the first place.

Merely adjusting copays and deductibles will not work any more. Our health care population has changed to much and the cost is too great. It's time we get current.

It's No Wonder Physican Offices Can Be Cranky

There's been quite a bit of talk about the inefficiencies of our existing health care system- here's another example.

We all know the route many of us take as patients- we go to the doctor (sometimes we have our health insurance cards, sometimes we don't). We have no clue what our benefits are. If we don't get fixed immediately (we're impatient) we go somewhere else. For those with chronic conditions, we may have to run from one specialist to another, filling out the same forms, and repeating the process all over again. We don't worry about all of the "administrative details", that's the doctor's office problem. We'll just complain when we don't understand the bill.

[I may be a little critical on the "consumer/patient" here- but, unfortunately, it's reality. It's another part of the system that needs to be addressed- consumer understanding/education]

So, what does all of this cost the doctor's office to wade through the mess and hold our hands to deal with "health insurance"? Not surprisingly, a lot.

The May issue of Health Affairs included an interesting article summarizing a study that tried to answer the question of "what does it cost for physicians to interact with health plans today?" You can take a look at the entire article on our site by clicking here.

The study estimates our current process costs our system between $20-$30 billion dollars per year. Each physician/practice deals with over 10 very different and individual "health care programs" and spends on average 3 weeks per year trying to manage the rules of each program. Clerical staffs average almost 40 hours per week (one full-time person) simply to coordinate billings, authorizations, credentialing, and claims. And RN/MA/LPN resources eat up over 9 hours per week trying to navigate through the multiple arrangements. You can probably multiply these numbers further when you include mental health, chiropractic, physical therapy, and some of the other care providers that weren't included in this study.

That's a lot of money- and it is a confusing and frustrating process for everyone involved.

"Technology" is already entering the picture and starting to automate some of these provider/health plan interactions. That's where a lot of our projected savings are going to come from and its the right direction to go. But, getting the technology in place is going to take time.

By simply looking at the numbers, it would seem to us that moving toward some common definition of benefits, formularies, care management protocols, claims processes, and prices between all of the private payers would have the potential of saving a ton of money and reallocate the time currently being spent on "administration" to "care for the patient".

It's pretty obvious that whatever final reform structure we take- we have got to figure a way to organize the mess of programs that are currently out there. It will be better for the payers, the providers, the consumers, and the health care system as a whole.

And, those that are delivering the care to us are likely to be a lot less cranky.

Doctors and Hospitals Join In; AHIP Day 3

Today, the President of the American Medical Association and the President/CEO of a major Los Angeles hospital participated in the primary (annual) meeting of the health plans from across the country. I guarantee you, a year ago these groups wouldn't have been part of the dialogue here. It shows how things have changed.

I think I heard the word "collaboration" today more than I've ever heard it before- and in the right way. And, I heard the dialogue and discussion between diverse stakeholders much more "honest" than I've ever heard before. The fact that the doctors, the hospitals, and the health plans are even talking together shows how far things have come. We aren't at the "hugs and kisses" stage yet- but the fact that its even happening recognizes that there is some common ground that can be built upon to come as close to a win/win outcome as we can. This is what we've been talking about since we created Collaboration Health Care three years ago. It can happen, and it can be done.

This group, (and three others) sent a letter to President Obama last week and we posted it on the resource page of our site http://www.collaborationhealthcare.com/. This letter was an attempt to provide more color and detail behind strategies that would be used to support their collective committment to "bend the cost curve" in health care spending in a collaborative process. There is no doubt that we still have a ways to go- but stakeholders are recognizing that we need to break down the silos that have evolved over the years to make this work. Those that aren't willing to collaborate and dialogue are going to be left behind. It just requires a little different perspective and a little different thinking than we're used to. (And, yes I recognize I was a little skeptical when this group originally announced their committment a few weeks ago- see previous blog- but, after listening to their rationale today- I believe the intent is more sincere than I gave credit for)

We also heard quite a bit about the "Massachusetts Experiment" today. Suffice it to say, it's not going real well in Massachusetts. But, once again, I hoped we've learned something from it. We've proven the fact, once again, that if you don't address cost and access at the same time when you are designing a delivery model- it's going to break the bank (same thing we did with Medicare).

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So, the AHIP conference of 2009 is over. In summary, I'd say the attendance was about the same as in the past (maybe slightly lower), smaller (but still respectable) number of exhibitors, and a little more somber mood. We all heard some very dramatic statistics and predictions about what could happen if we don't do something- and urgently. The time for talking about it is over- too much is at stake. I think everyone at the conference would agree. And, I actually think all of the stakeholders are beginning to understand that they can't do it themselves. I don't have the answer about how much should be controlled by a "government function" and how much should be placed in the free-market. We know that too much of the controlled function is not what this country is all about and too much of the free-market just doesn't work in a multi-segmented health care structure. As we said back in 2006, it's a combination between the two. We've just got to keep talking to each other to capitalize on the commonalities and reach the right combination.

In the world of health care- this is an historic event.

We're In For Some Change; AHIP Conference Day 2

Greetings from San Diego. The sessions today carried-over from my comments yesterday. If I had to summarize the key messages they would be that some type of health care reform is coming- and we've got to get our country healthier than it is today in order for us to make anything work. The two key issues that will be the focus of the entire debate is access and cost and you'll be hearing about these two issues throughout the debate that is about to begin.

The primary discussion around health care reform centered on whether we need to have a "public option" included in the system we have today. This idea was at the center of the "health insurance exchange" concept Obama used during his campaign. Naturally, the health care industry today would rather keep the public option out. But, those in favor of it argue that this option will fill the gaps for those that don't have coverage today, and inject more competition in geographic areas that have little or no competition in the current market. (Rumor has it that Max Baucus sent a letter to President Obama today telling him the "public option" would be included in his proposal).

Former governors Jeb Bush, Howard Dean, and John Kitzhaber started the day specifically talking about the need for a public option in the health care reform agenda. Bush was against it, Dean was for it, and Kitzhaber made the most sense to me with his recommendation of scrapping the system we have today in total- and starting over. I just don't think that his option is politically feasible. But, he made some interesting and fascinating points to support his case that I hope people listen to as this process evolves.

Jacob Hacker (Professor of Political Science at the University of California at Berkley), Gail Wilensky (Economist and Senior Fellow at Project HOPE- and on the Board of United HealthGroup), and Len Nichols (Director for the New America Foundation) continued the debate later on in the day. Hacker was a strong supporter of the public option (and wrote the White Paper the Obama Administration is using to support the idea), Wilensky was against, and Nichols was uncommitted- he just wants to make sure reform happens this time around.

By the end of the day, I was concerned that most of the political debate is being centered around the need for a public option as opposed to the other key issues we need to address (some of which were presented by Deloitte yesterday). The focus on value, consumer engagement, payment reform, and IT infrastructure seemed like side-bars as opposed to key components of a reform strategy.

The other key message today is another topic we've talked about for many years- our culture is unhealthy and something needs to be done to begin to change it. We all know the statistics- 70% of all of our costs are related to chronic conditions- and with the aging of the Baby Boomers it's only going to increase. And, of these costs; 40% are related to lifestyle, 15% are related to socio-economic factors, 5% are related to the environment, 30% are related to biological factors, and only 10% are related to actual medical costs.

So, when you put it all together what we're talking about is a need to begin to create a healthier population- and then reforming the payment and delivery structure that surrounds it. It's certainly easier said than done.

Regardless of what side you are on, each and every discussion today supported the fact that the system we have today is morally and economically unsustainable. The real possibility exists of our country defaulting on our debt obligations because of the costs of our health care system. A substantial (not incremental) reform strategy is required this time- we don't have a choice. The debate is about to heat-up and (as I said yesterday) providers, health plans, consumers, and legislatures had better be ready. We're in for a whole new ball game.

What Health Plans Are Thinking; AHIP Conference; Day 1

It's amazing what a difference a year makes. When I was at this conference last year, health care reform was discussed, but most political commentators didn't think much would happen- there was interest- but not a lot of passion.

In June of last year we were talking about gas prices, then the banks started to fail, then it was the economy. But, in January of this year, the OMB made a statement that has remained at the center of where we are today- we cannot fix the economy unless we fix health care.

An interesting statistic- of the significant debt we are now assuming with the new budget- $35 trillion of that debt is Medicare- if we don't fix Medicare- we're hosed. We can't fix the economy if we don't fix health care. Finally, we're bringing the two together.

So, it's going to be an interesting conference to hear what the health plans are thinking right now. I have a feeling most of it is going to be about health care reform. The tone I'm picking up (and it's only the first day so I could be wrong)- is that health plans aren't as sure of themselves as they were in years past. Health plans were the drivers in the past, now they are the passengers.

I attended a seminar put on by Deloitte Touche which was absolutely fascinating that I think is going to set the stage for the next two days. Within the next two weeks we're going to start seeing all of the proposals being developed by Congress and then the "discussion" will really begin. There are 5 major Republican proposals being developed, and 5-15 Democratic proposals. But, the consensus of the group----- something will be enacted this year (Obama wants to have it signed by Thanksgiving). What a difference a year makes.

Deloitte's model of health care reform includes 4 basic components all developed sequentially. First is establishing a solid health information technology structure that we don't have today. Second is focusing more intently on comparative effectiveness and evidence-based service delivery, third is coordinating care, and fourth is consumerism. All of these components are being discussed- but I wonder if we're going to have the time to sequentially execute as opposed to combining some of the components. The group estimated 6-10 years to put this model in place. I don't think we have that much time.

The exhibit hall seemed much smaller this year. I've used the size of the exhibit hall as a gauge of the "health of health care" in the past. I remember when the halls at this conference were immense with huge displays by some of the vendors. I didn't see that today- but I'll spend more time there tomorrow.

So, it's going to be an interesting few days here. Bottom-line- the health care marketplace is going to change and health plans, providers, employers, and consumers had better be ready.

Until tomorrow from San Diego