Healthcare: Survival of The Fittest

According to Levin and Associates, mergers and acquisitions in the healthcare industry totaled over $227 billion, an 11% increase over 2010 and the fourth-largest year of the past decade. Even more interesting, is that the value of healthcare services deals increased 43% while technology decreased 2%.  Hospital systems are moving into new communities, integrated health systems are acquiring additional delivery system assets, managed care networks are growing, and specialty care service businesses are expanding their footprint---to be well-positioned for survival in a post-reform world.

This is the type of data we shared with TripleTree's Health Executive Roundtable--the investment bank's "think tank" comprised of a diverse group of health industry executives with backgrounds ranging from banking, medical device, education and life sciences; to food services, technology, human capital management, and compliance. 

We asked each Roundtable member: "What are the key trends that will emerge from this consolidation?" 

Their independent and unique perspectives are published in:  

Viewpoint: A Kaleidoscope of Insights Regarding Growth Opportunities amid Consolidation in the Healthcare Industry. 

You can view and download the report here. 

In addition, you are invited to participate in a webcast on Wednesday, February 29, 2012 from 12-1 pm CST where we will discuss the highlights and key themes from the report.   You can register for the webcast at:  https://www2.gotomeeting.com/register/771534410.  After registering you will receive a confirmation email with information about joining the event.
 

As a preview. the following are the highlights and key themes from the report: 

1. Healthcare costs will increase. It's all about supply and demand. Market consolidation sets the stage for increasing healthcare costs as fewer, large, hospital and healthcare systems leverage their size and strength during unit cost contract negotiations with payors.
2. Contraction of the delivery system = expansion of demand for meaningful innovation to combat the pressures of #1.  However, the only "new new things" that will survive are those that solve real problems with a scalable, cost-efficient solutions that integrate with the existing healthcare infrastructure. 
3. B to C solutions require B to B revenue streams. Consumer adoption is critical for demonstrating relevance, but consumers don’t typically fund high  growth enterprises.
4. "Health and Wellness" will transition to "Life and Well-Being." Payers and employers will seek innovations that support life and well-being as the distinction between work, home and health become increasing blurred.
5. Healthcare gaming will emerge--actually, it will explode.  Gaming platforms that integrate entertainment, interaction, and achievement will be a transformational solution for driving consumer engagement and behavior change as well as provider education, training, delivery, research and cost containment. 
6. Electronic health records will evolve into smart health information technology ecosystems. These ecosystems will (finally) enable the coordination of care and drive shared accountability among healthcare providers.  
7. Doctors will be loyal to a single system.  (Smart) hospitals and health systems will attract and retain doctors with mobile and wireless software applications that enhance personal income and lifestyle.
8. The most disruptive solutions are likely to come from outside the traditional healthcare industry.  The core assets and capabilities that fuel retail, consumer packaged goods, banking, and telecommunications, for example, can be translated into unique and meaningful  healthcare solutions by companies and individuals not trapped in parochial "we've always done it that way" thinking. 

A  “perfect  storm”   is brewing where science and technology have no boundaries, and the convergence of reform and unsustainable medical costs are generating opportunities for change.  I can't think of a more exciting time to be in healthcare. 

I look forward to your feedback via blog post comments, personal email, or during the webcast.

Create Health, 

Archelle

Rebuttal to Last Week's Blog, Death of Disease Management (Finally)

Last week's blog, The Death of Disease Management, was well....provocative.  It received unexpected broad readership and was reposted on Managed Care Magazine Online. 

Here is a fantastic "rebuttal" to my blog by Al Lewis, Executive Director of the Disease Management Purchasing Consortium and someone I consider the "father" of disease management.

In the spirit of collaboration, I am re-posting Al's blog and encourage you to read it.  It's this type of constructive dialogue (and banter...which Al is always good for!) that will help identify the opportunities for change that we need to advance health. 

Reports of the Death of Disease Management Are Greatly Exaggerated

Submitted by Al Lewis on Sat, 2012-01-14 10:28

 

There have been unsavory rumors flying around the internet that disease management as practiced today may not be all that effective. I’m not going to reveal who started these rumors but her name rhymes with Archelle Georgiou. This person says disease management is “dead.” Since there are still many disease management departments operating around the country apparently oblivious to their demise (and disease management departments are people too, you know), I suspect this commentator was using the word "dead" figuratively, as in: “The second he forgot the third cabinet department, Rick Perry was dead." (Another example of presumably figurative speech in the death category would be: "After he denounced gays while wearing the Brokeback Mountain jacket, you could stick a fork in him.")

And if the rhymes-with-Archelle commentator intends “dead” as a synonym for “not in very good shape,” she certainly has a point.  Not only does she have a point, but I would add more items to her list of reasons for the field's current troubles:
(1) The interval between diagnosis (the point where readiness to change is usually greatest) and successful patient contact can exceed three months;
(2) Predictive modeling “risk scores” that tell you only how sick someone was, dressed up as a “risk score,” not how sick they will be, even though they aren’t already high utilizers;
(3) Some interventions are so expensive that they exceed the cost of the disease;
(4) The physicians are still not involved;
(5) Rather than using actual mathematically sound methodologies to calculate results, many vendors and consultants damage the credibility of the entire endeavor by believing in the Outcomes Fairy.

Fortunately, there are improvements afoot to address all of these issues:
(1) Electronic medical records presage faster claims adjudication, and ICD-10s will mean much more detailed patient information than is possible today. And disease management departments are already coordinating with UM/precertification/discharge planning better than even two years ago. Together, these innovations will match people with programs much faster;
(2) Predictive modeling is increasingly including the lab scores. “Increasingly” meaning that instead of 1% of models having lab data, maybe 3% do. Still, it’s a start. Lab values allow actual prediction, instead of simply drawing a line connecting last year’s high claims to this year’s high risk scores;
(3) The cost of interventions is declining quite rapidly, largely with the advent of mHealth (use of mobile communications devices in health care), which is hugely overrated by venture capitalists as a vehicle for getting rich from, but quite appropriately rated as a way to facilitate contact with members if indeed privacy regulations get rewritten to assume that the only person who answers a cellphone is the owner of that phone, and hence no “opt-in” app is needed;
(4) Some physicians are getting involved because their contractual arrangements and accreditation, such as patient-centered medical homes, are requiring it;
(5) And finally, my own forthcoming book, Why Nobody Believes the Numbers: Separating Fact from Fiction in Population Health Management, will take care of the last item. Imagine the Outcomes Fairy-meets-The Hurt Locker. Credibility will be restored for those vendors whose outcomes are modest but valid. The introduction may be downloaded gratis from www.dismgmt.com .

Is disease management dead? No. It is going through a transition period in which older models are being replaced via “creative destruction” and plain old innovation with newer models. This isn’t too much fun now but ultimately this trial-and-error process should create health-improving interventions that are truly effective in preventing, forestalling and addressing some small but significant portion of the 75% of cost attributable to people with chronic disease.
So I think perhaps these two seemingly conflicting posts are in broad agreement, the only difference being that what I believe is well-founded, evidence-based optimism that the industry can innovate its way out of the current stagnation. On this point, only time will tell. In a few years we should know, to quote the immortal words of that aforementioned great philosopher Rick Perry, whether or not who is right.
 
Al Lewis is Executive Director of the Disease Management Purchasing Consortium 

Originally posted online by Managed Care Magazine

The Death Of Disease Management (Finally)

In 1995, Dr. Steven Rosenberg published an article in the New England Journal of Medicine (NEJM) that fueled the start of an industry.  In a randomized, controlled trial, he showed that an investing in proactive disease management (DM) activities could decrease the cost and improve the quality of life for patients with congestive heart failure.

The premise of disease management seemed intuitive:

·      Systematically assure that evidence-based medicine is applied.

·      Educate and empower patients to practice self-care.

·      Intensely manage the sickest 5-10% of the patients driving 80% of the costs.

Healthplans, employers and other payers (and I) jumped on the bandwagon hoping that these programs would be a consumer-friendly silver bullet to escalating health care costs.

Cardiac Solutions, Matria, LifeMasters and American Healthways, among others, became household names. In addition, business opportunities abounded: 

·      Disease Management Association of America was founded in 1999.

·      NCQA developed an DM accreditation program in 2002.

·      Data analytics companies developed predictive modeling tools to better identify the highest risk patients.

·      Employee benefits consultants promoted the “new new thing” for cost control.

But, behind the scenes, there was a lot of hand-wringing.  On the eve of a major Disease Management conference, circa 2004, I remember sitting in the bar of an Orlando hotel having cocktails with DM gurus who who’d nabbed the coveted keynote speaker spots at this major forum. The Medicare Modernization Act of 2003 had just passed, and CMS had a mandate to test the disease management model in Medicare fee-for-service beneficiaries. I was shocked when my industry colleagues admitted that this $20 billion industry would only last as long as it would take for the pilots programs to be completed and CMS to analyze the results.

In the mean time…double-digit healthcare cost inflation fueled employers demand for a wide array of condition-specific programs as a cost reduction strategy.  According to Mercer Consulting, in 2010, 73% of employers offered disease management programs even though consistent, reproducible evidence of a positive ROI is still lacking.

It’s been seven long years since that Orlando meeting…and the time has come when will disease management may finally…finally…. fizzle and die.

The CMS demonstration programs started between August 2005 and January 2006 and preliminary results reported in 2008  concluded that "Results to date indicate limited success in achieving Medicare cost savings or reducing acute care utilization."   The individual programs, all using nurse-based call centers, ended between December 2006 and August 2008, and the definitive results were published in NEJM in November 2011.  In summary:

• Only 2 of 15 programs resulted in reduced hospital admissions. None generated net savings.

• There were only 14 significant improvements in process-of-care measures out of 40 comparisons.

• These modest improvements came at substantial cost to the Medicare program in fees paid to the disease management companies ($400 million), with “no demonstrable savings in Medicare expenditures.”

So, why did this intuitive approach to managing disease fail?

In my opinion, there have been 3 critical missteps in the evolution of this industry:

1)    NCQA Accreditation Standards: NCQA’s health plan accreditation standards require that DM programs be population-based—in other words, that ALL individuals with a condition be eligible for participation--not just those at highest risk who are most likely to benefit clinically and financially.  Healthplans and vendors complied to achieve the marketing value of the NCQA gold seal of approval. Employers bought into this approach in the spirit of “prevention.”  However, this peanut butter approach allocates time and money to individuals who are so low risk that there is little opportunity for clinically meaningful improvement that translates into financial savings.

2)  Toys and Trinkets: From glossy brochures to felt puppets to refrigerator magnets, DM companies have differentiated themselves with collateral materials that have sales appeal but have little impact on improving care or decreasing utilization.  At the same time, all these all of these items inflate program costs and erode ROI.  At the end of the day, DM that does not achieve a net savings is not successful.

3)   Over-reliance on Evidence-Based Medicine: Yes, EBM is the holy grail. However, the sole reliance on these standards in disease management interventions does not actually "manage disease” since avoidable costs are frequently due to subtle opportunities and gaps in care that exist as a result of multiple co-morbidities.  For example: A patient in a diabetes DM program may also have rheumatoid arthritis. If the patient’s hand/joint pain is not well managed, it is unlikely that she will be able to comply with manually operating a glucometer to check her blood sugars. Unfortunately, the critical thinking required to truly coordinate care is difficult to systematically build into program design....therefore, too often, its absent.

So, if disease management doesn’t work, what does?

This month, hundreds of health care entities will be submitting proposals to CMS to get a piece of the $1 billion funding available through the Health Care Innovation Challenge.   As CMS grants between $1 M and $30 M to various projects, let’s hope that they fund initiatives that reflect fresh, not "same old, same old"  thinking for improving health and decreasing cost. 

Technologies and platforms that are relatively low cost, scalable and seem the most promising are those that leverage:

1)    Social networking—Condition-specific communities of patients continue to proliferate and the user-generated content from “people just like me” is having a positive impact on compliance, self-care, and quality of life.

2)    Gaming: Health gaming is extending far beyond Wii Fit. Game developers are designing increasing numbers of consumer-oriented applications that address prevention, healthy lifestyles and disease self-management.

3)   Remote monitoring: Biometric and ambient activity sensors offer clinicians and caregivers 24/7 insight to a person’s clinical status so that care can be delivered when it’s needed rather than when it’s scheduled.

4)    Mobile/wireless health management applications: In addition to consumer focused health management apps, mobile and wireless access to patient medical information accelerates how physicians make critical diagnostic decisions and can prevent delays in care.

5)   Environmental solutions:  Innovative companies are poised to transform health care with disruptive products and systems that rely on design thinking--solutions that make it easy to be healthy, passively and continuously support better health,  and don't rely on individual behavior change.

Proposals are due January 27, 2012. Awards will be announced in March. Results won’t be in for 3 years.

In the mean time, employers looking for immediate health care cost savings can save $2-5 per member per month in fees by terminating their disease management programs. 

Disease Management: RIP

. 

Sweat The Small Stuff

For the last 2 months, I've exited the blogosphere....and plunged into the dance studio.

As mentioned in my last post, I am a "celebrity" dancer for the Annual CornerHouse Let's Dance event scheduled for November 12. While the evening of the gala will be an exciting finale to four months of preparation, it's really been the process of getting ready that has been extraordinary. Take a look at this 1-1/2 minute video for a 'behind the scenes' glimpse:

Link: Dancing with Bruce, the planet's most patient dance instructor

The video is a humorous promo for the event. The more important transformation transcends the dancing and comes from "the small stuff" --- brief but important moments that made me pause and translated into meaningful insights:

• On technology: We selected a song that was 34 seconds too long.  At 9:15 am one morning,  while driving to work, I used my cell phone to call a professional production company.  By 9:25, David (of David & David Productions) had downloaded the song from iTunes and we were discussing the areas to splice. At 9:45, I got my first cut; by 10 am, I had a 2 min 29 sec version of the song loaded onto my iPod. Thank you David..and Steve Jobs. Technology is truly amazing. 

• On people: After looking at more than 1000 dresses on line (yes, 1000),  my favorite was a lace and crystal extravaganza made by Randall Designs.  Custom made for L'il Kim (the rapper) when she danced the Argentine Tango on Dancing With the Stars, the dress is for (re)sale, but the price tag...excessive. As a last resort, I asked Randall Designs if they could help me and explained the charity. To my surprise, they graciously agreed to let me borrow the dress for the night. Generosity is abundant. 

• On health: By itself, dancing once or twice a week hasn't been rigorous enough to get me in shape. But, the pressure of a performance has suppressed any desire to binge, got me back on the treadmill and motivated me to lift weights every day. The result: I'm a little lighter and a little firmer (for now) with greater appreciation for the power of the accountability that arises from publicly stated goals. Competition is an important element of behavior change. 

• On purpose: Many of us receive donation solicitations and dutifully write our checks to various charities. However, in this case, complementing the financial support by getting personally engaged has connected me to the cause and touched my heart in a way I didn't expect. Whether you are passionate about breast cancer, a religious institution, a political candidate, human rights, or legal advocacy....immerse yourself. You will get back much more than you give.  Philanthropy is more meaningful when you give of yourself..not just your money.

• On human rights: During a recent tour of the CornerHouse, my spine shivered when I learned that in the room next door, a young girl was disclosing the details about her sexual abuse. This story repeats itself 3 times a day...every day. Child abuse is real. 

• And so many more. 
  

So, as hard as it is for me...I will "just ask" if you would support the children served by CornerHouse by voting for your "favorite" dancer.  Here is the link.  Each vote costs $5.  You can buy as many votes as you want using the online link below.  I would greatly appreciate it.

Create Health, 

Archelle