Thursday, May 07, 2015

Non-profit vs For-profit

There is concern in Massachusetts about a reported decline in the quality of care following the purchase of ten nursing homes in the state by Synergy Health Centers, a for-profit nursing home chain (Woes follow nursing home chain’s arrival, The Boston Globe, May 5, 2015).   The article discusses similarly reported declines in nursing homes recently purchased by Genesis Health Care and Zenith Health Care Group, two other for-profit chains. 

It all poses the issue of what role for-profit enterprise should play in the provision of health care services.

Professionalism is a very important component of our health care culture.  We believe that those who provide diagnosis, treatment and care should put the patient’s interest over their own.  They should not behave in ways that are of financial or other benefit to them but are of no value or damaging to their patients.  The reason we don’t let doctors sell medicine is because we don’t want them to be tempted to make money by prescribing a drug the patient doesn’t need or might find harmful.

As our health care system moves towards financial mechanisms that incentivize providers to do less rather than more, we will see whether the for-profits can discipline themselves to resist the temptation to withhold needed services in order to increase profits for investors. 

To some extent that will also be an issue for non-profit providers but the absence of private investors looking for a return will reduce the intensity of the temptation and public ownership will provide a more effective means of redress if they succumb. 


Thursday, April 30, 2015

Cost and Culture

I like aphorisms and one of my favorites is this – no hospital administrator ever got his portrait in the lobby for saving money.

That one has been apt for a long time and still is, but things seem to be changing.  Here are a couple of quotes from an editorial that appeared in the March 16 issue of Modern Healthcare:

“Over the past two years, conventional wisdom presumed without offering much in the way of evidence that the lingering recession and the rise of high-deductible and narrow network plans explained the slowdown of healthcare spending, now in its fifth year.”

“Indeed, most economists and the media echo chamber repeatedly said rapid spending growth would resume once the economy picked up steam.”

“But now, finally, the Mr. Joneses at the Congressional Budget Office have come around to admitting that something is happening here, even if they don’t know what it is.”

One possibility is that there has been a shift in the culture.  Somehow, public concern about cost, the inclusion in Obamacare legislation of cost-reduction measures, more aggressive tactics by insurance companies, the growth of so-called value based payment mechanisms and other factors seems to have made it acceptable for management to be more aggressive in pursuing cost reduction measures, even when that gores somebody’s ox.

Culture is a powerful thing and may someday even get a cost-reducing administrator’s portrait in the lobby.

Sunday, April 19, 2015


Interoperability is the fancy word used to describe the ability of computers containing electronic medical records (EHRs) to communicate with one another.

Interoperability is one of the main potential benefits of EHRs.  Making a patient’s medical information available to every doctor and hospital would be an enormous boon and make better care possible at lower cost.         

According to the April 13 issue of Modern Healthcare, some $29 billion has been spent under the Affordable Care Act (a.k.a. Obamacare) to promote the development of EHRs, a program that has emphasized interoperability.  Eleven years ago, President George W. Bush created the Office of the National Coordinator for Health Information Technology with a mandate to implement a “nationwide…interoperable health information technology infrastructure.”  But according to a survey conducted by the publication, only 11% of respondents claimed to have routine interoperability across the country – presumably with the rest of the 11%.  17% said they had interoperability within their individual states.

The April 17 issue of the New York Times carried an editorial on the subject, blaming the lack of interoperability on “transfers being blocked by developers of health information technology or greedy medical centers that refuse to send records to rival providers.”

It all seems to be a part of the whole EHR debacle.  In concept, the situation doesn’t seem to me to be all that complex.  To achieve interoperability, computers containing EHRs either have to be able to talk to each other or they have to be able to talk with a computer or a few computers that can talk to all of them.  That means there has to be some level of commonality among the EHR programs and once the basic structure is decided upon, that commonality would be defined and required to be included in all EHR programs and providers required to use it.

Maybe there is a good reason why that hasn’t been done, but I can’t imagine what it is.

Wednesday, March 18, 2015

Market Forces in Health Care

What role should market forces play in health care?

As a general rule, we Americans believe that market forces are very useful.  People having to make choices based on what things cost assures a certain level of economic discipline, directing resources to uses considered most valuable and giving producers an incentive to innovate and be more efficient.

But we have been ambivalent about applying those forces when it comes to providing and obtaining health care services.  We tend to think of health care as a ministry that should be shielded from commercial considerations.

At the same time, if by driving an extra five miles a patient needing an MRI could receive one for half the price, that seems to be a reasonable thing to expect.  But if the MRI is covered by health insurance, the incentive to do so becomes very weak because the savings go to the insurance company, not the patient.

Many have addressed that problem and suggested the need for a system of financing that gives the patient some “skin in the game.”  The February 16 issue of Modern Healthcare included an interview with Mark Ganz, CEO of Cambia Health Systems, a health plan conglomerate operating in the northwest states.  Ganz is quoted as saying “Imagine if healthcare were priced to consumers.”  He cites drugs as an example and argues that involving the patient’s pocketbook more heavily in the purchase would reduce the cost of health care.

He may be right, but I am also impressed by the argument that sick people are not good shoppers for health services because their attention is focused primarily on their illness.

My own view is that a better approach is for health plans to assemble panels of providers with which they have negotiated prices.  They then offer separate health insurance policies, each covering services provided by a specific panel at a stated premium price.  Customers choose from among the competing panels and prices when they are well and able to give careful consideration to the choices.

It is an issue that we ought to be debating. 

Monday, March 09, 2015

Reinventing Health Care

The February 23 issue of The Boston Globe carried an article headlined “To reinvent health care is goal of 22 fellows.  The lead sentence read as follows:

“Harvard Medical School’s Center for Primary Care has launched InciteHealth Fellowship, a new program that brings together 22 talented individuals eager to transform the delivery of health care in the United States.”

I wish them luck, but caution them to be modest in their expectations.

It is easy for us to ignore the depth to which our system of health care is rooted in our culture.  Our feelings about the importance of health are intense.  Our attitudes towards the caring professions and our relationships with them are strongly held.  Those feelings and attitudes change over time, but very slowly.

As is often the case with the print media, the content of the Globe article didn’t quite live up to its headline.  The project as explained seems more oriented to the use of technology to improve care than to a total redesign of the health care system.

Useful gadgets and computer applications are always welcome but reinventing health care requires tinkering with the organ located between our ears.


Friday, March 06, 2015

Professional Licensure and the Cost of Care

Last February 18, the US Supreme Court in a 6-3 decision ruled that the Federal Trade Commission was allowed to charge the North Carolina State Board of Dental Examiners with “anticompetitive and unfair actions.”  It seems that spas and salons in the state had been offering teeth whitening services, a service that had been shut down by the Board as constituting the practice of dentistry without a license.  The Board is dominated by dentists and Justice Kennedy opined that “Active market participants cannot be allowed to regulate their own markets free from antitrust accountability.”

Professional licensure is among the major barriers to cost reduction in health care.  Adopted for the purpose of protecting the public from charlatans and unqualified providers, they now effectively prevent provider organizations from experimenting with different, more efficient ways of organizing and staffing the delivery of health care services. 

A case in point is the use of nurse practitioners and physician’s assistants to provide primary care.  There is reason to argue that it ought to become standard practice and some of it is happening but the change is proceeding at snail’s pace.

The North Carolina decision does not address that issue, but it reminds us that professional licensure can have consequences other than those initially intended.


Tuesday, February 10, 2015

Still No Portrait in the Lobby

Anyone who knows me well will be aware of my fondness of aphorisms, one of which is that no hospital administrator ever got his portrait in the lobby for saving money.

As a follow-on to the publicity about the judicial rejection of Partners’ expansion plans and the appointment of its new CEO, The Boston Globe in its February 6 edition ran another front page article under the byline of Robert Weisman, this time headlined Partners looks to mend ties, tame costs.

The article pointed out that “Fears of higher health care costs were at the root of opposition to Partners’ recently rebuffed [expansion] plans” and that “A state judge cited rising health costs when she rejected a settlement in late January that would have allowed the [expansion.}”

Later in the article, the new CEO (Dr. David Torchiana) is quoted as saying “In Massachusetts, there is an almost overwhelmingly singular focus on cost because access has already been addressed” through the state’s 2006 universal health care law.

That same Globe edition carried an article reporting that health insurance companies in Massachusetts are projecting a 7% increase in costs for 2015.  That is almost twice the goal of 3.6% set by the state in 2012.   

Dolores Hamilton, a human resources director for the Town of Framingham, responded to the announced increase by saying "It's a budget-buster" and the article speculated that many employers would be passing the increase along to employees through higher copays and deductibles.  No mention of the need for providers to find less costly ways of providing care.

So we may not yet be ready to live with the pain of serious cost control.  There are signs that we are on the road to getting there but hospital executives who hope to see their portraits in the lobby will for the time being have to get it some other way.


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