Category Archives: Hospitals

Are Massachusetts healthcare costs ok after all?

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The best defense is a good offense. I assume that’s what Partners HealthCare CEO David Torchiana had in mind when he penned First do no harm in the Boston Globe. In a nutshell, he argues that healthcare costs in Massachusetts are more affordable for businesses and individuals than elsewhere in the country, that they are becoming relatively more affordable, and that the state should resist the urge to impose further cost controls.

I’ve made similar arguments about affordability myself. See for example, Massachusetts: Land of affordable health insurance from back in 2011.

And yet…

While Massachusetts has retained its affordability relative to other states, healthcare is taking up a higher and higher percentage of families’ incomes, including in Massachusetts. Medicaid and other healthcare spending dominates the state government’s spending growth, squeezes out discretionary initiatives for priorities such as education, and necessitates the tough budget cuts Governor Charlie Baker is making.

I’m sure I’m not the only one whose eyebrows were raised by Torchiana’s sanguine perspective.

Partners also should not claim too much credit for the reasonableness of healthcare spending in Massachusetts, considering that its own costs are among the highest. Despite receiving substantially higher reimbursement from commercial payers than other providers and enjoying a richer payer mix, Partners recently reported a record loss of $108 million for the year. Meanwhile, its smaller rivals –including those who treat a higher proportion of Medicaid patients and receive lower commercial reimbursement rates– are reporting better financial results.

If Partners had remained just Massachusetts General Hospital and the Brigham & Women’s Hospital I don’t think its executives and lobbyists would have to expend so much effort fending off the state. Massachusetts residents are justifiably proud of the worldwide reputations of these hospitals, which draw tremendous research dollars from the NIH and elsewhere, attract patients from around the world, and are equipped with the medical expertise and equipment to treat the most complex conditions.

No, the issue is that over the years Partners has dramatically expanded its footprint throughout the region, buying up or partnering with community hospitals and physician practices, and expanding its own overheads as it grapples with the balance between central and devolved management. Partners is now in the business of providing routine care throughout the region, and that helps drive up costs and puts the company in the spotlight. As the state grapples with bringing costs in line with benchmarks, Partners cannot expect to be given a free pass.

So there are a couple of alternatives: #1: Partners can bring its own costs closer in line with rivals or #2 it can divest its community assets and focus on being a great academic medical center. From what I can see, Partners is pursuing a light version of #1 while simultaneously slowing its plans to further expand in the community and mounting a charm and lobbying offensive with the state and the public.

By healthcare business consultant David E. Williams, president of Health Business Group.

BIDMC and Lahey talk merger; I’m quoted

Beth Israel Deaconess Medical Center and Lahey Health are talking again about a merger. From the Boston Globe:

Top executives from the two hospital systems are discussing a possible merger, according to people with direct knowledge of the negotiations, the fourth time they have explored a deal in the past five years.

I’m quoted:

David E. Williams, president of Health Business Group, a Boston consulting firm, said Beth Israel Deaconess has been looking for ways to grow its network since its biggest rivals, Mass. General and Brig-ham, merged in 1994 to create Partners.

“Beth Israel Deaconess never got involved in the original Partners transaction, and ever since then they’ve been looking for a way to get bigger and be stronger like Partners,” he said. “Lahey is a strong, medium-sized player that’s come up time and again.”

From what I understand, this may actually be the fifth set of talks, not the fourth. Both players are high quality and relatively low cost, so a combination could create a strong, efficient alternative to Partners.

But mergers are complex and risky, so there are reasons not to move too fast. In particular, the board and management of each institution has to decide if the specific deal is good for their own organization. In the past that case hasn’t been made convincingly. It’s not clear that it will be any different this time.


By healthcare business consultant David E. Williams, president of Health Business Group.

Boston Children’s gets the go-ahead. I’m quoted

From the Boston Globe (Children’s gets green light for hospital expansion, with conditions)

Massachusetts health regulators said Friday that Boston Children’s Hospital should be allowed to go forward with a $1 billion expansion project, a recommendation that seeks to support one of the state’s premier hospitals without undermining efforts to control medical spending.

The staff at the Department of Public Health recommended approval of the plan to build an 11-story building in Longwood and an eight-story outpatient clinic in Brookline.

Here’s my quote:

“DPH seems to be trying to satisfy everyone here, including taxpayers, health insurers, [Children’s Hospital], and competing hospitals,” said David E. Williams, president of Health Business Group, a Boston consulting firm. “The conditions DPH lays out may help achieve these goals, but it is hard for a government agency to manage the hospital market so tightly.”

Children’s plan to use its expanded capacity to draw patients from out of state and overseas is consistent with the hospital’s overall strategy. DPH appears to accept Childrens’ explanation, but wants assurances that MassHealth patients will not be displaced and that Childrens will not attempt to lure well insured, healthier patients away from local competitors.

Ironically, DPH seems to be fighting the last war. After all it was Partners, not Children’s, that expanded widely within the local market. Meanwhile Children’s big recent acquisition was in New York, New Jersey and Connecticut not Massachusetts.

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By healthcare business consultant David E. Williams, president of Health Business Group.

Medicare and the end of racial segregation in healthcare

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The story of how Medicare ended segregation in healthcare settings is a pretty remarkable one. Temple University Professor David Barton Smith’s  The Power to Health: Civil Rights, Medicare, and the Struggle to Transform America’s Health Care System brings the events of 50 years ago to light.

“In four months [government bureaucrats] transformed the nation’s hospitals from our most racially and economically segregated institutions to our most integrated,”he writes. “A profound transformation, now taken for granted, happened almost overnight.”

In the early 1960s healthcare was even more segregated than the economy as a whole. In Southern states there were separate hospitals for whites and blacks; there were separate waiting rooms in physician offices, with black patients seen last.

The 1964 Civil Rights Act prohibited racial discrimination in programs that received federal funds. But when Medicare was enacted in 1965, no one really took the provision seriously. After all, the Brown v. Board of Education decision a decade earlier had not led to rapid progress in school desegregation.

And yet Wilbur Cohen and a small team from the Social Security Administration and Public Health Service put together rules that prevented hospitals that discriminated from receiving Medicare funding. Learning their lesson from the failure of Brown’s “all deliberate speed” language, which had let school segregation fester, the team decided to enforce the rules from day 1.

Since hospitals couldn’t afford to forego Medicare, desegregation was achieved in a matter of months. Imagine that.

Image courtesy of podpad at FreeDigitalPhotos.net

By healthcare business consultant David E. Williams, president of Health Business Group.

MGH marketers take on Boston Children’s

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The doctor will see you now –and forever

I was driving along in Boston last weekend when I heard an intriguing radio advertisement for MassGeneral Hospital for Children, the pediatric division of Massachusetts General Hospital (MGH).

MGH is a world famous hospital, but when it comes to pediatrics it’s much smaller, less well known, and lower ranked than Boston Children’s Hospital –the #1 rated children’s hospital by US News.

I thought MGH picked a clever angle for the ad: highlighting a patient with Crohn’s disease who was diagnosed at age 10 and is now an adult. The message: illnesses that occur in childhood may need ongoing care into adulthood. Therefore why not start with a hospital that cares for children and adults? Boston Children’s isn’t mentioned, but it’s the clear target.

The Crohn’s example is not accidental. It’s a fast growing illness among kids, and it lasts for life. I don’t have the data but my sense is that it must be a highly profitable line of business for hospitals because of the frequent surgeries, endoscopy, and use of biologic drugs. (I would have been surprised if they had uses a common but non-lucrative disease like diabetes.)

The transition from a pediatric to adult gastroenterologist is an important step on the patient journey. A bad transition can be stressful and even lead to worse health outcomes. I’d be interested to learn what processes MGH has in place to make the transition smoother for its patients than what Children’s can offer. (I’ll have to research that.) It’s also unclear how highly to weigh this factor when choosing a place for a child to be treated, especially if that child might move away for and after college.

I don’t want to sound too cynical on this. In my own experience, I’ve seen physicians from Children’s and MGH –including in gastroenterology– collaborate closely to help one another’s patients. If you have a child with inflammatory bowel disease and live near Boston, count your blessings.

Image courtesy of kdshutterman at FreeDigitalPhotos.net

By healthcare business consultant David E. Williams, president of Health Business Group.

Sutter’s Dr. David K. Butler on EMR-enabled transformation

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Dr. David K. Butler

Dr. David K. Butler came to healthcare as a digital native, unwilling to accept the paper-based status quo. In about a decade he went from using Microsoft Word to make medical notes legible to being named Epic Systems Physician of the Year for his contributions to the field of EMR implementation and optimization.

Butler is VP of EHR Optimization and Transformation at Sutter Health. In this podcast interview, I asked him to share his opinions and expertise. You’ll hear interesting perspectives on workflow, video games, and more.

  • (0:13) You went into medicine to be a practicing physician. How did you get interested in EMRs?
  • (2:58) EMR implementation has supporters but also detractors. What do you say to people who complain that EMRs have ruined the practice of medicine?
  • (6:36) In a decade you went from your first insight on electronic record keeping to being name Epic Physician of the year. How did it happen? What does it mean?
  • (9:32) How do video games fit into your view of how an EMR should operate?
  • (12:50) You work near Silicon Valley. What are you seeing from startup companies there? How do you advise them?
  • (16:18) What changes do providers need to make in EMR utilization as they shift from fee-for-service to value based payments?

By healthcare business consultant David E. Williams, president of Health Business Group.

Scaling up bundled payments: Interview with Loopback Analytics CEO Neil Smiley

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Neil Smiley, Loopback Analytics CEO and Founder

Neil Smiley is CEO and Founder of Loopback Analytics, which supplies tools to providers to manage bundled payments. I asked him to comment on the growth of bundled payments and the role of analytics.

Why are hospitals hesitant to adopt bundled payment options?  What strategies can long-term care providers take to encourage bundled payment adoption on a large scale?

In most cases, a hospital’s financial responsibility ends upon patient discharge.  Bundled payments significantly lengthen the care episode, making hospitals responsible for the costs of downstream care partners.  The shift to value-based reimbursement from our current environment of fee-for-service represents a sea-change for the industry.  Decades of business practices, clinical relationships, payment structures and core competencies are being reevaluated in light of this new payment model.  Such evaluation and reflection takes time, and we are starting to see leading organizations embrace this challenge as an opportunity to develop differentiating capabilities.

Long-term care providers can help accelerate this process through proactive engagement with their hospital colleagues.  Hospitals will need better data from their post-acute care partners to have confidence that they can consistently deliver efficient care and strong clinical outcomes.  The long-term care providers that can demonstrate these capabilities pave the way for hospitals to better understand, trust and rely on the broader care delivery pathway they must manage with bundled payments.

What are the main benefits patients will reap from bundled payments?  

Bundled payments have the potential to significantly improve patient outcomes through better care coordination across providers and care settings.

Under a fee-for-service payment model, there is little financial incentive to help ensure a patient makes a successful transition to skilled nursing after an acute care stay, or ensuring that patient successfully transitions home after leaving a skilled nursing facility.

Under bundled payments, there is now an aligned incentive with providers across care settings to ensure transitions are clinically successful and financially efficient.  Patients are likely to get more help in navigating multiple silos of care, when participating providers are financially responsible for the cost of poor outcomes.

What factors are holding back scalability of bundled payments options?

Broader scalability of bundled payment options will be paced by the availability of accurate and timely data from network participants and workable frameworks for sharing risks and rewards among bundled payment partners.

At the national level, CMS has relayed its intention to aggressively advance pay-for-value reimbursement models, with bundles being a prominent example.  Ready or not, the expectation is that bundles will quickly expand to include additional conditions and broader mandated participation.

At a health system level, first movers that have invested in the tools, competencies and partnerships needed to succeed in bundle configurations will be courting more bundle opportunities to take advantage of their lead in the market.

What is the role of analytics in bundled payment? Can you provide an example?

Advanced analytics are absolutely essential to success in bundled payments.

Bundled payments require that different providers across the care continuum come together to consistently deliver a clinically successful and financially efficient episode of care.  Without deep knowledge of potential partners’ strengths and weaknesses, a bundled payment manager stands a poor chance in creating a winning network.

CMS provides data to healthcare systems, ranging from high-level quality ratings to detailed, individual claims records.  With effective application of data analytics, these sources of information, combined with data from network partners can be used to create the most effective care delivery network possible.

How will analytics advance over the next 5 years? 10 years? How do you measure progress?

Looking towards the future, we expect a pronounced shift from retrospective, historical analytics to prospective, predictive analytics.  The former allows healthcare systems to accurately assess their current and historical states, and is an essential component for improving operations.  The latter allows healthcare systems to avoid costs and adverse clinical events before they even occur.  The availability of real-time health data will continue to grow with the proliferation of digital monitoring devices. Machine learning and predictive algorithms are already establishing themselves in matching patients with appropriate resources based on a diverse set of data markers.  We foresee significant expansion on this front in the coming years.

With so many analytics solutions vendors out there how do you distinguish yourself?

Loopback Analytics puts analytics into action.  Loopback has an integrated technology platform that allows our clients to move from investigatory analytics to data-driven interventions, through a platform  that provides a closed loop feedback system to ensure executed actions achieve the expected impact.

It is only through such an integrated solution that healthcare organizations can be assured that the problem is understood, the appropriate actions executed and impact quantified.

By healthcare business consultant David E. Williams, president of Health Business Group.