hospitals

Can Price Transparency in Health Care Really Lower Costs?

By M2|2019-08-21T14:53:39+00:00August 20th, 2019|Health care spending, Health Care Trends, Hospitals, Insurance, Out-of-pocket spending, Physician-patient communication, Providers, Reimbursement, Uncategorized|

Can Price Transparency in Health Care Really Lower Costs?

Telling patients what they will pay for their health care services is a key stepping stone to more efficient use of health care dollars. Consumers, employers, payers, and the system as a whole would likely benefit if the true cost to the patient were made available before a patient receives a health care service or product.

Several states already have laws on the books requiring health care providers to make at least some price information available on at least some procedures. Some states also run centralized databases where different payers report what they get paid for different services. Additionally, the federal government requires hospitals to post a list of standard charges on the internet.

The Trump Administration wants providers to further expand the price and quality information to consumers, and issued an Executive Order (EO) on Improving Price and Quality Transparency in American Healthcare to Put Patients First in late June. The order aims to help consumers make “well-informed decisions” and expand transparency efforts that provide information “which patients can research and compare before making informed choices based on price and quality.”

More specifically, the EO directs the U.S. Department of Health and Human Services (HHS) to require hospitals to publish negotiated rates in a searchable, consumer-friendly format for 300 “shoppable” services.

You Can Shop if You Want To

Consumers are being asked to make more of these decisions on their own, as we’ve described in previous posts. My home state of Colorado has a shopping tool like the one the EO has in mind. It took me less than a minute to get the result below from the Colorado Center for Improving Value in Health Care (CIVHC) for an MRI scan of a leg joint within 15 miles of my ZIP code:

Shop for Health Care Services – MRI Scan, Leg joint (CPT 73721)

Seems pretty obvious that while the closest option, seven miles away, is Centura Health St Anthony Hospital, they would charge me $510 for the scan. If I drive another five miles, I would only have to pay $150 at Denver Health Medical Center.

“Shoppable,” but Perhaps Not “Buyable”

According to the Health Care Cost Institute (HCCI), “For a health care service to be ‘shoppable’, it must be a common health care service that can be researched (“shopped”) in advance; multiple providers of that service must be available in a market (i.e., competition); and sufficient data about the prices and quality of services must be available.” HCCI estimates that approximately half of out-of-pocket spending is spent on “shoppable ambulatory doctor services.”

The problem is, you might be able to research and compare certain services with upgraded information, thus improving your shopping experience, but you might really struggle to buy the service that is lower in cost.

Using the example of lower-limb MRIs, a 2018 study titled Are Health Care Services Shoppable? Evidence from the Consumption of Lower-Limb MRI Scans found that people typically drive by multiple lower-priced providers to get to their final treatment location. Why? Because that is where the patient’s referring provider sends them. The study shows “the influence of referring physicians is dramatically greater than the influence of patient cost-sharing or patients’ home ZIP code fixed effects.”

In particular, “physicians who are vertically integrated with hospitals are more likely to refer patients to hospitals for lower-limb MRI scans.” We’ve written previously about how costs vary dramatically by site of care. That also means patient cost-sharing varies. We are asked to pay more out-of-pocket for a service we could get elsewhere. But that would mean 1) shopping and 2) acting against the advice of a provider. Not impossible tasks, but difficult for sure.

Increased transparency means you can shop for services, but that is only half of the problem. Yes, it is important to have price and quality information. If the problem were a technical one, more information would lead to different decision making. But in fact, changing the way a consumer selects a health care service – even a “shoppable” service – is an adaptive problem. That is, it requires a change in the way people think, prioritize, and behave.

Additional information on quality and price is definitely necessary, but if I drive by two Centura Health facilities with lower cost MRIs to get to the HealthOne facility my referring provider recommended, I would also need some encouragement, at least, to go against my physician’s recommendation.

It looks like we health policy types have more work to do.

Consumerism: “Activity in Search of Strategy”

By M2|2018-07-17T19:59:47+00:00July 17th, 2018|Health Care Trends, Health Reform, Hospitals, Providers, Retail Health, Uncategorized|

Consumerism: “Activity in Search of Strategy”

Consumerism is a hot topic in health care. Whether you define it as (a) improved personalization (as Robert Sahadevan, Senior Vice President of Consumer Marketing & Analytics at Humana and formerly the VP of United Airlines’ Mileage Plus frequent-flier program does), or (b) understanding and meeting/exceeding customer expectations, or (c) encouraging patients to act like consumers by actively choosing where to spend their health care dollars, consumerism is a focus in practically every health care business across the country.

The trouble is, while consumerism is a focus, it seems much of this work in health systems and hospitals at least, is “activity in search of strategy,” according to KaufmanHall, a strategic, financial, and operational performance advisory firm.

The KaufmanHall 2018 Healthcare Consumerism Survey included more than 425 respondents across 200 health systems, stand-alone hospitals, children’s hospitals, and specialty hospitals. “Improving customer experience” was a top strategic priority for 90% of the respondents. Still, the survey found “these efforts need to be more strategic, more effective, and more rapidly implemented if legacy healthcare organizations are to grow and compete in an increasingly consumer-focused world.”

Where is the disconnect? Why is there so much activity that isn’t strategic or likely to be effective? Seemingly, it’s because these health care organizations are focused on the ways they would like to improve customer service, not necessarily on the ways consumers would like to see access and care changed.

Example 1: Consumer Access

The KaufmanHall 2018 survey respondents ranked high on access to bricks and mortar health care facilities. More than half said their organization had an urgent care center, 40% said they offered access to freestanding imaging sites, and outpatient centers were widely available.

More innovative care options, that some studies show are preferred by consumers, were not as common. Video visits were only available at 14% of the respondent facilities, and retail clinics were only available at 27% of health systems or hospitals surveyed.

Example 2: Consumer Convenience

Consumers who are accustomed to clicking a button and receiving a shipment later that day, or horrors, the following day, don’t want to wait a week or a month for an appointment to see a health care provider. Conveniences such as same-day scheduling of appointments, online scheduling, and extended hours are expected by consumers, but few organizations are delivering. The chart below shows only about a third of the KaufmanHall respondents offer same-day appointments or extended hours for primary care. Only 20% have fully implemented online self-scheduling.

Example 3: Consumer Frustration

Notably, interactions with the health care system that patients and consumers find frustrating are not typically much of a focus for health care organizations. One example is reducing office wait times. Just 17% of the KaufmanHall respondents have a full implemented initiative to address wait times. Another example is billing. It isn’t for lack of understanding billing as a customer pain point that organizations aren’t prioritizing it: “Billing is confusing and frustrating and stressful, and it is their last interaction with us,” one executive explained in the survey, yet only 28% of respondents had fully implemented customer-friendly billing statements. Organizations instead seem focused on changes easy for them to make, such as ensuring phone numbers are easy to find and providing customer service training for staff (see chart below).

Example 4: Pricing

“Of all the key areas related to consumerism in healthcare, pricing strategy provides the most room for improvement for the nation’s hospitals and health systems,” according to KaufmanHall. Asking any person who has interacted with the system, and indeed, most policymakers, you will get the same answer. Consumers need more information about the prices of the services or products they have been told to buy by their health care provider – whether a surgical intervention or prescription medication. Only 5% of the KaufmanHall respondents are “aggressively pursuing” consumer initiatives related to pricing strategy and/or price transparency. Only 10% list prices online and less than half can provide a consumer-requested price quote in a defined period of time.

Design Thinking Opportunity in Consumerism

We have written a book chapter titled, Using Small Step Service Design Thinking to Create and Implement Services that Improve Patient Care, for the upcoming book, “Service Design and Service Thinking in Healthcare and Hospital Management” from Springer Publishing (due out this fall). The chapter is about using design thinking in health care services and provides two case studies about organizations that have done it well. As the KaufmanHall 2018 State of Consumerism in Healthcare showed, many organizations are involved in activities that address the consumer experience, but most of these activities are not strategic aligned with what consumers actually want. Better understanding the customer – for example, by using the five-step design process – would likely improve these organizations’ efforts to exceed customer expectations. Until health care organizations can look outside their own experience, improving consumerism is likely to be very slow going.

It’s a Hospital, It’s a Health Plan, It’s Both!

By M2|2018-04-20T18:55:42+00:00April 20th, 2018|Health care spending, Health Plans, Hospitals, Insurance, Medicaid, Medicare, Uncategorized|

It’s a Hospital, It’s a Health Plan, It’s Both!

Tufts Health Plan (Watertown, MA) and hospital company Hartford HealthCare (Hartford, CT) have announced a joint venture to form an insurance company, which will focus on providing those over 65 who qualify for Medicare the alternative of purchasing a Medicare Advantage plan.

The “twist” with this joint venture is that it will bring together an insurer and a hospital firm in one company and “it’s a first for Connecticut.”

Like many of the new health care collaborations sprouting up, such as Aetna-CVS and Berkshire Hathaway, Amazon and JPMorgan, the name of the game right now is using data better to try to lower costs.

Hartford is looking to Tufts Health Plan to bring “insights around closing gaps in care, identifying members who have needs they may not even be aware of and better coordination of care,” James Cardon, Hartford’s chief integration officer, told the Hartford Courant. Tufts has 1.1 million members across New Hampshire, Massachusetts, and Rhode Island.

Collaborations between health plans and providers are not unknown; however, they are in “relative infancy, and many of the approaches don’t involve as extensive as a commitment that is implied and inherent in a joint venture,” according to Tufts CEO Thomas Croswell.

A key advantage of the joint venture is that it will combine clinical data from Hartford with claims data from Tufts Health Plan, giving the partners the ability to reach out to members. Inherent in these concepts is reaching patients before they have serious health care needs.

Hartford HealthCare CEO Elliot Joseph explained the joint venture was built specifically to address both organizations’ realization that there’s room for improvement in care for patients with chronic conditions, especially in helping seniors manage their care in order to avoid hospitalizations. If reducing costs is the goal, it makes sense that Tufts and Hartford HealthCare are focusing initially on seniors, given their high use of health care services; however, such a strategy is unlikely to work for other populations.

In another example of provider-insurer consolidation, Centene Corp., a Medicaid managed care insurer and the “dominant health plan on the Affordable Care Act exchanges,” plans to buy Florida-based primary-care provider Community Medical Group.

Community Medical will boost Centene’s scale and capabilities around care delivery, and Centene will gain access to the provider’s patient population.

Community Medical Group operates 13 medical centers and two specialty centers serving more than 70,000 Medicaid, Medicare Advantage, and Affordable Care Act exchange patients in Miami-Dade County, FL. As of the end of last year, Centene had 848,000 Florida plan members, and that number is expected to increase as it grows membership in the ACA exchange in Florida.

Centene also announced recently that it has agreed to buy MHM Services, a provider of health care and staffing services to correctional facilities and government agencies, serving 330,000 people.

This strategic approach is all about controlling where plan members receive care, similar to previous deals where an insurer buys a provider group. UnitedHealth Group’s Optum subsidiary bought DaVita’s medical group and acquired Surgical Care Affiliates last year. Humana also bought home healthcare provider Kindred Healthcare last year.

The health care system in the U.S. is changing rapidly. With less direction (or interference, depending on your point of view) from the federal government, health plans and provider groups are leading the way in creating new approaches for care delivery. Whether payers, including employers and consumers are better off, is yet to be seen.

Health Information Technology: Visioning vs. Planning

By M2|2017-10-08T11:51:55+00:00May 30th, 2017|EHRs, Health Care Trends, Health Information Technology, Hospitals, Uncategorized|

Health Information Technology: Visioning vs. Planning

A recent study in Health Affairs confirmed what health providers and their patients already know: During a typical patient, the health care professional spends more than half of his or her time staring at the computer, not talking face-to-face to the patient. As of 2015, about 96% of health care organizations have a certified electronic health records (EHRs), and by the end of 2013, 66% of physicians were using electronic prescribing. Just ten years ago, those numbers were much lower, with only 9.4% of hospitals using a basic EHR and only 7% of physicians e-prescribing. Behind the push to get hospitals and physicians using health information technology was the promise of using big data.

While there have been volumes written about this has worked well in some ways, and not so well in others, what is undeniable is that health care organizations, and the patients they serve are now digitally intertwined. It is unlikely the system will be going back to paper-only records any time soon, so are there ways to make health information technology (HIT) work better?

One point of view was recently published by Family Medicine for America’s Health (FMAHealth) which focused on what primary care physicians want from HIT. They argue, “in addition to putting up barriers to achieving the Triple Aim, the poor usability and utility is resulting in health IT contributing to the growing problem of physician burnout.”

After a one day Visioning Summit, FMAHealth put forth a vision based on the following design principles: HIT should:

“(1) foster connections among health care professionals, including the individuals and communities they serve, and the environment in which people live;

(2) accumulate and analyze data that can support these connections and address the needs of population health; and

(3) promote appropriate payment for health care.”

The vision is set forth in 1, 3, 5 and 10 year increments. For example, in one year, the group would like to see “Data visualization technologies, which make it easy for the clinician to see patterns and make insight, will emerge to support health-related decisions and actions.” In three years, technology will “provide easy ways to natively support healthy behaviors, such as improved diet and exercise…”. In seven years, the group hopes “We will effectively use technology to deliver meaningful and relevant health-related information at the right time in a way that is “frictionless” and supports bringing the joy back to the practice of medicine.”

In my opinion, HIT is capable of all kinds of things, many of which I am sure we only starting to understand. Bringing joy back to the practice of medicine might be really difficult, but FMAHealth is putting forth a vision, not necessarily a plan.

Leave the plan to the Chief Information Officers (CIOs)!

Considering all of the money, time and human resources invested in HIT, some CIOs argue that hospitals, health systems or large provider groups are essentially health care shops AND software shops. David Chou, CIO at Children’s Mercy Hospital in Kansas City, MO [check it is MO] explained, “the day you made that investment you became a software vendor.”

What are some of the ways to make this technology work better, according to these experts?

· Think like a software vendor (hint: clinicians are your customers!)

· Have a strong focus on the end user

· Use an iterative model to develop, test and get feedback from users

· If you can’t buy it, build it (don’t hesitate create a capability that works for your organization)

No matter our daily work – as policy makers, business owners, health care professionals, or patient advocates, we should all be focused on the end user, and on iterating. As the health care system continues to change, looking to some of the lessons of the fast moving and customer-focused industry of software development could be a great playbook to follow to improve HIT.

Service Business Model Innovation, the fourth case study from our recently published book chapter

By M2|2017-10-09T01:56:26+00:00April 13th, 2017|Uncategorized|

Service Business Model Innovation, the fourth case study from our recently published book chapter

As we a few weeks ago, M2HCC authored a chapter entitled “Essential Characteristics of Service Business Model Innovation in Healthcare: A Case-Study Approach” in Service Business Model Innovation in Healthcare and Hospital Management published by Springer. Today we share highlights from the fourth case study we feature in the chapter.

Sutter Health and the Sutter Medical Network
Sutter Health is a community-owned, not-for-profit health care system operating in northern California. The system has over 50,000 employees and 5000 affiliated physicians. Facilities include 24 hospitals, 34 outpatient surgery centers, 9 cancer centers, 9 neonatal intensive care units, 6 behavioral health centers, 5 acute rehabilitation centers, 5 trauma centers, and more than 4,000 licensed acute care beds. Sutter was recently named as one of the Healthgrades Top Hospitals in the U.S. for 2017.

We talked with Sarah Krevans, President and CEO of Sutter Health, and Don Wreden, M.D., Senior Vice President for Patient Experience, about how Sutter has been able to build the trust necessary to move from a diverse health care delivery system with inconsistent patient experience to a more integrated approach over the past several years. Their advice to build trust, cooperation and leadership? 1) Find a way to collaborate; 2) Embrace strong leadership; 3) Change takes time; 4) Acknowledge innovative ideas can come from anywhere.

Find a way to collaborate
Sutter was able to build trust that lead to service innovation, first, by finding ways to collaborate. Sutter’s collaboration efforts initially focused on selecting common clinical performance standards, goals and measurement mechanisms seeking to develop new and more efficient ways of delivering coordinated, consistent, high quality health care. It was essential to unite around common clinical goals so the medical group partners were motivated to work together in attaining clinical goals focused on patients. The common clinical goals were driven in part by looking at the varying practice styles of health care practitioners across the organization in a non-threatening way. For example, by aiming to reduce clinical variation, Sutter helped clinicians focus on the goal, instead of demanding practice style change.

As our Sutter case study interviewees described it, “we got our training wheels” by doing small, focused clinical initiatives where providers could agree on the goal and “could all understand how to work together.”

Embrace strong leadership
“We remember the health care market of the 1990s,” said Dr. Wreden, “where hospitals were buying medical groups without a clear strategy for clinical integration. We know now that didn’t work out in California.”

What Sutter did instead was nurture engagement of physicians in leadership roles and commit to educate and train physician leaders—which was part of a cultural evolution in the industry. Developing leaders, perhaps not surprisingly, requires a vision that embraces the importance of physician leaders.

One way to encourage leadership, Krevans explained, is not to be afraid of bringing in strong leaders through growth or mergers. If a strong leader exists outside the organization, it is okay to keep that leader engaged and interested in serving the Sutter mission when they come into the organization. As part of its commitment to developing leaders, one particularly innovative approach Sutter uses is to evaluate for leadership potential as part of the recruitment process. “We invest in team development,” Krevans said. Sutter seeks to ensure that it is growing and recruiting the right leaders; for Sutter, a leader needs to be thinking about how to better integrate the health care services the organization provides in service to the needs of the patient.

Trust takes time
Dr. Wreden further explained saying, “We facilitated this evolution by giving true responsibility to physician leaders. We ensured they were focused on partnership, collaboration, shared accountability” and they were serving patients the culture that supports a trusting, cooperative organization. However, both leaders acknowledged such an approach “is fragile, and takes time—it can’t be done in a year.”

These Sutter executives recognized that in today’s turbulent health care market, organizations needing to innovate will probably have to move faster than Sutter had to when they embarked upon this journey several years ago.

Acknowledge innovative ideas can come from anywhere
Finally, and uniquely in the case studies M2 wrote, the Sutter leaders advised health care organizations seeking to innovate their service model would do well to recognize innovation can come from people from a variety of backgrounds, including those with non-clinical training or experience.

For example, in 2015, Sutter hired Chris Waugh to be its first Chief Innovation Officer. Waugh had previously held leadership roles at IDEO, a global design firm that creates human-centered design. Sutter also relies on ethnographers, technologists, and other types of experts, to name a few, to ensure the organization is always improving at serving patients.

One of the key lessons from Sutter Health’s innovation experience is: “Don’t just value a particular kind of leader. Respect every member of the team,” according to Krevans. It is important to appreciate the skills and background of all different kinds of staff within the organization.

“Innovation in the service model and true breakthroughs will come from this range of expertise,” said Krevans.

Service Business Model Innovation, the second case study from our recently published book chapter

By M2|2017-10-09T02:00:19+00:00March 28th, 2017|Uncategorized|

Service Business Model Innovation, the second case study from our recently published book chapter

As we a couple weeks ago, M2HCC authored a chapter entitled “Essential Characteristics of Service Business Model Innovation in Healthcare: A Case-Study Approach” in Service Business Model Innovation in Healthcare and Hospital Management published by Springer. Today we share highlights from the second case study we feature in the chapter.

The BJC Collaborative
BJC HealthCare is based in St. Louis, Missouri and includes Barnes-Jewish Hospital and St. Louis Children’s Hospital. It is one of the largest nonprofit healthcare organizations in the U.S. and it is the largest provider of charity care in the state of Missouri. In 2012, Saint Luke’s Health System in Kansas City, Missouri, and CoxHealth in Springfield, Missouri, and Memorial Health System in Springfield, Illinois, joined BJC to form The BJC Collaborative. Over the past few years, four more organizations joined the Collaborative and members have combined annual revenues of over $9.3 billion but remain independent, serving residents of Illinois, Kansas, and Missouri.

The BJC Collaborative has three primary focus areas: 1) Implementing clinical programs and services to improve access to and quality of health care for patients; 2) Lowering health care costs and creating additional efficiencies that will be beneficial to patients and the communities served by the member organizations; and 3) Achieving cost savings. (BJC Collaborative 2016)

We talked with Sandra Van Trease*, group president of BJC HealthCare about how trust, cooperation and leadership have helped the Collaborative increase innovation year after year.

Common values and previous relationships
The importance of trust and relationships is on point, especially in this kind of organization, where entities are coming together as a collaborative, explained Van Trease. For example, the senior leadership of these organizations knew each other before the Collaborative was formed. “We already knew each other, we knew each entity was high performing, we held similar values, we all recognized a need for evolution and change in the healthcare system,” said Van Trease. Common values were a key component to building the Collaborative.

Service priorities should matter to staff and leadership
While it is clear that leadership and strong relationships drove the creation of the Collaborative, the process the Collaborative uses to determine priorities is also driven by a structure built on trust and leadership. It is essential to set service priorities that matter to both staff and leadership, not just one or the other.

Get results to improve results
Notably, Van Trease explained that getting results also helped to build trust, which in turn, drove improved results. High-performing systems are like competitive athletes, always wanting to improve and set higher goals. Getting results makes people more likely to trust each other, and the process, creating momentum that generates further progress, explained Van Trease.

Communicate what works
Finally, and one of the unique components of the four case studies M2 wrote, Van Trease explained that it is essential to celebrate and share successes and best practices that can be replicated is essential. At the BJC Collaborative, there is a dedicated communications roundtable that captures this information, writes it up, and then disseminates it to each local health system.

Talk to your team, then have them talk to each other. Have leaders work in close connection with team members. On paper, it doesn’t seem that difficult, but in practice, the BJC Collaborative worked hard to build trust, increase cooperation and show leadership to create a truly innovative service approach for their area of the United States.

*Blessing Health System in Quincy, Illinois (2013), Southern Illinois Healthcare in Carbondale, Illinois (2013), Sarah Bush Lincoln Health System of Mattoon, Illinois (2015), and Decatur Memorial Hospital in Decatur, Illinois (2016).

*Sandra Van Trease serves as a group president for BJC HealthCare, and provides strategic leadership and direction to the BJC Collaborative. In 2012, Van Trease was appointed president of BJC HealthCare’s Accountable Care Organization and leads BJC’s overall efforts in Population Health.