Health Care ‘Texas Style’: A Model for the Nation?
In the aftermath of Atul Gawande’s landmark piece ‘The Cost Conundrum‘ and the selective emergence of the ‘Mayo v. Mc Allen‘ mantra, I’ve been tweeting of late on the ‘irony’ of certain Texas health markets, particularly given the concentration of hospital assets in non profit health systems, and the timely question of whether such consolidations produce the ‘community benefits’ proffered by their leadership. The recently published Commonwealth Fund study ‘Aiming Higher: Results from a State Scorecard on Health System Performance, 2009‘ has supplied certain metrics to further contextualize the conversation.
First some background: I spent 13 years in the Lone Star state, initially advising a major national proprietary hospital management company’s implementation of its managed care strategy in the Houston market, followed by implementation physician networks for a 140,000 member global risk Medical Group, and finally managing payor and provider contracts for a joint venture ‘Super PHO’ affiliated with a dominant faith based hospital system in Dallas/Fort Worth.
Now mind you, everything in Texas is big – especially its delivery system players who have literally architected quite beautiful (and very expensive) ’cathedrals of medicine’. Examples include: the Texas Medical Center (an NIH like cluster of some 12+ competing institutions), Memorial Hermann Health System, Baylor Health Care System and Texas Health Resources to name a few of the trophy properties. Yet, years after the roll out of the strategic plans of these health systems, and the fulfillment of their market share objectives, certain of the state’s health care indicators look quite grim when contrasted to other parts of the country.
One might wonder why? Afterall, the typical pre-merger or alliance argument in favor of consolidation, acquisition or market expansion, was typically framed as follows, it will:
· Improve quality
· Improve access
· Increase operating efficiencies; and
· Lower costs
Yet according to the Commonwealth Fund study, and now years after these consolidations, here’s how Texas ranks on key metrics of health status compared to all 50 states, and the District of Columbia.
· Overall: 46
· Access to care: 51
· Prevention & Treatment: 43
· Avoidable Hospital Use & Costs: 42
· Equality between rich and poor: 50
· Equality between non-Hispanic white and minority: 48
· Healthy lives: 21
· Children with medical and dental check-ups in past year: 40
· Adults with a regular doctor: 49
· Medicare reimbursements: 46
· Infant mortality: 19
· Breast-cancer deaths: 18
· Colorectal cancer deaths: 15
· Adults who smoke: 17
· Overweight or obese children: 32
Not exactly ‘best in class’. So why not ask, where is the ostensible and promised ‘community benefits’ and not just those codified in IRS code, to justify the tax exempt status for most of the entities above? How is this ‘return’ (to the community) being measured; (is it via Medicare or Medicaid ‘shortfalls‘, or charity and bad debt write-offs; or some tangible real world contribution); or is it even accurately measured? The IRS 990 filings are somewhat ‘fluid’ on the specific reporting of activities that count towards community benefit.
Most, if not all, of these institutions are primarily ‘non profit’ (with some affiliate JV exceptions) yet they are aggressively managed to generate a surplus of revenue over expenses; after all ‘no margin, no mission’. While they do not have stock holders or investors per se, they do have bonds that require adequate debt service coverage in order to maintain favorable credit ratings and competitive access to capital.
This is where the ’story’ for the consolidations and, for some, the unspoken truth of the matter emerge, IMO. While perhaps stated in the vision for some, most of the benefits of consolidation are to be found in the pricing leverage that comes from asset concentration. Hospitals want higher rates, and payors (health plans and insurance companies) can tell you how difficult it was, and likely remains today, to extract material discounts from these massive institutions given their scale and market dominance.
So the question remains open: have they delivered, or are they just plain ‘doin’ it wrong’? Is the promised value proposition a reality today for the Texas residents they purport to serve? Based on these, and other metrics, many would say no. Rather than more of these Texas sized giants, why not refocus the Lone Star state on their one home grown version of a ‘Mayo Clinic’ model domiciled in Temple, Texas aka ‘Scott and White‘.
In the next blog post, i’ll touch on the physician role in the Texas market, and the historical rise and fall of physician driven integrated delivery systems in particular.
Health Care Reform in Perspective
A ‘Post Mortem” in the midst of health reform hysteria courtesy of the New England Journal of Medicine (Note: this is NOT for those craving sound bytes for emotive grand standing at ‘town halls’; will require active cerebral engagement):
President Barack Obama has placed U.S. health care reform at the top of his domestic agenda, and months of legislative work on the issue have resulted in five bills — three in the House of Representatives and two in the Senate — that proponents believe will move the country in the direction of universal coverage, a fairer insurance system, and slower escalation of health care costs. On September 25, in a symposium cosponsored by the Journal and the Harvard School of Public Health, four health policy experts — Henry Aaron, Katherine Baicker, Jacob Hacker, and Mark Pauly — explored the promise and limitations of the bills and the outlook for reform. The discussion was moderated by Arnold Epstein of the Journal and the Department of Health Policy and Management at HSPH.
What follows is a portion of the transcript of the program featuring: Arnold M. Epstein, M.D., Henry J. Aaron, Ph.D., Katherine Baicker, Ph.D., Jacob S. Hacker, Ph.D., and Mark V. Pauly, Ph.D.
For the complete transcript click here. Page one only is pasted below:
Perspective Roundtable: Health Care Reform in Perspective.
Introduction
DR. ARNOLD EPSTEIN: Past, present, and future. That’s the sequence, that’s how it unfolds. Let’s look back. When President Obama was candidate Obama, just a year ago, when we did our last forum here, he was very clear about his domestic priorities. The economy was number one, and after that was health care and energy. And he has not wavered one bit. And if you look at how health policy has unfurled from the White House, I wouldn’t be the first one to comment that it looks like a redux of reverse Clintonism. For if you go back to 1993, President Clinton wrote the first textbook. He came out in January, and at the end of the month, created a task force of federal bureaucrats, advisors, and counselors to ultimately produce a 1300-page document called the Health Security Act. Enormous in its scope and complexity, and what was remarkable about it is it came totally out of the executive branch. Not a whit out of Congress. It took until September before it was even introduced to the populace, leave alone going through the committees. And the President, to demonstrate his commitment to it, said, with a typical Clintonian gesture, it will be universal coverage and not one bit less. And he appointed his wife to head the task force putting the bill forth as an additional sign of his resolve, not to mention her own formidable ability. And despite that ability, and his resolve, it did not work, and we did not get health reform last time. No legislation.
So this time, we see President Obama really following a totally different script. No executive task force, just the opposite. This is Congress’s job, to propose the laws and make them. And it was the executive’s job, at least until 2 weeks ago, to merely espouse eight very broad principles and to partake in a very modest public relations campaign — getting information, regional forums, things like that. And Mr. Obama made it clear that he wanted something simple, not with labyrinthine complexity. Let’s stick to what we’re familiar with. He made it clear that he was ready to compromise — I have eight principles, but I’m ready to give in. And, oh, yes, please get on it, time is of the essence.
And so now we’ve come full circle towards the endgame. It’s September, and 2 weeks ago today, President Obama took eight principles and started to hone in on some of the things that he thinks are most important. And in Congress, we’ve seen the Congress do its job, still doing its job. Five committees of jurisdiction, three of them in the House, Ways and Means, Labor, and Energy and Commerce, have produced HR 3200, slightly different variants out of each committee, but basically the same bill. The HELP Committee — Health, Education, Labor, and Pensions in the Senate — has produced a bill on the delivery system, but they can’t touch finance. And the Finance Committee is marking up as we speak. Cont’d
Perspective Roundtable: Health Care Reform in Perspective.IntroductionDR. ARNOLD EPSTEIN: Past, present, and future. That’s the sequence, that’s how it unfolds. Let’s look back.When President Obama was candidate Obama, just a year ago, when we did our last forum here, he was very clearabout his domestic priorities. The economy was number one, and after that was health care and energy. And he hasnot wavered one bit. And if you look at how health policy has unfurled from the White House, I wouldn’t be the firstone to comment that it looks like a redux of reverse Clintonism. For if you go back to 1993, President Clinton wrotethe first textbook. He came out in January, and at the end of the month, created a task force of federal bureaucrats,advisors, and counselors to ultimately produce a 1300-page document called the Health Security Act. Enormous inits scope and complexity, and what was remarkable about it is it came totally out of the executive branch. Not a whitout of Congress. It took until September before it was even introduced to the populace, leave alone going throughthe committees. And the President, to demonstrate his commitment to it, said, with a typical Clintonian gesture, itwill be universal coverage and not one bit less. And he appointed his wife to head the task force putting the bill forthas an additional sign of his resolve, not to mention her own formidable ability. And despite that ability, and hisresolve, it did not work, and we did not get health reform last time. No legislation.So this time, we see President Obama really following a totally different script. No executive task force, just theopposite. This is Congress’s job, to propose the laws and make them. And it was the executive’s job, at least until2 weeks ago, to merely espouse eight very broad principles and to partake in a very modest public relationscampaign — getting information, regional forums, things like that. And Mr. Obama made it clear that he wantedsomething simple, not with labyrinthine complexity. Let’s stick to what we’re familiar with. He made it clear that hewas ready to compromise — I have eight principles, but I’m ready to give in. And, oh, yes, please get on it, time isof the essence.And so now we’ve come full circle towards the endgame. It’s September, and 2 weeks ago today, President Obamatook eight principles and started to hone in on some of the things that he thinks are most important. And inCongress, we’ve seen the Congress do its job, still doing its job. Five committees of jurisdiction, three of them in theHouse, Ways and Means, Labor, and Energy and Commerce, have produced HR 3200, slightly different variants outof each committee, but basically the same bill. The HELP Committee — Health, Education, Labor, and Pensions inthe Senate — has produced a bill on the delivery system, but they can’t touch finance. And the Finance Committeeis marking up as we speakPerspective Roundtable: Health Care Reform in Perspective.IntroductionDR. ARNOLD EPSTEIN: Past, present, and future. That’s the sequence, that’s how it unfolds. Let’s look back.When President Obama was candidate Obama, just a year ago, when we did our last forum here, he was very clearabout his domestic priorities. The economy was number one, and after that was health care and energy. And he hasnot wavered one bit. And if you look at how health policy has unfurled from the White House, I wouldn’t be the firstone to comment that it looks like a redux of reverse Clintonism. For if you go back to 1993, President Clinton wrotethe first textbook. He came out in January, and at the end of the month, created a task force of federal bureaucrats,advisors, and counselors to ultimately produce a 1300-page document called the Health Security Act. Enormous inits scope and complexity, and what was remarkable about it is it came totally out of the executive branch. Not a whitout of Congress. It took until September before it was even introduced to the populace, leave alone going throughthe committees. And the President, to demonstrate his commitment to it, said, with a typical Clintonian gesture, itwill be universal coverage and not one bit less. And he appointed his wife to head the task force putting the bill forthas an additional sign of his resolve, not to mention her own formidable ability. And despite that ability, and hisresolve, it did not work, and we did not get health reform last time. No legislation.So this time, we see President Obama really following a totally different script. No executive task force, just theopposite. This is Congress’s job, to propose the laws and make them. And it was the executive’s job, at least until2 weeks ago, to merely espouse eight very broad principles and to partake in a very modest public relationscampaign — getting information, regional forums, things like that. And Mr. Obama made it clear that he wantedsomething simple, not with labyrinthine complexity. Let’s stick to what we’re familiar with. He made it clear that hewas ready to compromise — I have eight principles, but I’m ready to give in. And, oh, yes, please get on it, time isof the essence.And so now we’ve come full circle towards the endgame. It’s September, and 2 weeks ago today, President Obamatook eight principles and started to hone in on some of the things that he thinks are most important. And inCongress, we’ve seen the Congress do its job, still doing its job. Five committees of jurisdiction, three of them in theHouse, Ways and Means, Labor, and Energy and Commerce, have produced HR 3200, slightly different variants outof each committee, but basically the same bill. The HELP Committee — Health, Education, Labor, and Pensions inthe Senate — has produced a bill on the delivery system, but they can’t touch finance. And the Finance Committeeis marking up as we speak.
Off to HealthCamp SF Bay & Health 2.0
While approaching a one year tenure in the micro-blogging space aka Twittersphere; and a fraction thereof as a periodic health care blogger, I am off to San Francisco with beaucoup energy to link up with like minded Tweeps for face to face conversations.
First stop on Monday is HealthCamp SFBay hosted at the Garfield Center for Innovation (a Kaiser operation), where I expect to see Mark Scrimshire, founder and tireless evangelista for the Healthcamp un-conference series, as well as Cindy Throop, Mike Kirkwood, Maren Connary, and Sherry Reynolds (those that I understand to be attending).
On Tuesday I get to experience my fist ever, aka ‘virginal,’ Health2.0 event at the San Francisco Concourse Design Center. I kinda feel that for someone who’s been on sabbatical for a while, these events will afford me the opportunity to re-engage with my tribe, i.e., a collective of like minded people committed to be the change for better in their lives with a particular passion in the health care space. Almost a coming home experience since my days at UC Berkeley in the 70s; yeah tribe!
But best of all; I get to experience a ‘road trip’ from San Diego to San Francisco accompanied by my youngest son, and Dave Matthews band junkie, Brendon (not too happy with dad here); and that both of us get to stay with my oldest son Anthony in his Ocean Beach flat, with Catherine and “saddie-mo’, a three year old bundle of joy.
Cool deal, out for the week tweeple! I, and many others, will be live tweeting from both venues…
Mayo Clinic ‘Transform’ Healthcare Symposium
The visionaries at Mayo Clinic are at it again.
On September 13-15th, 2009, the Mayo Clinic Center for Innovation is hosting a collaborative symposium entitled ‘Transform‘. This event intends to engage ’stakeholders’ in the timely yet complex conversation of how to reform the health care experience, including its over-engineered, under performing and unsustainable panoply of failed business models.
The net is cast wide to include and crowdsource the entire spectrum of interested parties from physicians, hospitals and health plans to bloggers, ‘twitterers’, scientists, designers, health policy wonks and artists.
The goal is to transform both how health care is experienced, delivered, and lest we forget, financed. The symposium intends to be ‘organic’ and ignite both real time (at conference and via the ‘twittersphere’) and a post event, after market continued engagement in this very timely conversation.
Why Attend?
- To be part of the solution.
- To connect with thoughtful colleagues from inside and outside the health care industry.
- To discover new models of care that will transform the experience and delivery of health care in the 21st century.
Lots of talented and forward thinking tweeple speaking and likley to participate in this event.
So who’s going to be the anchor model in medicine? Will it be Mayo or McAllen? The stakes are high, so why not be the change you want to see Tweeple…. lets get ‘er done!
A Health Reform “Desiderata” Courtesy of New York Times Op-ed…
Go placidly amid the noise and the haste, and remember what peace there may be in silence.
As far as possible, without surrender, be on good terms with all persons.
Speak your truth quietly and clearly; and listen to others, even the dull and the ignorant, they have their story.
Avoid loud and aggressive persons; they are vexations to the spirit.
July 26, 2009
EDITORIAL
Health Care Reform and You
The health care reform bills moving through Congress look as though they would do a good job of providing coverage for millions of uninsured Americans. But what would they do for the far greater number of people who already have insurance? As President Obama noted in his news conference last week, many of them are wondering: “What’s in this for me? How does my family stand to benefit from health insurance reform?”
Many crucial decisions on coverage and financing have yet to be made, but the general direction of the legislation is clear enough to make some educated guesses about the likely winners and losers.
WHAT ARE THE ELEMENTS OF REFORM? The House bill and a similar bill in the Senate would require virtually all Americans to carry health insurance with specified minimum benefits or pay a penalty. They would require all but the smallest businesses to provide and subsidize insurance that meets minimum standards for their workers or pay a fee for failing to do so.
The reforms would help the poorest of the uninsured by expanding Medicaid. Some middle-class Americans — earning up to three or four times the poverty level, or $66,000 to $88,000 for a family of four — would get subsidies to help them buy coverage through new health insurance exchanges, national or state, which would offer a menu of policies from different companies.
IS THERE HELP FOR THE INSURED? Many insured people need help almost as much as the uninsured. Premiums and out-of-pocket spending for health care have been rising far faster than wages. Millions of people are “underinsured” — their policies don’t come close to covering their medical bills. Many postpone medical care or don’t fill prescriptions because they can’t afford to pay their share of the costs. And many declare personal bankruptcy because they are unable to pay big medical debts.
The reform effort should help ease the burdens of many of them, some more quickly than others. The legislation seems almost certain to include a new marketplace, the so-called health insurance exchange. Since there will be tens of millions of new subscribers, virtually all major insurers are expected to offer policies through an exchange. To participate, these companies would have to agree to provide a specified level of benefits, and they would set premiums at rates more comparable to group rates for big employers than to the exorbitant rates typically charged for individual coverage.
Under the House bill, the exchanges would start operating in 2013. They would be open initially to people who lack any insurance; to the 13 million people who have bought individual policies from insurance companies, which often charge them high rates for relatively skimpy coverage; and to employees of small businesses, who often pay high rates for their group policies, especially if a few of their co-workers have run up high medical bills. By the third year, larger businesses might be allowed to shift their workers to an exchange. All told, the Congressional Budget Office estimates that 36 million people would be covered by policies purchased on an exchange by 2019.
IS THERE MORE SECURITY FOR ALL? As part of health reform, all insurance companies would be more tightly regulated. For Americans who are never quite certain that their policies will come through for them when needed, that is very good news.
The House bill, for example, would require that all new policies sold on or off the exchanges must offer yet-to-be-determined “essential benefits.” It would prohibit those policies from excluding or charging higher rates to people with pre-existing conditions and would bar the companies from rescinding policies after people come down with a serious illness. It would also prohibit insurers from setting annual or lifetime limits on what a policy would pay. All this would kick in immediately for all new policies. These rules would start in 2013 for policies purchased on the exchange, and, after a grace period, would apply to employer-provided plans as well.
WHO PAYS? Current estimates suggest that it would cost in the neighborhood of $1 trillion over 10 years to extend coverage to tens of millions of uninsured Americans. Under current plans, half or more of that would be covered by reducing payments to providers within the giant Medicare program, but the rest would require new taxes or revenue sources.
If President Obama and House Democratic leaders have their way, the entire tax burden would be dropped on families earning more than $250,000 or $350,000 or $1 million a year, depending on who’s talking. There is strong opposition in the Senate, and it seems likely that at least some burden would fall on the less wealthy.
Many Americans reflexively reject the idea of any new taxes — especially to pay for others’ health insurance. They should remember that if this reform effort fails, there is little hope of reining in the relentless rise of health care costs. That means their own premiums and out-of-pocket medical expenses will continue to soar faster than their wages. And they will end up paying higher taxes anyway, to cover a swelling federal deficit driven by escalating Medicare and Medicaid costs.
WHO WON’T BE HAPPY? Healthy young people who might prefer not to buy insurance at all will probably be forced to by a federal mandate. That is all to the good. When such people get into a bad accident or contract a serious illness, they often can’t pay the cost of their care, and the rest of us bear their burden. Moreover, conscripting healthy people into the insured pool would help reduce the premiums for sicker people.
Less clear is what financial burden middle-income Americans would bear when forced to buy coverage. There are concerns that the subsidies ultimately approved by Congress might not be generous enough.
WHAT IF I HAVE GOOD GROUP COVERAGE? The main gain for these people is greater security. If they got laid off or chose to leave their jobs, they would no longer be faced with the exorbitant costs of individually bought insurance but could buy new policies through the insurance exchanges at affordable rates.
President Obama has also pledged that if you like your current insurance you can keep it.
Right now employers are free to change or even drop your coverage at any time. Under likely reforms, they would remain free to do so, provided they paid a penalty to help offset the cost for their workers who would then buy coverage through an exchange. Under the House reform bill, all employers would eventually be allowed to enroll their workers in insurance exchanges that would offer an array of policies to choose from, including a public plan whose premiums would almost certainly be lower than those of competing private plans.
Some employers might well conclude that it is a better deal — for them or for you — to subsidize your coverage on the exchange rather than in your current plan. If so, you might end up with better or cheaper coverage. You would probably also have a wider choice of plans, since most employers offer only one or two options.
WILL I PAY LESS? Two factors could help drive down the premiums for those who are insured. In the short-term, if reform manages to cover most of the uninsured, that should greatly reduce the amount of charity care delivered by hospitals and eliminate the need for the hospitals to shift such costs to patients who have private insurance. One oft-cited study estimates that cost-shifting to cover care for the uninsured adds about $1,000 to a family’s annual insurance premiums; other experts think it may be a few hundred dollars. In theory, eliminating most charity care should help hold down or even reduce the premiums charged for private insurance. When, if ever, that might happen is unclear.
In the long run, if reform efforts slow the growth of health care costs, then the increase in insurance costs should ease as well. And if the new health insurance exchanges — and possibly a new public plan — inject more competition into markets that are often dominated by one or two big private insurance companies, that, too, could help bring down premiums. But these are big question marks, and the effects seem distant.
WILL MY CARE SUFFER? Critics have raised the specter that health care will be “rationed” to save money. The truth is that health care is already rationed. No insurance, public or private, covers everything at any cost. That will not change any time soon.
It is true that the long-term goal of health reform is to get rid of the fee-for-service system in which patients often get very expensive care but not necessarily the best care. Virtually all experts blame the system for runaway health care costs because it pays doctors and hospitals for each service they perform, thus providing a financial incentive to order excessive tests or treatments, some of which harm the patients.
An earlier wave of managed care plans concentrated on reining in costs and aroused a backlash among angry beneficiaries who were denied the care they wanted. The most expensive treatment is not always the best treatment. The reform bills call for research and pilot programs to find ways to both control costs and improve patients’ care.
The bills would alter payment incentives in Medicare to reduce needless readmissions to hospitals. They would promote comparative effectiveness research to determine which treatments are best but would not force doctors to use them. And they call for pilot programs in Medicare to test the best ways for doctors to manage and coordinate a patient’s total care.
Any changes in the organization of care would take time to percolate from Medicare throughout the health care system. They are unlikely to affect most people in the immediate future.
WHAT DOES IT MEAN FOR OLDER AMERICANS? People over 65 are already covered by Medicare and would seem to have little to gain. But many of the chronically ill elderly who use lots of drugs could save significant money. The drug industry has already agreed to provide 50 percent discounts on brand-name drugs to Medicare beneficiaries who have reached the so-called “doughnut hole” where they must pay the full cost of their medicines. The House reform bill would gradually phase out the doughnut hole entirely, thus making it less likely that beneficiaries will stop taking their drugs once they have to pay the whole cost.
Not everyone in Medicare will be happy. The prospective losers are likely to include many people enrolled in the private plans that participate in Medicare, known as Medicare Advantage plans. They are heavily subsidized, and to pay for reform, Congress is likely to reduce or do away with those subsidies. If so, many of these plans are apt to charge their clients more for their current policies or offer them fewer benefits. The subsidies are hard to justify when the care could be delivered more cheaply in traditional Medicare, and the subsidies force up the premiums for the beneficiaries in traditional Medicare to cover their cost.
Reformers are planning to finance universal coverage in large part by saving money in the traditional Medicare program, raising the question of whether all beneficiaries will face a reduction in benefits. President Obama insisted that benefits won’t be reduced, they’ll simply be delivered in more efficient ways, like better coordination of care, elimination of duplicate tests and reliance on treatments known to work best.
The AARP, the main lobby for older Americans, has praised the emerging bills and thrown its weight behind the cause. All of this suggests to us that the great majority of Americans — those with insurance and those without — would benefit from health care reform.
http://www.nytimes.com/2009/07/26/opinion/26sun1.html
