State health insurance exchanges lead off a top ten list of healthcare industry issues for 2013 issued Wednesday by PwC's Health Research Institute. The group's annual list of what to watch in healthcare this year also includes two issues that were the list in 2012: population health and pharma.
In a statement, Kelly Barnes, PwC's health industries leader says the millions of American who will be covered under the Patient Protection and Affordable Care Act will affect healthcare organizations already faced with a trifecta of full implementation of the PPACA, new consumer behaviors, and economic pressures to cut costs.
"By this time next year, the major provisions of the health reform law will be in effect, and the health industry has a lot of work to do before then," says Barnes. "It's now a foot race to 2014. The evolution of healthcare that has been in effect over the past several years will become a full-scale transformation in 2013."
State health insurance exchanges must be ready for open enrollment in October. Ceci Connolly, managing director of HRI, says there is a lot of work going on behind the scenes with payers who are looking to participate in the exchanges.
So far Aetna has said it will participate in at least 15 exchanges, including Connecticut, where four additional insurers have also agreed to also take part. As the federal government approves states' plans for exchanges, it's likely that more payers will announce plans to participate.
Whether state-run, federally run, or state-and-federally run, healthcare exchanges fundamentally shift the way healthcare is offered. It's this reason that HRI lists State's on the frontlines of the Affordable Care Act" as its number one issue for the industry this year.
The two other issues that appear on HRI's list from 2012 are population health and the pharmaceutical industry, though the concerns are different. On last year's list, population health was seen as a core reason for systems working together, namely Highmark's investment in West Penn Allegheny Health System and Optum, which bought into a company managing 2,300 physicians.
This year, population health remains a focus because PwC predicts more collaboration between insurers and providers in 2013.
In the pharmaceutical industry, HRI's report states the industry is poised for reimbursement challenges:
"Though pharmaceutical and medical device companies play a pivotal role in health outcomes, they will have to prove it to earn it by demonstrating their value and comparative effectiveness." Other issues to watch in 2013, according the HRI, include changing consumer behaviors, the medical device tax, and caring for the dual-eligible population. The full report may be downloaded from PwC's HRI website.
Also included in the report is a survey of 1,000 consumers on a range of healthcare topics including what 50% believe is the biggest obstacle to improving the U.S. healthcare system: politics. More than half—60% rank doctors as "the best hope" to improve the nation's system, ahead of hospitals and insurance companies.
This week's news that healthcare spending by consumers continues to grow at historically low rates is likely to continue according to the PwC Health Research Institute.
This week, the Centers for Medicare & Medicaid Services released its analysis of a report showing a 3.9% rate of healthcare spending growth in 2011. That's the lowest rate of growth recorded.
On the HHS blog, Kathleen Sebelius, secretary of Health and Human Services marked the milestone by noting, "That's the same rate of growth as in 2009 and 2010, and in all three years spending grew more slowly than in any other year in the 51-year history of the report."
Sebelius also went on to write that provisions in the Patient Protection and Affordable Care Act (PPACA) could help continue the slow growth trend, but Ceci Connolly, managing director of PwC Health Research Institute, says healthcare spending is down because of the recession and the subsequent weak recovery from the recession.
While such a cause and effect relationship may be reversed as the economy gets stronger, changes in consumer behavior over the last few years are likely to be more entrenched and part of the so-called 'new normal,' says Connolly.
"The growth in the use of retail clinics has gone from about 7.5% in the year 2007... to 24% in 2011," she says. "They're shopping around looking for better prices and better value."
Consumerism is changing the healthcare marketplace. Not only are retail clinics becoming a more popular place for healthcare (flu shots, anyone?), but one payer, Florida Blue, is selling its services in retail stores.
PwC's Health Research Institute has just issued a report listing the "consumer revolution in health coverage," as the number two issue to watch in 2013. It's second only to states getting prepared for health insurance exchanges this year, which, according to Connolly, will be a "sprint year," for payers who are ramping up for the exchanges quietly.
"We know from our work that a lot more is happening than is necessarily publicly announced and advertised right now," she says.
"A lot of these companies have been doing an enormous amount of preparation quietly behind the scenes, they were waiting for the Supreme Court ruling, they were waiting for the election results, they've been waiting to see some different rules and regulations, but they've been preparing and developing their plans and their strategies, and the infrastructure needed, and the personnel and a lot of that. So much more activity has taken place than perhaps is obvious."
Another factor slowing the growth of spending that is likely permanent comes as a result of physicians and physician groups joining hospitals as employees. Giving up their independence also means giving up physician preference purchasing.
"As more physicians are coming on staff at hospitals, they don't have that prerogative, so now the hospital can say we're buying one kind of stent, one kind of scalpel, one kind of pacemaker and [the hospital] can negotiate for a better price. That's one of the factors we identified as slowing growth," says Connolly.
Connolly says other factors are delay of care because it's too expensive and transparency laws that require consumers to see pricing and medical costs.
"It all adds up to flat growth rate at the moment," says Connolly, who also predicts the trend will continue through 2013. And what about next year?
"It's a little less clear what's going to happen in 2014 in part because of the new law is fully implemented," says Connolly. "We know it's going to increase total spending... but we don't know if the growth trend will actually alter."
In our annual HealthLeaders 20, we profile individuals who are changing healthcare for the better. Some are longtime industry fixtures; others would clearly be considered outsiders. Some are revered; others would not win many popularity contests. All of them are playing a crucial role in making the healthcare industry better. This is the story of Joseph Kvedar, MD.
This profile was published in the December, 2012 issue of HealthLeaders magazine.
"I can't call any doctor's office customer friendly, and these technologies give consumers and patients a way to directly connect and they tend to love it."
After nearly two decades of pioneering research into connected health as a reliable model for healthcare delivery, Joseph Kvedar, MD, has won fans and won over skeptics.
Kvedar is founder and director for the Center for Connected Health, part of Boston-based Partners HealthCare System. He started the Center in 1995 on the premise that healthcare doesn't always have to be delivered in a doctor's office or a hospital. His use of home monitoring, text messaging, and the now ubiquitous smartphone, shows improvements to patient health, provider efficiency, and a hospital's bottom line. His findings are just in time for the changing reimbursement reality, and for consumer demand of quicker access to personal medical data.
A self-described early adopter and gadget lover, Kvedar says he was always interested in how technology could make him more productive. In fact, he personally uses nearly a dozen tech tools everyday to monitor his own health, from wireless activity devices to medication reminders. "I'm a living laboratory for this stuff!"
Kvedar aimed his enthusiasm for technology at the healthcare industry nearly 20 years ago when he founded the Center for Connected Health. He says, his "aha" moment occurred when, as a dermatologist, he was involved in a research study that questioned whether a set of still, digital images could be a substitute for a dermatologic exam.
"The person who came in to be one of the blinded observers in the study sat down and did 30 cases in two hours. That was the turning point," he says.
Knowing there was no way to see that many patients in that short period of time led Kvedar to examine the traditional doctor-patient relationship.
"I hadn't really thought... you might be able to substitute images but you also might be able to be more efficient by asking the question whether the doctor and the patient always need to be in the same place at the same time. All these light bulbs went off, and I never looked back after that."
Kvedar's research predates the terms ACO and mHealth, but his findings solve contemporary problems, particularly in chronic disease management. For example, what began 10 years ago as a telemonitoring pilot program of congestive heart failure patients continues to show a 50% drop in the readmission rates.
Those results are particularly useful because Partners HealthCare is a Pioneer ACO. Kvedar says he is certain the health system will be able to show that not only can technology keep patients healthy and out of "brick-and-mortar" clinics, but also can help hospitals drive down costs to accommodate bundled payments, the PPACA, and payment caps. "You can't keep hiring people, that's 60% of our cost—labor. So, if you keep hiring people, you're not going to bend the cost curve. And, the technology is such that we can extend providers across larger numbers of patients."
Kvedar's use of technology and analysis of patient data has benefits beyond the balance sheet. His patient groups embrace things like uploading their blood glucose levels to an online program that is shared by doctors and nurses for diabetes management. Instead of feeling cheated that they didn't get any "facetime" with a doctor, the patients feel like they have a "hotline."
"Let's face it, we, in healthcare, have set up a system where we're hard to get to; we're hard to interact with; we're not really customer friendly. I can't call any doctor's office customer friendly, and these technologies give consumers and patients a way to directly connect and they tend to love it," he says.
One of the biggest cultural shifts has to come from doctors themselves. Kvedar says they have to let go of their traditional role of sole caretaker and hand over some control to patients.
"We believe, and we have evidence to support the notion, that as a profession we way under-appreciate what patients can do for themselves. We don't give them enough to do, we don't feel comfortable delegating to them; we're farmore paternalistic than we need to be." By and large, Kvedar says patients are ahead of providers in the tech curve and, once given a little bit of coaching, most are willing partners in managing their care. He points to success at one of the Center's programs where patients monitor their blood pressure from home.
"Their blood pressure data is fed into a website wirelessly so they can watch their trends, and their provider can watch their trends. We also give that particular group of patients algorithms so they can make changes to their own medications based on their blood pressure trends."
Kvedar's use of technology, all its data points, and nifty gadgets might seem to be the center of his research, but what really drives his work is patients: getting them healthier, faster. It just so happens that he also may have found a way to do it cheaper.
As health insurers look toward a year that will mark significant change in how they interact with consumers and the federal government, several issues over the Patient Protection and Affordable Care Act remain either unclear or unresolved from 2012.
Age ratings, medical loss ratios, and the sheer number of people looking for coverage, among other things, are still hurdles payers must overcome, though now the timeline to do so is even shorter because health insurance exchanges are due to come online in just 10 months.
There are many groups payers are watching to help make the 2013 healthcare landscape clearer not included on this list, but here are the top three groups whose actions will have the most impact on payers' decisions in the next 12 months.
1.Congress
The U.S. Senate and House waited until the last, the last possible moment before agreeing to avert the fiscal cliff. But its reluctance to forge a permanent solution brought in the New Year with a more of a whimper than of a bang for the healthcare industry.
The Sustainable Growth Rate (SGR) problem was sort of solved. To the relief of physicians, there will be no 26.5% cut to reimbursement rates, but the fix is still temporary. Medicare reimbursement rates for physicians will remain the same only through the end of this year.
The one-year fix will be paid for by other healthcare cuts that include reducing Medicaid Disproportionate Share Hospital (DSH) payments, reimbursement for ESRD patients, and for multiple therapy procedures performed on the same day.
Several groups rushed to issue statements on the so-called "doc fix". President and CEO of the American Hospital Association (AHA), Rich Umbdenstock issued a statement saying, "While fixing the physician payment formula is essential, it should not be done by jeopardizing hospitals' ability to care for seniors and their communities. That's why we are very disappointed at the approach taken in this measure. Hospitals are working to provide high-quality, innovative and effective care to seniors in their communities. Additional payment reductions will make it harder for patients to access the care they need and depend on."
MGMA-ACMPE (formerly MGMA) President and CEO Susan Turney, MD, issued a similar statement on the last-minute agreement. "Although Congress again averted another massive Medicare physician payment cut at the 11th hour, this action only perpetuates another year of uncertainty for physician practices forced to continue their work under the dark cloud of looming SGR cuts and the new threat of sequestration cuts scheduled for March."
"Without action to permanently repeal the sustainable growth rate formula, Congress will replay this fiscally irresponsible scenario again and again, with even larger cuts awaiting practices in the near future. Physician practices need a stable, predictable Medicare payment system to allow them to make sound, long-term decisions to invest in their practices, position themselves for the future, and provide the highest quality care to the Medicare patients they serve."
Congress also still has to deal with the sequestration cuts (postponed by only two months) to Medicare, which reduces the program by $11 billion over the next decade. Why is this important to payers? Health insurance companies use Medicare as a benchmark for their own reimbursement rates.
Another reason payers will be watching Congress in 2013 is to see if it repeals the health insurance premium tax levied against payers to help pay for healthcare reform. America's Health Insurance Plans points to studies showing the tax, which begins in 2014, will increase premiums. A bill in the U.S. House with 200 co-sponsors went nowhere in 2012, but with a new Congress and the sequestration cuts still in play, it could be a bargaining chip.
2. Centers for Medicare & Medicaid Services Every healthcare entity has its finger on the pulse of CMS, but in 2013, payers will be looking at the agency even more closely because health insurance exchanges have to be up and running by October.
Late in 2012, CMS issued three significant proposed rules guiding exchanges: essential health benefits, health insurance market and rate review, group wellness. The comment period is closed now despite several groups, including some in Congress, lobbying for an extension.
Health insurers are now waiting for the final rule to be published to see if comments from AHIP and other groups affected any change in the proposals. At issue is the amount payers would have to increase premiums to cover the cost of additional benefits without cost-sharing.
AHIP's stance on exchanges has favored those that are run by states. As of the 2012 deadline for states to declare whether they would enter into a state- or federally run, or partnership exchange, 18 states plus the District of Columbia committed to a state-run health insurance exchange.
CMS is approving the states to move forward with plans fairly quickly. It has until January 31 to tell states if the plans submitted are approved. The next health insurance exchange deadline is February 15. That's the deadline for states to declare whether they intend to enter into a partnership with the federal government on running a health insurance exchange.
3.Other payers
The variance between what the country's largest health insurance companies will cover is fairly small. With Medicare reimbursement rates as the benchmark for coverage decisions, payers first look to the federal agency, then to each other.
Yes, they're competing for their own share of healthcare dollars, but AHIP has illustrated the fine point on the issue that all payers are facing and that is how to cover an influx of new beneficiaries without additional cost sharing and without raising premiums?
The uncertainty hovering over how health insurance exchanges will work once up and running, and how many people will actually participate sets up payers to enter as late arrivals. Consumers, who are also confused about how exchanges will work, are likely waiting for the company name they recognize on their EOB statements to explain it to them.
Even though states have chosen how they will set up their federally mandated health insurance exchanges, there is still a lot of uncertainty over what exactly consumers will be buying when open enrollment comes around October 1, 2013.
By last week's December 14 deadline, half of the country's governors had rejected setting up a state-run insurance exchange and instead opted to hand over the responsibility to the federal government. Health insurance exchanges will be run by a federal-state partnership in seven states, while the remaining 18 states along with Washington D.C. plan on having a state-based exchange.
Sonya Schwartz, program director for the National Academy for State Health Policy, says she was "not at all surprised" so many states opted out of running their own exchanges. "I'm a little surprised more [states] aren't doing the partnership. I think that's mostly politics, but I wasn't surprised at all that so many decided not to do it."
So far, nine of the states running their own exchanges have received conditional approval from HHS, and of those, Schwartz says the three states, as well as Washington D.C. are furthest along in planning: California, Colorado and Vermont.
These states, she says, have requests out for proposals for health plans to meet their qualifications to participate. "They have pretty strong sense of how they're going to be certifying health plans and what's going to be required."
Every state committed to running its own exchange is taking a different approach. Colorado, says Schwartz, is offering something akin to a free-market plan. "They are not going to be selectively contracting with plans," she says. "They have federal standards in place and plans are going to come in and they're going to have to meet that floor."
California's approach, on the other hand, is an active user model. That state got out front early with its exchange called, "Covered California," and is planning a big marketing push to enroll members, which Schwartz says is key to having a successful health insurance exchange.
"It's not just the amount, it's who. If you roll out the program, and you don't market it very well, you may only get the people who need healthcare now; [those] who are sick; who are old; who have issues. What you really want to do is reach also the people who will need healthcare... but maybe don't have such an urgent need, and maybe are a little younger, and who really seize the opportunity to get this federal subsidy to buy healthcare."
The way state-federal partnerships will work became a little clearer this month with some guidance from HHS.
In essence, Schwartz says, the federal government will build the infrastructure states use to help determine members' subsidies, plan costs, and plan options, which she says will help states a lot because developing the infrastructure is "such a heavy lift."
States then will be responsible for either the plan management or consumer assistance, or both. Schwartz says she's hearing that states are interested in taking ownership of the consumer assistance piece because states want "people on the ground" to help members enroll.
"We've seen a lot of states are estimating that more than half the people coming in the door are going to need time with individuals by phone or in-person to figure out what plan to enroll in. A website alone will not help them," says Schwartz.
States may also opt for managing the consumer assistance portion of the partnership because the assisters, as they're called, are subsidized with federal money.
For the states that have defaulted to the federal government's way of running an exchange, details are still murky. "We do not yet know exactly what else the feds are going to put in place, and we don't know if it's going to be easy for states or hard," says Schwartz.
One big question is in which states will health plans participate? Commercial payers already in the group and individual markets are in the best position to get set up to participate in exchanges.
Aetna announced at its last investors conference that it planned on participating in more than a dozen exchanges. No other health plan has made such a statement,though some industry watchers expect more plans to come on board after the first of the year. Schwartz predicts it could take even longer.
"If the feds really wanted to make it easy for plans, they'll allow plans to fill out a form and check off all the different federally operated state exchanges they want to participate in, and then they'll [health plans] have to figure out if they're meeting the commercial insurance rules in all those states. By spring, we'll know a lot more," says Schwartz.
The federal government will run more health insurance exchanges as they come online next year than states. On Friday, both Virginia and Florida rejected running their own exchanges, just hours before the midnight deadline for states to officially declare whether or not they would set up their own insurance exchange or get some amount of help from the federal government.
Florida's refusal isn't too shocking considering Republican Governor Rick Scott had been a vocal critic of the Patient Protection and Affordable Care Act.
Virginia's Governor, Bob McDonnell, rejected setting up a state-run exchange, and sent a letter to Department of Health and Human Services Secretary, Kathleen Sebelius on Friday. McDonnell indicated his decision was based, in part, on what he characterized as the federal government's lack of direction and information.
"Originally, I asked that we begin the planning process to potentially operate a state-based exchange for Virginia, primarily so we would be in control of this process," wrote McDonnell. "However, despite repeated requests for information, we have not had any clear direction or answers from Washington until recent days, and we cannot conclude, as we review those materials, that we would have the control and flexibility needed to efficiently and effectively run our own state exchange."
Governors from Tennessee, Pennsylvania, and New Jersey cited similar concerns. At issue is the short run-up to prepare for an influx of healthcare consumers who will be looking to buy health insurance in 2014. Health insurance exchanges are part of the PPACA, but since open enrollment for 2014 begins October 2013, states only have ten months to set up the exchanges.
So far 25 states have decided to leave not only setting up the exchange, but also running them to the federal government. Eighteen states and the District of Columbia have said they will run their own insurance exchange, half have been granted conditional approval from the federal government: Colorado, Connecticut, Massachusetts, Maryland, Oregon, Washington, New York, Kentucky, and Washington D.C.
The third option states had was to partner with the government on running the exchange. Only two states, Delaware and Illinois, have officially declared their intent to do so, though five others have said publicly they prefer the partnership option: Iowa, Michigan, Arkansas, West Virginia, and North Carolina. States have until February 15, 2013 to decide whether it will partner or not.
HHS extended deadlines for states to decide on running their own health insurance exchanges by about 30 days. The initial deadline was November 16. Now that HHS has its list of which states will run their own exchanges, Secretary Sebelius has until January 1 to grant conditional approval to them.
Two already big Texas hospital systems are merging to form the largest nonprofit integrated delivery system in the state, and possibly the southwest.
Dallas-based Baylor Health Care System and Temple-based Scott & White Healthcare announced late Friday afternoon that both systems have signed a letter of intent to merge.
The new organization will be known as Baylor Scott & White Health, said Joel Allison, president and CEO of Baylor, who will also be CEO of the new organization. Scott & White's CEO, Robert Pryor, MD, will be COO of Baylor Scott & White Health.
Citing the future of healthcare, Allison said in a teleconference that the merger represents "two strong partners coming together truly creating a new model of healthcare delivery that really focuses on the patient, [on] population health management."
The deal will join together two of the most well-known hospital systems in Texas with Baylor dominating the north Texas market and Scott & White in central Texas.
Allison says the two healthcare systems have been in talks for a little over a year.
"What we realized is [we are] two very like-minded organizations. Like-minded in our commitment to our mission, our vision, our values, our commitment to patient care and to access to care for all," he said.
Baylor is the most preferred hospital in the 12-county Dallas-Fort Worth metropolitan area. It recently opened a $350 million cancer complex which includes a 467,000-square-foot outpatient facility and the area's first dedicated cancer hospital with 96 beds.
Scott & White is 126-year old physician-owned healthcare system. It has access to 12-hospitals, and with more than 1,100 physicians on staff, is one of the largest group practices in the country. Scott & White also runs a health plan with over 240,000 members.
The merger will result in the largest nonprofit system in Texas with:
42 hospitals
350 patient care sites
4,000 doctors
34,000 employees
Baylor Scott & White Health will be governed by one board made up of 28 members, with an even number representing each organization. Drayton McLane, Jr., will be the initial chairman of the board of Baylor Scott & White Health. The chair-elect is Jim Turner, who currently serves as chairman of the board of trustees for Baylor.
McLane has been chair of Scott & White's board of trustees for over 12 years, serving on the board there for a total of 26 years. He says the merger creates an opportunity to deliver healthcare to an area that was out of reach—Dallas-based Baylor is 121 miles north of Scott & White.
"We always wanted to be involved with a healthcare system that stretched over a wide geographical area, where you didn't have to get two or three hospital systems," said McLane.
Allison says the two organizations have had the opportunity to collaborate previously, which helped when the two broached possibly merging.
"We have worked together in the past [via] our association through The Healthcare Coalition of Texas. We are also the only two Texas systems that are part of the High Value Healthcare Collaborative that includes a small number of leading healthcare systems in the country, including Mayo Clinic and Intermountain Healthcare, UCLA Healthcare... some of the leading [hospitals] that are committed to quality," explained Allison.
For now, much of the hospitals' operations will remain separate including brands, foundations, and medical staff. However, Baylor and Scott & White will collaborate on medical education and research to attract physicians, research initiatives, and grants.
The next step is due diligence which will last well into next year. Until then, Baylor Scott & White Health will have two operating divisions: Baylor Health Care System and Scott & White Healthcare. The respective CEOS will remain in their same roles. The two operating divisions will eventually consolidate.
Allison says Baylor Scott & White Health will represent a new model of care for Texas and the nation.
"We are very excited about this opportunity. We think it's transformational as it relates to where healthcare is going. We want to be that model of what we believe will create value for the patients we serve," he said.
A year-to-year comparison of cost increases at both physician- and hospital-owned medical practices shows senior executives and administrators are increasingly being called on to build efficiencies.
MGMA-ACMPE (formerly the Management Group Medical Association) released on Wednesday its annual report on cost data gathered from member and non-member practices. Published since the mid-1950's, the Cost Survey for Multispecialty Practices: 2012 Report Based on 2011 Details, is a 300+ page benchmark report used by practices to measure how their spending and cost increases compare to their peers.
Overall, says Todd Evenson, director of data solutions for MGMA-ACMPE, there's been a "64% increase in total operating costs for multi-specialty practices" since 2001. In comparison, 2011 shows a modest 1.27% increase from 2010 for physician-owned practices.
In real dollars, that amounts to $528,182 in operating costs per full-time employee physician. Hospital/Integrated Delivery System (IDS)-owned organizations saw a 6.45% increase in operating costs, or $387,586. Evenson cautions against comparing the operating costs of the two models because they operate so differently.
Instead, Evenson says it's more significant to look at the single-digit increases in growth of each, saying the 2011 figures show "medical groups are laboring to bend the cost-growth curve."
"I feel like practices in this era of uncertainty are very cautious. And as a result, they're doing everything they can to control that cost curve growth and they're taking every opportunity, such as [cutting costs for] medical surgical supplies, where they may have had a large inventory of said items; now, they're keeping a just-in-time inventory of those items," said Evenson.
Going back to 2007, Evenson says per FTE physician, doctors were spending $10,853 on surgical supplies, and now that cost is up to more than $13,000 in 2011.
"Concerns over the sustainable growth rate (SGR) and diminished reimbursement are causing uncertainty within the market space and limiting potential investments," he added.
Other cost drivers to managing medical group practices include:
Business support staff
Clinical staff
Information technology (IT)
Building and occupancy rates
Drug supply costs
Evenson says there isn't much on that list that is controllable. Demand for RNs and LPNs is the main reason clinical staff salaries keep increasing, says Evenson. "It's an area where demand is dictating growth."
Medical practices are under enormous cost pressure. They have little control over fixed costs, such as building and occupancy rates, they're subject to market pressures that dictate higher labor costs because of nursing and expertise shortages, and their doctors are looking at possible double-digit reductions in reimbursement rates because of the looming fiscal cliff lawmakers are debating now.
"It's commendable that medical practices are so diligently monitoring their costs," says Susan Turney, MD, MS, FACP, FACMPE, president and chief executive officer of MGMA-ACMPE.
"It is almost impossible, however to make informed business decisions and craft long term strategies when a disastrous cut to Medicare physician payments looms on the horizon. When costs continue to increase and practice professionals are forced to conservatively plan for their future, it hinders their ability to innovate and rapidly evolve as our industry calls for transformation."
An undercurrent to all of this is how much practices have to invest in IT.
"If we were to look at total general operating costs, which are everything with the exception of support staff costs, we can see that since 2007, these items have [gone] up roughly 7.8%. But if we look [at] information technology [costs] since 2007, they went up by over 46%," says Evenson.
Evenson also says spending money on technology not only meets the needs of patients and the market, but it also enables practices to operate more efficiently.
Efficiency is also at the heart of another major cost driver: labor costs. RNs are in short supply, but so are senior level executives and administrators who can effectively run a medical practice. Their compensation packages are more robust because they are also in high demand. Running a medical practice is complex, says Evenson.
"It's much different than it's ever been in the past, and as a result, medical groups are looking for the strongest professionals possible."
Evenson points to MGMA's profile of members as an example of the need for increasingly skilled workers. "In 2012, over 50% of our membership has a graduate degree (MBA, JD, MD); whereas, in 2003 only 35% did," he says.
In our annual HealthLeaders 20, we profile individuals who are changing healthcare for the better. Some are longtime industry fixtures; others would clearly be considered outsiders. Some are revered; others would not win many popularity contests. All of them are playing a crucial role in making the healthcare industry better. This is the story of Joseph Kvedar, MD.
This profile was published in the December, 2012 issue of HealthLeaders magazine.
"I can't call any doctor's office customer friendly, and these technologies give consumers and patients a way to directly connect and they tend to love it."
After nearly two decades of pioneering research into connected health as a reliable model for healthcare delivery, Joseph Kvedar, MD, has won fans and won over skeptics.
Kvedar is founder and director for the Center for Connected Health, part of Boston-based Partners HealthCare System. He started the Center in 1995 on the premise that healthcare doesn't always have to be delivered in a doctor's office or a hospital. His use of home monitoring, text messaging, and the now ubiquitous smartphone, shows improvements to patient health, provider efficiency, and a hospital's bottom line. His findings are just in time for the changing reimbursement reality, and for consumer demand of quicker access to personal medical data.
A self-described early adopter and gadget lover, Kvedar says he was always interested in how technology could make him more productive. In fact, he personally uses nearly a dozen tech tools everyday to monitor his own health, from wireless activity devices to medication reminders. "I'm a living laboratory for this stuff!"
Kvedar aimed his enthusiasm for technology at the healthcare industry nearly 20 years ago when he founded the Center for Connected Health. He says, his "aha" moment occurred when, as a dermatologist, he was involved in a research study that questioned whether a set of still, digital images could be a substitute for a dermatologic exam.
"The person who came in to be one of the blinded observers in the study sat down and did 30 cases in two hours. That was the turning point," he says.
Knowing there was no way to see that many patients in that short period of time led Kvedar to examine the traditional doctor-patient relationship.
"I hadn't really thought... you might be able to substitute images but you also might be able to be more efficient by asking the question whether the doctor and the patient always need to be in the same place at the same time. All these light bulbs went off, and I never looked back after that."
Kvedar's research predates the terms ACO and mHealth, but his findings solve contemporary problems, particularly in chronic disease management. For example, what began 10 years ago as a telemonitoring pilot program of congestive heart failure patients continues to show a 50% drop in the readmission rates.
Those results are particularly useful because Partners HealthCare is a Pioneer ACO. Kvedar says he is certain the health system will be able to show that not only can technology keep patients healthy and out of "brick-and-mortar" clinics, but also can help hospitals drive down costs to accommodate bundled payments, the PPACA, and payment caps. "You can't keep hiring people, that's 60% of our cost—labor. So, if you keep hiring people, you're not going to bend the cost curve. And, the technology is such that we can extend providers across larger numbers of patients."
Kvedar's use of technology and analysis of patient data has benefits beyond the balance sheet. His patient groups embrace things like uploading their blood glucose levels to an online program that is shared by doctors and nurses for diabetes management. Instead of feeling cheated that they didn't get any "facetime" with a doctor, the patients feel like they have a "hotline."
"Let's face it, we, in healthcare, have set up a system where we're hard to get to; we're hard to interact with; we're not really customer friendly. I can't call any doctor's office customer friendly, and these technologies give consumers and patients a way to directly connect and they tend to love it," he says.
One of the biggest cultural shifts has to come from doctors themselves. Kvedar says they have to let go of their traditional role of sole caretaker and hand over some control to patients.
"We believe, and we have evidence to support the notion, that as a profession we way under-appreciate what patients can do for themselves. We don't give them enough to do, we don't feel comfortable delegating to them; we're farmore paternalistic than we need to be."
By and large, Kvedar says patients are ahead of providers in the tech curve and, once given a little bit of coaching, most are willing partners in managing their care. He points to success at one of the Center's programs where patients monitor their blood pressure from home.
"Their blood pressure data is fed into a website wirelessly so they can watch their trends, and their provider can watch their trends. We also give that particular group of patients algorithms so they can make changes to their own medications based on their blood pressure trends."
Kvedar's use of technology, all its data points, and nifty gadgets might seem to be the center of his research, but what really drives his work is patients: getting them healthier, faster. It just so happens that he also may have found a way to do it cheaper.
In our annual HealthLeaders 20, we profile individuals who are changing healthcare for the better. Some are longtime industry fixtures; others would clearly be considered outsiders. Some are revered; others would not win many popularity contests. All of them are playing a crucial role in making the healthcare industry better. This is the story of Michael Graves.
This profile was published in the December, 2012 issue of HealthLeaders magazine.
"It is about design, but there's always a human being who is the client."
In 2003, celebrated architect and designer Michael Graves was suffering from what he and his doctor thought was a common sinus infection. Within 24 hours, Graves was paralyzed from the waist down. Though Graves still had the use of his hands, the life-altering change profoundly impacted him and his work. Just four years earlier, Graves was a National Medal of Arts recipient. In 1999, he also signed on as a partner with retailing giant Target, which launched him to the rare "starchitect" status. But, Graves' paralysis also meant there was a new set of discerning and design oriented eyes that would show the healthcare industry how to make products easier for patients, like him, to use.
"I was in eight hospitals and four rehab centers," Graves says. "It was like a bad dormitory. There was an old string to pull your light on, and it would break and you would have to call the nurse."
Moving around the numerous hospital and rehab rooms in a wheelchair revealed how simple tasks were disrupted because so much was out of reach, especially in and around the bathroom.
"The mirror was above your head—clearly meant for someone standing. You couldn't comb your hair or brush your teeth or shave because the faucets were out of reach" he says. "So, I determined that we would clear a place on our business plate and make room for healthcare along with our other endeavors."
Graves first ventured into medical product design with the Michael Graves Active Living Collection for a durable medical equipment manufacturer based in New York. Now, just like at Target, Graves' recognizable signature is on the company's heating pads, tub rails, shower seats, and a nifty bag cane—a height-adjustable cane that folds up into a bag with a shoulder strap.
From those small, personal health products, Graves has since moved on to bigger projects, including hospital room furniture. Stryker Medical is now selling a Michael Graves-designed suite that includes a chair, overbed, one over-the-bed table, and two different side tables.
"Working with Stryker is like working with family," says Graves. "They get it."
What Stryker "gets," says Graves, is that good product design is always person-, or in this case, patient-centric.
"Everything that we do is centered around the individual. … We imagine that person; many of them are going to be just fine, but there's going to be an occasional one who's arthritic or who is very elderly and can't do certain things, and we want to make those things active for them, not difficult, but gratifying. It is about design, but there's always a human being who is the client."
Graves tests out all new medical prototypes. Before he started designing Stryker's new overbed, he took one home.
"My nurse, who is small, 110 lbs., couldn't move it in the room. It was so big and bulky and had drawers, and mirrors and all kinds of cup holders. It had everything but overdrive, and we lightened the load," says Graves.
The new table is sleek and simple. The tabletop itself is oval and extends out from a single arm not unlike an island jutting out from the side of a palm tree.
"We divided the table into two parts—one part for your lunch, and another part for your personal items, your tissues, and so forth and so on. And we redesigned the huge handles so that the cleaning crew will clean those," he says.
While Graves says he seeks out healthcare projects, he still designs products and buildings. As head of his architectural firm, Michael Graves & Associates, and his product design firm, Michael Graves Design Group, he's still churning out blueprints. His latest designs include the Resorts World Sentosa, which includes the Hard Rock Hotel and Convention Centre in Singapore, and most recently, a project that tapped into his personal experience with illness, the Wounded Warrior Home. Built on Virginia's Fort Belvoir Army base, the two prototypes Graves designed meet the needs of soldiers who return from war disabled. For the physically disabled who use a wheelchair, their needs are like his—roomy halls and accommodating kitchens and bathrooms.
"These houses are terrific; they've got very wide corridors. In fact, two wheelchairs can pass each other in a corridor. You can turn around. You've got roll-in showers, tables that go up and down so that you can slide your wheelchair under the table," says Graves.
These wheelchair-accessible homes were not designed solely for physical disabilities. They're also meant to help heal the emotional scars of returning home from war. Graves says surroundings are crucial when learning to adjust to a new normal.
"There are so many things that lift the spirit in architecture," says Graves.
Indeed, the sense of playfulness that Graves is known for in his design shows up in both prototypes. One house is sunny yellow. A nearby white picket fence completes the picture-perfect exterior. The other house, red with white trim, has several small round windows and a wide front porch that is equally charming.
Graves says his dream is to design an entire hospital, rooms and all. With all that he's accomplished in healthcare product design after nearly 10 years as a patient, it wouldn't be surprising at all if one day his trademark slate blue markings are on a hospital door.