" Given the stresses expected to bear upon delivery of services in the future, such models deserve consideration as
one potential mechanism for managing a particular class of medical problems, serving a particular patient need, and
maximizing patient benefit with limited resources."
Dear Friends and Colleagues:
Attached a very interesting article from todays NEJM reviewing the issue of in-store clinics.
The author emphasizes the following:
* Payers note that primary care is less expensive when delivered at in-store clinics than when provided in a doctor's office or emergency room,
* patients value the convenience and low price,
* entrepreneurs see a profitable business model
* proponents of consumer-driven health care see services that can be paid for out of health savings accounts.
* Physicians, however, express concern about the quality of care and the potential impact on their businesses.
How is the care in-store clinic health care delivery structured?
* Care is intended to be quick,inexpensive, and convenient: visits and waiting times are short,the charge is usually less than $50, and extended hours are offered along with ample parking.
* It's not surprising, then,that patients and investors have taken notice. Although only7% of respondents in a 2005 poll said they had ever used such a service, 41% said they would be likely to do so.
* Diagnoses are made by using a simple binary test(such as for a streptococcal throat infection) or by applying a rigid, protocol-based decision rule. In some cases, no diagnosis is required (such as for a hepatitis vaccination).
* In addition,the conditions treated and therapies offered require no or minimal follow-up (for instance, clinics offer diabetes screening but not treatment), and decisions can be guided by highly specified protocols.
* More important, the conditions can be diagnosed and treated quickly.
What are the concerns doctors have with the emergence of in-store clinics?
* The effect of this specialized care delivery model on traditional primary care practices may be to remove some patients and services from the doctor's office, leaving a sicker population behind.
The in-store clinics raise important issues regarding the future design of primary care delivery including:
1. In-store clinics reflect a well-designed operating system in which all the elements — location, physical structure, information systems, staffing, clinical and business processes, and range of services — are aligned to meet a particular population's needs efficiently and effectively.
2. In-store clinics place patients in a new role, as they become responsible for sorting their medical problems according to their complexity. Because some menu items are diagnoses, there is an implicit assumption that patients can make their own clinical judgments, relying on clinics only to confirm the diagnosis and deliver the treatment.
3. Prognosticators see an impending crisis caused by the convergence of a reduced supply of physicians and nurses and an increased demand for health care as baby boomers age and develop chronic conditions. Service models such as in-store clinics may efficiently provide services to a small slice of the population, freeing up primary care practitioners and emergency rooms to deal with more complex cases, for which they are more appropriately configured.
4. In-store clinics are certainly entering the market at the low end of medical complexity. However, they have, by design, limited ability to move "up" into coverage of more complex conditions or problems. The menu of services consistent with their operating model is short, and taking on others would undermine their operations and their customer value proposition. Consequently, it is unlikely that in their current form they will usurp the core business of primary care practitioners.
The author concludes stating that " Whether or not this model becomes a permanent feature of the health care landscape, the thinking behind it — in terms of operating-system alignment, alternative approaches to stratification and capacity creation, and the patient's role — may well influence the design of future delivery systems."
A VERY IMPORTANT ASPECT WE CAN FOCUS ON LIMITING THE SPREAD OF IN-STORE CLINICS IN OUR STATE
Clinics are located in states that allow prescribing by nurse practitioners, and physician involvement is limited.
WE CAN LIMIT THE IN-STORE CLINICS IN FLORIDA BY FOCUSING ON THE SCOPE OF PRACTICE ISSUE AND TIGHTEN THE SUPERVISION ASPECT!!!
THIS WILL GIVE US ENOUGH TIME TO EVALUATE THE PERFORMANCE OF IN-STORE CLINICS AS IT RELATES TO PATIENT SAFETY AND THE RELATIONSHIP BETWEEN NPs AND PAs WITH THE SUPERVISING PHYSICIANS.!!!!!!
Yours truly,
Bernd
NEJM 02-22-2007
The Rise of In-Store Clinics — Threat or Opportunity?
Richard Bohmer, M.B., Ch.B., M.P.H.
The recent acquisition by the pharmacy chain CVS of MinuteClinic, a chain of in-store clinics founded in Minnesota, has put this model of primary care delivery back in the spotlight. Although still not widespread, the model is increasing in prevalence (see table) and appeals to several stakeholders: payers note that primary care is less expensive when delivered at in-store clinics than when provided in a doctor's office or emergency room, patients value the convenience and low price, entrepreneurs see a profitable business model, and proponents of consumer-driven health care see services that can be paid for out of health savings accounts. Physicians, however, express concern about the quality of care and the potential impact on their businesses.
The typical in-store clinic is a kiosk — a small, thin-walled structure located inside a store — staffed by a nurse practitioner. The clinics differ from the old "doc-in-the-box" model in that they are neither routinely staffed by a physician nor intended to provide all primary care services. Indeed, the range of services — posted as a "menu" on the company's Web site or on the kiosk — is strikingly small, including common adult vaccinations, screening tests, and treatment for simple conditions.
But for these circumscribed services, the clinics provide a compelling value proposition. Care is intended to be quick, inexpensive, and convenient: visits and waiting times are short, the charge is usually less than $50, and extended hours are offered along with ample parking. It's not surprising, then, that patients and investors have taken notice. Although only 7% of respondents in a 2005 poll said they had ever used such a service, 41% said they would be likely to do so.2 And since 2000, when the concept was developed by QuickMedx (which later became MinuteClinic), at least 10 other companies have entered the market and several hundred clinics have been opened or are being planned. The California HealthCare Foundation expects thousands to open in the near future.1
At the heart of the appeal are well-thought-out business and operational models, both dependent on the limited services menu. Overhead is low because staffing, real estate, and financing costs are low, and some of these overhead costs are shared with the store. Clinics are located in states that allow prescribing by nurse practitioners, and physician involvement is limited. In addition, their focus on out-of-pocket payment limits accounts-receivable costs. Affiliations with drugstores benefit both partners: patients appreciate the convenience of being able to fill prescriptions on the spot, and the clinic draws customers to the store.
The operational model is equally well constructed. The originators based their design on the McDonald's hamburger chain, in which customers select items from a limited menu. The services listed are highly standardized interventions and require no physician evaluation. Diagnoses are made by using a simple binary test (such as for a streptococcal throat infection) or by applying a rigid, protocol-based decision rule. In some cases, no diagnosis is required (such as for a hepatitis vaccination). In addition, the conditions treated and therapies offered require no or minimal follow-up (for instance, clinics offer diabetes screening but not treatment), and decisions can be guided by highly specified protocols. More important, the conditions can be diagnosed and treated quickly.
Some concerns have been raised, however, about quality of care. Critics worry that important, albeit rare, diagnoses and opportunities to address other concomitant health issues may easily be missed by nurse practitioners following rigid protocols. Questions have also been raised about the potential lack of continuity of care: when care is fragmented, with different clinics or clinicians providing care at different times, trends suggestive of serious underlying conditions may be missed, and if clinics have no explicit after-hours arrangements, complications arising from daytime care may go unaddressed. In addition, past experience suggests that for-profit clinics might be motivated to overservice patients.
These drawbacks have thus far remained theoretical. Clinics have worked to maintain good relationships with local primary care practitioners,3 some have software that searches for patterns of repeated presentations, and the strict reliance on evidence-based protocols should prevent overservicing. Both the American Medical Association and the American Association of Family Practice support the concept of pluralism in primary care services.3 Moreover, these clinics raise important issues regarding the future design of primary care delivery.
First, in-store clinics reflect a well-designed operating system in which all the elements — location, physical structure, information systems, staffing, clinical and business processes, and range of services — are aligned to meet a particular population's needs efficiently and effectively. Health care services tend to be loosely stratified, typically by patient age, by body system, or by disease. Although these variables are often rough proxies for the complexity of medical problems, complexity itself is not usually an organizational rubric. In-store clinics, by contrast, stratify the primary care market into more and less complex care and are carefully configured to serve the needs of the less sick. Focus on a small segment of the market facilitates such operating system alignment.
The effect of this specialized care delivery model on traditional primary care practices may be to remove some patients and services from the doctor's office, leaving a sicker population behind. Some practitioners will see this as "cream skimming" and a threat to their revenue, particularly if they rely on income from short appointments for simple cases to subsidize the cost of more time-consuming appointments for more complex cases. But others may see in-store clinics as a way to improve their patients' access to care, decompress their busy waiting rooms, free them up to spend more time with patients, and serve the uninsured, a group of patients whom they may wish to avoid.
Second, in-store clinics place patients in a new role, as they become responsible for sorting their medical problems according to their complexity. Because some menu items are diagnoses, there is an implicit assumption that patients can make their own clinical judgments, relying on clinics only to confirm the diagnosis and deliver the treatment. The clinics' highly engineered business and operational models are very sensitive to misclassification. Attracting patients for whom the clinic is not configured — for instance, someone with an acute, life-threatening disease — would cause a serious delay for others in the queue and weaken the customer value proposition of speed and convenience. Clinics, however, say that such occurrences are less common than one might fear; Michael Howe, the chief executive officer of MinuteClinic, notes that less than 10% of patients are turned away at his company's clinics, which have never had a patient present with chest pain, for instance. With regard to the circumscribed set of conditions on the menu, patients have turned out to be capable diagnosticians. Moreover, some patients — and not just those in higher socioeconomic groups — seem to be happy with this role and comfortable arranging their own care.
Third, prognosticators see an impending crisis caused by the convergence of a reduced supply of physicians and nurses and an increased demand for health care as baby boomers age and develop chronic conditions.4 Service models such as in-store clinics may efficiently provide services to a small slice of the population, freeing up primary care practitioners and emergency rooms to deal with more complex cases, for which they are more appropriately configured. In fact, primary care practices and emergency departments could themselves use such a model, both to improve access to care and to create spare capacity. Indeed, several provider organizations have already opened their own in-store clinics, using their powerful local brand to attract consumers.
Finally, some wonder whether this model is a "disruptive innovation" — that is, a service or technology that enters a market at the low end, initially not performing as well as higher-end incumbents, then improves until it captures the whole market.5 In-store clinics are certainly entering the market at the low end of medical complexity. However, they have, by design, limited ability to move "up" into coverage of more complex conditions or problems. The menu of services consistent with their operating model is short, and taking on others would undermine their operations and their customer value proposition. Consequently, it is unlikely that in their current form they will usurp the core business of primary care practitioners.
Whether or not this model becomes a permanent feature of the health care landscape, the thinking behind it — in terms of operating-system alignment, alternative approaches to stratification and capacity creation, and the patient's role — may well influence the design of future delivery systems. If these clinics are to complement existing services, they will have to ensure continuity of care by building effective relationships with local primary care physicians and by developing systems to track patients who have multiple appointments in order to identify patterns suggestive of underlying illnesses. However, concern about the quality of care is not a reason to reject such models out of hand. Given the stresses expected to bear upon delivery of services in the future, such models deserve consideration as one potential mechanism for managing a particular class of medical problems, serving a particular patient need, and maximizing patient benefit with limited resources.
Source Information
Dr. Bohmer is a senior lecturer in business administration at Harvard Business School, Boston.
An interview with Dr. Bohmer can be heard at www.nejm.org.
References
1. Scott MK. Health care in the express lane: the emergence of retail clinics. Prepared for the California Healthcare Foundation. (Accessed January 30, 2007, at http://www.chcf.org/topics/view.cfm?itemID=123218.)
2. Many agree on potential benefits of onsite clinics in major retail stores that can provide basic medical services, yet large number are also skeptical. Wall Street Journal Online/Harris Interactive health-care poll. October 26, 2005. (Accessed January 30, 2007, at http://www.harrisinteractive.com/news/newsletters/wsjhealthnews/wsjonline_hi_health-carepoll2005vol4_iss21.pdf.)
3. Store-based health clinics. Report 7 of the Council on Medical Service (A-06). June 2006. (Accessed January 30, 2007, at http://www.ama-assn.org/ama1/pub/upload/mm/372/a-06cmsreport7.pdf.)
4. Bodenheimer T. Primary care -- will it survive? N Engl J Med 2006;355:861-864. [Free Full Text]
5. Christensen CM, Bohmer RMJ, Kenagy J. Will disruptive innovations cure health care? Harv Bus Rev 2000;78:102-112. [ISI][Medline]
Wednesday, February 21, 2007
Sunday, February 18, 2007
Medicare Part D
"Most Americans are aware that our health-care system is in deep trouble, a dog's breakfast ofprivate providers and insurers that has weak and inconsistent incentives for quality control and cost containment."
Dear Friends and Colleagues;
Greetings from the cold, but sunny Jerusalem.
Attached a very interesting and informative article published in yesterdays Wall Street Journal reviewing the effect and performance of the Medicare Part D program.
Part D is a massive social experiment on the ability of a privatized market to deliver social services effectively.
The author and researcher claims that in terms of health delivered per dollar of cost, our health care system is grotesquely inefficient. We spend $6,102 per person on health care each year, nearly 17% of GDP. Our neighbor Canada's single-payer system costs $3,165 per person per year, about half our expenditure, or 10% of their GDP. The Canadian costs and health outcomes are typical of developed countries, where government managed and financed systems predominate. The extra cost of our system is not buying us better health. The probability of dying between ages 15 and 60, a good indicator of failure of a health-care system to prevent and treat disease, is 8.1% for females in the U.S.; in Canada, the same probability is 5.7%.
f current trends continue, health care in the U.S. as a proportion of GDP will rise to 40% by 2050, a level that will break the current system of financing health through employers, pension funds and Medicare/Medicaid.
The authors then continue analyzing the performance of the Medicare Part B program and gives it a mixed report card:
My overall conclusion is that, so far, the Part D program has succeeded in getting affordable prescription drugs to the senior population. Its privatized structure has not been a significant impediment to delivery of these services. Competition among insurers seems to have been effective in keeping a lid on costs, and assuring reasonable quality control. We do not have an experiment in which we can determine whether a single-product system could have done as well, or better, along these dimensions, but I think it is reasonable to say that the Part D market has performed as well as its partisans hoped, and far better than its detractors expected.
Does this mean that Part D proves that privatization will be effective in other segments of the health-care market?
The authors cautions and points out that:
* the success of Part D depends substantially on thoughtful and muscular management of the market.A health insurance market like Part D probably requires this level of active management to work well; after-the-fact oversight in the style of the SEC or FTC is inadequate. If privatization is going to work elsewhere in health care, active market management will be needed.
* consumer-directed health care works only if consumers can understand the consequences of their choices. In much of medicine, providers are the agents that guide consumers through these choices. If consumer-directed health care is to be effective, these providers must give sound advice on both the health and financial consequences of alternative choices. This is possible if the incentives to providers and consumers are right, but the design of such markets should not be left to chance.
Yours
Bernd Wollschlaeger,MD,FAAFP
A Dog's Breakfast
By DANIEL L. MCFADDEN
February 16, 2007; Page A15
Last year, Medicare underwent a major expansion with the addition of Part D prescription drug coverage. A controversial feature of this new program was its organization as a market in which consumers could choose among various plans offered competitively by different insurers and HMOs, rather than the single-payer, single-product model used elsewhere in the Medicare system. Proponents of this design touted the choices it would offer consumers, and the benefits of competition for product quality and cost; opponents objected that consumers would be overwhelmed by the complexity of the market, and that it was unnecessarily generous to pharmaceutical and insurance companies.
Part D is a massive social experiment on the ability of a privatized market to deliver social services effectively. With the support of the National Institute on Aging, my research group has monitored consumer choices and outcomes from the new Part D market. I will summarize our findings, but first I want to provide some perspective on the American health-care system and the questions that study of Part D may help answer.
Most Americans are aware that our health-care system is in deep trouble, a dog's breakfast of private providers and insurers that has weak and inconsistent incentives for quality control and cost containment. Many consumers cannot obtain health insurance at reasonable cost, and financing the system is stressing employers, pension funds, and the government's Medicare and Medicaid programs.
In terms of health delivered per dollar of cost, our system is grotesquely inefficient. We spend $6,102 per person on health care each year, nearly 17% of GDP. Our neighbor Canada's single-payer system costs $3,165 per person per year, about half our expenditure, or 10% of their GDP. The Canadian costs and health outcomes are typical of developed countries, where government managed and financed systems predominate. The extra cost of our system is not buying us better health. The probability of dying between ages 15 and 60, a good indicator of failure of a health-care system to prevent and treat disease, is 8.1% for females in the U.S.; in Canada, the same probability is 5.7%.
In the future, things are going to get much worse. If current trends continue, health care in the U.S. as a proportion of GDP will rise to 40% by 2050, a level that will break the current system of financing health through employers, pension funds and Medicare/Medicaid.
There are a number of reasons for this gathering storm. First, the U.S. population is getting older, and the old require more medical maintenance. Second, we are getting wealthier, and staying alive is the ultimate luxury good. Third, we demand expensive medical innovations, such as dialysis, MRIs, transplants, stents and biotech. About a third of all medical costs are incurred in the last year of life, and are at best marginally effective. The incentives in the system do not force hard choices.
To deal with this future, three substantial reforms are needed. First, we need to wring out some of the inefficiencies. Something like 30% of our health costs come from administrative overhead, legal costs and defensive medicine. These could be largely eliminated in a comprehensive reform; we just need to emulate best practice in other developed countries.
Second, we need universal health insurance coverage, with active emphasis on preventive medicine that is effective in reducing later medical events and costs. Perhaps this can be accomplished by cobbling together existing sources of finance, as in Gov. Arnold Schwarzenegger's current proposal for California. However, eventually we will have to go to a system that is not channeled through employers, something like a tax-financed medical voucher system.
Third, we need incentives that match choice of expensive treatments with consumers' willingness to pay for them, a benefit-cost analysis that places treatment choices and financial responsibility on the individual.
This brings us to Medicare Part D. This experiment in privatizing the prescription drug insurance market and the interface between insurers and consumers gives the individual the right, and responsibility, to make insurance plan choices that are in his or her self-interest. If consumers are up to this task, then their choices will ensure that the plans, and insurers, that succeed in the market are ones that meet their needs. However, if many are confused or confounded, the market will not get the signals it needs to work satisfactorily. The success or failure of the Part D market is a bellwether for proposals to spread consumer-directed health care across the system, putting health and financial choices in the hands of consumers, and utilizing the forces of market competition to rationalize the system.
So, how well has the Part D market worked? We now have one year of experience, including a second open enrollment period in which consumers could switch plans, or enroll if they had not done so earlier. We can ask whether consumers were satisfied with this market, whether their choices were consistent with their interests, and whether Part D insurance has had a positive effect on health outcomes. To do this, my group is tracking about 2,200 consumers age 65 and up from opening of the initial enrollment period in mid-November 2005. We interviewed them just before enrollment began, and again just after the initial enrollment period ended on May 15, 2006. Here are some of the things we have found:
Consumers were quite confused about the Part D program before enrollment began, with 40% knowing little or nothing about what the program offered, and 17% indicating that they were unlikely to enroll. Start-up problems, widely publicized, further clouded the program's future. However, when the initial enrollment period closed, only 7.4% of the age 65-plus eligible population of 35.8 million were not enrolled in Part D or comparable prescription drug coverage. It helped that monthly premiums, predicted to be about $37, were substantially lower, averaging around $24, with some plans available for premiums as low as $6 to $10. It helped that about 68% of the population was automatically enrolled, either through employer or union based plans or through Medicaid, VA or federal employee coverage. It also helped that Part D incorporates an annual subsidy of about $1,200 per enrollee, so that most potential enrollees benefit immediately.
Failure to enroll turned out to be a minor problem, but making Part D voluntary rather than mandatory did have some consequences. About 1.2 million seniors who use enough prescription drugs so that they would immediately benefit from enrolling failed to do so. Mostly, these were not the very poor, who were picked up by Medicaid and by outreach programs, but poorly educated people above the poverty line.
General opinions elicited after the close of the initial enrollment period give Part D a mixed report card. Seventy-seven percent liked having a choice of plans, but 58% thought the program was not well designed; 77% say they would have preferred to have prescription drugs provided automatically as part of Medicare Part A; 58% are less satisfied with Medicare as a result of Part D; and large majorities dislike formulary restrictions and the gap, a range of out-of-pocket costs where the Part D standard plan offers no benefits.
However, when one looks at plan choices made, one finds that consumers were relatively consistent in recognizing their self-interest. Most consumers selected among the lowest-cost plans available in their area. Consumers with significant drug needs enrolled early, while those with no immediate needs mostly enrolled later to preserve their option value of obtaining insurance at non-penalized rates. There is some evidence that consumers did not fully appreciate the consequences of the gap, and enhanced policies that covered the gap were not heavily demanded, even though the additional coverage they offered was close to actuarially fair.
The picture that emerges is that elderly consumers were mostly able to navigate the Part D market and reach reasonable choices, despite its novelty and complexity. Two concerns with insurance markets that also arise for the Part D market are adverse selection, in which only the sickest seek insurance, and insurers respond by cherry-picking, refusing coverage for individuals and conditions likely to increase claims; and moral hazard, in which insurance coverage encourages additional treatments by reducing the incremental costs of these treatments.
Adverse selection has so far been avoided in the Part D market because the voluntary enrollment rate is high, including a high proportion of healthy seniors who currently are net contributors to the system. Further, adverse selection is not a problem for plan switchers because participating insurers must take all comers, and are reimbursed by Medicare based on each individual's experience rating. There is moral hazard in the sense that prescription drug use is increasing for seniors newly insured under part D, to 4.4 from 3.3 prescriptions on average per month, according to our survey.
This increase must be assessed in terms of its health consequences. Dana Goldman at RAND Corporation has found that making at least some drugs available to seniors at lower cost more than pays for itself in decreased incidence and cost of health problems. For example, reducing the copay on statins to $10 from $45 for a 30-day supply increased plan prescription drug payments, but the increased adherence of patients to the therapy at the lower copayment reduced cardiovascular incidents and attendant hospitalization costs, so that total annual health costs per patient in his study fell to $5,180 from $5,470.
A recent study of the VA population indicates that statins increase adult life expectancy by nearly two years, apparently because they act as anti-inflamatories as well as reducing cholesterol. Anecdotal evidence indicates that Part D coverage will reduce medical problems and hospitalization costs enough to offset a significant portion of its cost. However, reduced adherence to therapies by consumers who hit the gap will probably have a significant adverse effect on health outcomes that we will begin to see in 2007. A humorous proposal is that employers could lower their total health-care bills by putting statins and anti-hypertensives in the water cooler. What is clear is that an integrated approach is needed to evaluating health-care costs, and programs like Part D that can deliver effective preventative drugs may pay for themselves.
My overall conclusion is that, so far, the Part D program has succeeded in getting affordable prescription drugs to the senior population. Its privatized structure has not been a significant impediment to delivery of these services. Competition among insurers seems to have been effective in keeping a lid on costs, and assuring reasonable quality control. We do not have an experiment in which we can determine whether a single-product system could have done as well, or better, along these dimensions, but I think it is reasonable to say that the Part D market has performed as well as its partisans hoped, and far better than its detractors expected.
Does this mean that Part D proves that privatization will be effective in other segments of the health-care market? Here, I think caution is advised. First, the success of Part D depends substantially on thoughtful and muscular management of the market. The former head of Medicare, Mark McClellan, and a dynamic, no-nonsense 75-year-old government bureaucrat, Abby Block, bullied insurers to make sure there were, in her words, "no bad choices." It is unclear whether their successors will be as successful in standing toe-to-toe with the industry and making sure consumers' interests are protected.
A health insurance market like Part D probably requires this level of active management to work well; after-the-fact oversight in the style of the SEC or FTC is inadequate. If privatization is going to work elsewhere in health care, active market management will be needed.
Finally, consumer-directed health care works only if consumers can understand the consequences of their choices. In much of medicine, providers are the agents that guide consumers through these choices. If consumer-directed health care is to be effective, these providers must give sound advice on both the health and financial consequences of alternative choices. This is possible if the incentives to providers and consumers are right, but the design of such markets should not be left to chance.
Mr. McFadden, the E. Morris Cox professor of economics and director of the Econometrics Laboratory at Berkeley, is a 2000 Nobel laureate in economics.
URL for this article:
http://online.wsj.com/article/SB117159975453110920.html
Dear Friends and Colleagues;
Greetings from the cold, but sunny Jerusalem.
Attached a very interesting and informative article published in yesterdays Wall Street Journal reviewing the effect and performance of the Medicare Part D program.
Part D is a massive social experiment on the ability of a privatized market to deliver social services effectively.
The author and researcher claims that in terms of health delivered per dollar of cost, our health care system is grotesquely inefficient. We spend $6,102 per person on health care each year, nearly 17% of GDP. Our neighbor Canada's single-payer system costs $3,165 per person per year, about half our expenditure, or 10% of their GDP. The Canadian costs and health outcomes are typical of developed countries, where government managed and financed systems predominate. The extra cost of our system is not buying us better health. The probability of dying between ages 15 and 60, a good indicator of failure of a health-care system to prevent and treat disease, is 8.1% for females in the U.S.; in Canada, the same probability is 5.7%.
f current trends continue, health care in the U.S. as a proportion of GDP will rise to 40% by 2050, a level that will break the current system of financing health through employers, pension funds and Medicare/Medicaid.
The authors then continue analyzing the performance of the Medicare Part B program and gives it a mixed report card:
My overall conclusion is that, so far, the Part D program has succeeded in getting affordable prescription drugs to the senior population. Its privatized structure has not been a significant impediment to delivery of these services. Competition among insurers seems to have been effective in keeping a lid on costs, and assuring reasonable quality control. We do not have an experiment in which we can determine whether a single-product system could have done as well, or better, along these dimensions, but I think it is reasonable to say that the Part D market has performed as well as its partisans hoped, and far better than its detractors expected.
Does this mean that Part D proves that privatization will be effective in other segments of the health-care market?
The authors cautions and points out that:
* the success of Part D depends substantially on thoughtful and muscular management of the market.A health insurance market like Part D probably requires this level of active management to work well; after-the-fact oversight in the style of the SEC or FTC is inadequate. If privatization is going to work elsewhere in health care, active market management will be needed.
* consumer-directed health care works only if consumers can understand the consequences of their choices. In much of medicine, providers are the agents that guide consumers through these choices. If consumer-directed health care is to be effective, these providers must give sound advice on both the health and financial consequences of alternative choices. This is possible if the incentives to providers and consumers are right, but the design of such markets should not be left to chance.
Yours
Bernd Wollschlaeger,MD,FAAFP
A Dog's Breakfast
By DANIEL L. MCFADDEN
February 16, 2007; Page A15
Last year, Medicare underwent a major expansion with the addition of Part D prescription drug coverage. A controversial feature of this new program was its organization as a market in which consumers could choose among various plans offered competitively by different insurers and HMOs, rather than the single-payer, single-product model used elsewhere in the Medicare system. Proponents of this design touted the choices it would offer consumers, and the benefits of competition for product quality and cost; opponents objected that consumers would be overwhelmed by the complexity of the market, and that it was unnecessarily generous to pharmaceutical and insurance companies.
Part D is a massive social experiment on the ability of a privatized market to deliver social services effectively. With the support of the National Institute on Aging, my research group has monitored consumer choices and outcomes from the new Part D market. I will summarize our findings, but first I want to provide some perspective on the American health-care system and the questions that study of Part D may help answer.
Most Americans are aware that our health-care system is in deep trouble, a dog's breakfast of private providers and insurers that has weak and inconsistent incentives for quality control and cost containment. Many consumers cannot obtain health insurance at reasonable cost, and financing the system is stressing employers, pension funds, and the government's Medicare and Medicaid programs.
In terms of health delivered per dollar of cost, our system is grotesquely inefficient. We spend $6,102 per person on health care each year, nearly 17% of GDP. Our neighbor Canada's single-payer system costs $3,165 per person per year, about half our expenditure, or 10% of their GDP. The Canadian costs and health outcomes are typical of developed countries, where government managed and financed systems predominate. The extra cost of our system is not buying us better health. The probability of dying between ages 15 and 60, a good indicator of failure of a health-care system to prevent and treat disease, is 8.1% for females in the U.S.; in Canada, the same probability is 5.7%.
In the future, things are going to get much worse. If current trends continue, health care in the U.S. as a proportion of GDP will rise to 40% by 2050, a level that will break the current system of financing health through employers, pension funds and Medicare/Medicaid.
There are a number of reasons for this gathering storm. First, the U.S. population is getting older, and the old require more medical maintenance. Second, we are getting wealthier, and staying alive is the ultimate luxury good. Third, we demand expensive medical innovations, such as dialysis, MRIs, transplants, stents and biotech. About a third of all medical costs are incurred in the last year of life, and are at best marginally effective. The incentives in the system do not force hard choices.
To deal with this future, three substantial reforms are needed. First, we need to wring out some of the inefficiencies. Something like 30% of our health costs come from administrative overhead, legal costs and defensive medicine. These could be largely eliminated in a comprehensive reform; we just need to emulate best practice in other developed countries.
Second, we need universal health insurance coverage, with active emphasis on preventive medicine that is effective in reducing later medical events and costs. Perhaps this can be accomplished by cobbling together existing sources of finance, as in Gov. Arnold Schwarzenegger's current proposal for California. However, eventually we will have to go to a system that is not channeled through employers, something like a tax-financed medical voucher system.
Third, we need incentives that match choice of expensive treatments with consumers' willingness to pay for them, a benefit-cost analysis that places treatment choices and financial responsibility on the individual.
This brings us to Medicare Part D. This experiment in privatizing the prescription drug insurance market and the interface between insurers and consumers gives the individual the right, and responsibility, to make insurance plan choices that are in his or her self-interest. If consumers are up to this task, then their choices will ensure that the plans, and insurers, that succeed in the market are ones that meet their needs. However, if many are confused or confounded, the market will not get the signals it needs to work satisfactorily. The success or failure of the Part D market is a bellwether for proposals to spread consumer-directed health care across the system, putting health and financial choices in the hands of consumers, and utilizing the forces of market competition to rationalize the system.
So, how well has the Part D market worked? We now have one year of experience, including a second open enrollment period in which consumers could switch plans, or enroll if they had not done so earlier. We can ask whether consumers were satisfied with this market, whether their choices were consistent with their interests, and whether Part D insurance has had a positive effect on health outcomes. To do this, my group is tracking about 2,200 consumers age 65 and up from opening of the initial enrollment period in mid-November 2005. We interviewed them just before enrollment began, and again just after the initial enrollment period ended on May 15, 2006. Here are some of the things we have found:
Consumers were quite confused about the Part D program before enrollment began, with 40% knowing little or nothing about what the program offered, and 17% indicating that they were unlikely to enroll. Start-up problems, widely publicized, further clouded the program's future. However, when the initial enrollment period closed, only 7.4% of the age 65-plus eligible population of 35.8 million were not enrolled in Part D or comparable prescription drug coverage. It helped that monthly premiums, predicted to be about $37, were substantially lower, averaging around $24, with some plans available for premiums as low as $6 to $10. It helped that about 68% of the population was automatically enrolled, either through employer or union based plans or through Medicaid, VA or federal employee coverage. It also helped that Part D incorporates an annual subsidy of about $1,200 per enrollee, so that most potential enrollees benefit immediately.
Failure to enroll turned out to be a minor problem, but making Part D voluntary rather than mandatory did have some consequences. About 1.2 million seniors who use enough prescription drugs so that they would immediately benefit from enrolling failed to do so. Mostly, these were not the very poor, who were picked up by Medicaid and by outreach programs, but poorly educated people above the poverty line.
General opinions elicited after the close of the initial enrollment period give Part D a mixed report card. Seventy-seven percent liked having a choice of plans, but 58% thought the program was not well designed; 77% say they would have preferred to have prescription drugs provided automatically as part of Medicare Part A; 58% are less satisfied with Medicare as a result of Part D; and large majorities dislike formulary restrictions and the gap, a range of out-of-pocket costs where the Part D standard plan offers no benefits.
However, when one looks at plan choices made, one finds that consumers were relatively consistent in recognizing their self-interest. Most consumers selected among the lowest-cost plans available in their area. Consumers with significant drug needs enrolled early, while those with no immediate needs mostly enrolled later to preserve their option value of obtaining insurance at non-penalized rates. There is some evidence that consumers did not fully appreciate the consequences of the gap, and enhanced policies that covered the gap were not heavily demanded, even though the additional coverage they offered was close to actuarially fair.
The picture that emerges is that elderly consumers were mostly able to navigate the Part D market and reach reasonable choices, despite its novelty and complexity. Two concerns with insurance markets that also arise for the Part D market are adverse selection, in which only the sickest seek insurance, and insurers respond by cherry-picking, refusing coverage for individuals and conditions likely to increase claims; and moral hazard, in which insurance coverage encourages additional treatments by reducing the incremental costs of these treatments.
Adverse selection has so far been avoided in the Part D market because the voluntary enrollment rate is high, including a high proportion of healthy seniors who currently are net contributors to the system. Further, adverse selection is not a problem for plan switchers because participating insurers must take all comers, and are reimbursed by Medicare based on each individual's experience rating. There is moral hazard in the sense that prescription drug use is increasing for seniors newly insured under part D, to 4.4 from 3.3 prescriptions on average per month, according to our survey.
This increase must be assessed in terms of its health consequences. Dana Goldman at RAND Corporation has found that making at least some drugs available to seniors at lower cost more than pays for itself in decreased incidence and cost of health problems. For example, reducing the copay on statins to $10 from $45 for a 30-day supply increased plan prescription drug payments, but the increased adherence of patients to the therapy at the lower copayment reduced cardiovascular incidents and attendant hospitalization costs, so that total annual health costs per patient in his study fell to $5,180 from $5,470.
A recent study of the VA population indicates that statins increase adult life expectancy by nearly two years, apparently because they act as anti-inflamatories as well as reducing cholesterol. Anecdotal evidence indicates that Part D coverage will reduce medical problems and hospitalization costs enough to offset a significant portion of its cost. However, reduced adherence to therapies by consumers who hit the gap will probably have a significant adverse effect on health outcomes that we will begin to see in 2007. A humorous proposal is that employers could lower their total health-care bills by putting statins and anti-hypertensives in the water cooler. What is clear is that an integrated approach is needed to evaluating health-care costs, and programs like Part D that can deliver effective preventative drugs may pay for themselves.
My overall conclusion is that, so far, the Part D program has succeeded in getting affordable prescription drugs to the senior population. Its privatized structure has not been a significant impediment to delivery of these services. Competition among insurers seems to have been effective in keeping a lid on costs, and assuring reasonable quality control. We do not have an experiment in which we can determine whether a single-product system could have done as well, or better, along these dimensions, but I think it is reasonable to say that the Part D market has performed as well as its partisans hoped, and far better than its detractors expected.
Does this mean that Part D proves that privatization will be effective in other segments of the health-care market? Here, I think caution is advised. First, the success of Part D depends substantially on thoughtful and muscular management of the market. The former head of Medicare, Mark McClellan, and a dynamic, no-nonsense 75-year-old government bureaucrat, Abby Block, bullied insurers to make sure there were, in her words, "no bad choices." It is unclear whether their successors will be as successful in standing toe-to-toe with the industry and making sure consumers' interests are protected.
A health insurance market like Part D probably requires this level of active management to work well; after-the-fact oversight in the style of the SEC or FTC is inadequate. If privatization is going to work elsewhere in health care, active market management will be needed.
Finally, consumer-directed health care works only if consumers can understand the consequences of their choices. In much of medicine, providers are the agents that guide consumers through these choices. If consumer-directed health care is to be effective, these providers must give sound advice on both the health and financial consequences of alternative choices. This is possible if the incentives to providers and consumers are right, but the design of such markets should not be left to chance.
Mr. McFadden, the E. Morris Cox professor of economics and director of the Econometrics Laboratory at Berkeley, is a 2000 Nobel laureate in economics.
URL for this article:
http://online.wsj.com/article/SB117159975453110920.html
Sunday, February 04, 2007
Health Information Technology
Attached you find a link to several interesting articles from the recent edition of Health Affairs about the medical information technology applications.
Data gathered in electronic health records on the experience of millions of patients have the potential to dramatically accelerate clinical research and provide the nation with timely, urgently needed knowledge about the value of new medical technologies, researchers report in a special edition of Health Affairs on "rapid learning" published January 26. Strategies for advancing rapid learning in health care was the topic of a Health Affairs-sponsored conference in Washington, D.C., today that included an appearance by AHRQ Director Carolyn Clancy, as well as several authors from the January 26 issue.
A webcast of the briefing is available at:
www.rwjf.org/newsroom/activitydetail.jsp?id=10195&type=3
The attached prologue accurately reflects on the content and purpose of the articles.
Yours
Bernd
http://content.healthaffairs.org/cgi/content/full/hlthaff.26.2.w107/DC2
26 January 2007
Rapid Learning:
Getting Technology Into Practice
PROLOGUE: Amid persistent concerns about performance and quality, the health sector remains ambivalent about electronic health records (EHRs). Champions of accelerated adoption of health information technology (IT) have been unable to generate a groundswell of demand, despite excellent arguments for health IT's potential to save money, improve quality, and transform care. It may be, though, that the strongest argument for speeding IT adoption is still largely below the radar.
The dramatic pace of biomedical innovation has dazzled America but created nagging tensions as well. Our insatiable demand for new drugs and technologies is driving unsustainable growth in health spending. An explosion of new knowledge has strained clinicians' learning capacity and fostered subspecialization and fragmentation of care. Clinical research and regulatory capabilities are swamped with urgent questions about the safety and effectiveness of new treatments.
But on scattered islands within the dominant system, promising approaches to managing innovation are beginning to surface, and their foundation is the EHR. In organizations such as the Veterans Health Administration (VHA), Kaiser Permanente, and the Geisinger Health System, the richness of data capture in fully deployed patient record systems is enabling clinicians and researchers to answer practical questions about safety, effectiveness, and cost more efficiently than the traditional process of randomized clinical trials (RCTs) possibly could.
The implications of these approaches for the future of "rapid learning" are spelled out in an overview paper by Lynn Etheredge. "An inadequate knowledge base limits initiatives to improve health system performance," Etheredge writes. "With large, computer-searchable databases, studies that would now take years will be doable, at low expense, in a matter of weeks, days, or hours." Case studies accompanied by commentaries explore how EHR database research is being used at the VHA (for diabetes research and care), Kaiser (for cancer research and care), and Geisinger (to close the "inferential gap" between RCTs and real-world clinical decisions). David Eddy offers his vision for a health system that will use predictive models from large, merged databases of EHRs to advance the biomedical sciences as well as clinical care. Sean Tunis and colleagues suggest strategies to use large new government clinical care databases to support Medicare coverage decisions, comparative effectiveness studies, and postmarket drug safety surveillance.
The rapid-learning efforts described here were originally presented at a March 2006 conference in Washington, D.C., organized by Etheredge and Health Affairs and sponsored by the Robert Wood Johnson Foundation. The publication of the papers is also supported by Kaiser Permanente and the federal Agency for Healthcare Research and Quality.
Data gathered in electronic health records on the experience of millions of patients have the potential to dramatically accelerate clinical research and provide the nation with timely, urgently needed knowledge about the value of new medical technologies, researchers report in a special edition of Health Affairs on "rapid learning" published January 26. Strategies for advancing rapid learning in health care was the topic of a Health Affairs-sponsored conference in Washington, D.C., today that included an appearance by AHRQ Director Carolyn Clancy, as well as several authors from the January 26 issue.
A webcast of the briefing is available at:
www.rwjf.org/newsroom/activitydetail.jsp?id=10195&type=3
The attached prologue accurately reflects on the content and purpose of the articles.
Yours
Bernd
http://content.healthaffairs.org/cgi/content/full/hlthaff.26.2.w107/DC2
26 January 2007
Rapid Learning:
Getting Technology Into Practice
PROLOGUE: Amid persistent concerns about performance and quality, the health sector remains ambivalent about electronic health records (EHRs). Champions of accelerated adoption of health information technology (IT) have been unable to generate a groundswell of demand, despite excellent arguments for health IT's potential to save money, improve quality, and transform care. It may be, though, that the strongest argument for speeding IT adoption is still largely below the radar.
The dramatic pace of biomedical innovation has dazzled America but created nagging tensions as well. Our insatiable demand for new drugs and technologies is driving unsustainable growth in health spending. An explosion of new knowledge has strained clinicians' learning capacity and fostered subspecialization and fragmentation of care. Clinical research and regulatory capabilities are swamped with urgent questions about the safety and effectiveness of new treatments.
But on scattered islands within the dominant system, promising approaches to managing innovation are beginning to surface, and their foundation is the EHR. In organizations such as the Veterans Health Administration (VHA), Kaiser Permanente, and the Geisinger Health System, the richness of data capture in fully deployed patient record systems is enabling clinicians and researchers to answer practical questions about safety, effectiveness, and cost more efficiently than the traditional process of randomized clinical trials (RCTs) possibly could.
The implications of these approaches for the future of "rapid learning" are spelled out in an overview paper by Lynn Etheredge. "An inadequate knowledge base limits initiatives to improve health system performance," Etheredge writes. "With large, computer-searchable databases, studies that would now take years will be doable, at low expense, in a matter of weeks, days, or hours." Case studies accompanied by commentaries explore how EHR database research is being used at the VHA (for diabetes research and care), Kaiser (for cancer research and care), and Geisinger (to close the "inferential gap" between RCTs and real-world clinical decisions). David Eddy offers his vision for a health system that will use predictive models from large, merged databases of EHRs to advance the biomedical sciences as well as clinical care. Sean Tunis and colleagues suggest strategies to use large new government clinical care databases to support Medicare coverage decisions, comparative effectiveness studies, and postmarket drug safety surveillance.
The rapid-learning efforts described here were originally presented at a March 2006 conference in Washington, D.C., organized by Etheredge and Health Affairs and sponsored by the Robert Wood Johnson Foundation. The publication of the papers is also supported by Kaiser Permanente and the federal Agency for Healthcare Research and Quality.
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