Healthcare Trends to Watch in 2014

Posted on February 16th, 2014 in Uncategorized by Karl

The Changing Health Care World: Trends To Watch In 2014

While today’s news is bombarding us with headlines about Healthcare.gov, the Affordable Care Act isn’t just about insurance coverage. The legislation is also about transforming the way health care is provided.  Consequently, it has ushered in new competitors, services and business practices, which are in turn generating substantial industry shifts that affect all players along health care’s value chain. Following are some of the top trends that our alliance is preparing for in 2014:

Chronic Care, Everywhere. It’s no secret that providers are moving quickly to implement accountable care organizations (ACOs). Recently, the Premier healthcare alliance released a survey [1] of hospital executives projecting that ACO participation will nearly double in 2014. As providers work to improve their way to shared savings payments, look for a more intensive focus on the biggest health care consumers: those with multiple chronic conditions.

Since each chronic condition increases costs by a factor of three, managing this population is the sweet spot for the ACO, and the deepest pool from which to pull savings. To do it, an increasing number of providers will deploy Ambulatory Intensive Care Units (A-ICUs) or patient centered medical homes as part of their ACO, which will be charged with better managing chronic conditions exclusively within a clinically integrated, financially accountable primary care practice. As part of the approach, providers will develop care pathways for better managing chronic conditions and behavioral health needs, with an eye toward lowering hospital utilization, including inpatient bed days, length of stay, admissions, readmissions, and ED visits.

Put Me In, Coach. As an outgrowth of the need to manage chronic conditions, we expect new forms of health care employment in 2014. For instance, early adopters of the A-ICU care model report that their biggest asset in the effort to manage chronic conditions isn’t a nurse or a doctor, it’s a health coach.

Health coaches function like a personal trainer in a gym; they’re there to motivate, challenge, inspire, and listen. They complement medical professionals providing care; they get to know the patient one-on-one and keep clinical staff apprised of issues that wouldn’t come up in a doctor’s appointment, including financial struggles, problems with housing, family concerns, or any other obstacle that could stand in the way of someone following a prescribed care plan. And because the position does not necessarily require a medical degree, health coaches can be drawn from a diversity of settings.

Health Care at Home. We may have thought the days of the house call were over, but increasingly, they are coming back into fashion. Marketing firm BCC Research predicts that the market for remote monitoring and telemedicine [2] applications will double from $11.6 billion in 2011 to about $27.3 billion in 2016. Much of the interest is being fueled by the people expected to become insured through the Affordable Care Act, a surge of new consumers that our system simply can’t treat in person.

Also driving the growth is the need to make care more convenient, particularly for those with chronic conditions, so patients can be monitored and coached to health anytime, anywhere. And there’s a cost component to the trend as well. “Hospital at Home,” a program designed by Johns Hopkins that provides acute care services in the homes of patients who might otherwise be hospitalized, has been demonstrated to increase the quality of care patients receive, improve their satisfaction, and reduce costs by at least 30 percent.

Last, technology-enabled at-home health care is increasingly solving an access issue for patients. According to a recent survey, almost half of rural hospitals use virtual care or telemedicine to connect with patients who may be too far away for an in-person visit, allowing them to close the gaps in care that arise due to geography.

On-the-Job Health. If you don’t already work for a company that offers incentives for healthy behaviors or penalties for non-compliance, that’s likely to change in 2014. This trend is being driven by two forces, both spurred by the ACA: the ability for employers to increase the dollar value of wellness incentives from 20 to 30 percent of total coverage, and increased private insurance costs.

When considering the wellness incentives, employers are responding with both free health tools and financial incentives. On the tools front, this can include free pedometers or FitBits to monitor activity, or free subscriptions to wellness web sites such as iFit or HealthyRoads. In terms of incentives, these can take a variety of forms, too. Whole Foods, for instance, offers its healthiest employees deeper store discounts. Others provide gift cards or extra paid days off for wellness behaviors such as joining a gym or participating in health screenings.

To address the cost issues, employers are addressing lifestyle choices that lead to higher health care consumption and corresponding costs, including tobacco use and obesity. Some employers, including Alaska Airlines and Hollywood Casinos, have hiring bans for employees who test positive for nicotine use. Others charge higher premiums or impose financial penalties for employees that fail to meet minimum health standards, such as a 40-inch or less waist circumference or a body mass index under 35.

Changes in the Exchanges. Insurance exchanges aren’t just for the public markets. In fact, a growing number of employers are considering comparable, private exchanges for their employees. Private exchanges allow employers to contract with a benefits provider offering hundreds of competitive health plans from dozens of insurers. Individuals are given a defined contribution from their employer to purchase coverage, allowing them to select the form their benefits will take, including the amount devoted to health, dental, vision, life or disability insurance, as well as the risk they accept via co-pays and deductibles.

Our expectation is that private exchanges will continue to grow in popularity in 2014, as they give employees an opportunity to customize coverage and provide a predictable amount of spend for the employer.

War of the Words. Mid-term elections will have politicians out in full force trying to re-prosecute the case on health reform. But anyone anticipating big changes to the ACA before 2017 will be disappointed; although the bellyaching will be at fever pitch, there will be no viable pathway to repeal and replace the law this year.

However, there will be opportunities for health policy changes this year. A few areas we see getting traction include a permanent fix to the sustainable growth rate (SGR) method for calculating physician payments. There is an SGR fix on the table, and members of Congress could come to a compromise on the path forward, complete with “pay fors” to fund it, by March. A permanent SGR fix will put physicians on the value-based purchasing (VBP) track that hospitals adopted years ago, with a significant portion of their income tied to quality and cost improvement, as well as incentives to pursue alternative models such as bundled payment and shared savings.

Along with SGR, we expect to see CMS adjust their two-midnight rule (which has already been further delayed until after September 30). This would help ensure that medical decision making is left in the hands of the physicians and not an arbitrary timetable. And we expect there could be changes to the hospital-acquired conditions (HAC) policy, which today penalizes hospitals up to three times for the same conditions. Ultimately, we believe CMS will recognize this policy is in effect arbitrary and unfair and replace it by moving HACs into the VBP program.

Data Liberation. The big buzz in health care is Big Data. From electronic health records to clinical measures and decision support tools, providers are inundated with new technologies that enable them to automate processes and capture new types of clinical data. However, these systems are limited in their potential because they don’t “talk” to one another; they’re the equivalent of an email system that only allows you to send messages to people in your own company, or a phone plan that only allows you to make calls in your house.

As long as data remains captive behind proprietary walls, we won’t be able to unlock its true potential. Inherent in the Big Data revolution of 2014 will likely be a provider-led push to liberate data by making application programming interfaces open source tools that developers can use to design creative, new applications that make use of all the data, and turn it into something providers can truly leverage. It’s sort of the iPhone approach to health care technology — Apple owns the operating system, but anyone can design an app that leverages it to deliver programs and services that the user truly values.

Recognizing the trend, some EHR vendors and insurers are making more systems open for innovation. But industry players can look for 2014 to be the year that the push for transparent data assets reaches a boiling point.

Partners R Us. We’ve already started to see unusual partnerships across health care designed to deliver care in new ways. Some of the more interesting moves in 2013 involved drug chains partnering with physician groups to create ACOs based around retail clinics. But in 2014, look for the trend to include community-based groups, including social service agencies, area gyms, and other non-health care service providers.

To give an example, Mount Sinai Hospital in Chicago serves a highly indigent population, where the poorest residents have a diabetes rate that is three times the national average.  There, Sinai partnered with a local grocery store to offer healthy food and classes on how to prepare it. Encouraged by the success they had working with 300 patients, Sinai expanded the program to local schools, day-camps, and youth programs.

As more providers look to provide “whole person care,” we expect many more of these kinds of unconventional approaches, and anticipate more formal arrangements with community churches to provide group care sessions, nature centers to provide outdoor exercise opportunities, taxi services to provide free or reduced price health care transportation services, and many more.

Article printed from Health Affairs Blog: http://healthaffairs.org/blog

 

As hospitals buy up independent physician practices -> Cost will rise

Posted on February 14th, 2014 in Uncategorized by Karl

Shift in markets pushes doctors to salaried jobs

By Elisabeth Rosenthal

|  NEW YORK TIMES

FEBRUARY 14, 2014

NEW YORK — American physicians, worried about changes in the health care market, are streaming into salaried jobs with hospitals. Though the shift from private practice has been most pronounced in primary care, specialists are following.

Last year, 64 percent of job offers filled through Merritt Hawkins, one of the nation’s leading physician placement firms, involved hospital employment, compared with only 11 percent in 2004. The firm anticipates a rise to 75 percent in the next two years.

Today, about 60 percent of family doctors and pediatricians, 50 percent of surgeons, and 25 percent of surgical subspecialists — such as ophthalmologists and ear, nose, and throat surgeons — are employees rather than independent, according to the American Medical Association. “We’re seeing it changing fast,” said Mark E. Smith, president of Merritt Hawkins.

Health economists are nearly unanimous that the United States should move away from fee-for-service payments to doctors, the traditional system where private physicians are paid for each procedure and test, because it drives up the nation’s $2.7 trillion health care bill by rewarding overuse. But experts caution that the change from private practice to salaried jobs may not yield better or cheaper care for patients.

“In many places, the trend will almost certainly lead to more expensive care in the short run,” said Robert Mechanic, an economist who studies health care at Brandeis University’s Heller School for Social Policy and Management.

When hospitals gather the right mix of salaried front-line doctors and specialists under one roof, it can yield cost-efficient and coordinated patient care, like the Kaiser system in California and Intermountain Healthcare in Utah.

But many of the new salaried arrangements have evolved from hospitals looking for new revenues and could have the opposite effect. When doctors’ practices are bought by a hospital, a colonoscopy or stress test performed in the office can suddenly cost far more because a hospital “facility fee” is tacked on. Likewise, Smith said, many doctors on salary are offered bonuses tied to how much billing they generate, which could encourage physicians to order more X-rays and tests.

“The question now is how to shift the compensation from a focus on volume to a focus on quality,” said Smith. He said that 35 percent of the jobs he recruits for currently have such incentives, “but it’s pennies, not enough to really influence behavior.”

Creating a “Can Do” Culture

Posted on February 6th, 2014 in Uncategorized by Karl

(Adopted from Ben Horowitz’s blog:  http://www.bhorowitz.com)

The reasonable man adapts himself to the world; the unreasonable one persists in trying to adapt the world to himself. Therefore, all progress depends on the unreasonable man.
-George Bernard Shaw

Lately, it’s become in vogue to write articles, comments and tweets about everything that’s wrong with young technology companies. Hardly a day goes by where I don’t find something in my Twitter feed crowing about how a startup that’s hit a bump in the road is “fu&%@d” or what an as*h%le a successful founder is or what an utterly idiotic idea somebody’s company is. It seems like there is a movement to replace today’s startup culture of hope and curiosity with one of smug superiority.

Why does this matter? Why should we care that the tone is tilting in the wrong direction? Why is it more important to find out what’s right about somebody’s company than what’s wrong?

The word technology means “a better way of doing things.” This is easy to say, but extremely difficult to do. Making a better way of storing information, a better currency, or a better way of making friends means improving on thousands of years of human experience and is therefore extraordinarily difficult. At some level, it would seem logically impossible that anybody could ever improve anything. I mean if nobody from bible days until 2014 has thought of it, what makes you think you are so smart? From a psychological standpoint, in order to achieve a great breakthrough, you must be able to suspend disbelief indefinitely. The technology startup world is where brilliant people come to imagine the impossible.

As a Venture Capitalist, people often ask me why big companies have trouble innovating while small companies seem to be able to do it so easily. My answer is generally unexpected. Big companies have plenty of great ideas, but they do not innovate because they need a whole hierarchy of people to agree that a new idea is good in order to pursue it. If one smart person figures out something wrong with an idea–often to show off or to consolidate power–that’s usually enough to kill it. This leads to a Can’t Do Culture.

The trouble with innovation is that truly innovative ideas often look like bad ideas at the time. That’s why they are innovative – until now, nobody ever figured out that they were good ideas. Creative big companies like Amazon and Google tend to be run by their innovators. Larry Page will unilaterally fund a good idea that looks like a bad idea and dismiss the reasons why it can’t be done. In this way, he creates a Can Do Culture.

Some people would like to turn the technology startup world into one great big company with a degenerative Can’t Do Culture. This post attempts to answer that challenge and reverse that tragic trend.

Dismissive rhetoric with respect to technology is hardly new. Sometimes the criticism is valid in that the company or invention does not work, but even then it often misses the larger point. Here are two historical examples to help illustrate:

The Computer

In 1837, Charles Babbage set out to build something he called The Analytical Engine the world’s first general-purpose computer that could be described in modern times as Turing-complete. In other words, given enough resources the machine that Babbage was building could compute anything that the most powerful computer in the world today can compute. The computation might be slower and the computer might take up more space (OK, amazingly slow and incredibly huge), but his design matched today’s computational power.  Babbage did not succeed in building a working version as it was an amazingly ambitious task to build a computer in 1837 made out of wood and powered by steam. Ultimately, in 1842 English mathematician and astronomer George Biddel Airy advised the British Treasury that the Analytical Engine was “useless” and that Babbage’s project should be abandoned. The Government axed the project shortly after. It took the world until 1941 to catch up with Babbage’s original idea after it was killed by skeptics and forgotten by all.

171 years later, it’s easy to see that his vision was true and computers would not be useless. The most important thing about Babbage’s life was not that his timing was off by 100 years, but that he had a great vision and the determination to pursue it. He remains a wonderful inspiration to many of us to this day. Meanwhile, George Biddel Airy seems more like a short-sighted crank.

The Telephone

Alexander Graham Bell, inventor of the telephone, offered to sell his invention and patents to Western Union, the leading telegraph provider, for $100,000. Western Union refused based on a report from their internal committee. Here are some of the excerpts of that report:

“The Telephone purports to transmit the speaking voice over telegraph wires. We found that the voice is very weak and indistinct, and grows even weaker when long wires are used between the transmitter and receiver. Technically, we do not see that this device will be ever capable of sending recognizable speech over a distance of several miles.“Messer Hubbard and Bell want to install one of their “telephone devices” in every city. The idea is idiotic on the face of it. Furthermore, why would any person want to use this ungainly and impractical device when he can send a messenger to the telegraph office and have a clear written message sent to any large city in the United States?

“The electricians of our company have developed all the significant improvements in the telegraph art to date, and we see no reason why a group of outsiders, with extravagant and impractical ideas, should be entertained, when they have not the slightest idea of the true problems involved. Mr. G.G. Hubbard’s fanciful predictions, while they sound rosy, are based on wild-eyed imagination and lack of understanding of the technical and economic facts of the situation, and a posture of ignoring the obvious limitations of his device, which is hardly more than a toy… .

“In view of these facts, we feel that Mr. G.G. Hubbard’s request for $100,000 of the sale of this patent is utterly unreasonable, since this device is inherently of no use to us. We do not recommend its purchase.”

The Internet

Today most of us accept that the Internet is important, but this is a recent phenomenon. As late as 1995, Astronomer Clifford Stoll wrote the article entitled Why the Web Won’t Be Nirvana in Newsweek, which includes this unfortunate analysis:

Then there’s cyberbusiness. We’re promised instant catalog shopping—just point and click for great deals. We’ll order airline tickets over the network, make restaurant reservations and negotiate sales contracts. Stores will become obselete. So how come my local mall does more business in an afternoon than the entire Internet handles in a month? Even if there were a trustworthy way to send money over the Internet—which there isn’t—the network is missing a most essential ingredient of capitalism: salespeople.

What mistake did all these very smart men make in common? They focused on what the technology could not do at the time rather than what it could do and might be able to do in the future. This is the most common mistake that naysayers make.

Who does the Can’t Do Culture hurt the most? Ironically, it hurts the haters. The people who focus on what’s wrong with an idea or a company will be the ones too fearful to try something that other people find stupid. They will be too jealous to learn from the great innovators. They will be too pig headed to discover the brilliant young engineer who changes the world before she does. They will be too cynical to inspire anybody to do anything great. They will be the ones who history ridicules.

Don’t hate, create.

Summary of the Davos World Economic Forum by Duncan Niederauer (CEO NYSE)

Posted on February 6th, 2014 in Uncategorized by Karl

Last week I joined 196 top academics, 288 government officials, 48 representatives from non-profit organizations, and 2,101 business leaders & CEOs gathered in Davos, Switzerland for the World Economic Forum’s Annual Meeting. Typically, even the most upbeat thinkers can leave conversations at Davos feeling gloomy about the global economy. This year, however, among the 2,633 world leaders present, optimism was in the air in a way it had not been in the 6 previous times I attended.

That sense of optimism is well-grounded in all that’s happening around the world today. Just consider these facts, which were frequently cited in discussions at Davos:

  • Five years after the worst financial crisis since the Great Depression, the recovery has proven much faster and more resilient than almost anyone predicted;
  • Global GDP is projected to grow at 3.7 percent this year according to the IMF;
  • In addition to strong growth projected for countries like the U.S and Japan, Europe is showing signs that it has turned the corner and China’s economy – while slowing – has not had the “hard landing” some feared a year or two ago;
  • Africa was mentioned over and over again by CEOs – indicating that region is becoming an area of real opportunity for multinational companies;
  • Corporate balance sheets are healthy and companies are strong;
  • Despite some pull-back in recent weeks, U.S. markets remain near all-time highs and more than 130% higher than the March 2009 lows;
  • IPOs have returned – 2013 was the best year for IPOs since 2007 and the pipeline for 2014 looks strong.

But the sense of optimism that permeated Davos didn’t mean anyone expects the road ahead to be without difficulties. In fact, much of the formal agenda focused on remaining challenges and it is clear there is more work to do:

  • Global economic growth remains well below its potential, particularly as emerging countries – which accounted for 75% of global GDP growth the last five years – are slowing down.
  • Unemployment remains a real concern throughout the world with more than 200 million people globally needing jobs according to the World Bank. The U.S. labor participation rate is the lowest it’s been in 35 years, unemployment rates in Europe remain at or near record highs, and throughout the world the jobless rate among young people is worryingly high.
  • Income inequality is also a major concern. While wages for the top earners have grown, the median (inflation-adjusted) wage in the U.S. is the lowest it has been since 1998.
  • The percentage of Americans who own stocks is the lowest it has been in 15 years, dropping from 60 percent of Americans to 50 percent in the last five years. So, unfortunately, many retail investors missed the market rally, and that means those of us in the financial industry have a lot more work to do to restore investor confidence.

Among other things, these challenges all point to the need to remain focused on job creation, which is the only thing that will ensure the sustainability of this recovery. As I have said many times, jobs come from entrepreneurs who are able to turn ideas into growing businesses. That, of course, requires capital – so access to affordable capital for entrepreneurs and small businesses must remain at the top of policy agendas around the world.

That said, the private sector isn’t putting all the onus on policymakers. In fact, as risks and challenges were discussed at Davos it was clear that business leaders are not waiting around for government to provide all the solutions. In many cases, they are taking the lead themselves. For example, in my private meetings with CEOs we discussed topics like military hiring and better integrating young people with Autism and Asperger’s Syndrome into the workforce. Businesses are not just economic actors but social ones as well, and there is an increasing expectation among investors, customers, employees and business leaders themselves that their companies take an active role in improving the countries and communities in which they operate.

One area clearly requiring collaboration of the public and private sectors is cyber security. Cyber security received too little attention on the official Davos agenda this year but came up frequently in my private meetings. This is an area of real concern to many business leaders. One prominent bank CEO even said the biggest threat to our financial system is cyber security. Experts can debate what specific actions are required to better protect against this potential threat, but for now, our priority ought to be on simply ensuring the topic gets sufficient attention.

In summary, the future looks extremely positive but real challenges remain and they must be addressed. If public and private sector leaders approach these issues with a spirit of collaboration and solidarity, the outlook for the global economy, for jobs, for opportunity and our security will remain very bright.