Potential for disruption

Summary

Introduction

Potential for disruption and its implications

• Replicate effectively being low cost, simplified offerings, allowing medical specialists the opportunity to retain profits and invest and increase their returns.  
• Scale easily using the focus on elective procedures, standard hours and well developed scheduling capabilities to minimize costs and infrastructure.  
• Offer a different value to the community: Low cost, high quality; as well as margin for the doctor.  By avoiding ED is emergency department.  Pain is the main reason (75%) patients go to an E.D.  It has traditionally been part of an acute care hospital but recently is being deployed standalone as a catchment funnel to the owning hospital.  The EMTALA legislation requires E.D. treatment to stabilize every person seeking treatment by most hospitals.  Unreimbursed care is supported from federal government funds.  E. D. profitability has been helped by hospitals contracting with 3rd party companies who are able to improve margins through surprise billing.  The standalone E.D. competes with the positioning and brand power of lower cost urgent care clinics.  Commercial nature of care requires walk-ins to register to gain access to care.  With the focus on treatment of pain, E.D.s are a major distributor of opioids (5% of opioid prescriptions) and a major starting point of addiction in patients but are cutting back (Jun 2016). 
  commitments and inpatient requirements for 24 hour variable staffing overheads, these simplified offerings can focus on lowering cost, expanding volume and iteratively increasing quality is the Plan Do Check Act (PDCA) cycle developed at Bell Labs by Walter Shewhart.  Each activity that an organization identifies it will 'do' is formally described in a 'plan' including a model of the expected outcomes of the act if it successfully achieves its goals.  If a subsequent 'check' of the results of the action relative to the predicted model is unsatisfactory the initial plan is modified to correct for identified problems and the cycle is re-executed.  The cycle allows learning to become represented in the improved plan.  Following the process institutionalizes the learning. 
  .  
• Are separated from general hospitals by the asymmetric nature of the attack presented by these focused offerings.  If general hospitals start competing directly they will undermine their own core business model adding to the threat and its credibility.  So there is a barrier to entry for such organizations.  
• Synergize differently with the other nodes in the health care network.  Because of the additional cost pressures of the ACA is the Patient Protection and Affordable Care Act amended by the Health Care and Education Reconciliation Act of 2010 (Obama care).  In part it is designed to make the health care system costs grow slower.  It aims to do this by: increasing competition between insurers and providers, offering free preventative services to limit the development of serious illnesses, constraining patients' use of expensive services, constraining the growth of payments to Medicare providers and piloting new ways for PCPs to manage patient care to keep patients away from costly E.D.s.  It funds these changes with increased taxes on the wealthy.  It follows an architecture developed by Heritage Action's Butler, Moffit, Haislmaier extended by White House OMB health policy advisor Ezekiel Emanuel & architect Jeanne Lambrew.  The Obama administration drafting team included: Bob Kocher; allowing it to integrate ideas from: Dartmouth Institute's Elliot Fischer (ACO).  The ACA did not include a Medicare buy in (May 2016).  The law includes:
  • Alterations, in title I, to how health care is paid for and who is covered.  This has been altered to ensure
    
  • Americans with preexisting conditions get health insurance cover - buttressed by mandating community rating and
    
  • That they are constrained by the individual mandate to have insurance but the requirement was supported by subsidies for the poor (those with incomes between 100 & 400% of the federal poverty line).  
  • Children, allowed to, stay on their parents insurance until 26 years of age. 
    
  • Medicare solvency improvements. 
    
  • Medicaid expansion, in title II: to poor with incomes below 138% of the federal poverty line; an expansion which was subsequently constrained by the Supreme Court's ruling making expansion an optional state government decision. 
    
  • Hospital Readmissions Reduction Program (HRRP) which was enforced by CMS mandated rules finalized in 2011 and effected starting Oct 2012.  
  • Medical home models.  
  • Community transformation grants support the transformation of low income stressed neighborhoods to improve their lifestyles and health. 
    
  • Qualifications for ACOs.  Organizations must:
    
  • Establish a formal legal structure with shared governance which allows the ACO to distribute shared savings payments to participating providers and suppliers. 
    
  • Participate in the MSSP for three or more years. 
    
  • Have a management structure. 
    
  • Have clinical and administrative systems. 
    
  • Include enough PCPs to care for Medicare FFS patient population (> 5000) assigned to the ACO. 
    
  • Be accountable for the quality and cost of care provided to the Medicare FFS patient population. 
    
  • Have defined processes to promote: Evidence-based medicine, Patient-centeredness, Quality reporting, Cost management, Coordination of care; 
  • Demonstrate it meets HHS patient-centeredness criteria including use of patient and caregiver assessments and individualized care plans.  
  • CMMI Medicare payment experimentation.  
  • Requirements that pharmaceutical companies must report payments made to physicians (Sunshine Act). 
    
  • A requirement that chain restaurants must report calorie counts on their menus. 
    
  , general hospitals are weakened by loss of margin.  Specialists can continue to use their favored hospitals for performing complex procedures with costly infrastructure.  But these specialists are similarly pressured by lower Medicare is a social insurance program that guarantees access to health insurance for Americans aged 65 and over, and younger people with disabilities and end stage renal disease or ALS.  Medicare is currently missing a cap on out-of-pocket costs and direct prescription drug coverage.  It includes:
  
  • Benefits
  • Part A: Hospital inpatient insurance.  As of Dec 2013 Medicare pays for home care in only limited circumstances, such as when a person needs temporary nursing care after a hospitalization.  Part A covers 20 days of inpatient rehabilitation at a SNF after discharge from inpatient care at a hospital. 
    
  • Part B: Medical insurance for non-hospital services including: doctor visits, tests, injectable drugs, ambulances, physical therapy;
    
  • Part C: Medicare Advantage 
  • Part D: indirect prescription drug coverage The MMA prohibits Medicare from directly negotiating drug prices. 
    
  • Eligibility
    
  • All persons 65 years of age or older who are legal residents for at least 5 years.  If they or a spouse have paid Medicare taxes for 10 years the Medicare part A payments are waived.  Medicare is legislated to become the primary health plan. 
    
  • Persons under 65 with disabilities who receive SSDI. 
    
  • Persons with specific medical conditions:
  • Have end stage renal disease or need a kidney transplant. 
    
  • They have ALS. 
    
  • Some beneficiaries are dual eligible. 
    
  • Part A requires the person has been admitted as an inpatient at a hospital.  This is constrained by a rule that they stay for three days after admission.  
    
  • Sign-up
  • Part A has automatic sign-up if the person is drawing social security.  Otherwise the person must sign-up for Part A and Part B. 
    
  • Should sign-up for Part B during the Initial Enrollment Period, of seven months centered around 65th birthday, online or at a social security office.  But if still covered by spouse's insurance or not yet retired then may only join during the 3 month general enrollment period (January to March) each year, with coverage initiated the following July.  Incremental yearly 10% penalties apply for not signing up at 65.  These penalties apply to all subsequent premiums. 
    
  • Premiums
  • Part A premium
  • Part B insurance premium
    
  • Part C & D premiums are set by the commercial insurer.  
  , Medicaid is the state-federal program for the poor.  Originally part of Lyndon Johnson's 1965 Bill, eligibility and services vary by state.  Medicaid currently pays less for care than Medicare, resulting in many care providers refusing to participate in the program.  Less than 10 percent of Medicaid recipients, those in long-term care including nursing homes where 64% are dependent on Medicaid, use one-third of all Medicaid spending which is a problem.  The ACA's Medicaid expansion program, made state optional by the SCOTUS decision, was initially taken up by fifty percent of states.  As of 2016 it covers 70 million Americans at a federal cost of $350 billion a year.  In 2017 it pays for 40% of new US births. 
  and Employer (CalPERS reference pricing) reimbursements is the payment process for much of US health care.  Reimbursement is the centralizing mechanism in the US Health care network.  It associates reward flows with central planning requirements such as HITECH.  Different payment methods apportion risk differently between the payer and the provider.  The payment methods include:
  • Fee-for-service,
    
  • Per Diem,
    
  • Episode of Care Payment, 
  • Multi-provider bundled EPC,
    
  • Condition-specific capitation,
    
  • Full capitation.  
  .  However, in this case they can reduce the impact by switching simple procedures to the standalone elective centers.  
• Hedge fund is an investment fund that accepts investments from a limited number of accredited individual or institutional investors.  Hedge funds are able to use investment methods that are not allowed for other types of fund. 
  Glenview Capital sells off Hospital Corporation of America & Health Management Associates, but still suffers from investments in hospitals: Tenet; that have added debt from acquisitions but lost customers to outpatient treatment and HDHP is a high-deductible health plan which has lower premiums and a higher deductable than traditional health insurance plan such as a HMO plan or PPO plan. 
  pressure (Sep 2017)
  
• Major hospital systems is the owner of a set of hospitals and other owned infrastructure and employer of direct staff.  :  Dignity + Catholic Health Initiatives, Ascension, Advocate + Aurora; plan mergers; Tenet & Community Health sell off poor performing hospitals & shift further to outpatient services.  All are hoping to capture patient base before new entrents: UnitedHealth, CVS Health, Amazon; can.  And scale may help with margin & HCIT is health care information technology.  The AHRQ argues HCIT consists of a complex set of technologies, policies, standards and user sets.  Technically they represent it as a set of layers: Application: CPOE, CDS, e-prescribing, eMAR, Results reporting, Electronic documentation, Interface engines, etc.; Communication: Messaging standards (HL7, ADT, NCPDP, X12, DICOM, ASTM, etc,) Coding standards (LOINC, ICD10, CPT, NDC, RxNorm, SNOMED CT, etc.), Process: HIE, MPI, HIPAA security & privacy, etc.; Device: Tablet and PC, ASP, PDAs, Bar Coding, etc.; 
  costs.  UnitedHealth's Optum purchases the Advisory Board.  Republican tax law suggests reduced funding of: ACA is the Patient Protection and Affordable Care Act amended by the Health Care and Education Reconciliation Act of 2010 (Obama care).  In part it is designed to make the health care system costs grow slower.  It aims to do this by: increasing competition between insurers and providers, offering free preventative services to limit the development of serious illnesses, constraining patients' use of expensive services, constraining the growth of payments to Medicare providers and piloting new ways for PCPs to manage patient care to keep patients away from costly E.D.s.  It funds these changes with increased taxes on the wealthy.  It follows an architecture developed by Heritage Action's Butler, Moffit, Haislmaier extended by White House OMB health policy advisor Ezekiel Emanuel & architect Jeanne Lambrew.  The Obama administration drafting team included: Bob Kocher; allowing it to integrate ideas from: Dartmouth Institute's Elliot Fischer (ACO).  The ACA did not include a Medicare buy in (May 2016).  The law includes:
  • Alterations, in title I, to how health care is paid for and who is covered.  This has been altered to ensure
    
  • Americans with preexisting conditions get health insurance cover - buttressed by mandating community rating and
    
  • That they are constrained by the individual mandate to have insurance but the requirement was supported by subsidies for the poor (those with incomes between 100 & 400% of the federal poverty line).  
  • Children, allowed to, stay on their parents insurance until 26 years of age. 
    
  • Medicare solvency improvements. 
    
  • Medicaid expansion, in title II: to poor with incomes below 138% of the federal poverty line; an expansion which was subsequently constrained by the Supreme Court's ruling making expansion an optional state government decision. 
    
  • Hospital Readmissions Reduction Program (HRRP) which was enforced by CMS mandated rules finalized in 2011 and effected starting Oct 2012.  
  • Medical home models.  
  • Community transformation grants support the transformation of low income stressed neighborhoods to improve their lifestyles and health. 
    
  • Qualifications for ACOs.  Organizations must:
    
  • Establish a formal legal structure with shared governance which allows the ACO to distribute shared savings payments to participating providers and suppliers. 
    
  • Participate in the MSSP for three or more years. 
    
  • Have a management structure. 
    
  • Have clinical and administrative systems. 
    
  • Include enough PCPs to care for Medicare FFS patient population (> 5000) assigned to the ACO. 
    
  • Be accountable for the quality and cost of care provided to the Medicare FFS patient population. 
    
  • Have defined processes to promote: Evidence-based medicine, Patient-centeredness, Quality reporting, Cost management, Coordination of care; 
  • Demonstrate it meets HHS patient-centeredness criteria including use of patient and caregiver assessments and individualized care plans.  
  • CMMI Medicare payment experimentation.  
  • Requirements that pharmaceutical companies must report payments made to physicians (Sunshine Act). 
    
  • A requirement that chain restaurants must report calorie counts on their menus. 
    
  , Medicare is a social insurance program that guarantees access to health insurance for Americans aged 65 and over, and younger people with disabilities and end stage renal disease or ALS.  Medicare is currently missing a cap on out-of-pocket costs and direct prescription drug coverage.  It includes:
  
  • Benefits
  • Part A: Hospital inpatient insurance.  As of Dec 2013 Medicare pays for home care in only limited circumstances, such as when a person needs temporary nursing care after a hospitalization.  Part A covers 20 days of inpatient rehabilitation at a SNF after discharge from inpatient care at a hospital. 
    
  • Part B: Medical insurance for non-hospital services including: doctor visits, tests, injectable drugs, ambulances, physical therapy;
    
  • Part C: Medicare Advantage 
  • Part D: indirect prescription drug coverage The MMA prohibits Medicare from directly negotiating drug prices. 
    
  • Eligibility
    
  • All persons 65 years of age or older who are legal residents for at least 5 years.  If they or a spouse have paid Medicare taxes for 10 years the Medicare part A payments are waived.  Medicare is legislated to become the primary health plan. 
    
  • Persons under 65 with disabilities who receive SSDI. 
    
  • Persons with specific medical conditions:
  • Have end stage renal disease or need a kidney transplant. 
    
  • They have ALS. 
    
  • Some beneficiaries are dual eligible. 
    
  • Part A requires the person has been admitted as an inpatient at a hospital.  This is constrained by a rule that they stay for three days after admission.  
    
  • Sign-up
  • Part A has automatic sign-up if the person is drawing social security.  Otherwise the person must sign-up for Part A and Part B. 
    
  • Should sign-up for Part B during the Initial Enrollment Period, of seven months centered around 65th birthday, online or at a social security office.  But if still covered by spouse's insurance or not yet retired then may only join during the 3 month general enrollment period (January to March) each year, with coverage initiated the following July.  Incremental yearly 10% penalties apply for not signing up at 65.  These penalties apply to all subsequent premiums. 
    
  • Premiums
  • Part A premium
  • Part B insurance premium
    
  • Part C & D premiums are set by the commercial insurer.  
  & Medicaid is a social insurance program that guarantees access to health insurance for Americans aged 65 and over, and younger people with disabilities and end stage renal disease or ALS.  Medicare is currently missing a cap on out-of-pocket costs and direct prescription drug coverage.  It includes:
  
  • Benefits
  • Part A: Hospital inpatient insurance.  As of Dec 2013 Medicare pays for home care in only limited circumstances, such as when a person needs temporary nursing care after a hospitalization.  Part A covers 20 days of inpatient rehabilitation at a SNF after discharge from inpatient care at a hospital. 
    
  • Part B: Medical insurance for non-hospital services including: doctor visits, tests, injectable drugs, ambulances, physical therapy;
    
  • Part C: Medicare Advantage 
  • Part D: indirect prescription drug coverage The MMA prohibits Medicare from directly negotiating drug prices. 
    
  • Eligibility
    
  • All persons 65 years of age or older who are legal residents for at least 5 years.  If they or a spouse have paid Medicare taxes for 10 years the Medicare part A payments are waived.  Medicare is legislated to become the primary health plan. 
    
  • Persons under 65 with disabilities who receive SSDI. 
    
  • Persons with specific medical conditions:
  • Have end stage renal disease or need a kidney transplant. 
    
  • They have ALS. 
    
  • Some beneficiaries are dual eligible. 
    
  • Part A requires the person has been admitted as an inpatient at a hospital.  This is constrained by a rule that they stay for three days after admission.  
    
  • Sign-up
  • Part A has automatic sign-up if the person is drawing social security.  Otherwise the person must sign-up for Part A and Part B. 
    
  • Should sign-up for Part B during the Initial Enrollment Period, of seven months centered around 65th birthday, online or at a social security office.  But if still covered by spouse's insurance or not yet retired then may only join during the 3 month general enrollment period (January to March) each year, with coverage initiated the following July.  Incremental yearly 10% penalties apply for not signing up at 65.  These penalties apply to all subsequent premiums. 
    
  • Premiums
  • Part A premium
  • Part B insurance premium
    
  • Part C & D premiums are set by the commercial insurer.  
  ; will all be further impacting revenue to hospitals (Dec 2017)
  
• NYT/UC Berkeley study finds prices rise after hospital mergers, since these: reduce competition, raise price of admission, undermine quality; with major groups: Baylor Scott, CHI Franciscan Health, Dignity, Hartford, Memorial Hermann, Phoebe Putney Health System, Sutter Health, West Virginia University Medicine, Yale New Haven Health; integrating other hospitals and especially physician groups (Nov 2018)
• UnitedHealth purchases standalone surgery center Surgical Care Affiliates for Optum's OptumCare (Jan 2017)
• Amazon, Berkshire Hathaway, JPMorgan Chase partnership aims to disrupt health care; leveraging their combined consumer choice & health insurance knowledge to enable technology to simplify care.  (Jan 2018)
  
• Analysts: Berkeley, Harvard, NorthWestern; doubt they will achieve their goals (Jan 2018) or suggest the impact will be limited or adverse for other Americans: Kaiser Health News; (Feb 2018) 
• Comcast keeps health care costs to 1% growth (instead of 3% average of large employers) with an innovative go it alone approach to health benefits, helped by Venrock and Comcast ventures portfolio companies: Accolade health benefit navigators, Grand Rounds for second opinions, Doctors On Demand for tele-health is the use of remote health care.  It includes telepharmacy and clinical telehealth for stroke and psychiatry.  It also includes sessions between primary care providers and patients and assisted caregiving such as medication reminders and DME usage monitors. 
  , Brightside, which helps employees manage their finances, is a startup which Comcast Ventures created; for its 225,000 employees - although many of its workers are contractors.  NBGH vets the startups for its members.  Some large companies cover the costs of health care for their employees, but most use insurers to do paperwork, and contract with hospitals and doctors.  It can be hard for the partners to get data from the insurers.  Fidelity Investments is large enough to make insurers cooperate.  Companies and employees are unhappy with the regular service (Sep 2018)
• RWJ funded RAND study, of 1,598 hospital treatment's insurance claims, shows Parkwiew Health, in Indiana, charges private insurers 4 * its Medicare is a social insurance program that guarantees access to health insurance for Americans aged 65 and over, and younger people with disabilities and end stage renal disease or ALS.  Medicare is currently missing a cap on out-of-pocket costs and direct prescription drug coverage.  It includes:
  
  • Benefits
  • Part A: Hospital inpatient insurance.  As of Dec 2013 Medicare pays for home care in only limited circumstances, such as when a person needs temporary nursing care after a hospitalization.  Part A covers 20 days of inpatient rehabilitation at a SNF after discharge from inpatient care at a hospital. 
    
  • Part B: Medical insurance for non-hospital services including: doctor visits, tests, injectable drugs, ambulances, physical therapy;
    
  • Part C: Medicare Advantage 
  • Part D: indirect prescription drug coverage The MMA prohibits Medicare from directly negotiating drug prices. 
    
  • Eligibility
    
  • All persons 65 years of age or older who are legal residents for at least 5 years.  If they or a spouse have paid Medicare taxes for 10 years the Medicare part A payments are waived.  Medicare is legislated to become the primary health plan. 
    
  • Persons under 65 with disabilities who receive SSDI. 
    
  • Persons with specific medical conditions:
  • Have end stage renal disease or need a kidney transplant. 
    
  • They have ALS. 
    
  • Some beneficiaries are dual eligible. 
    
  • Part A requires the person has been admitted as an inpatient at a hospital.  This is constrained by a rule that they stay for three days after admission.  
    
  • Sign-up
  • Part A has automatic sign-up if the person is drawing social security.  Otherwise the person must sign-up for Part A and Part B. 
    
  • Should sign-up for Part B during the Initial Enrollment Period, of seven months centered around 65th birthday, online or at a social security office.  But if still covered by spouse's insurance or not yet retired then may only join during the 3 month general enrollment period (January to March) each year, with coverage initiated the following July.  Incremental yearly 10% penalties apply for not signing up at 65.  These penalties apply to all subsequent premiums. 
    
  • Premiums
  • Part A premium
  • Part B insurance premium
    
  • Part C & D premiums are set by the commercial insurer.  
  prices.  States paying the most are: Indiana, Wyoming, Maine, Wisconsin, Montana, Colorado, Texas, Georgia, Ohio, Washington; on average hospitals charge 2.4 * Medicare prices to private health insurance patients.  Outpatient care was 3 * Medicare pricing; angering employers.  Employers say they must exert discipline on health care costs: will gather data on prices and quality to decide on the best strategy: single-payer is a healthcare architecture in which there is a single financing organization.  Significant aspects of single-payer include:
  • Strengths of single-payer:
  • Removes the extensive replication of payer organizations and their different interfaces to the other healthcare entities and subscribers. 
    
  • One payment organization, removing the need to allow subscribers the yearly choice to change payer, encouraging payers to help subscribers remain healthy
    
  • Single-payer instantiates a political monopoly on health insurance. 
    
  • Problematic implementation of single-payer in the US
    
  • Undermines the alignment of the healthcare network, threatening profits, power structures and financial rewards.  This limits the possibility of single-payer in the US: Lobbying juggernaut: Politicians, Providers, Doctors, Insurers; leveraging dislike of tax increases, The 9 out of 10 Americans who are employed or retired are satisfied with their situation, Current insurance costs are hidden from the insured: in lowered pay packages, spread over all tax payers reducing government revenues; Current private insurers would be forced to reduce costs;
  • Alters one sixth of the US economy: Commercial health insurance replaced, investors impacted by transformation of business models; a huge change of high uncertainty, something evolution works to avoid by including mechanisms to force small incremental changes. 
    
  • A state: Vermont (Jan 2014); can use public funds for all health care financing while the delivery of care is provided by non-state organizations.  Analogously Intermountain Healthcare's SelectHealth Share requires organizations to use Intermountain for health care finance (Feb 2016). 
    
  , focus on best value hospitals;  Insurers are not incented to keep prices down when working for self-insured companies - where insurers are spending the companies money and make more revenue when the company spends more.  Anthem claims narrow networks - When all health insurance plans are comparable on line people are expected to choose narrower less costly plans.  This has the effect of encouraging providers and PCP to compete to be part of the narrow plan by reducing their charges and driving down the prices of the plans.  By limiting the number of providers/doctors offered in the plans the few that are included should get more business.  Across the US in 2015 39% of health plans offered in public exchanges are narrow (30 - 70% of areas providers) or ultra-narrow (30% or less of providers).  In large cities narrow networks are even more common.  Typically if consumers go outside of the choices offered in their narrow network they will be responsible for the high bills.  There are problems induced by narrow network constraints:
  • Queuing issues - while a surgeon and a hospital may be in-network other agents in an operation, such as anesthesiologists or anesthetists, may not have the same set of insurance contracts.  Even if a subset do, once these are allocated to a task the hospital must then manage a complex set of resource constraints to keep its ORs running.  If it does this by ignoring the 'out of network' status of these necessary resources the patient will be impacted by a high bill.  
  • Success is more likely when the plan maintains a broad list of PCPs but a narrow list of specialists and hospitals (Oct 2016). 
    
  of hospitals is its direction to drive down prices.  One-third of all healthcare spending goes to hospital care.  Hospitals are buying physician practices is physician practice management.  This consolidation of PCP practices was partly a response to Wall Street's capitalization of HMOs and hospitals in early 1990s.  As Wall Street switched to financing PPMs, enabling Medpartners's purchase of Mullikin Inc., hospitals responded by buying up the PPMs.  Most PPMs struggled to control costs in the capitated care framework of the 1990s.  Some of these PPMs shifted to become PBMs. 
  and spending on new facilities.  Hospitals (AHA is the American_hospital association. 
  ) argue they lose money on Medicare and Medicaid is the state-federal program for the poor.  Originally part of Lyndon Johnson's 1965 Bill, eligibility and services vary by state.  Medicaid currently pays less for care than Medicare, resulting in many care providers refusing to participate in the program.  Less than 10 percent of Medicaid recipients, those in long-term care including nursing homes where 64% are dependent on Medicaid, use one-third of all Medicaid spending which is a problem.  The ACA's Medicaid expansion program, made state optional by the SCOTUS decision, was initially taken up by fifty percent of states.  As of 2016 it covers 70 million Americans at a federal cost of $350 billion a year.  In 2017 it pays for 40% of new US births. 
  , so the comparison is biased (May 2019)