Next Things First


Reform: Finally, Some Discussion of the Real Issues by Rob Coppedge

In light of all the distraction recently generated by discussions of health care IT (and even, cue the smoke machines, Health 2.0), I was very pleased to find Senator Tom Coburn, MD, and Regina Herzlinger’s piece in the Huffington Post.

In a week that for many of us has been dominated by reading the “wouldn’t-it-be-cool-ifs” of messenger bag-carrying technology evangelists, it was refreshing to see a call for a much needed national debate around the *real issues* facing the health care system.

With little fanfare, Congressional leaders may be near to agreeing on the most sweeping expansion of government in a generation – the de-facto takeover of the health insurance market by the government. Congressional Democrats are already icing the champagne. When the President’s “Medicare for all” plan is coupled with the budget, which contains a “down payment” of $634 billion over the next decade for health care, government-run health care may be inevitable.

All sides in this debate acknowledge that the U.S. has long needed easier access to health insurance. This need has gained urgency for the many Americans who are fearful of losing their employer-sponsored insurance in the midst of a recession. Unfortunately, the President’s plan will not only endanger the U.S. economy, but millions of patients as well.

They make clear that the issue here is cost containment. Or, perhaps better, that solving the “access” issue without controlling costs may be politically expedient but is a recipe for disaster.

The fundamental problem is that the President and congressional leaders lack realistic plans to control the health care costs that are already crippling U.S. global competitiveness. As a percentage of GDP, our businesses spend roughly 70 percent more on health care than competitors in other developed nations, yet we hardly receive 70 percent more in real value.

We talk a lot about cost containment – and in the world of health care venture capital, some of the most exciting investment opportunities address just this set of issues. But translating these decidedly market-focused ideas into terms that are politically palatable is difficult. Denying reimbursement for treatments, no matter their relative value or efficacy, has interest groups rushing to mount the barricades. However, as Coburn and Herzlinger point out, there is a risk of even greater hazard if we don’t engage the cost containment challenge now:

In the end, the Democrats’ health care reform will require drastic rationing… Consider Canadian patients, who may wait a year or longer to get radiation therapy. Or ask one of the nearly 1.8 million Britons who are waiting to get into a hospital or have an outpatient procedure. Or talk to the German breast cancer patients who are 52 percent more likely to die from the disease than Americans.

Concerns about rationing and patient outcomes are not demagoguery. How else can a government control costs in the real world? Many experts, including the Congressional Budget Office, dismiss as wishful thinking the Democrats’ claims of achieving efficiencies through bureaucrats’ dazzling implementation of information technology and other technocratic tools.

And this is where the real world collides with the health care technology bandwagon. It goes without saying that health care lags behind in the implementation of back office and administrative information technology. And certainly this is due in some part to all the factors that are debated regularly in the blogosphere. However, it is also due to the basic fact that there has been little ROI for physicians implementing these technologies.

I worry that we are just further confusing the issue. As my colleague Alan Buffington points out:

Isn’t it interesting that no matter how many times they are corrected, politicians and media folk refuse to distinguish between health care and health insurance.  Failing to make this distinction is what causes the problems discussed in the article.

If you watch the blogs, Twitter or CNN, you will have proof that the problem Alan points out is deep and widespread. The problem with health care is that it is “hard” – complex, path dependent, interlocking, huge, with substantial ethical and moral considerations. For most people (especially politicians),  this is way too much.

Posted by RobC

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Health Innovation in the Northwest … Buzz Is Building by charlottegee
April 14, 2009, 7:34 am
Filed under: innovateHealth, seattle market, start-ups | Tags: , ,

This week, Dave Chase’s Seattle P-I blog, Seattle Startup Buzz, highlighted the health care innovation taking place in the Pacific Northwest:

It’s clear there is an innovation revolution taking place around the health care industry. The need for transformation is huge given the size of the market (16% of GDP and relentlessly growing). I worked in Healthcare I.T. in the 80’s and 90’s and always described it the industry as a paradox. On the one hand, it was at the cutting edge when it came to medical technology but was in the dark ages when it came to information technology. …

The Northwest is quietly staking a claim to leadership in this new innovation economy… and it makes sense. The region is home to some of the most successful software companies on the planet and we also have an extremely vibrant health care ecosystem with significant stakeholders like Swedish, Virgina Mason, Fred Hutch the UW and many others. Combine these elements and what you get is the makings of a first-tier health care innovation environment that will very likely produce the next great companies from the Northwest and could very well become difference makers in the US and even worldwide health care marketplaces.

Recognition of this potential is exactly what spurred Davis Wright Tremaine and a group of health care entrepreneurs to launch innovateHealth…a recently formed organization connecting innovators in the region and creating access inward and outward with potential clients, government leaders, capital resources and more. The folks behind the group are Rob Coppedge of Faultline Ventures, Peter Gelpi of Clarity Health Services, Tobin Arthur of iMedExchange, Joe Whitford and Stuart Campbell both of Davis Wright Tremaine.

We’re thrilled about the building “buzz” around the many innovative health care companies in the area and look forward to more.

More on innovateHealth: innovateHealth // Supporting Health Care Innovators in the Pacific Northwest

Posted by CharlotteGee



Everyday Low Prices? More Views on the Wal-Mart EMR News by charlottegee
April 1, 2009, 12:23 pm
Filed under: electronic medical records, health it | Tags: , ,

We wanted to pass along another viewpoint on the Wal-Mart EMR news, this one from Don Fornes at Software Advice. He’s got a nice post up: Wal-Mart + eClinicalWorks Electronic Medical Records | An Odd Couple with Good Intentions.

The Wal-Mart / eClinicalWorks (eCW) partnership to sell electronic medical records (EMR) software in Sam’s Club strikes us as an odd couple. While we think eCW will benefit from this marketing coup, we don’t see the relationship lasting over the long term. Certainly, the intent is good: simplify a traditionally complex and expensive purchase by distributing through a low-cost distribution channel. … However, we don’t think EMR software presents the same economies of scale that Wal-Mart relies on to deliver “everyday low prices.” Wal-Mart can sell a wide range of products at low prices because they negotiate massive bulk purchases, run dramatically efficient logistics and efficiently manage inventory….

Furthermore, we do see some very real sales and services challenges arising from this partnership. Simply put: sophisticated, $25,000 EMR systems don’t sell themselves. Get a Wal-Mart “greeter” involved and things could get ugly. Wal-Mart has already stumbled a bit trying to support the relatively complex sale of iPhones. EMRs are a far more complex sale. My mind goes to the horribly awkward image of a brilliant, yet intolerant, cardiologist interrogating a greeter about eCW functionality. The mismatch of intellect and clinical expertise could be incendiary. …

We don’t expect this partnership to be a failure. Instead, we think it will accelerate eCW’s already impressive growth and position in the market. The awareness generated by the relationship will be well worth it for eCW. As for Wal-Mart, we expect them to realize sooner rather than later that they can make more money elsewhere. They’ll give this program a year or so, and then put something a little more traditional on the shelves.

Posted by CharlotteGee



Wal-Mart to Sell EMRs (Wait … What?) by charlottegee
March 11, 2009, 2:34 pm
Filed under: electronic medical records, health it | Tags: , ,

“We’re a high-volume, low-cost company,” said Marcus Osborne, senior director for health care business development at Wal-Mart. “And I would argue that mentality is sorely lacking in the health care industry.”

According to the New York Times, Wal-Mart “is striding into the market for electronic health records:”

The company plans to team its Sam’s Club division with Dell for computers and eClinicalWorks, a fast-growing private company, for software. Wal-Mart says its package deal of hardware, software, installation, maintenance and training will make the technology more accessible and affordable, undercutting rival health information technology suppliers by as much as half. … The Sam’s Club offering, to be made available this spring, will be under $25,000 for the first physician in a practice, and about $10,000 for each additional doctor. After the installation and training, continuing annual costs for maintenance and support will be $4,000 to $6,500 a year, the company estimates. Wal-Mart says it had explored the opportunity in health information technology long before the presidential election. About 200,000 health care providers, mostly doctors, are among Sam Club’s 47 million members. And the company’s research showed the technology was becoming less costly and interest was rising among small physician practices, according to Todd Matherly, vice president for health and wellness at Sam’s Club.walmart

The Wall Street Journal Health Blog adds: “Wal-Mart has been getting more deeply involved in health care in recent years, drawing a lot of attention for its $4 generic-drug program. It has improved its image in health after drawing criticism for offering stingy health benefits.”

And from Chilmark Research’s blog:

Wal-Mart/Sam’s Club has no credibility, no brand, no nothing in the technology solutions market. Hell, they don’t even have a Geek Squad. … if it were our money, we would go with an HIT specific solution provider who has a few years under their belt installing, training and servicing fellow physicians. Wal-Mart brings none of that to the HITECH gold rush.

What do you think?

A. Wal-Mart: A Study in Cool (Health Care Innovation)
B. Wal-Mart, WTF?
C. Whatever, Wal-Mart. We need to go back to the drawing board and completely rethink HIT before it gets out of hand. (One doctor close to us asks: Where’s the “Apple of EHRs”?)

Posted by CharlotteGee



Overheard: Health Affairs and HIT (Take Two Aspirin and Tweet Me in the Morning…) by charlottegee
March 10, 2009, 5:54 pm
Filed under: consumer engagement, health it, innovation | Tags: ,

If you haven’t heard, Health Affairs has devoted a chunk of its March/April 2009 edition to “stimulating health IT.” Today Health Affairs held a briefing on health IT, featuring a whole slew of experts, and the event was covered live on Twitter. One of the articles in this latest edition, and of course much of today’s discussion, touched on Web 2.0 in health care: “How Twitter, Facebook, And Other Social Media Are Reshaping Health Care.”

One observer: “The fact that Health Affairs – the leading health services journal – is spending ink on this stuff now is a big deal.”

And in a recent conversation, we overheard a leading NYC-area orthopedic surgeon say:

[Health Affairs is a] great journal and hell-bent on meaningful reform and innovation. Their writers are wonderful and insightful – and wouldn’t waste their readers’ time if they didn’t believe this is the next wave. Now you can no longer poke fun at me as I “tweet”… or engage. Patients get it, the “well”: public gets it, the press is starting to catch on…. but most docs are woefully ignorant of the changes taking place. I tried to gather support through the medical executive committee to put together a platform so the docs at [hospital name] can be*available* to their patient base… and you would have thought I asked each and every member of the committee to pose nude. They think that only teenagers are using this technology. We still have a ways to go… There are few companies that enable the physicians to adopt this type of wide-reaching and wide-ranging communications platform and docs still feel they simply don’t need to engage consumers like this….yet.

Posted by CharlotteGee



A Physician’s Reaction to the New York Times’ EMR Story (From Howard Luks) by charlottegee

The NY Times ran another piece* on the potential benefits of an EMR platform. I’m not sure who was *behind the story*… but I disagree with a number of the statements and premises of their article.

I have blogged about this topic often enough … here, here and here.

I am not against technology. As a doctor, I am against  *shouldering the burden* and *paying a fortune* for technology that will probably not enable my patients, will not materially affect my business, and as currently designed will not reform health care or the practice of medicine. EMRs, as currently available today, are in their infancy. They are, for the most part, very poorly engineered, very expensive, and do not allow me to share patient data with hospitals, RHIOs, etc.

(image from California Physician)

(image from California Physician)

Physician innovators should have taken the lead on EMRs … but we didn’t. We should have been involved at all levels of the platform’s build-out, but we weren’t.

Who benefits MOST from an EMR, and the sharing of knowledge, tests and procedural data … ? *Nope* … it’s not the patient … but the managed care industry!!! *If* technology such as an EMR platform decreases the number of duplicated procedures, the managed care industry’s profits rise. *If* they need fewer FTEs to handle electronic claims, their profits rise.

Do you think they will decrease their premiums if their costs go down???? Nope. Look at the airline industry. Gas/fuel are at four-year lows … yet we are still paying a fuel surcharge!

So, if the MCOs are going to benefit the most …WHY SHOULD THE DOCS, many of whom are already operating on a very fine margin, SHOULDER THE ECONOMIC BURDEN of purchasing, rolling out and maintaining an EMR system that most relevant research shows they probably will not like in the first place????

“This requires the usual leap of faith that knowledge will yield good things — better care, doing things smarter and, yes, saving money in the long run.”*

Leap of faith??? I’m not jumping out of a plane and relying on a parachute opening. Design a platform I like, align the interests/economic burden of those who prosper from the IT expenditure, make it economically feasible, make the systems inter-operable, the data actionable and computable and I will be the first one to sign up.

“We have to restructure our medical culture,” he said. “We have to promote a culture that believes in the evidence and is trained in analyzing the evidence. It’s the only long-run answer to the challenges we face in health care — evidence-based medicine.”*

This has nothing to do with evidence-based medicine (EBM). Whenever possible, I have been practicing EBM for years. The problem is that we do not have enough evidence. Without interoperability, currently available EMR platforms will not lead to a plethora of EBM data.

There has to be a better way … another reason why the Obama administration needs to fund the health care venture capital sector to allow for disruptive innovation in a space clearly in need of a new way of thinking.

In addition, this clearly points to the need for physician thought leaders to be actively involved in the innovation process.

Submitted by Howard J Luks, MD



The Big Push for Healthcare IT … Economic + Political Perspectives (From Howard Luks) by charlottegee
December 15, 2008, 10:57 am
Filed under: economy, health it, health policy | Tags: , ,

During a speech last week in DC in front of the Department of Health and Human Services Health Policy Forum (with nearly 50 of America’s thought leaders on disruptive healthcare), Ben Sasser, the Assistant Secretary of Health, commented that the projections for Medicare Part A funding were wrong. The Department figured out last week that Part A funding will be bankrupt prior to the end of Obama’s second term!! And solvency of Medicare will not be the only healthcare (HC) issue this administration will need to tackle.

President-elect Obama, Senator Baucus and others are crafting numerous initiatives they plan to bring forward early during the new administration’s first term. Most of these initiatives are geared toward *reforming* the healthcare system. There are innumerable issues that need to be addressed under the auspices of HC reform. Access, quality, efficiency, diminishing medical errors, minimizing duplication, waste and affordability are *simply* a few of the issues the administration will need to contend with.

It appears the incoming Obama HC team believes, right or wrong, that a big push into HC IT infrastructure will pose as the spark toward adoption of more widespread reform. There are both economic and political reasons why it makes sense to tack the IT spend onto the current stimulus package under consideration.

From an economic perspective, a big push into HC IT will result in jobs being added to the only sector of the economy that has demonstrated job growth over the last two quarters. Heading into 2009, job growth is going to slow in the HC sector as federal and state Medicaid funding is severely cut during the next round of budget cuts. (Consider: In New York State, Governor Patterson’s staff already has informed hospitals to plan for their worst nightmare.)

Combined with the tightening of the credits markets, hospitals are going to be hard pressed to offer services to the poor, uninsured and under-insured. “No margin, no service” will become the rule of the hospital landscape in 2009. Both the credit markets and financial issues will most certainly impact the ability of hospitals to pursue large capital intensive IT initiatives.

The AMA news recently reported that “Despite changes to federal rules that allow hospitals to donate health IT to physicians, studies show neither hospitals nor physicians are jumping at the opportunity.” No doubt, the cuts in state funding, the increase in the uninsured, and thus the increased financial stress on hospitals that offer services to the uninsured, will make it impossible for hospitals to spend money on IT without government assistance.

Therefore, *if* the incoming administration *believes* that a HC IT initiative is necessary as a stimulus for job creation and broader HC reform, the timing for tacking on a HC IT initiative as part of the current stimulus package is perfect.

From a political perspective, tacking on a HC IT spend to the current economic stimulus package will virtually assure its passage. The Democrats are working very hard to get a *comprehensive* stimulus package ready for President-elect Obama’s signature within a few weeks of entering office. All indications point to the fact that the monetary figure will be enormous — but many economists believe that deficit (Depressionary) spending and contemporary New Deal programs are *necessary* if we are to avoid a significant deepening of the current recession. That theory will give proponents of a HC IT initiative the ammunition necessary to obtain the necessary support for a 5-year, $50-billion IT package.

Perhaps most important: After the passage of an enormous stimulus package, it will be difficult for the new administration to obtain support of an exceptionally expensive comprehensive healthcare reform package — strictly based upon the cost of such an effort. By taking the $50 billion IT spend (and SCHIP spending) out of the HC Reform package, the overall cost of healthcare reform will *appear* lower … and perhaps more palatable to fiscally conservative members of Congress.

Bottom line? Healthcare IT is estimated to be at least a $50 billion industry in the United States. Anybody who chooses not to participate could be giving up a potentially large amount of revenue.

Submitted by Howard J Luks, MD