HFMA VIEWS

Scott MacStravic, PhD

The concept of arraying people and even entire countries on a “hedgehog vs. fox” continuum has been around for thousands of years, since originated by an ancient Greek philosopher. At the hedgehog end are those who look for and rely on “one big thing,” a universal and simple solution to problems--rolling up in a ball when attacked in the case of actual hedgehogs. In contrast, the fox end belongs to those who look for and rely on a large number of “little things,” complex and often independent, though potentially integrated solutions. No one knows how a fox will react when in danger, not even the fox.

The assortment of “solutions” proposed for healthcare reform in the US can be arrayed on the hedgehog/fox continuum. The most hedgehog-like example is probably the idea of shifting to a “market solution” based on consumer-directed health plans (CDHPs) where people have health spending/savings accounts (HSAs) and high-deductible coverage. This is intended to give them “more skin in the game” and thereby make them more prudent consumers of health care and spenders of their own money.

At its heart, this, like most hedgehog solutions, is appealingly simple, a single stroke that can make dramatic positive differences in the currently out-of-control healthcare costs. But to predict its overall effects, we should first look at precisely what it is supposed to change, and whether this single stroke is likely to do so. Clearly, the intent is to make dramatic differences in how consumers behave with respect to both their own health, and their healthcare utilization.

Ideally, the changes made in consumer health behaviors--in their diet, physical activity, tobacco/alcohol/drug use, driving, personal safety, management of stress, sleeping habits--will significantly reduce the incidence and prevalence of the diseases and injuries that create the need for and use of sickness care. Moreover, for those with existing chronic conditions, currently accounting for the vast majority of sickness care costs, increased adherence to prescribed medications and relevant lifestyle changes will reduce the crises, complications, and worsening of these conditions, and thereby further reduce the need for and use of sickness care.

One thing is clear, and that is that the use of “healthcare,” particularly that currently modest portion that is truly preventive and proactive in nature, should increase in order to reduce sickness care use and expense. So the changes in use of “healthcare” should be selective, not universal. Employers and insurers are already demonstrating their awareness of the need to be selective, in “value-based health benefit plans” that reduce or eliminate financial barriers to use of proactive disease-managing drugs, in contrast to reactive sickness care prescriptions.

But the real question that should be asked is whether shifting a significantly higher share of the sickness care cost burden to consumers will do the intended job. Will “punishing” them for being or getting sick, by forcing them to pay a larger share of the costs when they do so, turn them into healthier behavers? Given our admirable ability to deny to ourselves the likely consequences of unhealthy behaviors to our health and life quality, longevity, etc. will adding the threat of having to spend more of our personal wealth suffice to reform consumer behavior?

It has already been demonstrated that people who select CDHP/HSA coverage tend to be healthier and behave in a healthier fashion than those who prefer other insurance options. But some portion of this “effect” may simply be “self-selection bias”--the logical tendency of people who already behave more healthily and are in good health to choose CDHP/HSA coverage, since they can be more confident in their lower risk, compared to those who are not as healthy or do not behave as healthily.

We should look to experts in human behavior and behavior change for insights into whether a hedgehog solution such as shifting more costs of “unhealth” to consumers will actually do the trick. Future risks and negative consequences have not worked well in making us all law-abiding citizens, for example, despite the consequences being at least as dire as would be the case under greater consumer responsibility solutions.

Marketers, who are at least self-proclaimed experts in changing consumer behavior, would probably suggest a more complex and fox-like approach to promoting healthier behaviors and more prudent use of sickness care--one that would increase the extrinsic benefits of doing so, increase consumers’ awareness of the intrinsic benefits, or do both. Combining carrots and sticks usually works better than relying on sticks alone, particularly when it comes to making changes in regular behaviors, vs. rare “crimes”.

In any case, rather than focus on any simple (hedgehog) or complex (fox) “solution,” we should focus not on the solution, but on the problem. We need to address not only how consumers behave, for example, but on how providers behave, considering how much of sickness and health care use is driven by provider decisions and prescriptions. We need to address how governments and employers behave with respect to promoting vs. threatening the health of citizens and employees. We may even need to do so with respect to advertisers.

Any effort to dramatically reform consumer behavior, one that covers an incredibly broad range of different behaviors, as well as an incredibly diverse set of consumers (the American “melting pot”)--as well as of employers, providers, and governments--would seem to require a complex solution, vs. a simple one. Imposing more financial costs, and providing modest financial benefits as inherent in the CDHP/HSA “solution,” may be a useful element of a solution, but is not likely to suffice by itself.

In addition to asking experts in human behavior change, we might perhaps conduct some “market research,” into all those people whose behaviors must change--individual consumers, providers, employers, governments, etc. This should include both overt research, asking them what they think it would take to get them to change behavior, and perhaps even what they think it would take to get other stakeholders to change. But some covert research, based on “brain science,” on identification and analysis of the emotional and sub/unconscious, as well as conscious reasons for healthy vs. unhealthy behavior among all stakeholders would likely be useful as well.

Only when we clearly identify and understand the problem--which is the fact that nobody in the “healthcare system” is behaving the way they should--can we possibly gain the best chance of solving it. And when/if we achieve such understanding, it seems likely that a single hedgehog solution will not emerge as the best way to achieve the complex set of behavior reforms that will be necessary to succeed. 

Scott MacStravic, PhD

Ever since America revolted against the old aristocracy of Great Britain in the 18th century and fought an extra war in the 19th century to ensure its separation, we in the US have tended to think we are ahead of our neighbors across the pond. We have assiduously avoided their “descent” into socialized medicine, for example, and frequently crowed about how most people, as long as they are not “medically deprived” can get better medical and hospital care here.

Passing US in Employee Health

But there are increasing signs that the UK is ahead of the US in more than alphabetical order. Thanks to having a national health service, though reflecting the fact that the majority of employers in the UK offer private health insurance options to their employees as supplements to the government version, employers are ahead of their US cousins in employee health management (EHM), for example, at least in what they look for and invest in as desired outcomes.

Employers in the US largely focus exclusively on the most direct and easily measured results of employee (and often dependent) health management, namely reductions in sickness care, workers compensation and disability expenditures. The vast majority avoid focusing on or even measuring the clear impact that employee and dependent health improvement has on absenteeism and productivity at work. Even one of the most progressive HCOs in the country, the Duke University Health System gauges its “Prospective Health Program” aimed at employee and dependent members of its self-insured health plans in terms of direct cost savings alone, seeing the measurement of absence and presenteeism as too difficult.

By contrast, it is routine for UK employers to include absence and productivity at work as major focuses for and measures of success in their EHM efforts. Since they are usually not responsible for much if any of their employees’ and dependents’ sickness care costs, it makes sense for them to leap over these direct success dimensions that dominate US employers’ efforts and focus on overall labor costs, instead. Many UK employers have reported dramatic reductions in sickness-related absences, by more than half in many cases, as well as similar reductions in presenteeism.

Moreover, UK employers have gone beyond cost savings in general, at least in some cases, to examine and celebrate increases in revenue attributed, at least in part, to healthier and happier employees and improved employee retention. Reduced turnover has long been one of the cost saving dimensions included in UK employer ROI evaluations, but at least a few have recognized that having employees remain longer and work at top form increases sales, adds more new business and helps retain customers, as well.

Passing US in Retail Medical Clinics

More recently, there are signs that the UK is jumping on the retail medical clinic bandwagon initiated in the US. But it is passing us in the ways that these clinics are used and the scope of revenue as well as customer benefits they offer. In London, for example, a chain of nine “Medicentres” has opened, many located near the railroad stations where many who work in the city arrive from elsewhere. While they use physicians as their medical care providers, in contrast to the nurse practitioners that staff most such clinics in the US, they offer a far broader range of services and financial arrangements.

For example, its “Medicard Executive” program offers five prepaid physician visits a year, along with an annual flu shot, PSA or Pap Smear test, and discounts on other services and medicat+ions purchased at the centers, for an annual fee of 105 British pounds. It also includes a lifestyle questionnaire and personal health profile customized to the health risks of each client, as well as a “lifestyle book” advising on how clients can lower their risks or keep them down. Discounts include 50 pounds off its comprehensive health assessment screenings, and 25 pounds of the more basic Well Woman or Man screening package.

The Medicentres also offer both occupational and corporate health programs to employers, as ways to achieve the same broad reductions in labor costs as UK employers have shown themselves to be interested in achieving. Occupational Healthcare services are aimed at reducing both health-related employee claims, and improving employee retention by both increasing employee loyalty and reducing health-caused retirements. Many of the screening services can be offered at the worksite, including customized packages that employers request, or at Medicentre locations.

The Corporate Care Programme looks after employee health generally, including full or basic health assessments, up to three prepaid physician visits per year, flu shot, unlimited advice calls to the Medicentre doctor helpline, a comprehensive health screening lasting two hours, biochemistry profile, resting ECG and BMI, hearing, vision, and lung function. The prompt care capabilities of the centers’ locations can reduce time workers spend away from work getting medical care, while advice line calls enable them to avoid unnecessary care or wait to more convenient times when not at work.

At least one retail clinic chain in the US offers proactive health services in addition to traditional routine primary care, at close to the levels of the Medicentres in the UK. The RediClinic clinics (“Get Well. Stay Well…Fast!) operate in five H-E-B stores in Texas, plus three Wal-Mart Supercenters in Oklahoma and Arkansas, plus one in a pharmacy in New York City. Its “Stay Well” services include screenings, immunizations, and routine physicals. But it goes beyond these to offer disease counseling and monitoring for diseases, such as asthma and diabetes), and for risk conditions, such as high cholesterol and blood pressure, overweight and obesity. It creates either a general or comprehensive health profile for patients wishing to manage their health, rather than merely be treated for existing problems. (www.rediclinic.com)

But this is certainly the exception, not the rule in US retail medical clinics. As a consequence, clinics in the US have access to a far smaller revenue potential in terms of the “share of wallet” of the patients it serves, to say nothing of missing entirely the employer and executive markets. By contrast, the recently announced “Preventive Plan” network of Preventive Medicine Centers, to be developed as hospital/physician partnerships across the US by US Preventive Medicine, Inc. might use the UK’s Medicentre’s as a model for their move into the employer health market, with prices similar to those at the Medicentres for packages of services. [“U.S. Preventive Medicine, Inc.” Wall Street Transcript Oct 2, 2006 (reprint provided by company)]

In any case, we are clearly behind the UK in terms of the scope of both our retail medical clinics and our employee health management investments. While the US, fortunately, is known to be ahead of the UK in terms of employee productivity, this advantage may not last long in light of the explicit focus on productivity among UK employers and the willingness of UK providers to work with them toward improving this key national economic parameter.

John Britt and Ray Albertina
Health Sciences Advisory Services, Ernst & Young

Continuous quality improvement (CQI) is a well-accepted discipline within healthcare ranks. It is both required by a number of regulatory agencies and a logical and natural fit for what providers produce--patient care. The nomenclature evolution from quality assurance to total quality management to CQI perhaps reflects our adaptation to a concept which has evolved from an ill-defined abstraction to a measurable and concrete reality. For many providers, CQI is no longer separate and distinct from the service they provide and is no longer considered either a capital expense requiring budget justification or an effort to appease a regulator. Indeed, CQI is simply embedded into services provided.

In the healthcare arena, the concept of change management has not experienced the same accelerated evolution as CQI in that change management is still viewed by many as an external influencer of process or motivator of work behavior and is not necessarily “baked” into actual work process or employee motivation. Hence, unlike CQI which tends to become self perpetuating, change management often must be constantly proselytized--particularly to clinicians--for it to stay alive and have an impact.

However, both CQI and change management are essentially about recognizing the current state of a process or work behavior, envisioning the future state, and implementing actions to achieve the future state. If CQI and change management share a common lineage, perhaps we can identify the divergent chromosomal strands of their DNA which have contributed to their respective evolutionary outcomes. The chromosomal strands to be examined include scope, context, and urgency.

Scope

It must be understood that a deliberate change management effort and CQI are both designed to facilitate – well, change. Perhaps the perceived scope (size, frequency, and intensity) of the change on the part of the staff (clinical staff, for example) who are ultimately responsible for or affected by the change may have an impact on the outcome. A comparative analysis of CQI and change management might reveal the following in regard to these parameters:

	CQI	Change Management
Size	Small, focused	Large, diffuse
Frequency	Low	High
Intensity	Low	High

While this matrix is not necessarily always the case, it is apparent that change management, in general, simply requires a much higher level of energy and attention in comparison to CQI. When change comes in frequent and large doses, those involved in the change can become overwhelmed and fall victim to change fatigue.

Perhaps a lesson learned, then, is to look at change management in “bite-sized” pieces. That is not to say to compromise on the level of change that is required but, with deliberation, to plan for the change implementation in a work breakdown structure that is manageable rather than exhausting.

Context

To expect successful change, the change must have context for the people involved. For many clinicians, the context must be inclusive of quality patient care. With CQI, the Q is for quality and many CQI initiatives are centered around clinical outcomes. Change management, on the other hand, is often dealt in the context of such areas as revenue cycle improvement, staffing, productivity, etc. Most clinicians understand there is a business side to their practice, but a value proposition may need to have a tie to quality to affect their work behavior significantly. If the organization has a healthy culture, this type of proposition should not be a stretch. Clinicians desire training, education, tools, and equipment to provide better patient care. By helping clinicians see the relationship between a positive financial outcome of service and being able to fulfill some of these desires, leadership and management may be able to provide some context which motivates the clinicians toward desired work behaviors.

Not all change efforts will be able to be linked easily to improved quality care. However, it is important to determine if a potential link exists and to solicit clinicians’ input early in the assessment phase, inviting them to help articulate the quality link that management or leadership missed or did not clearly communicate.

Urgency

Healthcare leadership and management work in dynamic environments and are highly sensitized to fast-paced change in response to economic, regulatory, and political pressures. On the other hand, most clinicians are not. Kurt Lewin, known as the father of change management, believed that for effective change to occur the work behavior must be unfrozen, molded to the desired behavior, and then refrozen. In Leading Change, Kotter [Lewin] offers an eight-step model for change management, with one of the primary steps for leadership being to create a sense of urgency. How can we both allow for “unfreezing” and create a sense of urgency?

Let’s examine the CQI Model. An opportunity is identified. Plans are made to change processes or work behaviors. Accountability is assigned, and results are generally reported monthly. Actions are calibrated in expectation of an improved outcome and incremental gains are expected.

In contrast, with change management an opportunity is identified. A change management effort is announced by leadership with a definitive sense of urgency. Management is dispatched with their targets, but not necessarily the tools, training, and resources to reach and sustain the target metrics. Using Lewin’s model, we might compare this approach to taking a steak out of the freezer, throwing it in the oven for a few minutes, and then expecting a great dining experience. This type of change facilitation, like the steak, is tough to chew and does not digest well.

Change should be filtered for urgency. The current processes and work behaviors needing to be changed, most likely, did not form quickly and are more likely to be effectively changed through actions and reforms that promote some thawing of the current state. Leadership should, in fact, create the urgency to act, but with restraint and awareness that expectations of dramatic shifts in work behaviors may result in only temporary effectiveness if unlearning and relearning have not occurred. Leaders should consider their communication style and tone when discussing change with clinicians. Avoid hype and lay out the “business case” for change. Enlist the clinicians to act and communicate an expected implementation time. Do not allow for undue delays in the process but reserve the “super-urgent” card for a critical need.

Summary

CQI today is ubiquitous in the healthcare industry. It is a focused methodology for looking at specific outcomes and determining what can be changed to improve those outcomes. Because many typical CQI focus areas have at least a tangential relationship to some aspect of patient care, clinicians, in general, accept the CQI model.

Change management, by contrast, is more episodic in nature, larger in scope, and invasive. It too offers a methodology to improve specific outcomes but often does not always have a self-evident relationship to quality patient care. Hence, buy-in on the part of the clinicians is more difficult to obtain. But change management and CQI are both creatures of the same species. Leaders who can offer a change management effort

• in a logical and manageable scope
• in a context where the clinician can relate to patient care
• with a sense of urgency bridled by practicality

are more likely to gain the respect and followship of the clinicians.

***

The views set forth herein are those of the authors and do not necessarily reflect the views of Ernst & Young LLP.

Scott MacStravic, PhD

Not-for-profit hospitals and other healthcare organizations have long been required to devote a significant amount of effort and funds to “community” benefit activities. This has been defined as their essential “charitable purpose,” and necessary to justify the exemption from local, state and federal taxes they enjoy. But despite the long history of this special treatment, it has also been the source of years, if not decades of controversy.

What constitutes “community benefit” activities and expenditures? How shall expenditures be calculated to ensure that all HCOs do it the same way and in a manner that accurately reflects real costs and expenses, rather than accounting tricks? How much is enough to warrant the exemption from taxes, given the amount that HCOs save and governments lose as a result?

HCOs have been asked to help states meet the matching requirements for Medicaid funding, since they benefit when more federal funds are made available to cover the costs of treating the poor. Recently, state efforts to decrease the numbers of uninsured citizens in their domains have proposed taxing hospitals as sources of funds to be used in extending insurance coverage. After all, HCOs will gain financially if the number of uninsured patients they serve is reduced, just as they do when Medicaid funds are more widely available.

The California proposal that calls for a 2% tax on physicians’ and 4% on hospitals’ revenues is one example, and one likely to be followed by other states as they act in the absence of the federal governments coming up with any “solution” to the growing numbers of uninsured. Needless to say, this tax is not popular among providers, though most will avoid the 4% payroll tax in lieu of health insurance for their workers, since most providers offer such coverage. Whether the increase in collections from serving more insured citizens will make up for the added provider tax is yet to be seen, of course, since providers vary widely in terms of the numbers of uninsured they treat.

A Better “Tax”?

The argument can be made, however, that neither community benefit requirements nor taxes on revenue to cover care to the uninsured is likely to make a significant dent in the burgeoning costs of hospital and physician care. A better option might be to require hospitals, at least, to both devote a significant amount of their efforts and achieve significant results in reducing the incidence and prevalence of disease throughout the populations they serve, through proactive efforts that have been proven to have such effects.

These efforts may range over any of eight proven ways to save sickness care expenditures:

• End-of-life management, planning and managing the most dignified and cost-effective dying experiences possible, while reducing futile and expensive interventions
• Chronic disease management, that reduces the crises, complications, and worsening of conditions that already exist
• Acute disease case management, that reduces the costs and improves the outcomes of severe acute cases by managing the entire care experience or episode, rather than narrow care events
• Disability management, that reduces the length of time people spend recovering from illness or injury through integrating all services relevant thereto, and working with employers to speed up return to work accommodations
• Demand management, that ensures people are seen at the best time, in the best place, by the best sources of care for the problems they have, as contrasted to over-use of ER and other expensive care, and delayed use of necessary care
• Risk condition management, that reduces the incidence and prevalence of such conditions where possible, while controlling or “reversing” them, rather than waiting for them to become acute or chronic diseases or injuries
• Risk behavior management, that reduces the incidence and prevalence of risky behaviors known to lead to risk, acute and chronic conditions, by preventing them, reforming them, and replacing them with healthier alternatives
• Health/wellness/fitness promotion, that reduces general risks of illness and injury, speeds recovery therefrom, and reduces risks and negative side effects of life events such as pregnancy and menopause, as well as treatments such as cancer therapy

What could make such investments palatable to governments rather than taxes or traditional community benefit investments would be the fact that they all are known to reduce the overall need, demand, and expenditures for sickness care. This will necessarily also reduce hospitals’ and physicians’ sickness care revenue and profits, of course, but that will happen anyway under current proposals. But by demonstrating that these investments have. not merely theoretically should have reduced sickness care expenditures, providers can make a strong case for being exempt from taxes because of the at least equivalent value they are producing.

Engaging in any of these eight proactive health management activities could be cost-saving for hospitals as well. Managing the end-of-life to avoid futile, expensive medical care can also save hospitals the losses when DRG-based payment fails to cover the costs of heroic treatments. Managing the health and demand of frail elderly to keep them out of hospitals where DRG payments are typically less than costs can also create financial benefits for hospitals, as has already been proven by a number of institutions.

Proactive health efforts aimed at their own employees and dependents covered by insurance or self-insured programs can save hospitals costs, just as it does for employers in general. While it will reduce sickness care utilization by their own employees, the net effect is likely to be entirely positive, with costs saved far greater than any revenue foregone, in terms of productivity gains, absence and presenteeism reductions, etc. Moreover, with increasing pay-for-performance bonus revenue on the horizon, increasing revenue is also likely since healthier employees perform better.

Finally, engaging in whichever of these eight proactive health activities they can effectively compete in can enable providers to add significant revenue from employers, even insurers and governments, who will be able to afford far more generous payment when they are saving money as a result than as compared to sickness care, which is pure cost. If, when, and because hospitals become masters of both the delivery of illness and injury reduction and promotion of health – and more particularly of measuring the total positive impact thereof on their own, employers’ and insurers’ financial performance, they may prove to be formidable competitors to the health plans and vendors already marketing proactive health.

The combination of forgiveness from taxes and other financial burdens with internal cost reduction and external revenue additions can only be estimated at this stage. It will be up to each organization to determine whether, and how, it can make such an alternative work. But it is at least an alternative worth considering.

Robert Fromberg
Editor-in-Chief, HFMA

I demonstrated some inside-the-box thinking the other day in a discussion about payment-system reform.

I was on the phone with a freelance writer discussing interviews he would be conducting for an article about overcoming barriers to changing the healthcare payment system.

“Don’t spend much time talking about a single-payer system,” I said.

“Why not?” he asked, a bit of a challenge in his tone.

“Well,” I said, “no way is a single-payer system going to happen, and it’s a fairly short article, so I don’t think we need to do much more than mention it.”

In my mind was an article in the Christian Science Monitor (“Healthcare Crisis Countdown,” Nov. 11, 2006) that quoted Robert Blendon of Harvard as saying that a single-payer system is “not likely to be given a fair examination” because of “cultural resistance.”

The article went on to list the interest groups that object to a single-payer system and to note that when a single-payer system was on the ballot in California and Washington, opponents devoted a great deal of money to successfully trouncing the proposals.

The consensus of the experts interviewed for the Christian Science Montior article was that the state of the healthcare system would have to become even more dire than it is today for a single-payer system to receive a fair hearing.

All of which could be construed as a reason not to devote much space in a short article about payment system reform to a single-payer system.

Or it could be construed as a reason to encourage consideration of radical reform.

The central finding of Consumerism in Health Care, the most recent PATIENT FRIENDLY BILLING® report, is that stakeholders with divergent goals must work together if hospital pricing is to be more rational and meaningful for consumers. In his HFMA Views post "Those Devilish Details," HFMA President and CEO Dick Clarke writes, “strengthening Medicare’s financial status will take a collaborative approach with all options on the table.” In the forthcoming March issue of hfm, HFMA Chairman Joe Fifer writes in his column, “While some states and communities have stepped into the land of uncertainty with innovative solutions, I see little of that at the national level.”

Solving the healthcare crisis will come about only if stakeholders who rarely talk with each other start talking, and only if they talk about solutions they find unfamiliar and uncomfortable. Allow me to enjoy a moment of idealism: Imagine the change that would occur if everyone reading this magazine were to pick up the phone this week, call a stakeholder in the healthcare system with whom the caller usually doesn’t talk (a large employer, a payer executive, a community activist), and discuss one idea for healthcare reform—preferably one that is downright unrealistic. Now let me extend that idealistic moment and imagine what would happen if every month (or, dare I dream, every week) everyone who read this magazine made such a call.

Perhaps such a call would be made in the context of a specific, current issue of concern—a new price-transparency or community-outreach initiative. But I also like the idea of scheduling time to share ideas beyond what is happening today, ideas about what the health system could be, as well as specific actions to move toward that future.

As for me, I will make at least one call. I will call that writer back and let him know it’s OK to dream a little.

Scott MacStravic, PhD

The Fifth Annual Medical Banking Institute is to be held in Marietta, GA on March 5-7 this year, clearly indicating that there has been something around called “medical banking” for five years, though I confess to not having heard of it before. It indicates the increasing commonality of characteristics, interests, and even overlapping and interdependent functions of health care and financial “institutions”.

The announcement I read on this upcoming conference asserts that: “On our collective journey towards better healthcare using technology, banks are uniquely positioned to catapult emerging eHealth projects around the country into a secure, seamless, consumer-oriented network.” [“Banking on Better Healthcare Featured at the Fifth National Medical Banking Institute” PRNewswire.com Feb 1, 2007]

Certainly, banks are increasing their involvement in healthcare. They support credit card payment at point of service, patient loans to pay the increasing portion of bills that consumers are being required to bear, health spending/saving accounts, and virtually any financial transactions between patients and providers. After all, banks are concerned with people’s “wealth asset” in much the same way as HCOs are concerned with their “health asset”, though usually on a much more proactive and continuous basis.

The term “medical banking” was reportedly coined in 1996, and has been copyrighted, by the people involved in the Medical Banking Project (www.mbproject.org). It aims to enable HCOs and individual providers focus more on what they do best, deliver excellent clinical care, while banks focus on the financial transactions related thereto. But the two would become more truly “partners” if banks achieve what appears to be the vision of at least some.

One element of this vision, specific to the Medical Banking Project, is to digitalizing payment transactions between consumers and providers, including the management of providers’ ER accounts and charitable funds. This is projected to save significantly on the costs of such transactions and management, enabling HCOs to operate more efficiently, and freeing more resources for serving the uninsured population, through a “Charitable Communities NetworkTM”. [“Our Vision, Our Mission” Medical Banking Project Feb 3, 2007 (www.mbproject.com)

Perhaps even more important is the idea of having banks host personal health records in “community care platforms” that will enable such PHRs to become lifetime/all places resources for patients and providers, and enable the coordination, even true integration of the kinds of continuity of care currently impossible. (“A Medical Banking Road Map for America”, available through the Medical Banking Project)

Given all the attention currently being given to developing a truly interoperable electronic medical and personal health record system for community-level and even national use in revolutionizing healthcare, the entry of banks into the arena may prove interesting, along with governments, community organizations, technology firms, employers, insurers, and other stakeholders. At a minimum, it brings into the mix organizations that have a history of performing with an enormously lower rate of errors than healthcare is used to.

The question will always be the extent to which “medical banking” will benefit providers, patients, and payors, in competition with the banks, of course. None who are used to dealing with banks, and their imaginative ability to find ways of adding fees, penalties, interest, and similar sources of revenue, compared to relatively modest generosity with respect to what they deliver in service or interest paid, should doubt that the banks will do very well under any arrangements they have a say in arranging. But it should help ensure that HCOs, as the Chinese saying recommends, live in interesting times.

Richard L. Clarke, DHA, FHFMA
President and CEO, HFMA

The old saying “the devil is in the details” applies well to the federal budget mess. While many agree on the goal to balance the federal budget, the details of how to get there spark lively debate.

Yesterday, President Bush released his budget proposal to the Congress. The proposal reflects the Bush Administration’s goal to balance the federal budget by 2012 from a current official deficit of $248 billion. That goal, and even its timing, is acceptable to many on both ends of the political spectrum. However, the president proposes to get there through a focus on entitlement programs, and that is far from universally palatable.

The president proposed deep cuts of $75.8 billion in five years to the Medicare program, noting that it has serious long-term financial problems--a concern shared by many. But to solve the problems with Medicare, three basic options are available: increase revenue through taxation, reduce costs through increased beneficiary cost sharing or benefits cuts, or reduce costs through cuts to suppliers and providers of care, especially physicians. Not surprisingly, most of the budget savings, some $60 billion in five years or 80 percent of the total savings, come from the third option: reducing payments to providers and suppliers. More specifically, the budget proposes reducing annual updates for hospitals, hospices, and ambulance services for a total $18.7 billion in savings, while skilled nursing facilities and inpatient rehabilitation facilities would get no payment increase in FY08 and reduced increases subsequently, for a total savings of $11.1 billion.

For Medicaid, the president proposed $13 billion in savings from new legislation, such as proposing to align all reimbursement rates in Medicaid at 50 percent, and $12.7 billion savings through administrative action, such as eliminating Medicaid funding of graduate medical education.

No matter which approach the president selected, some interest group would complain. The devilish details impact different constituents in different ways, with everyone pointing to the other side to bear the burden of balancing the budget.

These details challenge the overall goal of bringing the federal budget into balance and placing Medicare on a sound financial footing. Solving the federal budget shortfall and strengthening Medicare’s financial status will take a collaborative approach with all options on the table. The president’s budget proposal, with providers the key source of cost savings, looks more like slash-and-burn budgeting than a balanced approach to solving these devilish problems and helping our communities.

Scott MacStravic, PhD

This week, the American Hospital Association sent Congress a letter arguing that hospitals’ ability to keep the promises they have made to patients and communities would be “…seriously challenged by potential federal budget proposals to reduce payments for services to the elderly, poor, and disabled under the Medicare and Medicaid programs.” [Letter from Rick Pollack, Executive VP of AHA dated Jan 30, 2007]

While I was delighted to see the AHA use the term “payment” instead of the common and totally misnamed “reimbursement” in the first paragraph of the letter, it did not strike me as making a strong business case (and besides, it used the term “reimbursement” in the very next paragraph).

It cited the continuing failure of Medicare and Medicaid to pay enough to cover the costs of providing care, at a time when hospitals are challenged to make huge investments in information technology, prepare for emergencies that might include terrorism, modernize facilities, care for increasing numbers of aged, etc. Their role as a safety net for uninsured Americans is also threatened, and arbitrarily cutting payment levels does nothing to address the problems that hospitals face.

Of course, cutting payments does something significant to the problems that the government faces, in Medicare, Medicaid and Social Security alike, which threaten the financial viability of these essential programs. And hospitals have arguably been part of the problem with these programs for decades, and clearly intend to continue to be so. One must wonder what might happen if they could become part of the solution, instead.

The U.S. Preventive Medicine® company has announced to the business world, in an ad that appeared in the Wall Street Journal recently, that it intends to create a Preventive Medicine Network of hospitals and physicians working to prevent the incidence and prevalence of the problems that the AHA wants the federal government to pay more for.

When this company began beta testing of its business model, that model focused on affluent consumers willing and able to pay thousands of dollars for preventive diagnostic testing and health improvement coaching, rather than traditional sickness care alone. This is a narrow market that hundreds of hospitals have already penetrated with “executive health” and “health vacation/medical spa” programs.

But its new plan calls for the addition of two major new markets: 1) a “Prevention Plan” that offers a suite of services in the $300-$500 range to be in the reach of almost all American consumers; and 2) “Group Prevention Services” that will serve both employers and state/local governments with respect to their employees’ health. While this plan is clearly intended to yield a network of profitable centers across the country, it will also be part of the solution, delivering services that should, in both the short and long run, save the federal government money by reducing the sickness for which too many people already seek care. [“U.S. Preventive Medicine, Inc.” Wall Street Transcript Oct 2, 2006 (reprint provided by company)]

Admittedly, the Centers that will provide such services will be serving employees, not Medicare and Medicaid beneficiaries. But to the extent that they enable more employees to remain healthy, they also remain employed, and less likely to need Medicaid assistance. And to the extent that they reduce or delay the incidence and prevalence of chronic diseases, and even “reverse” them to the point where no medical care is needed to control them, only lifestyle management, they will be reducing costs for both Medicare and Medicaid.

The MDVIP organization of some 140 physicians in 16 states is also doing a favor for Medicare, by proactively managing the health of its beneficiaries, who make up a significant portion of the over 100,000 patients served by MDVIP practices. These practices have shown to manage their patients, with significant proactive health efforts, rather than just sickness care, at costs significantly below what traditional practices operate at. (www.mdvip.com)

If, when and because hospitals can make a business case that sufficient payment is needed from Medicare and Medicaid to reduce the incidence and prevalence of disease and injury, and thereby the future costs that the federal government and taxpayers will have to bear, the AHA will have a far stronger position to argue for higher payment. In the meantime, insisting that US hospitals “need the money” is getting pretty old, though they and physicians alike enjoy a reasonably strong lobby.