Debt is Bad for Healthcare

Props to HISTalk in his latest column featuring the review by Greg Halls blog note on Healthcare Profit and Debt and how this has essentially mortgaged off assets that were owned but that asset was sold off to show a profit.....

The concept is best summarized by comparing this to the fire service:

Examine the notion of ‘capacity utilization.’ Without debt, excess capacity is not viewed as a problem. Consider the local fire department. Paid staff resides at stations 100% of the time, regardless of emergency conditions. 100% state of readiness. Imagine if the fire station had to pay a mortgage: it would then be forced to convert its unused (excess) capacity to a cost, and in turn focus on raising revenues to support its excess capacity. This is exactly the case with hospitals (and many other large U.S. businesses).

So for the fire department they would need to service that debt and might be encouraged to start a few fires, find a side line business of fire extinguishers and perhaps even spin off various pieces to show profit - perhaps privatizing the ladder (front and back to different organizations that specialize in being the best at ladder work at the front). If we do that we could even turn our fire fighters into independent contractors paying those that have Self Contained Breathing Apparatus (SCBA) training higher salaries.....who would then tend to group in higher density areas where they would have more work and higher pay as a result.....

You get the picture. So as Greg suggests any restructuring or stimulus package must attend to the debt load accrued as a result of the "pirated equity" squandered by a procession of "B-school grads, many of them who found their way into health care as their widget of choice". Wouldn't it be nice if we could try and reclaim some of that wealth that got paid out as big fat bonuses similar to the one paid to Peter Kraus of Merrill Lynch to buy his $37 Million dollar apartment.

Americans Pay More for Healthcare - But Why?

The McKinsey report "Why Americans Pay more for health care" (free registration required for access to full report) provides useful insights into the spending patterns and some of the underlying reasons for the high cost of health care in the US

While the higher costs is expected in part due to the wealth of the country:

Across the world, richer countries generally spend a disproportionate share of their income on health care. In the language of economics, it is a “superior good.” Just as wealthier people might spend a larger proportion of their income to buy bigger homes or homes in better neighborhoods, wealthier countries tend to spend more on health care.

Despite taking account of this the US spends some $650 Billion more than might be inferred from its wealth. As for the where this spending goes

The research also pinpoints where that extra spending goes. Roughly two-thirds of it pays for outpatient care, including visits to physicians, same-day hospital treatment, and emergency-room care. The next-largest contributors to the extra spending are drugs and administration and insurance.

But do we receive value for money - not based on outcome measures as compared to other OECD countries where we lag in many areas (more here and here where the US ranked last in a group of 19 countries). The report looks at possible reasons for the additional costs including the possibility that a less healthy population would mean higher treatment costs........survey said no.

So where does this additional expenditure go? Two thirds of this goes to outpatient care and while the US is doing well by shifting care and cost from in patient treatment to outpatient (and the legacy of President Bush's community clinic outreach has been a positive component of that as detailed here) this has actually added to the cost of health care in the US because of much higher utilization. Unfortunately not only was the utilization up but so too was the cost visit in part due to increasing use of expensive diagnostic testing (CT and MRI's being major contributors). The system is structured in such a way as to incentivize this type of care with the delivery of more services offered that are more expensive.

After outpatient care the next highest contributor is pharmaceuticals and not because of increased usage of drugs but because the mix is of more expensive and and the higher cost of drugs in the US

the price of a statistically average pill is 118 percent higher than that of its OECD equivalents

Even taking account for the possible explanation that the US pays more for a "superior product" and the high prices that subsidize the R&D for the rest of the world this still does not explain the large differential

But none of these factors, by itself, can explain the gap between the price of drugs in the United States and the rest of the OECD. When we adjust for US wealth, we find that the country’s branded-drug prices should carry a premium of some 30 percent, not 77 percent for branded small-molecule drugs.

Finally administration and insurance costs are the third highest but although these costs are significantly higher than other countries, the good news it

.....we find that given the structure of the US system, its administrative costs are actually $19 billion less than expected, suggesting that payers have had some success in restraining costs

The possible solutions are wide and varied but must involve all the stakeholders. Despite the high spend the US continues to lag behind in the general health of the population and as such "reformers should therefore focus on the preventative efforts" which represent a potential big win. Community clinics as supported by President Bush's administration are one such effort. In addition the consumer must be more engaged and informed and this requires the sharing of health care information that is structured so as to provide real information and not just make the medical haystack bigger. Technology plays an important part in the sharing of data and the ability to structure and make it available quickly and in meaningful ways to allow decisions and choices to be made.

Speech Recognition no Panacea to Change Work Habit

Study published at RSNA 2008 and reported on in Auntminnie: SR Technology no panacea for reporting work habit change (registration required) reviewed the implementation of speech recognition technology at University of North Carolina Hospitals in Chapel Hill. This was not a review of the effectiveness of Speech Recognition overall since:

It's a well-known fact that implementing speech recognition (SR) technology can revolutionize report turnaround time and dramatically enhance the workflow efficiency of radiology departments.

But the question for this study was "can it improve the work habits of individual radiologists?". Not surprisingly technology does not change work habits. Radiologists who were slow to report before the implementation of speech were slow to report after the implementation of speech. Installing technology that speeds up the overall process does not change reporting behavior. Rank order of turnaround times by radiologists did not change pre and post implementation

The learning point - using technology to change behavior tends not to be successful. Technology should adapt to individual behavior rather than trying to change the behavior. Providing tools and technology that does not require a change behavior is more likely to be successful. Often behavior has been refined over the course of time that is optimal for that individual and circumstance - change is not always better or more efficient.

Why Doctors Don't Like EMR's

Mr HISTalk is on the money in his latest blog

Doctors, like 99% of people, want to be consumers of information, not creators of it

Doctors want to give great care - that's a universal maxim for the profession and anything that enables or facilitates this will be successful and will get used. But that's not what has been going on:

The model of forcing doctors to share their thoughts through manual electronic documentation is fatally flawed. There is no industry … none … where someone with the education and time value of a physician is expected to peck on a computer, especially in front of a client who’s only going to get seven minutes of time (I’ve never seen a CIO typing meeting minutes into a PC, yet they’re often the ones beefing about computer-avoiding doctors).

and my personal favorite part of this piece - philosophic johad:

....trying to force those small business owners to use computers based on some kind of naive philosophic jihad against the inefficiency of paper-based recordkeeping

He is right "speech recognition" (or better yet the newer and more relevant speech understanding) is ready for prime time.....

Gathering the data should not be the focus - it should be a natural by product of the interaction and speech can help in achieving this. The real value comes with driving clinical information to support to decision making allowing clinicians to focus on the healthcare process

Diagnostic Imaging Report Added to the Healthstory

Interoperability is one step closer especially in radiology with the announcement of the approval of the implementation guide for Diagnostic Imaging that makes it possible to seamlessly share information between radiologists and other electronic health records. The story was reported in Health Imaging and IT Radiology reporting takes on a sharing approach:

The new implementation guide for diagnostic imaging reports will help
radiologists capture and share the whole report or patient story in an
industry-accepted, human- and machine-readable format that includes
both narrative and structured data, according to HL7. As a result,
high-quality diagnostic decision-making reports will be more easily
available to both referring clinicians and clinical systems.

This implementation guide along with the previous guides is available from The Health Story Project (formerly known as CDA4CDT).

This is great work and will of increasing significance as more guides are established and more participants join the project