The Seven Deadly Sins: Chronic Care and the Future Of American Healthcare

1
The Seven Deadly SinsChronic Care and the
Future Of American Healthcare

• Ian Morrison

Contact_at_www.ianmorrison.com
2
The Seven Deadly Sins

• Pride
• Anger
• Envy
• Greed
• Gluttony
• Sloth
• Lust

3
Seven Deadly Sins

• Proud Republicans
• Angry Democrats
• Envy The Uninsured and underinsured who are
  envious of people with access to health care that
  adds true value and protects the chronically ill
• Greed why healthcare is about incomes not
  outcomes (tax policy, provider reimbursement and
  return on investment)
• Gluttony and Sloth A powerful double act
  fueling the obesity epidemic, the depression
  epidemic, and the failure of the SF Giants
• Lust Its all we have left

4
Republicans and Perotians are the Natural
Majority of the United States
Perot cost Bush the Elder in 1992
Nader cost Gore in 2000
5
Republicans Grow with Income
Republican Vote by Family Income
63 of 200K Plus (2 of electorate)
50K Plus is 55 of electorate 75K Plus is 32
6
Exit Poll Results Most Important Issue
Issue ( of electorate naming as top issue) Kerry Bush
Moral values (22) 18 80
Economy/jobs (20) 80 18
Terrorism (19) 14 86
Iraq (15) 73 26
Health care (8) 77 23
Taxes (5) 43 57
Education (4) 73 26
7
Exit Poll Results Abortion
Abortion should be Kerry Bush Bush 2004 vs. 2000
Always legal (21) 73 25 -
Mostly legal (34) 61 38 -
Mostly illegal (26) 26 73 4
Always illegal (16) 22 77 3
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Moral Values versus Moral Values

• Moral Values aka Divisive Social Issues that
  appeal to Christian Conservative Voters
• Abortion
• Gay Marriage
• Stem Cell Research
• Some Other Examples of Moral Values
• Healthcare is a Right
• Poverty is bad
• Dont pollute the environment
• Dont burden our children with a mountain of debt
• Dont Shoot Any Living Creature unless they are
  trying to shoot you

9
Exit Poll Results Availability and Cost of
Health Care
Bush Wins the Unconcerned in a Landslide
Percent concerned Kerry Bush
Very concerned (70) 58 41
Somewhat concerned (23) 28 71
Not very concerned (5) 15 84
Not at all concerned (2) 15 83
10
What to Expect Under Bush 43 Release 2.0

• Tax policy as health policy
• Make the tax cuts permanent
• Large deficits
• Pressure on Medicare reimbursement
• Medicaid no help
• Health Insurance Market
• Talk about the uninsured but remember the 7, 14,
  28, 56 Rule
• HDHPs Shitty coverage for all
• Medicare Policy
• Pay for Performance
• WIPDBS Implementation
• Reimportation given the Drug Industrys
  demonization
• Private Sector Medicare PPOs Say What?
• HSAs
• Malpractice Reform?

11
Continuing Backlash Against Health Care Industries
In 1997 computer companies were rated
together (I.e. hardware and software companies
were not measured separately Because airlines
were not included in 1997, the trend for airlines
is from 1998 - 2002
12
Health Care Tops List of Industries Public Wants
to See More Regulated
Should Be More Regulated
Generally Honest Trustworthy
Managed Care Companies
Health Insurance Companies
Pharmaceutical Companies
Hospitals
13
Medicare Drug Benefit
5
Catastrophic Coverage
5100
Out-of-Pocket Spending
2850 Gap
No coverage
Medicare Part D Benefit
420 in annual premium
2250
Partial Coverage up to Limit
25
250
Deductible
Equivalent to 3,600 in out-of-pocket spending
250 deductible 500 (20 cost-sharing on
2000) 2850 (100 cost sharing in the
gap) Source Kaiser Family Foundation
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Medicare Bill The Ten Commandments

• There shall be competition (Even if it is
  unpopular, doesnt work and there are no willing
  HMOs or congressional districts willing to
  participate in it)
• There shall be liberty for seniors to be confused
  by a myriad of private health plan and drug
  coverage offerings
• There shall be skin in the game (consumer
  responsibility for payment through co-payments,
  deductibles and premium sharing) because it is
  good for consumers to pay at the point of care
  (it will stop them overusing the Medicare system
  for recreational purposes and it teaches seniors
  that they should look after themselves in their
  forties and fifties)
• There shall be no supplementary coverage because
  supplementary coverage nullifies skin in the game
  
• There shall be no new taxes for rich people, only
  raised premiums for all
• There shall be privatization because private is
  better than public (dont argue, this is a
  commandment)
• There shall be unrestricted free choice of plans
  each of which has a restricted choice of doctors
  because choice is good
• There shall be no Canadian drugs in the veins of
  Americans even if the drugs are made in America
  and purchased by Americans
• There shall be big differences in coverage among
  seniors but thou shall not covet thy neighbors
  coverage
• There shall be no senior left behind.. in
  traditional Medicare

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Obesity Trends Among U.S. AdultsBRFSS, 1985
(BMI ?30, or 30 lbs overweight for 54 woman)
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Obesity Trends Among U.S. AdultsBRFSS, 1986
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Obesity Trends Among U.S. AdultsBRFSS, 1987
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Obesity Trends Among U.S. AdultsBRFSS, 1988
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Obesity Trends Among U.S. AdultsBRFSS, 1989
20
Obesity Trends Among U.S. AdultsBRFSS, 1990
21
Obesity Trends Among U.S. AdultsBRFSS, 1991
22
Obesity Trends Among U.S. AdultsBRFSS, 1992
23
Obesity Trends Among U.S. AdultsBRFSS, 1993
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Obesity Trends Among U.S. AdultsBRFSS, 1994
25
Obesity Trends Among U.S. AdultsBRFSS, 1995
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Obesity Trends Among U.S. AdultsBRFSS, 1996
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Obesity Trends Among U.S. AdultsBRFSS, 1997
28
Obesity Trends Among U.S. AdultsBRFSS, 1998
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Obesity Trends Among U.S. AdultsBRFSS, 1999
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Obesity Trends Among U.S. AdultsBRFSS, 2000
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Obesity Trends Among U.S. AdultsBRFSS, 2001
(BMI ?30, or 30 lbs overweight for 54 woman)
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Lifestyle Changes that Promote Sedentary Behavior
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Obesity Drivers

• We are eating more (duh!)
• We are eating out more (In 1970 34 of the food
  budget was consumed outside the home in late
  1990s it was 47)
• Everything is supersized at home and at McDonalds
• We stopped smoking
• We are all working too much especially women
• We dont exercise enough because we are all
  working too much
• The only people who are exercising and eating
  right are people who were thin in the first place
  or bulemic celebrities or rich people who dont
  work or French

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Supersize Everything Part 1
National Geographic August 2004
35
Supersize Everything Part 2
Source Young and Nestle, Am J Public Health ,
2002
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Obesity How Far Upstream Do You Go?

• Metabolic medical management
• Drugs
• Surgery 140,00/year we could be doing 15 million
• The Fat Trapper and Exercise in a Bottle
• Wellness and health promotion
• Public Health Style Prevention
• Reinvigorate participation not competition in
  athletics
• Financial incentives Weighted Premiums or Tax
  BMI
• Urban Design RAND and IFTF
• Tax Policy
• Fat taxes not Flat taxes
• Iowa corn farmers from corn syrup to ethanol
• Fast Food as Tobacco companies
• No subsidy for cars, urban sprawl, commuting,
  drive thrus
• Give all the money to Head Start and public
  school PE

37
Whats the National Game Plan for Financing
Chronic Care?

• Consumer Deflected Healthcare Retail care and
  Catastrophic coverage
• Discounted fee for service everywhere
• Siloed delivery systems
• No incentive for coordination
• No IT infrastructure
• All delivered through a pluralistic Gong Show of
  providers intent of maximizing their income under
  the perverse and toxic incentives they face
• That should work pretty well, eh?

38
Consumer Responsibility for Payment

• Defined Benefit to Defined Contribution not
  necessarily in pure form
• Skin in the game no matter what
• The Ross Perot Effect
• Transparency in Pricing The End of the
  Hostellerie de Plaisance Model
• Break the Culture of Entitlement
• Let Them Eat Choice
• The political and economic context is crucial
• Tiering no matter what
• Ability to pay shapes service, choice, network
  and technology
• The backlash against coverage erosion

39
Chronic Care A Long Way to Go
Objective
Source Improving the Care of the Chronically
Ill Is it Good Business? Ed Wagner, MD, MPH.
MacColl Institute for Health Innovation, Group
Health Cooperative, 11/03
Source Chronic Disease Management Through
Quality Improvement the Basics. Chris
Rauscher, MD (Canada), 5/04
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The Argument For Consumer Responsibility for
Payment

• Consumers have been progressively insulated from
  the cost of care for the last 40 years
• If they only knew how much healthcare cost and
  had to pay they would use it less
• If they were responsible for paying they would
  also take more responsibility to become healthy
  and cost the system less
• Consumers should have the right to choose and to
  trade up to better quality with their own money
• When they are make rational consumer choices the
  market will be working and whatever is spent will
  be appropriate like any other market or sector of
  the economy

41
The Argument Against Consumer Responsibility for
Payment

• The 5/50 Problem Most consumers that are heavy
  users have significant co-morbidity or serious
  illness like cancer, they didnt choose this
  health status
• One day in an American hospital and they are over
  their maximum deductible, so
• Catastrophic coverage is a green light for
  excessive care by hospitals and
  procedure-oriented specialists
• While skin in the game can clearly move people
  around does it save money overall?
• The equity problems
• A de facto reallocation of resources from poor to
  rich (my access to the collective social capital
  of health insurance is better because I can come
  up with the economic down payment for physician
  visits and tests)
• Poor people with chronic illnesses will be
  disproportionately affected by consumer
  responsibility for payment

42
Consumer Exposure to Health Care Costs is About
to Increase
Per capita amount of personal health care
expenditures paid out-of-pocket
Percentage of total personal health care
expenditures paid out-of-pocket
Projected
Source Centers for Medicare and Medicaid Services
43
Consumer-Directed Health Plan Prototype

• Employer funds only
• Notional account
• Section 105 Plan
• Balance rolls over yr to yr
• Employer controls growth
• Employer controls exit rules
• Vesting
• COBRA
• Retiree medical
• Coverage for alternative care

Employee purchases catastrophic coverage
Employer contributes to cost of catastrophic
coverage
INSURANCE

• Participant responsibility
• Can fund through Section 125 plan

DEDUCTIBLE CORRIDOR

• Ensures good health
• Neutralizes hoarding

PERSONAL HEALTH ACCOUNT

• Consumer education
• Chronic disease management
• Health promotion
• Online tools
• Telephonic support

PREVENTIVE CARE
EDUCATION DECISION-SUPPORT TOOLS
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High Deductible Health Plans for Five Years

• Consumer Directed Health Plans (CDHP) and HSAs
  are a subset of and a stalking horse for High
  Deductible Health Plans(HDHP)
• HDHP will grow and CDHPs will grow fast BUT from
  a very small base.
• The leading edge benefit design CDHPs will
  drag all plan designs toward higher deductibles.
• 1973 Nixon passed HMO legislation and thought
  hell get Kaiser but instead he got PPOs.
• 2003 Bush passed MMA thinking hell get
  tax-sheltered HSAs (CDHPs) but instead he will
  get high-deductible plans.
• The ideology of consumer-driven health care has
  been implemented before the infrastructure to
  make it viable has been built.

45
HDHP Consumer Behavior

• HDHP are not necessarily young immortals
• Two populations those that have a choice and
  those forced into HDHP
• Not sophisticated or confident shoppers
• Pay more out of pocket (duh!)
• And have very significant compliance problems
  which are mitigated considerably by first dollar
  coverage of preventive services

46
Impacts of HDHP Providers

• Retail care capture the high end and the
  desperate frequent fliers
• Big impact on pediatrics, internal medicine
• Scopers and gropers will be impacted by specific
  procedure deductibles but CDHP is a green light
  for the esoterica
• Overuse by the rich and well, to-do under-use by
  the poor, sick
• Supplier-induced demand will explode among the
  well insured and well heeled
• Not brilliant for the chronically ill

47
Skin in the Game Matters

• Trading down twice as often as trading up
• Rapid increase in generic and therapeutic
  substitution
• Poor, chronically ill most effected
• Starting to lead to adverse health outcomes like
  the uninsured
• Dumb cost shifting without sophisticated chronic
  care management is not the right answer in the
  long-term

48
The Obesity Solution Tiered Fast Food
Formularies

• Sandwiches
• The All Lettuce Whopper Free
• The All Lettuce Whopper with Cheese 15
• Real Whopper with Cheese 35
• Drinks
• Water Free
• Diet Coke 0.99
• Regular Coke 15
• Supersized Regular Coke 35

49
The Emerging Value Context

• Rising costs
• Rising cost shifting to consumers
• The Fat Trapper, Bariatric Surgery and the
  Swaning of America
• Infatuation with Technology based care
• Evidence that Innovation makes a difference
• Expect more Innovation in long term although gaps
  in the short run
• Potential Paradigm Emerging
• High cost, High efficacy, High Customization but
  unaffordable
• The Concorde Syndrome
• The Quest for Value
• IOM Balancing cost, quality, access and equity
• Evidence based medicine and evidence based
  benefit design
• Pay for Performance
• Value Purchasing
• Count Value Higher Value Options are identified
• Make Value Count Higher value options
  reinforced by the market
• Capture Value Gain Consumer Migration and
  Provider Re-engineering

50
A Market Approach to Costs
Employers believe that consumer pressure is a
powerful, underutilized lever for improving
quality and efficiency. They believe that higher
quality and lower cost will result if consumers
spend more of their own money for services they
believe are high quality, and if providers
respond by improving their performance. For this
strategy to succeed, consumers will have to be
activated to seek more efficient, higher quality
care and physicians will have to be rewarded for
delivering it. Robert Galvin, Sounding
Board NEJM, September 19, 2002

• Transparency
• Incentives and Rewards
• Focus on Quality and Efficiency

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Quality and Efficiency Vary Widely By State
Health Affairs April 7, 2004
52
Supply-Sensitive Care Can Be Measured for
Specific Providers
Physician Visits During the Last Six Months of
Life
53
Six Purchasing Elements for Value Breakthrough in
Health Care
Plan, Provider Vendor Accountability

• Count ValueHigher value options are identified
  and made available
• 1. Health Plans are routinely assessed on 6 IOM
  dimensions of performance, starting with risk
  benefit-adjusted total cost PMPY, HEDIS and
  CAHPS and implementation of breakthrough
  elements 2-6
• 2. Individual Providers and Provider
  Organizations are routinely assessed on 6 IOM
  dimensions of performance, starting with
  (allocative) efficiency, effectiveness, and
  patient centeredness
• 3. Health Disease Management Programs and
  Treatment Options are routinely assessed on 6 IOM
  dimensions of performance

• Make Value CountHigher value options are
  reinforced by the market
• 4. Consumer Support enables consumers to
  recognize higher value plans, providers, health
  and disease management programs, and treatment
  options in a timely and individualized manner
• 5. Benefit Architecture encourages all consumers
  to select high value options
• 6. Provider Payment incents high performance
  today and re-engineering to enable higher
  performance tomorrow

Capture Value GainsBreakthroughs in health
benefits value occur Todays Gain
MigrationConsumers migrate to more efficient,
higher quality plans, providers, health and
disease management programs, and treatment
options ( an initial 5-15 net percentage point
offset of future cost increases and gt 2 ?
quality reliability) Tomorrows Gain
Re-engineeringSensing a much more
performance-sensitive market, health plans,
providers, health and management programs, and
biomedical researchers create stunning
breakthroughs in efficiency and quality of health
benefits ( further net percentage point offsets
of future cost increases and gt 4 ? quality
reliability)
6 Institute of Medicine performance dimensions
Safe, Effective, Patient-centered, Timely,
Efficient, Equitable Source Pacific Business
Group on Health
54
What We Have Learned to Date

• Consumers dont have the tools yet
• Consumers will discriminate but will likely
  forego, defer or trade down more than trade up
• Plan Level Story
• Like choice and are slightly more likely to trade
  down when have to pay
• Provider Level Story
• Dont see much difference in quality
• Tiered Networks West versus East
• Havent paid to get a better doctor
• Therapy Level Story
• Trading down twice as often as trading up

55
Health Care Products Services Rated on Value
For Money
56
Americans Lack Knowledge of Health Care Costs
Healthcare Service/Product Average Actual Cost Average Estimated Cost Difference of Estimated from Actual Estimating Too Little Estimating Too Much
Statins 109 156 43 18 (lt50) 34 (gt150)
High Blood Pressure Medication 93 153 39 21 (lt50) 30 (gt150)
Primary Care Visits 80 97 21 24 (lt50) 11 (gt150)
Trip to the Hospital in an Ambulance 550 476 -13 50 (lt300) 16 (gt750)
Blood Chemistry Test 300 143 -52 73 (lt150) -
Hip Replacement 25,000 10,639 -57 72 (lt10,000) -
Day/Night in Hospital 3,600 1,058 -71 83 ( lt1,500) -
Source Wall Street Journal/Harris Interactive,
June 24-28, 2004
57
Pay for Performance

• Common metrics for quality measurement
• Historic competition in the quality industry
• Problems of data measures
• Problems of electronic infrastructure
• Significant financial incentives for providers
• Penalty for poor performing providers
• Disproportionate allocation of premium increases
  to best performers
• Rewards could be based on objective historical
  measures (IHA), price/positioning (BHCAG),
  patient satisfaction (Wellpoint), medical group
  assessments (Pacificare), or redesign criteria
  (Leapfrog, PBGH)
• Still very little at risk for highly compensated
  people like doctors compared to private sector
• Need CMS to lead the charge
• Need Daughter of Capitation

58
Examples of Pay for Performance(Arnold Epstein
et al, NEJM, Jan. 22, 2004)

• United Kingdom has recently adopted a
  payment-for-performance initiative of
  unprecedented size and scope. Nearly a third of
  a G.P.s income will depend on practitioners
  performance as defined by 130 quality
  indicators.
• GE, Partners Healthcare, Tufts Health Plan, Lahey
  Clinic and other employers in Massachusetts
  Bridges to Excellence programMaximum bonuses
  to physicians 55 per patient per year, with up
  to 100 for diabetes patients.
• Integrated Healthcare Association (IHA), a
  collaboration of 6 California health plans, which
  cover 8 million lives. Up to 100 million will
  be available for but specific formula not yet
  defined.
• Anthem Blue Cross Blue Shield of New Hampshire
  reward physicians (very modestly) who provide
  certain preventive measures, based on HEDIS.

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Value Purchasing Conclusions

• Value purchasing is cost shifting in drag (unless
  we have information, build infrastructure, create
  institutions)
• Value purchasing will grow because employers and
  health plans will push it
• Because consumers dont see big value differences
  this will mean
• Pay to stay (with my current doctors)
• Trading down based on costs for commodities
• Foregoing care or deferring care
• Lack of adequate infrastructure will fuel public
  discontent
• Cost shifting as a gotcha rather than informed
  consumerism
• Ideally it will move market but.
• Will it save total costs? (International)
• Do the value players have the capacity to absorb
  more patients (drugs its easy, hospitals and
  doctors its hard)
• A triumph of ideology over infrastructure

60
How Can We Impact Costs?
Consumer Corridor Preventive Coverage

• Catastrophic
• DSM
• Pay for performance
• IT (e.g., CPOE, etc.)

61
Who Pays More? Who Benefits?
HC/GDP
Business -
Government
Households
Rx --
Hosps -
MDs - O
Others ?
62
HIT and Chronic Care

• HIT is good thing dont get me wrong
• EMR is a PET
• It wont save money quickly
• Expectations are too high, but
• You gotta spend to save
• You create a platform for improvement
• We do not have another idea
• Strong bi-partisan support conceptually .. Show
  me the money
• The power of simple disease registries what can
  you achieve on 3x5 cards and a telephone
• Enough conferences already, lets get going
• What about the vast rabble of American doctors?

63
Four Scenarios for Health Care 2004-2010
Minor Delivery System Reform
Bigger Government
Tiers RUs
National Rational Healthcare
Major Delivery System Reform
64
Scenario 1 Tiers R Us

• The SUVing of American Healthcare
• We pay more for choice and control
• WIPDBS brings the market to Medicare
• Chronically ill, low income beware
• Catastrophic coverage for the very sick
• The benefits of benefit design save employers
  money
• Trading down more often than trading up
• A world of opportunity and risk
• Private sector celebrated

65
Scenario 2 Bigger Government

• Major backlash against cost shifting to consumers
• 2008 election run on the retirement and health
  security issues of the middle class
• Protect the baby-boom at all costs
• Medicare Advantage for All or
• Pay or Play or
• Expanded Medicare and FICA tax or
• Fill the donut holes, stick it to pharma, shore
  up the entitlement
• Live with the consequences
• Politicization of healthcare spending
• Rationing and restriction
• Lower Innovation
• Lower profits
• Equity over efficiency
• Rising costs and taxes

66
Scenario 3 Market Nirvana

• Break the Culture of Entitlement
• Consumers learn to discriminate and pay
• We buy care not cars
• Incentives for health and personal responsibility
• Catastrophic coverage and retail medicine for all
• Utilization based on ability to pay
• The rise of cheapo plans and delivery systems
• Reaching high end retail customers is key
• Delivery reform is market-based not
  evidence-based
• Opportunities abound for the entrepreneurial
• Americas economic base as private sector
  healthcare
• High quality, high service, low equity

67
Scenario 4 National Rational Healthcare

• Universality and Delivery System Redesign
• Evidence-based floors and ceilings
• Pay for Performance
• Daughter of Capitation
• Reference-pricing and cost-effectiveness criteria
  for new technology
• Financial rewards for clinical redesign
• Universal Mandated Coverage
• Employer and individual mandates or
• Expanded Medicare Advantage or
• Expanded Safety Net Delivery Floor
• Expanded Access and Rational Design
• Delivery System Innovation rewarded
• All enabled by a 21st century IT and bioscience
  infrastructure

68
Floors and Ceilings Not Universal Care

• Tiers no matter what, so pick your poison
• Tiered Insurance
• No coverage for many
• Shitty coverage for most
• Great coverage for the rich and the lucky
• Tiered delivery
• Primary care clinics and adequately supported
  public hospitals
• Community hospitals and economically restricted
  networks for the middle class
• Its good to be rich because you get the best
  healthcare in the world
• Dont be poor, dont get sick. Dont retire

69
A Closing Thought on LustDespite Bob Dole as
Spokesman..
Consumers who have talked to a doctor about a
drug that is advertised (2000).
Conclusion Republicans would have more sex if
it wasnt for their allergies.