A Few Quick Thoughts on Amazon, JP Morgan, & Berkshire Hathaway Tackling Health Care

When I recently wrote about The Year of the Partnership, this is not quite what I had envisioned. But wow – what an announcement!

I put pen-to-paper on a few quick thoughts. Here it is:

  1. I love that these big players are seeing what those of us in health care have known for a while – something needs to change (and soon). When three bigs converge on the problem, it’s exciting.
  2. The solution is going to come from the employer side. Not policy makers.
  3. The size and money that these 3 players have makes me think there will be dis-intermediation. They’ll go direct to provider (a concept generally known as employer-direct contracting). They’ll also negotiate direct contracts with pharmacies (or develop their own pharmacy – heaven knows they have the distribution). Check the stock price of CVS and ESI.  They’re scared (and they should be). I was also educated recently by Brian Klepper who wrote an article that discussed this same topic. Until reading it, I had not known that Berkshire Hathaway had a medical stop-loss division. Interesting…
  4. How will these companies use existing Amazon/Whole Foods infrastructure to reach consumers?  This intrigues me and the possibilities are interesting. Imagine going to buy your groceries, and taking a moment to get a check up while you’re there.  Since primary care in the US is so important, I see this as a very real possibility.
  5. I hope they pay attention to the social determinants of health as they attack this.  Not everyone buys their groceries at Whole Foods, banks with JP Morgan, or has an Amazon Prime account.
  6. Innovation and technology are key – it will be interesting to see what tech is used/created here. I’ll be watching this closely.
  7. Leadership is even more important.  Throwing money at a problem doesn’t solve it. Who do these players bring in to lead this charge?  I’ll be watching this even more closely.
  8. They have their work cut out for them.  One of the large challenges in health care today is “The System” – I’ve blogged about this before.  If these big 3 players have to work with the existing infrastructure of patient data, claims data, etc. then interoperability will prove to be as big a hurdle to them as it is to the rest of us.
  9. I think these companies want to make a significant dent in health care, but spinning off one (or more) successful health care businesses is where the future takes these guys. Think of it as a giant petri dish that can conduct huge experiments on their own gigantic base of employees. If it works there, they spin it off into mainstream US health care system. Wouldn’t it be neat to see these big three companies challenge entrepreneurs throughout the world to get involved in solving the problems in health care?
  10. Sorry to end on a bit of a downer, but when you’ve work in the biz as long as I have, you are cautiously optimistic (at best). I am excited about the prospects of what could happen, but I’m also reminded of the sobering facts and history of entrepreneurs and other companies trying to make a dent in this behemoth.  So my fingers are crossed here, but I’m trying not to get my hopes up too high.

What’s Transparent Is This – Engagement Is Missing

Last week, The Journal of the American Medical Association (JAMA) released the results of a price and transparency study.

Though I do not have access to the full study, I read the brief excerpt including this:

Conclusions and Relevance:  Among employees at 2 large companies, offering a price transparency tool was not associated with lower health care spending. The tool was used by only a small percentage of eligible employees.

Anyone else have a “whoa” moment after reading this? (I’m guessing it will only be the health care geeks out there who have this moment.)

With the continued rise of high deductible plans and the push towards consumer directed health (where a member/patient takes a more active role in shopping for and consuming health care services), the need for a cost and transparency solution was a market need eventually met by a number of organizations.

Coupled with the exchange phenomenon – both private and public – and it appeared the market would be drawn to such tools in droves.  But as this study shows, people are not using the tools.

Should we be surprised at this conclusion? No, we shouldn’t.

We can push transparency and we can offer incentives. We can conduct payment reform and change how we pay for healthcare. We can insure the entire country and set up national work groups to look at quality, efficiency and costs. And perhaps tools and services will be brought to the market to help in these areas.

But if the patient doesn’t get engaged, then you may (still) see a consumer make a poor decision by not questioning a referral to a particular doctor or hospital. You may (still) see a patient select the lowest quality, highest cost hospital for a particular condition.

Engagement has been missing – and it appears it still is. Until we have an engaged health care consumer, price and transparency tools (along with anything else brought to market) will continue to see low utilization.

Health Care, Entrepreneurs, & Integration

For the better part of the last 20 years, I’ve worked in some area or another of the U.S. health care system – an industry in dire need of some changes.

I am regularly reminded of the challenges this country faces related to health care – high costs, coverage for the uninsured, reducing waste and fraud, transparency and quality – the list goes on and on.

Luckily, there are wonderful health care startups and entrepreneurs who are doing their best to find solutions, disrupt the system [insert your favorite buzz word here].  I’ve met more than a few of them and I’m regularly inspired and encouraged.

But then reality sets in and I ask the question that sometimes keeps me up at night…

How is it all integrated?

Without integration and coordination, its like we’re all trying to move a giant boulder…but we’re pushing from different sides and not accomplishing much.

I have attended “demo days” for Rock Health, Healthbox, and recently TiE ScaleUp – all in the Boston area.  The health care startups always have great concepts and ideas and some have since thrived.

But how much has the overall system been improved or impacted?

Some would argue that the silos in health care drive a lot of the challenges that exist in health care.  I tend to agree, but I’m not sure how much of it is attributed to the lack of integration. My sense is a lot of problems and challenges could be solved if the integration and coordination puzzle was solved.

Systems that are tied more closely together can better understand what each area is doing and, as a result, align business practices for the best possible outcome for the patient and/or member.

To revisit my previous example – push the boulder in the same spot in the same direction at the same time – create a system that truly works.

This poses a challenge to all the clever entrepreneurs and startupy folks out there – how to create a health care PLATFORM that allows integration across ALL aspects of the health care continuum – insurance, care delivery, electronic medical records, data integration, medication adherence, wellness and well-being, predictive analytics…the list goes on and on.

To the entrepreneurs out there who have a fire in their belly related to the health care space: the gauntlet has been thrown down. Let’s see whatcha got…

First Class Ticket and the Importance of Health

Happy New Year to all!

To help set some perspective for 2016, I thought I’d write about an experience from a few months back…

This summer I was at the airport getting ready to board a plane after being on vacation for a week. While boarding the plane, I was waiting in the aisle in the first class cabin while others ahead of me stored their overhead bags.

Though I wasn’t trying to eavesdrop, I overheard one side of a phone conversation from a person sitting in first class. He was a man in his mid to late 40s, tall and slender – generally in good health from an outward appearance standpoint. However he was sharing with the person on the other end of the phone that the doctor’s aren’t sure what’s wrong and that he has to go back for monthly monitoring. Mentioned Sloan Kettering which makes me believe it could be rather serious in nature – perhaps cancer related.

I’m not sharing this to break any HIPAA rules or to speculate on someone’s medical state. I’m sharing because we often get caught up in life – job, work, family challenges, money, etc.  We don’t often place enough focus and attention on our health and well being. We take for granted our health and stress about things that – in the grand scheme of things – just aren’t worth stressing about.

This experience help set some perspective for me – a person sitting in first class, looking fairly healthy to the eye at first glance, could be facing a terrible illness with an unclear outcome.  My hope is that he will be OK.

As we begin a new year, let’s remember this: health affects everyone.  Though we can’t always control what happens from a  health perspective, perhaps the importance of health and taking care of yourself should be higher on the old priority list than it sometimes is.

So if you’re looking for a resolution for 2016, why not this:  make health and well being a priority.

Wishing you and yours the very best in 2016. Happy New Year!


Doctors and Hospitals – Get Involved With Local Employers

Recently I took part in my employer’s open enrollment, the time when employees not only choose which employer-sponsored insurance they’ll have for the upcoming year, but also take part in things such as health risk assessments (HRAs) and biometric screenings.

The HRA and biometric screening help employers to get a baseline as to the health of their employees.  It’s usually an online HRA then a scheduled sit down with a health professional to get health stats like weight, blood pressure, glucose levels, and cholesterol levels.

Typically the biometric screenings are outsourced to a vendor who travels to your employer and spends a day drawing vials of blood. The other option is that the employee is responsible for getting the tests done themselves at their doctor’s office or a local lab.

In the first instance, the employer is typically footing the bill for the on site vendor to conduct the biometric screening.  In the second instance, it is likely that the biometric screening does not get done. If it’s not convenient for the employee, they’ll probably skip it.

Not to mention that when I called a lab and asked to schedule a biometric screening for my wife, they asked what that meant. (I’m not kidding here.  I had to figure out which tests made up a biometric screening so I could share it with the lab professional).

I began thinking a bit about this situation and have come up with a possible improvement idea that may work in certain markets.

Have the local hospital or physicians practice sponsor the biometric screening for local employers.

Now before you bother me with logistics, let’s just look at the idea to see if it has merit.

Many employers are moving to high deductible, consumer driven health plans today and they need to engage their employees a bit more in their health. These high deductible plans typically come in the form of a PPO – preferred provider organization – meaning the individual receiving care does not need a referral. He/she can visit any doc they want (pays less for in network and more for out of network).

There is good and bad in this type of plan. The good being the freedom of choice (though folks should beware of swinging pendulums). The bad is that this sort of plan does not require the member to choose a primary care physician, whose primary goal is preventive medicine.  As a result, people do not see their PCP for preventive care and only seek care when they are sick.  Couple this with the lack of primary care doctors in the country, and you have a problem.  It is not helping rising costs of healthcare for employers.

Now take a look at doctors and hospitals who are scrambling to find ways to improve outcomes as the industry shifts from fee-for-service to outcomes-based reimbursement.  Accountable Care Organizations (ACOs) are being formed as I write and doctors and hospitals will need to engage and manage their patients better than they ever have before in order to assure maximum reimbursement.

So…you have employers who have shifted to PPO plans, thus eliminating the PCP component, and doctors/hospitals who need to do a better job of engaging and managing patients to improve outcomes.

See any synergies here?

It makes sense for hospitals and physician practices that have access to lab services to engage local employers to sponsor their biometric screenings. Perhaps they do it free of charge or at a reduced rate on the condition that employees agree to choose a primary care doctor that’s part of the hospital or physician’s practice.

It benefits the doctors/hospitals as they are, in a way, gaining new patients for preventive care services.  It also helps to manage the care for the patient and positions the provider to manage the patient’s outcome. It benefits the employers as their employees choose a PCP which helps manage preventive care services before someone get sick, thus reducing claims cost down the line.

I believe the term for this is win-win.

I also believe that this could be the beginning of an employer-provider community healthcare relationship whose impact is just now being explored.

Hot Spotting At Work – The Next Step For Employers?

If you are a fan of Atul Gawande, then you’ve likely read his work in The New Yorker.

In January of 2011, he did a piece entitled “The Hot Spotters” which covered Dr. Jeffrey Brenner’s city-altering approach to healthcare in Camden, New Jersey.   By using healthcare data to create health maps, Brenner was able to track the healthcare delivery system and how it was utilized throughout the city of Camden.

By engaging high risk, high cost, frequent flying individuals, Brenner was able to significantly impact health status of the patients in Camden.  The results, which were quite impressive, included improvement in prescription adherence, weight loss, patient education on health conditions, and reduced trips to the ER.  All of which contributed to reduced medical costs.

So how does this relate to employers?

I mentioned in a previous post that surveys showed the majority of employers were not interested in pushing their employees to state health exchanges. With employers committed to offering health benefits to attract and retain talent, I do not think it would be a far reach for employers to begin seriously thinking about hot spotting at work.

Now I’m sure some would argue that employers would be over-reaching their boundaries with employees if they were to somehow force engagement into this sort of program.  But let’s make difficult leap that healthcare costs are not sustainable and that more innovative, perhaps drastic measure may be warranted in years to come.

With some large to medium-sized employers considering on-site clinics through companies such as HealthStat, it’s quite possible that a hot spotter-type program would fit quite well with this new direction for employers.  Couple this with things such as telemedicine and personalized patient health records, and employers suddenly have some really powerful tools to help engage employees in better health.

There is, of course, another leap that one must make in order to buy into the idea of hot spotting at work.  In Atul Gawande’s writing, he noted that social workers and other health care professionals were involved in activities such as visiting patients at home to assess family and support systems.  The line between home and work would become quite blurred if this were to occur so I’m not sure that the full extent of Brenner’s approach could be used.

But it’s worth a look.  We need to start somewhere.

[A note to my readers: In recent months, life has kept me pretty busy. This has resulted in fewer posts over the last five months or so.  Thus I may be trying a bit of a different approach – shorter blogs that I can bang out in half the time.  That doesn’t mean you won’t still catch a few of my “typical” long-winded blogs…they just won’t be as frequent.  Thanks for your continued support!]

The Carrot-Flavored Stick

A while back I posted a blog about Mr. Stick, the mean, older brother of the carrot.  It was in reference to the fact that benefits managers are somewhat hamstrung when it comes to cost cutting measures related to healthcare.  They can only tweak so many plan designs before they need to resort to the stick approach.

Mr. Stick is the bully in the playground who demands your lunch money. And you give it to him because you don’t have much of an option.

I began thinking a bit more about the challenges a benefits manager faces.  And I have a few thoughts and ideas to share…

Why is healthcare so expensive?  Well, there are so many reasons…fragmented care, enhanced technology, our payment system, medical waste, mis-aligned incentives, disparate systems, over-utilization, etc.

But there is another piece to this which is a huge component of the cost puzzle – the consumer.  Or the patient. Or the employee.  He/she goes by many different names.

Fact is that people complain about healthcare costs as they sit around eating ice cream by the pint and drinking “diet” soda while going to the world’s most expensive hospital’s emergency room for a hang nail.

Yes, I’m over-exaggerating.  But the scary fact is that people don’t realize the role that they play in contributing to healthcare costs.

Now, this blog post isn’t going to be about health and wellness. But it is going to be on utilization and education.  Some would consider this to be a “stick” approach.  But the carrot can be added to the stick to create…well, I guess it would be a carrot-flavored stick.

So how does the benefits manager play a role in utilization and education?  How does an employer help impact behaviors enough to curb the wanton utilization that isn’t needed? How does the benefits manager create the carrot-flavored stick?


This requires some explanation, doesn’t it…

Benefits managers have only so much power to change benefits, raise co-pays, raise deductible levels, change health plans, offer incentives and promote healthy behaviors.  But the fact still remains – most people have no clue how our healthcare system works or the downstream effects of their choices.

Therefore, benefits managers need to find a way to educate and empower their employees about healthcare.

I’m sure you’re picturing what I’m picturing – a room…no wait, a HALL…full of eager employees, salivating, just waiting to learn about healthcare.  And no, I did not forget to take my meds today. It’s purposely sarcastic.

Employees probably won’t care about something like this…unless there’s something in it for them.

Today, many employers are using some form of carrots and sticks.  Carrots can be in the form of incentives when someone completes a health risk assessment or takes part in a wellness program.  Sticks can be in the form of a tobacco surcharge or more cost sharing.

My thought to create the carrot-flavored stick is this:  put together programs that educate employees on how the healthcare system works – how hospitals are paid, how doctors are reimbursed, why some hospitals cost more than others, how insurance companies operate, the value of generic vs. brand medicine, how more healthcare doesn’t equate to better outcomes – the topics go on and on.

For each “course” completed, the employee gets money into their employer-funded health reimbursement account (HRA).

The fancy pants benefits managers will go even further.  They will have levels of “courses” and will designate healthcare “champions” for those who achieve high levels of education.  They’ll test employees and create competitions around these programs. Winners get special things like days off or gift cards.  And as the employees become more engaged in this, the stakes can be raised.  Education on things like employer-direct healthcare will help educate employees as to the value of such a “drastic” measure. However, the employee buy-in is likely to be greater because they now have a much better understanding of the system and why something like this is a chance for the company to save big money resulting in lower premiums for themselves and their families.

The question becomes this: who will offer these trainings?

I’ve got my own thoughts on this.  One is brokers/consultants, just as Gary Fradin suggests – see my author’s note below.

In my post about the Broker (R)Evolution, I discuss how brokers need to evolve. This is one of the ways to evolve.  The other idea would be for the entrepreneurs out there – create a company that does this sort of education.  I suppose it’s also possible that the employer trains someone internally on these topics, but that is not as likely. The last idea would be for the federal government to offer it.  Picture the state exchanges in 2014, complete with patient/member education programs that offer lower premiums if you complete training/education classes.

Good idea?  I think so.  Because a carrot-flavored stick is better than just a plain old stick, right?

Now, if we can begin working on the ice cream flavored stick…low-fat, of course…

[Author’s note: I attended a continuing education class today, well after I drafted most of this blog. The teacher of the class, Gary Fradin of Health Insurance CE, LLC suggested that brokers be the ones who educate employers on topics such as over-utilization and the harm of un-needed healthcare.  Well, since he stole my thunder a bit, I figured it was time to complete writing this blog tonight.  Thanks, Gary! ;)]

Healthcare 5.0 – Post Baby Boom…And The Big Payoff?

Being the healthcare geek that I am, I often wonder two things about the rising costs of healthcare:

1) Is anything being done today going to really impact the trend of rising costs especially with baby boomers getting older and the cost of healthcare being at its highest prior to death?  Probably not.

The Dartmouth Institute for Health Policy & Clinical Practice states that 25% of Medicare’s dollars are spent in the last year of a patient’s life.  As more baby boomers reach the end of their respective lives, these costs will be evident and any cost saving efforts or efforts to streamline cost, quality and outcomes (see ACOs) may not yield deep savings…at least not initially. I’m assuming that any efforts today to address the high cost/consumption of healthcare at the end of life will yield minimal cost control results by the end of the baby boom.

Oh and I’m purposely not addressing the quality or outcomes question here nor am I getting into waste or physician practice patterns – a blog for another day, perhaps!

Back to the subject at hand…

We cannot let short-term results (or lack thereof) deter us. We have to continue trying and we can’t be discouraged when drastic changes in healthcare delivery, payment, and utilization yield only minimum cost impact due to rising costs in other areas that are outside of our control. Technology costs money as well, but it also leads to better care in many cases.  I should also note that we should not be tricked into thinking these cost control measures aren’t working due to the overall rise in healthcare costs.

2) What will happen post baby boom? Will all of the work we’re putting in now to promote awareness, empowerment, and consumerism become “the norm” in 50 years? Will behaviors have changed enough in 50 years so that prevention and wellness is no longer a program offered by your employer, but a way of life?  Will this change lead to lower healthcare costs or at least a more controlled trend for future generations? Will the pendulum swing to the other side or at least come back to center?  Is this when we’ll see the fruits of decades of effort?

OK, so maybe I’m wondering a lot more than just two things…it’s part of being a healthcare geek, I suppose.

This is where I think we will see some impact.  After the high utilization baby boom period has passed, costs may normalize (meaning not be as skewed due to a higher volume of baby boomers consuming more care at the end of life).  This, coupled with the education, prevention, and empowerment efforts of today will lead to sustainable behavior change.  It will yield a future generation of more savvy healthcare consumers who will be living in a new era of healthcare – an era I’m calling Healthcare 5.0. (Has anyone claimed HC5.0 yet?  If not…DIBS!)

So lets look past the end of the baby boom generation which, by most accounts, is only 30 to 40 years away.

The baby boom generation began around 1946 and ended in 1964. Assuming that folks live to age 80 (which in some cases will be a conservative number and others, not so much), that puts us into 2040 time frame before the baby boom generation has lived its collective life.  Let’s also assume that Medicare is still solvent and the health system we have in place (or some semblance of it) is in effect.  The result may be a pendulum swing back the other way. Oh and that’s also assuming we survive the continued rise of costs that may not be curbed until 2050.

Empowered patients, wiser consumption, a focus on prevention, integrated quality and coordinated care that drives better outcomes, evidence-based guidelines for the practice of care…and the dawn of Healthcare 5.0.  Kind of makes me wonder what Healthcare 3.0 and 4.0 will look like…