For the first time, we have the potential to use real data to drive the effectiveness of health care. But large practical obstacles bar the way. We can’t get there from here without specific action and real leadership from across the industry.

More than half of our current physicians intend to retire or cut back their practices at the very time that 30 to 40 million new people are entering the system, and the Baby Boom is entering its years of “peak medicine.” The necessity of producing more doctors, and emphasizing primary care, is obvious, but the real answer is far larger. Helping doctors become more efficient and effective could in effect greatly increase the number of available doctors and the time they have to give to patients, and restructuring and re-thinking how we do much of health care (particularly chronic care) could make the whole process far more effective and efficient — and far less expensive.

We now actually have considerable experience, data, examples, and outcomes of pilots that show exactly how to provide better health care, for less, for everyone. They have a number of factors in common, such as much more emphasis on primary care, prevention, and chronic care; teamwork; tight control of processes; and partnering with patients. All of these clearly illuminate making far better use of nurses – at the very moment that we are losing nurses out of direct patient care every day. Nurses are key to a better future. Let’s take a look at how that works.

New technologies, pharmaceuticals, and methods of treatment will over the coming decade short-circuit much of today’s medical care, replacing it with cheaper, easier, more precise, more effective techniques that will produce startling changes in health care.

The trends, vectors, and forces that are rapidly re-shaping health care are far deeper and broader than what is written into the health care reform act. Within a decade the structure, economics, legal position, and technological underpinnings of health care will be nearly unrecognizable. The organizations that thrive in these changes will be the organizations that best understand, anticipate, and build for them.

The emerging future of health care shows definite and startling features: Far beyond merely “bending the cost curve” of health care inflation, various organizations across the country are showing how to actually drive the cost down by substantial amounts, without depriving anyone of anything. What is emerging from the private sector is a coherent collaborative strategy. Flower shows how it works and how to make it work, with clear examples, models, and parameters.

The road to real “consumer-driven health care” is twisty and full of potholes. But some health care providers, some employers, and some insurers are making it work so well that it begins to look like the answer. Let’s take a look: What makes a difference? What’s so hard about it? What do we need to do to make it work? Who’s making it work? How? Is there a formula?

Here’s a simple key to parsing the future economics of healthcare. We have been trying for over 30 years to control healthcare costs. And there is little evidence that any of these efforts have had much effect. For decades the rise in healthcare costs has been consistently several times higher than the general inflation level.

There have been dozens of schemes used in various parts of the industry — inpatient, ambulatory, devices, pharmaceuticals — and by different payers. But all of them, at each level in the industry, have had the same DNA: they have been based on controlling the unit costs, the price a doctor can charge for an office visit, a pharmaceutical company for a drug, a hospital for a night in a room. The few that have attempted to control system costs, such as “certificate of need” processes to control hospital expansion, have been indirect and ineffectual, and often have served only to control one part of the system (such as hospitals) while other parts expanded unchecked (such as independent surgery centers and labs).

Imagine that a business is constrained by the market, or some regulation, in how much it can charge for a product, such as televisions. What does it do to try to continue making a profit? Two ways. The first is volume. It does its best to sell more units. The second is upsell. Instead of selling simple TVs, now it wants to sell home entertainment systems with 50-inch screens and massive speaker systems.

Does this sound a bit like what the healthcare system has done over these decades? The system does vastly more for us than it did a few decades ago. There is vastly more that it can do. There is no doubt that much of this “more” is also “better,” wonderful and useful, helping us to live longer with less suffering. But much of this “more” is not better, it’s just more — surgeries of marginal usefulness, drugs to solve lifestyle problems, ER crises that could have been avoided by smarter, earlier intervention.

Now that the real cost and capacity crisis is beginning to hit us, and much of the health plans’ traditional cost-avoidance business model has been kicked out from under them, we are beginning to see “green shoots” of a new style of thinking arising across the industry, mostly from large employers and a few health plans, focused not on unit cost but system cost, asking not how they can “bend the cost curve,” lowering medical inflation by a few percentage points, but how they can actually send it negative, actually lower the real system costs of healthcare, not by denying people care, but by making them healthier. Because most of the cost of healthcare arises from chronic disease, most of which derives from behavior and can be prevented, and most of which can be medically controlled, the opportunities for reducing cost are huge. The models are there, have been proven, and can be copied. The business case for both employers and health plans is strong. So watch this trend: Ignore continuing attempts to control unit cost, and pay attention to emerging programs, partnerships, and business models that reduce system cost. That’s the future.

[By Joe Flower, from the May 17, 2010, issue of H&HN Weekly]

The country seems to have shifted in less than 18 months from a
slogan of “Yes We Can!” to “Oh, well…” and a shrug, then back to “Cool!
I think. What was that, really?” Hopes for a true rebirth of health
care turned into the Year of Screaming Inanely, then took that long
slide from what we might hope for to what we might settle for. Yet
suddenly it seems like things are popping up all over the place, like
mushrooms on a forest floor in springtime. New projects and initiatives
are emerging from little companies, big companies, garage startups,
info-giants and mega-industrial combines.

It looks just as if, frustrated by a glacial and refractory
legislative process, Americans and American companies have taken
matters into their own hands, not with torches and pitchforks, but
devices and codes and business models, all trying to figure out some
way they can help make health care better, faster and cheaper. It is as
if Rosie the Riveter of the World War II poster were once again flexing
a muscle and saying, “We can do it!”

Better for Less

“Better, faster and cheaper?” The glib management saw is: “Quality,
cost and speed—choose two.” The received wisdom is that you can do
things at high quality and low cost, but it will take a long time. If
you want high quality at high speed, it will cost a bundle. If you want
low cost and high speed, you can’t have quality.

But health care does not fit that wisdom at all. In health care
“speed” translates to “accessibility,” in terms of coverage,
availability of services and convenience, as well as sheer rapid
response.

And uniquely in health care, the management saw is wrong: You can
have all three. The Dartmouth Center studies repeatedly show that
efficiency and effectiveness go together in health care. There is no
clinical advantage to making the process more clunky, difficult and
expensive. And more is not better in health care—doing more tests and
more procedures actually correlates not just with added cost, but with
worse outcomes. Efficiency, convenience and low cost are
therapeutically effective.

This is the giant prize at the center of the labyrinth of changing
health care: We could do it better for less. Much better, for much
less. And more and more companies are heading straight for that prize.

Retail Clinics

Let me give you a few examples. They sometimes are big, bold
actions, and sometimes are things that seem like details from the
outside, but could turn out to be very large.

CVS/Caremark, for instance. The CVS pharmacy chain has been growing
very quickly over the last 15 years, swallowing up Revco, Arbor,
Eckard, Sav-On, Osco and Longs, ballooning from 1,400 stores to over
7,000. In 2006, it bought MinuteClinic, a chain of retail clinics, and
began expanding it to almost 600 locations today. In 2007, CVS merged
with the massive pharmacy benefit manager Caremark, with some 64,000
participating pharmacies, to become CVS/Caremark. The combined
organization is now the largest provider of prescription medicines in
the nation.

The interesting detail? CVS/Caremark has decided to use its massive
market footprint to do something about chronic disease, starting with
diabetes. It goes beyond the more usual passive education programs to
aggressively get out and work with patients by, for instance, sending a
nurse to your house to show you how to test your glucose level, how to
use insulin and how to regulate your diet to keep the disease in check.

And the PBM side of the company is working with the pharmacy part so
you can walk into any MinuteClinic to get the same advice, or get your
A1c score tested, any time that is convenient, instead of having to
make an appointment at a doctor’s office. There is likely a convincing
business model to such services, but these kinds of direct patient
services are much harder to pull off than another PBM deal or opening
another store. They are the kind of thing a company has to want to do.

A Leader in Efficiency

GE Healthcare, with 46,000 employees, headquartered in the United
Kingdom, is one of the largest vendors of medical equipment in the
world, owning (to take one example) 80 percent of all the anesthesia
machines in the United States and 60 percent of the machines in the
world. Like all of General Electric, the world’s largest corporation,
GE Healthcare is highly focused on quality, and the processes by which
it continually hones its products and abilities.

But GE Healthcare has come to realize that this mindset, so natural
within GE, is not shared by its customers, who often think quite
differently, and have quite different concerns and incentives. Within
the past year, it set out on a major program involving all its major
executives, down to the manager level, especially in the service
division, which interacts with the customers on-site every day for
years on end, to better understand the customer—how the industry works,
how it makes its money, how it gets things done, why quality and
efficiency in processes are only beginning to be understood across much
of health care.

They are doing this, GE executives tell me, not only to work with
their customers better, but also partly to influence their customers,
to educate them to the way GE thinks about quality and efficiency. I
asked one GE Healthcare executive how this would help sales. If it were
really able to help its customers be more efficient, wouldn’t they be
more efficient, among other things, in using GE machines—and so
actually buy fewer units?

“That may happen,” he told me, “but we see that health care simply
has to change, and it will change, to be more lean and efficient. If we
help lead that charge, we will be identified in the customers’ minds
with a whole new way of working more efficiently, with less variation,
and better quality.”

New Approaches to Storing Health Records

Personal health records make up one big mushroom patch. Google
Health, for instance, provides a place where patients can keep their
health records. But here again, the revolutionary force is down in the
details. Besides plain old record storage, Google Health also provides
what may become a de facto standard for personal health records, making the CCR standard it has adopted into the MP3 of health records.

Equally important, both Microsoft’s HealthVault and Google Health
work like Apple’s iPhone: They provide an open platform with an API—an
application programming interface—for which anyone can design apps.
MDLiveCare, the see-a-real-doctor-online-right-now site I mentioned in
a previous column, is an app integrated with Google Health, as
OnlineCare is with HealthVault.

Similarly, SalesForce.com has invested in (and provided its
Force.com platform for) PracticeFusion, a free medical practice suite.
Its ChartShare allows any authorized provider to view and interact with
the patient’s chart—and its sibling, PatientFusion, gives the patient a
look at the chart arranged in one convenient interface. All of this
software is free.

The business models are all over the map. Like many things Google
does, Google Health does not really have a business model, except
Google’s belief (so far well-founded) that the more it can provide
storage and search and interface for every bit of information on the
planet, the more it will prosper. Google Health does not plop
advertising on your chart, and does not sell your information to
anyone. PracticeFusion supports itself through advertising and through
selling impersonal, statistical information about disease trends.
MDLiveCare asks for your credit card information.

Mostly, these companies seem to be in a kind of land rush. They see
health information as a nowhere-near-mature field, and they are staking
out the territory with little or no focus on profit for now.

New Platforms

If we want to imagine the true power of these patient interfaces, we
have to look even beyond today’s Internet browser-driven information
world to the new platforms arising right now: the smart phone and the
whatever we will call the generic version of the iPad. The iPhone is
not just a product, it is a platform. Though Apple is suing its
imitators, the platform will be imitated, copied, expanded and made
cheaper. The core of it is not the device, it is the combination of
cheap or free apps on a relatively open platform for which anyone can
design.

The growth of this model has been explosive: More than 140,000 apps
are now available for the iPhone alone; people have downloaded more
than 3 billion of them. There is already a website dedicated just to
reviewing medical apps (iMedicalApp.com, of course), including patient
scheduler apps, charge capture apps, medical calculators and patient
trackers.

The recently launched iPad will likely be another platform—similar,
but bigger and even easier to use, big enough to share, intuitive
enough for the non-tech-savvy, on which anyone can build any app,
especially including patient health care interfaces of every flavor.
Like the iPhone, it will launch a flood of imitators as well, and
manufacturers are already developing medical applications and
accessories for it.

Real Value

None of these things will “fix” health care. But collectively they
route around its problems and head more directly toward the real value
we are looking for—the health of the patient, at the highest possible
quality and the least possible cost. Insurance reform can make health
care more available for more people. But collectively, these
innovations do what insurance reform could never do—actually make
health care better, faster, cheaper.

Cartoonist Walt Kelley’s character Pogo famously pronounced: “We
have met the enemy and he is us.” But Buddhist teacher Pema Chodron
much less famously pointed out that there is a corollary to Pogo’s
pronouncement: “I have met the friend and he is me.” In health care we
have for a long time been our own worst enemies, each defending our own
turf and way of doing things, often caught in a welter of mixed
incentives that would cross an investment banker’s eyes. In these
disruptive innovations, we can see the million ways we have of becoming
our own best friends.

With over 30 years’ experience, Joe Flower has emerged as a premier observer and thought leader on the deep forces changing healthcare in the United States and around the world. As a healthcare speaker, writer, and consultant, he has explored the future of healthcare with clients ranging from the World Health Organization, the Global Business Network, and the U.K. National Health Service, to the majority of state hospital associations in the U.S. as well as many of the provincial associations and ministries in Canada, and an extraordinary variety of other players across healthcare – professional associations, pharmaceutical companies, device manufacturers, health plans, physician groups, and numerous hospitals.
Flower is the author of hundreds of healthcare articles, and a regular columnist for Physician Executive, the Journal of the American College of Physician Executives, and of Hospitals and Health Networks Weekly.