Health Care Reform

Factors Leading to Excessive Federalization of Health Care Financing

2009-09-13T11:37:00.001-07:00

The Obama healthcare agenda is to accelerate the path toward socialized medicine, but it can be stopped. Growth of the aging population will naturally lead to significant increase in the ratio of federal to total health care financing from the current 33%. This already implies a shift toward more centralized government control of health care through expansion of Medicare rolls. In addition, as employees move among companies with periods of unemployment, those caught in between employers will desire portable coverage, leading to further accumulation on the federal budget if a public option is considered.

Lack of cost containment or adaptation by the insurance industry will negatively affect business competitiveness, leading to a tipping point where employer based insurance loses viability, unless a hard stop is put in to prevent this and force parties to the table to find a hybrid solution that includes private enterprise and patient directed health care. Socialism is about the power of centralization and not the freedom of the individual to make their own choices. If not checked, this road map leads to a single payer system, with budgetary constraints forcing care rationing at a national policy level, and with fallout to compromise religious beliefs in the practice of medicine for expediency.

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Christopher Grell

Importance of Local Decision Making in Health Care Delivery and Access

2009-09-12T16:39:00.001-07:00

While the current initiative on health care reform is being debated as a national policy, health care is mainly delivered locally. Considerations such as urban versus rural environment, variations in state and local laws, and participation by community organizations lead to discriminating the concepts of coverage versus access to health care. Even if universal coverage were affordable at this point in time, it is a much more expensive proposition than simply offering local access to the poor and homeless, to alleviate the free rider problem with emergency room medicine. Federalized altruism is poor substitute for local care by community and faith based organizations.

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Christopher Grell

President Obama's speech

2009-09-12T11:12:00.001-07:00

Pushing forward this year is imperative and I commend the efforts to transform the process. However, we must maintain the long term perspective and constrain the roadmap so that our system remains uniquely American. The balance of free enterprise and government involvement, the balance of power between state and local and federal funding of health care, and the preservation of individual rights are at stake as we move ahead over the next 15 years. In addition, we must consider the ethical framework of the treatment decisions as new technologies emerge. Ultimately too much concentration of power may overshadow the patient's rights to direct their own healthcare, leading to interference with the basic freedom of the Constitution.

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Christopher Grell

Patient Controlled Healthcare

2009-09-12T09:10:00.000-07:00

One of the most important aspects of the heath care reform package is in the efficiencies and cost savings from full implementation of interoperable electronic medical records. Up until now, there has been a division of medical record keeping between the HMO/PPO provider networks and the hospitals, with these systems for the most part not interoperable. The data sets that are currently available in the health care system include pharmacy prescription record data, health insurance reimbursement claims data, hospital stay medical records, and physician office medical records. In addition to these, there are government data sets for Medicaid and Medicare payers by fee for service and DRG.

All of these data sets combined provide a 360 degree view of a person's medical history. But these pieces of information are owned by parties with different vested interests. And presently there is no way to link them all together in one comprehensive longitudinal medical record for a particular identity record. This ambiguity benefits individuals by retaining some measure of privacy because if federalized then these records would become the property of the government rather than the individual. The question then becomes how do we achieve the efficiencies in health care that we desire through IT enablement without ceding our freedom and our privacy.

One model for electronic medical records is the integrated health system model, exemplified by Kaiser and the VA Medical systems. These institutions control and disease manage a population and integrate ambulatory and hospital care in a seamless system. In the case of the VA the control is derivative of military service. In the Kaiser model, it is a non-profit with voluntary participation. But since they have experience with the end-to-end data captured across the entire health care delivery, their systems are more advanced and yet not flexible enough to be used in a more hybrid system of care, where patients would have portable records under their control to take from one site of care to another.

The framework for a portable, tamperproof, encrypted, interoperable record could be based on an extension of some emerging models for personal health records (PHR's) that have been introduced by Google and Microsoft, as well as an open source platform developed at Children's Hospital in Boston and funded by Intel and others called Indivo. Given the urgency of unifying the electronic records to move forward, it may take too long for an open source solution to mature. So for the first generation of this re-engineered process, we should look to Google and Microsoft to harmonize their APIs and provide a choice so that there is a check and balance in the system.

The interfaces to these records could be a standard Application Progamming Interface usable by all health systems in the United States. They would need to add the flexibility for the patient to open selected parts of the record to each institution on a need to know basis. And the central servers for these would need to be put into some neutral framework not controlled by a corporation.

This approach would give us time to integrate the IT across the system while developing a more complete second generation solution to include the genomic data, which will need to have a higher level of security. Once our genomes are sequenced in the next decade it will be especially important to have strong controls on the disclosure by patients to third parties. Data can be grouped into categories based on their impact for medical treatment. Some genomic data will be useful prospectively to predict disease susceptibility and guide disease management programs. Other data such as susceptibility to drug response will need to be kept as current drug allergy data is currently maintained -- for example, so that an emergency hospital visit would trigger opening the data.

The current state of electronic medical records is such that most doctors do not use them because of the amount of time needed to be invested to integrate them into practice. In addition to the software needed to provide secure interoperable records, there will need to be some hardware components optimized for physician office workflow and for patients maintaining an electronic key to their records.

These measures are more complex than just letting the government take over the process. So in countries where socialized medicine is in place, the one size fits all model with no control by the patient has allowed greater efficiency in the short term. But there is no reason why we cannot have a hybrid system that provides a baseline of critical care combined with a broader spectrum of alternatives beyond this, determined by the individual patients' values, stage of life, and economic situation. Altruism aside, we need to plan for how the government can actually pay for the expanding the coverage to uninsured or temporarily unemployed individuals at reasonable rates, and avoid drafting regulations that seem to create greater efficiency but limit the choices in the system for all.

Important week for Health Care Reform

2009-09-08T07:59:00.000-07:00

The health care reform debate has narrowed down to the issue of how to introduce competition in the health insurance market. The compromise position is the formation of regional health insurance cooperatives. While the implementation of these is still unclear, this would provide the vehicle for the new business model for health insurance. The public option is too big of a step to take in order to just increase the level of competition because it creates a shift in power from state and local financing of health care to the federal government, unless this can be limited in some way. In the long term roadmap, the preservation of private enterprise in the delivery of health care depends on keeping a balance that is different than the socialized single payer financing model.

Donation Page

2009-08-31T14:04:00.000-07:00

This is a donation page for interested parties

Ratio of Private to Public Health Care Expenditure over time

2009-08-20T12:55:00.001-07:00

As I mentioned, one measure of the degree of federal control of the health care system is the ratio of spending by the federal government to the total spending in the system. In recent years this has been fairly stable at one third to the total. As part of the roadmap for health care reform we need to attempt to project the effect that the changes are likely to have. In particular, the impact of introducing more competition into the health insurance market by regional health care cooperatives should be examined. Of course in the long run the current federal programs such as Medicare will grow more rapidly as the demographic shifts toward a greater aging of the population.

Health Care Insurance Cooperatives

2009-08-19T17:59:00.000-07:00

On the subject of regional cooperatives to compete in health care insurance exchanges under the pending legislation, an analogy to credit unions was made by cooperatives expert Dr. Ann Hoyt of University of Wisconsin. If the analogy has a sound basis it is an interesting framework for considering a new type of health insurer in the marketplace (New Model for the Insurance Industry).

After the savings and loan collapse, and even before, credit unions filled a gap in the marketplace for consumers since they were more responsive to consumer needs than large banks, which were mainly focused on business customers. Credit unions made money by making auto loans and other types of household loans for consumers, and through their attractive loans kept pricing low for auto loans in particular. I personally had at least three auto loans in this manner and the service was excellent.

Similarly, the health care insurance cooperatives could play a role to drive down pricing for health insurance and focus on consumer oriented issues such as incentives for wellness and management programs for long term chronic disease. These cooperatives would be jump started by investment of federal dollars, but independent of federal control. It has been suggested that the Medicare Advantage model of regional coverage could be one alternative to make them also independent of state government control.

Alternatively, the deregulation of interstate sales of insurance could play into the design of these entities as well. But, the main point is that the current health insurance industry is neither profitable nor responsive to consumers, the worst of both worlds, and must change (Restructure or Die). New business models pioneered by these cooperatives could accelerate the needed change and establish new value networks in the health care industry.

Trading Coverage for Freedom

2009-08-18T20:28:00.000-07:00

I personally have a stake in the outcome of the healthcare debate. Having been unemployed for three years, I have been through the current system of COBRA and then the coverage of last resort which is HIPAA. The latter is the 1996 requirement that health insurers offer continuing coverage from two of their most popular plans without requiring a waiting period for pre-existing conditions.

The ability to obtain coverage is one of the important issues in this debate. The administration has proposed limiting pre-existing condition limitations, which is an appropriate role for the government. However, the expansion of health care access to the majority of uninsured comes at a price, depending on the implementation. The administration has proposed that an alternative plan be available to act as a safety net for those that cannot obtain coverage, offered through regional health insurance exchanges, which would also act as a downward influence on pricing because of subsidies. In other words, our federal budget dollars would be spent to buy down the cost of premiums either directly or indirectly, instead of having the federal government as the payer.

The goal of expanded coverage is provide access to health care for more of the population and eliminate "emergency room medicine". There are alternatives to expand access to services other than expanded insurance coverage. San Francisco has a model program on the local level to provide health care access to residents of the city. It utilizes existing organizations for health care delivery such local clinics, San Francisco General Hospital, and now Kaiser to provide the services. It handles the problem of emergency room medicine on the local level with some state and federal contributions.

Advocates of a single payer health care system have an alternative solution to this issue. Make the federal government the insurer and provide access to everyone. Then all care gets reimbursed by a federal agency. The simplicity of this solution makes it seem attractive, especially to the physicians that only need to deal with one organization to get paid. But this simplicity ignores the fact that this still has to be paid for by federal taxation with a limited budget. Right now the health care system is largely funded by contributions from employers, which operate on the state and local level, through insurance intermediaries. These insurance companies are accustomed to dealing with corporations and are not very responsive to individual consumers, since they operate more on a risk pool basis.

Uninsured individuals fall into several categories. First, are those with catastrophic illness which are considered uninsurable. Second, are those that are unemployed or self employed. Third, would be new immigrants or illegal immigrants that are not able to establish long term employment. Fourth, are those young people that opt out of the system because of robust health or due to a perceived unnecessary expenditure. In which cases do we want our federal tax dollars to be used to purchase insurance coverage? The problems that we are trying to solve are mainly a question of access to health care in an appropriate way, not waiting until it becomes an emergency room situation.

Insurance coverage by the federal government is a two edged sword. As with other federal programs like Social Security, Food Stamps, or Medicare that directly impact individual citizens, there is a loss of privacy as a quid pro quo to receive those dollars. I have personally experienced the process of signing up for Food Stamps as an example of how the federal government collects copious amounts of information and biometric data on individuals in order to prevent fraud. This information is by federal regulation not to be used for other purposes, but it seems there is much information collected by federal agencies that is used by other agencies such as Homeland Security when national security directives are issued. A prime example is the wiretapping by NSA to infiltrate terrorist organizations.

Concentration of power in the federal government was a concern of the founding fathers and authors of the Constitution. Technology has progressed in a way that makes it too easy for the government to overstep the limits of power authorized by Congress. So in some sense, by making the federal government the insurer in order to provide proactive access to health care, we have created two other problems, which are privacy of individual citizens and the prospect of health care rationing when federal budget constraints dictate.

So the question is, do we really need universal insurance coverage or do we need universal health care access? The latter can be achieved through state and local initiatives, without involving the federal government directly in our health care. I, for one, as a voter and citizen am opposed to federalized health care in any form. And I say this with something at stake, because I too am about to lose my coverage, but fortunately not my access since I live in San Francisco. But I would rather have no access to health care than lose my freedom. Those that cannot afford insurance coverage may be tempted to trade freedom for coverage, but I have made my choice. The simplest solution can have unintended consequences beyond health care and I urge people to consider this.

Federalized Altruism and the Centralized Control of Health Care

2009-08-17T22:10:00.000-07:00

The two most contentious issues in the health care debate today are how expanded coverage will be funded, and how more competition can be encouraged in the health insurance market to lower premium costs. Both of these have implications for the balance of federal versus state and local control of the health care system. My position on this is clear: I want the patient to be in charge of their health care, not the government. But the tradeoff between national and state/local control is also a factor in how this plays out with vested interests.

There are many arguments that play to the instinct for altruism to cover those less fortunate. This raises the question: what is the difference between federalized altruism and socialism? When I say federalized, I mean control of the health care system by the national government as opposed to state and local institutions. Socialism is a social contract to redistribute wealth and provide equality of social status, and makes the national government a caretaker of last resort. In the United States, we depend on a different model to take care of people in need, through non-profit organizations and state and local governments.

It is important then to measure the ratio of health care expenditures by the federal government versus the overall health care economy. If this ratio is changed too dramatically in the direction of federal control, it could jeopardize our individual freedom to control our own health care decisions. Besides being inefficient, concentration of power in such a large sector of the economy in federal hands would be detrimental in a number of ways.

Right now the debate is playing out as an increase in coverage for difficult to insure individuals versus the federal costs and taxation needed to insure them. But as we add more insurees to the national government rolls, we tip the balance toward federal control of the health care system. So our good intentions to be altruistic and help the less fortunate or even our neighbors who have become unemployed, combined with the trend of the aging of the population leads to a shift in the balance of power unless we take specific measures to prevent this. Once a substantial majority of the population is federalized, when combined with predictable budgetary constraints from taxation, we will end up with a nationalized rationing system of care.

So I am encouraged by the recent discussion of an alternative to a public option plan to compete with the health insurers (see Cooperatives Pushed as Alternative to Government Plan) based on local cooperatives or non-profit organizations. The most important aspect of this is that the health care system stays under local control. This is essential not only for preventing a shift in the balance of power toward centralization but also to ensure that our privacy and individual health care choices are maintained.

Turning Point in the Health Care Debate

2009-08-16T23:23:00.000-07:00

A significant development today toward resolving the impasse on health care reform: HHS Secretary Kathleen Sebelius indicated on CNN that the administration is not wedded to the public option for health insurance reform. This opens the door for the the regional non-profit cooperatives alternative, seeded by government funds but not controlled by the federal bureaucracy and more responsive to local and regional concerns.

Overall, there is a balance to be achieved in terms of taxation and funding of the health care plan, the balance of federal versus state and local control, and the expansion of coverage versus the schedule of benefits received. These are the short term considerations to get legislation passed that achieves the objectives of realistic budgetary impact, significant expansion of coverage, and reduction of health care costs for consumers through increased competition in the insurance market and subsidies. But this deals with the cash flow of the health care system, the payers, and so far neglects the restructuring of the providers. The result will be a short term success at wringing more coverage out of the current system at a lower average cost to the consumer and satisfies the populist constituency.

At the same time, any regulations that transfer more control to the federal government will be blocked, which should allow enough of the opposition to passage to be neutralized to get it through. But an opportunity has been lost here for a mature dialog about what will happen five years from now, just as we have failed to do on Social Security and other health and welfare related issues. This one is the one that breaks the bank unless we restructure.

Restructure or Die

2009-08-13T10:43:00.000-07:00

This dramatic title represents the essence of what is missing from the current health care debate. The legislation is voluminous and opaque and the people are confused. The administration is successfully brokering a lot of one off deals with various parties and are to be commended as acting as a catalyst for the legislation. But it is a short term view.

Without a significant entrepreneurial infusion into the health care system to restructure the health insurance industry and the hospital care delivery system, the long term roadmap for the system is to continue to expand in the current cost inflation until there is no more budget, which then leads to allocation and a completely government run health care. Government subsidies to improve access with consumer coverage guarantees will ease the pain and bring in votes but completely miss the opportunity to change the direction.

Frankly I am shocked that the debate has continued to narrow its focus to a tactical reform of the health insurance industry. It is no longer health care reform but cost containment and brokering a deal to give the insurance industry more customers, while allowing them to provide reduced benefits so that the transaction is profitable all around. This perpetuates the current structural problems in the system such as the dominance of Medicare pricing model to fix prices and the inefficiency in hospital care delivery. In addition, it gives the insurance industry a free pass not to change their business model to add more value to the system.

So I have to say in this crucial month of August for reform, we need some immediate intervention by the private sector of America's largest corporations that will have to deal with the aftermath of this. Because it directly affects our competitiveness in the marketplace across the entire economy. If we stay on the current "glide path", eventually the employers will give up and let the government take charge with a single payer system to reduce their cost basis. This will be bad for all of us.

Here is how this could be avoided. Granted there needs to be a bill passed this year. And the groundwork has been laid for budgetary compromise, with pharma chipping in $80B, health insurance companies chipping in, and some new taxes to fund the subsidies to extend coverage. But this is only papering over the problem. In ten years, we will face another balloon payment and this time the demographics will be so difficult with aging of the population that we will be forced into allocation (also called rationing) within a single payer framework. In parallel with the current legislative progress, there must be a commitment to restructure the business propositions of the health insurers and the cost and value delivery of the hospitals. I recommend that CEO's of leading companies that have a large stake in this meet with some academic leaders such as Harvard in particular to find a path for restructuring care delivery.

For the health insurers, there needs to be a wake up call somehow built into this legislation that the status quo cannot continue. President Obama's solution to this was to have a public option to compete with them, but this just increases the downward slope of the curve toward a single payer system. Of course, for the efficiencies and value delivery to take hold, it hinges on the IT infrastructure build out, which is mainly a technical issue but also an adoption issue by the physicians. There needs to be a third directed effort to accelerate progress here not just with funding but also with expertise. I am recommending that companies in the new economy such as Google take the lead here. Microsoft is making a large investment but their vested interests in the enterprise market make them unlikely to play a neutral role.

I will continue with my own research into the ideas from Harvard and others, but I am more likely to pursue the IT related part of this puzzle myself. In particular, I am trying to identify some of the barriers to the adoption and building out of a patient controlled model. In addition, I plan to continue to post on the roadmap, because this is the missing piece for a consensus on true health care reform, not just for insurance companies. I may have some ideas for insurance companies along the way, but what is needed is to educate their executives about how to manage chronic disease through incentives and health coaching, such as the United Health's subsidiary is doing. This is still a small part of their business and takes a back seat to acquisitions for increasing their revenue and profitability. Shareholders need to be satisfied in the short term but if we are forced into single payer, they will lose it all.

Electronic Identity and Health Care Reform

2009-08-13T04:47:00.000-07:00

On Wednesday August 12 I went to the DICE career fair and updated my profiles for short term and long term employment. Overall my strategy is Java Programming for short term and Biomedical Informatics for the long term as it fits into the health care system and health care reform, particularly enablement of genomic information in second generation patient controlled electronic medical records. Next I have turned my attention to the most important issue of this month of August, the pivotal month for the health care reform issue.

In my view there are three main components to the success of health care reform. Reform and reinvention of the health insurance industry, reengineering of hospital based care delivery, and the enablement of IT integration and services throughout the health care system. For the latter, one key element is the implementation of patient controlled electronic medical records. The barriers to creation and adoption of this model for self-directing a patient's care are security, privacy, and management of identity. This third component relates directly to what I have referred to as secrecy in the health care system (http://reform2009.blogspot.com/2009/07/secrecy-in-health-care-system.html), because identities have military or national security implications.

Today I have started a new blog entitled Under Cover -- Identity and its Implications at the appropriately entitled URL http://fogofdeceit.blogspot.com . Any examination of the issues related to the enablement of IT integration and services in the health care system must take this element into account. So I start from the point of view of someone who regularly uses the internet but without the benefit of any security clearances. Thus, there is no chance that I will reveal any secrets, military or otherwise.

Open Letter to Google

2009-08-12T17:20:00.001-07:00

August 12, 2009

Dear HR:

I'm an experienced business development manager for PC software and biotechnology that has recently updated technical skills with a Sun Java Certification (SCJP) and training in bioinformatics, including machine learning algorithms and biostatistics at Stanford and UCSC Extension. I am looking for an entrepreneurial environment and a position in development or project management with client involvement especially in the health care sector.

Regarding system level background, I have experience with Ubuntu Linux to complement my day to day experience with the Mac environment and prior experience with OEM Windows software delivery at InterVideo. I have done Java programming on both Mac and Linux platforms and strongly support open source.

Short term I am looking for a position applying Java to applications and delivery of Google's excellent services online. Longer term I would like to develop for a patient controlled electronic medical record infrastructure extending Google Health Record to enable integration of genomic information into the health care delivery system. I believe that Google could have a significant role to play in providing an independent repository of information and services to empower consumers in the direction of their own health care choices while ensuring security and privacy. The result would be a more efficient and accountable health care system.

Sincerely yours,

Christopher Grell
(650) 331-0104
www.google.com/profiles/cgrell
http://reform2009.blogspot.com

Dean Kamen Quotes About Health Care Debate - Interview With Inventor Dean Kamen - Popular Mechanics

2009-08-07T10:48:00.001-07:00

Dean Kamen Quotes About Health Care Debate - Interview With Inventor Dean Kamen - Popular Mechanics

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Roadmap for Health Care Reform - Part 2

2009-08-06T07:47:00.001-07:00

A more complete redesign of the healthcare delivery and financing system is needed. Healthcare has focused to date on curing sickness, but much of the profitability and opportunity for incremental revenue generation will result from a more consumer/patient centered view of healthcare¹. Costs can be optimized through increasing efficiency and by focusing on delay and prevention of expensive chronic disease². This is especially important for capping the contribution necessary from federal and state budgets. But revenues that can lead to investments in new technology and ultimately more choices for consumers depend on the private sector economy. Value for outcomes also needs to be increased through restructuring of business models for health care delivery, particularly for hospitals³.

The priority for immediate changes in the one to five year timeframe are centered around reducing costs of healthcare delivery through increased efficiency and increasing coverage through government subsidies, eliminating pre-existing conditions and enrolling more individuals that have lost their employment. But these changes are tactical in nature. If not balanced with a long term view they could easily lead to an irreversible course that constrains costs and allocates treatments by forcing people into a government run system. This is widely discussed as the advantage of a single payer system compared with other countries such as the UK in terms of pure efficiency and elimination of commercialism in medicine⁴. Alternatively, the more proactive approach to expensive chronic disease through patient enablement by health counselors in conjunction with personal health records, and wellness incentive programs provided by private health insurers will take us in the direction of budgetary stability and patient autonomy.

So while a national health care plan is needed for achieving a national consensus on the direction and making targeted investments, it must seek the role of catalyst rather than architect, and communicate the full implications of the structural changes. So far government has been able to successfully run the VA Medical system and the Medicare system. Both of these are centralized organizations that control pricing and delivery of services. What is needed in the redesign of the healthcare delivery and financing system is a decentralized, regional model integrating private enterprise as a change agent, and empowering the patient to manage their own health.

Taking the most successful regional models and helping them grow is one approach to doing this but most current delivery models are not delivering the level of value for outcomes and adapting quickly enough to new technology. Government alone cannot drive the remodeling of these systems since it is outside their expertise. Entrepreneurial activity must be allowed to flourish to restructure these institutions and provide new value networks. A long range vision of technology and medicine are needed to put in place the key public investments that anticipate and enable the integration of scientific and economic breakthroughs as early as possible into the system. But substantial private investment will be necessary as well to grow new companies that can actualize this patient centered model, based on new technologies such as low cost sequencing, electronic medical records, and decision support software to manage genetic information and integrate it with clinical record data to deliver more value to patients and increase their control of the process.

Budgetary constraints will limit the amount that government can accomplish in the near term. The temptation will be to cede too much control in exchange for increasing the insurance coverage of the population. But this would lead to effective government allocation of services to reduce costs, instead of increasing the value delivered in terms of wellness and management of costly chronic disease. We want to avoid the demographic spiral that this path could take as the population ages, since without better value delivery in chronic disease the health care system will be overwhelmed with costs, leaving little choice but rationing in the long term.

In six to ten year time horizon, we will move from the period of IT enablement for efficiency of delivery to a period of genomic information enablement, leading to major progress in costly chronic disease. While the information itself must be patient owned, it is a critical component of a changed health insurance model that optimizes value in outcomes rather than costs. Full genome sequencing will be at the $1000 level per patient within the next three years. A government investment in obtaining this information for all citizens, would be the next stage but a tax credit/subsidy approach would be the best solution to retain patient ownership of the information. The evolution of health counselors for chronic disease to genetic counselors will be needed to fully utilize this information in care delivery along with new decision support tools to educate patients and medical professionals.

While the removal of pre-existing conditions in health insurance is a fair and laudable goal, there has not been a figure published on the economic impact of this change. One possible implication is that private health insurance could be overtaken by an expanded Medicare, as people lose their employment and the government option has to absorb them. I prefer that we not expand the Medicare system, since it is inherently inefficient and leads to budgetary pressure to implement rationing. Therefore, the subsidy approach may be a better course to broker a solution for pre-existing conditions, with government assisting but leaving the private insurance industry in place to give them time to adapt to a new business model. As I mentioned previously the private insurance industry has a valuable role to play, but going forward it is much more than catastrophic risk reduction and cost management.

A major barrier to moving forward is the full implementation of information technology throughout the health care system. This is not for lack of effort or investment, but resistance to change in the processes of health care delivery. Government cannot make this happen. It must come from the institutions themselves, in partnership with private enterprise. The investment dollars that have been allocated to making these systems affordable still have not addressed how they are and should be used in a future health care setting. So there is a risk that this investment will be wasted. There needs to be something beyond a certification entity to enable these changes, since companies making these products want to make money based on what they have to sell now even though it is not the right solution looking forward. Once this array of incompatible systems is in place it will be very difficult to migrate.

These two issues are the major unsolved problems of the health care reform effort. In subsequent posts, I will focus on how to shift toward a patient centered model of health care delivery in the context of a remodeled private insurance industry (creating value through outcomes) and a forward looking implementation of financial and medical integrated health records (for continuous process improvement and patient autonomy).

¹Redefining Health Care. M. Porter, E. Teisberg. 2006.
--To be reviewed in a future post
²Critical. T. Daschle. 2008.
Review: Critical
³The Innovator's Prescription. C. Christensen, J. Grossman, J.Hwang 2008.
Review: The Innovator's Prescription
⁴A Second Opinion. A. Relman. 2007.
Review: A Second Opinion

Roadmap for Health Care Reform - Part 1

2009-08-05T00:00:00.000-07:00

A transparent roadmap is needed looking out 10 to 15 years, to see the implications of the changes that proposed health care legislation would make incrementally over time and to give us a picture of that which government cannot supply. Looking at these assumptions and testing what other changes may occur in the future would give us confidence that we are creating a unique solution for the United States with our values of freedom and personal autonomy, and not just a path to socialized medicine. Without this roadmap, the political process cannot effectively broker a solution based on confidence from the voters that vested interests have not taken over. The interests of large global corporations have much in common with a socialized approach to medicine and much be counterbalanced by local interests and well informed voters. We need to have a sense of the endpoint 15 years from now, based on what will happen to government budgets and economic/medical technology scenarios.

As I mentioned in previous posts, there are several conditions to be met to maintain a hybrid public/private health care system that provides necessary services at a reasonable cost and maximum value for outcomes, and optional services on a competitive basis. First of these is that the payer system of public and private insurance needs to be carefully balanced so that the subsidized public programs do not crowd out private industry. The private insurance industry also must change to be more than a financial instrument in order to add value to the health care system. Second, for the rapid implementation of interoperable information technology throughout the health care system, a common format and process implementation for electronic medical records and information exchange will be needed. But to preserve privacy and individual freedoms these records must be owned and controlled by the individual citizen. Third, preservation of real choice in the system for selection of doctors, treatments, institutions, and methods of financing requires decision making at the local level and funding of new care delivery models, even though there can be regional exchanges of information and replication of model health care delivery, information technology, and financing systems.

Patient Controlled Electronic Medical Records

2009-07-29T18:15:00.000-07:00

One of the most important aspects of the heath care reform package is in the efficiencies and cost savings from full implementation of interoperable electronic medical records. Up until now, there has been a division of medical record keeping between the HMO/PPO provider networks and the hospitals, with these systems for the most part not interoperable. The data sets that are currently available in the health care system include pharmacy prescription record data, health insurance reimbursement claims data, hospital stay medical records, and physician office medical records. In addition to these, there are government data sets for Medicaid and Medicare payers by fee for service and DRG.

All of these data sets combined provide a 360 degree view of a person's medical history. But these pieces of information are owned by parties with different vested interests. And presently there is no way to link them all together in one comprehensive longitudinal medical record for a particular identity record. This ambiguity benefits individuals by retaining some measure of privacy because if federalized then these records would become the property of the government rather than the individual. The question then becomes how do we achieve the efficiencies in health care that we desire through IT enablement without ceding our freedom and our privacy.

For a health care system to evolve in the US in a way that preserves individual freedom, it is essential that each person owns their own longitudinal electronic medical record along with their personal identity.

At present, there are several different types of electronic medical records in existence. The question is whether any of these legacy systems can migrate to what is needed to preserve personal freedom. In other words, can any of the current solutions scale to a national level without compromising our principles?

One model for electronic medical records is the integrated health system model, exemplified by Kaiser and the VA Medical systems. These institutions control and disease manage a population and integrate ambulatory and hospital care in a seamless system. In the case of the VA the control is derivative of military service. In the Kaiser model, it is a non-profit with voluntary participation. But since they have experience with the end-to-end data captured across the entire health care delivery, their systems are more advanced and yet not flexible enough to be used in a more hybrid system of care, where patients would have portable records under their control to take from one site of care to another.

The framework for a portable, tamperproof, encrypted, interoperable record could be based on an extension of some emerging models for personal health records (PHR's) that have been introduced by Google and Microsoft, as well as an open source platform developed at Children's Hospital in Boston and funded by Intel and others called Indivo. Given the urgency of unifying the electronic records to move forward, it may take too long for an open source solution to mature. So for the first generation of this re-engineered process, we should look to Google and Microsoft to harmonize their products and provide a choice so that there is a check and balance in the system.

The interfaces to these records could be a standard API usable by all health systems in the United States. They would need to add the flexibility for the patient to open selected parts of the record to each institution on a need to know basis. And the central servers for these would need to be put into some neutral framework not controlled by a corporation.

This approach would give us time to integrate the IT across the system while developing a more complete second generation solution to include the genomic data, which will need to have a higher level of security. Once our genomes are sequenced in the next decade it will be especially important to have strong controls on the disclosure by patients to third parties. Data can be grouped into categories based on their impact for medical treatment. Some genomic data will be useful prospectively to predict disease susceptibility and guide disease management programs. Other data such as susceptibility to drug response will need to be kept as current drug allergy data is currently maintained -- for example, so that an emergency hospital visit would trigger opening the data.

The current state of electronic medical records is such that most doctors do not use them because of the amount of time needed to be invested to integrate them into practice. In addition to the software needed to provide secure interoperable records, there will need to be some hardware components optimized for physician office workflow and for patients maintaining an electronic key to their records.

These measures are more complex than just letting the government take over the process. So in countries where socialized medicine is in place, the one size fits all model with no control by the patient has allowed greater efficiency in the short term. But there is no reason why we cannot have a hybrid system that provides a baseline of critical care combined with a broader spectrum of alternatives beyond this, determined by the individual patients' values, stage of life, and economic situation. Altruism aside, we need to plan for how the government can actually pay for the expanding the coverage to uninsured or temporarily unemployed individuals at reasonable rates, and avoid drafting regulations that seem to create greater efficiency but limit the choices in the system for all.

Socialized medicine is incompatible with the US Constitution and individual freedom. Government will not control medical records in the United States because this is incompatible with a free society.

Secrecy in the Health Care System

2009-07-29T13:41:00.000-07:00

One difficulty in having an open discussion about the architecture of the health care system and the roadmap going forward is that there are national security interests involved. While much of the information about approved drugs and treatments are public information, there is also much that is not public due to military and security considerations. This means that some of the institutions involved in health care will not be able to transparently discuss their roles in the system. So while a public roadmap for the system is necessary to build confidence that the health care reform plan is incrementally moving toward a direction other than socialism, the evidence must be incomplete.

Secrecy is necessary from the point of view of competition among nations as well as from the point of view of keeping knowledge from those that could cause us harm. For other countries that have already taken a socialist route, it is easier to preserve the secrecy throughout the system as an extension of the government. The United States and other countries that seek to emulate our model have a more difficult challenge to preserve a part of the health care system as private, with individuals in control of their information.

Private citizens will have access to information that is not secret, therefore they control the part of their medical history that applies to known diseases and treatments. They can provide this information with their consent to their physicians and hospitals. However, they will have no record of treatments they may have been subjected to without their consent. If national security requires that government acts on private citizens without their knowledge, these medical records will be incomplete.

For more information, regarding national security implications of health care disclosures please reference my blog: Identity and Its Implications at http://fogofdeceit.blogspot.com

A new model for the insurance industry

2009-07-26T15:30:00.000-07:00

At this point in time, the health insurance industry provides a valuable piece of the health care industry to provide consumer choice in the system, by allowing selection of provider networks. However, as a pure risk adjustment mechanism for catastrophic illness, it falls short because of the strong incentive to cherry pick insurees. A larger role could be created for this industry which would alleviate the need for a government plan that would compete unfairly wiith private industry.

There is both a prepaid care component and a catastrophic risk adjustment component in most plans available today. At present, the cost of plans and availability is unacceptable to achieve the level of coverage that our nation should be able to provide for the percentage of GDP that we spend.

With the health care reform bill to expand coverage there is an opportunity in having additional subscribers that are mandated by government regulation, but unless the insurance industry adapts to the new circumstances and takes a more proactive stance in creating value rather than just making predictable returns as a pure insurer in the end it will be replaced by a government payer system.

But there is not a business model established yet to take advantage of incentives for reduction of expensive chronic disease. With the reform plan requiring insurers to cover more of the population and eliminate pre-existing conditions, it creates a powerful incentive to control these costs through new business structures outside of the traditional insurance company P&L. In other words, insurance companies would benefit from a reinvention of their role in the system to capture more value at the wellness and prevention level by incentivizing people for their wellness and behavior. This is in contrast to having government mandate or penalize behaviors as we are seeing in some other countries.

Some companies are starting to do this through their websites by providing and consolidating medical information, but the efforts so far are fairly weak and don't split out into a different business model. So they are measured according to the traditional metric for an insurance company rather than an internet service business for disease management for example.

Intrapreneurship efforts at these companies could succeed if they are split off and given different incentives and funding. Also, there are some new internet businesses that could be acquisitions targets by insurers. But the idea is that rather than an inefficient government insurer with deep pockets, we could be better served by private enterprise taking advantage of profitability carved out from the end to end management of the costs of chronic disease.

Moving forward from the current system

2009-07-25T22:41:00.000-07:00

Any consideration of a change in the status quo needs to consider the tradeoff among three competing objectives in the healthcare system. This is fundamentally the tradeoff among coverage for basic services, ethical consideration of the guaranteed benefits at each stage of life, and national interest, limiting universal coverage to basic services while providing the opportunity for private enterprise to innovate new value added services beyond basic coverage, such as into incentivized wellness programs to combat costly chronic diseases of aging rather than goverment coercion to achieve this, reported recently in Japan for metabolic disease.

The current system has evolved from the post-World War II integration of civilian and military medical technologies, preserving secrecy in those areas which are in the national interest. So while delivery of care by individual doctors is fairly standardized by practice guidelines, the institutional structure such as hospitals are a combination of market driven procedures that can be competitively priced and government run services which constitute an overhead burden.

This places some limits on how flexible the overall system is to a change in business models. Business model innovation will be an important factor in driving down costs and adding more value in outcomes per dollar spent, but can only be applied in certain areas of the healthcare system that are unconstrained by national policy. The idea that any change leads in the direction of socialized medicine and a single payer model is a fallacy. There are several possible trajectories that this can take depending on which constituencies are more highly valued. For example, in a scenario planning exercise we can imagine different future outcomes based on the primary and secondary forces influencing the environment, such as the federal and state budget upsides or downsides, federalism versus state or local control, and corporatism versus cooperative or non-profit delivery structure. What we need is a 10 to 15 year roadmap with sensitivity analysis based on these different environmental factors.

We are assuming that the major improvements we are seeking are increased coverage, lower cost per capita, and regional quality benchmarks within the constraints of the financial impact that can be tolerated in the budgets over the period of re-engineering of the system. We want a "seamless system" enabled by information technology, while maintaining individual privacy and choice. Our model should explicitly include the redistribution of revenues that could be shifted from one sector to another if we successfully address the major cost barriers anticipated by prevalence of disease and demographics. Government's role is to force the parties to the table to negotiate these redistributions so that resources reallocations are not blocked by vested interests.

The least desirable outcome is for immediate adoption or expansion of a government run program that limits the possible trajectories the system evolution could take given introduction of new technologies and business models. Interests that already have a substantial amount of control such as corporations, could easily railroad the process to gain more control over the system, to the detriment of the both the richness of service offerings and the freedom of individuals to control their own destiny within the system. What began as a military-industrial complex, could either become more centralized or more responsive to individual health issues. The dream of personalized medicine centered around the individual and enabled by new technologies with highly leveraged outcomes can only take place if we make choices as a society around the financial constraints imposed by the aging process itself and what measures are the minimal safety net for a particular stage of life.

Reflecting on the current health care debate

2009-06-22T17:11:00.000-07:00

In addition to reviewing some of the relevant books, in this blog I would also like to try to ask some questions and provide some answers in relation to the current debate. Where we are today is that President Obama has given us the general principles that we should incorporate in health care reform of expanded access while maintaining quality, control of cost escalation, and preservation of consumer choice in selecting insurance, providers, and treatments. There are several contentious issues that are still to be resolved before we can move forward with any reform of the system. These include: 1) who will pay, 2) how much should government pay and how much should we pay, 3) who will be covered, 4) what benefits and quality level will be guaranteed, and 5) as a society how much public expense can we afford?

Right now holding up the legislation are a controversial government insurance option and the total incremental cost of the reforms. It is assumed that the reform proposals will build on the current system of employer provided health insurance and expand coverage to the uninsured. The proposed means to do this is to increase competition in the insurance market through regional insurance exchanges, government subsidized insurance, and close the loopholes of preexisting conditions, in other words almost entirely by fixing what is considered to be a market failure in health insurance. It is assumed that government disrupting the insurance market in this way and regulating "cherry picking" will drive the industry to adapt to the new conditions and become profitable again at a more reasonable price. Another scenario is that over time the government will absorb more and more of the undesirable insurees until it has a near monopoly position. This is why many have seen it as a road to a single payer system.

As Dr. Relman and others have pointed out, this is not the only problem with our system. The delivery of health care has resulted in an inefficient fee for service model throughout the industry which has led to misallocation of resources (overtreatment) and personnel (overspecialization). One of the main drivers of this fee for service model has been the government payer Medicare. If this new public insurance option is modeled on Medicare it will inherit its favorable overhead structure for administrative costs, but it will also perpetuate this fee for service model for care delivery.

Is health care a public good or a private good? Certainly public health is a public good, but individual health is something that each person has the right to purchase more or less of as their circumstances allow. Catastrophic coverage should be the minimum standard so that risks are pooled across the population. Individuals don't control their genetic makeup but they can control behavior, so there must be some built-in incentive for staying healthy for the long term and avoiding chronic disease. Is health care a right according to our constitution? Perhaps it is only to guarantee no discrimination based on race, ethnic group or age, etc., and to keep us safe from severe epidemics or terror attack. Is there a moral right to good health in a wealthy society? The answer here is less clear and depends on the values in the society.

Back to first principles, what do we want the health care system to look like in ten years? What are the scenarios that may play out and what would happen to health care financing and delivery in each of them? What is the ideal role for government to play? What is the ideal role for the consumer to play? and what is the minimum level of health care that should be available to everyone at different ages in their life?

Let's consider what the single payer model means. First of all, it means that the we would pay for health care indirectly through taxation. So we don't exert any market forces at all on the practice of medicine. Decisions about care are made according to government issued guidelines of best practices and allowed treatments which could be on a federal or state basis. But care could still be provided through mostly private and community owned institutions that are familiar. The average amount of care provided per person would be measured against benchmarks of countries that have a similar level of development and GDP per capita. To the extent that health care has a consumer element to it such that consumers may want to purchase more of it, it is unclear how this would work.

In a hybrid system such as ours, where there is a substantial government payer component coexisting with private insurance, there is an issue with pricing because government is setting the floor for pricing for various services and adjusting for inflation every year. So there is not a real price competition in a pure market sense. And also, the purchasers of the services are the insurance companies and not the actual consumer. But as new technology is brought into the marketplace over the next ten years it could change the value networks substantially. First, will be the impact of IT invested over the next five years. And subsequently the impact of genomic technology will be felt in a major way in the next five years. This includes markers for diagnostic purposes to reduce the cost of lab tests to assess disease states, and prediction of drug effectiveness on an individual basis along with prospective risk assessment for chronic diseases.

Somewhere in the financing of the next ten years of health care, we must factor in the cost of sequencing the genomes of all of our citizens which will be on the order of $1000 per person or $300 billion. The return on this investment will be in the form of money more effectively spent on treatments and prevention of chronic disease. But this also leaves a substantial role for individual consumer involvement not only in behavioral change but also in purchasing the services, some of which may be considered life extending rather than life preserving.

Unfortunately there is no option to have a completely private system, because of the accelerating aging of the population and the cost of major illnesses such as cancer. The nearest we could get would be the mandatory catastrophic coverage plus health savings account (HSA) approach, where citizens would be rewarded for staying healthy by growth of principal in the HSA accounts over time. But this is inherently unfair in the sense of requiring lower income individuals to budget contributions into an HSA and subsequent expenditures versus their food budget for example. But it raises the point of whether there should be a tiered health care system where people that have more money can buy more of it. In other words, will a diverse society really be satisfied with "Kaiser for everyone"?

Like all health and welfare issues, there is the tradeoff of states rights versus federal control. Public health is maximized by federal control of medical record information, but individual health may be maximized by taking advantage of local value networks and state funding. Once all of our genomes are sequenced who will own that information? Will each individual own their genome and opt-in to a value network, or will the database be managed federally? Is there information in such a database of strategic importance to the US for example?

Let's try to analyze this by the numbers. What are the major effects and what are the minor effects in the economics of health care? The total annual expenditure is on the order of 17% of GDP and growing (or about $2.4 trillion annually growing at 7% per year). Medicare is about $400 billion (or 3% of GDP) annually. 175 million have private health insurance (57%), 50 million uninsured (16%), 40 million on Medicare (13%), 40 million on Medicaid (13%). Matters such as indemnifying doctors against risks that they now overprescribe to avoid are only on the order of $10 billion, while very important to individual doctors' financial condition -- so much so that the overprescribing has a multiplier effect of up to $80 billion. So they are significant, but not a major factor in the analysis. Fifty million uninsured at a rate of $7500 per person annually (currently the going rate in the US) is $375 billion annual additional cost, with some reduction for eliminating "emergency room medicine" for lower income individuals. This is why the estimates from the CBO are coming in at numbers like $1.6 trillion dollars over 10 years.

Over 10 years other reductions are to come from reduced payments to Medicare and Medicaid ($300 billion) and implementing electronic health records across the system ($150 billion). For Health IT implementation, according a recent article in the Economist "if 90% of hospitals and doctors in America were to adopt HIT over 15 years, the health system could save some $77 billion a year from efficiency gains, ...and double that for health and safety gains." So the recent stimulus investment of $19 billion for HIT regional exchanges and electronic health records implementation should have a reasonable return on investment.

Book Review - The Innovator's Prescription

2009-06-18T14:28:00.000-07:00

I have recently finished reading The Innovator's Prescription by Clayton Christensen and can highly recommend it to the extent that it addresses the Obama administration's criteria of cost, quality, and choice from the perspective of technology and business model innovation.

According to the author, the current state of the health care industry is not unlike other heavily regulated industries before it, such as telecommunicationsand transportation, where initially providers were centralized and services were affordable only by the higherincome segment. In each case, it was not deregulation that led to change but disruptive innovation that followed it.

So the premise of the book is that health care reform cannot be achieved without disruptive innovation, and that this is mutually exclusive with a single payer model. Instead, what is needed is for disruptions in technology, business models, and value networks to act in concert to remodel the health care system. In order to allow new entrants that can disrupt existing networks and shift the sites of care from centralized to decentralized and the personnel for delivery from specialized to less specialized, there must be a heterogenous system tied together by electronic health records.

The current state of the industry is mired in centralized mixed business models that need to be separated into three types of businesses: "fee for service" solution shops that work heuristically with incomplete information to diagnose and treat disease ("intuitive medicine"), "fee for outcomes" value added process businesses that emphasize efficiency and repeatable results ("empirical medicine"), and "fee for membership" disease management networks that emphasize compliance ("precision medicine").

Right now the general hospitals have a mix of all three but still charge everything on a fee for service basis because of reimbursement policies. This has led to excessive overhead burdens on what should be "fee for outcomes" or "fee for membership" types of services. By separating these business models into separate corporate entities they can optimize their performance and value networks. The author also cites the contrast of integrated health systems such as Kaiser and Geisinger which by use of electronic health records and fee for outcome measurement can achieve much greater efficiencies, and can engender their own disruptive innovation internally because of their ability to capture the benefits.

Overall then, in order to lower the rate of cost increases in health care while maintaining quality and increasing choice, the prescription is to encourage disruptive innovation in technology and business models that enable decentralization of care and use of less specialized personnel, tied together by electronic health records to capture the outcomes data.

Book Review - Critical

2009-06-18T14:27:00.000-07:00

Another influential book on health care reform and the model for new policy is Sen. Tom Daschle's book Critical. In this book, he outlines the history of failed health care reform efforts and lessons learned and points a new way forward that avoids some of the politicization on the details of the health care debate. The premise is that there needs to be a Federal Health Board to create detailed policy for the long term, analogous to the Federal Reserve Board for monetary policy. The main lessons learned from the Clinton administration's difficulty with health care reform were: 1) trying to encapsulate every policy detail in the health care bill, giving opponents a very broad target to attack and 2) being out organized tactically and financially by opponents in outreach to voters. Organizing for America is mobilizing to address the second of these, but the first still remains an issue that is currently being debated.

The idea of the Federal Health Board is that it could be somewhat insulated from the current political environment, even though the members would be political appointees. And it would determine the most contentious of issues such as what benefits would be paid, and what treatments would be approved, by clearing cost-benefit analysis hurdles. In our current system, Sen. Daschle argues that there is no good mechanism to screen new health care innovations on the basis of their value for outcomes and overall cost reduction in the system. So much of the current expenditure on health care is wasted on marginally effective treatments or worse, financially motivated prescribing or lawsuit avoidance measures. The Federal Health Board would determine which treatments are truly cost effective and should be provided to all as a benefit.

There is a discussion of the analogy to the U.K. health system office NICE which serves a similar function, and there is considerable data showing that money is spent more efficiently. But in their system, all are covered, all pay the same amount, and all receive the same benefits. This is not the model for the US. We value innovation more and the freedom to choose to pay the amount we can afford and select our providers. So they are two extremes, our system where marginal treatments are allowed to fail in the marketplace with some inefficiency, and theirs where a central agency determines what will be allowed to compete.

Following this logic further, Sen. Daschle outlines the excessive cost of high technology preventive interventions in our system such as advanced imaging scans, while failing to take advantage of the low tech preventions that might make a greater impact on chronic disease, such as programs for smoking cessation, diet modification, medication compliance, and so on. He states that it results from distributed gatekeepers that allow new innovative treatments into the market (CMS), but then fail to eliminate the ones that are not cost effective for outcomes quickly enough.

Regarding the health insurance issue, Sen Daschle favors the individual mandate over the employer mandate, and subsidies based on a percentage of income expended on health care. In addition, he favors the creation of a new public insurance agency modeled on Medicare to compete against private insurers and thereby lower rates. This is also being seriously considered by the Obama administration for the upcoming bill. While no one would object to a situation of increased competition in the health insurance market (envisioning Geico-like commercials as in auto insurance), over time the government run insurer will accumulate more and more of the undesirable insurees, as people lose their jobs, etc. And it assumes that there is some market failure in the current environment that makes health insurance non-competitively priced. So the real question is, what is the roadmap for the system ten years from now, a highly competitive insurance marketplace or government having the dominant market share.

Overall, this book is the political perspective on how to get health care reform accomplished, taking account of past failures to reach consensus, even though the need for reform was widely accepted. It serves well for this objective. Hopefully our organizing efforts can help us break through the logjam this time around. With regard to policy though, the analogy of the Federal Health Board to the Federal Reserve Board is a bit of stretch, and may in fact be incompatible with the majority values in the US, with our bias to encourage innovation and allow the marketplace to decide its success or failure.

Book Review - A Second Opinion

2009-06-16T18:25:00.000-07:00

"A Second Opinion" takes another complementary viewpoint from the eyes of a physician. Dr. Arnold S. Relman is widely known as former editor of the New England Journal of Medicine and for his prescient 1980 article on the commercialization of medicine, and his phrase "the new medical-industrial complex". As many of his predictions have come true, he argues for a radical change in both ends of the current system to reduce waste and administrative overhead, improve quality, and provide coverage for all.

Dr. Relman details the post World War II development of medical practice in the US, and the transition of role of the physician responsible for "care of the sick" to the varied roles they have today in the commercialized "health care industry". He describes the effects of commercialization as fragmenting the delivery of care at the expense of quality, encouraging overutilization of new technologies, and increasing inequity of care.

In "A Second Opinion" he argues for a single payer system to eliminate administrative costs in the insurance industry and waste in the overutilization of treatment. In addition, he recommends a restructuring of the delivery of care to physician multi-specialty group practices (PGPs) that resemble the integrated health systems such as Kaiser, with reimbursements based on a fixed annual dollars per patient and doctors paid on a salaried rather than fee for service basis. In this way, physicians would return to their roots as a profession of primary caregivers, without regard to the level of compensation or financial incentives to practice medicine a certain way. In addition, like the PGPs, health care delivery facilities such as hospitals would be not-for-profit entities owned by the local community.

By telling the history of how the practice for medicine has been commercialized and the effect of the growth of Medicare and the indemnity insurance industry, Dr. Relman is able to convey the ethic that has been lost in his profession that a systemic change could restore. In addition, he makes a detailed comparison with the Canadian system, recounting its history in parallel with ours. The result is that Canadians have 100% coverage and spend $3500 per person annually, or one-half the amount in the US (only 10% of GDP). He concludes with a open letter to his colleagues in the profession about the need for change and his vision of the practice of medicine in salaried not-for-profit multi-specialty group practices.

Because of his perspective as a physician and manager of health care institutions, he doesn't approach the subject with any faith in market forces or technology to correct the current situation. In fact, he believes that the movement of consumer driven health care (CDHC) will fade with time just as HMO's did. The combination of catastrophic indemnity insurance and health savings accounts (HSAs) promoted as a solution to restore consumer decision making in the market will not change the fee for service orientation of the major expenditures such as hospitalization. Thus, it will fail to contain costs and at the same time will cause hardship in paying for physician office visits for low income individuals that may forego care to save the money in their HSAs.

One issue with Dr. Relman's approach overall is that it freezes the current state of delivery of healthcare in place and makes adoption of innovation difficult, because there is no profit motive to compensate for risk taking and investment in service delivery. The rate of innovation in medical technology is increasing, not decreasing, and medical practice will need to keep up with the emergence of personalized medicine and telemedicine. But this structure would not preclude the medical device and pharmaceutical industries from remaining as for-profit suppliers to these non-profit delivery entities.