Kudos for the Other Rochester

Mention Rochester in the context of leadership in health care, and I’ll wager most people think of the Mayo Clinic. Rochester MN absolutely merits recognition as home of this world-class health system for more than 100 years. However, Rochester NY deserves just as much attention for its ongoing successes in community-based, future-focused health planning.

This past Friday, I had the pleasure of sharing the podium there with Dr. Janet Corrigan (CEO of the National Quality Forum) at a conference organized by the Healthcare Benefits Network, attended by leaders from a broad array of organizations with stakes in improved well-being of the population. Local guest speakers who followed our keynotes gave impressive overviews of data-sharing, care coordination, public health programs, wellness activities, and other collaborations to promote top-quality medical services and make them available as inexpensively as possible. The community’s new program for reducing unnecessary care was particularly impressive.

My usual role is to tell audiences that they had better start collaborating to do these things right away, but last Friday I found myself validating good work that has already been done. I was particularly impressed to see that vertical (multi-stakeholder) community partnerships, not just horizontal collaborations among providers, are the well-established norm there. Rochester MN is the place to look for a benchmark delivery system that has withstood the tests of time, but Rochester NY is the place to see how an entire community—not just its providers—can coordinate activities and resources to build a rational health system in response to today’s challenges.

Rochester NY isn’t waiting to see what Washington DC will allow as the latest health reform laws unfold (more likely, in my opinion, unravel) between now and 2018. Rather, Rochester’s leaders are defining what the local population needs for the foreseeable future and restructuring relationships as necessary to produce desired changes for the good of the community. If my comments added anything new for the local leadership’s consideration, it was a challenge to develop systematic methods for retaining and reallocating the resources saved as costs are lowered and unnecessary services are eliminated. Today’s dysfunctional system does not reward providers for becoming efficient, so they need to develop prior agreements that redirect savings to other planned improvements in community health.

After attending quite a few recent conferences exploring how to prepare for government-mandated health reform, I was inspired to find community leaders instead discussing how to meet local needs for health care in spite of ARRA and the Affordable Care Act. Can any community afford to put progress on hold while seeing what happens in Washington? If you agree with me that change cannot wait, I suggest you explore what’s happening in Rochester NY. Whether you agree or disagree, please contribute a reply to the Healthy Debate.

Putting HITECH Incentives in Perspective

The final rule on meaningful use of electronic medical records (EMR) is presumably going to be published soon.  Under the law, financial incentives for qualifying investments in EMR begin in 2011 but turn into penalties in 2015.  Pessimistic commentators fear that the final rule will require providers to do more than they are willing or able to do in the four years before the “carrot” turns into a “stick.”  On the other hand, optimists argue that the size of the incentive payments will be enough to overcome providers’ resistance to EMR adoption.   

As a medical economist, I’m skeptical of the optimists’ argument.  I think it overlooks financial realities, beginning with the fact that incentives will only be paid to providers that have already invested in EMR.  The law does not give seed money in advance, only payment for money already spent on certified systems that are meaningfully used.  The current reimbursement outlook—a 21% reduction in Medicare fees for physicians and a half-trillion dollar reduction in future federal payments to hospitals—works against providers being able to borrow money to buy EMRs that might qualify for incentives.

Even more to the economic point, reimbursement for “meaningful use” under HITECH will only be a meaningful incentive if it is greater than the marginal cost of making the investment.  I haven’t seen any financial analyses to convince me that authorized incentives are enough to swing the balance sheet in favor of making the investment, especially because providers do not generally have spare cash to pay the difference between the costs of an EMR and the amount of incentives.  When training and compliance costs are added to the equation, purchasing an EMR just to get the incentive “does not compute” for a lot of providers.    

My skepticism about the questionable value of HITECH incentives must not be interpreted as negativism toward EMR.  I have argued for years that digital transformation is absolutely necessary for health reform.  I cannot imagine a really good health system without electronic records.  However, I fear that HITECH is delaying progress.  It has put EMR implementation on hold while providers wait to see how to get federal incentives (money many will not want when they see the strings attached). 

The good news is that EMRs are already a hallmark of our country’s exemplary health systems.  The best providers invested in electronic records to excel in clinical care, not to qualify for reimbursement incentives.  They made dramatic changes in their business models, too.  I hope short-term focus on HITECH incentives will not divert attention from the fundamental lessons of leading providers’ accomplishments.  Success requires a lot more than an EMR.  What do you think?

Renewed Optimism at AHIP Institute 2010

Regular readers will remember that I was once excited about the discussions surrounding health reform. Only a year ago, the key stakeholders in Washington agreed on a common goal—curbing incessant increases in medical spending by sharing the pains of significantly restructuring the health care delivery system. Decision-makers were actually discussing tough choices and exploring trade-offs that need to be made. A medical economist’s dream fulfilled, at last…


Consensus sadly succumbed to politics during the summer recess. Democratic leaders shifted the discussion from comprehensive health reform to a single issue, insurance overhaul, when Congress got back to work in September. I was disheartened by the ensuing legislative scramble to put together any combination of ideas that could get 216 votes in the House. The two laws finally enacted this spring were colossal disappointments to me because they did not provide a solid foundation for building a really good health care system. In the unlikely event that the laws are implemented as enacted, more Americans will have access to a system that is still inefficient and ineffective.

My spirits were lifted last week when I attended the 2010 Institute of America’s Health Insurance Plans (AHIP), an organization vilified by the political architects of insurance overhaul. Speakers in every session were talking about reasonable actions that could be taken to reduce medical expenditures, such as sophisticated health promotion programs and improved data analytics to identify waste in the delivery system. They focused on getting more value for health care dollars through better management of existing resources, the solution that politics forgot.

Presentations at last week’s AHIP meeting did not change my longstanding view that payers need to improve business practices just as much as providers and purchasers (including the federal government) need to change theirs. However, the AHIP sessions did renew my economist’s belief in the power of creative destruction in the medical marketplace—progressive transformation through radical innovation. I heard insurance executives and other industry experts talking about moving forward with promising new solutions to old problems. They were discussing real health reform, from my perspective.

Their explorations of ways to improve health and cut costs were a refreshing contrast with the final months of legislative maneuvers focused almost exclusively on passing a bill, not improving medical care. I found health plans that are working with purchasers and patients to put a lid on health care spending. Of course, there’s lots of work to be done and many major changes to be made in the business of health insurance. Do you share my belief that mandating insurance is not a solution to the serious problems of cost and quality? Where do you think progressive health plans should focus their initial efforts to do what Congress would not?

Should reform be based on statistical significance?

Having spent roughly half my career teaching research methods and statistical analysis to medical professionals, I believe the difference between statistical significance and real-world importance must be understood by anyone who makes decisions in health care.  Statistical significance is a measure of the probability (p) that random chance explains the outcome of a test to see if an experimental effect—such as a new drug, a change in care delivery, or an alternative mechanism for reimbursement—makes a difference.  Statistical significance increases as the p value declines.

However, statistical significance often has no practical importance for our daily lives or long-range plans.  I’ve taught hundreds of students to resist the temptation to overreact to studies based on statistical significance of the findings.  Presentations at last week’s annual meeting of the American Society of Clinical Oncology illustrated this very important point.  Several researchers suggested that cancer patients who took new drugs lived significantly longer than comparable patients who took a placebo or older medication under controlled conditions.  

The statistically significant difference sounds impressive, all other things being equal, but should we immediately start paying for a new drug if it extends life only three months and costs $50,000?  Of course not!  Today’s push for health reform is based on widespread agreement that our country cannot afford to spend more on medical care, and we could surely find a more productive way to spend an extra $50,000 if we had it.  

Today’s economic realities and political circumstances are forcing us to learn to live within our means.  We cannot adopt some new approach to medical care just because it is supported by statistically significant research.  (For the record, I am a very strong supporter of medical research.  This blog post questions the use of research reports, not the research itself.)

To complicate matters, a recent article in the Journal of the American Medical Association (JAMA; 26 May 2010, p. 2058-64) http://jama.ama-assn.org/cgi/content/abstract/303/20/2058 suggests that reports and interpretations of studies with statistically non-significant findings are frequently inconsistent with the actual results.  In other words, more than a few of today’s “scientific” publications convey impressions not supported by the data. 

We now run not only the risk of overreacting to good research, but to bad research as well.  I hope that you will join me in pressuring our policy-makers to put statistical significance into proper perspective.  Or am I the only one who fears that policy analysts are putting too much faith in data and too little in strategic vision of an efficient and effective health system with limited resources?  Please share your thoughts.

What can countries learn from each other?

Having spent the past week at conferences in Amsterdam and Grenoble with several of my London-based colleagues from Xerox/ACS, I had an excellent opportunity to gauge the current status of three top-rated health systems that are commonly cited as models for the U.S. to emulate.  Ironically, I discovered that policy-makers in the Netherlands, France, and Great Britain are looking to us for solutions just as much as we are looking to them.  Our respective systems for financing and delivering care are facing the same problems, in spite of significantly different organizational characteristics.

The costs of health care have exceeded available economic resources in these three top-rated European countries.  American health policy analysts might look to them as models for universal coverage, but their economic challenges are no different than ours.  These countries are slashing providers’ budgets on a scale comparable to the cuts that Democrats in Congress recently imposed to pass insurance overhaul “reforms.”  So much for political promises that the United States could maintain accustomed levels of service and move toward European-style universal coverage!

The extent of covered benefits is also declining in these health systems that presumably provide more health care for their citizens.  Residents of all three countries told me that many services traditionally included in the universal plans are now only covered under supplemental plans that require the individual to pay an additional premium.  Further, the role of private providers is growing perceptibly in state-directed systems that many American liberals would have us emulate.


Those of you who follow my commentaries on health care will not be surprised that the principle themes of my speeches at last week’s European conferences were efficiency and effectiveness—that is, eliminating waste in health care delivery.  Perhaps I should not be surprised by the strong, positive audience responses to my message.  Indeed, a French study just concluded that more than 30% of all hospital stays there are inutile (useless).  The world’s top-rated health systems are suddenly realizing that they must harness medical expenditures that do not contribute to the health of individual citizens or national populations.    

The United States does not have a top-rated national health system, but I proudly believe our best providers are global leaders in applying performance improvement to health care.  Americans can still learn from European countries that produce healthier populations with lower shares of GDP, but we can teach them a thing or two about lowering costs (efficiency) and improving quality (effectiveness).  Some of our providers and payers have developed world-class solutions that will solve problems in Europe and elsewhere.  I expect more Americans will be asked to speak at international conferences in the future.