See you after Labor Day

Blogging break here for the next week or so.

Live and learn

Every now and then, I like to clean out my old folders on Gmail.  Yes, I know there is unlimited memory, but I am a reverse pack-rat.

So, I went in and deleted the contents of my "sent mail" file.  Little did I realize that this also deleted the copy of every email I have ever sent in all of the individual folders that I had created.  So, now hundred of things I had carefully saved for business and personal purposes are gone.  There is no way to reverse the action.

At first I was bothered, but then I realized that most of those messages actually don't matter at all.  So, a new Kubler-Ross paradigm arises:  Shock, dismay, freedom, happiness.

Wine takes the lead on the city streets

It's times like these that I wish the Center for Short-Lived Phenomena were still around.  They used to study interesting geological and astrophysical events, but they also would explore questions like, "Why are there so many dead squirrels on the street this year?"  (Answer, the weather was excellent for acorn production, and boy and girl squirrels created lots of pups, who then got squashed crossing the streets.)

What prompts this wish on my part?  A noticeable bulge in the number of single-serving Sutter Home wine bottles on the streets of my fair city.  Recall my Mike-Dukakis-inspired compulsion to pick up trash when I take my walks around the neighborhood.  In the past, nips prevailed, especially vodka servings, especially near the collegiate neighborhood transit station.

Now, though, it is wine.  Cabernet Sauvignon is the apparent favorite, followed by Pinot Grigio, with Chardonnay a distant third.  Were the CS-LP here, they could tell us whether this is a seasonal tilt in preferences, or a longer-term subtle refinement of the local student body's alcohol tastes.

In any event, it remains disturbing to think of (1) automobile drivers drinking these bottles clean and then (2) driving under the influence while tossing them on the roadside as trash.

Hurricanes and airplanes

As hurricane season arrives, it is interesting to see the impact these storms have on airline volumes and routes.  Here is a video showing air traffic as Hurricane Katrina came through:

You can find other similar ones here.

Good stuff happening in the countryside

There is a tendency for those of us associated with urban and suburban medical centers to forget the many dedicated people serving the public in rural areas, often where there are high poverty levels.  One such group are the folks at the Appalachian Regional Healthcare System (serving northwest North Carolina and northeast Tennessee) who run the Appalachian Healthcare Project.  Here is a description:

Appalachian Healthcare Project is a collaborative effort of the medical community to provide healthcare for the low income, uninsured residents in Watauga and Avery Counties. The project enrolls persons who meet program guidelines and coordinates healthcare on their behalf. The coordination of healthcare includes assigning patients to a primary care provider, managing referrals to specialists, and obtaining medications for the patients. The medical care providers donate much needed care to those who qualify.

In 2011, the AHP assisted more than 500 patients with prescriptions, valued at approximately $1.8 million. Currently, 33 primary care providers and 60 specialty care providers participate in AHP.  Community outreach activities included three sessions of Boone’s Biggest Winner weight loss program and 17 community health fairs and screenings, 38 CPR classes for the community and 12 health promotion events.

ARHS also runs a Farmworker Health Program, which "provides access to quality, affordable, community-based, culturally appropriate, and comprehensive healthcare services for migrant and seasonal farmworkers and their families in Watauga, Avery, and Caldwell counties."

The system's Facebook page gives a great update on these and other activities. This all reminds us that those delivering care locally, with a good understanding of community needs, are a vital part of the country's health care system.

Scholarships for IHI National Forum

Dale Ann Micalizzi, Founder/Director of Justin's HOPE at the Task Force for Global Health, sends along this reminder about scholarships for attendance at this year's IHI National Forum.  For information, click here.

Here is the description:

Justin’s HOPE Project and IHI are extremely proud to announce the Justin Micalizzi Memorial IHI Scholarship in loving memory of Justin A. Micalizzi who died at the age of 11 due to a medical error. Learning from this devastating loss ― and making a difference that will improve pediatric health care ― has become a quest for Justin’s family. Justin's HOPE project will award scholarships to health caregivers who are committed to pediatric patient safety and providing a safe health care environment for their patients and families.

The Justin Micalizzi Memorial IHI Scholarship will cover the cost of the General Conference fees for IHI’s 24th National Forum on Quality Improvement in Health Care December 9-12, 2012, in Orlando, Florida. In addition, the scholarship will provide a $1,500 reimbursement to be used toward travel, lodging, or other Forum expenditures (including fees for Learning Labs or Minicourses).

Wendy honors Bruce and others

Author Wendy Chapin Ford has generously offered copies of her book Normalcy as a free download.  She says:

My husband, Bruce, loved to take care of his family. When we received the news that he had cancer, he immediately determined that we should strive for normalcy. It was his desire for normalcy, as elusive as it seemed to us at that moment, that set his family down a path of carrying on, doing well, and enjoying life. It served us well through his illness and beyond, and I am sure will continue to do so.

It is my great hope that cancer patients and family members – or anyone dealing with a devastating diagnosis – will be able to avail themselves of this document free of charge, and that it somehow helps. To that end, I am offering it as a free download, under a Creative Commons license.

She also hopes that it might stimulate some people to philanthropy:

I also hope that our experience might inspire readers who are so moved to make contributions to Dr. Rebecca Miksad's medical research fund for her study of liver cancer and cholangocarcinoma, the form of cancer that affected Bruce. Dr. Miksad must be one of the most talented, intelligent, dedicated and compassionate physicians that I shall ever know. To make a donation to BIDMC's CureLiverCancers team, please click here.

#2, now. Is their advice still good?

Here is an example of the stupid uses to which the vacuous US News & World Report hospital rankings are put. Early this morning, a friend received an email come-on for The 2012 Johns Hopkins Depression and Anxiety White Paper that offers this reason for subscribing (at $19.95):

The Johns Hopkins Hospital has ranked #1 among America's Best Hospitals in US. News & World Report for 21 consecutive years 1991-2011. You simply won't find a more knowledgeable and trustworthy source of the medical information you require.

Hmm, this year it was not ranked #1.  Some other place was, complete with a Duck Boat parade.

Oh, but wait, the hospital says something different on its website advertisement:

Year after year, The Johns Hopkins Hospital ranks among America's Best Hospitals in US. News & World Report. You simply won't find a more knowledgeable and trustworthy source of the medical information you require.

Hmm, a copy editor's dilemma!

Mandar does not mandate

The question of how to achieve process improvement has been addressed in many ways.  As my readers know, I am strong proponent of the Lean philosophy, but there is no monopoly on good ideas.  Here is a fascinating piece from Knoweldge@Wharton about Mandar Apte, a chemical engineer who has worked at Shell for twelve years.  His idea was to add meditation to the mix to help encourage process improvement.  This has been codified in an approach called Empower.

An excerpt:

Empower's objective is to nourish the innovation culture by empowering staff to play a role in innovation. The objective is also to leverage the passion of each employee and to play any role that the employee chooses to play in this innovation set up. So, for example, innovation starts with an idea, but once the idea is conceived, there are many other roles that one needs to play. One needs to learn how to sell the idea, how to build a story. One needs to learn to build networks and circles of trust where you get good feedback to develop that idea into something else. Finally, one needs to authentically connect with people who can help bring that idea to a proof of concept. This is a very social process. Not everyone in an organization needs to be the person with the idea. You can play other supporting roles -- just like in a movie there is an actor and there are supporting actor roles. That's what Empower facilitates -- it helps you understand what role you want to play. It all begins with a state of mind in which you decide you want to play a role. This necessitates looking inward so that you can support not just yourself but people around you as well.

I think the home-grown spread aspect of Empower is a fascinating feature:

The uniqueness of Empower is that it's a grassroots initiative. Employees organize these workshops for one another at the workplace -- that's the first step. It's not mandated, but it's peer-to-peer inspired. The first step is an introduction to Empower, which is held over a lunch session. During the introduction, we discuss the innovation theory and the various roles that one can play. We also introduce some breathing and meditation exercises. The staff then chooses the second step. Someone may say, "Yes, I like the introduction session and I want to invest my time in learning more about the innovation theory as well as mind management." And the third step is, if people want to learn how to facilitate the Introduction class, they are trained and then they run the Introduction sessions at their workplace.

Brown versus Warren: A pre-Labor Day view

It is always dangerous to prognosticate election results before Labor Day, but I am going to offer an opinion based on observation of one set of clues only:  The design of lawn signs.

Look at these two.  First, the incumbent's, Scott Brown:

Next, the challenger's, Elizabeth Warren:

Those of you not from Massachusetts may have been led to believe that this is a liberal state.  Not so.  While it is often portrayed as a highly Democratic state, look at this party enrollment:

Source: http://en.wikipedia.org/wiki/Politics_of_Massachusetts

The Republicans always come out and vote, the Democrats more sporadically.  So, the race is about getting the Democrats to vote and grabbing those unaffiliated voters.  Who are these people?  Well, in great measure, they are like most of the rest of the country, concerned about the same things.

But the dirty secret is that--like the rest of the county--they are less concerned about the issues than they are about the characteristics of the person running.  They want to trust and like their Senator.  And it is here that the Warren campaign has been faltering.  She/they seem to think that her substantive record and experience on issues will bring out the vote.  Her answers on policy issues are thoughtful and in full paragraphs, but they come across as dispassionate and intellectual.  They have failed, so far, to convey in a visceral way who she is and why we should like her.  Her lawn sign offers nothing to offset this.

What the Brown campaign understands is that this election is about personality.  "He's for us" on his lawn sign has double power.  "He cares about us" is part of it, but subliminally, "He's one of us" is the underlying message.  Scott always refers to Elizabeth as "Professor Warren."  He is appearing to be respectful, but he is really reminding the electorate that she is an untrustworthy Cambridge Harvard intellectual, while he is a normal person.

The lawn signs tell us all this.  Gee, I can even text Scott a message.  I bet he is likely to answer.

(Please note that this blog post is not about my personal vote or my preference in the race.  It is simply an analysis of what I see and hear.)

Not enough time for lupus

That systemic lupus erythematosus affects a relatively small percentage of the population does not change the fact that this is a troublesome life-changing disease of uncertain origin and unclear treatment.  Thus, we find that physicians and nurses involved with this problem are extremely dedicated to their patients.  Together, they try to establish a partnership that will help ameliorate symptoms and maintain normal life patterns.

A book is coming out this fall that should be helpful in that regard.  The author is Dr. Donald Thomas, Jr., and the book title will be The Lupus Encyclopedia (Johns Hopkins University Press).  This should be a definitive work that will be of great value to patients and caregivers.

The foreword to the book is being written by Dr. George Tsokos, Chief of Rheumatology at Beth Israel Deaconess Medical Center, himself a world expert on the subject.  I reprint with permission some excerpts of the current draft of his introduction (which might change somewhat in the final printing), as they are indicative of the passion displayed by those involved in this disease.  The biological aspects are stunning, and time will tell what can be done about those, but note especially the final paragraph.  There, George decries the current medical care system, which itself contributes to the suffering.  That aspect of the disease is within our control and deserves as much attention as the scientific aspects.

Like Dr. Thomas, as a senior in medical school I was assigned to participate in the care of a 24-year old young lady with fevers, chest pain, swollen joints and blood swollen legs.  Systemic lupus erythematosus loomed first in the differential diagnosis, and the tests confirmed the presence of anti-nuclear antibodies, anemia, low platelet and lymphocyte counts, which helped seal the diagnosis. Her face is still vivid in my memory, and her anxious and inquisitive eyes ask me every day,  "Will you ever find a cure for me? I am engaged to be married and I want to live." We gave her prednisone in buckets like it was done those days, and we probably added to her lupus symptoms a bunch of dreadful problems caused by the drug. Decades later, we can diagnose patients with the disease faster, we can treat them more effectively, minimize drug-related side effects, take better and prompt care of infections and other frequent conditions linked to lupus and promise an almost normal and lengthy life, but we cannot answer positively the proverbial, “Are we there yet?”

How do you solve a problem like lupus? Even if you scan through the pages of the book you hold in your hands you will realize that you are up for a crash course in medicine, not sparing obstetrics, gynecology and neurology. How do you grasp a disease that wants the doctor to command every field in medicine and how naively we expect our fatigued, achy, feverish and disillusioned patient to handle it? Breathing hurts, the joints yell, the skin blemishes and the kidneys silently go in to oblivion. Every organ becomes involved to pour away the well-being and the life of the young ladies.

Lupus is a demanding partner in the life of the patient, and you will soon learn that prompt diagnosis, perfect close care by specialists, tight control of medications and their side effects and abiding, tenacious efforts to control comorbidity (infections, cardiovascular disease and cancer) make all the difference in the world. Doctors are continuously pressed to shorten their encounter with the patients while the documentation component looms continuously larger. This could be fine in the wisdom of the regulators should the doctors be dealing with simple self-limited, one-dimensional diseases. But obviously, the Procrustean (one fits all) approach is damning to patients with lupus and their doctors. The doctors have little time to go over the many dimensions of the disease that each patient brings to each office visit and no time to educate them properly. 

Dr. Thomas and all of us who care deeply about the patients know very well that it is the patients who take charge of their disease who fare the best. They come to the office quite prepared, and it is our duty to educate them further. They bring knowledge acquired from the internet (usually unfiltered and non-critical) and the doctor is pressed to transfer scientific knowledge to properly fill the gap. It is incumbent upon the healers to translate the medical information to the patients so that they can maximize the earned benefit. In these encounters lots is lost in the translation that compromises the welfare of the patient.

The pace of justice

This is not Mike

Out of the blue, my friend Mike recently received a summons to appear in court for failing to pay the fine for a traffic violation that occurred in 1992.  Yes, 1992.  Twenty years ago.

He arrived in the court serving South Boston and said to the court official, "I guess I have been on the lam longer than Whitey Bulger!"

The official laughed and said, "Get out of here. Case dismissed."

Well, duh! A wish and a hope is not a policy.

Folks who are urging the adoption of risk-based provider contracts seem to forget the basics:  To take on risk, you have understand the degree of risk you are taking on and how to manage it, and you need to have a balance sheet strong enough to take on that risk.  Kaiser Health News reports:

Few hospitals interested in becoming accountable care organizations are ready to take on financial risk, according to a survey released Friday from The Commonwealth Fund.

“We’re really still at the very beginning of the adoption curve of the ACO model,” says lead author Anne-Marie Audet, who researches health system quality and efficiency at Commonwealth. “The challenge is that hospitals are still not ready to assume financial risk.”

There are already 154 ACOs serving nearly 2.4 million Medicare beneficiaries, and dozens more ACOs are involved in partnerships with private insurers. But so far, the majority of ACOs are pursuing models that allow them to share in any savings they achieve without losing money if they fail to cut costs. In other words, there’s a lot of carrot but not much stick.

But only one in five hospitals pursuing an ACO model reported that they were using data to predict which patients were most likely to be in poor health and need more services—a significant gap in their ability to manage risk.

We are not there yet, and the future is uncertain, notwithstanding Ms. Audet's optimism.  Why is it that we expect things to change?  What is it in the future of hospital finances that will make them more interested in taking on risk in the future?  Do we expect their financial capacity for losses to grow?  Do we expect that there will be truly integrated care across the spectrum of care, including community-based facilities like nursing homes and rehabilitation hospitals?

This is a policy direction based on a wish and a hope, not a rigorous assessment of its likelihood of success.

Follow True North to St. Louis

This month, The Mayo Clinic Proceedings has published a section (free and open to the public) dedicated to ACO (accountable care organization) commentaries written by leaders from large health systems across the country, including Ballard, Ascension, Partners, Atlantic, and Methodist Le Bonheur.  There is one to which I would like to draw your attention.  It is by Robert Porter and Amanda Tosto, from SSM Health Care St Louis, entitled, "The SSM Health Care Approach to Achieving 'True North': Improving Health Care Quality While Reducing Costs."

My regular readers will not be surprised to see that what I like about this article is the emphasis on process improvement, patient-centeredness, and transparency shown by the authors, irrespective of the regulatory or institutional framework offered by the federal government.  You or I might not agree with everything set out, but we have to admire the thoughtfulness and commitment demonstrated.  Here are some pertinent excerpts:

SSM Health Care St Louis thoroughly investigated the opportunity to participate in the Medicare Shared Savings Program (MSSP) as an ACO and weighed components of the application to determine if this program was in the best interest of the organization and, ultimately, the people in the communities that we serve. 

SSM Health Care St Louis has determined that its path forward is to respond to the fundamental factors driving the health care industry in the context of the overall US economy, rather than conform to the requirements set forth by the MSSP. We have designed a deliberate path, True North, which synchronizes the economics of its transformation with the operational changes necessary to accomplish that transformation. SSM Health Care St Louis recognizes that transformation and change must occur, whether or not the political environment is conducive to the current efforts of the Centers for Medicare and Medicaid Services to establish a reformed health care system within the regulations outlined in the Patient Protection and Affordable Care Act.

Like many health care organizations, SSMSL has determined that the future of its mission, and of health care in this country, depends on creating a system capable of delivering dramatically greater value and eliminating the rampant behavioral, clinical, and administrative waste within the current system. Value is defined as achieving high-quality outcomes with the greatest efficiency/least cost over time and across the continuum. Achieving this requires a major philosophical, cultural, and operational shift from a focus on volume and the treatment of sick patients to a focus on the active engagement of individuals, with the support of health care resources, to manage their health.

The key elements in SSMSL’s version of True North are:
● Assembling the elements of the health care system around the patient as an integrated team.
● Aligning the incentives of all parties, including and especially the individual, around optimizing health and minimizing waste. This includes, ultimately, placing financial risk with those best equipped to manage that risk, the person and her/his physician and care team.
● Developing comprehensive tools to support information-managed care across time and across the continuum including:
OE Predictive modeling of health risk in the population being supported; OE Clinical decision support to ensure that health care professionals have the information and resources needed to make fully informed, evidence-based decisions OE Disease registries that provide real-time information regarding the interventions needed to optimize management of patients’ care and the level of their compliance with their individual health management plan;
● Statistical tools to study and understand variation in order to address unjustified variation and test improvements in care delivery processes;
● Business intelligence systems to extract and report real-time information to support performance management;
● A culture of transparency and clinician-led accountability to drive the organization toward the goal of superior value.

Can't get them to (re-)admit a mistake

Some time ago, I pointed out a report that indicated underlying problems with the use of readmissions data as the basis for financial penalties for hospitals. I also pointed out research that demonstrated potential unintended consequences from this kind of regulatory action.  Well, once the boulder of government regulation gets moving, there is little to be done to stop it.  Here is a thoughtful and reasonable comment by the Massachusetts Hospital Association:

The federal government’s Centers for Medicare and Medicaid Services (CMS) last week announced reimbursement penalties for more than 2,000 hospitals — including a number in Massachusetts – because of the facilities’ 30-day readmission rates.  “No hospital community is doing more to address readmissions than Massachusetts,” said MHA President & CEO Lynn Nicholas. “Our hospitals are committed to providing safe, high-quality patient care, and are national leaders in voluntary, public reporting of patient quality and safety information. MHA supports the concept of working collaboratively with others to improve the readmission rate and recognizes that financial incentives can play a constructive role. But it must be recognized that hospitals do not control most of the factors that affect readmissions. Hospitals can perform their roles with all due diligence and yet may not see a significant impact on the readmission rate. So programs that are designed to address the readmission rates should take that reality into consideration.”

MHA believes that CMS has failed to comply with the requirements of the ACA to not count readmissions that are for conditions unrelated to the initial hospital admission, or for readmissions that are part of a scheduled medically appropriate care regimen such as chemotherapy.

Hospitals across the state are currently participating in numerous projects to address and reduce hospital readmissions, in particular the STate Action on Avoidable Readmissions (STAAR) initiative. Participating hospitals have formed cross-continuum teams and submitted baseline 30-day readmission rates, and are now busy determining how to improve the patient's transition from hospital to post-acute settings. In addition, in 2010 the MHA Board of Trustees unanimously endorsed an association-wide initiative to move beyond public reporting and transparency to make measurable, concrete improvements in hospitals' performance, with a particular focus on readmissions.

Are you wearing blinkers, you idiot?

Speaking of football, as we approach the fall soccer season here in the US, we referees take heart from the following Belgian video.

Click here if you cannot see the video.

Medicine and Football

Watch this heartwarming story from the BBC.  Back in March, a brilliant young footballer had a heart seizure on the pitch and one of the country's leading cardiac surgeons happened to be in the crowd AND the security guards were smart enough to let him on the pitch to direct emergency treatment.  And that's just the beginning of the story!  (BTW, an NHS triumph!)

If you cannot see the video, click here.

Maria's story

Here's a story to read and think about, from Maria Bonyhay, taken from the Brain Tumor Foundation website:

When you are dealing with an illness, it is important to remember that every patient is an individual and everyone should get the best possible treatment.  I think the most important message of my story is to never accept one doctor’s opinion – get a second and third if necessary.  Treatment guidelines are useful but may not be appropriate for everyone.  Every case is different.

My headaches began after an ordinary bout with the flu.  My primary care physician ordered an MRI to determine the exact cause.  Since I had had a head trauma about 20 years ago in the same location of the headaches, he suspected a cerebral aneurysm.  Instead, he found a ping-pong ball sized tumor in the middle of my brain.  Other than the headaches, I had been experiencing light and noise sensitivity and my normal sleep patterns changed.  During the MRI, I began feeling confused and felt a weakness on my left side as well as problems with my eye.   I was admitted to the hospital, and the following day the doctors performed a stereotactic brain surgery needle biopsy.  My diagnosis was confirmed – Glioblastoma Multiforme.
My doctors told me that surgical resection was not an option and they offered me conservative treatment and experimental protocols with an estimated survival rate of two years.  This was not good enough.  I needed a second opinion.  Unfortunately, after speaking with another doctor, the consensus was the same  – a resection was not an option.

With the help of some friends, I was referred to another neurosurgeon at Columbia Presbyterian [Dr. Jeffrey Bruce], who had developed the surgical technique of removing a tumor in the pineal region, the same area mine was located in.  After reviewing my MRI and various other test results, and taking into consideration my young age and otherwise healthy condition, he decided to remove the tumor.  The pathological analyses of the tumor showed a lower grade tumor (Anaplastic Glial-neuronal) than was originally diagnosed by the needle biopsy.  After 6 hours in surgery, I had a relatively easy recovery – I could even talk and walk the following day and by the 10th day, I had no symptoms at all.  As a precaution, I received a 7-week proton therapy.

Now, I feel healthy and strong and have no remaining after-effects of the tumor.  My follow up MRIs show no new growth.  My long-term prognosis is good!  Because my brain tumor was removed, my quality of life is better.  Because my brain tumor was removed, my chance for long-term survival has increased significantly.  With God’s help, I will now live to see my young sons grow up.

Let's do the numbers

Julie Creswell and Reed Abelson offer a story in the New York Times about the HCA for-profit hospital system, noting "A giant hospital chain is blazing a profit trail."  The HCA story and similar ones about other hospital chains financed by private equity force us to consider how a such firms can achieve a return on equity that satisfies investors.

The answer is that they cannot, if we think about running the business on a long-term basis.  What makes it work is extracting cash and the exit strategy, the heart and soul of private equity.

As Warren Buffett might say, let's keep this simple.  A for-profit hospital system has the following disadvantages vis-a-vis a non-profit hospital system:  (1) Its finances are a mixture of equity and taxable debt, both of which are more expensive than the nontaxable debt of a non-profit; (2) it pays taxes--federal and state income tax, property tax, and sales tax--on which the non-profit is exempt; and (3) it is an unattractive vehicle for charitable donations, compared to the tax-advantages offered donors of non-profits.

These are hefty financial advantages for non-profits, which nonetheless are fortunate if they are able to earn an operating margin of 3%.  Admittedly, that's 3% of revenues, not a 3% return on capital.

An equity investor in a for-profit doesn't care about margin, strictly speaking, but rather is focused on the rate of return of his or her investment.  But let's stick with the operating margin just for a moment, and let's just accept that a 3% margin would not generate the kind of equity return demanded by the market place:  You pick the hurdle rate:  15%, 20%, 25%, more?  It doesn't matter.  A three percent margin just doesn't get you there.

Given the extra costs inherent for a for-profit firm, how can it do better than the 3% margin of the non-profit hospital?  How can it offset the relative disadvantages by decreasing its costs or increasing its revenues sufficiently?  Creswell and Abelson suggest that part of the answer for HCA has been to "upcode" its patients, collecting more money for the same services.  They note that individual doctors receive great pressure to contribute to the hospital's income statement by offering unnecessary, high contribution services.  They also suggest that HCA intentionally sends away lower paying patients.  Finally, they hint that there might be some operating efficiencies employed by the for-profits that are not used by non-profits.

I do not judge those assertions (although I note that these are very thorough reporters), but I say to you that even this mix of actions would not produce such a substantially different margin as to satisfy private equity investors. Those investors are satisfied by two financial techniques employed by private equity firms in all kinds of industries.

First, use the cash flow of the firm to produce interim equity returns.  Focus on EBITDA (earnings before interest, taxes, and depreciation).  Employ a capital structure with a very high percentage of debt (i.e., leverage up).  Minimize capital investments by not fully funding depreciation.  Sell off unnecessary assets.  These include things like the pathology laboratory, where you discontinue running your own laboratory.  Call Quest and sell them the business, agreeing to pay them laboratory fees.  Also, monetize the real estate value of your buildings, perhaps with sale-lease backs or outright sales.  Meanwhile, purchase physician practices that will produce referral volumes, offering above-market prices.  Pay your debt service costs, but extract as much cash as possible.

Your goal is to show steady growth in EBITDA. Think about it this way:  The top line (revenue) is actually more important than your bottom line (net income after interest, taxes, and depreciation).  You will do anything to add revenue (even, in the case of Vanguard Health Systems, buying the distressed Detroit Medical Center).*

But wait, some of those tactics produce cash in the short run but add operating costs in the long run.  Some actually lose money.  What good is that?

The answer comes from the second financial technique:  Avoid the long run by flipping the business in an IPO (or to another private equity firm in a secondary buyout).  The capital markets are awash in cash right now, money seeking opportunities. There is always a greater fool. You pick your timing, and you go to market with a success story--a record of top line growth, of EBITDA returns in the teens, a prominent public presence.  Here's the secret part.  You don't actually need to generate that much cash in your IPO to produce a great return for the equity investors.  Remember, you have been extracting cash all along for them.  Plus, you are highly leveraged.  A small increment on the sale prices relative to your purchase price gives you a nice hit on the equity return.

How best to characterize this whole situation? Please review this thoughtful summary by private equity experts at Day Pitney: "It is kind of like the gold rush in years past."

--
* I am mainly talking about the US market here.  For-profit hospitals in non-US locations can do very well indeed on a bottom-line basis.  They play in countries with national health insurance.  People who can afford private insurance or who are provided it by their employers (or international visitors) go to them for unregulated private-pay service, especially in the high-end, high-compensation specialties.  Those specialties might have long waiting times at the nationalized hospitals, or they might not be offered at all, or they might be viewed as substandard.  Those hospitals, too, often have a dominant geographical advantage in that market segment.

Interestingly, though, the unregulated nature of such hospitals can mean that the actual quality of care is undocumented, as they can be exempt from governmental reporting requirements.  Thus, such hospitals can have an unjustified reputational advantage, offering the appearance of higher quality without ever proving it.  They could also engage with impunity in the kind of practice cited in another Abelson and Creswell New York Times article, Hospital Chain Inquiry Cited Unnecessary Cardiac Work.

The Jubilee Project takes off

From Facebook:

Last week, Eddie, Jason and Eric left their jobs (White House and Consulting) and school (Harvard Medical School) to pursue their dreams and work on the Jubilee Project full time making videos for a good cause.

To kick things off, we're currently on a road trip across the country to move to LA. Along the way somewhere in Indiana, we wanted to have some fun. This video is a thank you to all of you for making this possible.

We've launched a fundraiser to produce a film to end AIDS. Please support us by donating to our fundraiser.

If you cannot see the video, click here.

Windham offers a lot of hot air

My post below about the staff's response to a safety problem in a local theater got a lot of attention.  (By the way, the theater director called and reported that the cause was fixed:  The loose seats had gotten "ungaffed" from the others in the row.)  But the story also prompted a note from Melissa Mattison, one of my favorite doctors, who reported on a even more poor staff response to a huge safety hazard at Windham Mountain Adventure Park.

See a recent feature about what happened to my daughter  in NY last weekend.  My seven year old daughter jumped onto "The Big Air Bag" and the bag wasn't positioned correctly.  It was too far out from the platform.  Her fall was broken by the bag - thank goodness! But instead of staying on the bag, she was thrown off the bag and on the ground.  Thankfully she doesn't appear seriously injured but she landed on her head in a mud puddle, came up bleeding (cut mouth/gum), scraped up and down her arm and leg and covered in mud.

Here's the video of the event:


Melissa continues:

Here is a link to a Yelp review I did to also ‘get the word out’.  Yelp can be a powerful way to affect change in the commercial world, but until staff at facilities adopt a different stance towards safety it seems it will take time to truly change things.

Here's the pertinent part of the Yelp review:

Here's where it gets even worse.  The staff operating this ride did NOT stop the ride.  They would have let my 5 yr old jump right after if I hadn't stopped her.  The staff did not inquire how my 7 yr old was.  She picked herself up and we walked together up the hill to the main lodge/bathroom area and NO ONE who worked there asked us a single question or stopped us.  I cannot imagine they didn't see this happen.  There weren't that many people there, my daughter was crying loudly and was a mess (bleeding, muddy).  Another parent there asked me if she was okay, as she was concerned.   After we washed out the cuts in the bathroom, the manager of the facility (Alexander) came up and asked us what happened. (I think one of the other parents must have said something to him.)  When we told him his response was, "You signed the waiver didn't you?" and then he went on to say, "This has been working fine all summer."

Moving from unconscious incompetence to conscious incompetence

I ended last week with a post about the medical school curriculum on disclosure developed by David Mayer and others at UIC.  There is a new post on Educate the Young that delves into a bit more of the pedagogical theory of the material presented.  It is the most important portion yet, and I urge you to read it, here, whether you are a medical student or someone who teaches medical students.

David explains:

This post discusses the goal of bringing students a dose of reality about wanting to do right from wrong, from organization-centered to patient-centered, wanting not to "deny and defend" but tell the truth, wanting to be be caring and compassionate and not unprofessional. We talk about taking them from unconscious incompetence to conscious incompetence through simulation training using standardized patients. With his legal background, my colleague Tim McDonald made sure the students understood they shouldn't be doing this as students and residents:  It requires leadership buy-in, knowledge of hospital by-laws, support from the medical malpractice insurance carrier, knowledge of state apology laws, and coaching and mentoring before having that conversation. A bad disclosure is worse than no disclosure. Our goal was always to have them understand how we have been doing it wrong for so many years and showing them there are better ways. We also aim to have them understand that we must support our caregivers when they have not violated just culture approaches and are also hurting from the harm that they have caused.

As you read this material, you understand again why disclosure training cannot just be a fifty minute lecture.  This is sophisticated and deep stuff, worthy of attention by every medical school.

Car Talk: How not to respond to a safety problem

I saw a great show today, Car Talk, The Musical, at the Central Square Theater in Cambridge.  The performers were terrific, playing on a clever set (see above) and the show is funny and vibrant.  That part was terrific.

What was not terrific was that my seat was at the left end of the second row, on a riser about six to eight inches above the floor level.  As I learned halfway through the show, there was no lip at the end of the riser to protect against movement of the seat.  My seat moved slightly to the left, and I went tumbling off the end of the riser in the darkened theater, falling on my arm and jarring my neck and back as I fell.  Apparently, I instinctively reached out for stability with my right arm as I fell, pulling along with me the neighboring chair.  This person's chair also got pulled off the edge, and she fell along with me, also landing on her arm.

The show went on, which is fine (and pretty impressive given the noise and disruption that we made.)  But no one from the staff came to see if we were all right either immediately or after the show, even though it was evident that cast members had seen the event.

After the final curtain, we reported the incident to the house manager.  She apologized and filled out a form, asking us to add our information to the form.  She did not, however, give us any advice about what to do if we were injured or had medical issues that became more evident over subsequent days.  Nor did she offer a first aid examination or any other assistance.

Beyond those points, though, here is the major problem.  We both said, a few times, that this was a dangerous arrangement and that something should be done to protect against a similar fall by future patrons.  The house manager gave no indication of hearing that concern and made no mention of any follow-up actions she or the theater were likely to consider.

In the hospital world, when there is an unsafe condition that has caused harm and a patient reports it, we train people to give a sincere apology; we offer immediate remedial assistance; we offer to make recompense or compensation in proportion to the degree of harm; and--most importantly--we explain how the institution will learn from the error so that other people do not suffer the same result.

My fellow patron and I both left the theater feeling that the final step would not take place.  That made us resentful that the third step was never offered.  Frankly, I never even would have thought about recompense or compensation if the final step had taken place.  Like a patient who has suffered harm and has not heard the appropriate response from a hospital, resentment leads to a desire for financial compensation.  What an unnecessary outcome!

Finally, instead of talking with friends about the wonderful show we had seen and the great performance by talented actors and musicians, we found ourselves talking about the unsafe condition at the theater and what we felt was a poor response to harm that had occurred.

Major safety threat found in the UK

Thanks to Wait, Wait . . . Don't tell me, I just learned of something I missed last week:  A threat to health care workers everywhere.  Luckily, the NHS is on this and has taken decisive action.

Here's the story on the BBC World News.  I publish the story in a different font and color for emphasis so no one will miss it: 

NHS health and safety chiefs ban ‘dangerous’ metal paper clips

Manchester NHS Trust officials made the decision to stop the use of the metal stationary item after a member of staff cut their finger using one. In a memo to staff, it was warned that the use of metal fasteners was ‘prohibited’ and the offending clips must be ‘carefully disposed of immediately’. ‘Due to recent incidents, NHS Manchester has decided to immediately withdraw the use of metal paper fasteners,’ explained the memo featuring an accompanying picture of a paper clip – just to avoid any confusion. ‘Please ensure any that remain in use be replaced by similar plastic fasteners. The use of metal fasteners is prohibited and must be carefully disposed of immediately. Thank you for your co-operation.’ 

Disclosure training is not a fifty minute lecture

Head over to the Educate the Young blog written by David Mayer and friends for an important series of articles about disclosure of medical errors as part of a medical curriculum.  David created the first longitudinal medical school program in quality and safety at the University of Illinois College of Medicine in Chicago.  He draws on that experience and more in this series, starting with a post entitled "Disclosure training is a process, not a fifty minute lecture."

He then proceeds to the first phase of the training, things covered in the first and second year of medical school.  This is followed with a discussion of the third year curriculum.  He promises that in the final post in the series:

I will share the final component – the capstone – of our four-year medical school curriculum on disclosure of medical errors. It is our belief that educating future physicians about the importance of open and honest communication when patient care causes unintentional harm is most certainly more than a 50 minute, one-time plenary.

What a model David sets forth! You see the rigor and thoughtfulness behind this, as well as the pedagogical excellence inherent in it.  It leaves you wondering why other medical schools have not done the same.

Not warm and fuzzy at BCBS of Rhode island

Facebook friend Nancy Thomas, President of Tapestry Communications, reported from Rhode Island last week:

No one would believe it. Blue Cross has now taken away the seats in their waiting room in the lobby. You have to sign in on a pad of paper. Then you stand in the lobby and wait. When you finally get called in to talk to 1 of the 2 customer service reps, she tells you that you are now being recorded. I asked her where the tape recorder was, astounded to hear her say that, "It's here," holding her hands up.

Not just once.  Again, today:

I had to go down again to turn in some transfer forms as my daughter is now being covered by the firm where she works, and I just wanted to drop it off.  The woman said I had to confirm my information so I said it again - name, address, phone, had to repeat area code! (slow simmer...) and she said it again - "We are recording this."

Apparently the environment isn't so warm and fuzzy either:

No one can go above the ground level at Xanadu. A surreal experience.

This building is affectionately called "Xanadu" by RI media because NO ONE has seen it.  It is supposed to have a garden on the roof and it glows blue at night.

I managed to take some photos of the BC lobby and also found a website that actually shows for the first time that I'm aware of what the building looks like upstairs.  I have a colleague who has an office in the office building next door and she says that when you look in the windows there is no one there - and she watches this one woman doing her makeup and fixing her hair all day - in her windows cubicle.

It just galls me....and I'm a private paying client!

Here is the link to the architect's website.

Minimum disruption on WIHI

August 9, 2012: Minimally Disruptive Medicine
2:00 – 3:00 PM Eastern Time

Guests:
Victor Montori, MD, MSc, Director, Mayo Clinic Healthcare Delivery Research Program; Professor of Medicine, Mayo Clinic

Nilay Shah, PhD, Assistant Professor of Health Services Research, Mayo Clinic
 
One of the most common phrases used to describe patients who are not taking their prescribed medications or following up on the recommendations of their health care providers is “non-compliant.” What if we viewed the behavior as an act of civil disobedience instead? This provocative notion definitely got the attention of health professionals in the audience at IHI’s 13th Annual Summit on Improving Patient Care in the Office Practice and the Community (March 18-20, 2012). It’s the thinking of Dr. Victor Montori, a diabetologist and researcher at Mayo Clinic whose keynote remarks* at the gathering were, in part, intended to shake up common and sometimes negative assumptions about patients with chronic diseases who don’t seem to be holding up their half of the bargain. Dr. Montori invites all of us to consider the work of being a chronically ill patient, and the burden of increased expectations to follow regimens that don’t easily fit into a patient’s daily life, social circumstances, preferences, and more.

What’s the alternative? Dr. Montori and colleagues call it “minimally disruptive medicine,” and WIHI invites you to learn more about this change of mindset and approach to chronic disease and what it can look like in practice on the August 9, 2012, show. Host Madge Kaplan and Dr. Montori will be joined by Nilay Shah, a health services researcher at Mayo Clinic. Both Drs. Shah and Montori argue that with the growth of patient-centered medical homes and numerous other initiatives that assume a greater role for patients and family members in managing chronic conditions, it’s a critical moment to examine what added workload this implies. The two argue that some of the burden on patients can be reduced if approaches to care are married with efforts to reduce unnecessary and costly over-treatment.

Think of it this way, says Dr. Montori: So-called “non-compliance” is actually an alarm system for a health care system that’s failing patients. The goal needs to be shifting and sharing responsibility for chronic disease with patients and families — not shifting the burden.

Please join what promises to be a vibrant discussion on the August 9 WIHI. To learn a bit more about minimally disruptive medicine before the show, check out the story of Susan and John.

To enroll, please click here.

Understanding Patient Safety

Bob Wachter at the University of California, San Francisco, has done so much good for the world--for patients, their families, and his colleagues in medicine--and he recently added to the total.  He published the second edition of Understanding Patient Safety.  The first edition rapidly became the leading primer in the field when it was issued in 2008.  This update and expansion will surely take its place.

The contents are extensive and inclusive, starting with the nature and frequency of medical errors and adverse events, leading to basic principles of patient safety, and thence to issues of safety, quality, and value.  Following this introduction, we are led through the types of medical errors and solutions to them.  As one might expect from Bob, the presentation is interesting, concise, and thoughtful.  If I were a doctor or nurse--newly minted or experienced--I would want this as my key reference. While the book is not really written with the patient community as its main audience, it is readable enough to warrant broad circulation.

Lucien Leape described the book as "a true gem, destined to be a close companion for all of us who strive to make health care safe."  Lucien was absolutely on target.  This book represents the best that medicine can be.  It adds to my gratitude for knowing Bob and having the opportunity to learn from him again and again.

First, assume a ladder

A distinguished local health care economist was giving me a hard time about some of my statements about the Massachusetts health care market.  I had talked with him about the importance of removing disparities in the amount paid to the dominant provider group and other topics covered in this blog.  He said, "You're wrong.  I've been looking at this a long time.  Just get the pricing right, and it will get better.  Get rid of fee for service and move to global payments."

This reminded me of the old joke.  An engineer and an economist were walking through the forest when they fell into a deep pit in the ground.  It had vertical sides, and they could not climb out.

"This is hopeless," said the engineer.  "We'll never be able to get out.  No one knows we are here.  We will die before we are found."

"Not so," said the economist.  "There is no problem."

"What do you mean?  How could that be so?" replied the engineer.

"It's simple," said the economist.  "First, assume a ladder."

My economist colleague was doing the same thing.  He was assuming that market conditions exist in the state that will allow a different pricing regime to make a substantial difference in the pattern of health care cost increases.  There is no evidence for this proposition in a state with a dominant provider group and a dominant insurance company. 

Josh Archambault, Director of Healthcare Policy at the Pioneer Institute, has thought things through more clearly.  He says, of the legislation signed by the Governor today: 

Rather than provide financial incentives for individual patients to take charge of their own medical care, this legislation rearranges the system based on accountable care organizations (ACOs) and governmentally-imposed changes in payment methods.  Real-life evidence that these approaches contain costs is mixed at best; as a result, the law misses the mark by a long shot and will not lead to long-term, sustainable containment of health care costs.

The government will impose caps in healthcare cost increases, which will lead to further consolidation in the market--exacerbating one of the causes of the predicament we are in today. The law will also lock in place current inequalities of provider reimbursement levels, as everyone will grow at the same rate, but not everyone is starting from the same place. Then just to add salt to the wound, the government is ensuring that healthcare will cost us all a lot more, by adding hundreds of millions of dollars to the system through new surcharges, fees, and penalties. Make no mistake about it, these costs will be passed onto consumers.

By the time this is evident, the current governor and many current legislators will no longer be around to help dig the state out of its new hole.

The Great Train Robbery, version 2.0

A few years ago, at a meeting of business executives and the leaders of the Executive and Legislative branches of the Massachusetts state government, a representative of MA Blue Cross Blue Shield made a presentation advocating capitated, or global, payments for health care providers in the state.  This was presented as the most effective way of lowering the rate of growth of health care costs in the state.

The people from Partners Healthcare System were quiet during the presentation.  The CEO of Tufts Medical Center pointed out that effective cost control was impossible as long as the disparities in reimbursement rates among provider groups remained in place.  She pointed out, too, that overlaying global rates on a rate system based on market power would just perpetuate the existing problem.

I took a different tack.  I pointed out that instituting global payments would represent a huge shift of actuarial risk from insurance companies, which are structured and compensated for taking risk, to providers (doctors and hospitals), who are not.

I recall one of the top three state officials turning to me in surprise and saying, "Really?"

Well, we can see how much influence the CEO of Tufts Medical Center and I have had on the public policy debate.  As I have noted, the state has gone whole hog in assuring that the competitive price advantage enjoyed by Partners persists into the future.  The recent legislation also provides tremendous encouragement for the spread of capitated rate plans.  The former is a victory for Partners, the latter for BCBS.

Think of it.  The firm, in the face of little or no empirical proof, has persuaded an entire state to adopt a rate-making approach whose main value is to shift risk from it, the dominant insurance company.  Now, risk does not disappear.  Usually in society, we pay people to assume more risk.  Also, people from whom risk is shifted usually expect a lower return.  Here, the risk is shifted, but the insurance company gives up nothing.  Indeed, it is secure in pricing its product because it knows exactly how much money it will pay out in medical claims.  Meanwhile, the percent of premiums it collects to cover administrative costs remains remarkably constant, even as revenue grows.  The capital reserves that it has accumulated over the years to cover actuarial risk remain untouched, even thought the degree of risk assigned to it has fallen.

In contrast, doctors who take on risk contracts must secure that risk with their salaries.  If they are good at case management, i.e., meeting the arbitrary targets set by the insurer (and now the state), they might make a bit of a surplus to share among themselves.  (Recall, though, that how that surplus is shared remains a tough question. Who gets it?  The primary care doctors or the specialists?)  If they are not good at case management, or if something goes awry in the actuarial forecast that is the basis for the contract they have signed, their salaries go down.  There are no cash reserves to help them meet the deficiency, except their personal bank accounts.

Hospitals that take on risk simply face the prospect of higher or lower income, ultimately improving or diminishing their balance sheets and their ability to fund renewal and replacement of important capital assets used in providing care to patients.  As with the doctors, there are no cash reserves dedicated to risk management.  The hospital's endowment or working capital gets depleted as necessary to cover its losses.*

And the state official said, "Really?"

Really.  Even if you believe that capitated contracts are the best thing that could happen in health care, you should not and cannot believe that the transfer of risk inherent in such contracts should go unrecognized.  The state's failure to account for this gift to the insurance company represents an example of incomplete policy-making.

Oh wait, since the state intends to apply this kind of rate-making to Medicaid patients, it is also a beneficiary of the shift in risk.

Combined, the "gift" from providers to the insurer and the Commonwealth is this year's version of the Great Train Robbery.

--
* Hmm, if I am the CPA firm doing the annual financial audit of such a hospital, shouldn't I require it to reduce current income to create a new reserve account for this risk? It may be a year or two or more before the actual surplus or deficit is known.

Cure for the heat: Boston Harbor Islands

Here's some hot weather escape advice for tourists and locals in the Boston area, the Boston Harbor Islands.  There is regular ferry service to and among the islands, starting at Long Wharf on the waterfront.  From there you might want to go to Spectacle Island, where a former landfill and horse rendering plant have been transformed into a lovely park, using the dirt from the new underground central artery highway.  You can easily walk up to the top of one or both recently heightened drumlins and if your eyes are sharp, you might find this reward on the way down:

There is a small but well-maintained and supervised, lifeguard protected swimming area.  The water is nice and cool.  Well, ok, cold.  But clean, thanks to the Boston Harbor cleanup project.

But the kids seems to find other things to do.

Meanwhile, over on George's Island, you can take a ranger-led tour of Fort Warren, built in 1850 and enhanced over the years.  It was used as a prisoner-of-war camp during the American Civil War, for both southern soldiers and northern deserters.  Here is our guide, Jerry, showing the bakery, with ovens large enough to feed hundreds of people their daily ration of bread.

The views from the islands are spectacular.  Here are some folks looking for distant landmarks.

Why there are fewer images being made

David Lee from GE Healthcare and Frank Levy from MIT have published a thoughtful article in Health Affairs entitled "The Sharp Slowdown In Growth Of Medical Imaging: An Early Analysis Suggests Combination Of Policies Was The Cause." The authors noticed that, well before implementation of bundled or global payments, the growth in usage of certain radiological modalities had moderated (see chart above).  They were curious why.

The abstract:

The growth in the use of advanced imaging for Medicare beneficiaries decelerated in 2006 and 2007, ending a decade of growth that had exceeded 6 percent annually. The slowdown raises three questions. Did the slowdown in growth of imaging under Medicare persist and extend to the non-Medicare insured? What factors caused the slowdown? Was the slowdown good or bad for patients? Using claims file data and interviews with health care professionals, we found that the growth of imaging use among both Medicare beneficiaries and the non-Medicare insured slowed to 1–3 percent per year through 2009. One by-product of this deceleration in imaging growth was a weaker market for radiologists, who until recently could demand top salaries. The expansion of prior authorization, increased cost sharing [i.e., with patients], and other policies appear to have contributed to the slowdown. A meaningful fraction of the reduction in use involved imaging studies previously identified as having unproven medical value. What has occurred in the imaging field suggests incentive-based cost control measures can be a useful complement to comparative effectiveness research when a procedure’s ultimate clinical benefit is uncertain. 

The hypothesis:

We hypothesize that prior authorization policies, higher deductibles, and lower reimbursements worked to offset strong nonmedical incentives, such as physicians’ fear of malpractice litigation or a desire to generate revenue to order imaging studies. Furthermore, we speculate that the slowdown may have included a meaningful proportion of procedures with marginal or unproven medical value, as discussed below. If our hypothesis is correct, what has occurred in the imaging field is evidence that reducing nonmedical incentives to perform a procedure is a useful cost-control strategy, where a procedure’s ex ante clinical benefit is uncertain and clinical guidelines are hard to write.

The conclusions:

Logic suggests that the growth in use of advanced imaging would have slowed eventually, but interviews and available evidence point to several policies that slowed the growth in utilization beyond any exhaustion of trend.

These authors identify these as prior authorization, increased cost sharing, reimbursement reductions in the deficit reduction act of 2005, and fear of radiation.