Health Care is Expensive

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Key takeaways:

  • There is a high level of concern about health care becoming simply not affordable to many
  • Near-term government intervention seems unlikely due to polarization
  • More likely are market-based solutions which include:
    • Providers becoming insurance companies
    • Insurance companies acquiring providers
    • Price-shopping
    • Telemedicine
    • Navigation to centers of excellence
    • High-touch primary care
    • Focused specialty care delivery systems for the “sickest of the sick”
  • It is imperative Lee Health responds by:
    • Working with doctors, identify and adopt best pathways of care
    • Not overbuilding because it is costly to have excess capacity
    • Efficiently operating
    • Assuring top quality and service are provided

Affordability is one of the largest challenges facing our country. Before the pandemic, health care cost consistently polled across multiple surveys as the nation’s top or near-top concern.

Struggles are common with today’s health care expenses. With health care costs rising faster than incomes, there is concern that tomorrow’s household budgets will be even more challenged. Health care is costly and for many, simply becoming too expensive.

It is not uncommon to learn about patients not getting prescriptions filled because they don’t have the money to pay for them. You hear about people skipping treatments (even cancer care) or not going to a doctor’s appointment for the same reason. Case in point? The growing move to import medicines from Canada.

Lee County is not spared from this worry about the cost of care. Let’s look at health insurance.

Locally, there are 30 Medicare Advantage plans available from eight different health insurance companies. All but six have a “zero dollar” premium, with the insurance companies relying exclusively on the funding the federal government provides. These “zero dollar” products have higher levels of patient cost sharing through larger deductibles. Very few seniors buy the more expensive, lower deductible plans that actually charge the member a monthly premium.

Similarly, less than 10 percent of approximately 70,000 Lee County residents who use the ObamaCare Florida Health Insurance Marketplace “buy up” to more robust coverage.

Rather, these patients with bigger deductibles hope they don’t get sick. If they do, they may defer care or, if treated, struggle to pay their health care bills alongside their other expenses.

Deferring care or struggle with your bills? Heck of a choice. For many, it is a very scary situation explaining its top concern positioning.

So what is going to happen?

Given the polarization, there is a good chance there won’t be anything meaningful coming out of Washington. Finding a proposal that both parties would support or having the Republicans or Democrats consolidate enough power to pass meaningful health care legislation seems improbable. In today’s environment, it is doubtful there will be much expansion of the role of government in health care.

Rather, in most states including Florida, providers, health insurers and entrepreneurs will test new ways to do more with less, hoping to find a better approach to delivering and paying for care. The population’s deep and broad concern about affordability creates opportunity.

Expect to see the following innovations:

  • Providers becoming insurance companies to unlink provider revenue from volume of services delivered and to encourage delivery of the right service at the right place at the right time. Lee Health’s Best Care, Next Gen ACO and Vivida Health represent an excellent beginning here.
  • Insurance companies acquiring providers to again unlink provider revenue from volume of services delivered and to enable better management of referral services. One example here is United Health, which now employs 50,000 providers nationwide through its purchases of medical groups MedExpress and DaVita.
  • Price shopping to help patients, especially those with high deductibles, learn where to go for less expensive but presumably equally good care. To assist in their search, starting in January, the federal Center for Medicare and Medicaid Services is requiring hospitals to publish pricing for 300 “shoppable” services
  • Telemedicine to increase access by making care more convenient and. competitive, as out-of-area centers of excellence compete with local providers
  • Navigation to centers of excellence to help patients identify the best places to receive care, to both achieve better outcomes of care and to reduce cost by having fewer re-dos and complications.
  • High-touch primary care to provide a higher level of patient service, which in turns helps with engagement and therapeutic compliance. Growing national firms include Oak Street Health, Iora, Agilon, One Medical and Chen Med.
  • Focused specialty delivery systems for the “sickest of the sick” to both provide better medical care at a lower cost and to improve patient experience. Growing national firms include the home visiting medical group, Landmark Health, where I served as founding director and which is now serving over 100,000 patients in 15 states. Another meaningful example is Commonwealth Care Alliance in Boston which specializes in the patient dually covered by Medicare and Medicaid and where I also serve as a director.

There is reason to believe these innovations can make a difference. There are huge variations in the cost and the way care is delivered, as providers are compared with each other. Savings of 30-40% are potentially available.

So what is Lee Health to do?

The above list of innovations will impact Lee Health. Lee Health does not have an option doing nothing.  There is too much concern about affordability for the status quo to be maintained.

In some ways, Lee Health has already begun to make the needed changes. Building on its population health management program but accelerating the pace and working hard to be best in class, Lee Health should focus on four goals:

  • Working with our doctors, identify and adopt the best pathways of care, understanding what treatment delivered where creates the best outcome of care.
  • Using these pathways of care, match hospital and other facility capacity to what is needed to serve the population – but do not overbuild as having excess capacity is costly.
  • Efficiently operate, making special efforts to minimize waste and unnecessary duplication, and to effectively manage the supply chain
  • Assure top quality and service are provided to minimize re-dos and to ensure Lee Health is well positioned against possible future intensified competition

Regarding best pathways of care, typical initial targets of opportunity :

  • What care is being delivered outside of Lee Health that could be returned to the system?
  • What hospital admissions could have been avoided if better outpatient care were provided?
  • What ED visits could have been treated equally effectively at urgent care, using telemedicine or in a doctor’s office?
  • What hospital admissions could have been avoided if more intensive home care were available and direct admission were used?
  • What hospital readmissions could have been avoided with improved discharge planning and better management of post-acute services including rehabilitation and home care?
  • With informed choice, what are the opportunities for improved palliative and hospice care?
  • Is there an opportunity to substitute lower cost but equally effective imaging and lab tests?
  • Are there opportunities to better manage medications including using more generics and therapeutically equivalent but lower cost brand drugs? Is there an opportunity with patients better adhering to prescriptions, that is, taking meds when they’re scheduled, to avoid expensive complications?

Data is needed to better understand unwarranted clinical variations. Assembling and accessing data has sometimes been challenging. Lee Health, as a priority, needs to build meaningful clinical and administrative (claims) data warehouses.  Lee Health employee data is a beginning. Medicare, Medicaid and FloridaBlue are potential additional important sources. There may be some value in working with Lee County and The School District of Lee County to include their data.

With data in hand, physicians, who are at their core scientists, usually engage and then work hard to find and adopt best care pathways. They are governed by patient first values.

The capacity planning and efficient operation initiatives should follow industry best practices.

Lee Health’s quality and service track record is strong as demonstrated with its high CMS and Leapfrog ratings.

Given their growth, Lee Health should make sure there is high quality and service in office-based and telemedicine sites of care.  Also, Lee Health should develop a new source of data which might be helpful in assessing quality and service across all sites of care is patient reported outcomes.

Aligning Economics

Aligning economics makes change management easier.  Adopting new processes and workflows is easier when there are reinforcing financial rewards.

As noted above, the Best Care, Next Gen ACO and Vivida Health initiatives should be continued to align economics. During the startup phase, these programs should be aggressively managed to minimize the inevitably incurred losses.

Lee Health should also continue to refine its relationships with FloridaBlue and other carriers. About 60% of revenue comes from Medicare HMO, Medicaid HMO, Commercial HMO/PPO and other insurance. In these relationships, we should seek to increasingly assume full risk for Lee Health patients to assist in Lee Health margin development.

Lee Health also needs to address incentives as well as how losses will be handled. Once best pathways of care are identified, it is important to identify who is accountable for managing patients.  Further, reinforcing compensation plans should be developed.

Because of its significant impact on revenue, further attention is warranted to assure that the risk of the patient populations is appropriately and accurately assessed. Because revenue is risk adjusted, having this correct is extremely important.

Lee Health should also assess whether to develop a Special Needs Plan to assist in caring for the sickest of the sick population. There are currently 18 offerings focused on patients who are dually eligible for Medicaid and Medicare, chronically ill or disabled, or institutionalized. There are material opportunities here.

There are also many opportunities to participate in demonstration projects sponsored by the federal Center for Medicare and Medicaid Innovation. Involvement would help Lee Health to remain on the leading edge as well as to assist in maintaining center of excellence positioning. A recent example is the CMS Direct Contracting Program.

Finally, given the importance of Population Health Management and Value-Based Purchasing, the Lee Health Board of Directors should consider establishing a standing committee to provide oversight.

There is challenge and opportunity here.

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