Value-based Interoperability: Less is more

Interoperability in health care is all the rage now. After publishing a ten year interoperability plan, which according to the Federal Trade Commission (FTC) is well position to protect us from wanton market competition and heretic innovations, the Office of the National Coordinator for Health Information Technology (ONC) published the obligatory J'accuse report on information blocking, chockfull of vague anecdotal innuendos and not much else. Nowadays, every health care conversation with every expert, every representative, every lobbyist and every stakeholder, is bound to turn to the lamentable lack of interoperability, which is single handedly responsible for killing people, escalating costs of care, physician burnout, poverty, inequality, disparities, and whatever else seems inadequate in our Babylonian health care system. 

When you ask the people genuinely upset at this utter lack of interoperability, what exactly they feel is lacking, the answer is invariably that EHRs should be able to talk to each other, and there is no excuse in this 21st iCentury for such massive failure in communications. The whole thing needs to be rebooted, it seems. After pouring tens of billions of dollars into building the infrastructure for interoperability, we are discovering to our dismay that those pesky EHRs are basically antisocial and are totally incapable or unwilling to engage in interoperability. The suggested solutions range from beating the EHRs into submission to just throwing the whole lackluster lot out and starting fresh to the tune of hundreds of billions of dollars more. When it comes to sacred interoperability, money is not an object. It’s about saving lives.

As the HIMSS15 extravaganza is getting under way, and every EHR vendor flush with cash from the Meaningful Use bonanza is preparing to take its unusable product to the next level, machine interoperability is shaping up to be the belle of the ball. A simple minded person may be tempted to wonder why people who, for decades, manufactured and sold EHRs that don’t talk to each other, are all of a sudden possessed by interoperability fever. The answer is deceptively simple. After exhausting the artificially created market for EHRs, these powerful captains of industry figured out that extracting rents for machine interoperability is the next big thing.

The initial pocket change comes from selling machine interoperability to their current bewildered (or stupefied) clients, and to less fortunate EHR vendors. But the eventual windfall will not come from the health care delivery system or the hapless patients caught in its web. How much do you think access to a national and hopefully global network of just-in-time medical and personal data is worth to, say, a pharmaceutical company giant? How about life insurance, auto insurance, mortgage, agribusiness, cosmetics, homeland security, retail, transportation? Google built an empire by piecing together disjointed bits of personal data flowing through its electronic spider webs. What do you think can be built by combining everything Google knows with everything your doctor knows and everything you know about yourself?

Machine interoperability is not about patient care in the here and now. Interoperability is not about ensuring that all clinicians have the information they need to treat their patients, or that patients have all the information they need to properly care for themselves. Interoperability is about enriching a set of interoperability infrastructure and service providers and about electronic surveillance of both doctors and their patients. Machine interoperability is about control, power and boatloads of hard cash.

For example, if you are hospitalized, it makes sense that your primary care doctor should know that you are (not in the past tense), and when you are discharged, he or she should be appraised of what transpired during your hospital stay. In the old days, before the advent of hospitalists, this could be assumed. Today, thanks to more efficient division of labor, not so much. If the government was genuinely concerned about smooth transitions of care, it would mandate that upon discharge, hospitals must provide all pertinent information to the primary care doctor, and the patient, by any means necessary. If this meant that a piece of paper is stapled to the patient’s robe, and that the hospital employs an army of delivery drones for the purpose, so be it. Eventually, hospitals, which are big businesses, would come up with the most cost effective and efficient way to be compliant with the law.

That’s not how things currently work or how they are envisioned to work. Discharge summaries have a mandated format of structured data elements, complete with metadata, based on government approved standards that change with frightening regularity. Furthermore, to satisfy regulations, the summaries must be generated and transmitted electronically from one “certified” EHR to another, allowing for a host of intermediaries to access and collect said data or at the very least its metadata. Consulting with the PCP by phone for an hour doesn’t count. Sending the information from a non-certified software package doesn’t count. Printing and sending over information by special courier doesn’t even begin to count. Attempting to build a device that streams the information as it happens directly into the PCP medical record will get you excommunicated or burned at the stake.

If you refer a patient to cardiology service, and in a misguided senior moment decide to pick up the phone and talk to the cardiologist at length about this patient, it doesn’t count. If the cardiologist pens a concise and beautiful letter to you after she sees your patient, thanking you for the referral and summarizing her impressions and plan of care in proper English, it doesn’t count. The only thing that counts is a lengthy clinical summary containing all the sanctioned data elements sent from you to the cardiologist, copied in its entirety and returned from the cardiologist to you, hopefully with some indication about what happened during the consult. Having your EHRs talk to each other this way is considered interoperability. Whether you actually read the interoperated information is irrelevant. As long as the contents are captured by the network for other uses, it’s all good.

But wait, there is more. If you practice, say, in St. Louis, Missouri and work for a huge health system or somehow managed to string together a machine interoperable network with the twenty or so specialists you use on a regular basis and the four hospitals where you have admitting privileges, that’s not good enough. Nothing is good enough unless any research lab in Hopewell, New Jersey or Bangalore, India can discover you on the (inter)national interoperability network and request data about a patient you may have treated five years ago, and nothing will be good enough unless any app store developer in Cupertino, California can discover your patient and subsequently obtain her medical data once she downloads a free diet app from iTunes.

Are you “just” a patient eager to be “engaged” in your own care? Picking a doctor who will spend two hours with you listening carefully and explaining things you don’t understand, and who will give you his cellphone number in case you have more questions, doesn’t count. Getting a team of physicians together on a conference call to brainstorm about your mom’s options, doesn’t count. Building a long term relationship with your pediatrician and having her come see your sick kid at home because your car is in the shop and your toddler can’t keep any food down, and now the baby won’t stop crying, doesn’t even register on the interoperability radar. Nothing counts unless you log into a website or an app, accept the cookies, the tracking beacons, the small print, and then click on some buttons to verify that you are a “Never smoker”, or to peruse machine generated visit notes that even your doctors don’t read anymore.

Perhaps machine interoperability on a national scale is a wonderful thing, but so is having arugula in every fridge. There is absolutely no evidence that either one will improve health and/or reduce the price of care. Every dollar spent on national machine interoperability is a dollar that was previously used, or could be used, to provide medical care. Where did we find the moral fortitude to demand that people experience adverse outcomes at least three times before letting them have a slightly more expensive pill, while spending billions of dollars to incentivize the purchase of unproven and often failing technologies? If we are supposed to be parsimonious in our use of health care resources, if we are supposed to choose wisely in all other areas, where is the comparative effectiveness research showing that expensive machine interoperability on a grandiose global scale provides more value than cheaper and simpler localized or human mediated communications?

• Add one doctor visit for every Medicare beneficiary for the next 8 years
• Give primary care a 20% raise for the next 4 years
• Double the number of residencies for the next 3 years
• Educate 60,000 new primary care doctors from scratch
• Buy an iPhone glucose monitor for every diabetic patient and an iPhone BP monitor for every hypertensive patient (no, I'm not a "technophobe")
• Put a brand new playground, a gym teacher and a home economics teacher in every elementary school in the U.S.
• End homelessness in America

These are some of the things we could do with the billions of dollars spent on machine interoperability. Which has more value for our collective health? How did health care become a fully owned subsidiary of the computer industry? Who authorized this unholy acquisition and how much were those brokers paid? Have we forfeited our right to choose, or even know, how endless fortunes are steadily interoperating out of our treasury and into the hands of global technology firms? Publishing fuzzy ten year plans on obscure websites, so the Technorati can tweak them, doesn’t count. Publishing thousands of pages of regulations in the federal register, so interest groups can preview the fruits of their labor, doesn’t count either. Raiding public coffers to please friends and family and to curry political favors is hardly a disruptive innovation, so let’s just call it what it is.

The Primary Care Journey from Tomatoes to Ketchup

According to OECD data, Americans see doctors less frequently than people in any developed nation. We are hospitalized less frequently and we stay in the hospital less time than citizens of other nations. The vast majority of Americans, more than any other nation, describe themselves as healthy, and America has the largest percentage of young people in its population. So why is health care in America so much more expensive than it is in all those other developed countries? In the US, we spend more than twice as much as the nearest nation on administrative activities (over $200 billion per year). We also pay a lot more for each hospital stay, in spite of it being shorter. We pay orders of magnitude more for each imaging test and we are paying a hefty price for medications we probably shouldn’t be taking. All of these things amount to one major difference between America and the (largely socialist) developed nations: our unit pricing for medical services is completely out of whack.

Ignoring simple math, the government of the United States in cahoots with insurance companies, and a host of other global business interests, is hell bent on having Americans use even less medical services than the modest amounts they are currently using. This may be medically questionable, but one could see how overall health care expenditures could be reduced, if and only if, unit prices were held constant. To the certain dismay of every fourth grader learning how to multiply big numbers, the government is simultaneously encouraging unprecedented increases in unit prices.

By promulgating a flurry of complex regulations, the government is eliminating all small and lean medical facilities in favor of large quasi monopolistic entities able and willing to raise unit prices at will. On an individual business level these health care conglomerates are also seeing healthy increases in service volumes, driven by mass destruction of their competitors. Higher unit prices coupled with higher volume is a sure recipe for higher profits, even when discounting for extra costs of compliance with regulations, and decreased utilization on a personal patient level. Health insurers couldn’t care less about the allocation between volume and unit price, as long as total expenditures remain the same, or the increase is covered by taxpayer largesse and/or individual out of pocket responsibilities.

The net result is that when you buy fewer tomatoes, but you buy them all at the one mega store, and pay twice as much for each tomato, you get less tomatoes and the mega store gets more money. Since greed has no boundaries, maybe we can substitute ketchup for your tomatoes? Herein lays the value in value-based utilization of medical services, or tomatoes, because bait and switch is an honorable and time tested business model. There is however a minor problem. What if the cashier refuses to cooperate and walks out? This of course is what thwarted value-based extraction of wealth in the nineties. Somehow, things seem different now. People are becoming increasingly convinced that ketchup is just a more convenient form of tomatoes, while doctors are increasingly willing to peddle Heinz and none more so than primary care physicians.

Direct Primary Care

At one time all care was direct and most care was primary care. You called the doctor, he came to your house, did whatever he did, and before he left you gave him some sort of payment for his services, directly from your hand to his hand. If you had nothing to give, you went without, or relied on the doctor’s charitable nature, if he had one. Later on, you obtained health insurance, and you could send the receipt from your doctor to your insurer, and the insurer would reimburse you for all or part of the money you paid your doctor. Today, you sign a form to reassign your health insurance reimbursement to your doctor and let the two of them duke it out over proper reimbursements. A few decades ago, representatives of all doctors got together and recommended to the government, the largest health insurance payer in the country, that primary care work is essentially worthless. The government and all other insurers agreed.

A few disenchanted primary care doctors decided to bypass this unfair (to them) system and opened little concierge practices, where they charged what they believed their services are worth and where the patients paid directly to the physician owner. Just like an expert cupcake maker does not open a little bakery store to solve world hunger problems, these concierge docs never presumed that what they do is a solution for the national health care fiasco. They are small business owners who want to make a decent living by doing something they love doing, and are presumably very good at.

As is usually the case, some people figured out how to monetize this disenchantment with the system. Today, the direct primary care (DPC) moniker has been hijacked by a more ambitious business proposition. Establishments calling themselves DPC today are usually founded by entrepreneurial primary care physicians with the explicit goal of creating national chains of primary care clinics where practicing doctors are employees or franchise managers, like Starbucks or McDonald’s. DPC chains charge subscription fees hovering around $1,000 per patient per year regardless of utilization. This is significantly more than a primary care physician is paid by the typical mix of insurance plans. In return for the higher unit price, DPC chains promise to provide superior services, better doctors, higher availability, longer visits, and a host of ancillary benefits ranging from Skype visits to personal trainers (Tomatoes).

The DPC chains were never intended to be truly direct pay practices, but they did purport to offer doctors who were too frightened to hang out their own shingle, another way to practice medicine free of micromanaging insurers. That didn’t last long, because most health care money (public and private) is controlled by health plans, and because venture capital is not in the habit of forgoing its obscene and customary returns on investment. Hence, these venture capital funded DPC chains are actively seeking and some already have contracts with the same evil health insurance companies their employed physicians were trying to avoid. The directness of this model, which was tenuous from the get go, is now practically nonexistent.

Since the entire DPC terminology is headed straight down the drain, Todd Hixon, founder and managing partner at New Atlantic Ventures is suggesting a much more accurate definition of this model of primary care: “Population Management Primary Care (PMPC), a new business model based on retainer plus value-based payments to manage a set of customers”. First, “independent payers (health plans, large employers, managed care organizations) will want to work with strong Population Management Primary Care companies to manage their members to good health at affordable cost”. Second, “PMPC providers will need to integrate with retail medicine providers, and also integrate with virtual medicine providers, or become partly virtual themselves”, so they can “equal” the lower pricing of these “other primary care providers” for delivering “low-acuity care more efficiently” (Ketchup).

At this point there is not even a sliver of daylight between the old HMO doctor and the brave new PMPC doctor. No worries though, America, because Mr. Hixon, who is actively investing in PMPC companies, is assuring us that “the comfortable, simple primary care of Marcus Welby, MD is long gone, but if Dr. Welby came back and took a look at what is happening, he might like what he sees”. Or he might just hang himself from the first available chandelier.

Fixing Health Care: Rockefeller Style

Health care in America is a perfect example of the Pareto principle, because 80% of our gargantuan expenditures on health care are due to only 20% of us who are very sick, elderly, disabled and vulnerable in many other ways. If we genuinely wished to reduce health care expenditures, common sense dictates that we would leave the 80% alone and zero in on those 20%, trying to care for them better than we currently do, and hopefully as their health improves, we would see a spectacular bang for our buck, not to mention the moral gratification of having helped our neighbor, because there but for the grace of God go we all. 

I have a better idea. Following the tried and true philosophy of John D. Rockefeller, why not turn the health care disaster into an opportunity to create the magnificent Standard Oil of our times? The 20% of people, who burn through 80% of our $3 trillion of health care money, are known as high-utilizers, frequent-flyers, hot-spotters, train-wrecks, million-dollar-babies, and all sorts of other terms indicative of receiving highly complex medical treatments, many times with minimal odds of getting better. Although, there is practically no way for us to partake in this messy frequent-flyer market, what if we could shrink its size and simultaneously expand the much nicer healthy market?

What if we could blow the Pareto principle to smithereens and reduce medical spending on the sick from 80% to say 50%? That would free almost $1 trillion dollars per year, just waiting to be disruptively innovated into our accounts receivable, by selling something to the 80% that need little to no professional medical care. Keep in mind that the nation is only expecting to slow the growth of health care expenditures, or to “bend the curve”, not to actually reduce the amount of money it spends on health care. The $3 trillion will be there year after year for us to enjoy. We just need to come up with a smarter allocation of resources.

Unfortunately, it looks like other innovative folks are having the same epiphany, so we will have to share the bounty and engage in some serious team work. The two pronged approach consists of prying the money out of the clenched fists of doctors who provide medical services to the 20%, and of using a few non-practicing physicians to legitimize increased reallocation of expenses to the 80%. In other words, we move from a sick care system to a health system, while delegating the care portion to involuntary labor performed by the sick 20% who have the most skin in the game. I think old John D. would be proud.

The first order of business is to obtain support from the government because although we are not a socialist country, the government controls and regulates most of our $3 trillion play money. Check. The second step is to put those high spenders on a budget without seeming heartless or criminal. The best way to do that is to budget indirectly. Instead of going to each sick person and telling them that we will not spend more than say, $100,000 on you this year, we make their doctor an offer she can’t refuse. Here is $100, 000 dollars for this particular frequent-flyer. If it ends up costing more, it comes out of your paycheck. If it ends up costing less, you get a cool sticker.

Doctors went to medical school, not business school, so we may get that deer in the headlights look when we make our offer, which is where our opportunity begins to emerge. We are business people and we know how to budget and allocate resources, so we can share with you methodologies that worked for the banks, for Toyota, for Starbucks, for the Cheesecake Factory and myriad other successful businesses. And we can share technology tools to make you successful, doctor. Of course, this is America, and we need to be successful too, so there is a fee for this cache of wisdom and intelligent software. Not to worry though, we’ll show you how to factor it into your allotted $100,000 and spread it over your entire client population. It’s not like it’s coming out of your pocket, you know.

Team work means that we have to keep hospital systems happy too. Many of them are heavily invested in all sorts of construction projects and machinery. If we cap the spending on the most lucrative 20%, hospitals will fight us tooth and nail, and unlike little doctors, these guys are no deer in our headlights, so we need to think outside the box. To get the best hospitals to join our winning team, we promise to obliterate the competition and funnel all customers to a handful of centers of excellence, while at the same time we allow them to raise unit prices per service. The net result for each team player is that revenues go up slightly, while profits go up significantly, as volume of expensive services drops like a rock. And in return for our innovative counseling and enabling tools, we take a piece of that action as well.

Finally, we take stock of our capabilities to identify stuff we can sell for approximately $1 trillion per year to please the 80% who are basically healthy. We know how to do social media, mobile apps, targeted marketing, data processing, telecommunications and retail. Our go to market plan is crystallizing before our eyes. Social health, mobile health, health surveillance, health data, telehealth, Apple Health, CVS Health, Google Health, basically we just slap health before or after our existing line of products. Not a word about sickness because the 80% want to be healthy, and we are selling health. If we get lucky, even the 20% may be persuaded to see the value of curative hope in a cell phone.

For the sake of completeness our plan should explore the largely historical bumps in the road, such as the Food and Drug Administration (FDA) and its antiquated insistence on regulating medical things. That was fine and dandy for the sick market, but in the innovative health market, everybody is already healthy so efficacy and safety are misplaced notions for wellness vaporware. To solidify our clinical standing, we should come up with some clinically sounding products as well, and impress upon the healthy 80% that every self-respecting billionaire is already using these health enhancing things on a regular basis, whether it’s Tim Cook who can’t live without his new watch, or Mark Cuban who can’t go more than three months without self-inflicted bloodwork (or a little free publicity on Twitter).

This does sound like taking candy from a baby, because it is. Traditional health care did not behave much like a market, but health is a classic consumer market and we are the champs when it comes to selling cheap stuff to consumers, or selling consumers to manufacturers of cheap stuff. The now discretionary $1 trillion is just the beginning, you see. The half trillion or so, previously spent on the healthy 80% is also up for grabs, because we don’t need doctors to sell that stuff. And once we get our foot in the door, we can chip away at the remaining $1.5 trillion wasted on the sick as well. To whet your appetite, here’s a billion dollar idea to leverage community resources: nudge the chronically unemployed to provide free care to the chronically ill, in the comfort of their artificially intelligent homes.