The major goal of this bill continues to be to extend health insurance to all people living in the US. It is accepted without debate that not having health insurance is a severe health risk. The truth is actually much more complicated, but that is another discussion for another day. This bill goes far beyond simply increasing access to health insurance, however. The bill contains an almost endless list of studies, experiments, demonstration projects, and health improvement initiatives geared to making people healthier.

The following list describes some of these initiatives:
• Establishes the Center for Quality Improvement and Patient Safety to identify best practices and healthcare delivery process improvements
• Medical Homes will be funded to provide medication management services for specific patients that includes in-home services
• Funds a program to develop patient decision aids sensitive to cultural issues to help patients make the right healthcare choices for themselves
• Establishes an Office of Women’s Health to focus on how to improve healthcare for women
• Creates a National Prevention, Health Promotion, and Public Health Council to reduce incidence of preventable illness and disability (includes reduction of tobacco use, sedentary behavior, and poor nutrition)
• Funds more School-based clinics
• Provides for funds to study ways to improve oral health care
• Allows Medicare to pay for a physician visit to put together a personalized prevention plan
• Directs Secretary of HHS to determine which preventive services should be covered by Medicare without co-pays or deductibles
• Funds a tobacco cessation program for pregnant women covered by Medicaid
• Directs the Secretary to research incentives that could be implemented to change risky behaviors in the Medicaid population
• Requires manufacturers to make sure that new healthcare technology is accessible by the handicapped
• Provides funding to increase immunizations
• Requires chain restaurants to label their food with nutritional values
• Funds community centers to develop individualized wellness plans
• Requires employers to provide reasonable break times for nursing mothers
• Creates an initiative to combat childhood obesity
And many more…

Sadly, they left out my favorite health improvement idea. Studies have shown that people with pets tend to be happier and live longer. The authors of this bill should have funded a program of buying everyone a government approved pet. The good news is that this idea and any others that are left out can be added later. The bill calls for the establishment of many new Offices, Centers, and Commissions that can add new programs and initiatives as studies indicate their value.

Clearly, there was a heavy dose of academic input into this bill. Academics love to create studies and recommend courses of action that address the problems and implement the solutions identified by their studies. Obviously, the political sponsors of this healthcare bill have bought into the above academic ideas in a big way. The question is why they have done so now? The answer is embedded in the language that accompanies almost all of the health improvement initiatives. The ultimate goal is healthcare cost reduction. These collective initiatives are one of the cost reduction strategies the sponsors hope will not only pay for the cost of this entitlement, which will be much greater than projected, but also cover the ever growing government deficits caused by the Medicare and Medicaid programs. They are gambling big that healthcare costs can be driven down by preventive and wellness care. They are gambling with their political futures and perhaps the solvency of the US government.
Unfortunately, their gamble is going to fail because of the inherent immutable truth of the lead into this piece. Whatever other benefits these initiatives will generate, cost reduction will not be one of them. A simple thought experiment and real life example demonstrate this fact. Think about what would happen to the national cost of healthcare if an inexpensive cure for cancer was found tomorrow. The academic answer would be that healthcare costs would decline significantly. All the costs associated with diagnostic tests, surgery, chemotherapy, radiation therapy, and other related treatments would disappear overnight. The real answer, however, is that healthcare costs would decline in the short term and then begin to increase again until the increase swamped any savings generated by no longer providing cancer services. The reason is that anything that extends life almost certainly causes an increase in healthcare costs over time (as well as increasing the costs of non-healthcare programs like Social Security). Only the mix of healthcare services that are utilized would change assuming overall access to healthcare remains unchanged. Because cancer would no longer end people’s life prematurely, more will have to be spent on the increased incidence of other chronic diseases associated with aging such as congestive heart failure and dementia. Perhaps the best real world example of this conundrum involves cigarette smoking. It is very clear that the significant reduction in the number of people in the US who smoke cigarettes (from 37% in 1970 to 22% in 2003; a 40% reduction in the number of smokers over that time) has had no impact on the rate of inflation in the nation’s healthcare costs. Despite this reality, the federal government still publishes reports on how much cigarette smoking is costing the nation in terms of healthcare expenditures.

Hopefully, there are better strategies being considered than the ones discussed here to “bend the healthcare cost curve”. If not, the light at the end of the tunnel is a train.

I also interviewed the key Executive from IMS Health responsible for their global pharmaceutical market trend report (see Press Release)   IMS Health is the largest pharmaceutical research and market intelligence company in the world and is in the middle of a $5.2 Billion sale to several large investment houses. They have a global footprint and more data about pharmaceutical trends than we have time to elaborate upon.

The NYTimes references a nicely packaged report called the Rx Watchdog Report from the AARP Public Policy Institute. That report represents that the most widely used prescription drugs combined market baskets of drugs (commonly used by the Medicare Part D beneficiaries) had manufacturer prices (wholesale acquisition cost) that were increasing at rates above the Consumer Price Index. AARP reports that the overall market basket growth for pharmaceuticals increased by 5.4% in the 12-months ending September 2009. Specifically AARP reported that widely used Brand Name prescriptions grew by 9.3% and Specialty Prescription drugs increased by 10.3%.  The AARP report also states that Generic Prescription drugs decreased in price by 8.7%.

The NYTimes references reports from IMS Health but fails to parse out the details of their U.S. findings from their October 8, 2009 announcement which reported global market growth of 4-6 percent in 2010.

I mistakenly believed that when you looked at the IMS Health press release about global pharmaceutical trends and aligned it with the AARP Rx Watchdog Report that they were saying the same thing, when in fact they don’t. It might have been coincidence that the reports were released at similar times and have similar numbers in their headlines, but it just doesn’t add up!

For example:

1. The AARP Rx Watchdog Report only looks at Medicare Part D beneficiary market baskets. It is a segment of pharmaceutical utilization, and I guess for political reasons it is a really big deal to those trying to balance the reform budget and influence Medicare Part D drug benefits and administration. It does point out one thing for sure; the combined market basket has increased 5.4% at a time when the Consumer Price Index is falling. But I have to ask, what healthcare segment isn’t growing, and in the current economy it is nice to see any industry that has found a way to expand.

1. I do like the comparison of Brand vs. Specialty vs. Generic comparisons made in this AARP Report, but once again, it is useful for a Medicare Part D market basket only, it doesn’t tell us anything about what else is going on in the industry, even simple things like discounts, rebates, sample costs, improvements in efficacy, formulary make up of generic and brand drugs etc. It is one data point among many worth considering when calculating value.

1. The AARP Rx Watchdog Report measures price, it speaks not one word toward outcomes, efficacy, safety or quality…so the report is void of the major components of true Value. I would think its members might care a bit about that!

The IMS Health news release of October 8, 2009 and my interview with Murray Aitken, SVP of Healthcare Insights, was quite revealing and informative, but on an entirely different plane.  The product that IMS sells to the pharmaceutical industry to develop forecasts and cited in several stories is IMS Market Prognosis. IMS is in the business of trend reporting  on the $800 Billion global pharmaceutical industry. Analysts around the world use IMS data for: predictive modeling, planning, monitoring market surveillance, and to strategize about global drug issues.  Their audience is a business and research community looking at investments in therapies in dozens and dozens of countries around the world. The IMS reporting is what I would describe as B2B reporting.

I did learn a few things from Aitken that are worth reporting;

• The U.S. market represents 40% of the global pharmaceutical market and like most developed markets is growing in the mid-single digit range.
• The U.S. market projection is predicted to grow 3 – 5% in 2010 and 2 – 5% through 2013.
• The increases from the previous IMS Health projections are fundamentally the result of difficult multi-variant models that use history to project the future. Not all history is constant and for example some of the factors that influenced their most recent increases relate to a) inventory patterns that reflected swings in fluctuations from lows in Q4 ’08 to highs in Q1 ’09, b) expected price moderation in Branded products that did not develop, c) continued price contraction in Generics which failed to continue, and d) a better than anticipated year for drug safety with no major drug recalls occurring in 2009. So yes, I learned that price caught them by surprise as well.
• Pharmaceuticals, as a health industry segment account for a declining 10% of overall health care spending.
• 2009 U.S. pharmaceutical growth will likely end up as being one of the four lowest years for growth since 1957, the first year records were collected on this topic.  

In my opinion, the IMS Health report poses a fairly gloomy picture for the U.S. pharmaceutical industry from an investor’s standpoint.

So, two reports, two perspectives and a few insights about the complexities of a massive industry that has yet to figure out how to translate the spend into value. So in the interim, folks will look at Wholesale Acquisition Cost as the proxy for price (discounts and rebates cannot be accounted for) and little will be understood about how a $2.00 or $200.00 pill or bio-agent can; help improve the quality, extend the duration of or save the life of a loved one.

The biggest take away here is that the pharmaceutical industry needs to do what the hospital industry has done and develop a Pharmaceutical Value Index, so transparency can be introduced into the cost/outcome equation so desperately sought by today’s health activated consumer. And when those of us who are activated read the NYTimes, we should be cautious about news reports that combine Medicare Policy Watchdog reports and B2B global market data into a single conclusion that in retrospect may seem a bit politically motivated.

Are prices going up, yes. Do I know why my Accutane example is such an outlier, not yet.

Alas, my next big idea, The Pharmaceutical Value Index! Stay tuned.

John Morrow, The Ratings Guy.

It is generally agreed that the recently passed House Reform Bill will cause healthcare costs to explode. Providing more people with insurance coverage and making certain services free to the patient (e.g. there will be no cost sharing for preventive services) will cause an explosion in demand. As the Massachusetts experiment has shown, the only restraint on the increase in demand will be the shortage of physicians, especially primary care physicians.

This is not to say that none of the provisions in the Bill address healthcare costs. It is worth reviewing some of these provisions.

Reducing Fraud and Abuse:

The Bill increases funding for fraud and abuse investigations. Congress learned in the 1990s after passage of the Kennedy-Kassenbaum Bill that there is potentially a lot of money to be recovered from misbehaving providers committing Medicare fraud. There have definitely been some egregious cases of fraud where providers have engaged in scams to get Medicare reimbursement for fictitious services. For the most part, however, this fraud is small dollar fraud relative to the size of the Medicare budget. The big recoveries have come from cases where the fraud was dubious at best and at worst were attacks on specific industries or companies. The actions against lab companies, home health agencies, dialysis companies, and Columbia/HCA in the 1990s and early 2000s come to mind. The accusations mostly involved different interpretations of various regulations between Medicare and the providers. In most of the cases, the government decided to go after providers for long established practices that were well known. This is not true fraud and speaks more to the complexity of Medicare’s regulations and the government’s incompetence than anything else. If the government goes after major recoveries based on “new” interpretations of what is acceptable practice, no cost reductions are being accomplished. Medicare will recover the funds, but the providers will have to seek other revenues to replace what is lost and cover the fines. As they have for 50 years, they will look to private insurers (if they are still around). This is cost shifting, not cost reduction.

Establishing Clinical Standards:

Perhaps the more interesting cost-control provision of the Bill establishes a Center for Comparative Research inside the Agency for Healthcare Research and Quality. The purpose of this new Center is “to identify the manner in which diseases, disorders, and other health conditions can most effectively and appropriately be prevented, diagnosed, treated and managed clinically” i.e. this Center will be establishing new clinical standards. For opponents of the Bill, this Center is the dreaded “Death Panel”. They fear that the Center and its related Commission inevitably would establish standards that limit care for cost reasons. However, to avoid this criticism, the following language was added to the Bill:

“Nothing in this section shall be construed to permit the Center or Commission to mandate coverage, reimbursement or other policies for public or private payers.”

“Nothing in this section shall be construed to authorize any Federal officer or employee to exercise any supervision or control over the practice of medicine.”

The Bill’s opponents can decide whether these latter two provisions provide enough security from the federal government meddling in people’s healthcare decisions. From my perspective, it is simply a missed opportunity for the government to initiate some meaningful reform. The lack of consistently applied and dynamic clinical standards is perhaps the greatest weaknesses of the healthcare system today. No other industry operates in such a manner. This lack of standards makes it impossible for insurers to adequately describe what they cover (or do not cover) and for patients to understand what they should expect from their providers. This vacuum leaves the door wide open for attorneys to sue providers and insurers for their decisions when their client did not get the desired outcome. Without standards, there is always an “expert” available to say that the care could have been better. The lack of standards also allows many medical device and pharmaceutical companies to market inferior, more expensive, and sometimes even ineffective therapies in partnership with bought off medical researchers.

While undertaking comprehensive healthcare reform, the government has a real opportunity to bring some discipline to the provision of medical services. The physician’s decision to order tests or treatments is always an exercise in probability. The current system that exposes doctors to severe malpractice risks and financially protects patients from the cost of their care leads physicians to order tests and treatments that have a low probability of providing useful information or getting effective results. Clinical standards that are developed after consideration of clinical probabilities and costs of various treatment alternatives could be very helpful to physicians. While physicians have been generally resistant to these efforts, I believe their concerns can be addressed. If the standards are tied into protection from baseless malpractice suits, physicians will be more open to the idea. The process for setting standards would have to be dynamic so that they change as new technology and information become available. They would also have to clearly indicate where physician judgment is necessary. Most importantly, insurance companies should be allowed to make coverage decisions based on these standards. Their decisions could be reviewed by an outside panel where there is disagreement. Because the standards would be based on an evaluation of probabilities, patients should always be allowed to pay for tests and treatments that are not within the standards. Research companies could also pay for “non-covered” services for their purposes.

It is absurd to think that when the government gets to the point that it is paying 60 to 70% (whether this is appropriate is another discussion) of the nation’s healthcare bill that it should not make decisions about the value of what is being purchased. It is the same discretion that any intelligent person exercises when a significant purchase is being considered. Unfortunately, the House Bill is setting up the scenario where the government will eventually pay a large percentage of the nation’s healthcare bill and have to forego a valuable tool to manage its expenditures. It is a missed opportunity.

It’s been recently reported in the NYTimes and by the AARP that drug prices have suddenly increased by as much as 9% on average since the beginning of the year. The increase is such a turnaround in trends that the pharmaceutical industry’s largest market surveillance organization had to re-issue its guidance for the year. This is while more and more drugs are being ADDED to the generic formularies, and retailers are implementing competing programs to WalMart’s $4.00 generic extravaganza. I was pleased to find my local Hannaford Brothers Pharmacy not only with a cheap generic program, but offering a list of oral antibiotics that are now FREE! We know that nothing is free so I dug further.

And, I wasn’t surprised when I randomly took one family member’s prescription to the test to see what I could find in pharmaceutical value.  The news may not be surprising to to the NYTimes, but let me just confirm for all of you value-conscious shoppers, it is becoming a “shell game”…even with the alleged transparency on pricing. Where is the value going?

The sample prescription is Accutane, a popular brand medicine for the treatment of acne. Anyone with a teenager might know this one. It comes in several generics, and is typically expensive they tell me because of the safety and compliance rules surrounding its use. The patient must agree to monthly blood tests, take a monthly on-line pledge screening and show their special membership card to prove they remain in compliance. Only then can the patient get the prescription. I’ll pay for that safety, because it is part of the value of what I get.  But what has changed recently to influence the price of that?

The retail price in the last 4 months has gone from $294.99 to $650.01 for a typical 30-day supply and the generic has gone from $222.78 to $412.21 for the same. That’s a whopping 200% increase!!! Wow!

I asked the pharmacists what was going on and they said that “prices were now changing daily, faster than they had ever seen”. So much so I found  that Web sites that once posted prices, now have the typical insurance company disclaimer that “prices are valid only at the time of dispensing, and subject to change”. One pharmacy chain is having so many people question the prices in their Healthy Saver Plus program that they won’t tell you the price until the drug is dispensed! Are we going backwards with pharmaceutical transparency and value?

I checked my trusty Canadian pharmacy and the Accutane brand was one half the US price and the generic was 40% of the US cost. Same products, same manufacturers delivered to my door via the U.S. Postal Service, now that is value!

I am not the only one who thought it was curious that the Pharmaceutical lobby was so quite on the new pharmaceutical industry tax imposed as part of the legislation moving through the House. I also thought it was interesting that the conditions the pharmaceutical industry would be placed under for price negotiations under health reform were also surprisingly without discord. So, the Secretary in her infinite wisdom is going to get the best price from the pharmaceutical industry? Right!

The pharmaceutical industry is shooting itself in the foot with this kind of behavior. It has recently echoed around Washington that “there are few statesmen when it comes to health reform”, and this is just one more example of how value is falling in healthcare. Shame on the pharmaceutical industry for being so callous, you are anything but statesmen, maybe our only real hope is WalMart.

John Morrow

 HAVING PASSED a health reform bill that is, at least theoretically, paid for, the House of Representatives is poised this week to blow a quarter-trillion-dollar hole in the federal budget involving, you guessed it, health care. This is the so-called doc fix, to prevent scheduled cuts in Medicare reimbursements to physicians from taking effect.

At first glance, this would appear to be a significant and positive change for the future financial stability of hospitals. Under the old bill, the government plan would have had such an enormous advantage over private insurers in terms of what it paid providers in general and hospitals in particular that it was hard to see how the private insurers could survive. Their decline and eventual demise would have eventually reset provider rates across the country to Medicare rates, which do not cover the cost of operating hospitals by today’s standards.  Furthermore, the Health Choices Commissioner (HCC) was given power to restructure the payment methodology for providers that potentially could have caused even more havoc in the industry (the Bill still allows for experimentation with the Medicare payment methodology).

However, after reading the new House Bill that just got passed by the House, it appears there really is not much of a reprieve for providers if this Bill or something like it becomes law. The (HCC) was given even more powers to regulate the private insurance industry than the previous bill. These new powers in essence make all the private insurers de facto government run plans. The single most important new power is to approve annual premium increases. This gives the HCC the same power that the States have over their public utilities. There are several big differences however.  In my state, the Corporation Commission that has control over the public utilities rates is governed by an elected Board. They are not accountable to the State’s governor. The decisions of the Corporation Commission also do not significantly affect the State budget. As expensive as utilities can be, they do not make or break the State budget. By this bill, the HCC will be accountable only to the President and will have a powerful voice in how much the federal government pays for healthcare. The federal budget for this program will be significant and it will be very politically sensitive. 

The future HCC is going to face the inevitable squeeze of being between a rock and a hard place. As premiums continue to increase faster than inflation (as there are no cost reducing measures in this bill), the cost of the government provided affordability credits (subsidies to low income individuals and families to buy insurance) will rise as well. This will increase the pressure of the program on the government budget at a time when deficits are already projected to be high. One way to mitigate this budgetary pressure will be to fix the value of the affordability credits. If this is done however, the share of the premiums that lower income people will have to pay out of their own pocket will become unaffordable. This will be politically unacceptable. The other alternative will be to just tell the insurers that they cannot raise their rates as much as requested. This will be much more politically acceptable and reduce the pressure of the program on the government deficit.

By the time the above occurs, the insurers will also be restricted by the government’s target of maintaining at least an 85% medical loss ratio. As a result, they will not have the resources (or power) to implement tough new utilization standards that could help them reduce costs. They will not have any choice but to deny providers’ rate increase requests, the only cost they will be able to control (the government also dictates the benefit structure of each plan). Providers will not really have any alternative to accepting what the insurers offer because all the insurers will be forced to operate almost exactly alike. Providers could receive a double punch at this time. In recent years, providers have negotiated new rates with insurers to not only cover their increasing costs, but to also make up for the inadequate increases of Medicare and Medicaid. If the federal and state governments are limiting increases to providers through these programs at the same time, providers will feel enormous financial stress.

Eventually insurers and providers may again choose to experiment with capitation contracts (it is likely such a change would require government approval). Powerless insurers will want providers to take more risk for utilization and prices. Providers may prefer to take risk rather than accept pricing limits hoping that they can implement effective utilization and cost controls on their own. It seems that no matter what eventually occurs with healthcare reform, hospitals will have to become very innovative in lowering their costs.

No one disputes that there is variation in care and outcomes in the US and that variation manifests in many, many different ways. Most of us have been staring that variance in the eye for well over two decades. Some of us have even been doing something about it on a national scale.

One way to look at variation is to study Medicare spending per capita and to declare that if spending is high, and not justified by outcomes (controlling for age, gender, and other socio-economic factors) that it is a bad thing, and most might agree. It sounds logical and consistently plays out for the dozen or so years that the Dartmouth Atlas Project has been pushing for reform. Same model, same results no surprise there.

Others, especially those who build systems, collect data for analysis, test hypothesis, build models, teach physicians about variance and get their hands dirty every day with the “change” thing, know that the “stick approach” is nothing other than bad policy. What they also object to is the abject approach that if the spending says so then it is true!

I don’t have to cite examples of government data and research that points to illogical spending, reimbursement or taxation for that matter to make my point any more clear.

The simple point gentlemen is that there is no one single thing that makes McAllen,  East Long Island, Grand Junction or Rochester exceptionally good or bad, except that they are at similar points on some researchers pole that doesn’t adjust for all variables.

The reason that there is a Blog on The Hospital Value Index site is to also bring awareness to the multi-variant points of light that make health care unique from one place setting to another.  The more we refine the analyses, and the better the data and methodology become, the closer we get to root cause. But until then, let’s stay focused on some key factors; utilization, safety, satisfaction, process measures, risk adjustment for case severity, efficiency, outcomes  and price (and maybe a few other things) all matter! AND when building models and drawing conclusions it is more helpful to have complete, current and accurate data! GIGO is what we once called it, “garbage in, garbage out”.

Where the rubber hits the road is not with the researcher’s ego and political affiliation or even source of funding and grants, but with what we all can learn and deploy when we working stiffs go into hospitals and try to re-train the physicians and staff; most of whom weren’t taught anything about economics while they were studying for their Board certification. It may be just that easy…or not!

If you have a better point to make, go build something like RWJ funded at Dartmouth, or invest a couple million dollars and try to create your own engine like we did. I personally appreciate your contributions and look forward to your results.

John R. Morrow

Founder: The Hospital Value Index™, 100 Top Hospitals:Benchmarks for Success®, The Patient Satisfaction Index™

NASHVILLE, Tenn. –Today, Data Advantage, LLC announced the names of hospitals receiving the Best in
Value: Superior Affordability & Efficiency Merit Award™ from the 2009-2010 Hospital Value Index™, the
first and only national study on U.S. hospitals and the value of care they provide. 

The Superior Affordability & Efficiency Merit Award™ showcases hospitals that deliver affordable, high
quality care to their communities with high patient satisfaction. Hospitals in economically diverse
markets, such as New York, Pennsylvania and Alabama, indicate success on all fronts and dominate this
Merit Award list. Interestingly, no hospitals from California made the list. 

“The American Hospital Association recently revealed that profitability at community hospitals is
decreasing,” said Hal Andrews, CEO of Data Advantage. “Even so, hospitals like the Affordability &
Efficiency Merit Award winners are able to prevail in an economic downturn by operating their hospitals
efficiently. In doing so, this group is able to provide their patient communities with affordable
healthcare.” 

“With upcoming health reform legislation and the insolvency of the Medicare trust fund in 2017,
hospitals can expect continuous pressures on reimbursement. It will be increasingly important for
hospitals to deliver high-quality care in an efficient manner,” added Andrews. 

The Hospital Value Index™ is an independent analysis of each hospital’s performance in the categories
of: quality, affordability & efficiency and patient satisfaction. Out of the more than 4,500 hospitals that
were analyzed, 75 received the Superior Affordability & Efficiency Merit Award for achieving high marks
in the affordability & efficiency category. 

In order to receive the award, hospitals were first considered as Best in Value™, or in the top 25 percent
of all hospitals when considering quality and patient satisfaction. The top 10 percent of this group were
then recognized in the affordability & efficiency category in order to receive the Superior Affordability &
Efficiency Merit Award™. 

“The Affordability & Efficiency Merit Award™ hospitals exhibit some remarkable results,” said John R.
Morrow a founder of the Hospital Value Index™ study. “These hospitals improved their scores on
average by 18.58% representing the top ten percent of all hospitals in the study, while those in the
bottom ten percent on average saw a decrease of 23.51% in their affordability and efficiency scores.”
“These improvements reflect both a reduction of costs and a decrease in prices charged for the market
basket of services. This reveals a progressive and enhanced value proposition that these hospitals
deliver to their local communities every day,” Morrow added. 

In alphabetical order, the Superior Affordability and Efficiency Merit Award recipients from the 2009-
2010 Hospital Value Index™ study are: 

• ACMH Hospital – Kittanning, PA
• Alle-Kiski Medical Center – Natrona Heights, PA
• Anson General Hospital – Anson, TX
• Arkansas Methodist Medical Center –Paragould, AR
• Arnot Ogden Medical Center – Elmira, NY
• Bertrand Chaffee Hospital – Springville, NY
• Billings Clinic – Billings, MT
• Bourbon Community Hospital – Paris, KY
• Bristow Medical Center – Bristow, OK
• Brooks Memorial Hospital – Dunkirk, NY
• Butler Memorial Hospital – Butler, PA
• Canton-Potsdam Hospital – Potsdam, NY
• Claxton-Hepburn Medical Center – Ogdensburg, NY
• Clifton Springs Hospital and Clinic – Clifton Springs, NY
• Community Hospital – Tallassee, AL
• Decatur General Hospital – Decatur, AL
• DuBois Regional Medical Center – DuBois, PA
• East Texas Medical Center Crockett – Crockett, TX
• Five Rivers Medical Center – Pocahontas, AR
• Gilmore Memorial Hospital – Amory, MS
• Graham Regional Medical Center – Graham, TX
• Greenbrier Valley Medical Center – Ronceverte, WV
• Hamilton General Hospital – Hamilton, TX
• Helen Keller Memorial Hospital – Sheffield, AL
• Heritage Valley Beaver – Beaver, PA
• Heritage Valley Sewickley – Sewickley, PA
• Highland Hospital – Rochester, NY
• Iberia General Hospital and Medical Center – New Iberia, LA
• Ira Davenport Memorial Hospital – Bath, NY
• Jameson Memorial Hospital – New Castle, PA
• Jamestown Hospital – Jamestown, ND
• Jellico Community Hospital – Jellico, TN
• Jennings American Legion Hospital – Jennings, LA
• Jones Memorial Hospital – Wellsville, NY
• Kenmore Mercy Hospital – Buffalo, NY
• Lakeland Community Hospital – Haleyville, AL
• Lakeside Memorial Hospital – Brockport, NY
• Livingston Regional Hospital – Livingston, TN
• Marion General Hospital – Columbia, MS
• Marshall Medical Center South – Boaz, AL
• McCullough-Hyde Memorial Hospital – Oxford, OH
• Medcenter One – Bismarck. ND
• Mercy Hospital – Buffalo, NY
• Meritcare Health System – Fargo, ND
• Minden Medical Center Inc – Minden, LA
• Monroe County Hospital – Monroeville, AL
• Morehead Memorial Hospital – Eden, NC
• Nason Hospital – Roaring Spring, PA
• Nicholas H. Noyes Memorial Hospital – Dansville, NY
• Northern Hospital of Surry County – Mount Airy, NC
• Northwest Medical Center – Winfield, AL
• Pauls Valley General Hospital – Pauls Valley, OK
• Punxsutawney Area Hospital – Punxsutawney, PA
• Roane Medical Center – Harriman, TN
• Rochester General Hospital – Rochester, NY
• Rolling Plains Memorial Hospital – Sweetwater, TX
• Southeast Alabama Medical Center – Dothan, AL
• St. Alexius Medical Center – Bismarck, ND
• St. Bernard’s Medical Center – Jonesboro, AR
• St. Clair Memorial Hospital – Pittsburgh, PA
• St. Francis Hospital – Charleston, WV
• St. Joseph’s Hospital Yonkers –Yonkers, NY
• St. Mary’s Hospital at Amsterdam – Amsterdam, NY
• St. Mary’s Medical Center of Campbell County – La Follette, TN
• Stonewall Jackson Memorial Hospital – Weston, WV
• Takoma Regional Hospital – Greeneville, TN
• Tawas St Joseph Hospital – Tawas City, MI
• Taylor Regional Hospital – Hawkinsville, GA
• Uniontown Hospital – Uniontown, PA
• Unity Hospital of Rochester – Rochester, NY
• UPMC Bedford – Everett, PA
• Weirton Medical Center – Weirton, WV
• Wheeling Hospital – Wheeling, WV
• Williamson Memorial Hospital – Williamson, WV
• Woman’s Christian Association – Jamestown, NY
 

For more information on the Voices of Value™ and the Best in Value™ hospitals, please visit
www.HospitalValueIndex.com. 

Note: In order for hospitals to publicize results, including the use of this news release, hospitals must
obtain written approval from Data Advantage. To do so, please contact Araby Thornewill at 866-996-
3282.

NASHVILLE, Tenn. ‐ Data Advantage, LLC announced today 75 hospitals receiving a Best in Value™: Superior Quality Merit Award from the 2009‐2010 Hospital Value Index™ the first and only national study on U.S. hospitals and the value of care they provide.

The 2009‐2010 Hospital Value Index™is an independent analysis of each hospital’s performance in the categories of: quality, affordability & efficiency and patient satisfaction. Out of the more than 4,500 hospitals that were analyzed, 75 received the Superior Quality Merit Award for achieving high marks in the quality category.

“This group of hospitals has a proven ability to deliver high quality care, a key element in providing overall value to their communities,” said Hal Andrews, CEO of Data Advantage. “Our study suggests that hospitals that achieve outstanding scores in the area of quality will be rewarded in the new world of Value‐Based Purchasing, so each of these hospitals is off to a good start.”

The quality category is analyzed using data from the Centers for Medicare and Medicaid Services (CMS) Core Measures, AHRQ Patient Safety Indicators, CMS 30‐day mortality scores and CMS reported hospital readmission rates. In order to receive the award, hospitals were first considered as Best in Value™ or in the top 25 percent of all hospitals in the study. The top 10 percent of this group were then ranked in the quality category in order to receive the Superior Quality Merit Award.

“The Hospital Value Index™ study found that all hospitals recognized as Best in Value™ improved their quality scores by an average of 8.14% since March 2009, while those that were not recognized as Best in Value™ saw a drop in quality by 1.1% during the same term,” said John Morrow, a founder of the Hospital Value Index™ study.

“Quality continues to improve in high value hospitals, and these Merit Award recipients are being recognized for their exceptional quality performance,” Morrow added.

In alphabetical order, the Superior Quality Merit Award recipients from the 2009‐2010 Hospital Value Index™study are:

• Advocate Good Samaritan Hospital (Downers Grove, IL)
• Alegent Health Immanuel Medical Center (Omaha, NE)
• Alegent Health Lakeside Hospital (Omaha, NE)
• Alegent Health Mercy Hospital (Council Bluffs, IA)
• Alegent Health Midlands Hospital (Papillion, NE)
• Arnot Ogden Medical Center (Elmira, NY)
• Aurora Baycare Medical Center (Green Bay, WI)
• Ball Memorial Hospital (Muncie, IN)
• Baylor Medical Center at Irving (Irving, TX)
• Berger Hospital (Circleville, OH)
• Berkshire Medical Center (Pittsfield, MA)
• Bon Secours-Memorial Regional Medical (Mechanicsville, VA)
• Carolinas Medical Center‐University (Charlotte, NC)
• Centra Health (Lynchburg, VA)
• Clara Maass Medical Center (Belleville, NJ)
• Cleveland Clinic Florida (Fort Lauderdale, FL)
• Community Medical Center (Toms River, NJ)
• Cullman Regional Medical Center (Cullman, AL)
• Delray Medical Center (Delray Beach, FL)
• Evanston Hospital (Evanston, IL)
• Flowers Hospital (Dothan, AL)
• Forsyth Memorial Hospital (Winston
• Fort Madison Community Hospital (Fort Madison, IA)
• Fremont Area Medical Center (Fremont, NE)
• Gaston Memorial Hospital (Gastonia, NC)
• Good Samaritan Hospital Medical Center (West Islip, NY)
• Goshen General Hospital (Goshen, IN)
• Hackensack University Medical Center (Hackensack, NJ)
• Hackettstown Regional Medical Center (Hackettstown, NJ)
• Harlingen Medical Center (Harlingen, TX)
• Heartland Regional Medical Center (Saint Joseph, MO)
• Holland Community Hospital (Holland, MI)
• Holy Name Hospital (Teaneck, NJ)
• Huntington Beach Hospital (Huntington Beach, CA)
• Integris Mayes County Medical Center (Pryor, OK)
• Jackson Purchase Medical Center (Mayfield, KY)
• Kettering Medical Center (Dayton, OH)
• Kettering Medical Center‐Sycamore (Miamisburg, OH)
• Kingwood Medical Center (Kingwood, TX)
• La Palma Intercommunity Hospital (La Palma, CA)
• Main Line Hospital Bryn Mawr Campus (Bryn Mawr, PA)
• Mariners Hospital (Tavernier, FL)
• Meadowview Regional Medical Center (Maysville, KY)
• Memorial Hospital Pembroke (Hollywood, FL)
• Memorial Regional Hospital (Hollywood, FL)
• Mercy Medical Center‐Dubuque (Dubuque, IA)
• Mercy San Juan Medical Center (Carmichael, CA)
• Minden Medical Center (Minden, LA)
• Moberly Regional Medical Center (Moberly, MO)
• Munson Medical Center (Traverse City, MI)
• Newport Hospital (Newport, RI)
• North Ottawa Community Hospital (Grand Haven, MI)
• Oklahoma Heart Hospital (Oklahoma City, OK)
• Owatonna Hospital (Owatonna, MN)
• Parkway Medical Center (Decatur, AL)
• Peninsula Medical Center (Burlingame, CA)
• Presbyterian Hospital (Charlotte, NC)
• Presbyterian Hospital Huntersville (Huntersville, NC)
• Reid Hospital and Health Care Services (Richmond, IN)
• Saint Joseph Hospital London (London, KY)
• Saint Joseph Mercy Saline Hospital (Saline, MI)
• St. Charles Hospital (Port Jefferson, NY)
• St. Luke’s Regional Medical Center (Sioux City, IA)
• St. Mary’s Health Center (Jefferson City, MO)
• Summa Health System Barberton Hospital (Barberton, OH)
• Sutter Roseville Medical Center (Roseville, CA)
• Tawas St. Joseph Hospital (Tawas City, MI)
• Texas Health Harris Methodist Hospital Cleburne (Cleburne, TX)
• United Hospital Center (Clarksburg , WV)
• Vassar Brothers Medical Center (Poughkeepsie, NY)
• Venice Regional Medical Center (Venice, FL)
• Walker Baptist Medical Center (Jasper, AL)
• Walla Walla General Hospital (Walla Walla, WA)
• West Anaheim Medical Center (Anaheim, CA)
• Williamsport Hospital and Medical Center (Williamsport, PA)

For more information on the Voices of Value™and the Best in Value™hospitals, please visit www.HospitalValueIndex.com.

About Data Advantage, LLC

Data Advantage, LLC is a privately held healthcare information company that specializes in providing hospitals and other healthcare ‐related businesses with independent and objective business intelligence. The company has aggregated and compiled a warehouse of the most insightful information about healthcare utilization and maintains comprehensive benchmarks about the financial, operational and clinical performance of the U.S. hospital industry. For more information, visit www.data‐advantage.com or call 866‐996‐3282.

The powers of the new Healthcare Commissioner are enormous. So far, significant changes to the Medicare reimbursement system for providers have required Congressional action. If the House Bill is passed, the President will have enormous power to change how providers are reimbursed without asking Congress. The Commissioner can implement patient-centered medical homes and other care organizations, value based purchasing, bundling of services, differential payment rates, performance or utilization based payments, partial capitation, and direct contracting with providers. This power is subject to enormous abuse, which would seem almost inevitable.

The government is experiencing serious annual deficits, has a large accumulated deficit, and is facing huge deficits in the years to come. If the House Bill passes with its robust public option, the federal government could control the reimbursement rates for up to 80% of all provider claims within 10 years. One projection shows that the total cost for hospital services in 2020 could reach 1.5 trillion dollars. The government could be responsible for paying 1.2 trillion of that amount. How tempting it will be to cut hospital reimbursement and the reimbursement of other providers to decrease the government’s deficit.

However, it is not just a matter of how much of a cut hospitals may have to bear but also by what methodology they will get paid. Some of the code words above such as value-based purchasing and bundling of services should be alarming to providers. It means the government can decide winners and losers. It would appear that the government could do this on a local basis, regional basis, or even national basis.

On the local or regional level, the government could request bids from providers to provide certain services. Obviously, the first objective would be to lower the prices for those services. Hopefully, the government would also consider quality in its selection. But that would beg the question of how to measure quality. Ultimately, you can bet that politics would come into play to determine the winners and losers. Unions would try to use their clout to ensure that unionized facilities get selected. Community groups would lobby for the hospitals located in or close to their communities. Big donors to the political party in power would expect their recommendations to be considered and so on. Will hospital and doctors groups have to take on significant lobbying costs just to stay in business?

The government could also determine winners and losers on a national scale. In the 80s, hospitals and freestanding companies opened up new SNFs, psychiatric facilities, rehab facilities, and LTACs. The terrific expansion of these sub-acute units and facilities was largely a response to Medicare’s implementation of the DRG system of reimbursement for acute care services. The DRG system incented hospital discharge planners to move patients out of acute status as soon as possible and into sub-acute status where more reimbursement could be received. Initially, there was no real clinical purpose served by moving patients to these units. Many companies and hospitals invested significant capital in providing sub-acute services as volumes grew. This investment added value to their services and they are now an accepted part of the care continuum. Many hospitals converted some of their excess acute care capacity caused by the shorter length of stays to other uses. If the government decides to bundle these services into one reimbursement per patient episode, the incentive that generated growth in the sub-acute services will be turned on its head. Hospital and doctor consortiums will be the likely recipients of the bundled payments. They will want to keep as much of the funds as possible and pay outside vendors as little as possible. As a result, the average length of stays in hospitals will begin to increase and the admissions to sub-acute facilities will decrease. New capital may be needed to expand hospitals bed capacity while many sub-acute facilities are underutilized. This will be an enormous waste of resources at a time when hospitals will not have the capital resources available to them.

The House Bill encourages the Health Care Commissioner to experiment with different reimbursement models. There are an infinite number of ways to reimburse providers. Hopefully, the government will realize there are enormous consequences to changing the payment model as witnessed by the growth in sub-acute care services after the major change in the 80s. All businesses need some stability in their pricing model and volume projections to do appropriate long term planning.  

                The Unintended Consequences of Healthcare Reform – #1
                The Unintended Consequences of Healthcare Reform – #2
                The Unintended Consequences of Healthcare Reform – #3 Part 1
                The Unintended Consequences of Healthcare Reform – #3 Part 2
                The Unintended Consequences of Healthcare Reform – #4

Today’s coverage of the House health reform bill makes me think that some members of Congress should take a refresher course in basic math, such as how to add. Today’s Roll Call reports on the real cost of the House bill:

“The House Democrats’ health care plan would cover 36 million more Americans at a cost of $1.055 trillion over the next decade, while slashing the federal deficit overall by $104 billion, according to a preliminary Congressional Budget Office score released late Thursday.

The cost of the bill was a concern to fiscally conservative Blue Dog Democrats, who sent a letter to the CBO asking additional questions about their estimates and what additional measures could be taken to reduce the overall spending on health care.

Speaker Nancy Pelosi (D-Calif.) had touted the bill as costing $894 billion when she released it online earlier in the day, but that number nets out $167 billion in new pay-or-play taxes on individuals and businesses. Pelosi’s office had also said the bill would cut the deficit by $30 billion, but the CBO score came in much better.

The $1.055 trillion cost is offset by $740 billion in new taxes and revenue and a net $426 billion in cuts in spending, largely in Medicare.

The CBO also estimated that the deficit would continue to shrink slightly in the second decade after the bill is adopted, a key issue for many moderate Democrats, although it said that any estimates that far out have considerable uncertainty.

That $1.055 trillion figure only includes the coverage portions of the bill, down from about $1.2 trillion in the original bill.

Other pieces, including the cost of closing the “donut hole” in the bill for seniors under Medicare, come on top of those figures.

The bill also excludes an estimated $245 billion in costs for preventing a 21 percent cut to doctor’s pay under Medicare. Democrats dropped that provision from the bill and plan to move it separately so that they can say the larger bill does not add to the deficit.”

So, $1.055T – $740B – $426B + $245B + ? = $894B. Got it?

Remember, friends, this is courtesy of the same people who are sure that Medicare fraud is $60B per year that Federal agencies cannot seem to stop. What is your prediction when the Federal government adds another $1,000,000,000,000 into the pot?

Three Alegent Health hospitals are on a top 100 list of hospitals providing a good value to patients.

The list is based on an analysis of the value of care at hospitals nationally. The list is from Data Advantage, a health care information company in Nashville.

The analysis considers such factors as the prices that hospitals charge, patient safety and patient satisfaction.

Alegent hospitals in the top 100 were: Immanuel Medical Center in Omaha, Midlands Hospital in Papillion and Mercy Hospital in Council Bluffs.

Other Nebraska and Iowa hospitals in the top 100 included Nebraska Heart Hospital in Lincoln and St. Luke’s Regional Medical Center in Sioux City, Iowa. — Michael O’Connor

I don’t have a dog in the fight from an economic standpoint, unless Washington, D.C. decides to give everyone a full indemnity policy like the New Hampshire state union employees. As a result, I have had a freedom to think and speak in a way that few of my colleagues can.

It took me a while to realize that I would be so alone in this regard. I have been very fortunate to participate for the past five years in two different groups of nationally recognized healthcare executives with very diverse experiences. Several of them are very publicly prominent in the debate, and others are quietly influential. I have hoped that these groups might coalesce, create a blueprint for reform, and lead the way forward. While I am disappointed that has not happened, I am really surprised at how resolutely the group members have retreated to their economic realities or their philosophical ideals. In short, there has been no sustained dialogue with the goal of determining how hospitals, physicians, insurance companies, device manufacturers, pharmaceutical companies and others can create a reformed system. At the same time, I have observed all of us bemoan that “healthcare reform” is really “insurance coverage reform”, and not so impressive at that.

The result is that We, the People, have turned it over to Washington, D.C. In the coming weeks, 535 people who know a lot about politics, a little about the art of compromise, and almost nothing about how approximately 20% of the economy works will decide our future. The 20% of us employed in healthcare have failed to reform ourselves through real and shared sacrifice. The 80% is angry enough not to care that they don’t know the difference between a scalpel and a saw.

In the words of Dandy Don Meredith, some people in healthcare will need to “turn out the lights, the party’s over”. The tricky part is that we won’t know until the very end who that is.

On Wednesday, The Wall Street Journal ran an opinion piece called “Paying the Health Tax in Massachusetts” by an author named Wendy Williams. In it, Ms. Williams lamented that the Commonwealth of Massachusetts changed the definition of acceptable coverage. Her family’s policy no longer meets the requirement, so she must either (a) buy a more expensive policy, which she does not think she needs, or (b) enroll in the government option.

What caught my eye was the following:

“Mr. Romney and Sen. Ted Kennedy publicly promised that the middle class – that is, people like us – would not be taxed and that our health-care costs would actually decrease if the plan became law.

My husband and I weren’t convinced. It all seemed inane, but we are neither politically or socially conservative and figured the plan wouldn’t affect us much. Besides, who could be against a plan that covers more people for less money?”

Here in the South, we might respond to that statement by saying, “I’m not sure I would have told that”, but I am afraid the subject is too serious to be that dismissive.

Ms. Williams, in four sentences, has summarized the debate.

First, in order to get elected, politicians have to tell people (us) what we want to hear. Politicians rarely make the call for sacrifice, and today’s America is not interested in that much anyway. Elections for 473 of the 535 positions will be held in 2010. For each of those 473, the calculus over the next 60 days is about how a vote on healthcare reform will play at home between now and November 4, 2010 (Note: “what will get me reelected” is sometimes phrased as “what my constituents want” but rarely as “what does my country need” or “what does courage require”).

Second, We, the People, know better. What is wrong with us? We aren’t that stupid, and we don’t even like Congress. On the other hand, we do seem to like something for nothing. The members of the Greatest Generation have given way to individuals who are more interested in their personal good than the common good. Most of us just listen for what we want to believe and ignore the rest; some of us listen to talk radio and shout at the rest. The Greatest Generation gave way to the Baby Boomers, who seem to be the majority of those in power. The generation of Timothy Leary and “Turn on, tune in, drop out” seems to have taken the “drop out” part to heart, except that Leary’s hope for self-reliance has morphed into singular self-interest.

*********

It is time for We, the People, to wake up:

• As we proved spectacularly in Tennessee, you cannot cover more people for less money. No one in Washington, D.C. should know that better than Nancy-Ann Deparle.
• The results of the Massachusetts experiment are that costs have increased, while quality and access have decreased. These results should be terrifying since Massachusetts had one of the lowest uninsured rates in the nation at the start of the Massachusetts Connector program. Up next, “global payments”, aka capitation – good luck with that at Partners.
• In The Washington Post, Alec MacGillis reports that maybe the Mayo Clinic is not a model for reform since they restrict access to Medicare and Medicaid patients. As we continue to report, the Mayo Clinic does not deliver high healthcare value.
• The Senate Finance Bill pretends that physicians will take a 25% cut in pay in 2011 to achieve the $900B cost; it appears that AMA has convinced Senator Reid otherwise.

Sir Winston Churchill famously stated that:
“Democracy is the worst form of government, except for all those other forms that have been tried from time to time.” He also said, “The best argument against democracy is a five-minute conversation with the average voter.” Let’s hope that we do not allow Washington, D.C. to test the former, and let’s see if America can prove Sir Winston wrong on the latter.

(that are never properly considered)

Two healthcare reform proposals have dominated the debate to date; the public option and how to finance the additional cost for universal coverage. However, there are some other significant changes in the House Bill that the general public would find hard to understand that would nevertheless dramatically change the healthcare system if passed.

The new Health Commissioner that will oversee the Health Choices Administration will have enormous powers over the new healthcare exchange and private QHBPs (qualified health benefit plans). The healthcare exchange will act much as the Massachusetts Connector and provide a marketplace for individuals and small employers to purchase insurance. In essence, it will allow individuals and small employers to increase their purchasing power by forcing insurers to put them into large risk pools.

Some of the requirements in the House Bill for QHBPs are as follows:

• May not consider pre-existing conditions
• Guaranteed issue and renewability
• Premium rate variability:
  • Age – limited to 2-1 ratio from most expensive age group to least expensive
  • By area
  • By family make-up; ratio to individual premium must be consistent
• Parity in mental health and substance abuse benefits to medical benefits
• Must meet minimal medical loss ratio established by Commissioner; if does not meet it must make a refund to subscribers
• No annual or lifetime limitations
• No deductibles or co-pays for preventive services
• Limit to annual out-of-pocket expenses; $5,000  per individual, $10,000 per family
• Basic plan benefits must cover 70% of the expected cost of healthcare for the population; enhanced plan must cover 85% and premium plan must cover 95%

Some of the powers of the Health Commissioner are as follows:

• Commissioner has right to determine adequacy of network and force an insurer to pay in-network rates where their contracted network is deemed inadequate
• Commissioner can adjust premiums revenues among plans to adjust for adverse selection
• Under the public option, the provider payment mechanisms and policies may be changed from the Medicare methodology to include patient-centered medical home and other care organizations, value based purchasing, bundling of services, differential payment rates, performance or utilization based payments, partial capitation, and direct contracting with providers.

                The Unintended Consequences of Healthcare Reform – #1
                The Unintended Consequences of Healthcare Reform – #2
                The Unintended Consequences of Healthcare Reform – #3 Part 1
                The Unintended Consequences of Healthcare Reform – #3 Part 2
                The Unintended Consequences of Healthcare Reform – #4

100 Top Best in Value(TM) Hospitals

Hospitals in New York, Michigan, Pennsylvania, Alabama and North Carolina cited the most

(NASHVILLE, Tenn.) ‐ Data Advantage, LLC announced today the Top 100 Hospital: Best in Value Hospitals™ list from the 2009‐2010 Hospital Value Index™, the first and only national study on U.S. hospitals and the value of care they provide.

The hospitals in the Top 100 list represent nearly every state in the U.S. The states with the most hospitals achieving Top 100 Best in Value™ recognition were: New York, Michigan, Pennsylvania, Alabama and North Carolina.

“These are the hospitals that set the bar for the nation when it comes to value. If every hospital performed at the level of the Top 100, we found that more than $60 billion per year could be saved,” said Hal Andrews, CEO of Data Advantage.

“The Hospital Value Index™ winners are a geographically diverse group of hospitals that have a proven ability to deliver high value care to their communities and represent a model of care that other U.S. hospitals should look to,” added Andrews. “As legislators consider health reform, we believe that it will be increasingly important to recognize and reward those hospitals that deliver outstanding value.”

These results are part of the findings from the 2009‐2010 Hospital Value Index™ study, an analysis of the value of care provided at more than 4,500 U.S. hospitals. As part of the release, Data Advantage is inviting hospitals and healthcare leaders to participate in the Voices of Value™ Summit, which will take place in Chicago December 7‐9. Industry leaders will convene at the Westin Chicago River North and discuss topics such as value, affordability, efficiency and patient satisfaction.

• Alegent Health Immanuel Medical Center (Omaha, NE)
• Alegent Health Mercy Hospital (Council Bluffs, IA)
• Alegent Health Midlands Hospital (Papillion, NE)
• Alleghany Regional Hospital (Low Moor, VA)
• Arnot Ogden Medical Center (Elmira, NY)
• Berkshire Medical Center (Pittsfield, MA)
• Bertrand Chaffee Hospital (Springville, NY)
• Billings Clinic (Billings, MT)
• Bon Secours ‐Memorial Regional Medical (Mechanicsville, VA)
• Butler Memorial Hospital (Butler, PA)
• Carolinas Med Center‐Mercy (Charlotte, NC)
• Carolinas Med Center‐University (Charlotte, NC)
• Carolinas Medical Center‐Northeast (Concord, NC)
• Centra Health (Lynchburg, VA)
• Chelsea Community Hospital (Chelsea, MI)
• Citizens Medical Center (Victoria, TX)
• Clinch Valley Medical Center (Richlands, VA)
• Cobleskill Regional Hospital (Cobleskill, NY)
• Community Medical Center (Toms River, NJ)
• Connally Memorial Medical Center (Floresville, TX)
• Cullman Regional Medical Center (Cullman, AL)
• Dixie Regional Medical Center (Saint George, UT)
• Dubois Regional Medical Center (Du Bois, PA)
• Flowers Hospital (Dothan, AL)
• Forsyth Memorial Hospital (Winston Salem, NC)
• Fort Madison Community Hospital (Fort Madison, IA)
• Gaston Memorial Hospital (Gastonia, NC)
• Graham Regional Medical Center (Graham, TX)
• Greenbrier Valley Medical Center (Ronceverte, WV)
• Hamilton General Hospital (Hamilton, TX)
• Heart Hospital of Lafayette (Lafayette, LA)
• Heartland Regional Medical Center (Saint Joseph, MO)
• Henry Ford Macomb Hospital (Clinton Township, MI)
• Heritage Valley Sewickley (Sewickley, PA)
• Holland Community Hospital (Holland, MI)
• Integris Mayes County Medical Center (Pryor, OK)
• Jackson Purchase Medical Center (Mayfield, KY)
• Jefferson Regional Medical Center (Crystal City, MO)
• Kettering Medical Center (Dayton, OH)
• Kettering Medical Center –Sycamore (Miamisburg, OH)
• Lakeside Memorial Hospital (Brockport, NY)
• Lakeview Med Center (Rice Lake, WI)
• McCullough‐Hyde Memorial Hospital (Oxford, OH)
• Meadowview Regional Medical Center (Maysville, KY)
• Medical Center Enterprise (Enterprise, AL)
• Memorial Regional Hospital (Hollywood, FL)
• Mercy Health Partners Hackley Campus (Muskegon, MI)
• Mercy Health Partners‐ Mercy Campus (Muskegon, MI)
• Mercy Medical Center (Des Moines, IA)
• Mercy Medical Center‐Dubuque (Dubuque, IA)
• Methodist Medical Center of Illinois (Peoria, IL)
• Methodist Medical Center of Oak Ridge (Oak Ridge, TN)
• Minden Medical Center (Minden, LA)
• Monroe County Hospital (Monroeville, AL)
• Montgomery Regional Hospital (Blacksburg, VA)
• Mount St. Mary’s Hospital and Health Center (Lewiston, NY)
• Nebraska Heart Hospital (Lincoln, NE)
• Northwest Medical Center (Winfield, AL)
• Oklahoma Heart Hospital (Oklahoma City, OK)
• Owatonna Hospital (Owatonna, MN)
• Paradise Valley Hospital (National City, CA)
• Parkway Medical Center (Decatur, AL)
• Presbyterian Hospital Huntersville (Huntersville, NC)
• Redmond Regional Medical Center (Rome, GA)
• Reid Hospital & Health Care Services (Richmond, IN)
• Rochester General Hospital (Rochester, NY)
• Saint Joseph Hospital (London, KY)
• Saint Joseph Mercy Saline Hospital (Saline, MI)
• Saint Vincent Health Center (Erie, PA)
• Saint Vincent Hospital (Worcester, MA)
• Sarah Bush Lincoln Health Center (Mattoon, IL)
• Spectrum Health United Memorial ‐United Campus (Greenville, MI)
• St. Alexius Medical Center (Bismarck, ND)
• St. Anthony Hospital (Oklahoma City, OK)
• St. Anthony Regional Hospital (Carroll, IA)
• St. Charles Hospital (Port Jefferson, NY)
• St. Francis Health Center (Topeka, KS)
• St. Joseph Health Center (Warren, OH)
• St Josephs Hospital (Chippewa Falls, WI)
• St. Josephs Mercy Health Center (Hot Springs, AR)
• St. Luke’s Regional Medical Center (Sioux City, IA)
• St. Mary’s Health Center (Jefferson City, MO)
• St. Mary’s Hospital at Amsterdam (Amsterdam, NY)
• St. Vincent Healthcare (Billings, MT)
• Tawas St. Joseph Hospital (Tawas City, MI)
• Thomasville Medical Center (Thomasville, NC)
• Trinity Hospitals (Minot, ND)
• United Hospital Center (Clarksburg, WV)
• Unity Hospital of Rochester (Rochester, NY)
• UPMC McKeesport (McKeesport, PA)
• UPMC Northwest (Seneca, PA)
• UPMC Passavant (Pittsburgh, PA)
• Venice Regional Medical Center (Venice, FL)
• Walker Baptist Medical Center (Jasper, AL)
• Wesley Medical Center (Hattiesburg, MS)
• West Anaheim Medical Center (Anaheim, CA)
• Western Baptist Hospital (Paducah, KY)
• Wheeling Hospital (Wheeling, WV)
• White River Medical Center (Batesville, AR)
• Williamsport Hospital Medical Center (Williamsport, PA)

PITTSFIELD — Berkshire Medical Center has been ranked first in both the state and New England in a nationwide study conducted by a Tennessee firm that measures health-care value.

Nationally, BMC was ranked 86th out of the 4,500 hospitals that were considered for the 2009-2010 Hospital Value Index by Data Advantage LLC of Nashville, a privately held health-care information company that has specialized in providing the healthcare and business communities with independent and objective information about the country’s hospital industry since 1992.

Only acute-care general service hospitals that participate in the Medicare reimbursement program were considered for the Hospital Value Index, said Data Advantage’s senior adviser John Morrow. Specialty hospitals, veterans hospitals, and private health organizations that don’t participate in federal programs were excluded, he said.

The rankings are based on each hospital’s quality, affordability, efficiency and patient satisfaction performance under the Hospital Consumer Assessment of Healthcare Providers and Systems (HCAHPS) regulations. BMC received high marks in all four of those areas. The index is designed to use only objective, verifiable, and quantitative data that are consistent and complete across the country to ensure objective measurement rather than anecdotal evidence, according to Data Advantage.

Berkshire Health Systems Chief Operating Officer Diane Kelly said BMC’s ranking is the culmination of a “10-year journey” that began when BMC’s board of directors and president and CEO David Phelps made a commitment to quality that began when Gray Ellrodt was hired as chair of medicine a decade ago.

“What’s different and exciting about this award is that it has a strong component in quality of care, which is really the mission and purpose of everything that we do here at BMC,” Kelly said. “I’m happy to see that we have valuation from external organizations such as the index not just in top performance in quality, but having done so in a cost-effective manner, which is critical for any health-care system.”

“These national achievements for Berkshire Medical Center are a testament to the dedication of our medical staff, employees, trustees, and leadership team, and reinforce our commitment to providing the highest level of quality care for our patients,” Phelps said in a written statement.

This is the third time that Data Advantage has compiled the Hospital Value Index, but only the second time it has released the rankings publicly, Morrow said. The company’s previous rankings were focused on hospitals that are located in the country’s 100 largest metropolitan statistical areas.

“I don’t know off the top of my head if we ranked BMC previously,” Morrow said. “In the previous rendition, we didn’t rank and report on the findings, but in this rendition we did because we had expanded the analysis to include many, many more markets.”

Before the advent of the Hospital Index, no public measurement existed to integrate efficiency, affordability and quality, Ellrodt said.

“In my mind what’s exciting about this award and the Data Advantage approach is to be able to look at quality and at what cost,” Ellrodt said. “This is a big discussion in Congress right now, value.”

To reach Tony Dobrowolski:
TDobrowolski@berkshireeagle.com
or (413) 496-6224

In the September 27 edition of The New York Times, Sheryl Gay Stolberg reports on the White House’s intensive lobbying efforts to find a Republican Senator to support its vision for health reform. One example cited is a dinner of “lamb loin and Scottish salmon” between Mr. Orszag and Senator Susan Collins, during which Mr. Orszag reportedly e-mailed questions to Dr. Dennis Cortese at the Mayo Clinic.

As articulated here before, the Mayo Clinic has much to recommend it, but low cost, high value healthcare is not among them. Having walked the corridors of hospitals in more than 30 states, I am certain that the medical foundation model is not something that can be replicated successfully throughout America. If, however, Mr.Orszag is bound and determined to use the medical foundation model as the blueprint for national reform, we would again suggest using the GPS to find his way. Using the GPS will point him to the Billings Clinic, which the Hospital Value Index™ reveals produces the highest value of any of the medical foundation or clinic model in the U.S.

Better yet, we would suggest that Mr. Orszag join us at the Voices of Value™ Summit to learn what the 747 Best in Value hospitals have in common that allows them to produce high value care in urban and rural America, in teaching and non-teaching settings, whether for-profit or not-for-profit.

• As widely reported, the Senate Finance Committee rejected two amendments to Senator Baucus’s America’s Healthy Future Act of 2009 to establish a “public option”. The New York Times reported that Mr. Baucus voted against the amendments even though he thinks the public option is a good idea. Senator Baucus, perhaps taking the mantle of Senator Kennedy’s legacy, said, “My job is to put together a bill that will become law. In the Senate that means my job is to put together a bill that gets 60 votes.” It is a pity that more members of Congress fail to remember that is the reason we elected them.

• In today’s edition of The New York Times, David Leonhardt’s column “’Cadillac Tax’ Offers Opportunity” (at least that is what the title was in the print edition) calls out special interests for subjugating the national interest to their personal interest. As stated previously, I am convinced that shared sacrifice on the part of all Americans is an essential component of comprehensive reform of the healthcare (insurance, delivery, and wellness) system. In particular, Mr. Leonhardt points out that the unions, whose members would likely be disproportionately affected by the “Cadillac Tax”, are vigorously fighting the concept. Calling out the A.F.L.-C.I.O. is serious business at the Old Grey Lady, so credit Mr. Leonhardt with speaking the truth. Mr. Leonhardt points out correctly that limiting the growth in the cost of healthcare is a key goal of reform – I say “correctly” because some folks in Washington have forgotten that is the real issue. Mr. Leonhardt also cites research from RAND Corporation and others that conclude that there is not a difference in health status between those with “Cadillac” plans and “Chevy Malibu” plans. Mr. Leonhardt also quotes Jonathan Gruber, a health economist at M.I.T., as saying, “Taking someone who’s uninsured and giving them insurance unambiguously improves their health”. I am not sure the evidence supports that, which I will discuss in more detail soon.

• Today’s USA Today headline is “Millions in waste clogging Medicaid” (their capitalization, not mine). I am neither the first nor almost certainly the last to suggest that, if the White House really believes that health reform can be funded by eliminating fraud, abuse and waste, then time’s-a-wasting. Why do we need new legislation if we can address our cost issue with rooting out fraud, abuse and waste? Isn’t that the role the Office of the Inspector General? If the government is certain of the fraud, abuse, and waste and cannot end it, then why do we want the government taking more responsibility in healthcare? Perhaps We, the People, should require the Government to be faithful in the small things before granting them authority over the large things.

Hospital Value Index™ reveals 747 hospitals leading the way in delivering affordable, quality care  

Top Findings: America’s best hospital value often found in smaller towns, Midwest states

The 2009‐2010 Hospital Value Index™ ranked hospitals by an independent analysis of each hospital’s quality, affordability, efficiency and patient satisfaction performance. Out of the more than 4,500 hospitals that were analyzed, 747 were identified as providing the Best in Value™ care.

Key findings in the Hospital Value Index™ include:

• The highest value hospital care is often provided by community‐based hospitals, suggesting that consumers may find high value close to home and that policymakers should expand their search for models of reform beyond “name‐brand” teaching hospitals.

• If all hospitals in the U.S. performed at the average benchmark for the Best in Value™ hospitals, 9.3% of costs, or approximately $60B, could be eliminated from annual hospital spending on an all‐payer basis.

• The highest ranked hospitals in the study are geographically diverse, with the top 10 hospitals located in Dothan, AL; Minden, LA; Tawas City, MI; Clarksburg, WV; Gastonia, NC; Maysville, KY; Elmira, NY; Mechanicsville, VA; Holland, MI; and Winston‐Salem, NC.

• Of the 100 largest metropolitan areas in the U.S., the highest ranked markets are Charlotte, NC, Rochester, NY, Grand Rapids, MI, Pittsburgh, PA and Knoxville, TN. Markets with a population of less than 2,000,000 outperformed markets with a population of more than 2,000,000.

• There was no appreciable difference in performance between teaching hospitals and nonteaching hospitals.

• The study found that the top five states with hospitals delivering high value are North Dakota, Iowa, Montana, South Dakota, and Maine. The bottom five states for finding hospitals providing high value care are New Mexico, Arkansas, California, Hawaii and Nevada.

• The study found the gaps in hospital value can be dramatic. In one example, the study found the cost for the same medical procedure provided with the same quality of care at hospitals less than two miles apart can be more than $10,000.

The full findings of the study – and market by market rankings of hospital value performance – areavailable to the public for free at www.HospitalValueIndex.com.

Health reform

“As legislators consider health reform and as consumers shoulder an increasing burden of the cost of healthcare, it is important to recognize and reward those hospitals that deliver outstanding value,” said John Morrow, a senior advisor to Data Advantage.

“Healthcare consumers are increasingly making decisions based on value including quality, patient satisfaction and affordability. Hospitals providing the best value will ultimately be rewarded with more business.”

One of the prominent initiatives in health reform is Value‐Based Purchasing, which the Centers for Medicare and Medicaid Services (CMS) first recommended in November 2007. According to CMS, Value‐Based Purchasing will “drive improvements in clinical quality, patient‐centeredness and efficiency” in hospitals.

“The Hospital Value Index™ is the first‐ever and only benchmark to analyze these components to help hospitals understand their value proposition,” said Hal Andrews, CEO of Data Advantage. “In Value‐Based Purchasing, hospitals will likely be reimbursed based on the overall value that they deliver, and it is essential for hospitals to understand the areas in which improvements are needed. Regardless of the ultimate scope of reform, it is clear that the future of the American economy depends upon value becoming the key determinant in purchasing healthcare.”

The Hospital Value Index™ defines a hospital’s “value” by its success in four critical areas:
Quality, including CMS’s Core Measures, patient safety, mortality and readmission rates;
• Efficiency, including the relative measure of the cost to the hospital for providing services;
• Affordability, a relative comparison of prices charged for inpatient and outpatient services, including what hospitals ultimately collect; and
• Patient satisfaction as measured by HCAHPS.
 

Study summit
In the study, Data Advantage found many hospitals in every state that are providing exceptional value in an increasingly demanding environment. The Best in Value™ hospitals are urban and rural; teaching and non‐teaching; for‐profit and not‐for‐profit.

“Now, more than ever, it is important to identify those hospitals that have achieved excellent results,” said Morrow. “These hospitals are the models for success under health reform.”
In order to discover the keys to delivering high value, Data Advantage will host the Voices of Value™ Summit in December, where Hospital Value Index™ leaders will discuss and share best practices in achieving and providing value in this new era.

Data Advantage will reveal more details on the Voices of Value ™ Summit in the coming weeks, and additional comments from the Voices of Value™ participants can be found below.

About Data Advantage, LLC
Data Advantage, LLC is a privately held healthcare information company that specializes in providing hospitals and other healthcare‐related businesses with independent and objective business intelligence. The company has aggregated and compiled a warehouse of the most insightful information about healthcare utilization and maintains comprehensive benchmarks about the financial, operational and clinical performance of the U.S. hospital industry. For more information, visit www.data‐advantage.com
or call 866‐996‐3282.

Voices of Value™
(full quotes are available at www.HospitalValueIndex.com)
“The HCA TriStar Health System is honored to be named among the ‘best value’ health systems in America. Our ranking is a reflection of the hard work and dedication of our staff and physicians, and our continued focus on efficiency, effectiveness, and quality outcomes.”
Larry Kloess, President
HCA TriStar Health System (Nashville, Tennessee)

 
“Our leadership team and staff continue to look at the way we operate our hospital in order to provide improved value, quality and service to our community. We are excited about sharing our strategies, as well as learning new practices from hospitals at the Voices of Value™ summit.”
Lloyd Ford Jr., PhD, FACHE, President and CEO
Jefferson Regional Medical Center (Festus, Missouri)

“Billings Clinic appreciates the recognition as a leader in value from Data Advantage. We are strong believers in the importance of providing quality care at an optimal cost in our current health care environment and to prepare for future changes in health care.”
Nicholas Wolter, MD, CEO
Billings Clinic (Billings, Montana)

 
“Parkway is honored to be named a Top 100™ Hospital. We strive to be a leader in offering outstanding ‐ high value ‐ care for our community. At Parkway, patients can expect to be treated always with compassion and professionalism and to have access to the latest medical expertise and advanced technology. It is this combination that positions us well for the future.”
Tim McGill, CEO
Parkway Medical Center (Decatur, Alabama)

 
“Zeeland Community Hospital is honored to receive the Best in Value™ Award. The award is an affirmation of our most sincere efforts to meet the needs of our community and exceed their expectations in terms of quality, efficiency and compassionate care.”
Henry A. Veenstra, President
Zeeland Community Hospital (Zeeland, Michigan)

 
“I am pleased that Saint Vincent Hospital in Worcester, Massachusetts has been recognized as one of the Top 100™ hospitals in the country in terms of the ‘value’ it provides. If health reform is to be successful at the state and federal levels, hospitals like Saint Vincent that provide the highest level of quality care at reasonable costs will lead the way.”
Joseph J Mullany, President
Vanguard Health System, New England & Chicago Market

 
“This achievement is truly a team effort combining the efforts of our Board, medical staff, employees, and community creating a quality health care system. St. Anthony is proud to be recognized by this award and will continue to make a caring difference every day. ”
Gary Riedmann, President
St. Anthony Regional Hospital & Nursing Home (Carroll, Iowa)

 
“Holy Name Hospital is honored to be ranked among the top hospitals in the country for quality, efficiency, affordability and patient satisfaction. The Best in Value™ award is distinguished by its use of published data from objective, third‐party sources. The value index isn’t anecdotal or subjective; it’s culled from a wide variety of nationally‐recognized standards, measures and indicators, and I think that’s what makes this recognition especially meaningful. One of the key tenets of our mission is stewardship, and that’s being recognized here. I am continually impressed by the way our entire team of employees, nurses and physicians comes together in a process that creates value, engendering excellence on every
level.”
Michael Maron, President/CEO
Holy Name Hospital (Teaneck, New Jersey)

 
“The Best in Value™ Award recognition is a testament to the great care provided at Berger Hospital. We consistently hold ourselves accountable to deliver high‐quality, cost effective healthcare, and this third party review helps to validate our success.”
Tim Colburn, CEO
Berger Hospital (Circleville, Ohio)

 
“At a time when the nation is focused on providing both high quality and affordable healthcare, it’s great to earn national recognition for doing just that. Consumer education is increasingly more important when making healthcare decisions. This study from an independent source verifies the value we provide our patients.”
Rosemari Davis, CEO
Willamette Valley Medical Center (McMinnville, Oregon)

“I am very pleased that we, as a team, have been recognized with this award. Our people make the difference. They are passionate, caring and down‐to earth. Whether it’s a physician, nurse, therapist or the person who works in the lab or in dietary, people make an institution great. Certainly in healthcare that’s true. Over the last 20 years this organization has done a great job of creating the infrastructure of an integrated system, which is ideally suited to successfully face challenges in health care. Our focus is entirely patient centered and we benchmark against the best of the best to constantly improve the quality care and value we are able to offer our patients.”
Mark Laney, President and CEO
Heartland Health (Saint Joseph, Missouri)

 
“Earning this recognition demonstrates our commitment to excellence from every part of our organization – physicians, employees, volunteers, managers and our Board of Directors.”
Edward J. Roth III, President and CEO
Aultman Hospital (Canton, Ohio)

 
“There is no way to really reform health care without transparency, consistent metrics and full understanding of value for money. The Hospital Value Index™ is one of the fundamental building blocks for reform that results in an accountable system and a model for engaging physicians and patients in ways that can make a real difference.”
Jonathan T. Lord, CEO
Navigenics

My Foundational Premises:

Let me first state the two critical foundational premises that inform my proposals.

First, I don’t think that personal health records or electronic medical records will bring any cost savings to the system. I note that some of President Obama’s advisors agree. In any event, absent 100% inter-operability, PHRs and EMRs will always hit the “End of the Line”, to quote the Traveling Wilburys, most likely when a physician is in urgent need of the information. The only entity in the U.S. that can guarantee anything approximating 100% deployment is the Federal government, the most obvious example of which is the Social Security account.

Second, I think the HSA concept is a good one. Consumerism pervades every aspect of the American economy except for those health care services for which Medicare has established a fee. In contrast, consider how Americans shop for plastic surgery, cosmeceuticals, alternative therapies, and organic foods. I believe that training consumers to make unique value decisions in health care purchases is a good and necessary idea. Even when the tax-deductibility of employer-sponsored health benefits inevitably crumbles (the only real way to pay for reform), I think a tax-advantaged Health Savings Account is good policy.

My Plan:

I know that a good political plan should be summarized in three points, but healthcare merits a few more. Hence, the following eleven points represent a direction that the Federal government could take that would at once be palatable to a majority of working Americans, reap long-term cost-savings and other benefits such as allowing Americans to retain decision-making power over personal healthcare decisions and immediately incentivize the healthcare financing and delivery system to deliver far more value for the money.

1. Couple the issuance of a Social Security card to newborns with a tax-advantaged HSA and a PHR.
2. Similar to Senator Kerry’s proposal in the 2004 Presidential election, purchase a 25-year term catastrophic insurance policy for the child at birth.
3. Deposit $2,000 per year into the HSA for preventive care.
4. Marry SCHIP reform/expansion with those HSAs to deliver preventive care, specifically to incorporate CDC guidelines. Between preventive care and catastrophic coverage, we can cover the vast majority of every child’s healthcare needs.
5. At age 18, allow the child to convert the balance of the HSA into a 529 account for college expenses.
6. At age 24, “sweep” the balance of the account, if any, into the now-adult’s Social Security account and purchase a new 40-year catastrophic policy.
7. For adults, a call for personal responsibility is critical – the healthcare delivery system is only 10% of the issue, while behavior and genetics are each more than 30%. For the 30%+ that is behavioral, ERISA should be amended to allow employers flexibility to provide incentives, but not penalties, for improved health behaviors. For the 10% that is related to healthcare purchasing, knowledge is power, and price/cost transparency is necessary to allow consumers to evaluate the value of the care that they need.
8. The hardest issue, but perhaps most crucial, is the need to address the employer-sponsored tax benefit in a rational fashion so that the consumer/patient is incented to control the costs. The most likely positive unintended consequence of reform is the behavioral change that price/cost transparency would bring.
9. Repeal of the McCarran-Ferguson Act is essential to health insurance reform. It is widely cited that Medicare’s administrative costs are lower than those of commercial insurers. CMS obviously has the benefits of scale that allow a lower administrative cost as a percentage of dollars paid. The critical fact in comparing CMS to United or Aetna or Wellpoint is that CMS does not have to follow state insurance regulations, which allows it to administer a global budget with one adminstrative team. In contrast, insurers with multi-state operations have tremendous duplication of the same essential function, which is required to comply with differing state requirements. It may seem counter-intuitive to Republicans to federalize the oversight of the insurance industry to eliminate the barriers presented by state-to-state regulation. In a sense, it is a restriction of state authority; in another sense, it is deregulation. Wise regulation can level the playing field across states for private players to compete at an administrative cost level with each other and with CMS.
10. Address the issue or pre-existing conditions.  Whereas the President seems to believe his version of the reforms will make them a non-issue, Republicans must address this one issue that resonates with most tax payers. If federal oversight is in place, and barriers to interstate competition lowered, wider risk pools will be available to the average consumer, thereby spreading the coverage cost over a larger base. In any event, pre-existing conditions cannot be allowed to prevent Americans from obtaining affordable insurance coverage.
11. To date, Washington has focused almost no attention on the healthcare delivery side, which is the most complicated aspect. For starters, carefully analyze the 747 hospitals celebrated by The Hospital Value Index™, which should rightfully be the models of healthcare delivery reform, not just Mayo, the Cleveland Clinic and Intermountain. These examples routinely cited by the White House as models of reform cannot be replicated, mostly because they are geographic or demographic outliers. There are literally hundreds of hospitals delivering great value — go find them, find their commonalities, and start there.

A few concluding thoughts:

The White House, and particularly Peter Orszag at the OMB, are fixated on Dartmouth Atlas, which uses 2005 Medicare data as a prescription for reform. As we have demonstrated in our analysis, a “GPS” approach that evaluates the most recent all-payer data is much more insightful than an Atlas.

Elements of this plan do not provide immediate coverage for all uninsured, but it could be adapted to “grandfather” in every person in the U.S. who is under 18 at the effective date of the plan. It would, however, provide a much more targeted program than SCHIP, presumably at a lower cost. My belief is that the combination of a distinctly Democratic concept (Social Security) and an equally distinctly Republican concept (HSA) would allow a truly bipartisan solution.

I keep waiting for a call for shared sacrifice from Washington; instead, all of the bills or proposals shelter labor from any sacrifice in insurance reform. Health reform for all must mean ALL, not everyone except organized labor. As George Will suggests, we will all be much better off when 7% of the workforce stops making all the rules.

All of this requires more thought and discussion, but I think it is fairly reasonable.

As referenced in David Goldhill’s article in the September issue of The Atlantic, what is troubling is that just obeying what your mother told you 3,684 times can generate as much as $30B in savings (or 37.5% of what the entire pharmaceutical industry wants to “contribute” to healthcare reform). Fundamentally, that suggests a simple lack of discipline throughout hospitals, and it is hard to pin the blame for that on the executive suite. As we have previously suggested, personal responsibility is a key, though forgotten, element in healthcare reform. If we need to start with the basics, so be it – let’s go.

What is exciting from a value perspective is that the first initiative is common-sense, low cost, and clearly proven to reduce infections. I am not sure whether success in this area requires organizational process improvement (Six Sigma, Lean) or just cultural change through inspired leadership. 

I am also not sure why these initiatives always start with the “name” hospitals, though I applaud them for acknowledging their need for improvement. With the Hospital Value Index™, we are constantly reminded that the highest value healthcare in America is often delivered at hospitals that don’t make the U.S. News and World Report list. Let’s hope that the Joint Commission broadly embraces the hospitals that nobody talks about in the near future, where most of us receive our care.

I am sure that this initiative does not cost much money, and it will clearly save lives and dollars. If the White House is serious about the path to reform, it is the everyday blocking and tackling that will get us there. Kudos to Mark Chassin for demonstrating leadership in this area, and let’s hope that others follow quickly and forcefully.

• Is it possible for Republicans to be more tone deaf than to have a cardiac surgeon from Louisiana give a response to the President’s address? Maybe they thought Dr. Kevorkian would give a rebuttal. Is malpractice reform really the best Republican idea? At best, it is a 1% solution to the issues before us. As to rationing, it already happens, even if subtle ways. Cardiac surgery is not one of those subtleties – cardiac surgeons are not famous for performing bypasses on indigent patients.
• President Obama spoke for almost an hour and talked almost exclusively about health insurance reform. Does it concern you to think that it takes an hour tonight, in addition to most of August, to talk about insurance reform? Insurance reform is the easy issue for the American citizens – perhaps no other issue in the history of polling is so heavily slanted as it is against the insurance industry. If it takes all year to address the low-hanging fruit, how will Congress ever understand healthcare delivery? For a guess, see the first bullet above.
• As to the insurance reform suggestions, it sure sounds poll-tested – no caps on lifetime coverage (who pays for that?), no denials for pre-existing conditions, etc. Do Congress and the White House really think that the insurance companies will fail to pass the proposed taxes and incremental costs onto the policyholders?
• We will discuss in much more detail next week our “747 concept”. For now, we beg the White House to expand their search for examples of what is right and replicable about healthcare value. Professor Nicholas John Spykman once said, “Geography is the most fundamental factor in the foreign policy of states because it is the most permanent. Ministers come and ministers go, even dictators die, but mountain ranges stand unperturbed.” The theory of geography as destiny applies to healthcare, too, as does demography. Intermountain Healthcare has done some really innovative things, and Brent James, M.D. is well-regarded, but much of Intermountain’s success is due to a largely homogenous, if not teetotalling, population.
• When did the cost of health insurance for Congress become the benchmark for “affordable”? Is that compared to plans for union members?
• The President firmly stated that the public option has to be self-sustaining from premiums? History suggests how that works – lower premiums=fewer benefits. The public example is CoverTN; the private examples are often fined by insurance regulators for misleading consumers on the amount of the benefit. History also suggests that government sponsored plans are subject to lobbying for increased benefits, which usually become unfunded mandates. If the public option has to pay for itself from premiums, and Congress establishes minimum benefits, then premiums increase, right?
• In speaking on healthcare for an hour, the President mentioned value only once.
• In speaking on healthcare for an hour, the President never mentioned individual behavior or personal responsibility, except for the proposal to require everyone to obtain healthcare coverage like auto liability coverage. Anyone notice that was one of the three times (the others being malpractice caps and no federal funding of abortion) that the Democratic side of the chamber sat on their hands?
• The President called out Alabama as the example of a state in which a single insurer dominating a market, with the clear inference that less payer competition is worse for Americans. The Hospital Value Index™ study suggests just the opposite of what the President stated  – higher value markets are usually characterized by less competition on the payer side, whereas lower value markets are often characterized by more competition on the payer side.
• Finally, the President finished with a predictable appeal to Senator Kennedy’s legacy. Two things come to mind: First, watching Speaker Pelosi glowing while hearing the stirring tribute to Senator Kennedy was ironic, given that she appears to have failed to grasp his legislative genius. History suggests that Senator Kennedy would take as much ground on healthcare reform as he could get this year, and return next year to fight for more. That stands in stark contrast to Speaker Pelosi’s stance that there is no bill without a public option. Second, as to the President’s remarks regarding Senator Kennedy’s appeal to morality, if we have learned anything in this country, isn’t it that morality as the foundation for government policy is built upon sand? Wasn’t morality the underlying justification for the idiocy regarding death panels? We might be better off if both parties left morality to the church, as the separation of church and state suggests.

So, now the hard work begins. The good news is that there are 747 hospitals that are exemplars for healthcare reform, and next week, Washington will know who they are.

Native defenders of the Canadian system are firing back at American critics. These Canadians defenders refute the allegations that there are long waiting lines for elective services, that many Canadians come to the US for care they cannot get or wait to receive in Canada, and that Canadians are unhappy with their system. They have some impressive statistics from a government study (Healthy Canadians: Canadian government report on comparable healthcare indicators) that back their arguments.  

• The median wait time in Canada to see a specialty physician is a little over four weeks with 89.5% waiting less than 3 months.
• The median wait time for diagnostic services such as MRI and CAT scans is two weeks with 86.4% waiting less than 3 months.
• The median wait time for surgery is four weeks with 82.2% waiting less than 3 months.
• The median wait time in Canada to see a specialty physician is a little over four weeks with 89.5% waiting less than 3 months.
• 85.2% of Canadians reported that they were “satisfied” or “very satisfied” with the way health care services are provided in their country and an even higher number (89.8%) rated their physician in the same way though slightly lower ratings were awarded to hospitals (79.9% being “satisfied” or “very satisfied”).
• Only an estimated .5% of Canadians get their care in the US (Canadian National Population Health Survey Study).

People in the US may be able to get services faster than described above, but for many people getting insurance authorization for different procedures increases the waiting time closer to what Canadians experience. It is also doubtful that the extra wait times in Canada are significant to their clinical outcomes.

In the hyperbole of the debate however, the real difference in the US and Canadian systems is being missed. A 2005 report  by the Canadian Institute for Health Information (Medical Imaging in Canada) comparing MRI and CT utilization in the US and Canada highlights the real differences in the two systems.

The U.S. performed more than three times the number of MRI exams, reporting 83.2 MRI exams per 1,000 population in 2004–2005, compared to 25.5 in Canada and 19.0 in England. When comparing CT exams per population, the U.S. performed nearly double the exams, with 172.5 CT exams per 1,000 population, compared to 87.3 in Canada (Medical Imaging in Canada; Canadian Institute for Health Information).

 A very old study shows a similar pattern for coronary artery bypass surgery (Use of coronary artery bypass surgery in the United States and Canada. Influence of age and income; Institute for Clinical Evaluative Sciences, Ontario, Canada 1993)

There is little doubt that there would be similar findings with other clinical services. The real debate then should be about the value of the “extra” tests and procedures being done in the US, who should decide what is valuable, and who is going to pay for those decisions? Currently, physicians and their insured patients decide what is valuable and then send the bill to the government or their employer who have little to no say in the decision. This is the most untenable of situations. Demand for services far outstrip the value they produce. A popular number in the literature is that 30% of all healthcare services provided in the US are unnecessary.

 In a single payer system run by the government, the government is going to decide what is valuable. In a true free market system, the patient decides with advice from his or her doctor and then pays for that decision. As employers cut back on insurance benefits for their employees and in the absence so far of a significant government takeover, the US is moving toward the free market approach by default.  No matter whether the US moves toward a free market system by default or a single payer system by law, the utilization of elective healthcare services per capita is going to eventually decline and that is something providers better start considering in their long term future plans.

   2009-2010 Hospital Value Index™ – Release 3 Big Cities Low Value 

Nashville, TN – According to the most recent Hospital Value Index™ results, a study that analyzed data from more than 4,500 hospitals across the United States, hospitals in the largest U.S. cities generally offer a low value of patient care compared to elsewhere in the country.

“Our findings conclude that these urban areas offer less affordable and less efficient care, which affected the overall performance of the market,” said Hal Andrews, Chief Executive Officer of Data Advantage, the company that developed and maintains the Hospital Value Index™.

“Ironically, we found that the hospitals with which the White House and its advisers are most intimately familiar deliver low healthcare value against every benchmark ‐ city, state, CMS Region, and the U.S.”

For example, the Chicago market ranked 88th out of the 100 largest markets, just one spot behind McAllen, Texas and one spot ahead of Honolulu. Other than Fort Myers and Las Vegas, the lowest‐ranking large markets were all in California. The top five states in delivering value were North Dakota, Iowa, Montana, South Dakota, and Maine. The bottom five states were New Mexico, Arkansas, California, Hawaii, and Nevada.

“Like every other good and service, price is an essential part of healthcare value,” said Andrews. “For California, prices are relatively high, even after adjusting for national wage variances. The uninsured, underinsured and health savings account members are disproportionately harmed by the high prices, without receiving superior quality, outcomes or patient experience in exchange.”

“The rules have changed ‐‐ whether because of the economy, health reform or Value‐Based purchasing, and quality alone is not a sustainable strategy for the U.S. hospital industry,” said John Morrow, one of the authors of the study. “These organizations will need to be accountable to their communities for their performance on value and be transparent about doing so. The Hospital Value Index™ is a means toward that end.”

The latest study from the Hospital Value Index™ used the most current and comprehensive set of publicly available data, including Hospital Compare data released by CMS in July 2009, to analyze more than 4,500 U.S. hospitals to discover where patients can find the best value of care in their community. The Hospital Value Index™ researchers analyzed a variety of public data on hospital quality, price, efficiency, and patient satisfaction. The Hospital Value Index™ is updated frequently to reflect the dynamic impact of change occurring in the hospital industry.

Data Advantage will release the complete 2009‐2010 Hospital Value Index™ results on September 15 in Washington, D.C. For more information on the Hospital Value Index™ findings, please visit HospitalValueIndex.com or this site, www.TheHealthcareValueBlog.com.

Just as in Part 1 above, providers will benefit by more people being covered. Bad debt should decline and volumes increase fairly quickly. And just as above, the healthcare cost problem is going to be exacerbated going forward. At some point in the future (when Medicare and Social Security are substantially increasing the annual deficit, the new healthcare entitlement is more costly than expected, and the government’s ongoing operating deficit is unsustainable), the federal government will again have to take on the issue of healthcare costs. At that time, there will not be as profound an access problem complicating the debate. This new debate will focus on controlling healthcare costs.

To see into the future about how the government will proceed, it is best to look at the past. The major Congressional initiatives to control Medicare costs after they started to get out of hand were to implement the CON program in the early 70s, begin implementing prospective reimbursement in the early 80s, increase the anti-fraud efforts in the 90s, and reduce provider annual increases in the 2000s. Not once during any of those times was there a serious discussion about cutting back on Medicare benefits. Nor is there any reason to believe there will be any serious discussion of this possibility in the future. The baby boomers will be a large voting bloc that no politician will want to upset. Considering that a vast majority of this group will also not be financially prepared for retirement, they will vote to hold onto as many government benefits as possible. As in the past, the government will focus on a variety of ways to reduce their payments to providers.

It would seem that no matter whether there is a robust public option included in the current reform effort or not, the future challenges facing hospitals and all providers are fairly well mapped out. At some point in the future, providers are going to be faced with the challenge of how to survive with fewer revenues while the demand for services is rising. The providers that can establish clinical standards to ensure that each service provided is clinically “necessary” will be way ahead. The greatest barrier to setting such standards will likely not be physician obstruction. The greatest barrier will be the liability risk for limiting services based on low probabilities of clinical harm to patients.

                The Unintended Consequences of Healthcare Reform – #1
                The Unintended Consequences of Healthcare Reform – #2
                The Unintended Consequences of Healthcare Reform – #3 Part 1
                The Unintended Consequences of Healthcare Reform – #3 Part 2
                The Unintended Consequences of Healthcare Reform – #4

Much has been said about the impact on insurers and physicians if the robust public option is implemented. Less has been said about the impact on hospitals. The immediate impact on hospitals will be a reduction in their average reimbursement per patient encounter. The “robust” public option will pay providers Medicare-like rates. Some analysts have estimated that Medicare on average reimburses hospitals between 30 to 40% less than private insurers. As subscribers move from their private plans to the public option, hospitals’ revenue per patient encounter will begin to decline.

The upside for hospitals is that bad debt as a % of revenue will also decline if most people are covered after the reform is implemented. In fact, the dollars written off to bad debt should decline much faster than reimbursement. This is because universal coverage will be implemented immediately while the transfer of people to the public option will occur over time. Patient volumes should also increase. History shows very clearly that insured people increase their demand for healthcare services.

As a result, hospitals could enter into a last golden age that may last for 3 to 7 years. After this period ends, an extended dark ages would appear to be inevitable. As many critics have pointed out, the reform initiatives currently on the table will not reduce the % of GDP currently spent on healthcare. This reform’s major accomplishment will be to create a new entitlement.  The notion that giving healthcare access to the uninsured will make them healthier and therefore less expensive in healthcare terms has never panned out. People with insurance coverage continuously demand more healthcare services than those who do not have it. Healthcare costs for the country as a whole and the government will rise at an even higher rate that the already high rate experienced during the last decade.

It seems that most everyone no matter what their ideology or position is on the current debate agrees that the US must reduce what it spends on healthcare services. The government will have basically two ways to reduce its healthcare costs when it finally gets serious; cut benefits or reduce the costs of providing those benefits. History teaches us that governments only rarely cut back on the benefits they offer to voters. It is much more politically palatable for governments to cut costs or raise revenues from either a small group of voters or from institutions that do not vote. The other option of course is to just borrow more money and not deal with the problem. It would seem that the clock is ticking on this latter strategy for a whole host of reasons. 

Hospitals can be sure that no matter what else happens their reimbursement will be one of the first targets for cuts when the government needs to rein in its budget. If there is any doubt, review what is currently happening in Massachusetts, which is some years into its universal healthcare experiment.  There is a very serious proposal on the table to convert providers to a capitation reimbursement system. Such a system would allow the State government to set an annual healthcare budget at a specific amount and put the financial risk for cost overruns on providers.  As hospitals learned in the 80s and 90s, this is a prescription for fiscal disaster. To survive hospitals will have to successfully reduce the level of services provided to patients despite patients having the same high expectations for services they have always had and doctors being more concerned about lawsuits than the hospitals bottom line.  Cutting hospital reimbursement will reduce healthcare costs in another way besides just paying hospitals less money. The number of institutional providers of all types will decline. Lowering the number of providers will act as a cap on how many healthcare services can be delivered. Rationing will ultimately occur not by government policy but by default. It is worthy to note that the Healthcare Commissioner is given the power to implement a capitation type reimbursement system in the future.

                The Unintended Consequences of Healthcare Reform – #1
                The Unintended Consequences of Healthcare Reform – #2
                The Unintended Consequences of Healthcare Reform – #3 Part 1
                The Unintended Consequences of Healthcare Reform – #3 Part 2
                The Unintended Consequences of Healthcare Reform – #4

Individual subscribers will make an informed choice about what plan to purchase through the healthcare exchange. Initially, people who have utilized the healthcare system at a high rate will purchase a plan providing a high level of benefits if they can afford the monthly premium. People, who are healthy or choose minimal healthcareintervention will choose the plan that has the lowest premium and lower benefits. In other words, the plans providing the highest level of benefits will naturally experience adverse selection. If the premiums become too expensive for these plans, sick people who cannot afford these premiums will have to consider plans with lower benefits and higher out-of-pocket costs. They will be between a rock and a hard place.

It appears that the House Bill will give the Commissioner the power to address the above problem. The Commissioner can adjust the premium revenues from one plan that has healthier/lower utilizing patients to another plan that is covering sicker patients. How this determination will be made is anyone’s guess. How often the Commissioner will use such power is also hard to project. If he or she is aggressive in the use of this authority, the individual decision regarding the benefit-premium tradeoff may become meaningless. Choosing a 70% benefit plan with premiums that are adjusted upward to cover the higher utilization of the people who choose the 95% plan will not make any sense. Purchasing the higher benefit plan will be the better value.

In the scenario described above, a large percentage of the population could eventually be covered by plans that virtually protect them from paying any of the costs of their utilization of healthcare services. Utilization and costs will increase as a result. The current projections for the cost of this healthcare reform could be tremendously understated.

                The Unintended Consequences of Healthcare Reform – #1
                The Unintended Consequences of Healthcare Reform – #2
                The Unintended Consequences of Healthcare Reform – #3 Part 1
                The Unintended Consequences of Healthcare Reform – #3 Part 2
                The Unintended Consequences of Healthcare Reform – #4

   2009-2010 HospitalValueIndex™ Findings

The mere thought that price is irrelevant is a curious one, especially coming from an economist. Price always matters in a value discussion, whether you are in Tiffany or a Turkish bazaar.

As it relates to healthcare, price matters a great deal. The number of consultants advising healthcare providers on setting charges, aka price, would rival the army of a Nordic country. If price does not matter, then there would not be any managed care agreements based on a percentage of charges. If price does not matter, there would not be differences of as much as 1,000% between markets for the same basket of healthcare goods.

Not only does price matter, but it also tragically has a disproportionate impact on the uninsured, who do not have the benefit of group purchasing to negotiate a lower price. Regardless of your view of the politics of healthcare reform, it is stunning that a Democratic White House and Congress do not grasp this elementary principle. Equally stunning is that Republicans advocating for a free-market economy do not realize that price transparency is a fundamental requirement.

What is inexplicable in my experience of the wheelchair is that there can be more than one “price” and that it can be higher at the distributor level (WheelChair Professionals) than at the retail level (MobilityCo). For more musings on that concept, see Part IV.

If this provision is included in a final reform bill that passes, it will be another example of the government trying to make private business operate in a certain way that will have many unintended and negative consequences. The authors of the House bill want to limit insurers’ profits, executive pay, and ensure that as much money as possible is spent on actual healthcare services. They believe that limiting profits and administrative costs will ultimately lower premiums.

They will be in for a big surprise. This provision is much more likely to raise costs than lower them. For the authors of the House bill, administrative costs bring to mind some fat cat smoking a big cigar making hundreds of millions. However, there are many facets to insurers’ administrative costs. They include costs for marketing, utilization review, quality assurance, etc. These latter two are especially important. Insurers have invested significant percentages of their premiums to reduce unnecessary utilization by requiring precertification of certain expensive elected services and refusing to pay for rendered services that they determine in retrospect were unnecessary. These initiatives have created significant conflict between patients, providers, and insurers, but have been effective. Ironically, Medicare has reaped significant benefit from these efforts without paying for similar types of administrative services. As providers changed their practice habits in response to private insurers’ efforts, these new habits often carried over to how they treated all other patients including Medicare patients.  Insurers will reduce their efforts in these areas if the medical loss ratio is set too high in order to preserve some profit margin.   

Most importantly, insurers will be financially better off if healthcare costs increase in this scenario. Profit will be a function of a government established percent of premium. Nominal profits will therefore increase as premiums increase i.e. it is better to have 5% of $2 billion than it is to have 5% of $1 billion. With the government requiring all people to have insurance and putting in mechanisms to ensure no plan suffers the consequences of adverse selection, insurers will quickly shed as much administrative cost as they can and watch their profits grow as premiums increase due to higher utilization of healthcare services.

It is very dangerous to regulate a complex industry using simple formulas to determine which company is managing its business well and which is not.

                The Unintended Consequences of Healthcare Reform – #1
                The Unintended Consequences of Healthcare Reform – #2
                The Unintended Consequences of Healthcare Reform – #3 Part 1
                The Unintended Consequences of Healthcare Reform – #3 Part 2
                The Unintended Consequences of Healthcare Reform – #4

Is healthcare reform central to the long-term fiscal and economic health of the United States? I am sure it is – $37T (present value) of unfunded Medicare liabilities is simply unfathomable. Yet today’s healthcare debate in Washington, D.C. is focused on “just” $1T.

Maybe the American people don’t understand the intricacies of healthcare reform, and maybe they don’t even care. However, I believe that they are smart enough to know that fixing a problem as big as healthcare will require that everyone make sacrifices.

Maybe the American people do know in their hearts and in their expanding guts that they are to blame, and maybe they want to be inspired by someone who can help them to remedy their mistakes. Maybe the American people know there is no free lunch on healthcare reform, and maybe they know that they could skip a meal or two anyway. Maybe they are really angry because the Government of the People is not being candid with the People.

Maybe the anger and anguish of August is that the American people know that the medicine of healthcare reform does not come in grape or bubblegum flavors or in a tablet that dissolves on the tongue. Maybe they know the medicine will be very hard to swallow, and maybe it will make some people sick. Maybe they simply want leaders in the White House and Congress to tell the truth, the whole truth, and nothing but the truth.

What if they are prepared for that? What if, as citizens of the greatest nation in the world, they just need to be asked?

Have we had the discussion of whether healthcare is an unalienable right? No. Should we? Probably. Will we? Probably not.

Even so, in the history of this great nation, when called to sacrifice for the greater good, the American people have proven to be without peer. Do we still have it in us? Do we possess the character of the “Greatest Generation”?

I am not certain, but I won’t ever know unless someone calls the question. Where are the leaders? When will they call for sacrifice by the People, for the People, and for this great nation?

Hospitals in smaller markets deliver better value than hospitals in large urban areas

2009-2010 Hospital Value Index™ Release Top Markets

Hospitals in smaller markets deliver better value than hospitals in large urban areas

Want to be sure you are spending your healthcare dollars wisely? Fortunately, the latest version of the Hospital Value Index reveals that informed healthcare consumers can find high-value healthcare in every corner of the United States.

In fact, the study of more than 4,500 U.S. hospitals finds communities with hospitals with fewer than 300 beds consistently rank among those with the best value in the nation, according to Hal Andrews, CEO of Data Advantage, the company behind the Hospital Value Index.

“Our findings show that the best value of care often exists in smaller markets where patients access community-based hospitals, not just in large academic medical centers,” said Andrews. “For consumers, it is encouraging to know that the healthcare providers in communities like Dothan, Alabama, Billings, Montana or Dubuque, Iowa deliver some of the best value in the nation.”

These findings are among a number of interesting results in the 2009-2010 Hospital Value Index, the most comprehensive and current examination of the value of hospital care available today.

Communities with hospitals delivering America`s best value of hospital care include:

* Dothan, Alabama
* Minden, Louisiana
* Tawas City, Michigan
* Clarksburg, West Virginia
* Billings, Montana
* Dubuque, Iowa
* Charlotte, North Carolina
* Amsterdam, New York
* Bangor, Maine
* Pittsburgh, Pennsylvania

“In light of the ongoing discussion of healthcare reform in Washington, D.C., we were curious to identify markets where value is easy to find, as well as markets where value is a precious commodity,” said John Morrow, one of the authors of the study. “We were surprised to find that California has only two hospitals among the top 100 Best in Value hospitals. In contrast, states as diverse as New York, Alabama and Iowa each have at least six hospitals in the top 100.”

The latest study from the Hospital Value Index used the most current and comprehensive set of publicly available data, including Hospital Compare data released in July 2009, to survey more than 4,500 U.S. hospitals to discover where patients can find the best value of care in their community. The Hospital Value Index researchers analyzed a variety of public data on hospital quality, price, efficiency, and patient satisfaction for the study.

“The Hospital Value Index includes more data points from more hospitals than any other study,” said Morrow. “As a result, our findings point us to a broader spectrum of markets that will help consumers and might help reformers in D.C. better understand the healthcare delivery system.”

Data Advantage will release the complete 2009-2010 Hospital Value Index results on September 15 in Washington, D.C. For more information on the Hospital Value Index findings, please visit www.HospitalValueIndex.com.

As referenced in Part I, I was a bit of a Pollyana in thinking that dealing with United would be merely difficult. In hindsight, I was wrong.

Going in to the process, I had reviewed my policy, and I knew that the benefits were limited to $2,500. It was with great trepidation that I accompanied my wife and son to the wheelchair clinic on September 15, 2008.

As you will see in the Delivery Ticket, the company that delivered the wheelchair (referred to herein as MobilityCo) said that my estimated co-pay was $0. To say that I was surprised was an understatement, but I happily signed. You will also see that the total retail price for the wheelchair was $22,466. More on that later.

In October and November 2008, United denied the claims for the wheelchair because “under the plan, notification was required but not received” and, as a result, “the patient may not be billed for the declined amount”. This would appear to be contrary to the Authorization Letter from United stating that “you have met the notification requirement and no further action is needed at this time”.

 The attached and redacted Explanation of Benefits contains the heart-warming words “This is not a bill”. You will also see on page 1 that United instructed me to “Pay your provider(s) when they bill you” a total of $24,409.34, for three separate claim numbers. On page 3, you will see that United paid $2,500, which was what I had expected. In the column titled “Originally Billed by the Provider”, you will see that the total of the three claims comes to $39,952.80.

 So, for those keeping score at home, the tally is as follows:

• Delivery Ticket Retail Price: $22,466
• Per the December 2008 EOB, my portion after United pays its $2,500 benefit: $24,409.34
• Charges billed to United: $39,952.80

 The mind reels as the process of deciphering the puzzle begins. How can it be that, after United has paid $2,500 toward a Delivery Ticket retail price of $22,466, I owe $24,409.34?

As this happened during the holidays, I decided to wait until someone from MobilityCo called me to discuss how I could owe them more money after United had paid $2,500 than I did before. Imagine my surprise when they did not call in January…or February.

In March, I called MobilityCo. I spoke with three different people before being directed to a man I will call John (not his real name). I told John that the EOB from United indicated that I owed about $24,000 and inquired whether I could set up a payment plan. You can imagine my shock when John told me that I did not owe anything.

I asked John if he was sure, and he said that he was. When I asked John who else I might owe, he assured me that I did not owe anyone, including WheelChair Professionals. I had not heard of WheelChair Professionals and inquired about them. John told me that they handled the claim with United. More on that later…

 A bit perplexed, I hung up and thought, fleetingly, that I had won the equivalent of the lottery, but I still had nagging doubts. So, I called John back a few days later. Once again, John told me that I did not owe anything. On this call, John mentioned that MobilityCo had been paid about $9,000 in December, and they were happy with that. I asked again about WheelChair Professionals and whether I might owe them, and John once again assured me that I did not.

I remained perplexed, so much so that I shared the story with a couple of friends. One of them suggested that I call John back and get a copy of the invoice. As you see, the Statement shows a zero balance.

At this point, I should mention that I had not said anything to my wife about this, from the October EOB to the receipt of the invoice from MobilityCo showing a zero balance. As you might imagine, it would be awkward for a healthcare executive to explain to a spouse that the family might owe $24,409 or $0 or something in between for a wheelchair. Someone in the industry should be able to figure that out, right?

Even so, after three conversations with John and receipt of the invoice showing a zero balance, I broached the subject with my wife over dinner on a Friday in March, telling her that MobilityCo had repeatedly assured me that we owed nothing. In hindsight, I spoke too soon.

The following Monday, John called my wife at home demanding payment for the wheelchair. John then called me, demanding immediate payment of $16,758.20. I reminded John that he had told me three times in the previous 15 days that I owed nothing. He responded that United had discovered that it overpaid WheelChair Professionals and had then recouped it. In turn, WheelChair Professionals had recouped the overpayment from MobilityCo. Notice that the EOB says United had paid $2,500, but WheelChair Professionals had initially received at least $16,000 more than that.

My suspicions aroused, I asked John who had actually bought the wheelchair –MobilityCo or WheelChair Professionals? John answered that he thought that WheelChair Professionals had, but WheelChair Professionals said that MobilityCo had to buy the chair. I asked how MobilityCo could be in the wheelchair business and not know whether or not they bought the wheelchair. John answered that MobilityCo had just begun working with WheelChair Professionals and had not figured out how everything worked. So, I asked John, did MobilityCo think that they had received payment of $9000 in December to order the wheelchair and deliver it to us? After a too-long silence, John admitted that they did. No wonder, I told him, that they were so happy – getting paid $9,000 to order a wheelchair and spend 2 hours delivering it sounds like a good business.

To date, MobilityCo has received $18,500 of the $19,258.20 that they billed me (after they billed me $0) – $2,500 from United, $2,000 from MDA, and $14,000 from me. I have been blessed to have the resources to pay 95% of the bill that I received, even though that bill is different from the Delivery Ticket that I signed or the EOB detailing what I owed or the charges that WheelChair Professionals submitted to United. I have also been blessed with a platform to describe the abuses or incompetence or both (your choice) of the system in the hopes that reform might really occur.

Is It Worth It? In an economic sense, clearly not. Perhaps my experience is a twisted version of the laws of supply and demand, but it is obviously not an example of value principles operating in a market. In an emotional sense, yes. The freedom that the wheelchair gives my son is priceless to him.

In his post, Paul writes:

“So, for the next article, I’d like to see these authors or someone else address the on-the-ground problems of the Boston metropolitan service area. Is it possible to take the broad themes from the op-ed and bring them back home and advise this group of patients how to take their medicine? Or is there something about this organism that suggests a different diagnosis and treatment plan?”

We have been pondering this as well, though from a different angle. We have noticed that a number of the thought leaders behind the White House’s reform efforts hail from a fairly small part of New England geography. As a result, we decided to analyze the value proposition of hospitals in what we call the “I-93 Corridor” . The results are here. 

Part I: Why Value Matters to Me

My oldest son has Duchenne Muscular Dystrophy (DMD). DMD is a rare and serious form of muscular dystrophy that affects only boys. DMD causes muscle cells to be unable to regulate calcium correctly, which results in their calcification and destruction. Between the ages of 11-13, the decline in muscle strength intersects with an increase in weight at puberty, at which time the boys lose the strength to walk and become wheelchair bound.

My son was fortunate to continue walking until Memorial Day weekend of 2008, after which he began to use a manual wheelchair much of the time. At that point, I started the process of ordering him an electric wheelchair.

Knowing that your child will ultimately be wheelchair-bound triggers many thoughts and emotions, one of which is the dread for the inevitable fight with the insurance company. From the time that I learned of my son’s diagnosis in 2004 until he told us that he wanted the chair, I had health insurance coverage through several plans, including a self-funded plan, HealthSpring, Blue Cross of California, and United Healthcare. Except for the self-funded plan, no plan provided coverage for more than $2,500 for a wheelchair, for which the typical retail price is over $20,000.

At the time that we ordered the wheelchair, my coverage was through United, which I anticipated would make acquiring the wheelchair very difficult. In hindsight, I was overly optimistic.

Despite being in the healthcare business for almost two decades, it took me almost one year to discover what an electric wheelchair costs. The summary version, which will be explained in detail in the following posts, is that ordering the wheelchair through United cost over 100% more than if I had bought the wheelchair with cash. In other words, being uninsured and forced to pay out-of-pocket would have saved me 50% over what I paid after using all of United’s purchasing power.

I have argued repeatedly that the only legitimate (i.e., not Beltway math) way to pay for reform is to tax the employer-sponsored benefit. That, in turn, is the only likely positive unintended consequence of healthcare reform – the “shock and awe” that is currently being focused on partisan advertisements would instead become the fuel of a consumer revolution in healthcare to usher in a value-based healthcare economy. As you will see in what follows, I think that all of us would ultimately benefit.