Are You Ready for Intense Price Competition?

Note from Brian: The article below describes my recent keynote address to a large meeting of imaging center administrators, and appears in the Sept 2012 Radiology Today. I’m reposting it because it accurately reflects, in depth, the message that I tried to deliver.

Remarkably, the audience was evenly divided in their evaluations. Half thought it was a very important but difficult to hear talk. The other half thought I was a jerk and it was the worst talk they’d ever heard. My take on this is that the responses reflected an industry that has become comfortable with a lack of accountability and market forces, and that is highly threatened by change.

Jim Knaub

Published in Radiology TodaySeptember 2012, 13:8, p18

A keynote speaker told administrators to expect businesses threatened by ever-increasing healthcare costs with new approaches that will change how imaging organizations compete.

When Brian Klepper, PhD, delivered his keynote speech to the audience at the AHRA annual meeting in Kissimmee, Florida, last month, it was not the feel-good speech of the summer. Klepper, whose companies develop and manage worksite primary care clinics for employers and manage specialty care for those employees, told the audience that his company had recently negotiated a deal in Indiana for $450 MRI exams in a market that had technical fees ranging between $1,750 and $3,200. That was the opposite of a warm and fuzzy message to the 900 or so imaging administrators attending the meeting at the Gaylord Palms Resort and Convention Center.

“Somebody like me is going to come in to your market, and your volumes are going to plummet because there is no way you can compete against a $450 imaging price when you’re currently used to getting $2,800 or whatever you’re getting,” Klepper told the audience. “That is the problem.”

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Strengthening Primary Care With a New Professional Congress

Brian Klepper

Posted 10/01/12 on Medscape Connect’s Care & Cost Blog

Three months ago a post on this blog argued that America’s primary care associations, societies and membership groups have splintered into narrowly-focused specialties. Individually and together, they have proved unable to resist decades of assault on primary care by other health care interests. The article concluded that primary care needs a new, more inclusive organization focused on accumulating and leveraging the power required to influence policy in favor of primary care.

The intention was to strengthen rather than displace the 6 different societies – The American Academy of Family Physicians (AAFP), the American College of Physicians (ACP), the Society for General Internal Medicine (SGIM), the American Academy of Pediatrics (AAP), the American Osteopathic Association (AOA), the American Geriatrics Society (AGS) – that currently divide primary care’s physician membership and dilute its influence. Instead, a new organization would convene and galvanize primary care physicians in ways that enhance their power. It would also reach out and embrace other primary care groups – e.g., mid-level clinicians and primary care practice organizations – adding heft and resources, and reflecting the fact that primary care is increasingly a team-based endeavor.

We have come to believe that a single organization cannot be serviceable. Feedback on the article suggested that several entities were necessary to achieve a workable design.

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The Wrong Battles

Brian Klepper

Posted 9/20/12 on Medscape Connect’s Care and Cost Blog

This week the American Academy of Family Physicians (AAFP) issued a new report describing its vision of primary care’s future. Not surprisingly, the report talks about medical homes, with patient-centered, team-based care.

More surprisingly, though, it makes a point to insist that physicians, not nurse practitioners, should lead primary care practices. The important questions are whether nurse practitioners are qualified to independently practice primary care, and whether they can compensate for the primary care physician shortage. On both counts the AAFP thinks the answer is “no.”

AAFP marshals an important argument to bolster its position. Family physicians have four times as much education and training, accumulating an average of 21,700 hours, while nurse practitioners receive 5,350 hours.

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Primary Care’s Dilemma

Brian Klepper

Posted 9/12/12 on Medscape Connect’s Care and Cost Blog

Early in the new documentary, Escape Fire, which provides detailed portraits of US health care’s craziness, we meet Erin Martin MD, a young primary care physician in The Dalles, OR, who ultimately abandons her practice with low income patients. Time and financial constraints have frustrated her efforts to provide the care she believes is necessary to make a difference in people’s lives. Later, we see her in a business meeting with other primary care physicians in her new practice, reviewing financials. To maintain the practice’s revenues, they’ll need to see more patients, which means shorter patient visits. The defeat is palpable to her, to her colleagues and to the audience.

A few days ago, Rob Lamberts MD, 18 years into his practice, announced on The Health Care Blog that he was dropping out, leaving to go solo in a Direct Primary Care (DPC) practice catering to patients who can pay out-of-pocket rather than through insurance. Dr. Lamberts, a regular and characteristically sunny columnist, is workmanlike but chilly in his explanation.

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Demanding More From Medical Homes

Brian Klepper

Published 9/4/12 in Medical Home News 

Never confuse motion with action. 

Benjamin Franklin

A reporter called the other day to tell me that several local health systems now had medical homes. “I don’t think so,” I said.  She was emphatic. “They just told me they do.” I asked whether their medical homes take fee-for-service reimbursement. “I guess so,” she said. “Doesn’t everyone?” “Almost everyone,” I said. “But if they do, that means they have a financial stake in delivering unnecessary care.” By definition, that’s counter to the idea of a medical home, which provides the right care at the right time in the right context. You can’t have it both ways.

Virtually every organization remotely related to primary care now wraps itself in the mantle of patient-centered medical homes (PCMH), and many flaunt their Recognition by the National Committee for Quality Assurance (NCQA) as proof that they’ve met a standard. Presumably employers and other purchasers, enthused by the buzz surrounding medical homes, assume these credentials translate organically to better care at lower cost.

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Who Will Speak For Physicians and Their Patients?

Brian Klepper

Posted 8/29/12 on Medscape Connect’s Care and Cost Blog

Dr. George Lundberg has an important article on Medpage Today that deserves the thoughtful consideration of every American physician. He argues that the American Medical Association, a successful and representative organization for many decades, more recently “fails on both fronts” to fight for doctors and for the health of the American people. It has become, he says, “unsalvageable.”

In a companion piece earlier this month, he called on all physicians to become lifelong members of the AMA, as a way to gain professional impact and to make the AMA more reflective of American physicians’ concerns. “If you are an American physician and you don’t like what the AMA has done and is doing, if you are not a member, shut your mouth, you have no right to complain.”

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Will the Bubble Burst?

Brian Klepper

Posted 8/19/12 on Medscape Connect’s Care and Cost Blog

My recent 3-hour outpatient prostate biopsy generated nearly $25,000 in charges. My health plan will probably settle for four to five thousand dollars – this is the real market value – but if we were uninsured we’d be on the hook for the whole thing. All in all, a minor diagnostic procedure – nothing cured or treated – for the cost of a pretty nice car.

The capricious insanity of health care pricing is delivered with straight faces by health care professionals and executives to flabbergasted patients and benefits managers. It is the by-product of a system utterly devoid for decades of transparency, accountability or market pressures.

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The Most Important Health Care Group You’ve Never Heard Of

Brian Klepper and Paul Fischer

Posted 8/06/12 on Medscape Connect’s Care and Cost Blog

Excessive health care spending is overwhelming America’s economy, but the subtler truth is that this excess has been largely facilitated by subjugating primary care. A wealth of evidence shows that empowered primary care results in better outcomes at lower cost. Other developed nations have heeded this truth. But US payment policy has undervalued primary care while favoring specialists. The result has been spotty health quality, with costs that are double those in other industrialized countries. How did this happen, and what can we do about it.

American primary care physicians make about half what the average specialist takes home, so only the most idealistic medical students now choose primary care. Over a 30 year career, the average specialist will earn about $3.5 million more. Orthopedic surgeons will make $10 million more. Despite this pay difference, the volume, complexity and risk of primary care work has increased over time. Primary care office visits have, on average, shrunk from 20 minutes to 10 or less, and the next patient could have any disease, presenting in any way.

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Galvanizing Primary Care’s Power: A Call For A New Society

Brian Klepper

Posted 6/25/12 on Medscape’s Care & Cost Blog

The dream of reason did not take power into account – modern medicine is one of those extraordinary works of reason – but medicine is also a world of power.

Paul Starr, The Social Transformation of American Medicine, 1984

How can primary care’s position be reasserted as a policy leader rather than follower? Even though it is a linchpin discipline within America’s health system and its larger economy – a mass of evidence compellingly demonstrates that empowered primary care is associated with better health outcomes and lower costs – primary care has been overwhelmed and outmaneuvered by a health care industry intent on freeing access to lucrative downstream services and revenues. That compromise has produced a cascade of undesirable impacts that reach far beyond health care. Bringing American health care back into homeostasis will require a approach that appreciates and leverages power in ways that are different than in the past.

But primary care also has complicity in its own decline. It has been largely ineffective in communicating and advocating for its value, and in recruiting allies who share its interests. Equally important, it has failed to appreciate and protect primary care’s foundational role in US health care and the larger economy, as well as the advocacy demands of competing in a power-based policy environment.

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Patent Pools Pushed To Make Drugs Affordable in Developing World

Merrill Goozner

Published 5/9/12 in The Fiscal Times

Amid a growing crisis in financing treatments for AIDS, tuberculosis and malaria in the developing world, an arm of the World Health Organization will meet in Geneva later this month to consider alternative ways of producing lower-cost drugs, vaccines and diagnostic tools to fight the those diseases in poor countries.

A background report issued last month by a working group of the World Health Assembly called for establishing a global research and development treaty that would beef up research into cures for so-called neglected tropical diseases. It also called for the treaty to create mechanisms for ensuring the next generation of drugs for fighting those diseases could be produced by generic firms at prices barely above the cost of manufacturing.

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Whatever It Is, It’s Not Insurance

Tom Emerick

Posted 5/9/12 on Cracking Health Costs

Discussions about covering “pre-existing” health conditions occur frequently among health policy people. One frequent thread is that health insurers should not be allowed to deny coverage to people with pre-existing health condition. After all, aren’t those the people who need health insurance the most?  Sounds reasonable, doesn’t it?  Problem is that proposition is really not reasonable.

Let me explain.  For any kind of insurance to work right, the “contingent event” can not have already happened before you buy it.  In life insurance, the contingent event is the death of the policyholder.  You can’t buy life “insurance” on someone who has already died.  For homeowners insurance, you can’t buy fire insurance after the home has burned.

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Looking Beyond the Money: Crucial Steps to Getting Vaccines to Children

Lois Privor-Dumm

Posted 5/8/12 on Disruptive Women in Health Care

looking-beyond-the-money-crucial-steps-to-getting-vaccines-to-childrenWithout money, many nations can’t afford to tackle health care issues and introduce the life-saving vaccines that are critical to child survival in the developing world.  But even after a vaccine is introduced and money has been spent, some children never see even the first dose.  With so much investment and effort, you wonder — how can that be?

Take Nigeria, the country with the second largest number of child deaths globally.  Over the past few years, they’ve raised vaccine coverage in many parts of the country to nearly 70%.  But progress is fragile, and results uneven.  Some areas have coverage rates above 80%; others are barely providing any vaccine.  Economic status and presence or absence of donor funding don’t fully explain the disparities. It’s not just the money – there must be something more.

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Sue the Patient

Dan Munro

Posted 4/27/12 on Forbes

States often confer the tax-exempt status on hospitals with the expectation that certainly some services will be extended to the less fortunate with limited capacity to pay. Two of the more litigious hospitals in North Carolina are Carolinas HealthCare and Wilkes Regional Medical Center in North Wilkesboro. They each filed over 12,000 lawsuits against patients in the same five-year period. One of the controlling entities – Carolinas HealthCare System – reported annual profits of more than $300 million over the last three years. One facility, Carolinas Medical Center-Mercy (CMC-Mercy) promotes itself as a “Planetree Designated Patient-Centered Hospital.” Planetree, Inc (itself a non-profit) offers tiered designations (Bronze, Silver and Gold) for “achievement in patient-/person-centered care based on evidence and standards.” The designation appears to be loosely based on an “application review fee” ($2,500 – $5,000) and includes a “self-assessment.” CMC-Mercy’s Gold Designation status is prominently featured on the hospital’s website:

CMC-Mercy – Planetree Gold Designation

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Why US Health Costs are Higher Than Anywhere Else in the World

Jane Sarasohn-Kahn

Health Populi

The price of physician services, proliferation of clinical technology and the cost of obesity are the key drivers of higher health spending in the U.S., according to The Commonwealth Fund‘s latest analysis in their Issues of International Health Policytitled, Explaining High Health Care Spending in the United States: An International Comparison of Supply, Utilization, Prices, and Quality, published in May 2012.

The U.S. devotes 17.4% of the national economy to health spending, amounting to about $8,000 per person. The UK devotes about 10%, Germany 11.6%, France, 11.8%, Australia 8.7%, and Japan, 8.5%.

On the physician pay front, primary care doctors in the U.S. earn about $186,000 a year, compared with Australian colleagues who bring in about $92K a year, French peers at $96K per annum, Canadian PCPs earning $125,000, Germans at $131K, and British earning $160K.

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You Can Unleash This Horsepower!

Paul Levy

Posted 5/6/12 on Not Running a Hospital

Among the great hospital leaders in America, Jeffrey Thompson, CEO of the Gundersen Lutheran Health System in Wisconsin, stands out for going beyond achieving marvelous results in patient quality and safety.  Jeff’s commitment that his system will not accept mediocrity shows up in other arenas as well.  He and his board have adopted a corporate strategic plan that sets a goal of being “the best regionally and nationally on environmental stewardship and accountability.”

This is outlined in a recent keynote speech he gave at CleanMed 2012 in Denver.  Jeff pointed that hospitals have a large impact on the environment and on public health because of their use of electricity.  Noting that his system alone produces 500,000 pounds annually of airborne particulates tied to its electricity consumption, he concluded that reducing that impact can and should be tied into the culture of a health care institution.  He asserted, “We are going to be responsible to members of the community.  We are going to be transparent, and we are going to act to fix things.”

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