Brain Kelepper, PH.D

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Healthcare Reform
What’s Behind the Curtain?
Brian Kelepper, Ph.D

Is Meaningful Health Care Reform Possible
Likely Reform Scenarios In Policy and the Marketplace

Category: PBCMS
Date: November 3, 2007
Views:6,612 views

Good morning. As you're about to find out, I have a little different view than the AMA. The - and I will not have such prepared marks. I'll be speaking right off the top of my head. Let's see if I can learn how to use the technology. Down - ah there. Is health care reform going to happen? No, absolutely not. There's no real reform that's going on in DC right now and for reasons that I'll talk about in a minute.

Where is healthcare reform going to actually happen? It's happening on the Web, it's happening in clinical settings and it's happening in corporate boardrooms who are really fed up with what's gone on so far.

I met a guy a couple of years ago who's a very experienced healthcare guy. And he said something that was very profound to me in a very offhand, off the cuff way. He said, "You know," he said, "when an employer sits down at the table with all of his healthcare relationships; the broker, the health plan, the doctor, the hospital, the drug company, the device company." Everybody in the room wants it to cost more except for him. And they're all in a position to make that happen. That is a really true statement; it's a really true statement.

The comments that you just heard from the American Medical Association, I was in a meeting last week in Dallas where Karen Ignani made those same appeals for the health plans. And I was in a meeting a month ago in Phoenix where a representative from the supply chain organizations made that very same appeal. These are the people who are driving the process. And everybody is doing it in a way that always deposits the patient's interests are first, but what they're really talking about also is the money.

Here's what's actually going on if you're on the ground and in the world. You have unrelenting premium growth; huge premium growth. Shrinking benefits, people are having a terrible time. Dependent subsidies have all but disappeared and I'll talk about that in a minute. Of course you have rising uninsureds but more importantly under insureds. Tremendous bad dept, not only at the hospital level but at the doctor level too. People breaking their office appointments. They're not showing up or they come in and they can't pay; new levels. Simmering consumer rage.

Remember, it must be ten years ago, there was a movie with Jack Nicholson and there was some woman who had a sick child and HMOs came up and she released a string of expletives and then afterwards all the audiences clapped. We've got that cued right now.

And health plan enrollments are absolutely plummeting; plummeting. Health plans are in the worst shape they've ever been in in 50 years. It couldn't happen to nicer people, don't get me wrong about that. This is health cost growth over the last decade. It has grown four times as fast as everything else in the economy; four times as fast. Three-and-a-half times as fast as workers earnings. Nothing can withstand that, nothing. And the cost goes to everybody in the healthcare industry.

Now for those of you who are also long-lived in this you'll remember that in 1999 United Health Group made an announcement that they were going to be really benevolent. They were going to stop doing medical management because it pissed off the doctors and it pissed off the patients. And what they were really thinking was that health plans make a percentage of the total. So they wanted the total to be more. And when they reduced any police action, utilization would explode and the total cost would be more and they would make more.

And that's exactly what has happened for the last decade. This chart, which is hard to read, shows that in the seven years before 1999 healthcare cost growth was 25% and the seven years after it was 60%. So two-and-a-half times the cost growth when they simply made that move. And then every other health plan in the country made exactly the same move. Now health plans are up against a wall because now they've priced everybody out of the market by releasing this. And now they're trying desperately to figure out how to reinstitute medical management if they don't they're losing all of their members.

This is the loss in commercial health plan enrollment. These are numbers from AIS which is pretty reputable. And what you see is that since 2005 we've lost about 20 million people in enrollment to commercial health plans. This is unprecedented. Commercial health plan enrollment grew and grew and grew and grew until it got to 180 million and then it plummeted to this. And this doesn't even tell the story because there's a lot that's not in here. This is an 11% drop just in four years. Think about this, five million Americans dropping out of coverage in four years. You haven't heard anything about it.

Now there's other stuff. And this is more important. About six months ago I was facilitating a meeting of about 20 major health plan executives and I threw out a number that has been the ratio for my entire career. If you wanted to know how many lives there were in a group, you took the number of employees and you multiplied it by 2.2 or 2.3. A guy from Cigna raises his hand and says, "No, it's not that anymore. Over the last four years that number has dropped to 1.75." That's a 20% drop. That's a 20% drop in total enrollment.

Theoretically that would be 36 million more people who are not on coverage. And who are those people? Those are children. Those are children because employers no longer able to afford the rates of insurance, are no longer covering dependent coverage. So the kids get dropped first.

And if you look at the Kaiser data, when somebody loses coverage, about 40% of those people become uninsured, about 30% of them go on Medicaid and about 30% of them get individual coverage. So we're talking about enormous numbers of people who are seriously in distress, do not have the same access to coverage or are at serious, serious peril of going bankrupt if they have an event.

What does all of this boil down to? We've got healthcare costs rising, access is decreasing, available revenues to the industry are dropping and all the while demand is increasing. This is absolutely a perfect storm and it's not getting any better. And there are very clear structural underpinnings of all this that we have to talk about. It's important to talk about it because it's not just going to go away.

I do long distance ocean sailing by myself. And I always think about the fact that when something goes wrong, which it always does, when something goes wrong, when the boat springs a leak and I'm 800 miles offshore I don't have an ideology about how to fix the leak.

Here's the core of the problem. This is data from 2007 of the $2.8 billion that special interest gave to congress; $445 million of it was from the healthcare sector. Of that half was from the drug device and supply industry. This is where it lives. This is what's going on now. If you look at this year, just between January 1 and June 30 before it really got amped up. We have the numbers now for the first six months. But just in the first six months $263 million was given to senators and congressmen who willingly embraced it. Mostly democrats now; it used to be republicans, now it's mostly democrats. They all took the money in exchange for reshaping the legislation. Not in the interests of the American people, but in the interests of their corporate contributors. That is the cold harsh truth.

There is an equal amount of money, another quarter billion dollars that's been given on this issue by non-healthcare interests; people like AARP and NFIB and all those guys who want a say - the unions - they all want a say on this issue. So a half a billion dollars has been graced to the members of congress so that they will and that's how the game is played. So the AMA may have an important role in that, and they certainly do. So do a lot of other people. When the Baucus bill came out there were 560 amendments that were immediately attached to it and now they're working through the last few dozen of them.

Now it's also very important to recognize - I've got a letter, we'll see whether it gets published - an article that's pending with either the Wall Street Journal or The New York Times. That was written with the [Alan Antovin], the economist whose work was behind the original Clinton stuff before it got bastardized. As well as a very prominent physician, Dr. David Kibbe and a very prominent health policy analyst, Bob Laszewski that points out that none of the legislation that's currently on the table does anything to structurally change the system.

There are three very important things that are wrong with the system that I'll talk about. One is primary care is in crisis. And that crisis has effectively been created by the existing medical establishment. Two, a lack of transparency on any cost, any performance or on outcomes. And three a fee-for-service system that promotes doing more care, independent of its appropriateness, rather than rewarding the right care and outcomes. None of those three things are incorporated into the current legislative proposals.

And so what we've done is we've allocated more money for entitlements without anything that will take the tremendous waste, probably somewhere between 33% and 50% of all the money in healthcare is completely wasted. If you believe Brent James at Intermountain Health Care, arguably one of the best health systems in the country, and he's the physician driver of their tremendous success, it's 56%. So these are very important issues.

Here's the response from the CED, the Committee for Economic Development, to the initial proposals that came out. These are a little long but they bear looking at. The health committee proposals are unacceptable. They expand coverage without controlling costs leaving future generations with a system even worse than we have today. Lawmakers have bowed to political pressure at the expense of sensible policy. The business and policy community cannot stand behind these bills. This is a group of about 250 CEOs of large corporations and academics that are purely acting in the public interest. They don't have a dog in this fight except to say what's good for America and what's not.

Here's another thing, this is from Mayo. "Although there are some positive provisions in the current House Tri Committee Bill - including insurance for all and payment reform demonstration projects - the proposed legislation misses the opportunity to help create higher-quality, more affordable health care for patients. In fact it will do the opposite." This is unbelievable. This is a once in a generation opportunity and the whole system has failed.

What's going on in congress? There are four groups. There are two on the poles; there are two in the center. None of them can abide each other. And unfortunately on the left where you have two groups, the safe seaters and the running scareds who have a lot of conservatives in their districts, they can't talk to each other. The safe seaters have been in control and they've taken lots and lots and lots of money and they've been the architects of the bill so far. The people on the right, you have the right wing crazies and then you have the centrists.

And it's very, very difficult to break the log jam by getting the centrists together. That has been the core problem. We haven't been able to get the centrists together to come up with rational bills back in the interests of the public.

So what's the number one thing that we have to do to fix health care in some meaningful way for the patients and the people who are paying for it out there? We have to drive down costs, absolutely. And that's going to require to some extent changing the current business models and implementing proven solutions. And there are proven solutions.

And I want to spend the rest of my talk not hammering on what's wrong, but I want to show you some things that are wonderful. And that are going to change all of medicine in a very positive way. And that as I was sitting and listening to the talk last night about this wonderful institution that we're in I couldn't help thinking that this is one more example of things that are coming down the pipe. I mean that robotic device that was doing the assays at such a rapid rate. Was that not a mind blower? Really.

About two years ago I was invited to go out to Reno to the Northern Nevada Healthcare Coalition who called and said, "We want to have a big healthcare conference. We want to re-invigorate our interest in health care. And we'll bring everybody together. We've going to have the doctors and the hospitals and the health plans - everybody's going to come together and have a big happy business party."

And I said, "Look, do yourself a favor. Don't invite anybody from health care. They're going to tell you it's not as bad as you think. They're going to tell you they're working on it. They're going to obfuscate. Just invite the employers. Just invite the people who are paying the bills, first. And let's talk about the structural problems and let's talk about some of the issues.

And so they sent out 28 invitations and they got 48 acceptances. We had a two-and-a-half-hour meeting. We had it scheduled for two-and-a-half hours and we had accomplished everything we needed to accomplish in an hour and five minutes. And what we had asked them for was for all of these - this was in Reno.

One of the things I learned about Reno was that people who run casinos, they get how money works. We asked them to take all of their data and throw it into a pot and then we'd do analytics on the data. All modern analytic systems - risk adjust - they're all very credible. There are three or four primary algorithms that are used. It would behoove all of you to have a session with experts on this so you could put your mind at rest on how these are done.

And as a matter of fact, nearly all the health care analytics companies are run by physicians. That's another interesting comment. People who are afraid of being rated by tools, or people who simply are afraid of mathematics. But this stuff actually works when you have credible data. And almost all data that is coming down the pike is washed in a way that makes it credible.

I work with these data all day long every day and I can tell you that it doesn't matter to me which analytical algorithm I'm using. It doesn't matter if it's ETGs which are which unfortunately is a subsidiary of United or the 3MCRGs or DxCGs. Any of these tools are very, very credible and produce - they produce honest results.

We asked them to throw all their data into a pot. This is now up and running in Nevada. And it's producing very, very good, good strong results that we can talk about some time else. What are the main areas, first using data? And understanding what your data is and helping to use that data to identify the best choices and then creating incentives for doctors and patients and other people to make the right choices.

What am I talking about here? Well let's take a simple thing. I build and run clinics. I have a lot of doctors who work for me. These are comprehensive primary care clinics in three different kinds of sites; employer situations on-site or near-site clinics, prisons and image and care clinics. And I'm doing a lot of analysis on all the data that's coming out all the time. At the beginning of any year the first thing that we do is we look at retrospective claims data, we do health risk assessments and we do biometric blood draws.

And with those three kinds of procedures I can triangulate and identify two kinds of patients very accurately. First are the 15% or so of patients who have a chronic disease who are going to eat up 65-70% of all of the money. Second are the 3% of any population who are probably going to have a major acute event over the course of the next year; a heart attack or a stroke or something like that. I can identify the chronic patients. I immediately push them over to a disease management nurse. The data are unequivocal now.

But the only thing that has a shot at producing a lifestyle behavioral change is a face-to-face, - face-to-face, not call center - face-to-face interventions with a clinician that that patient has come to trust. And that's the key word, trust is the key word. And my nurses work collaboratively with the physicians the old fashioned way, by talking to each other and through the EHR, on that patient over time to work to change behaviors. And that's what works.

So we want them to do the health risk assessments. We create incentives for them to do that. If they do the HRA they get stuff and that's okay with us. In our clinics all the visits are free, all the drugs are free, all the labs are free, if they just use the clinic. Because it's much, much cheaper to get them in there and begin to manage them than it is to spend money on downstream care, on specialist care and inpatient care. Much, much, much better. These things really, really work.

Second, Health 2.0. Using the Web for consumer facing efforts and also for business facing efforts, transactional streamlining, decision support, all kinds of things like that. I'm going to show you some very interesting ventures. Three, re-empowering primary care. I'm going to talk a little bit about that. And finally I'm going to talk about business leadership on obesity and costs.

Understanding that obesity as the analog of the health care reform problem is the single largest cultural problem we have in America. The obesity epidemic is absolutely terrible and it's structurally identical to health care reform in the sense that it's not just about personal responsibility. It is about media interests, agribusiness interests, people who are making a lot of money and who throw a lot of money to congress to have open field running to sell their poisons to our children. That's what we have to understand.

Here's the data that most of you will not like. These are data from my friend Jerry Reeves in Vegas. Jerry is a physician; he's arguably the best health plan manager in the country. He's very, very highly respected. He's now the national Chief Medical Officer of the United Care Health Plan. And he developed a big reputation because when he took over the Culinary Fund Health Plans in Las Vegas, which is all the hotel and restaurant workers in that community, about 320,000 people. He drove so much money out of the system very, very rapidly that they gave everyone in the union a 60 cent an hour raise. These data are from there. They're four years old.

But what they show is that if you go into different specialties and different conditions and you hold the outcomes constant - these are identical outcomes - so you're pushing for the same outcomes. That there is a six to eight fold difference between the doctor who uses the least resources consistently and the doctor who uses the most resources consistently and which produces tremendous variation in cost to get the identical outcome. Now this is important data because you can go into any market and any specialty and you will see exactly the same problem.

Now there's a second thing I want to talk about as an aside. And that is the Norton Health System in Louisville where six years ago one of the senior executives made an executive decision and said, "We're going to publically publish all of our outcomes on every service in the facility and we're going to make that openly available." The medical staff flipped out, they took all the arc measures, they took all the NCQA measures, they just took all the measures that were available as standards and they put them up on their Web site where they have them today.

And what happened? Well the services and the docs that had great outcomes comparatively they gloated. But the ones who had lousy outcomes, they all of a sudden got terrified. And they got on the phone and they called people who they knew were getting better outcomes and they said, "So how are you doing it?" And all of the outcomes in the hospital improved, across the board.

And there's an important lesson here, which is that when there is no data on how you're doing you have no impetus to get better. When there is data and you can see how you actually do compared to how you think you probably do, then you're more likely to change. In every other aspect of American life we claim to believe in markets. And actually we claim that American health care is a market.

Adam Smith, the economist, said that to have a market work you have to have perfect information. We have no information in health care and that's why it's so important. It was a landmark case over the last couple of years where the AMA aligned with the Bush administration to fight the release of Medicare physician data. That's still pending. It was a case brought by a consumer advocacy group that initially won the case and then there was an appeal and the AMA lead the appeal in alliance with HHS through the Bush administration. It was overturned by 2:1 in a DC appeals court. If Medicare physician data were released we would easily be able to see how all doctors perform compared to their peers; very, very important. And the argument was that doctors have a right to privacy.

In the case of Medicare and Medicaid - let's talk frankly about this. Doctors are vendors taking public dollars. The only other vendors who take public dollars who receive that kind of protection are covert operatives. Yeah I know, it seems incredible to me too. So what you want to do is you want to find ways to aggregate data and then identify best results and approaches and you want to incent the optimal choices. This is going to happen anyway.

I just lead a meeting for the Georgia's governor's office. Where we brought in all the largest businesses in Georgia and we sat there - there was a representative there from United and one from Cigna. The guy from United who was the CEO of United in Georgia was sitting next to me. He was obviously terrified. And at the end of the meeting he stood up and he said, "Look, I want to make sure that everybody understands that we're behind this because I don't have any alternatives. And once you establish this new business health coalition we are going to give you all of our data."

Well if I have all of United's data I can do exactly the same I can do with the Medicare data. So the log jam is breaking loose. Once I have the data I can establish very credible analytical techniques and apply it to it I can make that data publically available and we can create market pressures.

Now here's a program that Jerry Reeves used in Vegas. And it's simply using a lot of data, a lot of counseling with doctors in the community. Brought them in, talked continually through it. He identified doctors who got little gold stars on his plan. And then he offered incentives for patients who went to gold star doctors.

What you can see in this chart is the migration of patients using the incentives to gold star doctors. It was a 30% increase in one year, two gold star doctors. And then over two years that saved that plan $69 million because those doctors were performing more effectively with demonstrably better clinical outcomes. Second, patients need to own their own data. The idea that a doctors group or the hospital or the health plan should own the patient's data needs to go away. Patients need to own their own data and then we use it. And so all data needs to flow into repositories that ultimately the patients have access to. That is the core thesis behind Microsoft HealthVault, Google Health, other efforts. Undoubtedly your effort where you're putting together a personal health record.

In my clinics we have personal health records that are available through the portal to all of our patients. Everything that's in the electronic health record is reflected over the PHR. When we take a blood draw on a patient we send it out to Lab Core. Lab Core does the analysis, they populate our EHRs, it's reflected back so patients can see their results the next morning on the PHR. I don't have that with my doctor but all of my patients do. Very, very important stuff.

BHCAG, the Buyers Health Care Action Group in Minneapolis, which is a bunch of really big companies; Target, Best Buy, Carlson Travel, 3M, those kinds of guys. They've been behind this. And there's a group that says big ROIs associated with making these kinds of data publically available. WorldDoc is a very, very interesting doctoral ed organization that creates patient decision support tools over the Web and has them deployed.

WorldDoc has an acute care diagnostic tool. See there's a little man there and you move your cursor over the little man and you click on parts of the body and symptoms drop down. And you click off your symptoms and it goes into an AI driven questionnaire and it will identify probable conditions. And it will say 'you need to go see the doctor' or 'you do not need to go see the doctor'. And here are drugs you can by over the counter. Very, very effective. Very credible.

Premera Blue Cross just tied into this as their national consumer engagement channel. It's cheap, it's very effective and it reduces a lot of unnecessary care. And it can be used by people with down to about a 4th grade level. Very interesting new development.

Here's a group that actually may be out of Boca if I'm not mistaken, Sensei, which is a weight management program that relies on texting. Enrollees can go into a restaurant and text in and say, "What can I eat here?" The responsiveness of these programs and the use of technology is phenomenal. And this one is focused primarily on weight management but it applies to a lot of other areas as well.

ChipRewards - ChipRewards is an incentives program, sort of S&H Green Stamps updated. Very interesting also.

WellCentive is the most important one from your perspective. This is a group developed by a Michigan physician, pulling in data from every place possible - claims, a lot of other places - EHR data - pulling it into a single registry, being able to cut the data in any way. And then an algorithm goes through every patient's aggregated record and identifies actionable items, care gaps and other things that the doctor can work on. Very, very helpful. It also allows you then once you've got lots of data to profile your various positions. There are lots of different ventures like this emerging.

RMD Networks, this is another very important one. Not an old-fashioned VHR like most of you are used to seeing. This is a platform. Think of it like this. I use Firefox as my browser. On Firefox I use an extension that allows me to see how hard the wind is blowing where I keep my sailboat. I know that's a little exotic but extend out that idea of extensions.

Now what you're getting with these new tools are very cheap. They're all Web-based. We're talking about a magnitude cheaper than client service systems. Very cheap platforms that are dashboards for the physician and that allow the physician to drill down immediately into anything they want to see; a patient's record, inventory management, care deps, best practice guidelines, analytics. Anything that you want to see can hang off of these things very, very cheaply.

Look at this, look at Practice Fusion which is an EHR system that's free. Look at DocSite, look at EMDs. Practice Fusion is another one.

Health Edge is a claims management engine that uses evidence-based protocols and will not reimburse, at least at the same levels, things that are unproven in the literature. Re-empowering primary care, I feel very strongly about this. Currently we have about 30%. Primary care about 70% specialties. All other developed nations have that ratio reversed and their costs are half of ours. It's the single biggest difference between us and everyone else. Very, very important.

And there all kinds of ways that we can move toward making fully realized medical homes. We have to change the way we pay primary care physicians. Last year in the state of Georgia four medical students went into primary care, and that's because primary care physicians make a quarter to a tenth of what specialists make. It's an absolute outrage. We've gutted it in this country and we've gutted it by design. And only the American people will suffer as a result.

My clinics are thriving and the reason for that is that I pay my - if an average doctor's in a community, the average PCP is making a hundred and a half, I start them at 250, no administrative responsibilities. And all I want them to do is to take care of patients. One doc to 1600 patients as opposed to 25-3500 out in the field. Twenty minute established office visits as opposed to 8 ½ out in the field. Let's do primary care right. That will drive down costs.

Specialties, we shouldn't pay specialists less. We should manage the process in a way so that there's dramatically less waste in the system and we have to create incentives to get there. So we have to change the legal service model which is part of the problem actually. By the way, CIGNA is moving into this full core. They know that they need to do something to drive down costs. the single biggest way to get there.

I'm going to move on, leadership on health and obesity. We are by far the fattest country. Here's what I have to say about that. This is all you need to know to know about our future. If obesity is a good predictor of health status, health status and productivity, productivity and competitiveness; the Japanese and Koreans are going to whip our fat asses. And this is a truism and again the source of the problem is lobbying. We have to get at the media, the fast food industries, the junk food industries, agribusiness. If we're going to fix this problem we have to do it.

To me there are only two places where the leadership on these kinds of issues can come from. That is from enlightened physicians who actually own up to what the problems are. And it has to come from American business leaders who have a direct financial stake in the future and they have the power in this country. We have no other power bases in the country. We have no centralized power base for patients or consumers so it has to come from other leaders. This is the single biggest problem. And these four conditions heat up 60% of all the money and account for 60% of all the debts and we can do much, much better.

To me all of these tools, all of these processes that are emerging in the market because they can't make their way in policy are the future and they are very, very exciting and very promising and they're going to change everything. And the old guard will just get run over in the process. So that's everything I have to say. Thank you very much.

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