Is Hospital-Physician Integration Sustainable?

Reprinted courtesy of MCOL.

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Perspectives on a Selected Key Topic |     April 2011/May 2011     |   Volume Three Issue Two


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Will a material number of hospitals and their core medical staffs, that are relatively independent, evolve into highly integrated delivery systems during this decade, and why?

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William J DeMarco MA, CMC
Demarco1
President and CEO, Pendulum HealthCare Development Corporation

The great momentum brought about by government and private payers demand for more accountability is unstoppable. Rapid consolidation of hospitals and consolidation of physicians by physician groups, hospitals and now insurers will shift referral patterns and consumer preference. 1 out of 4 hospitals will fall short of providing value and close or be absorbed within 10 years.

Physicians will be offered higher prices to sell out to insurers and investors who value the short supply of PCPs and will try to control care demand by retooling the care system building ASC and small scale short stay hospital.

True clinical integration will follow for the survivors. The ability to prospectively develop clinical budgets and bundles of services will connect regional tertiary and quaternary care facilities to local hospitals so integration can be regionalized across larger populations and payer segments.

Once these delivery systems realize they need a product recognizable to individual consumers they will seek alliance with select insurers or create their own insurance company thereby achieving the true definition of integration which is to integrate financing and delivery of care.

This offers the shared savings with themselves and stabilizes patient flow and overhead to achieve value to purchasers and users of care.

We think these opportunities will be at a tipping point on a market by market basis over the next 5 years and will be a national definition of success within 8 years. We believe this will happen because already the bond rating companies are looking at physician alignment and payer alignment as factors in establishing credit worthiness of hospitals for expansion and mergers.

Benjamin Isgur
Isgur2
Director, PricewaterhouseCoopers LLP’s Health Research Institute

Integration is certainly on the rise. The notion of independent physicians may be a myth because so-called independent physicians are becoming increasingly financially tethered to hospitals. In fact fifty-six percent of physicians PwC surveyed want to more closely align with a hospital in order to increase their income. The new health reform law focuses on population health and adopts a Medicare compensation model that penalizes poor quality and rewards cost savings and electronic information sharing. Some commercial payers are also pushing this business model.

Through the Lens of Disruptive Innovation: Why Direct is a Hit and PCAST is an Outcast

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(click on the graphics to link to original sources)

Regular readers know that I find Professor Clay Christensen’s theory of disruptive innovation to be a useful lens to explain industry evolution. Let’s look at two recent health IT initiatives and see why one is working and the other is stalled.

List of Top 10 Health Plan Issues — Out of Whack!

Healthcare IT News just published its list of top issues for health plans in 2011:

1. Administrative Mandates (Compliance HIPAA 5010, ICD-10, etc.).
2. Care Management, Data Analytics, and Informatics.
3. Health Insurance Exchanges and Individual Markets.
4. New Provider Payment & Delivery Systems (ACOs, PCMHs, etc.).
5. Bend the Cost Trend.
6. Medicare and Medicaid.
7. Health Information Exchanges and EMRs.
8. Consumer’s Role in the Modernization of Healthcare.
9. Reform Uncertainties.
10. Payer/Provider Interoperability.

Dear health plan colleagues,

Wake up! The order of this list is totally out of whack.

#2: Care Management, Data Analytics, Informatics. Good…sounds about right.

However,

#2 can’t happen before you address:

#7: HIEs and EMRs

#10: Payer/Provider Interoperability

Health plans can’t analyze the data and assist in care management unless they first have access to it. Payers need access to clinical data, and they are at risk of being cut out of the loop.

P.S.

Please also take a look at priority #1: Administrative Mandates (Compliance HIPAA 5010, ICD-10, etc.). This is completely reactive!

In these times of great change, is this how health plans want to posture themselves in the community?

Electronic Health Information Exchange — Way More Complicated Than Getting Money from an ATM

“If banks can exchange funds electronically through the ATM system, why can’t my doctor and hospital exchange information electronically?”

Keith Boone’s concise article “A Doctor is Not a Bank” explains why this conclusion about healthcare interoperability is overly-simplistic.

…and Keith’s article reminded me of an even deeper explanation presented in the National Academies’ Frontiers of Engineering series — Why Health Information Technology Doesn’t Work, by Elmer Bernstam and Todd Johnson. The table below summarizes the differences between health data and banking data.

 

Getting DIRECTly to the Point: The Role of the Direct Project in Fast-Tracking Health IT Interoperability

By Rich Elmore and Arien Malec. Rich Elmore is the Direct Project Communication Workgroup leader and Vice President, Strategic Initiatives at Allscripts.  Arien Malec is ONC’s Coordinator, Direct Project and Coordinator, S&I Framework.

A patient’s health records are no longer confined to a doctor’s office, shelved inside a dusty file cabinet. With the advent of the Nationwide Health Information Network, a framework of standards, services and policies that allow health practitioners to securely exchange health data, medical records digitized to be easily shared between doctor’s offices, hospitals, benefit providers, government agencies and other health organizations, all across America.

This health information exchange is dramatically enhanced by the Direct Project. Launched in March 2010, the Direct Project was created to enable a simple, direct, secure and scalable way for participants to send authenticated, encrypted health information to known, trusted recipients over the Internet in support of Stage 1 Meaningful Use requirements. The Direct Project has more than 200 participants from over 60 different organizations. These participants include EHR and PHR vendors, medical organizations, systems integrators, integrated delivery networks, federal organizations, state and regional health information organizations, organizations that provide health information exchange capabilities, and health information technology vendors.

Comments to ONC: PCAST HIT Report Becomes a Political Piñata

The PCAST Report on Health IT has become a political piñata. 

Early Feedback on PCAST 

Like many of my colleagues, I was taken aback by the release of the Report in early December 2010 — I didn’t know quite what to make of it. Response in the first week of release was: 
  • Limited. The first commentaries were primarily by technical and/or clinical bloggers. The mainstream HIT world had remarkably little initial reaction to the Report. 
  • Respectful of the imprimatur of “The President’s” Report and noting some of the big names associated with the report (e.g., Google’s Eric Schmidt and Microsoft’s Craig Mundie.)
  • Focused on technical and/or clinical perspectives around two broad themes.
    • The vision is on target:  “extraordinary”, “breathtakingly innovative”.
    • These guys didn’t do all their technical homework. The range varies, but the message is consistent. 

Today’s POV on PCAST 

What  a difference a six weeks makes. 

Walled Gardens vs. the Open Web: A Central Debate in Tech Finally Coming to Healthcare

The September issue of Wired magazine and an article in last Sunday’s New York Times illustrate a central debate in technology circles. The debate is not new — it’s being going on for two decades — but it has newfound vibrancy. The essence of the debate is about competing tech/business models: walled gardens vs. the open world wide web (web).

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vs.

 

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The debate is highly controversial and nuanced. There are “experts” on both sides.

My point today is not to take sides (although I’ll admit my canine partiality to the open web), but rather:

  • to point out that the debate is occurring 
  • to explain what the discussions are about
  • to suggest that competition between walled gardens vs. the open web is creating healthy competition and providing consumers with great choices (e.g., Apple iPhone as a walled garden vs. Google Android OS as a more open approach)
  • to point out that health care has not had much to say in this debate…until very recently.

A while back I started writing a series “Healthcare Crosses the Chasm to the Network Economy” . This essay continues that series.

Six First-Take Reactions to Surescripts Network Expansion

Yesterday Surescripts announced their new Clinical Interoperability Services:

  • Extended Network Connectivity – As a network of networks, Surescripts will support and enable the exchange of all types of clinical messages between EHRs, HIEs and health systems that, today, are not connected with each other.
  • Net2Net Connect – Allows health systems and technology vendors that already support clinical information sharing within their network to connect to Surescripts in order to receive and send clinical information outside their network (December 2010).
  • Message Stream – Secure messaging tools for health systems and technology vendors to enable their physicians to electronically exchange clinical information (December 2010).
  • Clinical Message Portal – Simple connectivity tools intended for providers that, today, do not have an EHR system to send and receive clinical messages. (January 2011).

Many others have recapped the new Surescripts network, so I’ll simply point you to a few of these resources:

Here are my 6 first-take reactions.

Healthcare IT News Highlights Mobile Health Expo Presentation

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Mike Miliard did a great job in capturing highlights and key points of my presentation at the Mobile Health Expo conference earlier this week. You can read his story here.

Please write me at vincek@bhtinfo.com in you’d like a copy of the PowerPoint presentation.

Update:  Neil Versel of FierceEMR also wrote up the presentation.  Here’s a link to his concise, on-target article “HIE, mobility, open platforms start to knock down ‘walled gardens’ of proprietary EMRs.”

The State-of-the-Art of Care Management Software: Disconnected

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Care management software is intended to help patients make critical connections across the health care delivery system.  Today it’s used primarily by 3rd party care managers who are typically either employed directed or indirectly by payers. While not surprising, the state-of-the-art of care management software is that it continues to function as disconnected islands of information.

The  2010 Health Information Technology Survey (available at no charge) provides an insightful yet sobering snapshot of care management software. The study was sponsored by TCS Healthcare Technologies, the Case Management Society of America, and the American Board of Quality Assurance and Utilization Review Physicians.

The study consists of answers from 670 respondents who chose to fill out to a web based survey; most respondents are direct care managers. 

The results are further broken down by subcategories of care management:  case management, disease management, utilization management, nurse triage, independent review organization, pharmacy benefits management, and behavioral health.  Variability among these subcategories should be considered directional given that the respondents are self-selected. The study doesn’t portend to be methodological rigorous, yet it’s a tremendously useful glimpse into the realities of care managers and the software they use.

Here are some key conclusions (mine) based on findings shown in Table 5A.  The numbers reflect the percentage of care manager respondents who indicated that their software provided specific capabilities.