Tag Archives: radiology

Important Alliance to Fight Health Costs

The Wall Street Journal reported that 20 large U.S. companies joined to fight high healthcare costs, launching the aptly named Health Transformation Alliance. Employers account for one in five dollars spent on healthcare in the U.S., yet they have relatively weak influence in the marketplace. But these influential companies are intent on aggressive action. With this kind of unified leadership, the alliance promises to shake the foundations of our health care economy.

There have been other efforts to harness the power of the business community to improve health care. My organization, the Leapfrog Group, is one such effort, founded by Business Roundtable in 2000 to address quality and patient safety in hospitals. Based on what we’ve learned over the past 16 years, here are three key principles for the alliance to start with:

  1. Lowering costs won’t automatically lower prices.

Whenever the subject of cost reduction comes up, some providers tout the enormous cost savings they have put in place through improved efficiencies, better technology or less invasive procedures. Recently, they have also pointed to the potential of large hospital system mergers to reduce costs through economies of scale. But employers are right to wonder why their own healthcare price tag continues to rise, despite these marvelous advances. Why don’t they see the cost savings?

Simply put, cost savings to the provider are not the same as cost savings to the purchaser. This sounds like such an obvious point. But the obfuscation over whose costs are saved persists and trips up progress year after year, with purchasers left scratching their heads. The alliance members will succeed in cutting their own prices only if they clearly demand that cost-reduction strategies have visible and substantial effects on their own bottom lines.

  1. Lowering prices won’t automatically lower costs.

Even if purchasers do succeed in lowering prices, the cost-reduction job is not done. That’s because the amount of waste in healthcare is profound. The Institute of Medicine estimates that as much as one-third of all costs are associated with unnecessary services, errors, infections and management inefficiencies. Not all providers are the same, and some incur much more waste than others. Whatever the price of a particular procedure, it’s no bargain when there are infections, complications and mismanagement—or if the procedure wasn’t medically necessary in the first place.

This is not chump change, this is game change. A 2013 study in the Journal of the American Medical Associaton (JAMA) reported that, on average, purchasers paid $39,000 extra when a patient contracted a surgical site infection. That excess doesn’t show up on the claim as a line item called “waste.” It is buried in a series of excess fees, tests, treatments and time spent in the hospital. Employers intent on cutting costs must factor wastefulness into the pricing equation.

  1.  Focus on the market incentives.

Our system of costs and pricing creates perverse incentives. The more a provider wastes, the more it can bill the employers. New financing models are slowly emerging, aimed at achieving value—the novel idea that payments align with patient outcomes. One of the most promising models is called “bundled pricing,” in which a health system is paid one total price for a particular procedure, including physician fees, radiology, hospital charges, etc. In this model, a provider is given incentives to actually reduce waste, so it maximizes profit under the bundle.

Some large employers have developed bundled pricing arrangements with a select group of health systems, for a select group of procedures. Walmart is a leader in this, as are employer members of the Pacific Business Group on Health. What have they found? A significant reduction in waste and better care for employees.

Another promising use of bundled pricing is coming from international medical tourism. Health services and pharmaceuticals are often much less expensive overseas than in the U.S. Most international providers offer bundled pricing and concierge hosting services. For example, Health City Cayman Islands offers bundled prices for certain heart and orthopedic surgeries, including all facility and physician fees, along with pre- and post-operative care at a lovely beachfront hotel. Its prices are one-fourth to one-fifth those for comparable services in the U.S.

The problem with medical tourism: determining the quality of international providers. Employer groups, like the Health Transformation Alliance, must address this in their work. Once again, waste and quality need to be factored into the cost equation.

5 Questions on Telemedicine Coverage

Teleradiology and telemedicine have increasingly become popular as hospitals and other healthcare providers outsource their radiology and other specialty work to independent practitioners. These practitioners often operate from remote locations, with some based in the same city but many based in distant states or even overseas.

Telemedicine organizations provide diagnostic and clinical medical services to urgent care facilities, hospitals, trauma centers, imaging centers, mobile imaging units, jails, nursing homes, corporate health departments and outpatient medical facilities. As many physician practices enter into this dynamic field, they will find that their current malpractice carrier and the insurance coverage they offer cannot provide them with the pricing and coverage flexibility they will need.

The most common problems encountered will include:

  • Inability to cover reads that come from states outside of where the practice is located.
  • Lack of premium pricing flexibility to base premium on exposures (number of reads or revenue).
  • Lack of portability of coverage and “tail” issues for departing physicians.
  • Inflexibility in underwriting requirements for pre-approval of new or last-minute physicians reading for the group.

Any one of these issues can trigger the need to seek alternative coverage tailored for these exposures. Physicians in the telemedicine field will need to recognize their changing medical malpractice insurance needs and, with the help of their brokers, find insurance coverage that is designed for these types of practices and exposures.

When it comes to covering the telemedicine provider with professional liability insurance, here are five important questions you should ask when searching for the right coverage for this unique risk:

#1: Does your current policy allow for additions of employed or contracted physicians automatically or with a minimum amount of information about them up front?

Just about every telemedicine company will have a situation where it needs to add a provider quickly. Many carriers require a completed application and loss history prior to their approving additions to the provider roster. This creates an unnecessary logjam when telemedicine groups need to fill a spot in a hurry.

#2: Does your policy cover contracted services provided in any state?

As a growing telemedicine provider, you want to be able to obtain contracts in any state. Many carriers cannot cover exposures in all states.

#3: Does your current policy have continuous coverage for terminated/departed physicians after they leave the group?

It’s called Rolling IBNR coverage (Incurred but Not Reported), and having this coverage in place is critical for many telemedicine groups because of the transient nature of the physician labor force in this area. Having the coverage affects up-front negotiation of contracts as well as provides for a much smoother transition when a physician leaves the group as it eliminates the problem of having to purchase a tail for each departed doctor.

#4: Does your current policy provide individual limits for each employed or contracted physician?

Many carriers can provide only “per event” limits for the employed and contracted physicians. In a lot of cases, this is completely acceptable, and many telemedicine groups operate fine with this coverage. However, some groups encounter situations where the healthcare entity or governmental body they’re contracting with requires individual limits, not just per-event limits, for each employed or contracted doctor providing services on their behalf.

#5: Can your insurance carrier provide you with limits up to $5 million or more if statutes or contract clauses require it?

Many healthcare systems and governmental bodies are requiring higher limits from their contractors.

Physicians specializing in the areas of teleradiology or telemedicine should discuss these questions with their insurance broker to be sure they are adequately covered. As the healthcare landscape changes, so will the potential liability of the healthcare professionals. Finding the right malpractice insurance program can benefit these companies in many ways.

Healthcare Metrics: Driving Standards?

It’s a new day when healthcare providers choose to compete on quality metrics instead of their new edifices and images of smiling nurses on billboards.

I ran into a sterling example of competing on value when the Orthopedic & Sports Institute (OSI) in Appleton, WI, was pitching employers on its bundled prices and its quality. OSI offers all-in prices from pre-op to surgery to rehabilitation.

That is the ultimate of transparency — a pre-set price for the whole episode of care. No bills with a multitude of line items; no incomprehensible codes; no separate bills for radiology, anesthesiology or rehab. Just one fixed price. OSI offers employers a fixed pricing menu for a range of orthopedic procedures.

So confident about its outcomes is OSI that it includes a 90-day warranty on its surgeries. Readmissions are on the house, as they should be.

OSI is not alone. The Orthopedic Hospital of Wisconsin (OHOW) in Glendale offers similar deals to corporate payers.

Employers/payers in the private sector and local government are looking for that kind of value proposition, especially when coupled with the best healthcare metrics on quality. OSI President Curt Kubiak led his presentation with the clinic’s .3% infection rate in 2013, a very low number on a life-and-death metric. (Bloodstream infections, known as sepsis, kill more than 200,000 Americans per year in hospitals.)

Also in good shape at OSI were these three measures for 2013:

 Readmission rate of .8% (vs. a national average of 4%).
 Patient “fall” rate of only 3.9%.
 Pain management rate (5 or less on scale of 1 to 10) of 17.8% vs. a normal range of 40% to 60%.

Kubiak added that OSI’s goal is to get surgery patients back to work or to their lifestyles in an average of 20 days faster than other providers.

OSI is winning direct but non-exclusive contracts from employers as far away as Eau Claire. It believes that, if it does a great job, it doesn’t need to lock companies into exclusive contracts. They will return willingly. Sounds like a bit of a marketplace for healthcare, doesn’t it?

OSI executives remain somewhat frustrated at the slow pace of adoption of new pricing and delivery models. But they are winning business, and 10 years ago there was nothing like this model around. The train is moving pretty quickly down the tracks, at least by the standards of the enormous healthcare industry.

For the record, I have no connection to OSI, other than to steer Serigraph employees to what we call “centers of value” like OSI and OHOW.

We believe that steering employees to such centers with financial incentives is not only the smart thing to do from a cost perspective; We believe it is the ethical thing to do. Don’t employers have a moral obligation to help their people find the best medical outcomes?