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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?

Medical Homes Change the Game

Washington county and Wisconsin are right in the middle of a seismic shift in the delivery of healthcare in America – from primary care as a loss leader for the big hospital corporations to medical homes for employees right at the work site.

The latest company to install an on-site clinic is West Bend Mutual Insurance, the largest employer in the county. West Bend has reportedly contracted with QuadMed, a subsidiary of QuadGraphics, another major employer in the state and county.

This clinic will be the “silver lining” for West Bend’s 1,100 employes, who have always enjoyed great benefits and work environment. “Silver lining” is the tag line for West Bend’s advertising and refers to the protection offered to policyholders. But it also fits what the new benefit will do for its workforce.

They will enjoy convenient, relationship-based, long-term-oriented, proactive and cost-effective primary care on campus. Those adjectives do not generally apply to the in-and-out, symptom care in big system medicine.

West Bend and its people can expect to see significant improvements in their workforce health metrics, like the percentage of smokers, cholesterol levels, blood pressure and even body mass index.

They can also expect to see health costs drop 20% to 30% over time. That’s been the audited experience of QuadGraphics, which pioneered on-site health care starting in 1990. Its QuadMed now provides contracted medical homes for 120 major employers in 90 clinics across the country serving 150,000 members. That includes NML, Briggs & Stratton, Kohler, Rockwell and MillerCoors.

Quad is one of several dozen entrepreneurial providers that have jumped into the business of on-site or near-site clinics. Quad started with its own employees and fulltime doctors, but now offers a menu of other options, such as clinics headed by a nurse practitioner (NP).

Serigraph contracts for its on-site clinic with Interra Health, a Brookfield-based provider. We also contract with Paladina Health, which has roots in Wisconsin, for part-time primary care doctors. Five other manufacturers in the county also use Paladina’s “concierge” doctors for their people.

HealthStats, Charlotte N.C., installed a clinic headed by a physicians’ assistant (PA) for the West Bend School District in 2013. Savings are already apparent. Office visits, for example, typically run $22 to $40 at on-site clinics vs. $160 to $190 at the big systems. Lab tests cost about half of what big systems charge.

HealthStats also won a trifecta with a contract for a clinic for the county, city and school district in Waukesha. It also services city of Kenosha employees. Other local governments and school districts are jumping on the bandwagon.

You get the picture. The nature of primary care in America is changing rapidly toward a model that keeps people well and out of the expensive, dangerous hospitals.

The big healthcare corporations have realized the challenge, and some, like Froedtert and Pro Health, are overhauling their business models to offer clinics tailored for employers and their employees. They are late to the game, but appear to be responding to the competition.

A few hospital-based systems, like Bellin Health of Green Bay and Theda Care of Appleton, saw the train coming early and moved fast into direct contracting with private companies. Their clinics center on patients as customers, as opposed to the specialist -centered model of the big systems that drove U.S. healthcare into unsustainable hyperinflation.

Here’s a major piece of irony: The Affordable Care Act, aka Obamacare, was supposed to address the cost issues but has worked to drive up premiums. It is employers and their entrepreneurial vendors for medical homes that are bending the curve for American health costs.

Disruptive innovation – if ever an industry needed disruption, it’s U.S. healthcare – is just getting started. Some big players are joining the revolution. DaVita, the nationwide dialysis chain, bought the predecessor to Paladina. Humana bought the Concentra clinic chain. Walgreens runs clinics. Not all are holistic medical homes, but they are headed in that direction.

Just recently, QuadMed and Walmart cut a deal to run a pilot that moves Walmart’s rudimentary clinics into a fuller range of services, headed by a PA or NP. Office visits are $40. If the pilot works, and Walmart puts its full muscle behind this new delivery model for primary care, look out.

The concept behind medical homes is sound. They allow employers to attack both sides of the healthcare equation – health and health costs. The contracted medical teams can home in on every employee with a chronic disease condition, the source of most costs. They are passionate about getting the disease conditions under control. Better and better predictive analytic tools help to identify those high-risk employes.

On the economic side, if expensive specialist care is needed, the teams can direct patients to the highest-value providers for both quality and price. With price variations routinely of more than 300%, there are easy pickings for savings. New transparency tools highlight the best buys. In short, the medical homes put employers back in charge of the medical supply chain.

The happy ending of this blog is that Washington county and some parts of Wisconsin are leaders in the medical home movement. We are early winners in terms of big savings.

When Leaders Don’t Lead on Medicaid

The big debate across the states over the expansion of Medicaid only deals with half of the equation.

The first half of the equation is political: who gets added to the entitlement rolls and who doesn’t. Wisconsin’s Gov. Walker, for example, decided to: turn down federal funds for expanding coverage; add 80,000 adults who are below the poverty line; and move some 70,000 residents who are above the line to the new federal exchange and subsidies.

But Wisconsin, like other states and the federal government, has ducked the rest of the issue: the staggering cost increases. Medicaid expenses, for which the states pay about 40% and the feds 60%, are crowding out funding for just about every other priority: K-12 education, the university system, environmental advances and economic development.

It’s the same story on health costs at the federal level. Medicaid, Medicare and the health bill for federal employees are the biggest driver of the crushing federal deficit. One recent secretary of defense said the department spends more on health costs than on weapons.

The void in the debate is the deafening silence on how to get the costs under control, with the exception of cutting people off the rolls.

It’s especially sad because there are solutions. Leading-edge employers in the private sector have put together a new business model for the delivery of health care that drastically lowers costs while improving health. Their best practices are applicable in the public sector, as some units of local government have discovered to great advantage.

Here are some proven, audited, beyond-debate cost-cutting moves that could be made with Medicaid plans:

  • Consumer-Driven Health Plans (CDHP) — Indiana has received a waiver from the Obama Administration to install Health Savings Accounts and to set higher deductibles for Medicaid recipients. Such CDHP plans cut costs by 20-30%. School districts and counties have deployed HSAs, as has Indiana for state employees and Purdue. Medicaid is rife with utilization abuse, because of an absence of such incentives and disincentives.
  • Reference Based Pricing (RBP) — CALPERS, the giant California pension fund that buys health care for 1.3 million members, has installed caps on procedures, such as $1,500 for colonoscopies and $30,000 for joint replacements. It’s easy to pay twice those maximums or more. But why do it? Why not RBPs for Medicaid? Note: A good number of providers have accepted the maximum prices.
  • Medical Homes — Another 20-30% can be cut from medical costs by offering proactive primary care. Many companies have set up on-site clinics to provide holistic care and keep people out of expensive hospitals. Why not set up medical homes where there are concentrations of Medicaid patients? Primary care is a lot less expensive than specialty care, the main offering of large hospital corporations. It’s also less expensive by far than care from emergency rooms, to which Medicaid entitlees often default. Obamacare provides some funds for community health centers, so there is a start for such medical homes.

The biggest problem for introducing aggressive and innovative management into Medicaid dynamics is the joint ownership of the program by federal and state governments. Differing agendas produce stalemate in most states. And, in the void, the costs scream upward.

Gov. Walker turned down the new federal dollars for a larger Medicaid program because of skepticism about the long-term availability of federal dollars. The soaring, unsustainable cost increases give substance to his position.

But his worry should be redirected to the costs. His concerns could be mitigated if the overall charges were sharply reduced.

He would look presidential if he followed the lead of private sector payers. That, again sadly, is in the political arena, so he probably wouldn’t get a federal waiver from the Obama administration for innovations, even if Indiana did.

Who loses in the managerial paralysis, when leaders don’t lead? In the case of Medicaid, it’s the taxpayers and poor people.