After $1B spent — VA and DoD abandon joint EHR effort — shocking news!

I don’t know what is more outrageous:

  • the fact that both the VA and DoD have technologically out-of-date and insufficient HIT systems, despite spending hundreds of millions of dollars ANNUALLY to support them
  • the fact that after nearly a decade of efforts — interoperability between the systems is still a ‘future promise’ instead of an everyday reality
  • that politicians (President, Congress) make grand promises, divert lots of attention and money and have absolutely zero accountability to achieve meaningful results

I sympathize with the hard working and well-intentioned folks within the DoD and VA that build and procure their HIT systems — the context and rules within which they operate are screwed up to say the least.     That said, I can’t get myself too excited about the ‘sky is falling’ chorus around the upcoming budget cuts from the ‘sequester’.   This is but one example (of hundreds) where current government spending (I’m sorry “investment”) is not increasing productivity, real GDP or infrastructure for the future.

Audacity of spin-handlers for Obamacare

I respect Don Berwick and Zeke Emanuel as smart, thoughtful and well intentioned policy folks.   Yesterday in an Op-Ed in the WSJ they tried to position Obamacare as ‘market-friendly’.   The audacity of positioning Obamacare as ‘market-friendly’ vs. the proposals of Romney/Ryan is just so outrageous that it can’t be allowed to stand without comment.   They must be subscribing to the theory the bigger the lie they tell — the more likely it is for the public to believe it.    From a quick scan of the online comments — at least they aren’t fooling the WSJ online readers.

One should really worry about the diagnosis and treatment plan from their physician when they either don’t see/acknowledge relevant facts or miscontrue the evidence to fit their preconceived notions, as is the case here.    Let’s go through some missing facts/evidence:

  • Medicare Part D — prescription drug benefits:   the market based approach of multiple plans, with different prices/formularies competing — with the consumer able to choose the right fit for them — has been a huge success and been substantially more cost-effective than any CBO or CMS projection at the time.
  • Medicare Advantage Plans:   super popular with Medicare beneficiaries — over 12M+ enrollees.   Again a program where the consumer chooses and the market is competing for their business.    Oh wait — maybe they didn’t mention this because Obamacare takes a lot of money from this program.    Furthermore — the whole point of MA plans is to encourage a focus on value (not volume) as they say they want (and I agree is critical — see prior post) — but just not in this ‘market-friendly’ approach.
  • Their approach is totally top down (ever see a top down, centrally controlled market work?):
  • support point 1 — administrative costs lower in CMS vs. private insurance — this is a total red-herring of comparing apples and oranges — but demonstrates clear bias to government centered
  • support point 2 — experts have determined that ‘bundles of care’ is critical to payment reform and CMS will help determine what payment models will work.    The rate of innovation will be determined by CMS and is again ‘expert-centered’ or government controlled.   This isn’t the way most markets work well.    Now — I accept that somehow CMS payments have to be reformed.    Seems like ‘vouchers’ with consumers choosing and suppliers competing might be a lot more likely to succeed here — even if it is messier.
  • support point 3 — IPAB.    This is the epitome of government centered without accountability.  I accept IPAB might be better than Congress in making recommendations on how to control costs — but to position it as ‘market-friendly’ and innovative — really?
  • Ryan Voucher plan:   the authors simply assert the Ryan voucher plan is “inadequate” and imply that throwing Medicare members on the ‘private market’ is inhumane….but provide no evidence (see first two facts above).   They prefer one size fits all vs. consumers/suppliers interacting in a marketplace to figure it out and drive continuous improvement.   The IOM recently released a report that estimated 33% of today’s health spend is waste and does not add to “value” in the form of better health outcomes — that is $750B in annual spend. Here is some evidence to suggest there is no credible reason today to say the ‘vouchers’ are inadequate.     It is more like the Chicago Teachers Union saying vouchers and charter schools can’t work — despite all the evidence that they do in the communities that have tried them.

After 60 years of a largely single payer, government run system in England the Cameron government has proposed real reforms that would move their system to be way more ‘market-friendly’, innovative in health delivery and empowering of consumer choice than Obamacare.    I prefer their treatment plan tothe authors.

We need a real political dialog in this country about the best framework to get more “value” from our health care expenditures — public and private.    The framers and spin handlers of Obamacare did not stimulate that objective debate….which was a huge disappointment and a lost opportunity.

Thoughts on the Supreme Court decision on Obamacare

One can’t have a serious health blog and not discuss the Supreme Court decision to uphold most of Obamacare.    My initial reaction was real disappointment — because I truly believe the law is a bad law and bad for the future of our country.   I am not a lawyer and Roberts’ logic seems somewhat tortured, but after reading several legal blogs on the topic — I believe Roberts was sincere and apolitical in his reasoning and I support the outcome and the process.

As I have written previoulsy, the real problem is Obamacare does little to solve the true health care crisis in our country.   Worse, the political dialog regarding Obamacare has done nothing to educate the citizenry about the dysfunctional health system which could have enabled a more sustainable set of solutions.

There are three pillars — Access, Cost and Quality — that are part of any discussion for improving our health care system.   They are all important and intertwined.   Obamacare primarily deals with Access (individual mandate, pre-existing conditions, insurance exchanges etc.) but it does nothing meaningfuj and systematic to improve either Cost or Quality.   The biggest issue in our healthcare system is economic — we are not getting sufficient Value out of our huge healthcare spend (Value = quality of health outcomes – cost over time).   For example, the IOM and other experts believe that 30+% of our $2.2 trillion of spend is wasted — that is $750B annually!!!    The only sustainable solution to increasing Access is to make health care more economically affordable, which requires an improvement in Value, which requires changing the way the system is organized and incentivized.  Obamacare does not do this and in fact, probably makes things worse re: affordability and sustainability.   Increased Access to insurance within the current framework obviously does not drive or improve affordability — or we would not have the unsustainable health care cost trend we do.

I will develop further the themes of Value and affordability in future blogs.  This WSJ op-ed is a good start.   My strongly held personal belief is that free enterprise, marketplaces and competition amongst providers and payers is much more likely to improve Value and affordability than more government rules and bureaucracy.

Which leads me to my biggest concern resulting from the Obamacare political debate…which is; is our country headed more toward socialism vs. our traditional strength of ‘free markets and free peoples’.    As Chief Justice Roberts noted in his opinion — it is not the job of the Supreme Court to “protect the people from the consequences of their political choices.”

TEDMED — further thoughts

There was no way I could keep up with the stream of incoming thoughts and people that I experienced at TEDMED.   Plus TEDMED had their own blog — which provides better coverage than I can do — so here is the official blog…which is worth a scan.

I learned a lot from TEDMED — I was particularly interested to learn about my microbiome.   The speaker — Jonathan Eisen — suggested it should be considered an organ, just like our skin.    His blog on the topic is here.

There were many thought-provoking questions:

  • the real impact of bias in the way data is published and shared from clinical trials.
  • the evolutionary future challenge of drug resistant bacteria — and whether it should impact treatment today and how
  • using gaming/crowdsourcing to figure out the right structure for a protein (go U of Washington)

One observation — which is further exemplified by the 20 grand challenges selected out of over 40 choices — is that there are SO MANY worth causes (diseases, fixing science in so many ways, engaging consumers etc) that real progress is on core issues (my definition — like getting a value driven, consumer centered health delivery system) is diminished as folks push their worthy agenda.    As Mike Leavitt said while Sec. of HHS — it is not that we lack political will – it is that there is too much political will that stops progress.

I was also struck by the many ‘chance’ encounters I ended up having with thoughtful, motivated and energized folks.  That is one of the great benefits of working in the health sector — the breadth and depth of the talent tackling the problems.     I hope the community really makes some progress in the coming year.

The real fight for ‘health reform’

Last week ‘health reform’ was in the news because of the three days of hearings in the Supreme Court.   I believe the Obamacare law raises some very fundamental questions about the scope and role of the Federal government.    I was delighted that the country is finally having a conversation about the core issues raised by the law – a debate that should have happened during the legislative process.

Here are some of my favorite posts:

However, I found this WSJ article detailing the nasty battle between UPMC and Highmark to be way more telling about the future of the health delivery system.   There are many dimensions to the battle over customers, physicians and dollars that are interesting.   One paragraph in the article I found particularly fascinating:  “Early talks between the companies hadn’t gotten far. Highmark has said UPMC initially sought a 40% increase in its hospital rates. Mr. Romoff doesn’t dispute that but says it was a fair boost to make up for inadequate payments under the old pact with Highmark.”    Pricing power matters a lot in the health economy and having a good brand and substantial market share dramatically increases pricing power – which has been UPMC’s strategy.   What is unique about the health marketplace is that there are limited checks and balances to this market power – at either the payer or provider level, because the consumer of the service is not engaged and empowered to ‘shop around’ for value.

My view is – without pervasive price transparency, ubiquitous quality reporting and material economic incentives for consumers to be smart shoppers (where applicable) – ‘health reform’ will unfortunately lead to neither increased ‘value’ in the health economy nor bend the cost curve.

p.s. update — Highmark CEO fired.   Not germane to the discussion — but felt the update necessary.

vNext for Neupert on Health

Last fall my wife and I became empty nesters and last month I fulfilled my long held promise to her of retiring from the ‘start-up’ lifestyle we have lived during our 24+ years of marriage.   I want to be engaged and making an impact on the health ecosystem – just with a different work-life balance.   I am delighted to have joined David Brailer’s Health Evolution Partners growth equity fund as an operating partner to help identify and grow innovative companies in health.   The health delivery system and overall ecosystem have a long way to go to become ‘digital’ and to benefit from the power of real-time data, ‘industrialization’, and consumer engagement.    The economic health of societies across the globe needs the health sector to adopt these changes and tools and faster!

 

Closing comments on Microsoft and Health Solutions Group:

I went back to work at Microsoft for a second time in 2005 after a seven-year absence where I was the founding CEO of drugstore.com.  One crucial lesson learned at drugstore.com was the role that government has in setting the rules of the game. So I decided I wanted to learn more about the government side of the business, and ended up on the President’s Information Technology Advisory Council. Because I was still chairman of drugstore, they made me co-chair of the health subcommittee.  And at that time, I got to learn from the IOM, from HHS, and from a lot of experts around the country that people die every day in our health delivery system because of inadequate information systems. That just seemed wrong and that more needed to be done to change it.

 

I decided to go back to work and try to make a difference.  I realized that to really make a difference in ‘digitizing the health economy’ required a company like Microsoft that would have the scale, tenacity, patience, and capabilities to build scalable health platforms.   We formed a ‘start-up’ unit inside Microsoft to capitalize on the observation that health is a big and growing segment that’s been under-invested in information technology.

 

Interestingly enough, during my first week on the job in 2005, Craig Mundie and I went to a GE Healthcare 2015 workshop hosted by GE CEO Jeff Immelt and Sir William Castell. Sir William had actually helped motivate me to go back to work with his inaugural speech at the Pacific Health Summit the summer before that talked about the need for completely different paradigms around early detection and prevention. Then to be able to participate in this two-day conference of 50 leaders in Crotonville, New York, in my first week backed formed a set of impressions that were inspiring and valuable.

 

Health has always been a part of my life, as it is with everybody. Everybody has personal stories. Healthcare information technology became a passion for me when I observed that health is fundamentally an information management problem, and for whatever reason, there wasn’t the class of systems inside of health organizations that enabled users to leverage real-time data for insight and action. It’s not because the technology suppliers were bad; it’s because the economic infrastructure doesn’t reward the kind of innovation that is rewarded in other industries. It’s a complicated problem and I recognized it would take many steps and time to change it.  My inspiration was to leave a better health system for my kids.

 

And that’s why most of my previous blog posts are centered around the idea that it’s not just about creating a better widget; you have to create a marketplace of incentive systems that allow and motivate people to adopt technology in a different way.   I intend to maintain this them in my blog going forward – as I find so many people operate with unexamined assumptions about the role of incentives and policy frameworks in driving health outcomes.

 

I’m proud of many things we’ve accomplished since starting the Health Solutions Group. We’ve built a trusted brand in an environment where people would have bet against us. Five years ago, people thought we were crazy to talk about personally controlled health records. Today it’s the law. So we’re helping to move the world in the right direction. And the fact that we’ve done it in a way that’s cooperative and collaborative with the rest of the industry is great.

 

The benefit of the new joint venture  between Microsoft and GE is that it allows us to move faster and accelerate our vision. I think it’s clear that customers expect Microsoft to play the role of platform, enabling a best-of-breed environment that allows them to choose from multiple vendors. It’s great to have GE, a first-tier application vendor, say, “Yes, I believe in an open environment, and I’m also going to invest in modifying my technology stack to go take advantage of this and to move forward.”

 

The vision of this joint venture — the vision that Microsoft has had of a connected, data-driven, health infrastructure — I see it happening. I think the only question is, “Does it take two years or 22 years?” It’s somewhere in between; it’s a matter of how fast reform can happen. I think more and more people will start to find ways to reap the benefits of bundling (as Zeke Emanuel wrote about in the New York Times), more prescriptive care pathways, and technology that lowers costs and improves patient outcomes.

 

So, it’s clear it’s going to happen. It’s just a matter of when. And whether the U.S. will be a leader or some other country leapfrogs the U.S. in capabilities.    I am confident the JV will have a major role to play in liberating the data, driving insight, empowering users and the health system alike to improve patient outcomes.