What Meaning, Price?

The TV commercial surprised me. Airing repeatedly during the Atlanta Falcon’s football game, Southwest Airlines (SWA) was spending lots of money explaining to consumers why their airfares are lower than competitors (here in Atlanta, that’s Delta Airlines, given SWA acquisition of AirTran). The implication is that without such an explanation for the low fare, Atlantans might be suspicious of an airline offering “$69 fares, one way”. Oh yea, and your bags fly free.

$69 airfares southwest

Southwest Airlines flies more Americans domestically than any other airline in the US.  They have been repeatedly celebrated for their corporate culture, innovation, and efficiency.  They’ve been in business for nearly 50 years, with a great safety record. And yet, they feel the need to explain why they are less expensive!

The reason stated in the commercial has nothing to do with the real reasons SWA has less-expensive fares: (1) SWA flies only 737-800s and 700s, rather than the 14 models of aircraft maintained by Delta (much lower maintenance costs); (2) they pay their captains less ($159K v $205K for 10 years’ experience); (3) they keep their airplanes in the air more (faster turn-around), and (4) they’ve historically had a more successful fuel-hedging strategy than has Delta (see 2005-2007), among others.

winglet physics

The commercial says the presence of “winglets”, upturned wingtips invented by NASA in 1976 to reduce wing-drag from turbulent airflow at the wingtip, is the reason for the low fares, enabling them to “burn 54 million less gallons of fuel each year”, which by the way represented only 3% of Southwest’s fuel burn in CY2012.  Saving 3% of fuel doesn’t equate to 30% lower airfares.  Moreover, at least 80% of the passenger jets I saw this week at Hartsfield-Jackson, Chicago O’Hare, and San Diego’s airport also had winglets, encompassing Delta, United, American, Alaska and US Airways.  So winglets are hardly a competitive advantage.

hidden brain

Whether we admit it or not, we Americans have a deep-seated belief that “you get what you pay for” when buying goods and services.  If an item costs less, our hidden brain (the Limbic system) believes that item is less trustworthy, less desirable, and lower quality.  I see this phenomenon in healthcare too.  The newest (ie, more expensive) antibiotic, implantable, catheter, scanner is immediately believed by doctor and patient alike to be superior to that which is tried and true (less expensive).

KP logo

When comparing health insurance plans with equal benefits, among populations of persons with equal levels of disease burden, Kaiser Permanente’s healthcare is nearly always less-expensive (see AonHewitt’s HVVI Report, for example).  And we deliver much higher quality outcomes and patient satisfaction than do the other companies (see annual NCQA National rankings, for example).  And yet, I hear Atlantans express suspicion regarding our lower costs.  Nevermind 9-years in a row as the quality leader in all of Georgia (see NCQA, Consumer Reports, ACHP).  Never mind we’ve received the JD Power award for customer satisfaction 5 of the last 6 years in Georgia and both Carolinas.

Maybe the Southwest commercial wasn’t about explaining their lower prices …. Maybe it was actually intended to entice the growing demographic of female millennials, who are the Americans most predisposed to changing their buying behavior based upon real or imagined impact to the environment (“54M less gallons of fuel!”).  Nah.  Given how smart their executives are (I’ve met some), they know exactly what they are doing.

Spare Me the Subjective and Objective; I seek the Assessment and Plan

It’s easy to find a well-done study to affirm how anxious and unhappy we physicians are these days. For example, the October 2012 Merritt Hawkins / Physicians Foundation survey of nearly 14,000 physicians paints a picture of individual pessimism and professional decline (see table below).

The Physicians Foundation & Merritt Hawkins, October 2012

%

Pessimistic about the future of the profession

77

Morale described as “negative” for self

58

Morale described as “negative” for colleagues

80

Profession described as “in decline”

84

Willingness to Recommend Profession to Children / Young

42

It’s harder, and perhaps more meaningful, to interpret the subjective and objective. Indeed, I suggest we stop “interviewing for pain”, and start crafting an Assessment and Plan that might improve things. Lesser physicians spend the majority of their time transcribing data into the subjective and objective portion of their progress note; greater physicians spend that time interpreting the data and crafting a path toward recovery.

The root causes of our pain seem to be (1) reductions in our autonomy (for diagnosis and treatment; for running our practice; for regulatory and contractual reasons), and (2) issues related to money (decline in payment amount per unit of care, thus driving higher number of units; patients changing doctors for coverage/cost reasons; a belief that one must work more hours for the same pay). Interestingly, these root causes have been the industry’s intentional response to the ridiculously high cost of American healthcare, as well as inadequate and unreliable clinical outcomes of that care. We physicians failed to solve the problem of runaway costs over the last 30 years, so payors sought to solve it for us by reducing our decision-making autonomy and payments per unit of care. Those “interventions” failed of course, but that’s a different article.

Our Plan must account for the root causes of the disease:

  1. If we believe (a) unwarranted variation exists in the practice of medicine and surgery, (b) some unwarranted variation leads to wasted resources and lesser patient outcomes, and (c) Evidence-Based Medicine (EBM) can reduce some of that variation, then we physicians should collaborate to create, adopt and continuously refine Best Practices, rather than lament loss of individual physician autonomy.
  2. If we believe (a) earning a salary in the top 2% of American society is sufficient compensation for our years of personal sacrifices and professional pressures, (b) being invited into the lives of people when they are most vulnerable is a unique privilege, and (c) easing pain and suffering is meaningful work, then we should emphasize a personal perspective reflective of those blessings, rather than continuously mourning the massive changes in our practices.
  3. If we believe (a) fee-for-service (FFS) compensation promotes volume over value and can misalign patient and physician interests, (b) having administrative infrastructure frees physicians and surgeons to do more of what they like to do, and (c) practicing in a fellowship of collegiality and comradery leads to professional fulfillment, then we should form self-governing multi-specialty group practices, in which each physician is accountable to one another along dimensions of quality, citizenship, and work ethic.
The Plan

% of the solution

Create, adopt and continuously refine Best Practices, led by physicians

20%

Practice a personal perspective that reflects the blessings of our profession

30%

Form large, self-governing multi-specialty group practices, organized around the principles of humble service, patient-centered care, and continuous improvement

50%

We must stop focusing on our personal and professional pain and start focusing on how to restore the fulfillment, the culture of humble, altruistic service, and the scientific method to our beleaguered profession.

A Glass Once Empty, Now Half Full

glass half full #2Twenty years ago I sat with my fee-for-service (FFS) colleagues in the auditorium of St. Joseph’s Hospital (SJH), witnessing an appeal from hospital administration to join the fight to eliminate unwarranted healthcare expense. Revenue was down, expenses up, and the CFO was worried.  Our reply was an incredulous version of “… but we (physicians) control only 20% of the total expense!”, referring to our professional fees. We preferred to blame plaintiff attorneys, pharmaceutical and device manufacturers, and the for-profit insurance companies as the cause of The Cost Problem, rather than take an appropriate portion of ownership. It was then I first heard or thought, “Ah, but 80% of the spend flows from our pens.”

blame game #2In the 20 years elapsed, we physicians traded-in our pens for keyboards and double-clicks, and SJH never did solve their price / cost equation, ultimately having to sell the hospital to Emory, which has so far been better at raising prices than lowering expense.

But what about that physician crowd in the SJH auditorium, now 20 years older? What’s their present-day point of view regarding physician responsibility for America’s Healthcare Cost Crisis?  Mayo Clinic researchers published a study this week in JAMA answering that question (Views of US Physicians About Controlling Health Care Costs, Tilburt JC, et al. JAMA 2013;310(4):380388). Thankfully, we physicians are more insightful and courageous about our role in healthcare costs than 20 years ago.

the buck stops here

Oh sure, we still like blaming the lawyers (60% of physicians), insurance companies (59%), pharma (56%), and even patients (52%), but finally we believe …

  1. We should adhere to clinical guidelines that discourage the use of marginally beneficial care (79% of docs)
  2. We need to take a more prominent role in limiting the use of unnecessary tests (89%)
  3. We have major responsibility for reducing healthcare costs (ok, only 36% of physicians agreed with that one, but that’s a glass no longer empty).

Not unexpectedly, physicians compensated through a salary (rather than FFS) and/or who practiced in a group or government setting had more enthusiasm for cost-consciousness.   Physicians who have the most to gain financially from wasteful practice will be the last to assume responsibility in controlling costs. Alas, we still have far to go before we sleep… 85% of respondents believe “the cost of a test or medication is only important if the patient has to pay for it out of pocket.” For more information, see my prior post, The Morality of Resource Stewardship.

Stickin’ It to The Man

A rising number of physicians, nearly all of whom are primary care physicians, are moving toward a more pure fee-for-service (FFS) compensation system for their professional fees and simple office tests (e.g., ECG, spirometry, urinalysis), no longer accepting The Man’s insurance payments, and eschewing trends toward non-FFS compensation systems. Of course, this is the model of physician compensation that existed for the majority of America prior to 1965.

stick it to the man - baby

I get what’s in it for the patients who choose to afford the $1,600-3,000 annual retainer fee – same day office appointments, night-time telephone advice, and more time with the doc in the exam room (20-60 minutes rather than 6-10). I also understand the benefit for the docs – more time with patients, a simpler business model, and more time doctoring (rather than dealing with insurance companies). Some report higher incomes too – a result of fewer office staff (less overhead) and higher professional fees (including that annual retainer).

But the following questions occur to me:

1. Have we physicians, particularly primary care physicians, given up on creating those same desirable and justifiable outcomes through other means, particularly authentic payment reform?

2. Have we become a guild of independent business-men and -women, rather than a profession dedicated to public service?

american family - rockwell

3. Will Primary Care soon devolve into a caste system: Americans who can afford a main doctor (concierge practices), versus those who can’t (relegated to see a NP at Wal-Mart for straightforward and low-risk stuff, and the ER doctor-du-jour, followed by a cadre of disassociated proceduralists for all other maladies)?    That is a recipe for Anarchistic Waste if ever there was one.

Give me your answer to those questions (or comments of your choosing) below.

The Triangle of Healthcare Integration

competition, monopoly, economic forcesOversimplification of economic forces can lead to erroneous predictions of market behavior. During the last three years, the mantra within our industry has been “(any) integration of healthcare players will lower healthcare costs and improve clinical and service outcomes.” In fact, we are now seeing the harm that can come from the wrong form of healthcare integration.

monopoly effect upon priceSeveral newspapers (AJC, July 7), consulting firms (personal communication with representatives at Deloitte) and professional societies (ACPE, July 10) are reporting that the craze for physicians to “integrate” with hospitals (typically defined as physicians directly employed by the hospital) is resulting in healthcare prices rising, and substantially so, without value added. This regrettable outcome could have been predicted, and indeed Dr. Michael Doherty, Chief of Staff for our Permanente Medical Group, did so in early 2011. Let’s consider the three ways that physicians, hospitals, and payors can integrate with one another, and the anticipated outcome of each alliance, based upon the interests of the parties involved (modified from Dr. Martin N Gilbert’s insight, June 2013):

#1 Physician & Hospital Integration, without Payor: it’s in both of their economic interests to maximize revenue from the payor(s), who in turn have no choice but to pass on those higher costs to the corporate or public employer.  The physicians and hospital raise prices in the absence of local competition (all physician services and hospital beds are under one geographic, economically-integrated roof). Several examples of this phenomenon exist in Atlanta.

Highmark BCBS#2 Hospital & Payor Integration, without Physicians:  when these two agents team up, unit prices can be driven down (lower prices for hospital beds and professional fees), but physician behavior is unaccounted for, allowing unwarranted high volume of services (overtreatment). One recent example of this type of integration is the Highmark acquisition in western Pennsylvania.

TSPMG logo, standard version, June 2012#3 Payor & Physician Integration, without Hospital:  this form of integration has the most promise to lower costs and improve quality (both players are interested in reducing outpatient overtreatment and improving inpatient efficiencies). This is the KP Georgia model, whereas integrating the Hospital too is the KP California model.

We must create the type of healthcare integration that accounts for the varied economic interests of the various players, if we are to address America’s healthcare crisis in cost and quality. Only integration of payor and physicians, with or without the hospital, will lower costs and raise quality over time.

Seeking Snake Oil

snake oil capsule“Tens of thousands of Americans undergo unnecessary surgeries that maim, and even kill, patients”.  That’s the subtitle on USA Today’s A1 article from Friday, June 21, entitled “Under the knife ‘for nothing‘.”  And the article doesn’t even address the unnecessary tests that lead to those surgeries, which harm even more patients (unnecessary testing often “discovers” normal or benign findings, leading to unnecessary intervention, causing unintended outcomes in some patients, not to mention needless anxiety and time away from work or family).  Such is our addiction to MORE in the American healthcare industry, amped up on a compensation system (fee-for-service, FFS) that financially rewards doctors, hospitals, pharmaceutical and device companies for pushing the snake oil. Let’s move some smack … Baby needs a new pair of shoes (or a longer car).

one word that can save your life, Time cover

This is not new news. Many institutions and individuals have published research asserting and confirming America’s addiction to medical and surgical overtreatment (defined here as any ordered test or performed treatment that had a poor chance of helping the patient and that physicians practicing without conflicts of interest (FFS) would not have ordered or performed). USA Today is merely the latest media source to (finally!) report on the overtreatment phenomenon in the US (Time, Newsweek, The New Yorker, The New York Times, Consumer Reports, Wall Street Journal are others). I’ve even written about it …

what would it take to convince America

The USA Today article goes on to list eight (8) common surgical procedures often done without true medical necessity. Articles within the last month have also called out tests that appear to have little to no benefit in typical circumstances: annual bimanual pelvic exam and PAP smear (New York Times online 29April2013); annual PSA testing for many men (cancer.gov and consumerreports.org ); excessive x-ray testing in many forms (medicalnewstoday.com ).

radiation - homer simpson

I’ve discussed in previous posts what drives doctors (consciously or unconsciously) to order unnecessary testing and treatments (FFS and/or absence of EBM in their practice). But sometimes it’s not the doctor who’s pushing the snake oil, rather the patient seeking it. Why? What characteristic of the human condition or American culture drives patients to seek care unlikely to be helpful, particularly when that care can harm?

I believe two forces are at play:

possibility v probability - gambling

(1) Most Americans have a poor understanding of probability; the possibility the treatment might help overshadows the probability it won’t, not to mention the possibility it might harm. A more sensible approach would be to insist upon research evidence of benefit before risking harm.  Or adhering to the approved and licensed uses for the treatments, rather than doctors and patients inventing such uses on a hunch.  For more information, see my prior post, “Our Problem with Science“, or “The Ongoing Debate for EBM: fighting for the scientific soul of our profession“.

selling hope

(2) We wish to buy hope from our doctor, rather than solely receive cognitive or surgical expertise, and who can blame us? Hope is a defining characteristic of the Human Condition.  It’s why we buy lottery tickets by the millions each month. In some clinical circumstances, however, physicians must help patients shift their mindset from “more healthcare means more hope” to “precise healthcare means best outcome”.  Hope is not a plan. By the way, many heart failure patients live longer and better once enrolled in Palliative Care rather than Intensive Care.

selling hope - cancer tx centers

What’s to be done about the supply and demand for snake oil?  One big step forward is the Choosing Wisely campaign sponsored by one of the nation’s most respected professional societies, in which we help patients choose care that is evidence-based, not duplicative, truly necessary and unlikely to harm. Tell me what else we docs can do to help our patients stop seeking snake oil … leave a comment.

Drive within Physicians

motivation - money

Seventy years of behavioral science research has failed to overcome folklore about what motivates most Americans.  Corporate language makes frequent use of the terms “bonus”, “incentive”, and “pay-for-performance (P4P)” in a context not supported by the scientific study of motivation.  Indeed, many healthcare pundits are writing enthusiastically of financial schemes intended to motivate individual physicians to achieve greater levels of clinical achievement once ACA is fully implemented, most recently in the Wall Street Journal (Monday, June 17, 2013: Squaring Off: R2).  But those writers don’t adequately understand (1) the human condition in general, (2) physician behavior in particular, or (3) the difference between what individuals can accomplish verses systems and teams.

daniel pink drive

I’ve written previously about this topic (“How do you get doctors to …?“, “What Role, Money?“, “Happy Doc = Happy Patient“).  But this week I’m rereading Daniel Pink’s sentinel 2011 book, so I wish to revisit the concept of physician motivation.  Here’s what Mr. Pink’s research says, as applied to clinicians:

autonomy - fishbowl

#1 Autonomy: good bosses state “the why” and “the what” of the desired work-product, and then create conditions for people to do their best work to achieve those outcomes.  It should be emphasized, unbridled physician autonomy has created many problems for patients through the centuries (physicians failing to use best practices often causes patient harm; for more information, read my three prior posts on Evidence Based Medicine [EBM]).  A physician’s job is to solve as many patient problems today as possible.  How those problems are solved is very much the business of the physician, necessarily guided by empathy, duty and The Scientific Method (PDSA cycles!).  Solving complex problems like obesity and heart failure requires an inquiring mind and the willingness to experiment toward better solutions.  Autonomy creates physician engagement – the fuel for creativity and discretionary effort.

mastery - asymptote

#2 Mastery: nothing compares to the feeling we get following a well-reasoned diagnosis, or well-performed surgery, leading to the prompt resolution of the patient’s problem.  To have the tools, time, and environment to constantly improve as a clinician, and to be our best each day, is a motivational drug unlike any other.  That’s sometimes called Flow.

#3 Purpose: the opportunity to do “meaningful work” is a universal motivator for all.  The relief of pain and suffering is meaningful work indeed.   Have you written Your Sentence?

fairness - scales

We find it comforting (or if you prefer, fair) in America to pay more to those individuals within a specific job class who achieve better individual performance (fine by me), but we mustn’t confuse our cultural concepts of compensation fairness with the science of professional motivation (drive).    Furthermore, we must not confuse system-wide financial incentives, often necessary to pay for the human and technical infrastructure required for continuous performance improvement, with individual incentives; two common examples of the former include paying large multispecialty medical groups for better population-based clinical outcomes, and no longer paying hospitals for avoidable complications.

critical conversations - sillouettes

Moreover, money has no role in the performance management of individuals, particularly highly trained professionals such as physicians and surgeons.  Individual underperformance against a set of clear job duties and expectations is typically due to (1) poor workflow or systems-design, (2) inadequate skill set or “fit”, or (3) weak bosses (including the tolerance of toxic workplace culture).  Addressing the root cause of an individual clinician’s underperformance has nothing to do with money (“No bonus for you!”).  Individual clinicians who produce reliably good results and promote a healthy workplace culture, get to remain in their position.  Money is absent in that equation.

My Italian Lesson

santa maria la scala at the sea June 2013

volcanic rock streets

There’s no way you’d call this a road … more like an alley.  The homes and family businesses lining the “Via” are made of 18×24 inch blocks of volcanic rock, cut and placed by hand 300 years ago, forming a canyon for fast moving pedestrians, bicycles, scooters and cars … with no more than 2 inches to spare all around.  I manually retract my side-view mirror at 30 km/hr to avoid collision with the on-coming Fiat 500 (Cinquecento, pronounced “Chin-kwa-chen-toe”) around a blind corner, and neither of us bats an eye.

These two weeks in Sicily have provided an opportunity to reflect upon what cultural successes of this 5,000 year civilization might apply to our 160 year old city and it’s planning as this century progresses.  I know … Sicily and Georgia are vastly different in economic, social and political context.  But that just makes the question more interesting, and perhaps more relevant.  Can we can sift the chaff (less consequential structural differences) from the grain (a thematic path to a healthier way of life).

santa tecla restaurant June 2013

No space is wasted, which leads to (1) creatively simple architectural and civic design, and (2) a thing is exactly the size it needs to be and no more.  Communal space outdoors serves as the place to stretch and expand with family and community, more than making up for the smaller space indoors. Relevance to Atlanta: at this year’s Annual Landmark Luncheon for the Piedmont Park Conservancy, Atlanta-based designer and TV personality Vern Yip challenged us to create smaller, multi-use interior living spaces, thus less carbon footprint, closer family encounters, more affordably.  Well, and a need for better manners.

built to last Sicily 2013

Most things are built to last, and usually do.  Reuse and repair are bigger than recycle here.  Smaller homes and apartments are made of concrete and brick-blocks, requiring less energy to heat and cool, and ceramic tile easier to clean, rather than large boxes of wood, carpet and synthetics that leak energy and retain allergens.  Relevance to Atlanta: when available and affordable, buy things designed to last a long time with episodic repair or refresh. Over time, manufacturers and builders will change to meet that demand.

mediterranean diet Sicily 2013

Health is part of the day, rather than an add-on if time permits. Eighty percent of the meals consumed in this community are freshly prepared in the family kitchen, from farm to table ingredients.  The other twenty percent are purchased from family-run, neighborhood businesses (bakeries, Italian ice [granite], coffee, and yes, pizzerias).  The tomatoes here actually have flavor. The fruit is freshly picked when nearly ripe, sold out of the back of tiny trucks, locally.  In my observations, most locals walk 6-9K steps per day here. Relevance to Atlanta: lets buy local Georgia produce, return to the kitchen, getting the whole family involved in the meal.  Organizations such as Trees Atlanta, Park Pride, Georgia Conservancy, and Piedmont Park Conservancy deserve our financial and physical support.  Zoning and neighborhood planning boards should approve multi-use projects that promote lasting design and constructuion principals, and walking over other transportation (pedestrian piazzas, green walkways, sidewalks and bike paths).

mtn trail connecting acireale and santa maria la scalla

The people of Sicily had to adapt to many cultural, economic and political changes through the centuries (Greeks, Romans, Phoenicians, and finally the Italians all ruled here), and made it through just fine.  We can adapt to changes in our day to day lifestyle that will strengthen the generations yet to come, by adopting some of what our Sicilian brethren have modeled.

pattie by the sea Sicily 2013

Better Than a Necktie

We fathers are most comfortable giving advice to our sons and daughters about school, careers and sportsmanship.  But what if discussing a different topic altogether was a stronger determinant of their future happiness, safety and success?   What if we made it our priority to have a conversation with our children about the importance of healthy relationships?  We might find the topic uncomfortable, but we have to be the ones to discuss it with our kids, not just mom.  It may be one of the best gifts we can give our families – and ourselves.

father talking to son

The ability to have and sustain a healthy, mature relationship, built upon respect and trust, is more important than many things we dads teach our kids. Yet my 28 years as a physician show few of us fathers formally teach our kids about such things. Our silence in this regard may leave them unprepared to prevent or avoid domestic violence, sexual assault or stalking by an intimate partner.  I firmly believe that by talking about the problem and educating our children about healthy relationships, we can indeed reduce the violence and protect all children, now and later in life.

The fact is we all have to engage in this process if we are ever going to reduce the prevalence of domestic violence and sexual assault in our society. According to the Centers for Disease Control (CDC), every minute, 24 people in the United States are victims of rape, physical violence or stalking by and intimate partner. Georgia is ranked 10th in the nation for the rate at which men kill women, in single-victim homicides, most of which are domestic violence-related murders.  Not only can conversations help protect our own children, but in having these conversations, each of us then plays a role in addressing this issue in the larger community.

That is why I am supporting a new effort called NO MORE, which through a new bold symbol,  is bringing together all people and communities that support ending domestic violence and sexual assault in our society.  A key focus of NO MORE is to involve men in raising awareness for these issues.

We are accustomed to women talking about the problem, but men can have a more powerful impact on their sons and daughters, particularly because it is unusual to hear this message from us. And Father’s Day gives us the opportunity to initiate a conversation with our kids about what is healthy and unhealthy in relationships. In the process we can teach them that violence and abuse, power and control, are never OK.

father talking to son in sunset

The critical first step is to know the best way to initiate these talks. It may not be our natural style, but it is helpful to start the conversation with questions, rather than lecture with statements. And of course we should let our kids’ maturity and context guide us in asking these questions. For example, you may want to ask, “Have you read any articles or books about domestic violence ?  Do you and your friends talk about this topic? What questions do you have? ”

NO MORE

Or another way to approach the conversation is to ask, “Have you ever been worried about the safety of a friend in a relationship?  Do you feel comfortable offering help, even when you have only a suspicion of a problem, rather than proof?”
Plenty of other recommendations for the conversation exist, easily found at www.nomore.org. Dads can learn how to talk to their sons about healthy relationships at www.mencanstoprape.org and www.acalltomen.org/.”

So with this information, how about we fathers have a conversation with our kids this Sunday about how to create and maintain a healthy relationship, and how to identify the warning signs of a relationship that may lead to domestic violence.  It’s more worthwhile than necktie.

In Search of The Holy Grail – being successful

beautiful waterfall #1

This post concludes a four part series I’ve written this week about the search for The Holy Grail of the new and future healthcare market … integrated delivery systems (IDSs) such as ours lowering the cost of a unit of care, such as an office visit, rather than relying upon relatively lower hospital and pharmacy costs to subsidize our relatively higher office visit costs.

Certainly our patients have benefited from those higher office costs in the past (more time with the doc, more preventive care, more care coordination), but payors have said they won’t pay extra for those benefits in the future, largely because they believe those desirable attributes should be “included” in the base price of the office visit / unit of care.  They have a point … you and I don’t pay extra for our water to be clean, or our groceries to be fresh, or clothes to last more than one season; whatever we pay, we expect it to cover all basic attributes of the good or service.   Good healthcare is now considered a basic attribute by payors, whether they be individuals, municipalities or corporations.

hbr 3 rules for success

That said we must reconcile that new direction with three overarching business principles that might appear on the surface to be in conflict.  Mr. Michael Raynor and Mumtaz Ahmed, both from Deloitte, recently wrote a book entitled The Three Rules: how exceptional companies think.   They provided a summary of their findings in the April 2013 issue of Harvard Business Review:

#1 Better Before Cheaper – “compete on market differentiators other than price”.  Great brand, an exciting style, or excellent functionality, durability or convenience are business strategies superior to offering a minimally acceptable standard, trying to attract customers solely with lower price.  In the past, our one-stop-shopping convenience has been easier for our members to see and understand than our eight-years-running highest quality outcomes in Georgia.  And companies and individuals in Georgia naïve to us have more often labeled us “less expensive” rather than “superior quality and convenience”.   The “me-too competitors” in the Atlanta area are attempting to  blur our hard-won differentiation on quality and service.  So, getting our office costs from 250% of market to 100% of market, while improving the recognition of our distinctly higher quality and service, should satisfy Rule #1 – outstanding business performance is more often created by greater value than lower price.

#2 Revenue Before Cost – “prioritize increasing revenue before reducing costs”.   In our industry, this rule was translated in the past as “its more important to grow profitable membership than reduce medical costs”.  But in the new economics of US healthcare, the amount of revenue per member is becoming fixed, whether because of sequestration, defined-contributions from companies, or transparent pricing in the Health Insurance Exchange (HIX).   Discretionary medical care, such as cosmetic surgery, will of course remain in the new healthcare world, but accounts for only 0.4% of the overall healthcare market (CNN, March 2010); and anyway, that’s not our mission.  So Rule #2 is satisfied by default … as revenue is now fixed (more or less), the only strategy that will lead to higher margins is that which lowers costs – eliminating waste in the system.

#3 There are no other rules – “so change what you must in order to follow the other rules”.  The authors continue, “the absence of other rules doesn’t give you permission to shut down your thinking.  You (must) still … follow the rules in the face of what may be wrenching competitive change.  It takes enormous creativity to remain true to the first two rules.”

in summary

In summary, here’s what we need to do in anticipation of the coming era of consumerism and disintegration in healthcare:

1.       Reduce the waste of current office resources (people & space) by …

2.       Practicing at maximal scope of practice, matching patient demand to clinician supply every day if not every hour, and increasing visit rates per exam room per unit time, while …

3.       Substantially increasing the patient’s discretionary effort to better manage his / her chronic condition, through more compelling use of “connected care everywhere” and behavioral motivation