David Williams: This is David Williams, co-founder of MedPharma Partners and author of The Health Business Blog. I’m speaking today with David Hom, Chairman of the Board of the Center for Health Value Innovation. Dave, thanks for speaking with me today.
David Hom: You’re welcome.
Williams: Dave, there are some listeners that aren’t familiar with the Center, so could you just start by giving us a quick recap on your mission and activities?
Hom: Sure. The center is a not-for-profit organization that was established in 2007 for employers, with employers, by employers, to protect a private healthcare system by sharing best practices in healthcare innovation.
Williams: We got together in May, six months ago, at Consumer Health World out in Las Vegas, and we talked a lot about the activities at the Center. A lot has happened in that time, in terms of the primary election, the general election, the mayhem in the financial markets, and into the recession.
You have a lot of the stakeholders at the table there. What are they saying about how they’re seeing health care today, and how is that affecting your activities?
Hom: I’ve probably met with all key stakeholders repeatedly over the last six plus months. There’s a concern with regards to each of the stakeholders, in terms of their ability to afford to provide access to healthcare.
For example, small employers are concerned with their ability to provide health insurance for their employees and independents that is affordable. Two is health plans have increasing medical loss ratios, and therefore it is difficult to get new customers, i.e., members, therefore they are under what I call margin issues.
So innovation needs to be driven faster by employers through health plans, by having health plans redoing their services that improve what we call patient adherence or compliance for chronic conditions.
Williams: It sounds like the focus that you have is the same as what it was. Do you see the role of compliance and adherence being fairly central in this whole affordability issue?
Hom: Yes. In fact, I’ve had several discussions with HHS (Health and Human Services). I think the next generation of healthcare delivery has to really focus in on how to improve the health of the American public with people with chronic conditions, how to give them the tools necessary to manage those conditions, with more targeted information about their disease. How to manage their disease, how to get access to physicians easily, how to get access to labs and diagnostics, preventative screenings, and how to get access to pharmaceuticals that can help them manage their chronic conditions.
So the big issues looming are the shortage of physicians, and the physicians not willing to accept new patients, because of different reimbursement schedules. Therefore access has become even more important. So things like 24/7 telemedicine is what I call a megatrend that can be integrated into what we call the Patient centered-medical home, virtually.
So think about the world of not just physical office visits, but the world of telephonic, video office visits, that people then can access physicians when they need it, at the time at which they need it, and in the vehicle in which they need it.
Williams: Massachusetts has been a template for what the Obama plan may look like, in terms of bringing more people into coverage. What we’ve seen here is a real difficulty in access among people that now have insurance, because the stock of physicians has not gone up, and the number of hospital beds hasn’t increased, and yet when people have insurance, then they want to use it. So it sounds as though some of the things that you’re describing could help alleviate that issue on a national basis.
Hom: Oh absolutely, absolutely. For example in Massachusetts, many of the physician practices are closed to new members. Why? Part of that is because the reimbursement level that was set by the state was too low, so there’s no incentive to physicians to take on the patients. Two, patients that they’re taking on tend to have severe multiple chronic conditions, because they’ve been out of healthcare for a number of years. So that requires intensive use of their time and resources.
So can you create a system that has this new virtual world of telemedicine that can provide relief valves of pressure to access physicians? So that way when someone does visit a physician and see them face to face, a lot of what I would call the routine information gathering for diagnosis has already been completed by someone else. That’s where I think the medical home model can really thrive for small physician practices.
Williams: When we talked last time, we were talking about emerging information technologies in order to enable these sorts of activities and to enable the patient to take a much more active role. I suppose that the need for these things has stepped up, to deal with the pressure on the system that’s coming as more people enter coverage, Are we closer to it today? What is your level of optimism? What are the issues that you’re concerned about in actually using these technologies on a wide scale?
Hom: A couple of issues; one is the use of technology on a wide scale takes time, and two is there are multiple barriers around that, I think primarily, who pays for it? Does a health plan pay for these new technologies, does the employer pay for it, or does Medicare or the federal government pay for it? That hasn’t been resolved.
In the absence of that, there are a number of initiatives that I think have been turbo charged over the last six months in the area of personal health record highways, I call them, such as the Google’s and Microsoft’s of the world, that really build PHR communication platforms that are of high value to a patient.
So the PHR world for example, will not only have the ability to capture information for an individual, but also will be able to push targeted communications to the patient based on their chronic condition.
Secondarily, there’s the migration of the patient’s personal health record to the cell phone as a communications platform. Think of the world of cell phones that can capture your sugar levels on a daily basis if you are a diabetic, create a scorecard for you, help you manage your diabetes, and when your diabetes is not under control, it sends a message to your physician who then calls you, and you do a video consult or telephone consult.
Williams: Now you’ve talked about the personal health record highways, and Google and Microsoft in particular. Now what’s interesting about those companies is that they have not come at it necessarily first looking at health plans or employers as customers, but really from a consumer standpoint.
How are employers and health plans actually viewing those organizations? Do they see them as rivals who are going to undercut them or disintermediate them, or do they find ways to work together?
Hom: That’s a great question. I think the answer is mixed. I think some of the health plans could progress knowing that the highway is being built, or that allow their information to be sent from the health plan to a Google, or to a Microsoft. The first example of that would be Aetna. I think others will begin to follow suit, and that this is not a threat, but rather it’s an enabler for patients to really manage their own information and data. So I see that as a fairly large trend.
For consumers, I think the issue is their ability to feel comfortable that data is secure. So there are some technology companies that build secure systems that are looking into getting into healthcare, and using their technologies to provide that security for the personal health record platforms.
I think once that begins to happen the people will feel more comfortable that their data is highly secure.
Williams: Then on the topic of the patient centered medical home, and using that technology to wrap around it, I’m wondering there, how quickly that can happen and whether you can retrofit an existing primary care practice to become a medical home and to be technology enabled, or whether it’s better off to reconfigure practices completely from scratch so that they’re sort of a medical home and information technology rich place from the start?
Particularly I’m wondering with some of these pilots, whether it’s even possible for one payer to do a pilot, because the primary care office may be partly doing the old fee for service, and then partly doing a medical home pilot. How do you think about that actually coming together?
Hom: It’s another great question. First thing you’ve got to do is to think about how to create a virtual patient medical home for the small physician practices who cannot scale up.
Two is you have to build the technology, so that it works with their current processes. So you can’t go in and reinvent a physician’s practice, because physicians have already spent thousands of dollars in building a practice and their management system, and they’re not going to discard it.
Two is you have to figure ways to overlap on existing legacy systems.
Once you begin doing that, you can begin then to get wider adoption. So the idea then is to begin testing through a series of pilots, different geographic areas, the small virtual patient medical homes over the next 36 months.
So, I’ll give you an example. I’m battling a cold so I apologize.
Williams: Yes, I can tell. Perhaps the medical home will prevent it next time.
Hom: I know, thank you David. I’ve been working with a 24/7 telemedicine company and a large technology company to begin building a patient medical home technology that can be utilized by many physicians across the U.S.
The process is that we’re having discussions with a couple of physician groups to test how something could be implemented and operationalized easily within their practice, and then from that we’ll develop a series of hypotheses and methodologies. Then we’ll begin talking to different medical groups across the U.S. One of them is in Boston who would like to consider this for their small practices as a pilot.
So you’ll see a number of pilots that will spring up in 2009, especially in the 2nd or 3rd quarter.
Williams: When you look at federal policy and what’s likely to happen after the Obama administration takes office, how well aligned are their policies with what you see as being the right thing to do? What do you think needs to change if anything?
Hom: There are a number of things. One is I that there’s a huge alignment on wellness and preventative screenings, Obama’s plan has that embedded in there.
Two is having employer mandates, getting everyone into the insurance pool; I think it’s great, like we do in Massachusetts. I think they need to figure out the funding arrangements for physicians to accept new patients. I also believe that they need to begin to provide standards that will create the highway systems for an exchange of information.
I think their focus initially will be on children’s health, providing coverage.
I’ll give you just a small thought –this is just me now– based on this whole bailout concept on this financial crisis. I think the government should look at bailouts with patients with chronic conditions. So if I’m a patient, I’m a diabetic, I have a cardiovascular condition, I’m hypertensive, I’m on three meds, that cost me 150 bucks a month, that’s unaffordable. So can we provide that patient with some sort of tax rebate, or some sort of couponing, or incentive and the federal government will then say “We’ll fund portions of your medications for chronic conditions, which would include some preventative screenings”? So the bailout then occurs at the patient level vs. at the aggregate level.
Williams: It’s an interesting concept. Certainly I think one of the things that shifted is the idea of what the government can do and should do. There have been some swipes taken at Obama for supposedly socialist policies, like raising the marginal tax rate, whereas at the same time the government is taking over Goldman Sachs, and AIG, and so on.
Williams: I think maybe people have a little bit different idea about what socialism is, and what’s acceptable for government intervention now. So it will be interesting to see how that plays out.
Hom: Yes, I agree with you.
Williams: Let me also ask you about the role of health information exchange, an also these eHealth collaboratives that are still operating in different states, including Massachusetts. Do they have a role, and are your stakeholders involved in those?
Hom: Yes, they have a role. Many of them have not worked effectively because there’s not a sustainable business model around it. So they get additional funding from the State, until they get something up and running, but there’s not a lot of sustainability around it and adoption, in using the information with the physicians.
So there hasn’t been a good buy-in process with the medical societies, with the AMA, and with other local regulatory bodies. Until we get to the point where the data that these RHIOs capture is used well, it will be a long road before things get settled down with adoption by States, and by physician groups and hospital systems.
Williams: I’ve been speaking today with David Hom. He’s chairman of the board of the Center for Health Value Innovation. Dave thanks for your time today.
Hom: You’re welcome David.November 24, 2008