Healthcare X PRIZE

Health Innovators: Another employed, capitated physician group makes headlines

2009-09-14T20:53:00.000-07:00

Modern Physician recognizes Physician Entrepreneur of the Year George M. Rapier III, M.D. for the creation of WellMed Medical Management which provides care for 83,000 patients in 29 clinics

This is a repost of an article written by Elizabeth Gardner of ModernPhysician.com which recently announced their Physician Entrepreneur of the Year. The award went to George Rapier III, MD who founded a large group practice founded on a capitated, physician employed, centralized group practice approach. It is yet another example of the type of quality, cost, and outcome improvements that can occurs when care becomes organized, coordinated, goal directed, and incentives are aligned with good outcomes. This article foreshadows for me the many variations of "Kaiser-light" that I expect to see evolve over the coming years.

By Elizabeth Gardner on September 14, 2009

George M. Rapier III, M.D., became a gerontologist because he liked old people. And he became an entrepreneur, somewhat inadvertently, because he thought there was a better way to take care of them. After almost 20 years, his better way seems to be paying off for everyone. The medical management company he founded, WellMed Medical Management, takes care of one in five seniors in its native San Antonio, and a total of more than 83,000 patients through 24 clinics in Texas and five in Florida. About 35,000 of its patients come through the managed-care option Medicare Advantage.

WellMed provides extras such as free transportation to appointments that helps patients show up consistently, free vaccinations to keep the flu away, and help with medication copayments and deductibles that have increased WellMed patients' prescription fill rates from 17% to more than 90%.

More than 12,000 WellMed patients wear bracelets or carry key fobs with a USB device that lets providers access their electronic health records. WellMed patients with chronic conditions such as diabetes or congestive heart failure have health coaches who contact them regularly and make sure they're getting the care they need to stay as healthy as possible, through a disease-management subsidiary called HealthRight. WellMed took in more than half a billion dollars in revenue last year. While the company is privately held and doesn't release profit figures, its revenue has more than doubled in the past three years. For his central role in creating a company that takes better care of patients and makes money doing it, Rapier is the recipient of Modern Physician's Physician Entrepreneur of the Year award for 2009. He was chosen from a field of 37 nominees in the second annual competition.

Rapier, 56, saw his entrepreneurial opportunity in 1990 when the HMO PacifiCare (now part of UnitedHealth Group) came to his previous practice, the multispecialty group Diagnostic Clinic of San Antonio, with a proposal to expand the amount of primary care in the metropolitan area. “There was not enough primary care even then, and it was already apparent that you have to have a good primary-care base that's incentivized to manage care,” he says. PacifiCare was willing to put up the money for the expansion. The practice wasn't interested, but Rapier himself (who was at the time the practice's president) certainly was. “It sounded like a no-brainer to me, so off we went,” he says. The resulting joint venture, funded with $1 million in PacifiCare seed money, opened Trinity Medical Group, specializing in primary care for seniors.

That first clinic grew, fueled by a model for primary care that wasn't built on volume. WellMed prefers to operate on the basis of capitation and delegation: that is, it receives a fixed sum from the insurer for the care of each patient, has sole responsibility for figuring out how best to spend it, gets to keep what's left over, and thus benefits directly from keeping its patients as healthy as possible. Its 60 employed physicians and 20 physician assistants are paid a base salary plus a bonus based partly on profitability and partly on hitting specific quality targets that vary from year to year. WellMed also contracts with about 150 primary-care physicians.

Recruiting physicians has been one of the relatively easy parts, because patient loads are at a civilized level. “We've never focused on high volume,” Rapier says. “That's not the way we do business. Most primary-care docs have to see 35 to 40 patients a day to make a decent living. We've operated under capitated risk arrangements since day one, and have put more focus on managing patients than on volume. Those are mutually exclusive.”

Rapier bought out PacifiCare's interest in the business as soon as he was able to, and changed the company's name to WellMed Medical Management. He grew it relatively slowly, keeping its clinics within the borders of Texas until last year, when WellMed expanded into Florida. WellMed also operates Physicians Health Choice, a Medicare Advantage health plan that's offered in Austin, Harlingen, Corpus Christi and El Paso, Texas, plus Little Rock, Ark., Fort Lauderdale, Fla., and Las Cruces, N.M.

WellMed's general approach is “doing well by doing good.” For example, the company picks up patients' excess prescription costs because they're strapped for cash and other bills always get paid first. “It was driving us crazy trying to manage them,” Rapier says. The company also augments a basic vision benefit that on its own covered only half a pair of glasses a year. “That didn't do them much good,” he says. Bryan Grundhoefer started with WellMed 11 years ago as chief financial officer, coming from Anthem (now part of WellPoint) in Indiana. His last job with Anthem was a physician joint venture similar to the one WellMed had had with PacifiCare, and Grundhoefer was intrigued by the potential for better care.

When Anthem decided it no longer needed to own any physician relationships, Grundhoefer called Rapier, whom he had met when Anthem was considering contracting with WellMed. Rapier just happened to need a CFO and Grundhoefer quickly found himself in San Antonio. He also took over the role of chief operating officer within a few months, and became president of WellMed Medical Management about three years ago. Grundhoefer was attracted to WellMed's approach, and to Rapier's particularly. “Every decision I've ever seen him make, the very first thing he considers is the impact on the patient,” Grundhoefer says. “The second is the impact on the physician, especially the primary-care physician. He believes that if he takes care of the patients and the physicians, everything else will work itself out.”

Bill Connolly has been with WellMed for three years as senior vice president of shared services, an umbrella title that takes in community relations, marketing, sales and a number of back-office operations such as claims processing, credentialing and purchasing. He came from PacifiCare shortly after its acquisition by UnitedHealth Group. “I really liked the model, the vision and the messages that I saw from WellMed when I worked with PacifiCare,” Connolly says. “I was just impressed with what they were doing.”

Connolly vastly prefers WellMed's active approach, including the patient and focusing on prevention, to the reactive way that many healthcare organizations work. “It's amazing how many people in this organization understand that if you do the right thing, good things happen,” Connolly says. “Dr. Rapier has been able to create economic incentives that combine the best interests of the patient, the payer and the provider in one model.”

As part of his mission to promote preventive care, Rapier gives lavishly back to the San Antonio community, both through a personal charity, the Blake, Kymberly and George Rapier Charitable Trust, and through the WellMed Charitable Foundation. “George is quite a hero in this community, and WellMed has set high standards for what a medical group should do,” says Fernando Guerra, M.D., San Antonio's director of health for the past 22 years. “If we didn't have them, some things would go without support, and there wouldn't be such opportunities for a public-private collaboration. We would do what we had to, but it wouldn't be anything as comprehensive as what WellMed's charitable foundation and their network can do.” For example, the city has received “formidable” amounts of help from WellMed in getting adequate supplies of flu vaccine, Guerra says.

Henry Cisneros, former mayor of San Antonio and secretary of Housing and Urban Development during the Clinton administration, runs a real estate investment company in San Antonio, and also chairs an organization called BioMed SA, devoted to developing the health and biomedical sector of the city's economy. He has known Rapier for about five years. The senior health center funded by the WellMed Charitable Foundation opened earlier this year and is named after Cisneros' mother, Elvira. “I've had the good fortune to see a number of really capable entrepreneurs, and Dr. Rapier has been one of the most impressive,” Cisneros says. “WellMed is one of the larger and more successful healthcare providers in our community—it's well-respected, doing creative and innovative work, and growing, even beyond San Antonio.”

Rapier is watching the current payment reform debate with great interest—particularly when it focuses on controlling costs with Medicare cuts. While he'd never go back to pre-Medicare days, Rapier thinks the focus of the program, and of healthcare in general, needs to come closer to managing care the way WellMed does. “To run a system effectively, you have to have someone coordinating care, and other than the primary-care physician, no one's trained to do that,” he says. “And there aren't enough of them. I would have hoped the legislation would have done something meaningful about that.”

Medicare Advantage payments are currently out of whack, he adds. “I think we'll see a reduction in Medicare Advantage funding, and I'm OK with it,” Rapier says. “I'm probably the only person in the industry that will tell you that.” Rapier quit seeing patients about six years ago because the company demanded his full attention, but he misses them. “I just like old people—I like dealing with them,” he says. “They grew up in a different time, went through the Depression and World War II. Most of them are so appreciative of what you do for them and really respect it.”

Elizabeth Gardner, a former reporter at Modern Healthcare, Modern Physician's sister publication, and is a frequent contributor to the magazine. Reach her at gardnerem@sbcglobal.net.

Thought Leaders: Arthur Chernoff's advice for the President on Health Transformation

2009-09-11T22:14:00.000-07:00

Dr. Arthur Chernoff shares his thoughts on how he would advise President Obama prior to his speech to both sessions of congress.

We wanted to highlight some aspects of President Obama's speech as they related to the X PRIZE. In reviewing a wealth of the information available, I noted an interesting article from Dr. Arthur Chernoff (anyone with a mugshot like the good doctors must be interesting!), who currently serves as the Division Chair of Endocrinology at the Albert Einstein Medical Center in Philadelphia, PN. This was written prior to his speech and provides at least one physicians perspective on health and health care reform. I highlighted a few areas in red that highlight the work the X PRIZE is trying to accomplish as part of its lofty objectives.

Prior to President Obama’s address to Congress on health reform, I asked myself, “What would I tell the President?”

First and foremost: go for it. All of it. Health care in America is too important, both economically and morally, to be left adrift in its current state. Its focus is wrong. It costs too much. And not everyone who needs it is able to have it.

Two rules that have served me well during 30 years of practice apply here. Rule #1. Make no assumptions. Rule #2. Always challenge authority. Accordingly, I challenge the very notion of health care reform. The word reform sends the wrong message to a public that by and large is happy with what they have and are afraid of losing it.

Reform is divisive; it implies that there is a wrong that needs reform. What is needed is not reform but transformation. Transformation is a process that can take place over time. Transformation invites cooperation among stakeholders; it is an evolutionary, adaptive process. We need to transform our notion of what health care is, how it should work, who should have it, and how its success is measured. We need to move to a system that focuses on improving the health of the individual and our communities. We need to learn to value knowledge-based care as much as the technology of care. We need to move from a system that values rescue care more than preventive care. We need to move from a system that is built to deny care to one that embraces those who are in need of care.

Universal health care must be a priority. The cost of not being inclusive is simply too high both on economic and moral grounds. Imagine if sanitation worked like health insurance: “I am sorry; you cannot have sewage or sanitation this year because you have a pre-existing condition.”

Single-payer health care would unify a disjointed system but it may not be feasible. This does not mean that the patchwork of private and government insurance that now exists can’t be brought to function as a unified system. This can be fostered by adopting unified standards for performance, processes and benchmarking just as other industries do.

Health care needs to function like a utility. It must be the same in Alaska as Alabama and it must be portable. And, like a utility, it has to be there when it is needed and it has to be easy to use.

Electronic medical records are a focal point for change. More important than having electronic medical records is to have electronic medical records that are fully integrated and compatible with each other. The Mayo Clinic record not only needs to be readable in the Cleveland Clinic, but in any clinic. Privacy is a concern. However, I worry more about gaining continuity of care in a population that is mobile and values choice. It has not gone unnoticed that fully integrated electronic medical records provide a key resource for the scientific tracking of treatments and their outcomes.

Research has received scant attention in the current debate; yet research is the heart of medical progress. We need research to power the transformation of care. Funding for basic science is critical to understanding normal biology and disease processes. There needs to be support for the research that brings discoveries made in the lab to the bedside. The process of medical care needs to be examined scientifically so that both doctors and patients learn what works and what does not.

Comparative research will determine which treatments are most efficient and which are wasteful, which medications are worth a premium price and which are not. Would cholesterol matter if no studies had been done to show that lowering it with statins prevents heart attack and stroke? Treatments need to be tested for their ability to improve our health and quality of life.

For the patient with a chronic disease, medical care is a marathon that is punctuated by sprints of acute care and races over the hurdles that the health care system imposes. In a transformed system, the health care industry would facilitate care and foster the resources to keep it coordinated and on track. Patients with chronic illnesses should have a passport to care rather than a requirement to get referrals for care.

There needs to be access for patient education, support for lifestyle modification as well as the prescribed medications and treatment. Chronic illness provides an opportunity to examine what limits effective care in the current system and why these limits need re-examination. A person at risk for diabetes may understand the need for exercise and healthy food choices but may live in a community where there is neither a place to exercise safely nor a market to buy affordable, healthy foods. Who bears responsibility? It is a health care problem that goes beyond insurance coverage and the affordability of medicines. It tests the limits of what we have traditionally called health care. It calls for a new order; one with broader vision and greater concern. It calls for a step away from acute care and a bold step toward preventive care.

It is clear why the current legislation runs to a thousand pages or more. Solving health care is complex. To do all of what I have outlined still would not meet the full measure of the health care transformation that we as a nation need; but it is a start.

So let us begin.

Arthur Chernoff is Chair of the Division of Endocrinology at Albert Einstein Medical Center.

Placebo Effect - What about the Health Effect?

2009-09-10T10:55:00.001-07:00

An interesting story recently published in Wired Magazine highlights the bizarre finding that the placebo effect is becoming noticeably stronger.

In a provocative story recently published in Wired Magazine the authors make note of the increasingly powerful effect of placebo in the various pharmaceutical studies. This enhanced effect of the placebo arm of the clinical trials is thought to be the collective effect of the aggregated pharmaceutical marketing efforts of the last several decades. When mixed with American's strongly held beliefs about the power of technology, these two influences have synergistically influenced the power of the placebo effect.

This is not only interesting but makes me immediately think what might happen when instead of the placebo effect, we start talking about the "health" effect. What happens when we change our overall definition of what "health" is, or how we collectively think about our health? What would happen if we made a multi-billion dollar, multi-decade investment in promoting the culture of health - what would the societal benefits we would reap. What happens when we actually start making healthy choices, start practicing healthy behaviors, and start having health and fitness become a fundamental component of our culture.

I believe the physical and mental "uplift" from this type of cultural investment would create a powerful double whammy of positive endorphins. Looking forward to see if we can fast forward this effect in smaller communities of 10,000. Hopefully the X PRIZE is coming toward a community near you!

Team Play - Including the entire care team to improve outcomes

2009-09-03T16:33:00.000-07:00

The Ashville Project demonstrates how non-physicians care providers can become highly valuable members of a care team who contribute to dramatic improvements in cost, quality, and outcomes.

I was recently made aware of a demonstration project that has the potential to go viral (ok, maybe that is a strong use of the term) in the quest to dramatically increase health value. I was asked to gather some information on the Ashville Project, a coopaboration (cooperative collaboration) involving adding pharmacist as a core part of the core team. I was very impressed by what I learned and thought the findings (while several years old now) would prove valuable to those interested in care team and care coordination.

Description of Project

Pharmacists are highly specialized, highly educated, and highly influential health care providers who have not historically participated in direct patient care in a meaningful way. On average, patients with chronic medical conditions see their pharmacist 5 times more than then they see their health care providers. These interactions provide significant opportunities for education, encouragement, and increased compliance with medical regiments while improving patient self empowerment and satisfaction with their health care experience.

In 1996, a large cohort of pharmacist across North Carolina embarked on a project to better coordinate their services while attempting to establish the value of the cognitive and coaching services they could provide. Their demonstration project involved having the pharmacist assume a coaching and advocacy role with patients. They received specific training for this expansion of their historical role, worked directly with patients to ensure understanding and compliance with their medical regimens, and followed the outcomes of participants assiduously to ensure efficacy of the program. They were paid directly by the self insured employer a flat fee ($300 / year) to provide these services while at the same time the employer waived the cost of all co-pays, medications, and supplies related to the targeted condition (diabetes).

Patients were provided the opportunity to meet with pharmacists at no cost to set and monitor treatment goals and to receive diabetes education, home glucose meter training, and information about adherence to their regimen. Pharmacists also performed physical assessments of patients’ feet, skin, blood pressure, and weight. Appropriate lipid management was a key component of the educational intervention. In addition, pharmacists referred patients to their physician, as needed. As an incentive to participate, patients received a free home blood glucose monitor and a waiver of co-payments for diabetes-specific drugs and supplies.

Outcomes

The Asheville Project was able to demonstrate tangible benefits and significant costs savings for patients, providers, and employers. Surveys indicated that patients felt more in control of their lives and were healthier. The pharmacists and diabetes educator agreed that the caring and supportive environment fostered by the project made patients comfortable with the process and facilitated their developing the skills necessary to self-manage their diabetes. Managers indicated that the program led to reduced medical costs and lower absenteeism.

Clinical

The Ashville Project was highly successful in increasing compliance while improving the target clinical objectives. Mean A1c decreased (i.e., improved) at every follow-up. Additionally, at every follow-up, 57.7% to 81.8% of patients were improved, compared with baseline. Further, the number of patients with optimal A1c values (i.e., A1c < 7%) increased. At the first follow-up, 24.3% more patients had optimal A1c values, and increases of 27.2% and 18.2% were noted at the second and third follow-ups, respectively.

Mean LDL−C decreased (improved) at every follow-up, although the magnitude of the change was small. The percentage of patients with improved LDL-C values was 50.0% to 66.7% at each follow-up. At the first six follow-ups the percentage of patients with optimal LDL-C increased, with a range from 2.4% to 20.9% increase over baseline.

Mean HDL-C increased (improved) at every follow-up. Similar to LDL-C outcomes, 53.3% to 75.0% of patients experienced improved HDL-C at every measurement. We also observed an increase in the number of patients achieving optimal HDL-C8values at each time.

Financial

Analyses of insurance and prescription claims indicated that mean total amount paid for all diagnoses decreased at each followup year. Most of the decrease in total costs was accounted for by a shift from insurance claims for emergency department, inpatient, and physician office visits to prescription claims. Mean costs for insurance claims decreased by $2,704 PPPY in the first follow-up year and by $6,502 PPPY in the fifth follow-up year. During the same periods, mean prescription costs increased significantly, by $656 to $2,188 PPPY, with diabetes-related prescriptions accounting for more than half of the increase. Logistic regression suggested that in the first year of the program patients with type 1 diabetes were less likely than those with type 2 diabetes to see a 10% decrease in total medical costs. The payers realized decreases in total direct medical costs that ranged from $1,622 to $3,356 PPPY.

In addition to these direct savings, indirect costs such as absenteeism were also affected. The mean number of days of sick time used for group 1 decreased at every follow-up year, compared with baseline. Data were available
for 37 patients for the years 1996 through 2001. During the baseline year the mean number of sick days was 12.6 days PPPY. There was a mean decrease of 6.6, 4.1, 5.3, 4.9, and 6.2 days PPPY in each subsequent year. The group 1 employer has estimated the value of increased productivity to be $18,000 per year.

Replicating the Model

The economics and financial model of the Ashville Project have been replicated in many other settings throughout the United States with success. In order for the project to be successful it requires a collaborative team approach, alignment of incentives, financial commitment from employers and/or payers, and agreement on which outcomes will be measured to demonstrate success.

Conclusions

The key factors identified in the programs success were the decisive influence the waived co-payments for diabetes medication and related supplies had as an incentive for patients to participate, the opportunity for patients to establish ongoing relationships with caring and knowledgeable health care professionals, and the improvements in self-management of diabetes brought about by the continuity of seeing the same provider on a regular basis. The program appears to demonstrate a significant return on investment by directly reducing cost of urgent and emergent care settings, which is seen in increasing cost reductions over time (despite increasing prescription costs during the same time). Demonstration projects provide preliminary evidence that these results can be replicated in other settings.

For me, the key learning is how other members of the care team, who are often latent or unaware of their potential impact, can be utilized to share their knowledge, insights, and expertise to achieve significantly greater health value. Think what will happen when all of our providers are working together to incrementally and seamlessly add value to the overall care delivery process.

X PRIZE Sponsorship: Team Leaders, Components, and Vendors

2009-09-01T14:08:00.000-07:00

The Healthcare X PRIZE contemplates the creation of an innovation ecosystem whereby Team Leaders, Team Components, and PRIZE Vendors compete to win both the larger prize as well as sponsored subprizes.

We continue to receive quite a bit of interest from multiple parties related to the X PRIZE. As the prize continues to work its way through the approval process, a key concept opportunity that continues to emerge relates to sponsorship. WellPoint, as the flagship sponsor, has taken the lead in helping to finance the development of the prize concept and will have their name associated with the prize similar to the Google Lunar X PRIZE and Progressive Auto Prize models. As with both of those prizes, however, there remain a number a "sub-category" or "sub-prize" opportunities. In fact, the ecosystem that can develop from the Healthcare X PRIZE may be one of the most powerful outcomes of the prize process.

As was discussed in the original Design Document, the competition is organized around various teams competing to radically improve the health value delivered to five unique "communities" selected from WellPoint's large employer base. Team leaders will be responsible for paying the registration fee, organizing (identifying, recruiting, signing, and managing) their "team", and then ensuring peak performance from their chosen set of interventions. Many of the additional team members will contribute key point solutions or components that will add significant value to the overall intervention program. We are calling these team members "components" to distinguish them from the Team Leader. Given the different roles, responsibilities, and reporting requirements you can begin to get a gauge of the type of companies and entries who can function as team leaders and who might be able to effectively contribute as component solutions.

In addition to these two entities, there is a notion of tools and technology providers being made available in a equitable way to all entrants in the competition. We are calling companies involved in this way "Vendors" to distinguish their specific role. We are still working out the "rules of engagement" for Vendors, and how we will make their services available in a way that makes sense to everyone, but this has great potential to allow even wider collaboration and participation. Vendors will not be competing for the overall PRIZE purse (at least $10MM), but they may compete for some of the sub prizes that are being contemplated in certain categories of innovation we are interested in incenting (best behavioral modification program, best health finance innovation, best use of personalized dashboard, etc).

This then creates a much wider sponsorship opportunity for those wishing to see specific types of innovation. You can envision which potential companies might want to sponsor particular areas of interest to them, which would create a much more rich and interesting "race" over the three year competition cycle. The singular focus on increasing health care value would be the unifying focus to ensure that the Healthcare X PRIZE does not become disjointed or distracted. Our preliminary conversations with Team Leaders, Team Components, and PRIZE Vendors have all been very positive and reinforced our interest in this line of thinking.

This begs the question - which type of competitor or sponsor are you?

Health Innovators Series - Michael Millenson on "40 years in the making" Health Care Crisis

2009-08-31T15:39:00.000-07:00

Michael Milleson is well known in the health policy and health quality for his articulate commentary, sharp wit, and undeviating focus on improving our health care system. His 1996 Book, Demanding Medical Excellence, is a tome that still rings true today.

Can you share with us your background?

I was one of the first journalists to cover health economics and policy for a general interest newspaper, beginning the feat as a financial reporter for the Chicago Tribune in 1982. In 1986, I received an Alicia Patterson Foundation Fellowship, whereby you go into the field for a year and write on a topic. (Newsweek economics writer Robert Samuelson and Passages author Gail Sheehy were Alicia Patterson Foundation Fellows.) My topic, in the post-DRG era was “The Deregulation of the American Health Care System,” which is what Republicans called their regulations. By being out in the field, I learned the difference between in-the-trenches reality and meeting room reality.

My series, “Managing Medicine” in 1987 looked at competition, the dangers and advantages of managed care, measuring and managing quality and “upstairs/downstairs” care of the uninsured. It was nominated for a Pulitzer Prize, one of three for which I was nominated while at the Trib. But the reporting also started moving me into a level of knowledge of health care (and appreciation of areas of gray) beyond journalism. I started covering the meetings of health services researchers, for example. By 1993, after writing a series on quality of care, which had become my main interest, I was ready for something more.

I was given a Robert Wood Johnson Investigator Award in Health Policy Research, the only non-MD or PhD to win this competitive award that first year and for many years after. I became a visiting scholar at Northwestern University and wrote Demanding Medical Excellence: Doctors and Accountability in the Information Age, a peer-reviewed, footnoted book written in plain English. I meant to do a journalist’s book; instead, I did a PhD thesis translated back into English about medical errors, medical informatics and informed decision-making, managed care, patient empowerment and value purchasing. It came out in 1997 and was much, much farther ahead of its time than I would have guessed or wished. I was still naïve about the pace of change in health care.

I finished the book while working as a principal in the benefits consulting practice of Mercer, because I believed in the power of employers to change the system to work more effectively. I left Mercer in 2001 and have headed my own firm, Health Quality Advisors LLC, while retaining an academic appointment as the Mervin Shalowitz, MD Visiting Scholar at the Kellogg School of Management. I’d describe myself as a consultant, academic and quality of care evangelical.

How has health care changed since you wrote your book in 1997?

Evidence-based medicine, once a curious important from England, has become so mainstream an idea that it’s inspired its own backlash — even though the actual practice of evidence-based medicine is very far from prevalent. The idea of value purchasing has come back into fashion and managed care has gone completely out of fashion (at least until a new name is invented). But the biggest changes are the end of silence about medical errors and the acceptance of the need for computer technology. The latter, of course, is a little like giving the military credit for accepting the need to replace cavalry horses with tanks by 1941, but at least it’s progress. One more technological change: the Internet was new in 1997. Today, it is giving patients the power to partner with their physicians, generate content and go “off the grid” of the medical establishment in ways that could not have been anticipated then. This grassroots change may end up being the most powerful of all.

What’s your diagnosis of the current health care crisis?

Well this is a “crisis” that was 40 years in the making. It’s funny because Medicare was created in 1965, took effect in 1966, and the first conference on health care costs being out of control was held in 1967. To be candid, I really don’t see much that has changed since the very beginning of this “system” being implemented.

My diagnosis tends to home in on the underlying drivers of behavior - which are mostly economic. Why do physicians behave the way they do? Why do hospitals behave the way they do? What incentives are driving the behaviors that we see that are placing us into this “crisis”? Immediately, we have to point to the payment mechanisms which incent an increased production of health care widgets as a means of increase payment. The infamous “supply induced demand” highlighted by the recent Atul Gawande article in The New Yorker.

Therefore, the question is how do we align the financial incentives to enable leadership to get true culture change? We certainly see great regional examples of this in Kaiser Permanente, Intermountain Health Care the Mayo Clinic and the Geisinger Clinic, but these appear to be the exception to an otherswise pervasive lack of these qualities in the general health care industry.

What are the specific reform efforts that you believe will yield the greatest results?

First and foremost, the physician is at the center of the system. Any doctor can prescribe any drug or perform any surgery. Compared to anyone else, physicians are given enormous autonomy.

The way we change health care is aligning financial incentives and changing social norms to encourage the with patient and doctor to eliminate waste. At heart, this means a chance in the doctor-patient social contract. The opportunity with the X PRIZE is to do the simple things and complicated things to achieve this kind of new social contract.

So, for example, the problem of unnecessary antibiotic use for children’s ear infections often ran up against the issue of anxious parents demanding a prescription. The solution turned out to be a combination of doctor education and a clever wrinkle in the doctor-patient relationship. Parents were given the prescription, but it was postdated; in other words, they were told that if the infection didn’t go away in a few days, then they should fill the prescription. Result: doctors feel as if they’re providing caring, patients feel cared for and unnecessary drug use — and unnecessary cost — are taken out of the system.

Those kinds of ideas, that blend cost reduction and quality improvement with a true patient-physician partnership, are where we need to focus. Having said that, we also need to ensure that doctors are not penalized financially for this paradigm shift. In my book, I wrote about a four-man family practice that reduced unnecessary tests, stopped having patients come to the office when a prescription could be written over the phone and, in a fee-for-service world, gradually went bankrupt.

It’s also important to spread the word about successful system-improvement efforts in an attempt to make sure they diffuse far more quickly. Under the leadership of its CEO and its senior medical staff, the Ascension Health hospital group has documented that falls, infections and other preventable causes of medical harm can be slashed to a fraction of their previous levels in just a few years. In the process of systematically doing just that, Ascension has saved more than 2,000 patients’ lives at its hospitals. That kind of achievement needs to receive the same kind of publicity as FDA approval of the latest statin.

That won’t be easy. After all, one man’s waste is another man’s profit center, and a pill or device to prevent or cure infections will always be a lot sexier than simply ensuring that everyone who gets close to the patient washes their hands.

How does universal access solve or not solve the issues you raise above?

Access is a fundamentally different issue that efficiency. Other nations that have universal access to care are no better than we are at consistently providing high-value, evidence-based treatments once someone walks inside the doctor’s office or enters the hospital.

Having said that, I don’t think that the question of access to care is a technical problem. As I wrote in an article in the Washington Post Outlook section in June, 2008, to get universal care you first have to care. We’ve had the same stories about the uninsured for decades. The problem is that the American public doesn’t really seem to care that much, perhaps because the uninsured are disproportionately black, Hispanic and poor. And so, we spend hundreds of billions of dollars adding a drug benefit to Medicare, but starting looking into our national pocketbook for spare change when it comes to the cost of covering the uninsured.

Texas, for example, has had the highest rate of uninsurance in the nation for years, reaching as high as 33 percent at a few points, and yet that fact did not hurt George W. Bush one bit either in the Republican primary or when running for president in the general election.

What are the top areas where you believe innovation can be applied to solve for market failures?

There’s a difference between health and healthcare. Health has a lot of environmental, socioeconomic components that are not present in healthcare. Take a look, for example, at the Obamas. Here’s a black family from Chicago’s South Side, where there’s what’s described as an epidemic of obesity. Yet they’re not fat. Why is that? Obviously, it’s not some physical antibody but a combination of education, willpower, genetics and socioeconomics that makes them different.

The question for innovative solutions to market failures is hot to properly incent physicians, employers and others to attack problems like obesity in the kind of comprehensive, holistic manner that is far more likely to succeed than a narrow, medicalized approach. Too often today, a doctor says that a patient’s compliance is not his problem because it’s not in his control. However, with markets, we can pay someone enough to make it their problem. We’re going to incent you to get things done rather than give up in advance.

At a certain pricepoint you’d stop talking about how unfair it would be to get people to come in and say, how do I sign up? We need to focus, as well, on the financial and social incentives that will enable the innovations that we already know work to diffuse more quickly. We know that giving those who adopt an innovation a very tangible, personal advantage is the key. As the current health care reform debate certainly proves, abstract words like fairness, accessibility, long-term fiscal stability and the like don’t have a great deal of impact on human behavior.

Your thoughts on how the PRIZE model can assist in catalyzing these efforts?

I like to say that we need to build a system based on “Do the right thing (do what’s appropriate) and then do the right thing right (do what’s needed in the most effective and efficient way)”. I really believe you have to build off the current technical and social platform for health. I realize that it is currently a difficult and unstable foundation from which to build, but I don’t think we have the luxury of completely excavating a new system of care. I see that the X PRIZE model can create a framework from which teams can work to use the current system as a jumping off point for radical change. That’s pretty exciting.

Your thoughts on how we can actually pilot the five winning solutions in five markets around the country?

There are markets that are used to innovation and those that are not. An incubator for the X PRIZE should be typical of America in terms of demographic, geographic and other challenges but atypical in terms of cooperativeness and openness to change.

Who else should we be speaking to?

Two people, whom you might not have considered, but who have informed my thinking include Ian Morrison (a futurist) and Emily Friedman (who focuses on access and public health issues). Both of these individuals have unique insights that might prove valuable to the X PRIZE efforts.

Prometheus Payment Model: Igniting a revolution in health finance reform?

2009-08-21T06:52:00.000-07:00

Prometheus Payment model is a health financing innovation that groups care into discrete episodes from which all providers receive a single global budget. It is a variation on capitation, which I call Microcapitation, wherein clearly defined "care packages" are created, delivered, and used to determine quality bonus payments.

The second health financing innovation with relevance to the Healthcare XPRIZE was highlighted in the most recent New England Journal of Medicine article. The Prometheus Payment Model has been a longstanding project of Francoise De Brantes (of Bridges to Excellence fame) and folks like Doug Emery who have been beating the “episodes of care based” financing for years. I have had some great conversations with Francois and Doug over the years and I am pleased to see their ideas actually being implemented in some pilots sponsored by the Robert Woods Johnson Foundation.

Prometheus is a payment concept based on clearly defined episodes of care wherein all the services provided can be bundled together in discrete “Care Packages” (not everything fits neatly into this construct as they note). These Care Packages are then assigned a global budget from which all care providers must deliver their services (technical term is Evidence Informed Case Rate). The Care Packages are further adjusted for patient severity as well as for Avoidable Patient Complications (APC). These are things like hospital acquired infections, exacerbation of chronic conditions, or other events that if optimally managed would not have occurred. This payment model rewards providers for organizing along the entire episode of care. It clearly is a move away from independent, discrete payments for disconnected care to a new model of continuous view of all the events that make up the episode. The global budget for a clearly defineable event creates financial incentives toward high performance and quality outcomes.

I was the first to call this new payment model "Microcapitation", and describe further in another post. The article is a good read, and highlights many of the talking points that we believe are fundamental tenets of health finance reform:

Rewards for value not volume
Rewards for quality not quantity
Rewards for the organization and coordination of care
Provides a financial integration mechanism for non-integrated providers to work together
Provides financial incentives to reward the above
Leaves plenty of room for innovation and improvements underneath the global budget.

We hope to see the Prometheus model gain additional traction. A variation of this concept and much simpler to follow is the highly successful “Proven Care” model employed by Geisinger (see their excellent website describing the development process and the elements of their Angioplasty episode of care). We are encouraged to see types of health finance innovations be introduced and are confident that the Healthcare X PRIZE participants will introduce many more.

Virtual Health Insurance Exchange - Utah Goes Live

2009-08-20T23:40:00.000-07:00

The State of Utah has embarked on a multi-year, multi-stage health reform plan. They recently introduced their new Utah Health Exchange, a virtual health insurance exchange with several novel twists

There have been several interesting health finance innovations that have been announced recently which have relevance to health reform in general and the Healthcare X PRIZE specifically. I wanted to first start with an announcement from the State of Utah that their version of a Health Insurance Exchange is now “open for business”. The Utah Health Exchange is based on a multi-year, multi-stage health reform effort in the very progressive but conservative state (is that possible?). The plan has three main components:

Defined Contribution
Virtual Health Insurance Exchange
Risk Adjustment

Each element is described in a detailed communication from Edmund Haisimaier, a Senior Fellow Research Fellow in the Center for Health Policy Studies at the Heritage Foundation. Before you dismiss this effort as some conservative schtick from the right, you should actually look at what they are doing and how they are doing it. It is actually a fascinating read.

My take: BRAVO! What Utah is doing in health financing is something we should be seeing alot more of in the future. Couple points of comment:

Defined Contribution. I also love the notion of a “defined contribution” coming from employers. This is also a no-brainer - let the employees both see how much you are contributing to their health as well as give them the flexibility to make their own choice. These ideas were made popular by Definity Health, and I love seeing this concept move forward. For me, this will be the “death knell” of employer based insurance if this concept takes off - which I see as a very positive outcome. I have already ranted about Employer Based Insurance in the past and the sooner we decouple this unnatural relationship the better off our country will be.

Virtual Health Insurance Exchange. Leveraging a technology platform (eInsurance in this case) to bring together all the disparate information to make an apples to apples comparison of various health insurance options. This allows the consumer to make rational choices based on their own preference sensitivity of price, features, benefits, and other metrics. I love that insurers, and the brokers who push their products, will have to do more than convince an HR manager who makes a company wide decision, but rather have to compete consumer by consumer by offering the best value. The technology makes it possible to compare dozens of different plans based on age and family status simultaneously. The agent role turns much more into that of a value added advisor.

Risk Adjustment. This is actually much harder to follow. Essentially, Utah is laying the foundation to create a state wide pool with everyone who has insurance being a part of a single pool. On the “front end” when the consumer purchases the insurance there will be some variation in pricing based solely on age and family status. However, on the “back end” the insurer taking the diabetic will actually get a little bit more of the premium. Furthermore, any insurer who has an inordinate amount of large expenses or wide variations in claims will receive additional credits from the other insurers. This innovative wrinkle can actually entice other insurers to participate as these “adjustments” further minimizes the risk that their “pool” performs worse or costs more than others. Essentially, the Utah Health Exchange pools premiums from all the consumers, each insurer provides coverage during the year, and at the end of the year they redistribute a portion of their premiums to any insurer who took an excessive hit during the year. The details of how this will work in practice were not included but the concept is very interesting.

This is exactly the type of health financing innovation we need to be seeing. New ways to pay for insurance, new ways to acquire insurance, new ways to spread and pool risk, and new business models that will allow these concepts to flourish.

Healthcare Innovators Series: Ginny Proestakes, Director of Health Benefits at GE

2009-08-18T10:00:00.000-07:00

Ginny Proestakes RN MPA, Director of Health Benefits at GE, shares her insights on the health care challenges faced by large, multi-national employers based in the United States.

What are the challenges you face in providing healthcare or insurance to your employees?

The challenges that GE faces in providing health insurance to its employees and retirees are the unpredictable, ever growing costs. We have to offer benefits to be competitive as an employer. However, because we compete in a global environment, we definitely see and feel the exceptional high health care costs in our US markets. These costs are increasing at an unsustainable rate.

What are some of the competitive challenges you face in terms of cost?

Specifically, when purchasing benefits it becomes a supply chain management game, and just like any other purchase in a corporate environment, you’re trying to buy the highest quality for the lowest cost. We always find it interesting that it is only health care costs that go up year after year; nearly every other expense area sees lower per unit prices each year. We are therefore constantly re-engineering and looking at ways of getting increased efficiencies out of the system. This includes directly employees to best care at lowest prices. This is very challenging because we are not talking about widgets, but human relationships that are very personal and there are some boundaries that we choose not to cross as an employer in this area.

How have you attempted to address this problem?

We have actually attempted to apply Six Sigma to our sourcing process, but I think the real opportunity is helping employees better manage their own health by providing advisory services to employees as they consumer health care. This would include directing them to the best clinician or facility when they are sick for their particular illness. This has actually proven very difficult because not only is this information difficult to obtain but health care is so personal with so many personal preferences to take into account.

What challenges are faced by the healthcare industry as a whole?

There are a wide variety of problems in health care. First, it is a highly fragmented industry. It’s not what we would call in Six Sigma a “wing to wing” process. There are many little processes that get rolled up into a large process and they not only don’t fit well together they often times don’t even connect. The second is it’s not a very flexible system. Change is very difficult, not only for providers but for the health system infrastructure as a whole. I’ve worked with plans and institutions that have had systems in place for over 20 years. Third, I think it is exceptionally difficult to find, purchase, and receive value. The way we pay providers, pay hospitals, and all the various suppliers in healthcare needs a major overhaul. What we’ve been doing is basically rewarding people for units of service and not total value, and I think we need to take a fresh, completely new approach to solving this issue.

Given the recent economic challenges, how do you think we should approach healthcare differently?

With the recent economic challenges, it’s really a very different era to be managing benefits for large employers in the United States. I think we should take a completely fresh approach. I think we should look for every opportunity to drive down inefficiencies, to try new things and to pilot different initiatives and not be afraid to restructure them or retool them as we go along. I think the time is right for innovation and bright, new ideas and really big imagination, which is why the X-Prize is so important to us at GE.

Why do you think the X PRIZE model is a good way to address these challenges?

A prize is a good way to address these challenges because it might attract people who wouldn’t normally get involved in solving this issue. I think it brings in multi, or cross-disciplinary, approaches to solving the problem. We have got to try new and innovative approaches, and we’ve got to reward people for the value that they create. I think the prize approach, and X PRIZE in particular, can be a great catalyst within the health care marketplace.

Why do you think a test or pilot is so important?

The real world test and the pilot always important to any innovation process. We’re taught Six Sigma at GE, and the last toll gate you pass through is the pilot because it is so different than the laboratory, or controlled setting. Whenever you put things in the rela world with real people, you learn a tremendous amount. I also don’t think there will be a single solution in healthcare; it is far too complex and as a result I don’t think there should even be a single prize. As a result, we are really excited about what might come out of this effort.

What outcomes do you want to see from this process?

First and foremost, any solution that comes out has to drive down cost but also improve quality in the process. I believe it has to impact value for all the stakeholders involved in the healthcare value chain. These stake holders include not only employers and plans but also providers, facilities and patients. I also believe a winning solution will need to drive down inefficiencies of information, process, and administration.

Anything else you want to add?

GE is certainly attracted to the X PRIZE and WellPoint partnership around this health care effort. In particular, GE’s well known tagline is “imagination at work,” and it’s embedded in our culture and everything that we do. We’re encouraged to come up with what they call imagination breakthroughs and attempt to pilot them and evaluate them, implement them with Six Sigma precision, and as a large employer to demonstrated how they allow us to increase efficiency, reduce costs, and improve outcomes. As a corporate entity, we have taken the lead in several other industry wide initiatives - including LeapFrog, Bridges to Excellence, and the medical home project. We really look forward to what can become of this partnership.

Health Innovators Series: Herbert Pardes, CEO of New York Presbyterian Hospital System

2009-08-17T09:46:00.001-07:00

Herbert Pardes shares his thoughts on the power of healing relationships and how the PRIZE model can be a catalyst for innovation within healthcare

In 1999, Dr. Herbert Pardes was elected President and Chief Executive Officer of NewYork-Presbyterian Hospital. As the former director of the National Institute of Mental Health and Assistant Surgeon General of the U.S. Public Health Service, he was well positioned to assume the top leadership role of one of the largest hospital based systems in the United States. He has also served as Vice President for Health Sciences and Dean of the Faculty of Medicine at Columbia University College of Physicians & Surgeons. Prior to this he was the Director of the Psychiatry Service at Presbyterian Hospital. For over three decades he has played a major role in the affairs of NewYork-Presbyterian Hospital and understands the challenges and opportunities within the current health care reform era. The X PRIZE team caught up with him earlier in the year to get his take on how to improve the health care system.

Can you give us your background?

My name is Doctor Herbert Pardes. I’m president and CEO of the New York Presbyterian Hospital in New York City. We are one of the largest hospital systems in the world and consist of a complex of institutions in the city as well as in Connecticut, New Jersey, and an affiliate in Texas. We deliver about 20 to 25 percent of the healthcare in the greater New York area which consists of clinical care, health education, and medical research.

What challenges do you face in providing care to your patients?

We can do so much more in healthcare today than we could just a short 20 to 30 years ago. Those of us who are in healthcare find our greatest pleasure in being able to help people and this has been very satisfying progress. As a result, many more people are living longer and the demand for complex healthcare is very substantial. As a result, the cost of healthcare has become very expensive. So our biggest challenge is how to provide the greatest amount of help to human beings while being sensitive to the cost issues for the nation and the population in general. This is a very difficult balancing act, and we attempt to find the way to extract maximum benefit for the dollars being spent.

How has the burden of administering the health care system changed during that same time?

I think one of the things that could help a lot would be a reduction in administrative requirements and the excessive oversight. I am not trying to minimize the value of oversight, but I believe it can be done in way to minimize the energy and the effort required to respond to oversight. As an example, in a recent study of nursing care, it was found that when you measure the amount of healthcare a nurse provides at the bedside, that the average nurse spends only 28 percent of their time at the bedside and 72 percent on other work. My feeling is that is imbalanced and should be corrected by taking off some of the unnecessary demands and freeing up the nursing staff to be more available to the patients.
In terms of reimbursements issues, what challenges do you face?

Well, reimbursement is an enormous problem for people in healthcare. There are a very large number of people in this country who are uninsured; there are a large number who are underinsured. Even people covered by Medicaid and Medicare represent an entire population whose reimbursement does not meet the cost of their care. So a hospital like ours loses money on Medicaid, loses money on Medicare, and in addition provides healthcare for people who are either underinsured or uninsured. While we do receive a modest subsidy from the government to compensate for our care, we lose money on everyone of these patients. We offset these losses by how we charge for our commercial care and in this sense we are a microcosm of the country. Our current payer mix is 30 percent Medicaid, 30 percent Medicare and some 30 percent or so commercial care. The remainder is people who pay for themselves or are uninsured. Reimbursement has been the toughest nut for all of us to crack and remains a very big, unresolved problem in healthcare.

What do you think about issues like pay for performance and incentives?

I’m in favor of pay for performance and I actually helped to draft the initial principles the joint commission used to create the current pay for performance efforts. I do not, however, favor reducing people’s revenue if they can’t meet the performance because what you’ve often got is an institution that may have limited resources, can’t do the job, and by taking more resources away from them they get into a vicious downward cycle. On the one hand, I think that having goals, setting targets, and having people strive toward better performance for quality, safety, and efficiency are very good. I am for incentives just as I am in favor of competition but we need to be careful that what looks like a good program does not become twisted as a means to artificially cut dollars for health care.

What are the greatest challenges we face in terms of the healthcare industry as a whole?

Well, first of all, I think that our country needs to once and for all move toward total coverage and total access so everybody can access the benefits of healthcare. That can sound like it’s gonna cost more money, and it probably will cost some more, but it’ll have more total savings associated with it. There are a lot of people who come to emergency rooms after their disease is well along, and as a result they’re suffering more and we are all paying more and our opportunity for success is also diminished.

I’d much rather see a system wherein a healthcare professional looks after your general health, pays attention in a preventive way to good health practices, diet, exercise, regular colonoscopies, etc, etc. This style of health care should results in a life of less major illnesses and less time suffering from major illnesses. I believe we could create a much healthier population but its foundation is in universal health care coverage.

We should not have the current disparities and inequities between different populations. We should focus on investments that have a clear health benefit, as well as a clear improvement in population health that can work more, contribute more, and produce more. This clearly helps the economic welfare of the country as well as the health interest of the country.
Why do you think a prize or competition is a good way to address these issues?

I think this country is built on competition, and I like competition. It stimulates people to do more, to try harder, and provides a built in rewards system to people who have done a good job. A prize creates some interesting competitive dynamics as well as the motivation for many people to strive for the prize. I think the catalyzing effect of the X PRIZE model can have a very stimulating effect on driving innovation. I commend the people behind the concept of the X PRIZE and am eager to see how it can be applied to health care.

What outcomes do you hope to see from this process?

I would like to see more innovation in healthcare. I would like to see particular attention to the interpersonal nature of healthcare, and a significant reduction in the preventable problems that are currently plaguing our system. Let me give you an example. One of the most common illnesses in the United States is diabetes. It’s known that if a person having diabetes handles themselves in such a way as to keep their blood sugar within normal bounds, the likelihood of the complications of diabetes is dramatically reduced. Now, in our hospital right now, if you and I went for a walk through, we would probably find something in the neighborhood of 1 in 4 people having diabetes, and the reason they’re in the hospital is not necessarily for the diabetes itself but for vascular problems, eye problems, heart problems, kidney problems, surgical problems, or vascular problem related to the underlying disease. If we could get people to handle themselves as they should, despite the fact that they have diabetes, the likelihood is the number of patients with those various complications would be dramatically reduced, and the nation would save considerable money.

My feeling is that if we can introduce both the most personal, responsive and sensitive healthcare system, it can have a dramatic impact on how people handle their health care problems. Think about a patient walking into a forbidding institution, with professionals they don’t know, who are not friendly or supportive, and it makes the person feel terrible; if you didn’t feel terrible before you will as you travel through this type of health care journey.

In contrast, if you have people who care about you, show it, patient-sensitive, friendly, understanding, try to help you, you begin to feel like there is this coordinated, caring team on your side. There is just a dramatic difference on how the patient feels and how they perceive their own health is a key indicator on how they actually do. So for me, I see this personalization of the health care system as having two key effects: 1) getting patients more engaged so that they become better stewards of their health from the beginning, and 2) a system evolves that is personalized, coordinated, and delivers the type of care in the way the patient can best receive it.

Any final thoughts regarding health care?

I think that people who become nurses, medical technicians, doctors, pharmacists are in this area of work for one primary reason: it feels good to help people get better. If you can then aggregate that effort into a systemic concept of improved health delivery that is more patient focused, achieves better outcomes, and saves the nation money in the process you are going to have a lot of people feeling terrific on both sides of the table. I think this is not only an exceptionally useful deployment of the prize model but that the X PRIZE should take enormous credit for stimulating this movement.

Health Innovators Series: Betsy Dietz and the medical home for a global workforce

2009-08-14T07:35:00.000-07:00

Betsy Dietz is one of the executive leaders in IBM's Global Business Services Healthcare Practice. She is passionate about improving efficiency and outcomes in healthcare and is a strong proponent of the patient centered medical home initiative.

Can you introduce yourself?

I'm a partner in IBM's Global Business Services Healthcare Practice. I have been the executive managing our WellPoint partnership for the last several years. I'm participating in the X-Prize initiative because I think it will drive innovation that matters in making a positive difference in the quality of people's lives. Innovation that matters is what motivates me and in fact it's one of IBM's core values.

As a very large employer, what challenges does IBM face in providing healthcare?

IBM certainly has a challenge in providing health care and insurance to over 300,000 people in IBM. All too often our employees receive woefully inadequate care from their physicians. The New England Journal of Medicine actually says that Americans receive only about half of the recommended evidence-based care that they require. Our employees get frustrated when they can't get timely appointments with their physicians or when their office experience feels like riding an assembly line conveyor belt. They also get frustrated when they don’t get calls back or their calls returned or when they can't get information like their lab results. We also hear from experts that as much as half of the American healthcare spend provides no benefit to Americans.

We really need - we would love to have - a plan that would provide alignment between incentives and compensation to the value that our employees receive in the medical system. We've been active participants in the Patient Centered Medical Home that begins to focus on the relationships between all the entities involved in care processes -patients, physicians, other providers, payers, and plans. I can imagine that one of these teams might want to compete for the X PRIZE by leveraging a medical home strategy as their approach.

Describe the competitive challenges that you face in relationship to rising medical costs?

As a nation we have the highest per capita healthcare spend among developed nations. We are more than 2-3X most other countries despite our democratic, free-market economy. Unfortunately, this gap is widening which is causing American Companies to lose their competitive edge as we compete in a global economy. IBM has been a pioneer in integrating a global workforce and we are attempting to help our worldwide clients do the same. We understand the challenges of leading multinational and multicultural teams in multiple time zones. We certainly have been taking on the challenge of increasing health care cost in the United States which clearly impacts the price of IBM products and services.

How does healthcare and health insurance impact the productivity of your workforce?

Well I think to address the productivity challenges that we have we really need to move from a healthcare system that is reactive, that only treats people after they're ill, to one that focuses on prevention and wellbeing. We would love to work with our partners to provide coaching for our employees. We believe that we need health coaching to help our employees permanently adopt healthier lifestyle and make the changes they need in their lifestyle and behavior choices. We think we need health value coaches that will help our employees navigate the healthcare system and to find optimal value. This would also include assistance with transparency, including helping employees find high quality providers, alternative treatment modalities, and traditional consumer decision making tools in making health decisions. They need not only to select the best plans for themselves and their families but also begin to plan their health care expenses over their lifetime just like they do with other retirement or financial planning expenses. We hope this focus accelerates that transition to a healthcare system that's centered around the patient.

What are the challenges that the healthcare industry faces as a whole?

Despite having many fine care delivery organizations and caregivers, the US healthcare system is badly broken. I'll assert that our current system is not sustainable. We have high and rapidly rising cost. And there's no linkage between that cost and the quality of care in our system and we have nearly 100,000 people dying each a year from preventable medical errors. We have another 57,000 people dying from inadequate care. And we have almost 90,000 people a year dying from hospital-acquired infections. it must be an absolute imperative that we improve the quality of care in America.

If you look at America compared to other developed countries, out of the top 30 countries we're actually 22nd in life expectancy out of 30; 28 in infant mortality; and rock bottom last in obesity. These are serious problems that have to be addressed. We also see a fourfold variances in cost for the similar or same outcomes being achieved by others. Can you imagine buying a car that is four times as expensive for the same level of function and quality as an alternative? This happens every day in healthcare because we have no idea where to turn for quality. I also think that these problems can't be solved by just turning to government intervention. Certainly can't be solved by throwing more money at it either. I think this is an "all hands on deck" urgent call! We are going to need radical innovation in order to make this happen. Again, this is where I really believe that an X PRIZE competition can create an environment for this radical transformation to occur.

Given the recent economic change that we've had how do you think we should approach healthcare?

The economic difficulties in the United States and the world are gonna affect possibly all aspects of our lives and certainly healthcare is no exception to that. We will continue to see the high number of Americans who are uninsured today, and those numbers could go higher. This highlights again that there has never been a greater need for innovation. We need to see, um, major reform on several fronts. We need to see individuals accept responsibility for their own health and well being and start making those healthy lifestyle changes they know they need to make. We need to enable our primary care physicians to treat the whole person and to provide the medical home that we've been talking about. And with these economic conditions above all we must find a way to deliver higher value, higher quality and safety at an affordable price.

Why do you think the X PRIZE model is a good way to address those challenges?

I think an X-Prize is an excellent way to address these challenges because incremental innovation is not adequate to meet the demands that we face as a nation. Historically companies have focused on innovation at the product and services level. And we have seen tremendous advances as a result: 3D imaging, advanced pharmaceuticals, new devices, etc. We have more recently seen companies innovate at the business process level. E-prescribing is a great example of that. It really streamlines the process between the patient and the provider and the plan while providing measurable gains in quality and cost containment.

But today plans really need to innovate at the business model level to redefine how healthcare is provisioned and financed in this country. I think that the X-Prize is an excellent way for us to drive radical innovation forward in these revolutionary times. I believe we can create a forum for employers and providers, health plans, government leaders and individuals to come together to not only define these challenges issues but foster the innovation solutions that will help us overcome this incredibly complex issues. X PRIZE has as demonstrated history of using prizes to reward revolutionary change.

What kinds of outcomes do you hope will result from this process?

I am delighted to be working with key WellPoint leaders on the Healthcare X PRIZE iniative. I can envision a system wherein primary care physicians treat the whole patient and where an individual's information is collected and analyzed for insight that can power the entire ecosystem. This will require care continuity between physicians, more more aligned incentives, and compensation based on outcomes versus volume. The X PRIZE provides a framework in which we can really drive to higher quality and safety at a significantly lower price. I am confident that the Healthcare X PRIZE competition can actually accelerate our transition to a sustainable healthcare system that is centered around the patient.

Health Innovators Series - Simeon Schwartz, MD on the

2009-08-12T10:00:00.000-07:00

Dr. Simeon Schwartz is president and founder of The Westchester Medical Group, a 150 physician multi specialty group practice. He is a board certified hematologist and medical oncologist. After receiving his undergraduate education at the Massachusetts Institute of Technology and his Medical Degree from Yale University, he completed his residency at Cornell –New York Hospital and a fellowship at Memorial Sloan Kettering Cancer Center. Under Dr. Schwartz’ leadership, The Westchester Medical Group was an early adapter of electronic health records and has continued to use health information technology to transform the practice’s delivery system. Their unique focus on patient centered, coordinated care has led to dramatic improvements in clinical efficiency, total cost and quality measurements.

Why are you excited about being involved in an X-Prize?

I’m excited to be involved in the X-Prize because the United States has the finest healthcare system in the world, but it has come to a point where the costs are unsustainable, and many patients are not getting the quality and the efficiency of care that they should. In other words, we’re not maximizing the opportunity to get the best care for the largest number of people at a price that we can afford as a society.

What is your general point of view on health care reform?

As a result of our fee for service health care model focusing on acute episodes of care, we have created a cost prohibitive system that fails to deliver evidence based services and high quality outcomes. Reform will require transformation of our payment system with focus on rewarding quality based outcomes, provider incentives for cost control, and enhanced preventative services. Development of national metrics for both cost and quality will allow reimbursement to be tied to value. Accountable care organizations with the governance and leadership to manage significant patient populations should be the focus of a reformed delivery model.

What challenges do you face with the current payment system?

Some of the challenges of the current system of payment is that when the primary model is fee for service, the incentive for the physician is to provide as many services as possible. Unfortunately, many of those services are not reimbursed based on the quality of those services nor on the outcome achieved. Alternatively, some of the markets in the country pay physicians flat fees in the form of capitation. The incentive in those payment models is to minimize the number of services that are provided. A good payment model for any healthcare system would maximize the number of patients getting the right service for the right condition at the right time within the right payment structure. Currently in the United States, the variation on the number of services in different communities and the different patterns of care could not possibly be explained by the biological differences between the patients.

What challenges do you face in providing care to patients?

Unfortunately, we’re facing increasing challenges in providing care to our patients. Our goal is to provide coordinated, efficient, quality care, but the current system impedes that goal in many ways. An example is is that it’s hard to provide efficient care when you have to spend a lot of your staff time and money obtaining pre-certifications and pre-authorizations from insurance companies for services that are obviously needed. In addition to that, the patients frequently do not understand their own benefit plans, and physicians have to take time trying to explain to patients why this service or this drug is not covered for or by their insurance company. When you add up all of our costs for administrative activities that are largely wasted, we’re spending more than 20 percent of our revenue dealing with the cost of administering just a small portion of the healthcare system.

Additional challenges that we face include the poor flow of clinical information from one group of proivders to another, even within our own community. Within our practice, which is paperless and filmless, the flow of information all takes place within our IT systems. When patients are seen by outside providers from our practice, which is common, we frequently have a great deal of difficulty getting access to that information or even sharing our own information with them. In addition, although we have a lot of desire to continue to improve our quality programs and invest in additional quality programs, the current fee for service reimbursement model really provides funding for such activities.

What challenges do you face with administration, paperwork and reimbursement?

The challenges of our paperwork and reimbursement from their insurance companies is largely based on the different rules that each carrier has, and in our practice setting, we deal with as many as 50 or 70 different insurance companies. In order to train our staff, our physicians and our patients to deal with that complexity, it adds a great deal of waste to the system that’s not productive. I’m very concerned that we continue to waste this much money; money which could be used toward quality programs and improved access for patients who are not insured.

What are the challenges faced by the healthcare industry as a whole?

Healthcare in the United States is facing many challenges besides the compensation model. In order to deliver excellent care, we need to invest in newer, more modern facilities with more equipment. The capitalization necessary to do that requires a healthcare organizations to be profitable so that they have funds to reinvest. Many of the healthcare organizations in this country at this time, particularly New York state, are not profitable. Very importantly, we need to transition care from the expensive inpatient setting to more efficient, less expensive outpatient settings. This model has been successful in many parts of the United States and in other parts of the world. However, it requires enough money to be able to close some of the older facilities that are less efficient on the inpatient side and construct new facilities. There are substantial investments necessary in information technology and healthcare analytics, which is the statistical analysis of the information so that we know precisely what is going on in terms of whether patients are achieving the quality outcomes of care that we expect.

How do you think we should look at the healthcare system differently?

Given the recent economic challenges, the healthcare system will be under greater stress as patients seek to find more value in healthcare services. In an economic sense, value is usually defined as quality divided by price. As you increase quality, you’re increasing the value of the service if the price remains the same. Alternatively, if you keep the quality the same and lower the price, you also increase value. What the public of the United States wants is really value driven healthcare, and the way you can increase value is both by lowering price while simultaneously improving quality. Our society would be much better off if we were more value conscious in our healthcare purchasing. Patients need access to transparent pricing, and they need meaningful data about quality so they can make informed healthcare decisions. Providers should be rewarded both on quality and on price efficiency.

We’ve watched around the country the success of large retailers such as Wal-Mart with their value based pricing. Their concept was that the consumer, given the opportunity, would be inclined to purchase goods and services where they could buy the same item at a lower cost. Imagine that you have a standard item like a container of Tide detergent. The consumer can go to several stores and see what that price is. They should be able to do the same in healthcare. They should be able to know what the standard product is, and they should be able to know what their costs are for that product. It’s easy to assume that the consumer will not make the right decision, but frequently in healthcare, the consumer has no information that’s useful to make the right decision.

Another notion is the idea of the coordination and organization of care. The United States has a large number of medical practices with one or two physicians. It is analogous to the situation before large scale retailers came to the United States, and some of my friends pejoratively refer to this as the "Walmart-ization" of medicine. But one of the advantages that we’ve seen in many industries, whether it be package delivery like UPS or FedEx or in the auto industry and other service industries, is that the consolidation of the number of players in the market results in improvements of efficiency. In healthcare, we have been impressed by the opportunities for consolidation, for improvements of information systems, for improvements of efficiency, for coordination of service, and part of the redesign of healthcare really should encourage the further consolidation of medicine, not to the level of monopolies and cartels but so there’s meaningful competitions of organizations that are large enough to be adequately funded and capitalized to be effective competitors.

Why do you think an X PRIZE is a good way to address those challenges?

I believe that a prize is a good way to address some of the challenges in the healthcare payment system because of the complexity of the system. When you have a system that is in excess of 2 trillion dollars a year, any change causes a large number of winners and losers. In our politically charged world, both of those parties will lobby aggressively both Congress and companies and other entities to make sure that they are not economically disadvantaged by the changes. The only meaningful way that we will achieve fundamental change is to reach a consensus largely supported by the public for meaningful change. I believe that the prize generates a great deal of interest in the redesign. In this political season where much of the conversation has been about payment for the uninsured, and very little of the conversation has been about the redesign of our delivery system, we need to refocus the public on the redesign of our delivery system and on improving the value in healthcare.

What outcomes would you like to see as part of the Healthcare X PRIZE?

There are several outcomes that I’d like to see from this process. First of all, I’d like to see agreement on the metrics of quality care so that there can be a standard benchmark. A lot of progress has been made with the specialty to societies defining what is optimal care. In medicine, there’s still an art, and not everything can be put in the form of a measurement, but a great deal of medicine does lend itself to measurements, and performance and outcomes can be determined for many of our common illnesses and for many of the parameters of good, preventive primary care. I believe that the country will be better off if we’re able to have a value based compensation system. I believe providers should be rewarded for their quality and their efficiency, not for their number of services. And finally, I believe if this project is successful, the United States will continue to have the finest healthcare system in the world.

Health Innovators Series - Bill Bradley on the Ethics of Connectnedness

2009-08-11T06:44:00.000-07:00

Bill Bradley shares his ideas on the power of the people and how the philosophical divide between Democrats and Republicans can be bridged through the "Ethics of Connectedness"

Senator William W. Bradley is another Healthcare X PRIZE Advisor who needs no introduction. He began his public life as an All-American, Olympic gold medalist, NBA Champion, and ultimately Hall of Fame basketball player. In addition to his athletic prowess, he received his BA degree in American History from Princeton University and an MA degree from Oxford University where he was a Rhodes Scholar. He later served from 1979 – 1997 representing the state of New Jersey. In 2000, he was a candidate for the Democratic nomination for President of the United States. Since his retirement, he has served as a Senior Advisor and Vice Chairman of the International Council of JP Morgan, chief outside advisor to McKinsey an Company, and currently serves as a Managing Director of Allen and Company

Thanks for joining us today.

I am very pleased to be a part of the Healthcare X PRIZE competition that Wellpoint is sponsoring. I believe it is one of those special moments where we can get people together from different elements of the healthcare system, get them collaborating with each other, and try to devise a system that will produce the highest quality healthcare for the greatest number of people at the lowest possible cost. The key to its success will be tapping the creativity of the American people and getting them involved. Anybody who has got a great idea should have the opportunity to put it forward.

What challenges are faced by the healthcare industry as a whole?

Well, I think that the healthcare problem in America is one of coverage. Forty-seven million people don’t have any health insurance in America. It’s also one of costs. It is much more expensive on a per capita basis than any other country by a factor of 10. And to round out the issues we need to be concerned about the quality of care we are receiving for how much we are paying for care. We have too many people in our hospitals for example who die of medical errors that could be prevented if we had the right kind of systems and the right kind of incentives.

What challenges in particular are faced by the federal government in terms of healthcare?

Well, the thing about the federal government is it already spends over half of all healthcare dollars. Between Medicare, Medicaid, civil service retirement, and the gigantic tax subsidy that exists for private sector coverage offered by corporations. As a result, the federal government clearly has a decisive role and it has the same issues related to healthcare that the industry as a whole has - how do you assure quality, how do you assure lowest cost, and how do you assure access to the system. From my perspective, the government currently and will continue to have a major role in any type of reform efforts.

What challenges have you faced in terms of developing broad based healthcare solutions?

Well, the problem is that the healthcare industry reminds me of the Balkans. It is a lot of small groups arguing with each other and fighting with each other, and you’ve never been able to get everybody on the page. This is one of the reasons I find the X PRIZE concept so interesting; perhaps this model will allow everyone and anyone to contribute within an organized framework to actually accomplish something that no one has otherwise. I also think it can be the beginning of a national dialogue on a true national health care system. At the federal level there’s always been the "Balkanization" problem, with the special interest groups at war with each other and everyone.

The problem with the federal level is when you put it in political context, it is so easy to distort the best efforts of people. You can always pick out one small aspect of a healthcare program and attack it politically, and it’s as if that’s the only part of the healthcare program. So what you have to see is the interconnectedness of payment with delivery, of cost and quality, and of best practice and best outcomes, then it becomes much harder to attack.

If you look at the healthcare system we currently have in America today, and you look at what we need, I think it’s the best example of what I call the ethic of connectedness. In other words we’re all connected, and we need both what I call the ethic of caring - which typically means this shared responsibility toward collective action which is most often associated with democrats. But we also need the ethic of individual responsbility, which is often associated with individual action and the republic perspective. This is ground zero for the philosophical ward we have been fighting for centuries which is perhaps best illustrated by our current healthcare debate.

Sure, everybody needs to be covered, but you need to take care of yourself too. That’s the individual responsibility part, and we need to have a payment system that is rational in this regard. Did you realize that doctors spend 30 to 50 billion dollars a year trying to get paid, and insurance companies spend 30 to 50 billion dollars a year trying sort out incomplete billing records and related information? This is just wasteful nonsense that needs to be eliminated.

How would you compare US healthcare versus that of other developed nations?

Most developed nations have a system of health that is funded by the government in some form. Some are single payers, some are variations on the theme, some are hybrids organized by government but privately run. We have Canadian, German, Swiss, and related models of care that are unique to the cultural and environmental conditions of those countries. What we universally see is that they typically deliver much better public health for significantly less than what we are getting in America. The difference in cost per capita is dramatic, actually astounding, and I think we need to seriously look at that. Having a single system can really drive down some of the wasteful costs that I mentioned earlier.

What do you believe are the differences in quality between private versus public versions of health care?

Well, I think that on primary care, most other countries probably have a better primary care system than we do. When it comes to specialties, we have clearly have the most advanced, most sophicasted, and most expensive specialists in the world. There is really no doubt or question about that. It is an interesting perspective, however, because as a result of our technology, innovation, and breakthroughs our people are living longer lives which introduces a whole new set of questions and concerns. Back to your point, I think you can see in the example that a more public focused health system results in better quality primary care but in a private based system attempting to maximize profits the dollars flow to the highest paying activities which results in increased specialization.

How do you think the recent economic and environmental should shape the way we approach healthcare?

I think it’s still a little too early to know exactly how the finanical crisis will play out. In terms fo the federal budget, we are seeing that it is going to cost alot, which means that funding for other areas will be affected. The hope is obviously that we can recoup some of our healthcare investment fairly quickly by reallocating funding and financing in a much more rational way. My hope is that the looming recession, which will result in large deficits at the federal level, will not dampen the enthusiasm and willpower to complete meaningful reform this year.

This is actually one of the reasons that I think the Healthcare X PRIZE is so important. I think it can be a catalyst in charging and energizing the debate by involving the American people. I really see the American people actively competing in this effort as competition and awards and championships are part of the amerian way. We are all familiar with winnign the NBA Champtionship and getting a championship ring. I can see that same mentality and effort and competition being applied to the Healthcare X PRIZE.

Do you think using incentives like prize competitions will encourage more innovation to address these challenges?

I think it’s very important that people take responsibility for their own actions and their own health. I think that part of that is being attuned to the costs and not just attuned to one’s needs and desires in healthcare - which quickly leads us to something that I call value based healthcare. This requires a completely transparent health system - much like the Healthcare X PRIZE commitment to transparency - in order to work. You should be able to go online and find at the Cleveland Clinic what a hip operation costs as well as the results of the various physicians who perform that procedure and the patients who underwent the procedure. The information should be detailed - how many people, what was the experience, how much pain, when were they able to return to normal, what were the side effects, etc. Virtually every procedure, heart operations, kidney transplants, hip replacements or whatever should have transparent information available about outcomes. Armed with this information, consumers can now begin to make rational choices regarding where and how and when they spend their health resources. Also, think about what happens when large health groups begin to compete on who can deliver the best healthcare outcomes? This would be powerful.

What outcomes do you hope to see as a result of this process?

My hope is that as a result of the Healthcare X PRIZE that millions of people across the country will feel a part of the effort to totally rethink our health care problem in America. I realize that this is a highly complex problem but I also think there are quite a few very smart people in America who could contribute to this effort. I truly believe that we can develop a model in which we can provide coverage for everyone at the lowest possible cost at the highest quality.

I always found in politics, the best thing to do was ask somebody what they thought, and that’s exactly what the Healthcare X PRIZE is intended to do - it is national conversation with the American people saying, "what do you think?". It is unlikely, perhaps inprobably, that a small business owner in Duluth, Georgia is going to conceptualize an entirely new health system but you never know. I think this potential, the vast possibilities, are what make X PRIZE's so fascinating.

Any additional comments?

I think that the key thing is getting information to people, and the more information the people have, the easier it’s going to be for them to influence decisions that will help shape our health care system. As I said before, the ethic of caring is to cover everybody; the ethic of responsibility is for everyone to take care of your own body; and the more information you have to help guide your decisions in both areas help you realize and participate in what I previously mentioned as the Ethic of Connectedness.

Health Innovators Series: Newt Gingrich on Healthcare Reform.

2009-08-10T08:02:00.000-07:00

Former Speaker Mr. Gingrich shares his thoughts on health reform and the X PRIZE innovation model

Newt Gingrich is a transformative leader who needs no introduction. As the former Speaker of the House, he led the Republican "Contract with America" efforts in the mid-1990's. Since leaving public service, he has continued to speak, to write, and to engage in the global politics of transformation. He is the founder of the Center for Health Transformation, which is a nationwide collaboration of leaders trying to develop a new, improved, 21st century, personal, intelligent health system designed to deliver the best health and greatest access to a system that results in better quality, better outcomes and lower costs.

His original interview with the Healthcare X PRIZE team is reprinted here:

What are the challenges faced in the health care system as a whole?

I think the system faces two or three really large challenges in addition to access for all of the uninsured to have insurance. I think they face the challenge of moving new ideas rapidly, because today it takes up to seventeen years to get a new best idea to the average doctor. I think they have a challenge of transparency, making sure that we have all the information electronics so that we know what's happening and who's doing well, who's not doing well. I think they have a challenge of how we pay for things, because in many ways we overpay for acute care and we underpay for preventive care and wellness which results in people getting very sick before we take care of them. There are significant improvements that can be made that would lead to better health outcomes with longer, more active lives at lower cost.

What challenges do you think the federal government faces in particularly in health care?
Well, the federal government faces enormous challenges. First, as the largest single payer it is currently paying ~45 percent of the total cost of health care. As the federal budget collapses under the weight of all the various problems we're seeing in Washington, it gets harder and harder to pay for adequate health care. Second, the federal government is a slow, cumbersome, bureaucratic, and paper-based system. This makes it incredibly hard to keep up with fraud, and we see a stunning amount of this in the Medicare and Medicaid prorams in particular.

One estimate in New York State alone estimates that 10 percent of the money spent is on fraud. So instead of the tax dollar going to help the poor, it's going, frankly, to help crooks. The federal government also has a challenge because it inherently is not innovative. It is very, very hard for a big system like the federal government which is designed to be subject to the political process to lead out in making big breakthroughs. As a result, innovation and the big bold ideas almost always come from the private sector. As they prove themselves out, the federal government can then adopt them to great effect.

How would you compare the U.S. health care system versus that of other developed nations?
I think the United States does a much better job on very sophisticated acute care. This is why you see wealthy people from all over the world come to the U.S. when they have a serious illness. But we don't do a very good job of public health. We don't do a very good job of preventive care, and we certainly don't do a very good job of early testing and wellness. You could argue, as some analysts have, that the ideal model would be to have a European approach to taking care of people before they're sick, and then an American approach to taking care of them once they're really sick.

What challenges does your organization face in solving the health care issues?
Well, we actually face three big challenges, and they're all three huge mountains to climb. The first is that the Center for Health Transformation is attempting to reach out to try to find the new best ideas. This means that you have do a lot of scouting and a lot of listening. You have to go all over the country learning about health care and health services innovations. Second, as we try to figure out how to popularize and disseminate these innovations so that the average American can see the case studies to know that is the type of health care system they want. Third, we try to figure out how do you explain these complicated ideas to elected and bureaucratic officials so that they can understand them given the limitations they have of time, interest, and background into these topics. At our best, when we do all three of those, we can achieve very significant change very rapidly. However, if any one of the three breaks down, if we can't find the right idea, if we can't explain it clearly, or if we can't figure out how to implement it, then we struggle to get it done.

Do you think using incentives like prize competitions can help innovation and why?
Well, I think historically incentives are very powerful. As you very well know, Charles Lindberg flew the Atlantic in 1927 in order to win a prize which had been posted since 1919. The purse was approximately $25,000, which translates to about a half million dollars today adjusting for inflation. He was just one of a dozen or so people competing for this. So the original breakthrough in long distance flight was a response to a prize. The original breakthrough in navigation at sea was the response to a prize. And we have since the original breakthrough in personal space flight, as demonstrated by the Ansari X PRIZE, was also a response to a prize.

The power of prizes is two-fold. First, they arouse the imagination. You get young graduate students and young entrepreneurs and people in their basement or their garage, and they go wow, I can win this prize. It is much the same drive that you see in the American Idol phenomenon. People begin to show up and suddenly compete because they could be somebody; they could win something. The other thing that makes prizes very interesting is you don't have to pass through a series of hurdles defined by professionals or current state of the art. If you have the idea and it works, it doesn't matter how much education you have, who approved your approach, or who is your sponsor you can still win. Prizes have the power to arouse creativity and to generate energy that you don’t get in a more structured process of peer-reviewed research.

Why are innovations so important to America?

Innovation is the key to the future of the human race and it always has been. From the perspective of the person who figured out how to take lightning and turn it into the sustainable fire, which the Greeks wrote about in mythology, to the first person who figured out that a wheel was a lot better way to pull something (which never got discovered in the New World by the way), to the person who figured out that if you harness the power of a horse you could plow - our civilization has always benefited from innovation. Every one of these innovations for thousands of years have made us who we are. The countries which innovate the most effectively are the wealthiest, the strongest, the safest, and the healthiest. And innovation in that sense has been the key to the progress of the human race for all of recorded history. It is still the key, and to the degree America is the most innovative country in the world, it has also been the most successful.

So what outcomes do you hope result from this process?

Well, let me say first of all, I was thrilled when we got the phone call and Well Point Anthem announced that they were going to undertake a real prize. I was particularly pleased to see that this was not just a reward for a nice paper, but they were actually were going to finance running the pilot projects in the field to see what happens. And I thought this is one of the boldest breakthroughs in corporate leadership that I've seen in a long time. I think it has the potential, which we will not realize until its done, to really make an transformative impact. But who knows, maybe all five will fail but I believe that you will see two or three that will really lead to some dramatic improvements in care. Regardless of the outcome, we know we are going to generate a whole new generation of next level conversations. I also believe you are going to get thousands of people talking among themselves the potential of the Healthcare X-Prize and Well Point Anthem to lead out in this change by fundamentally rethinking the financing and payment of health care. And that is such a profound application of the prize concept to social public policy that I think it's a terrific breakthrough.

Why should people and companies support the prize model?

Well, I think first of all you have to decide two big facts about your company or if you're a successful, wealthy person, about yourself. The first is, as a citizen, whether a corporate citizen or an individual citizen, do you really want to live in a better country? Do you want to help create the future. If God has been good to you and America's been good to you, do you feel a little bit of a moral obligation to return that, to help the next generation inherit a better world than the one which you lived in?

The second reason would be purely self-interest. From the standpoint of an insurance company, if we could find a dramatically better method of payment and we could align the incentives for health, we Would suddenly have a healthier population that needed less acute care, that lived longer, that had active healthy aging. We might take 20 or 30 percent out of the cost of health care. That makes life dramatically easier for the individual, for the doctor, for the hospital, for the payer, including the government, and for the insurance company that's managing the system. So there's a certain amount of enlightened self-interest as well as a certain amount of good citizenship. And if you can get the two to come together, then you have a real incentive for a prize program.

Anything else you want to add that we did not cover?
I just want to add that the leadership at Well Point Anthem is truly taking a bold, courageous, and intelligent step in this which I hope begins to set a pattern for the entire country. I believe this model has the potential to blossom over the next 20 years and I really hope the Healthcare X PRIZE can be looked upon as the catalyst that got the process going. If one or more of these five community experiments work out in the real world, you're gonna be able to look back and say we helped shape the right incentives for the right health system and therefore we helped shape the future of America and probably by adoption around the world of the entire human race. This is truly one of the best examples of corporate citizenship I've seen in a very long time.

Health Innovators Series: Chris Parks from Change:Healthcare on the Power of Transparency

2009-08-07T07:53:00.000-07:00

Chris Parks, the always entertaining CEO of Change:Healthcare, shares his vision of healthcare consumerism straight from his worldwide headquarters in NashVegas.

Can you tell us a little about your background and what your company does?

I’m focusing on helping people save money and make better health care decisions based on information. I began as an exercise physiologist who worked at Healthways. Later, I had the opportunity to work at HCA when Rick Scott was there. I left to work with Kaiser focusing in on capitated health plans. I next tried my hand at a small biotech company called Neopharma which focused on supply chain management. This is when both of my parents became ill and after watching both of them pass away, I was left managing over ~$25K in debt. I could not figure out where, when, and from whom I was being charged this money. It was actually the trigger that helped to found our company.

How do you approach the problem of reducing cost while improving quality?

If you make health information a commodity and present it in an understandable and actionable format to individuals, they will make good decisions as long as their wallets are impacted. Most individuals will not be able to understand all the clinical mumbo jumbo and will default to the doctors expertise; however, they almost universally understand financial choices. We see this as individuals will often choose not to undergo tests or procedures that have unknown outcomes when they are spending their own money.

We have found the challenge of defining quality is that it is subjective and constantly changing depending on the latest study or interpretation. We believe that the more time you spend defining and canonizing quality you will lock into predefined notions of quality that might not be widely applicable given everyone’s different value systems. As a result, we have chosen to focus on the cost side of the equation and let people make their own definition of quality.

Can you share some examples of how you guys do this?

We have a company of 1,000 employees in the back hills of KY - all blue-collar, tobacco-chewing workers without very good connectivity. Yet 95% have adopted our online tools, even though many required going over to their cousin’s house to help them figure it out. Our tools are useful to them as they save real money by reviewing their own and their colleagues health purchasing experience. We solve a real need that is tangible.

On the opposite end of the curve, what you can’t do is tell people they are now responsible for the first $5,000 dollars and then leave them to their own devices. How do they know how to allocate their money most efficiently? We can help them know that their wellness check, colonoscopy, and other preventive services has an excellent return on investment. Not only do we help them understand this but we also help remove barriers for them to access this information or benefit design problems where they are disincented to obtain these services.

I laugh at the co-pay strategy. A $50 physician office visit is still a buffet card to an all you can eat health services menu. We need to get that to $500 or $5000 to be able to see true consumerism take over.

You work alot with consumers, what is the pain they are feeling?

They are utterly frustrated, confused, and just plain mad about how difficult it is to interact with the health care system. We are trying every day to tackle some of the biggest problems they face - primarily around creating patient friendly billing information. This goes on every day in every city where patients are given bills that make no sense, are not tied to anything they understand, and don’t provide a way for them to understand whether they received good value or not. We tackle the touch points for patients/employees by making this type of information easy to understand, relevant, and actionable.

If I need an abacus and a spreadsheet and late night seance to figure out my bill, there is a problem. We chose to jump into the middle of the messiness by simplifying and communicating more effectively than a dead EOB. We soon found that people don’t want to put any effort into getting organized as it is just too much work. But tap into their wallet, and then are burning the candle on both ends to save a quarter. Our company found that employers are nice aggregators of consumers and health information. We determined that we could create a tool, which we call the Healthcare Consumerism Index, to help our employers and their employees understand what they were paying for and getting from their health care spend. It has an immediate impact on helping everyone understand which providers, which pharmacies, and which programs are actually providing good value.

Change:Healthcare is designed to be a platform and we’ve integrated this into a network of our users. So everyone who is on the platform can benefit from what the others on the platform share about pricing, experience, and related information. This information allows employers to come up with better benefit design, share information more fluidly, and ultimately create a much better user experience. Its fast becoming an ecosystem to capture and catalog health value.

How would this platform help someone with obesity to manage their health more effectively?

Well, we don’t approach the problem like the disease management companies do. We tackle the behavioral problem directly through the wallet. It is our contention that some people are going to be fat and smoke and not manage their diabetes. They are free to do that but they also need to understand that there is a consequence to this decision - typically in the form of higher co-pays or differential premiums. People will only change when they want to . . . but we provide some tools that provide some financial motivation to do so. We help provide support to the rest of the care team who is actually doing the heavy lifting - the physicians, nurses, dieticians, spouses, and families - by aggregating all the information in a way that allows them to see the consequences of their behavior.

The reality is that it requires a series of carrots and sticks, crisis and fear, and ultimate internal motivation to make the changes required. We have found some success in using financial incentives to spur on the internal motivation (and the external influence in employer settings).

What would you recommend as the key initiatives to reform our current health system?

I have heard alot of talk about blowing up our current health system and moving to something completely new. While I like big explosions and the feeling of anarchy it engenders, I am actually an advocate of working off the current system. What we need to do is focus on making it much better than it is right now by leveraging what is currently useful to employers and consumers.

A key part of that is make make health plan data portable in a format that is “mashable” by anyone that the consumer designates. There is no value in obfuscating the pricing or outcomes or information anymore - that model is appropriately dead. People need to be able to know the prices, compare quality between physicians, and then make a decision that is relevant to them. Claims data is a commodity. Negotiated contracts are a commodity. It is the consumer service experience that trumps all and matters most. We can dramatically improve the consumer experience by empowering them with information that allows them to make their own health choices.

What are some health care innovations that believe are ready for prime time?

I think there are many things that have promise - one that I personally love is the notion of the medical home. The concept has been around for a very long time but now that the employers are coming to the table to participate with the payers I see this gaining real traction. It’s really quite simple if you think about it - a physician is responsible for a population of patients and they work together using new tools and technology to achieve the best shared outcomes.

I would also love to see more innovation around behavior change (short term costs), insight (long term cost), and opinions (which drive adoption). Alot of this is related to the personalization including both delivery but also the information of the care experience. Most people want alternatives with choices and consequences and the freedom to make their own decisions. I also think there are alot of new online and interactive widgets that if brought together in the right way would be powerful contributors and great innovations. Still really like the idea of the iPhone as the platform and everyone designing on the platform.

Where do you think the X PRIZE can serve as a catalyst for innovation?

I would love to see teams focus on improving how we engage, communicate, and connect with each other. I want to see health care transformed and reconfigured with a human face, a human voice, and the human touch that everyone can comprehend. I would also love to see platforms and networks created that make it easier for me to do what I am trying to do. What is the platform that can serve as the gateway to communication and collaboration? I would love to see teams push the envelop on this.

I believe the X PRIZE could take the current system and create wrap around tools, presentation layers, simplicity, and a better user experience. I would like to know if my doctor is any good; I want a market place where I can get the information I want when I want it; I want grandma-friendly, actionable, relevant, and insightful information that someone has surfaced from all the data that is floating around out there about me. I want someone to simplify, explain, and interpret my health care experience.

Who else should we be speaking to?

You should be talking to the consumers of the system - talk to the people who are the most frustrated by what is going on. See what confuses them, what is difficult, and what they would like to see fixed. I think this perspective is the most relevant.

Health Innovators Series: Jim "Woody" Woodburn on the elimination of hospitalizations

2009-08-05T10:00:00.000-07:00

Jim Woodburn MD, the newly appointed Vice President and Medical Director for Clinical Initiatives at United Health. shares his perspectives on health, health care, and the key reform elements that can transform our current health system.

As part of the development of the X PRIZE, we have had fascinating conversations with innovators throughout the health industry and health care system. One of the favorite thinkers in this area is James “Woody” Woodburn, MD. Behind his “Aw shucks” exterior lies an extremely intelligent, always thoughtful, and highly intuitive leader with the knack for being right in the middle of the latest health innovations. From his original work at Blue Cross / Blue Shield of Minnesota, to serving as the first Chief Medical Office of Minute Clinic to his role as a entrepreneur in residence at Lemhi Ventures, Woody has been quitely but steadily driving us to a better health delivery system. He recently took a position with United Health as their Medical Director of Clinical Initiatives with a charge to change the delivery and financing of primary care.

His original interview, as well as a subsequent update regarding his new position, can be found below:

Woody, tell us a little about your background?

I began my career in medicine when I started working on a project to create an artificial liver in 1972. This project got me thinking quite a bit about medical devices and the opportunity for technology to impact the way we practice medicine. I later went to medical school and was drawn to Emergency Medicine as a specialty. After practicing in the community for five years, the sheer wave of chronic and preventive challenges I saw on a daily basis created an interest for me to get ahead of the problem. I worked another five or so years in occupational and preventive medicine before moving over into a corporate role at BCBS of Minnesota. In this capacity, I really learned alot about organized medicine, population health, cost drivers, and the myriad problems of access, costs, and quality that we dealt with everyday.

Part of my efforts were directed at bringing together the vast collective experience of all the various physicians who participated in Blues plans to develop a national medical management forum. From this experience I began moving into population health issues and the challenges of disease management. I could see that many of the issues were related to access - where a simpler form of care could potentially treat and manage many of the things that were showing up and contributing to Emergency room overcrowding. As we started evaluating solutions, we took a closer look at the Minute Clinic model that was just emerging in Minnesota. I ultimately ended up leaving BCBS to become the Chief Medical Officer of Minute Clinic. I participated in the rapid growth from 12 clinics to over 250 before the company was ultimately sold to CVS. It was one of those amazing lifetime experiences to be a part of delivering a new model of care to a market so ready to buy.

After Minute Clinic I began working with Lemhi Ventures who were founded by Tony Miller and several other of his ex-Definity Health colleagues. My role was as Entrepreneur in Residence evaluating health transformation concepts, information technology, and general health innovation. It was a great position from which to evaluate the market, see the latest and greatest tools and technologies, and meet some of the great innovators in the health care space. After an 18 month stint there, I was ready for the next challenge which I have accepted in my new role at United.

Can you tell us about this role and what United is trying to accomplish with their Clinical Initiatives Division?

I will be working in the Optum Health division and leading the development and operations for a few new strategic initiatives. The first is United’s new focus on rolling out Telehealth and Telemedicine applications with our Cisco technology infrastructure partnership. We envision Telehealth to be able to improve access in rural and underserved urban areas, drive increased volume to high performing and cost effective specialty care and improve productivity of employees of the companies United supports.

The second and related area is in mobile health clinic and remote ‘brick and mortar’ clinic operation and strategic deployment.

The third is helping with new contracting models of care. I’m very interested in redeploying revenue flow back into primary care in a new, accountable, web-enabled and cross-functional team (aka medical home) in the UHG networks. I think there are significant areas of where we can improve care coordination and incentives to reduce waste while improving outcomes.

What specific opportunities do you see to reduce costs while improving outcomes?
Well you need to begin by being careful how you define “waste” in the healthcare system. Someone’s waste is another persons bread and butter. We can say for sure that there are several points of failure. The hardest one to change is the culture of the physicians. The self-reinforcing “guild” mentality of physicians is not very patient centric and not very collaborative either. As a result, we have silo’d health information that is not interoperable, we have non-existent customer service, and we don't have meaningful or transparent reporting of outcomes.

We have not as yet developed or tested a completely enabled care system. Those data systems haven’t come close to becoming integrated as of yet. Everyone has these high hopes that we will be able to reduce wast,e but how can we unless we create financial accountability and measure outcomes as the drivers to improve physician behavior and ultimately patient health? This then begs the whole measurement question - do we aggregate scores? how do we provide public access? how is the information best synthesized and presented to the stakeholders? We have seen some powerful effects of even surfacing this data, let alone injecting it into the clinical workflows to help both the provider and the patient understand what the data says when they are at a point of decision. We currently aren’t using the full set of measurement tools that could be helping us move to a new system.

Any particular measures you would like to see implemented?

The more I think about it, hospitalization in and of itself should be considered a system failure. No one should be going to the hospital. In saying this, I realize that there are many cases where hospitalization is appropriate and required, but for a broad majority of situations the hospital is not where these issues should be treated. What if you could achieve a community that had no hospitalization? Many of the large integrated systems have dramatically reduced hospitalizations because it does not impact their bottom line negatively, in fact, they are rewarded for reducing hospitalizations. Is there a way to create a community wherein all the organizations were working together to wipe out preventable hospitalizations? That should be the aim of the Healthcare X PRIZE.

How could a community organize to achieve this?

Well this begins to strike at a core principle of population health, most of health (~70%) is not related to health care - issues like drinking water, air quality, education are bigger determinants of health than anything that the provider community is doing. An activated community, dedicated to reducing hospitalizations by 50%, might be able to marshal the resources, influence the culture, and engage people in a way that can actually achieve this goal. It would require chipping away at the goal one person at a time and bringing a myriad of pieces together to help it happen. That could really be powerful - entire communities focusing all their resources on a targeted goal like reducing hospitalizations 50%.

What care delivery models do you believe hold the most promise to achieve something like this?

Clearly I am a fan of the Medical Home concept, although I think it needs to be deepened and broadened and supported by tools that actually make the promise a reality. I believe that creating an accountable, capitated primary care system that is incented to holistically care for the patient will allow us to get to the type of care we all hope for. This team care will include the community, educators, primary care providers, practitioners, and others who will contribute to a focused factories managing a populations health. I am convinced that this cannot and will not happen with established players, but rather disruptive innovators who will completely change the paradigm and reset expectations of physicians, patients, and payers.

I also see great opportunities for new entrants who can reduce hospitalizations and dramatically improve the end of life. Look, no one who promotes reducing hospitalizations as part of their model is going to do well with the hospital crowd - reducing admissions reduces revenues which reduces employment for the largest employer in the community. This creates some serious political challenges to programs with this focus. The end of life also has some interesting political and ethical issues but the entire conversation should be reframed. No one wants to die in a hospital, or use resources in a futile situation particualrly when those resources mean that someone else goes without care. Instead, having a “system” frame of reference allows us to understand that quality of life, dying surrounded by family at home, and other end of life transitions can be a dramatic improvement for everyone over current practices.

What opportunities would the Venture Community see in the X PRIZE?

I think the VC Community is always looking for ways, particularly in health care, for winners and losers to more rapidly declare themselves. Healthcare has traditionally had a very slow experimentation process in the actual delivery and financing of care. This makes the entire health services sector somewhat of a challenge for the VC’s to get interested in given their traditional 4-6 year time horizons.

With that being said, if the X PRIZE can create a model where lightweight teams can be allowed to be creative, have rapid implementation opportunities, and measured results than I think we can create much more interest. I am thinking about the whole “Care Package” concept pioneered by groups like Carol.com which lend themselves very well to focused factories. I also think Web-Enabled coaching, and some of the new models of online interaction will be have an impact. Not to mention the entire health education / literacy space that goes way beyond any of the online content that we see today.

I think there are alot of value and opportunity inherent in the X PRIZE brand; the fact that it is being applied to health care should create new possibilities within the Venture Community.

Will we see Optum Health participating in the Healthcare X PRIZE?

It is far too early to tell. I will have my plate really full over the next several months. I certainly will be cheering for the X PRIZE as it officially launches and by that time should be able to provide greater clarity on how we might be able to leverage some of Optum’s considerable assets for the project. Lets touch base then.

Who are the other health innovators we should be speaking to?

A lot of what I’ve learned comes from radiologists, the ambulatory surgical space, and related high volume areas wherein they are interested in greater efficiencies, economies of scale, and a better patient experience. In these settings they are constantly looking for ways to reduce time, pain, promote healing, and optimize for experience. These particular specialty areas are often overlooked when gather lessons learned or establishing best practices.

Health Innovators Series: Sam Nussbaum, MD on Health Innovation

2009-08-04T18:34:00.000-07:00

Sam Nussbaum is a very familiar name through the health care industry as a thoughtful physician executive and clinical leader for more than 25 years. In an informal interview with the X PRIZE team, he shared his thoughts on health care innovation.

Can you share some of your background with us and your current role?

I am currently serving as executive vice president and chief medical office of WellPoint responsible for our clinical health policy. In this capacity I oversee corporate medical policy, clinical pharmacy programs, health improvement and quality resources, including several programs in clinical excellence and health information technology designed to optimize care for our nearly 35 million members. I really have enjoyed the opportunty to serve as the companies chief spokesperson and policy advocate, particular during this intense time of serious health reform efforts.

I started my career as endocrinologist at Mass General after completing my residency there and my internship at Stanford. I ended up getting involved in some clinical and basic science research that ultimately led to some new therapies to treat skeletal disorders and to measure hormones in blood. Later on, I served as President of the Medical Group and well as executive vice president of Medical Affairs and System Integration for the BJC Health System. I have also enjoyed my association with several national committees, including NQF and AHIP. I have met some wonderful people along the way and hope that our collective efforts have and will continue to make a difference.

From your perspective, what elements of delivering care have the most potential for dramatic improvement (e.g., access, coverage, transparency)?

I have always been concerned that we define “health” too narrowly. As you know, actual health care is only 30% of the determinant of overall health. Things like education (schools), environment (air quality), and what resources are available in the community often have a far bigger impact. I also think we begin to think about health care way too late - when bad habits and worse behaviors have been culturally imprinted on our children. We need to get our children productive and engaged at a much earlier age when attempting to create a “culture of health.” This all leads to a general feeling that we are far too behind the health care - we need to get way out in front with prevention, wellness, early education, health promotion, and incenting individuals to optimize and maintain their health. Contrast that image with our current one of Medicaid wherein their is no incentive, no coordination, and most care is delivered in the hospital or emergency department setting.

We have know about wellness and prevention for a while - what are the drivers that prevent us from moving more toward this model?

Our current health finance and payment system rewards for doing things to sick people in acute settings. It is also highly physician-centric, and we as a society have not held our physicians accountable enough for the care they provide. The variations in costs, quality, and outcomes is totally unwarranted and should be completely unacceptable. Again, I think the way to most effectively tackle this is to begin to pay for the things and the type of system we want. There must be a large restructuring of the payment system in order to create the type of incentives that will lead to the change sought after in the X PRIZE.

How should the concept of a Healthcare X PRIZE be used as a catalyst in the reform conversations?

Well, I think anything that emerges out of the X PRIZE should accomplish three objectives - produce a healthier nation, lower the burden from chronic disease, and reduce the overall costs. In terms of the innovation that we hope to see out of the competition would be a platform to truly and effectively deliver personalized medicine. We continue to maintain a vision of the individual patient having personalized health information, individual health optimization plans, and trusted care teams providing high quality, evidence based, personalized care in a time, place, and manner that is desired by the patient. I believe the tools and technology to do this is just around the corner. Many of the preliminary or early concepts I have heard about deal with this notion of delivering care that is much more personalized.

Where do you see the major opportunities for reducing costs while improving outcomes?

We have certainly heard a lot about comparative effectiveness over the last several months. When you realize that 35% of all services that are offered have no evidence have any clinical effectiveness you can see that there is dramatic room for improvement. The challenge we have had traditionally had limited insight into knowing which of the services fall into that 35% bucket. We must develop a methodology to systematically assess the value of the various treatments and disseminate that information widely. Even preliminary information about effectiveness is better than no information at all.

You should also realize that someones inefficiency and waste is someone else’s revenue. We have this massive investment in the current infrastructure and the current players will not cut into their revenue streams as a way to contribute to the public good. We have to find ways to incent and reward them for doing this. We know from the work of Dartmouth and others that we have a huge over supply problem, and that when there is oversupply we have more services which can lead to worse outcomes. However, who is talking to physicians and hospitals about working together to reduce capacity? Who is working on the contracting mechanisms that would allow this to even happen? I don’t think it exists yet.

Even efforts to leverage new types of providers or deliver systems have been uneven in terms of cost reduction. Look at the big experiment and the work around's for disease management. The results indicate that the doctor can’t outsource the management of her patients health - somewhere along the line - they need to take responsibility for their patients, and perhaps more importantly, the health outcomes of their “population” of patients.

Speaking of outcomes, what will the X PRIZE use as a measurement framework to actually judge the competition?

Well there are so many outcomes measures that are available it is actually quite hard to narrow down to a manageable set for a competition. Since the competition is focused on health value, and we are still getting a handle on which outcomes over which costs will be our health value measure, I think we need to carefully think through our selection process as it will guide the innovation stream that emerges from the competition.

I don’t think the focus should be on death or mortality. Death is the ultimate “outcome” and represents a composite of health but it tracks very slowly. Several other measures, many which we have experimented with in our own Member Health Index (MHI), can be obtained directly from claims data as well as some of the health data (labs, diagnostics, etc) that we have access to. We also clearly capture relevant cost information. However, even this data does not capture everything that can and should be captured as part of our health value measurement. I would love to see us include measures of patient experience, health risk factors, and some measures of functional status as well. Therefore, I believe we will ultimately need to develop a new composite measure that includes all these factors in a way that is reasonable, replicable, and will pass muster. We are actually hopeful that our measurement framework will be one of the most important innovations in the competition.

Who else should we be speaking to as we gather health industry information for the X PRIZE?

Well, I am fortunate to run in many of the policy circles that include both public and private health care leaders. I think any of these conversations should certainly be aligned with the ongoing efforts of DMS, AHRQ, and the CDC. Former Health Secretaries, like Donna Shalala and Michael Leavitt, could certainly add perspective about the harshe realities of trying to implement change within the health care industry. I also would be talking to groups like the NQF’s Janet Corrigan which has done an excellent job with their consensus building process and the IOM whose publications have changed our perspectives multiple times. May other private institutes, like Hoover or Brookings, also have alot of talented folks working on big projects. I also like the mavericks in the industry, like Paul O’Neil or Regina Herzlinger or Atul Guwande or Don Berwick, who have been relentless in various areas that are slowly moving us to a next generation health system. These are just a few who can add broad perspective to your research.

Health Innovators Series: Dean Ornish on improving Health and Wellbeing

2009-08-03T18:15:00.000-07:00

Dean Ornish is considered one of the most thoughtful spokespersons for comprehensive lifestyle change as a way to reverse chronic disease without drugs or surgery. His research, speaking, writing, and programs have influenced millions of people throughout the world.

As part of the development of the X PRIZE, we have had some great conversations with health innovators throughout the health industry. Dr. Dean Ornish, who has been a staple on morning talk shows as an authority on health and wellness, is the founder and president of the nonprofit Preventive Medicine Research Institute in Sausalito, Calif., where he holds the Safeway Chair. He is clinical professor of medicine at the University of California, San Francisco. Ornish received his medical training in internal medicine from the Baylor College of Medicine, Harvard Medical School, and the Massachusetts General Hospital. For over 30 years, Ornish has directed clinical research demonstrating, for the first time, that comprehensive lifestyle changes may begin to reverse even severe coronary heart disease, without drugs or surgery. Recently, Medicare agreed to provide coverage for this program, the first time that Medicare has covered a program of comprehensive lifestyle changes. He recently directed the first randomized controlled trial demonstrating that comprehensive lifestyle changes may stop or reverse the progression of prostate cancer. His current research shows that comprehensive lifestyle changes affect gene expression, "turning on" disease-preventing genes and "turning off" genes that promote cancer and heart disease.

The research that he and his colleagues conducted has been published in The Journal of the American Medical Association, The Lancet, Proceedings of the National Academy of Sciences, Circulation, TheNew England Journal of Medicine, the American Journal of Cardiology, and elsewhere. A one-hour documentary of their work was broadcast on NOVA, the PBS science series, and was featured on Bill Moyers' PBS series, Healing & The Mind. Their work has been featured in all major media, including cover stories in Newsweek, Time, and U.S. News & World Report. He is the author of six best-selling books, including Dr. Dean Ornish's Program for Reversing Heart Disease, Eat More, Weigh Less, Love & Survival, and his most recent book, The Spectrum. He writes a monthly column for Newsweek magazine.

We had the privilege to discuss the Healthcare X PRIZE with Dean early this year:

Tell us a little about how your career in health promotion evolved?

I began in 1977 with a series of studies how very simple choices—eating, stress levels, smoking, exercise, and social interactions could have powerful difference in health and well being. These types of studies are somewhat interesting, as it is somewhat challenging to get funding for such basic behavioral choices. However, starting with heart disease, we were able to show that basic diet and exercise can not only prevent but can actually reverse heart disease.

This was obviously impressive and caused quite a stir so we began to validate it with Mutual of Omaha. We were able to show a reduction in angioplasty rates within the first year that we formally substituted diet and exercise interventions instead of the angioplasty procedure itself. This amounted to a $30K/patient savings in our 3,000 patients. Because of the overwhelming evidence, ultimately medicare decided to cover the expense of our program as a benefit.
Moving from that success, we were able to show that we could also reduce or reverse the progression of prostate cancer. We also showed this for diabetes, hypertension, and cholesterolemia when incorporating very simple interventions. Inner Heart (which includes simple behavioral changes), COURAGE Study (angioplasty vs. medical therapy), and several other efforts showed us that if you can motivate people and leverage technology appropriately you can acheive impressive results with minimally invasive therapies.

Based on that success, how have your ideas spread?

Well, we have sought to train people to understand the cause of these issues and to address them at the most basic levels of health - understand how loneliness, depression, nutrition, etc all combine to affect what we term "health". As part of our work at the institute, we have been capturing and publishing this methodologies for more than a decade. More recently, we are working on creating online versions of this material to help people have a direct impact on their own health. I think the message of a proactive patient being good for the health care partnership is certainly getting out.

I often say that suffering can be powerful catalyst to transform our lives for the better. It seems that the “pain” we continue to experience from our health care system is ever increasing. I am not sure we have gotten to heart of the problem as of yet. My sense is that doctors are so busy mopping up the floor that no one has thought to turn off the sink. I would love to see us continue to work in ways that allows the bodies natural power of health to work for more and more patients.

What have been some of the barriers to getting this particular message out?

Its funny, when we were organizing some of our first trials, we had to get “permission” from NIH that it would be “safe” for the older study participants to walk, eat vegetables, meditate, and undergo the type of natural treatments we promoted. Later on, even when we were started to back some fairly impressive early study results, we found that our “evidence” was falling on deaf ears. It was not enough to have data, but we had to battle an entire culture and financial mindset that was trained and paid to use drugs and surgery as the only tools in the arsenal.

This was actually a bigger problem than we anticipated. Physicians were trained not to provide appropriate counsel or advice, as they had limited time to speak with people, and they weren’t even paid to provide this service anyway. We have subsequently tried several new channels to use high tech to make these issues known and our concept of health care more fun, sexy, and cool. So while we gather additional evidence about our message, we have also sought to improve the effectiveness of the messenger.

What do you see as some potential areas of innovation that might evolve from the Healthcare X PRIZE?

Something we have talked about alot is a new model of delivery that leverages technology to make everything much more personalized. Our computing power is such that we can personalize down to the individual level - we should be able to develop programs that help make it easier to define your health goals, outline the resources required to achieve these goals, and deliver it to you in whatever form you want. I think is very much along the lines of a “personalized health advisor” that provides both advice but also resources.

This model would have to be “mindlessly mindful” like using a Mac, or as Mark Zuckenberg says, enable “elegant organization” to emerge from the mass of chaotic health information on the web. We need to spend the time to make this as easy as possible for someone to be healthy. I also believe that we could create metrics that truly motivate people to make and maintain all the beneficial aspects of their behavior changes. Furthermore, I believe with the right combination of tools and technology this could not only be medically effective but also very cost effective.

You frequently mention changing behavior - what have you found to be effective ways to help people to make fundamental behavioral changes?

Look, risk factor reduction is boring, medication compliance is manipulative, and disease management is like outsourcing your mother in law to constantly nag you. What we need to do is find ways to interact with people and their health that are pleasurable, joyful and fun - this would make these efforts sustainable. Delivered in this way, these types of programs become motivational, shareable, and collaborative. Behavior change is tough, we should approach is from the positive as opposed to the negative side.

We are also certainly aware of the power of money to change peoples behaviors. We see this economically all the time and we should learn how to incorporate this medically as well. I have been actively involved with Safeway Health’s efforts at creating an incentive structure that actually rewards the type of fundamental behavrior changes you mention. In reviewing their health experience, they found that four chronic diseases accounted for 80% of their health care costs. More importantly, they realized that all four were addressable through lifestyle alternations. So they initiated a program whereby they reward their employees with reduced premiums for making smart health choices. Those who don’t make healthy choices pay more. Pretty simple stuff. They have been smart about only applying this differential premium program to very clear behavior choices. The results have been impressive - they have enjoyed flat premiums for nearly two years in a row with more and more of their employees utilizing this program all the time.

Physicians are not well trained nor compensated for counseling and followup work required to make fundamental behavioral change. How do you suggest they participate in this process?

Well you hit on a significant issue. In your seven minute hamsterwheel visit with a patient, there is no time to discuss this often complex issues. It is far easier to grab for the pen and write out a prescription for lipitor than it is to spend 30 minutes reviewing nutrition, exercise, and related behavioral modification plan. However, if the patient comes informed, and the provider is willing to work with ancillary health workers (dietician in this case), then a true care team can be formed and true behavioral change has a chance to happen. In this setting, change can happen quickly and be more long lasting - with often dramatic results. I believe you could achieve a 50% reduction in health cost related to heart disease by implementing our program.

However, to achieve this would require a complete upheaval of the current payment mechanisms to the current players. We currently practice "reimbursement-based" medicine versus the evidence-based medicine that is the ideal. Angioplasty and cardiac surgery are big time money makers for hospitals and physicians. Both of these entities are actually, quite perversely, incented to not want to dramatically reduce the number of these procedures as they are a significant source of their income right now. Even insurance companies, can be put in a position where they are incented to pay for surgery of a diabetic foot versus the foot care that would ultimately prevent the surgery. I am hopeful that some of the innovation that comes out of the X PRIZE might be addressed toward the entire incentive structure of health care.

How do you see the health industry evolving over the next couple of years?

We are already seeing a slow shift to consumerism. I believe that consumers will want more and more choices of alternative to traditional western medicine. I am also seeing a simplification, wherein patients are choosing to use low tech solutions to solve their health issues as opposed the latest and greatest MRI device. I also see that the internet will make us all health citizens where we are finding patients like us, reviewing treatments alternatives, and accelerating the shared human health experience. The web will continue to enlarge our health possibilites just as it has expanded the possibilities in every other industry.

On a side note, I was pleased to see the President Obama selected Tom Harkin, a good friend, to play a critical role in the health reform efforts coming out of the Whitehouse. The reason this is great is that Tom is steeped in the wellness and prevention tradition and will have a critical role at the health care

Who are the other innovators in this space that we should be speaking with?

I can think of several - Tom Harkin as I mentioned preivously, Larry Keeley from the Dobblin Group, and Steve Brown (physicist in Menlo Park who helped develop the health hero network). Each one of these individuals is doing wonderful work in the health promotion arena.

High Quality / Low Cost Care - 10 Communities who are making it happen

2009-07-27T23:34:00.000-07:00

Quite little conference brought 10 communities who consistently deliver high value health care meet in Washington DC to share with policy makers how they did it.

Last week several of the high priests of health care reform convened a little band of 10 top health value performers from accross the country to attempt to explain to each other and to the Washington on lookers how they were able to effectively "bend the trend". They came from all over the country and in as many geographic varities as they did demographic flavors: Asheville, NC, Cedar Rapids, IA, Everett, WA, La Crosse, WI, Portland, ME, Richmond, VA, Sacramento, CA, Sayre, PA, Tallahassee, FL. and Temple, TX. The one thing they all had in common was the fact that they had achieved what only a fraction of health service areas are able to achieve - consistent high quality, relatively low costs, and outstanding outcomes.

I had spoken with Elliot Fisher just prior to the conference and he was excited about how rapidly some of these organizations were able to respond to be in Washington sharing their stories. It seems that all of these folks are interested to share their stories and in some cases try to figure out why they have been so successful relative to others even within their region. For potential X PRIZE teams, I think there are some valuable lessons that can be learned. The highlights include:

Physician-hospital collaboration matters. They need to trust each other and have common patient-centered goals.
Data matters. All docs think they are doing the right thing for their patients, but they don't have the data to prove it, and when they do get the data, they often find plenty of room for improvement.
Teamwork matters; the myth of the "superphysician" who can do it all should be laid to rest.
Efficiency matters; philosophies like LEAN work, although you have to stick with them.
Leadership matters. Particularly physician-leadership.

In addition, focus areas on clinical and community cultures of health, smoothing of care transitions, and having plentiful data avaiable to measure, monitor, and improve outcomes. We have discussed several of these before and I believe that competing teams will need to master these and other quality / cost challenges to increase value by 50% in a community.

Looking forward to the full report coming out of the meeting.

Incenting the Ideal Health Care Delivery System

2009-07-20T16:39:00.000-07:00

Several key themes emerge from 15 Case Studies of high performing health systems.

The Commonwealth Fund recently published a very interesting report on how to reform the health care delivery system by sharing a series of case studies of high performing health systems. I recently highlighted some of the work of Group Health, but wanted to pull out some of the more generic information about the principles of reform that have been learned from these case studies. These principles were first elucidated in the Commonwealth's "Organizing the US Healthcare Delivery System for High Performance" issues in August 2008.

Six Attributes of an Ideal Health Care Delivery System

Information Continuity. Patients’ clinically relevant information is available to all providers at the point of care and to patients through electronic health record (EHR) systems.
Care Coordination and Transitions. Patient care is coordinated among multiple providers, and transitions across care settings are actively managed.
System Accountability. There is clear accountability for the total care of patients. (We have grouped this attribute with care coordination, since one supports the other.)
Peer Review and Teamwork for High-Value Care. Providers (including nurses and other members of care teams) both within and across settings have accountability to each other, review each other’s work, and collaborate to reliably deliver high-quality, high-value care.
Continuous Innovation. The system is continuously innovating and learning in order to improve the quality, value, and patients’ experiences of health care delivery.
Easy Access to Appropriate Care. Patients have easy access to appropriate care and information at all hours, there are multiple points of entry to the system, and providers are culturally competent and responsive to patients’ needs.

You will notice that many of these principles can be found in the incentive and measurement structure of the Healthcare X PRIZE. We are trying to motivate teams to provide the type of care that has been shown over and over to delivery the best care. However, we are not asking people to replicate Kaiser, Intermountain, Mayo, or Geisinger - we are asking them to improve upon those models. While they deliver the best care today, we believe there exists even better, more efficient, and more effective care models out there. We look forward to the many teams, conveners, stakeholders, and other parties coming to the table to surprise us with their novel concepts, ideas, and incentive structures.

Can't wait to see what the innovation approach from a field of what we anticipate will be a global competition.

Communities on the Move: What gets measured gets improved

2009-07-16T09:49:00.000-07:00

Pugent Sound Health Alliance urges doctors, hospitals, patients, insurers, employers and others to use new report to improve local care

The Healthcare X PRIZE Team has been on a brief writing hiatus as we drive toward finishing off the initial Prize Design ahead of some upcoming Board Meetings for both X PRIZE Foudantion as well as the prize sponsor, WellPoint Inc. and WellPoint Foundation. Alot has been happening during the last few weeks, including several new reports and stories coming out regarding some of the high performing systems in our country. The repository for this information seems to be the Commonwealth Fund, which has an impressive listing of all the great case studies from around the country. One of those recently highlighted was Group Health, which is part of the Puget Sound Health Alliance.

Key thing is to note the way they have organized care, the way they use metrics to improve and organize care, and the clear and often dramatic improvements they are making in healthcare. As a respresentative example, please see a recent press release below.

Seattle, WA - July 16, 2009 Recognizing that fixing what's wrong with our health care system is a moral imperative and a fiscal necessity, the Puget Sound Health Alliance has unveiled an expanded and updated the Community Checkup report comparing care in doctors offices and hospitals, highlighting where improvement is needed. For the first time, the Alliance is making the Community Checkup available for use in business decisions such as benefit design, marketing and contract discussions.

The Community Checkup report still shows wide variation in the care that patients receive in this region. "Too many patients still don't get effective health care recommended by national medical guidelines, said David Fleming, M.D., Alliance Board Chair and Director of Public Health - Seattle and King County. "The good news is that by using insights from the Community Checkup report, then making changes to improve the results, we can reduce the personal and financial cost of chronic disease and preventable health conditions."

The report shines the light on specific areas of care where there is real opportunity to improve local health care value, improving effectiveness of care, patient health and saving money:

Insight #1: Depression - On average in this region, 30 to 50 % of patients diagnosed with depression and put on antidepressants go off the medication too soon. Some medical groups have earned better results; however, even the best result in the region still shows as much as 25 - 40% of patients who don't stay on their medication for the recommended time. ROI: Depression is the top driver of health-related costs in the workplace. Getting better results will improve patient health and the bottom line for employers.
Insight #2: Medicaid - The report now shows results for care to people on Medicaid, a low-income population often challenged with language, transportation and other barriers. Yet some local clinics are still able to provide recommended care to Medicaid clients at better rates than national benchmarks for the commercially-insured population. Every medical group can learn from these clinics about ways to ensure that all patients get recommended care. ROI: Nationally, 83% of Medicaid spending is associated with chronic conditions. Improved care for people on Medicaid improves personal health, saves tax dollars, and can reduce the cost shift from public to private sector payers.
Insight #3: Generic Drugs - The report shows that too many patients fill prescriptions with expensive, advertised brand-name drugs rather than an equally effective generic. For antacids, for example, some local clinics do very well in getting as much as 85% of patients to take a generic, yet other clinics have only 5% of patients on a generic version. The spread of variation for Medicaid is smaller, likely due to strong financial incentives for doctors to recommend cost- effective generics to patients. ROI: An Alliance estimate, using local health plan data for four types of drugs, shows that for every 1% increase in the use of a generic in lieu of a brand-name drug, more than $2.5 million can be saved in this region.

"Real health care reform isn't just about legislation, it's about improving how health care is delivered, covered and received by patients," said Mary McWilliams, executive director of the Alliance. "Now that we're shining a light on areas for improvement, it's time for each of us to roll up our sleeves and make specific changes to improve health care value in this region."

In April, the Alliance Board lifted restrictions on how the report may be used, starting with the July Community Checkup, to encourage decisions that change behavior and improve results. "The Alliance is the one place where everyone has come together to improve health care," said Lloyd David, CEO of the Polyclinic and Vice-Chair of the Alliance Board. "The Community Checkup is an essential part of ensuring that we all head in the right direction together."

The report can be used by doctors and other health professionals to see how they compare with peers then learn and apply best practices to improve quality. Patients can use the report to see the importance of certain health services, then talk with their doctor about how to be as healthy as possible. Health plans, employers and union trusts can use the report to improve benefit design, remove barriers to effective care, and engage individuals to make better decisions. All organizations can also use the report results during contract discussions. Several organizations are making changes based on what they've learned, such as:

The Birth and Family Clinic has implemented a plan to ensure that patients are aware of equally effective yet affordable generic drugs.
Providence Physician Group built templates into their electronic medical record system to reflect the elements of care measured in the Community Checkup report.
Valley Medical launched a breast cancer screening awareness campaign to ensure that their patients receive needed care.
Northwest Kidney Centers use the Community Checkup as they work with clinics to help reach the goal of 100% of people with diabetes being screened for kidney disease.

To highlight even more stories of health care changes in this region, the Alliance now collects examples from organizations and individuals through the Community Checkup website.

"The Community Checkup has established the Puget Sound Health Alliance as a leader in the growing national movement to improve the quality of care," said Michael Painter, J.D., M.D., senior program officer at the Robert Wood Johnson Foundation, which helped fund this report through its Aligning Forces for Quality program. "It is important reading for anyone who gets, gives or pays for care in the Puget Sound region to make informed choices and improve local health care."

The Community Checkup is the largest medical care comparison report produced for the Puget Sound area. The updated report shows results for clinics with four or more clinicians, based on care provided to about 2 million residents by 76 medical groups, about 240 clinics and 30 hospitals. The clinics account for about 80% of the primary care doctors in pediatrics, family or general medicine, obstetrics and gynecology, and general internal medicine in the region.

Online, the Community Checkup shows medical group results based on all data, commercial insurance data only, and Medicaid data only. Medical groups have access via a secure portal to all of their results at a detailed level. The data used for the report was provided by 18 health plans, union trusts and self- insured employers. That data does not include patients' personally identifiable information, such as name or birth date. Nor does it include cost, charge or payment amounts.

For care provided in medical groups or clinics, the Community Checkup measures care in the following areas: use of antibiotics and imaging, asthma, depression, diabetes, heart disease, prevention, and generic drugs. Three new measures being added are Avoidance of Antibiotics for Adults with Bronchitis, Adult Use of Preventive Care, and Use of Primary Care for Children.

For hospital care, the report shows performance in care for patients who have surgery or are treated for heart attack, heart failure or pneumonia, plus topics such as communication with patients, actions to reduce medication errors, and more. Hospital results are drawn from several sources of publicly-available data, including Health and Human Services Hospital Compare, the Washington State Department of Health, and the Leapfrog Group.

Later in 2009, the online Community Checkup report will compare health plans in this market based on national standards and compared to national best practices. Also to be added are measures of the variation of intensity of services or relative use of resources, comparing: (1) the amount and types of care during hospital visits, and (2) 'episodes' of care tracked across time, provider type and locations. High- value care uses fewer resources to get similar results.

The next print version of the Community Checkup is expected to be published in 2010. "Our goal is to continue to have the Community Checkup report be the single best resource for patients, doctors, hospitals, employers, unions, health plans and others to find information about local health care performance in this region," said Dr. Fleming.

Current funding to produce the Community Checkup comes from organizations and individuals who participate in the Alliance, and special grants from the Robert Wood Johnson Foundation.

Demonstration Division: True Communities versus Geographically Concentrated Employers

2009-06-25T12:00:00.000-07:00

An attempt to answer a frequently asked question regarding the "community" question

Question: Your philosophy states that "The likely location of the test communities will be from the states where WellPoint has markets". We are a community of about 10,000 that has an interest, but as I understand it, Wellpoint does not have a market here. Should we consider our community to be excluded from consideration for this effort?

Quite the contrary, we are hopeful to inspire an entire network of communities just like yours to actively participate in the Healthcare X PRIZE. While the actual Prize competition has some operational limitations, including constraining the competing population to WellPoint employer "communities", we are contemplating designing a demonstration division wherein real, physical communities such as yours can compete within the X PRIZE framework. This may require some additional sponsorship money and heavy lifting in terms of community data sharing, but we believe this could be lead to some great breakthroughs for communities who would most benefit from this type of innovation.

A question I would have you consider, just as I asked Oroville, Ohio to do, is how would you organize your community to be able to share claims information, health data from individuals, and the general data management that we would need in order to operate the prize. Would a new entity need to be created? Who would head this entity? How would the entity be funded? These questions begin to give a flavor of the very real, but not insurmountable challenges, and the requirements for widespread community support from multiple stakeholders to pull it off. However, maybe this is absolutely what is required and necessarily to lead to the break through health innovations we are seeking.

For this reason, we are seriously contemplating a "demonstration division", where in true communities can compete along side of the employer based groups. They would have the same rules, the same measurement set, and the same reporting requirements available. We could potentially obtain additional sponsorship money to fund a purse for this and hope to incent alot of community based innovation in the process. This feels like it has a life of its own . . . we will keep exploring this.

Your comments and criticisms of a "demonstration division"?

Magical Medium: Update on the Healthcare X PRIZE

2009-06-23T23:15:00.000-07:00

An interim update on the progress of the Healthcare X PRIZEas it moves through the Prize Design Process in anticipation of several key milestones in July.

The X PRIZE Foundation is the world wide leader in developing and operating incentivized competitions designed to transform entire industries. This model has been highly successful in technological break through's (like the Ansari X PRIZE and the Progressive Automotive X PRIZE) and in helping the unimaginable become commonplace (like the Google Lunar X PRIZE). As X PRIZE has surveyed the world-wide market for innovation, it is becoming clear that the many world wide systemic failures (education, health, poverty, etc) can and should be addressed with incentivized competitions.

The first attempt at this is with the development of the Healthcare X PRIZE. WellPoint has stepped forward to sponsor both the Prize Development process as well as the winners purse. However, a systems prize is a challenge for a variety of reasons. Its bigger, its more complicated, it has far more moving parts, and given its complext interactions it is alot harder to describe in a single sentence statement. However, Healthcare is big, complicated, has lots of moving parts, and multiple interactions from lots of different players. What the Healthcare X PRIZE Design Team is trying to do is to simplify the madness and refocus on those things that can truly make a difference within the constraints and challenges of our competition framework.

As you already know from reading our Initial Prize Design, we are contemplated three general phases to the project:

The phases and timelines are all approximations subject to revision as part of the normal Prize Development process.

First, we have the Design phase which we are currently in. During this phase we are attempting to develop the infrastructure for Prize operations, the rules and measurement set, and to define the competition in such a way that teams will want to compete, that our sponsor will want to fund the prize, and that we can make the impact that we aspire to (nothing short of transforming the health care system of course!).

The next step, which is anticipated to begin following the Prize Launch event this fall, is the Selection phase. During this phase we plan to actively recruit communities and potential teams interested in participating in the competition. The EcoSystem is also anticipated to launch during this time, and will be a large collaboratory of teams, communities, individuals, point solutions, and other vendors who are interested in the HXP. We are hopeful that it serves as a useful match making service, an online marketplace for health care innovators to share ideas, meet each other, and engage in collaborative projects that advance the ball for everyone. We have begun to explore potential partnerships in this area, and several innovative technologies exist that can create this type of environment which we hope will live on well beyond the lifetime of the competition (more later).

It is important to understand that we are planning for three simultaneous selection processes to occur during this phase - team, community, and measurement set:

Teams will be registering, putting forward their concept, modeling that concept against a standardized database made available by WellPoint, and then having to validate their assumptions based on feedback from the independent judging panel who will have strict evaluation criteria but allow for the freedom for the widest range of solutions. Once teams pass the "threshold of validity", they will be available for the "match" with the five test communities.
"Communities" (most likely geographically based employer communities for reasons to be discussed) will also be selected from across the 14 states in which WellPoint operates. Community criteria are being finalized but will fall along the line of history of innovation, willingness to share information, geographic concentration of employees, data management capabilities, culture, leadership, and a variety of other factors. The five communities will rigorously studied, evaluated, and every attempt will be made to select "actuarially equivalent" populations. Communities will ultimately be "matched" to five Teams in an analogous process to the residency match (details forthcoming).
The measurement set, which we will begin to share publicly over the coming months, will also be finalized and validated during this selection period. We anticipate what we will put forward represents one thoughtful approach (among many alternatives) to help orient the teams to continue to move along the health value chain from disease -> health -> vitality. These will be subject to further refinement and validation during this phase by our team of measurement advisors and experts.

Given the amount of activities you can see why we are currently allowing for 18 months for this phase to complete. After the team and community match, we have allocated a 6 month window for team / solution implementation. Finally, after implementation is complete, the Competition phase can begin as planned in January 2012. During the competition phase Teams and Communities will be workign together to introduce health finance, care delivery, and personal incentive innovations that improve the Community Health Index while lowering the Total Cost required to obtain those results. Teams will be required to file quarterly reports which will be made publicly available to all interested parties and biannual educational conference events will be held with most sessions being made available to the public. A publicly available leader board will document who is leading the competition at all times and a public site will make available preliminary results from the competition. Independent third party judges, who audit the quarterly reports, will pronounce a winner at the end of the three year competition cycle.

While none of the above is set in stone, it should provide a summary of current thinking and is shared in this raw form to maintain our commitment to a transparent development process. We realize, occasionally to our own frustration, that we raise just as many questions as answer in moving through our Prize Development process. What I can say, without reservation, is that we are really trying to remain true to our aspirations of tranforming the health care system through the magically medium of the X PRIZE.

Health Value: Creating a level playing field

2009-06-19T14:12:00.000-07:00

Atul Gawande's article in the New Yorker describing extreme variations in cost has become required reading for anyone interested in health policy. One commenter referenced this article when asking how we could create a level playing field given this degree of variation

We have received some great feedback from many people throughout the world regarding our development of the Healthcare X PRIZE. It has been a fascinating project and we are working toward launching the prize this fall. One commenter had a concern about how the prize could create a level playing field given the wide variation in costs and quality throughout the country. Our colleagues at Dartmouth Health Policy Center have done a phenomenal job over the last 20 years documenting and explaining the reasons for these variations in care. Atule Gawande's article was an explosive reminder that we have a LONG way to go in moving toward a next generation health system that can delivery health care value.

Notice I did not say high quality, didn't mention cost, nor did I define any condition specific outcome that I hope a next generation health system can deliver. The entire framework of the Healthcare X PRIZE is based on the actual "value" delivered by the overall system as it interacts with you, not an anyone or several individual parts. The notion of value (outcomes / costs) is the great equalizer that levels the playing field throughout the country. McAllen Texas might be twice the cost as everyone else in the United States, and if they were delivering 2-5X the results, no one would complain. However, as Dartmouth has shown, the more you spend the worse your outcomes actually are. McAllen just happens to be the current poster child of high intensity, low value health care. Believe me, there are plenty of others.

Graphic Depicting variations in quality and spending between states for Medicare beneficiaries.
Hawaii scores well - high quality at a low cost (Credit, Elliot Fisher, 2006).

Conversely, there are other systems that spend very little, yet produce excellent outcomes. In fact, Hawaii spends the least of anyone and has fairly high quality scores. In other words, they produce great value. The focus on health care value is the great equalizer as I mentioned before because I venture to say that spending 8% of GDP on health (like some countries) might not be enough. Spending 16% like we do might not be enough either. But what we can say, is that 8 or 16% right now does not buy us very much. Not very much at all.

Hence, the Healthcare X PRIZE focus on value and focus on redesigning health finance, care delivery, and personal incentives to help create a next generation health system that delivers high value. Please stay tuned for prize design information we will be releasing in the coming days and weeks leading up to the formal Prize launch this fall.

Safeway Health as a Model for Reform: Incentivizing Health Behaviors

2009-06-17T23:13:00.000-07:00

Safeway has achieved remarkable results in their health care program over the last four years - 40% reduction in cost with same premium level - which is an unbelievable feat. CEO Steve Burd explains how they were able to do it (Repost from Wall Street Journal article on June 12, 2009)

Effective health-care reform must meet two objectives: 1) It must secure coverage for all Americans, and 2) it must dramatically lower the cost of health care. Health-care spending has outpaced the rise in all other consumer spending by nearly a factor of three since 1980, increasing to 18% of GDP in 2009 from 9% of GDP. This disturbing trend will not change regardless of who pays these costs -- government or the private sector -- unless we can find a way to improve the health of our citizens. Failure to do so will make American companies less competitive in the global marketplace, increase taxes, and undermine our economy.

At Safeway we believe that well-designed health-care reform, utilizing market-based solutions, can ultimately reduce our nation's health-care bill by 40%. The key to achieving these savings is health-care plans that reward healthy behavior. As a self-insured employer, Safeway designed just such a plan in 2005 and has made continuous improvements each year. The results have been remarkable. During this four-year period, we have kept our per capita health-care costs flat (that includes both the employee and the employer portion), while most American companies' costs have increased 38% over the same four years.

Safeway's plan capitalizes on two key insights gained in 2005. The first is that 70% of all health-care costs are the direct result of behavior. The second insight, which is well understood by the providers of health care, is that 74% of all costs are confined to four chronic conditions (cardiovascular disease, cancer, diabetes and obesity). Furthermore, 80% of cardiovascular disease and diabetes is preventable, 60% of cancers are preventable, and more than 90% of obesity is preventable.

As much as we would like to take credit for being a health-care innovator, Safeway has done nothing more than borrow from the well-tested automobile insurance model. For decades, driving behavior has been correlated with accident risk and has therefore translated into premium differences among drivers. Stated somewhat differently, the auto-insurance industry has long recognized the role of personal responsibility. As a result, bad behaviors (like speeding, tickets for failure to follow the rules of the road, and frequency of accidents) are considered when establishing insurance premiums. Bad driver premiums are not subsidized by the good driver premiums.

As with most employers, Safeway's employees pay a portion of their own health care through premiums, co-pays and deductibles. The big difference between Safeway and most employers is that we have pronounced differences in premiums that reflect each covered member's behaviors. Our plan utilizes a provision in the 1996 Health Insurance Portability and Accountability Act that permits employers to differentiate premiums based on behaviors. Currently we are focused on tobacco usage, healthy weight, blood pressure and cholesterol levels.

Safeway's Healthy Measures program is completely voluntary and currently covers 74% of the insured nonunion work force. Employees are tested for the four measures cited above and receive premium discounts off a "base level" premium for each test they pass. Data is collected by outside parties and not shared with company management. If they pass all four tests, annual premiums are reduced $780 for individuals and $1,560 for families. Should they fail any or all tests, they can be tested again in 12 months. If they pass or have made appropriate progress on something like obesity, the company provides a refund equal to the premium differences established at the beginning of the plan year.

At Safeway, we are building a culture of health and fitness. The numbers speak for themselves. Our obesity and smoking rates are roughly 70% of the national average and our health-care costs for four years have been held constant. When surveyed, 78% of our employees rated our plan good, very good or excellent. In addition, 76% asked for more financial incentives to reward healthy behaviors. We have heard from dozens of employees who lost weight, lowered their blood-pressure and cholesterol levels, and are enjoying better health because of this program. Many discovered for the first time that they have high blood pressure, and others have been told by their doctor that they have added years to their life.

Today, we are constrained by current laws from increasing these incentives. We reward plan members $312 per year for not using tobacco, yet the annual cost of insuring a tobacco user is $1,400. Reform legislation needs to raise the federal legal limits so that incentives can better match the true incremental benefit of not engaging in these unhealthy behaviors. If these limits are appropriately increased, I am confident Safeway's per capita health-care costs will decline for at least another five years as our work force becomes healthier.

The Healthy Measures program currently applies only to our nonunion work force. While we have numerous health and wellness provisions in our union contracts, we are working with union leaders like Joe Hansen of the United Food and Commercial Workers to incorporate healthy measures provisions in our union work force as well.

While comprehensive health-care reform needs to address a number of other key issues, we believe that personal responsibility and financial incentives are the path to a healthier America. By our calculation, if the nation had adopted our approach in 2005, the nation's direct health-care bill would be $550 billion less than it is today. This is almost four times the $150 billion that most experts estimate to be the cost of covering today's 47 million uninsured. The implication is that we can achieve health-care reform with universal coverage and declining per capita health-care costs.

There is a very real possibility that we will see positive transformational health-care reform in the near future. I am encouraged by the effort I see on Capitol Hill, particularly the bipartisan effort in the Senate. While some tough issues remain, if we continue to work in a bipartisan manner I believe we will resolve these issues successfully and find agreement on meaningful reform.

Mr. Burd is CEO of Safeway Inc., and the founder of the Coalition to Advance Healthcare Reform.