Insurance Rates Still Rising; Cost Is the Issue to Address

Annual health insurance premiums keep rising, according to a new Health Affairs report from the Kaiser Family Foundation. In 2018, rates increased for single: 3%; family: 5%. Real wages declined during this same timeframe (Bureau of Labor Statistics).

These trends don't intersect. We need to do better delivering value, lowering costs. We spent years looking at utilization, while prices increased for drugs, technology, healthcare services. Pricing is the one of the most pressing issues in healthcare and needs policy and market forces to start working together.

Why Functional Medicine is Your Most Effective Population Health Strategy

In 2003, David Kindig and Greg Stoddart popularized the term ‘population health’ in their American Journal of Public Health article, What is Population Health? [1] While the term had long been used at least in Canada, there struggled to be a common definition. Kindig and Stoddart defined population health as “the health outcomes of a group of individuals, including the distribution of such outcomes within the group.” More recently, the Centers for Disease Control (CDC) references Kindig and Stoddart’s earlier work on their website, but also provides a nationally-relevant update. The CDC views population health as “an interdisciplinary, customizable approach that allows health departments to connect practice to policy for change to happen locally. This approach utilizes non-traditional partnerships among different sectors of the community – public health, industry, academia, health care, local government entities, etc. – to achieve positive health outcomes.”[2]

Providers and health systems are becoming much more interested in population health, as their financial reimbursement is tied to health outcomes – many of which are influenced by what happens beyond a clinic visit, inpatient stay, or procedure. Don Berwick stimulated a focus on population health when his Triple Aim[3] was a foundational concept built into the Patient Protection and Affordable Care Act, more commonly known today as Obamacare.

Population health and health outcomes rank poorly compared with other developed nations. The World Health Organization’s 2018 World Health Statistics[4] shows that the US ranks 44th overall for infant mortality and 34th overall in life expectancy at birth. This same report notes that, based on 2015 data, the US is the spends more on health care per capita than any other developed country (16.8% of GDP, which recent estimates exceed 18%). Much has been written about how to solve for this, and clearly there is a role for many in broad efforts to improve the overall health of the population. This reality influences the sense of urgency to address population health, but nothing influences it more than having a financial incentive to do something about it. Where value-based reimbursement models for health care are being emphasized more, there is a direct relationship with interest in health care providers and health systems to do more to improve the health of the population they serve. In this specific way, we have an alignment of interests: improved reimbursement for health systems if they achieve improved health outcomes.

CMS has set a goal of 50% value-based reimbursement by this year, 2018.[5] A timeline for the implementation of their value-based models is available here[6], and shown below:  

Value-based programs are enduring, mostly because there is a shared interest in reducing health care spending and believe that these programs are effective in achieving reduced spending. New laws, such as the Medicare Access & CHIP Reauthorization Act of 2015 (MACRA),[7] more aggressively move toward value-based reimbursement models such as Alternative Payment Models (APMs) and Merit-Based Incentive Payment System (MIPS); both of which will be implemented by 2019.

The focus on population health is essential to achieving reduced health spending for payers (government and commercial), as well as providers. Patients, or consumers and their employers, are also interested in reducing what they spend on healthcare, especially as more costs have shifted to consumers.

From the demand (consumer) perspective, the predominant health concerns have to do with chronic and systemic disease; most of which are the result of lifestyle choices, most of which include multiple organ systems, and therefore DRG and CPT codes. Our system isn’t designed to take care of patients in a whole systems biology perspective. We have yet to embrace the need for a more systemic approach to disease diagnosis and treatment. This is where Functional Medicine offers an approach that is effective at providing not just a more comprehensive assessment, but also the kind of supports and services that help achieve lifestyle changes so that the root causes are addressed.

My own experience with Functional Medicine began in 2013 when I was working with Toby Cosgrove of the Cleveland Clinic and the Institute of Functional Medicine to envision what it would take to establish a program and create the evidence base to support the improved outcomes and cost effectiveness of this model. Within the year, we had a Center for Functional Medicine on the main campus opening up to serve patients. Every part of the operating model, research initiatives, teaching program were created for this specific purpose. We have all learned even more since opening day and made improvements upon the Center for Functional Medicine. The Center for Functional Medicine’s existence and continued demand (~3,000 patients are on a waiting list to be seen now, so more avenues for access are being explored) are evidence enough that there is a need for a model like this. More importantly, the Functional Medicine approach and model are integral to improving population health.

Chronic disease affects more than 50% of all Americans;[8] 75% of those over 65 years old have more than one chronic disease, which comprises 93% of Medicare expenditures. Prevalence and incidence rates are increasing for factors that drive chronic disease, and multiple chronic conditions.[9]

Assuming the above trends continue, clinical care programs that address chronic disease are paramount to decreasing demand, while also improving population health.

Functional Medicine is a systems-oriented approach that fosters patient engagement, while addressing the root cause of the patient’s issue – often permanently, assuming that associated required changes in lifestyle are maintained. The image is an overview of the Functional Medicine model that has evolved at the Cleveland Clinic, with the initial model provided by the Institute for Functional Medicine.  

The science behind the concept continues to grow, in part due to the commitment from the Cleveland Clinic. In 2010, David Jones and others published the Textbook for Functional Medicine, available here.

There are two innovative approaches that Functional Medicine provides:

1.      Systems approach to diagnosis and patient engagement: Functional Medicine’s diagnostic approach focuses on the root causes of chronic conditions. As the image shows, lifestyle factors are understood, as well as stress, trauma, environment, etc.

2.      Supports (resources, tools, and processes) for sustainable lifestyle changes: the Center for Functional Medicine has developed a Functioning For Life (FFL) program that includes health coaches, nutritionists, and other personalized supports designed to help the patient achieve health in a sustainable way.

There are challenges with any model. One noteworthy challenge with Functional Medicine is that most insurers do not cover the costs of some of the diagnostic testing, especially some of the more extensive blood work and nutrient profiling, as well as gut microbiome genetic testing.

Nonetheless, a Functional Medicine strategy incorporates many of the most influential factors driving chronic disease and, therefore, population health.

A two-pronged strategy to optimize the effectiveness of a Functional Medicine model is worth considering. My recommendation is to have concurrent efforts at the individual level and the community level. Most health systems start population health strategies by focusing on their most expensive populations. While everyone can appreciate the logic, the path to long-term and sustainable results is more likely the two-pronged approach outlined below:

FM Pop Health Strategy.png











A Health System Anarchist

A friend and leader in his own right, Ari Weinzweig, co-founder of Zingerman's in Ann Arbor, MI, often describes himself as a 'lapsed anarchist'. Ari has overhauled food and customer service to create a wildly successful set of businesses under the Zingerman's umbrella. At the core is a focus on what customers want. 

At the core of healthcare, we should center our thinking on what patients and populations want (and need). We often think from the perspective of the business we are working with. Long-term success will be based on meeting the needs of the people we are serving.

Anarchist - this term resonated with me this morning as I was reading the series of articles that the NYT is publishing in their Health Issue, which will be released in the NYT Magazine: I had this thought particularly after reading about the work that David Meltzer has been doing to quantify the value of the doctor-patient ratio (the one we think of as an old model where there is a long-term relationship and the knowledge of lifestyle, issues, and culture that comes with a long-term relationship):

When we look at how we are doing as an industry, we must ask, how healthy are the people that we serve? Do they receive the care they need when they need it? Is the care they receive effective? Are people in a system that considers their culture, their reality, their understanding, and their choices?  If we use health outcomes metrics, we have long been lagging other countries in how well our people are doing. The US' lagging performance has been documented by the Commonwealth Fund, World Health Organization, and others

The ever-increasing cost of healthcare is now one of every family's biggest concerns. Costs for insured inpatients has grown the fastest. The insured and uninsured face higher costs. As deductibles move to ranges that make every healthcare expense a burden, the costs of healthcare is increasingly a top concern shared by all.

The Commonwealth Fund has recently published how our uninsured population is increasing again, thanks to Trump's work this past year to destabilize the ACA. Those measures are often tip-of-the-iceberg; meaning, there are many under-insured whose access to healthcare is also compromised.

We have the technology such that personalized medicine should be our standard of care - not a new innovation. In some ways, the old model was that. And yet, we now know a lot more about what works for specific populations and what does not. Targeted therapies is worthy of the innovation that it is, but the ability to understand patients and develop recommendations with them that they are able to do should not be a novelty. 

I am increasingly a health system anarchist. Like Ari, I believe that a whole new model is needed - in this case, for healthcare. I have written about designing health systems to achieve health. I believe in this model. I believe in empowering patients. I also believe that strategic partnerships can be a powerful strategy (vs. competition only). 

Back to cost: we need an overhaul on what we charge for healthcare and how we pay for it. In the near term, we should expect people (consumers,  patients) to care a lot more about this - because they are paying a lot more for care (insured and uninsured; although at very different rates). 

Value should be defined by the patient, not the payer or health system. If patients are unable to achieve some value in the healthcare they receive, there will be only increased costs as people wait longer and opt out until they must engage. 

It is time for a health system anarchist - or group of anarchists - to carve a new path where value is defined by patients; costs are affordable; and people are able to achieve their full potential.

Thank You

I wanted to thank the many colleagues, friends, and organizations that are on our journey with us. Thank you for the opportunity to work together. Thank you for the ideas, growth, and challenges. Thank you for the hard work and dedication to a field that affects every single person. Thank you to your commitment to lead in un-chartered territory. We are grateful to be part of this journey with you.


Macroeconomic Perspective: ACA Repeal, Replace Affects Everyone

We need to go further in our thinking about the macroeconomic implications of current legislative proposals that include reductions to the safety net, increased uninsured, and payer options that forego minimum health benefits (defeating the purpose of health insurance and exacerbating premium increases on anyone with pre-existing conditions, including age). Our conversations need to be more inclusive of a broader impact due to EMTALA and the payer market.

Two recent articles worth reviewing: 1) January Health Affairs blog post that discusses the potential effects of a repeal and replace strategy on people that receive their health insurance through their employers by JoAnn Volk, and 2) July 14, 2017 article from Kaiser Health Network's Julie Rovner that highlights a thorough NAP/IOM study on the Community Effects of the Uninsured based on data prior to the ACA.

In simple terms, increased uninsured leads to more people not being able to prevent and/or manage chronic and mental health illness. The CDC notes that 86% of the $2.7T healthcare costs are due to chronic and mental health illness. EMTALA obligates health systems to treat and stabilize any patient that makes it to that health system's property before they can be released. This law guarantees access to care. The kind of access, however, is expensive and, while life-saving, not the highest impact in terms of long-term costs and quality of life. If policies reduce coverage for the safety net (through reductions in Medicaid, reductions in access to affordable health insurance plans, and other mechanisms), we will see healthcare costs go up for several reasons:

  1. Health systems are obligated to treat all patients that arrive on their property. There is a lot of data on the US' experience with this trend. When people don't have access to primary care, they use the ED as primary care.
  2. Health systems that provide uncompensated care will incur a loss. Uncompensated care is typically 'bad debt'. This compromises the financial viability of health systems, especially for those that provide more uncompensated care than others.
  3. Health systems will negotiate with payers to help address their higher costs of care. This happens during every contract negotiation with all payers.
  4. Payers may agree to increase reimbursement for care if a good case is made. Those increases in reimbursement are passed on to their customers as higher premiums.

The CBO's estimates provide a portion of a macroeconomic impact on proposed legislation. Taking CBO's scope of analysis a step further, we should be expanding the analysis to look at more comprehensive impacts to the entire economy. This work might include the impact of reduced access to care in terms of economic mobility and innovation. One of the highest growth markets was the individual payer market, which also allows for more economic mobility for employees and new businesses. Policies that compromise the individual insurance market (e.g., penalties for pre-existing conditions including age; penalties for any period without health insurance; allowing payers to forego minimum health benefit plans) are likely to stifle economic growth, employee morale, among other things.

The most significant macroeconomic impact is the pace at which we can expect healthcare costs to increase - from payers and providers both. They are intimately linked with the system we have. Reduced costs of Medicaid for the government can sound like a good thing - but it is like squeezing a balloon. You can squeeze the Medicaid part of the healthcare balloon, but those costs will show up as increased costs for health systems and increased health insurance costs. Unfortunately, the increase isn't proportional to the reductions in the federal government's spending. The increase will be more - because it costs more to take care of sicker people, which is a well-documented impact, based on the US's own experience, of higher uninsured.

If there is a significant change in policy that looks anything like proposed bills to date, we will need to work locally and regionally on developing safety net strategies that improve preventive and maintenance of care in communities to mitigate increased costs. We can do this work - but it will come from health systems, communities, and willing payers to develop different delivery models, cost and reimbursement structures.

Health Systems Will Need to Be More Bold if the AHCA Passes

Today's vote in Congress is mere politics - there is a vote because the GOP believe they have enough votes to pass something.  The bill will be voted on without a CBO score, which seems irresponsible for a bill of this magnitude. Once again, this is a GOP-only effort so collective thinking is not part of what is in the bill before the House today. Nonetheless, new legislation might become reality sometime soon. When it does, we can expect that legislation to remove or decrease funding for some key services that keep care more affordable if we have preventive and basic services funded.

What MUST We Do?

The healthcare system must be more aggressive in doing the work that we used to rely on the government to fund. That's it in a nutshell.

Some Facts:

  • Preventive care is more cost effective than acute care;
  • Most people want to be healthy;
  • We need to work on integrating care on behalf of patients to make it easier for them to take care of themselves and achieve the outcomes they want;
  • There are health issues that are directly associated with poorer socioeconomic conditions people live with - these are well-documented, well-known, and will continue to exist to the extent that these conditions continue;
  • Outcomes matter;
  • Patients are consumers - and they are increasingly paying for healthcare costs.

What Every Health System's Top Priority List Must Include:

  • Deliver care that improves outcomes, health, and wellness;
  • Be responsive in ways that matter to patients and their families (access, availability, education, help);
  • Aggressively coordinate care;
  • Negotiate/partner differently with commercial payers;
  • If necessary, find new ways to fund basic health services (partner with employers, cities, communities)
  • Relentlessly track progress on the above items.

We will need to be more bold in taking care of our communities than before. Those that do can expect to do better in the long run.

Post ACA Repeal Efforts: Now What?

The failure of the ACA repeal and replacement bill on March 24 creates a compelling opportunity, if there ever was one. Politically, Trump could still have a win if:

  • Bipartisan work can begin to make repairs to the ACA that achieve improved access and affordability;
  • Healthcare professionals can be involved in crafting of key revisions from the provider and payer sides to achieve a bill more likely to make improvements; and
  • A new effort includes soliciting and incorporating feedback from states and constituents about their healthcare access and affordability experience and current requirements;

Signaling an effort to move in this direction will help stabilize the market now and for 2018. Spending the time it takes to do this work well is another important commitment that could be made and would inspire confidence in the market. If the above path is at all feasible, it is possible that the next phase of improvements in healthcare could be a reality - something that affects every single US citizen.

Except our legislators. A new requirement of the law that would likely be quite popular with most US citizens, including Trump's base supporters, is this: 

Legislators will be on health plans that reflect the law of the land. They should experience the results of the laws they pass. Their current exemption keeps them removed from the consequences of their work. Aligning their work with personal experience of the results would inspire credibility at a time when that is greatly needed. 

Our work:

We should all continue to have a sense of urgency to press forward with changes in healthcare delivery that are more cost effective, provide higher value and better outcomes and are more patient centered. We can expect some trends to remain:

  • Costs will increase, although less so now with stabilization in the market and, especially, continued coverage for many that were otherwise at risk for being uninsured;
  • Aging of the population will continue to drive increased healthcare utilization;
  • Consumer behavior will continue to increase as people want their healthcare to be like other things that they purchase, They will want care to be something they can shop for that has demonstrably high value. They will expect the health system to be responsive on their terms (access, communication by email/text/video, easy to navigate, bills that are comprehensive and easy to understand). 
  • Health system reputations will matter more than ever because of the above three trends.

We will need to press forward with a sense of urgency to create the health system that can thrive in the environment that is already happening around us. We know what we need to do. Let's do it. 


Repeal and Replace Plan Revealed: Our Work Ahead Requires Cost Effective Care and Better Patient Outcomes

If you are waiting for a sense of urgency in terms of planning for the future of healthcare, you should have more of it today. The NYT has a good summary of the GOP plan revealed last night:

Our work remains the same: focus on cost effective care. Healthcare providers will bear more responsibility to negotiate with payers based on delivery system models that provide more cost effective care. Bundled payment strategies that allow healthcare systems to incorporate more integrated care to the benefit of the patient (in terms of outcomes, and longer term cost avoidance) make a lot of sense. And they will continue to do so.

If most of the model revealed last night remains, there is an extra burden on healthcare providers to take better care of the elderly and poor. This system will not benefit them, and so the burden of cost effectiveness will fall to providers.

In many ways, this isn't much of a surprise and there are some improvements. However, our work this year in planning became more clear last night.

Our Work Ahead: Focus on Delivering Cost Effective Care

Health providers are facing an uncertain market as plans for the ACA unfold quickly (repeal, replace, repair?). And yet, we have learned a lot these past few years of Obamacare. The IHI's Triple Aim was a foundational concept in the ACA, intended to improve quality, improve population health and reduce costs. New reimbursement models emerged that emphasized prevention and coordination of care. Early results demonstrate more cost effective care. If we are aligned in our interest to bend the cost curve in healthcare, we know what our work ahead is: focus on delivering cost effective care.

With so much uncertainty, the path forward is increasingly clear. Cost effective care is achieved through:

  • Better access to preventive care
  • Effective self-management of chronic diseases
  • Coordination of care across primary and specialty care 
  • Integration of care
  • Patient-centered care plans that enable patients achieve their goals

Our Work

The market is changing already, as it must. By March 2017, health insurance plans will have to start formulating what they believe they can offer for enrollment starting in October 2017. This is our window of opportunity on the provider side to design our systems to achieve cost effective care. To do this, we must continue our work in the following areas:

  • Know our cost drivers
  • Improve access to preventive care
  • Develop programs that enable patients to confidently manage their chronic diseases
  • Design our delivery model to achieve coordination of care across walls and systems so patients have a plan that they understand and can achieve
  • Make it easy for patients to pick us - access, virtual tools, wayfinding, coordination, patient-centered system design, responsiveness
  • Understand our path to financial sustainability 
  • Invest in the infrastructure to achieve high value, easy access care
  • Be prepared to negotiate with payers based on outcomes and cost effective care

This is our work this year and beyond. There is a great alignment of interests if we can bend the cost curve while delivering care that is effective and enables a healthier population. 

Inaugural Message: Why We Exist

There is something unique about this moment in time in the healthcare industry. We can only expect more change in the healthcare market as policy changes lurk in the near future. We have already been on a journey of great change - and have learned much from it. In times of uncertainty, a focus on what is important is often more clear than it otherwise could be.

Headlamp Advisors exists to help our healthcare clients navigate through the uncertainty and find their way forward in a manner that inspires confidence and commitment across the organization and beyond. We will be the partner of choice when there is uncertainty that must be addressed.

We will take the time to get to know you well and work with you to develop plans that resonate and reflect our collective best thinking. We know how important leadership, ownership and advocacy are when you are embarking on something new. We will help achieve that level of commitment across your organization to a future path that you and your team can believe in.

What Lies Ahead

There is little debate that healthcare costs are likely to increase again. The key drivers are simple in that they reflect an aging population, an economic recovery and increasing demands and expectations of the health system. We know that our Baby Boomer generation will hit their peak inpatient utilization in ~2030 - this is a certainty and we can plan for it. At the same time, we can continue to work toward prevention and integrated care largely delivered in other settings - ambulatory, at home and virtual.

What is Worth Continuing

The focus on value will only increase in its importance. The burden of proving value may fall more on healthcare providers, and we would do well to have better partnerships with payers and patients to connect the dots that otherwise make value more difficult to demonstrate. All efforts to improve value are worth continuing and, perhaps, increasing.

Next Level Innovation

There are many levels for innovation that should be pursued: 

  • Health system design
  • Precision medicine
  • Population health 
  • Patient experience and patient-centered care
  • Integrating medicine
  • Integrative medicine 
  • Functional medicine and systems biology
  • Accelerating discovery into clinical applications

Certainly, there is much to be done; much to be excited about; and much promise ahead for those bold enough to lead during uncertain times. We exist to make this journey more possible. We look forward to being your partner of choice on the journey - and helping you find your way.