A recent report from the Bureau of Labor Statistics showed the trends in employment by sector in the US. I don't have the reference here, but if you look at the period from 2007 to present, the major sector that has shown growth was health care. For example, look at this BLS article from 2011. The current job report, as I recall, will likely mark well over 110 consecutive month of job growth for the health sector.
In a related story over at Modern Healthcare, CMS provided detail of the pioneer accountable care organizations that realize the business proposition for the program doesn't work. "Seven Medicare Pioneer accountable care organizations that didn't produce savings in the first year of the Obama administration's most ambitious test of the accountable care model have told the CMS they will leave the Pioneer program and enter the Medicare Shared Savings Program model, while another two participants have indicated they will leave Medicare accountable care entirely."
Information Week explained this exodus:
The revelation that nine of the 32 accountable care organizations in Medicare's Pioneer program might leave it -- four of them to join the regular Medicare shared savings program (MSSP) -- has raised some eyebrows in the healthcare industry. The reason is that the Pioneer ACOs, which are among the most advanced healthcare organizations, are expected to take downside risk -- meaning they can lose money -- sooner than the ACOs in the MSSP, which have only upside risk -- meaning they share savings but not losses -- for the first three years. So the departure of nearly a third of the Pioneers would raise some questions about the viability of the government's plan to get providers to take financial responsibility for care.
This was entirely predictable two years ago when the program was announced. I noted that:
[T]he PPO character of Medicare would not change: "The provider may not require a beneficiary to obtain services from another provider or supplier in the same ACO."
How can you be held accountable, as a provider group, if you cannot control the management of care of your patients? I'm not blaming CMS for this contradiction. The agency is simply implementing what Congress and the President ordered it to do. There is no way Congress will limit choices among the Medicare population.
So, who can now can blame health systems for avoiding downside, unmanageable risk?
But how do the two stories relate? The issue goes beyond the structural problem built into the Pioneer program. The answer lies in the fact that you don't hire people into the health care system unless they are serving a growing demand for health care service. Little has changed to alter that growing demand. Four years ago, I outlined the causes. The conclusions are worth repeating:
I recently had a chance to view the average annual medical cost inflation rate of a health system's capitated patient group over the last five years. It was ten percent. This was ever so slightly below the health system's fee-for-service patient group, and I am willing to concede that the payment system made a difference. But the point is that is was not a major difference. What might be the other "primary contributors" to the problems we are trying to solve?
Here's my list, produced with the benefit of no data, but just observation of what actually goes on in the four walls of our hospital:
1) Demographics. The huge cohort of baby boomers have now entered the age at which they are seeking hospital care. Meanwhile, their parents are living longer than ever and are coming to the hospital for both acute and chronic care.
2) Entitlement. The first cohort named above expects and demands everything for themselves, and of the insurance products they expect their employer to purchase. For their parents, they often expect extraordinary end-of-life care interventions, paid for by Medicare.
3) New stuff. See #2 above. A knee that previously would have remained sore in the past or be treated by physical therapy becomes a target for arthroscopic surgery.
4) The medical arms race. Physicians and hospitals feel compelled to buy the latest technology, even without proof of enhanced clinical efficacy. [Addendum today: These "innovations" are often aided and abetted by Medicare pricing decisions.]
5) Defensive medicine. Yes, the threat of malpractice law suits leads to over-testing and other extra costs.
6) Regional medical mythology. Thanks to Brent James for this insight. Local practice patterns often are just that, with no evidentiary basis.
7) Preventable harm in clinical settings leading to extended hospitalization and bodily injuries.
8) Lack of access itself. If people don't have health insurance and can't get proper early diagnostic and preventative care, they are a more expensive burden on society when they get sick.
9) The cottage industry problem. The medical profession, both in physician practices and hospitals, has failed to adopt process improvement approaches that are common in other industries, that result in redesign of work flow and systems to derive efficiency, quality, and standardization.
10) A sedentary and malnourished lifestyle for all age groups, leading to obesity and other associated physiological problems that are the precursors to major health issues.
... We can fix some of our inadequacies through legislation, but many components of our problems lie deeper in society.
P.S. While there are pro's and con's of each country's health care systems, similar cost pressures have become evident in much of the rest of the world. Perhaps this suggests that a common organism underlies our problems, homo sapiens and its curious ability to live longer and expect more.
The BLS figures show greater growth in the ambulatory arena compared to the in-patient arena, and that may account for some moderation in the slope of the rising health care cost curve. But it does not modify the direction. Demand is inexorably pushing things to the northeast on the graph paper.
In a related story over at Modern Healthcare, CMS provided detail of the pioneer accountable care organizations that realize the business proposition for the program doesn't work. "Seven Medicare Pioneer accountable care organizations that didn't produce savings in the first year of the Obama administration's most ambitious test of the accountable care model have told the CMS they will leave the Pioneer program and enter the Medicare Shared Savings Program model, while another two participants have indicated they will leave Medicare accountable care entirely."
Information Week explained this exodus:
The revelation that nine of the 32 accountable care organizations in Medicare's Pioneer program might leave it -- four of them to join the regular Medicare shared savings program (MSSP) -- has raised some eyebrows in the healthcare industry. The reason is that the Pioneer ACOs, which are among the most advanced healthcare organizations, are expected to take downside risk -- meaning they can lose money -- sooner than the ACOs in the MSSP, which have only upside risk -- meaning they share savings but not losses -- for the first three years. So the departure of nearly a third of the Pioneers would raise some questions about the viability of the government's plan to get providers to take financial responsibility for care.
This was entirely predictable two years ago when the program was announced. I noted that:
[T]he PPO character of Medicare would not change: "The provider may not require a beneficiary to obtain services from another provider or supplier in the same ACO."
How can you be held accountable, as a provider group, if you cannot control the management of care of your patients? I'm not blaming CMS for this contradiction. The agency is simply implementing what Congress and the President ordered it to do. There is no way Congress will limit choices among the Medicare population.
So, who can now can blame health systems for avoiding downside, unmanageable risk?
But how do the two stories relate? The issue goes beyond the structural problem built into the Pioneer program. The answer lies in the fact that you don't hire people into the health care system unless they are serving a growing demand for health care service. Little has changed to alter that growing demand. Four years ago, I outlined the causes. The conclusions are worth repeating:
I recently had a chance to view the average annual medical cost inflation rate of a health system's capitated patient group over the last five years. It was ten percent. This was ever so slightly below the health system's fee-for-service patient group, and I am willing to concede that the payment system made a difference. But the point is that is was not a major difference. What might be the other "primary contributors" to the problems we are trying to solve?
Here's my list, produced with the benefit of no data, but just observation of what actually goes on in the four walls of our hospital:
1) Demographics. The huge cohort of baby boomers have now entered the age at which they are seeking hospital care. Meanwhile, their parents are living longer than ever and are coming to the hospital for both acute and chronic care.
2) Entitlement. The first cohort named above expects and demands everything for themselves, and of the insurance products they expect their employer to purchase. For their parents, they often expect extraordinary end-of-life care interventions, paid for by Medicare.
3) New stuff. See #2 above. A knee that previously would have remained sore in the past or be treated by physical therapy becomes a target for arthroscopic surgery.
4) The medical arms race. Physicians and hospitals feel compelled to buy the latest technology, even without proof of enhanced clinical efficacy. [Addendum today: These "innovations" are often aided and abetted by Medicare pricing decisions.]
5) Defensive medicine. Yes, the threat of malpractice law suits leads to over-testing and other extra costs.
6) Regional medical mythology. Thanks to Brent James for this insight. Local practice patterns often are just that, with no evidentiary basis.
7) Preventable harm in clinical settings leading to extended hospitalization and bodily injuries.
8) Lack of access itself. If people don't have health insurance and can't get proper early diagnostic and preventative care, they are a more expensive burden on society when they get sick.
9) The cottage industry problem. The medical profession, both in physician practices and hospitals, has failed to adopt process improvement approaches that are common in other industries, that result in redesign of work flow and systems to derive efficiency, quality, and standardization.
10) A sedentary and malnourished lifestyle for all age groups, leading to obesity and other associated physiological problems that are the precursors to major health issues.
... We can fix some of our inadequacies through legislation, but many components of our problems lie deeper in society.
P.S. While there are pro's and con's of each country's health care systems, similar cost pressures have become evident in much of the rest of the world. Perhaps this suggests that a common organism underlies our problems, homo sapiens and its curious ability to live longer and expect more.
The BLS figures show greater growth in the ambulatory arena compared to the in-patient arena, and that may account for some moderation in the slope of the rising health care cost curve. But it does not modify the direction. Demand is inexorably pushing things to the northeast on the graph paper.
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