The recently released Towers Watson 2010 Health Care Cost Survey: Workforce Health 2010: New Deal, New Dividend finds that health care costs continue to climb faster than the CPI and that “the gross health expenditure will rise by an average of $636 per employee in 2010, pushing the average total cost above $10,000 for the first time in history.”   Towers Watson notes that employees will pay an average of $400 more 2010 over 2009.

These figures are national averages. There is wide variation in performance among individual companies, however. The companies that best manage employee health costs and benefits are paying 18% less for their programs than the companies considered “lowest” performers. As Towers Watson points out, that means that a high performing company with 10,000 employees will pay $20,000,000 less annually than a low performing company.

Obviously, being a high performing company should be the goal. The following are what Towers Watson describes as the “top 10 factors that distinguish…the high performers in [the] survey.”

1. Understanding, supporting ad demonstrating the business value of workforce health

2. Ensuring that key success factors, such as leadership support and disciplined execution, are firmly in place

3. Establishing business-focused goals to ensure that health investments deliver a health dividend–and rigorously measuring the program’s success in producing targeted results

4. Building action plans to address gaps and opportunities

5. Engaging employees and promoting a culture of health

6. Creating a sense of shared responsibility and employee accountability for health and cost management

7. Designing programs that support transparency and create meaningful incentives for health behaviors and choices

8. Investing in a broad range of current and emerging health management approaches and technologies

9. Supporting employee needs for risk management and planning appropriately for health expenses in retirement

10. Building connectivity across health-related programs and vendors

To see a summary of the Report–including the list above–look here. To see the whole document, look here.


Hidden Costs

The collection of stories assembled by the Kaiser Health News on April 7, 2010 on the rising cost and complexity of back surgeries provides a case study for the question of whether or not “more” and “more expensive” care equals “better” care. The question is obviously not new (since even we have blogged about it already here).  What’s interesting about the research on back surgery outcomes (summarized below) is how the quality/cost equation finds real physical and financial expression.

Ruptured disc, spinal stenosis or degenerating spinal joints? See three common and chronic spine problems. (Graphic: NPR)

NPR: “Too many complex back surgeries are being done and people are suffering as a result, according to a study in the current issue of the Journal of the American Medical Association. The general tendency noted in the study — that many patients and doctors think more medical care is always better — has implications for the new health overhaul law. Back pain associated with aging can be treated in one of numerous ways: rest and physical therapy, surgery to remove the bony growths that can push on nerves, fusing two vertebrae together, or fusing many vertebrae together.” But several studies have not shown an advantage for surgery so this study examined Medicare billing records to see whether the number of back surgeries had been reduced as a result.

“They found the number of surgeries has gone down very slightly. But when they looked specifically at complex surgeries, they found a big difference. ‘The most complex type of back surgery has increased dramatically between 2002 and 2007, with a 15-fold increase,’ says co-author Richard Deyo. … Deyo and his colleagues also checked the rate of complications. ‘This more complex form of surgery is associated with a higher risk of life threatening complications,’ he says” (Silberner, 4/6).

The Associated Press: “A study of Medicare patients shows that costlier, more complex spinal fusion surgeries are on the rise — and sometimes done unnecessarily — for a common lower back condition caused by aging and arthritis. … ‘This is exactly what the health care debate has been dancing around,’ said Dr. Eugene Carragee of Stanford University Medical Center. ‘You have one kind of operation that could cost $20,000 and another that could cost $80,000 and there’s not good evidence the expensive one is being used appropriately in the majority of cases,’ Carragee said. Add to that the expense for patients whose problems after surgery send them back to the hospital or to a nursing home and ‘that’s not a trivial amount of money’ for Medicare, said Carragee. … The cost to Medicare, just for the hospital charges for the three types of back surgery reviewed is about $1.65 billion a year, according to the researchers” (Johnson, 4/6).

HealthDay News/Modern Medicine: “After adjustment for age, comorbidity and previous spinal surgery, the odds ratio of life-threatening complications was 2.95 for complex fusion compared with decompression. Also, for complex fusion versus decompression only, 30-day mortality was 0.6 versus 0.3 percent, the mean hospital charge was $80,888 versus $23,724, and the 30-day rehospitalization rate was 13 versus 7.8 percent” (4/6).

MedPage Today: “Complex fusion accounted for less than 1% of operations for spinal stenosis in 2002, but 14.6% of those performed in 2007.” Researchers were unclear about the reason for a spike in complex surgeries: “Several forces might be contributing, [Deyo] said, including effective marketing by device manufacturers touting the efficacy of complex operations using new surgical implants” (Neale, 4/6).

David Leonhardt in the New York Times also takes on over-treatment this week. He argues that the low-hanging fruit for managing healthcare costs is to say “no” to unnecessary care:

Advocates for less intensive medicine have been too timid about all this. They often come across as bean counters, while the try-anything crowd occupies the moral high ground. The reality, though, is that unnecessary care causes a lot of pain and even death.

The (partial) cure may be found in patient education, he suggests:

When patients are given information about potential benefits and risks, they seem to choose less invasive care, on average, than doctors do, according to early studies. Some people, of course, decide that aggressive care is right for them …. They are willing to accept the risks and side effects that come with treatment. Many people, however, go the other way once they understand the trade-offs.

The causes and effects of “too much care” are  clearly amplified by practice pattern variation. (But that’s a topic for another posting.)

There are plenty of places to read about the Health Care Reform Bill (HCRB). In fact, it is nearly impossible not to find coverage of its passage, its fans, its detractors, its promises, and its pitfalls. In addition, there is more than enough commentary documenting the debris left behind by its warring factions, as well as illuminating the barriers to its effective implementation.

President Barack Obama reaches for a pen as he signs the health insurance reform bill in the East Room of the White House, March 23, 2010. (Official White House Photo by Lawrence Jackson)

One interesting way to view the healthcare landscape after passage of the HCRB, however, is through the health care reporter’s lens. Where do health care reporters see the action emerging?   Pia Christensen from the blog Covering Health selected four journalists and asked where they will be looking for news. What’s compelling is that the “breaking news” on the horizon teases out how changes in the provision of health care to individuals will impact employers, hospitals, states, provider groups, etc.–the partners and clients of insurers.

These are excerpts of what they said:

Jim Landers from The Dallas Morning News

The thing most people will want to know about this bill, and its local dimension, is the impact on insurance coverage – who now gets in, who stays out – and what the local “charity” hospitals think will happen to their patient loads in the ER.
…The bill has lots of stuff about gradual improvements in these. The most evident are the promises by hospitals and pharma to forego $155 billion and $80 billion. There are also the health IT efforts that everybody is pursuing.
The story on a quick turnaround, however, would be to question the high-cost hospitals (see American Hospital Directory for the retail prices) about why that is, and what they’re doing about it in light of the legislation. Hospitals are big targets, and someone should always be available to talk.

Trudy Lieberman from the CUNY Graduate School of Journalism

The affordability issues tucked into the health reform law cry out for exploration. Through this whole debate, people have been told that they would get subsidies to help them buy coverage, but all the nuances of those subsidies available through the state exchanges, or shopping services, and the amounts people will actually pay out of pocket have barely been discussed. Some readers, viewers and listeners will be in for a big surprise. They may have to decide between buying subsidized insurance with a hefty out-of-pocket outlay for premiums along with high deductibles – perhaps as high as $4,000 – or taking a tax penalty that will be a smaller hit on the family purse.
Subsidies are based on family income; those at the low end of the income spectrum will get more help than those with an income of $88,000, the upper limit for government help. Families with middling incomes will find themselves paying nearly 10 percent of their income on a policy with the government paying the rest. So a family making $66,000 would spend $6,257 for a policy that may cover only 70 percent of their medical expenses, on top of the deductible.
These insurance-buying dilemmas will make interesting and readable stories. Plus they will also get at the question of how well the law is working and whether people are really getting coverage. That, after all, was the central goal of the law. How are families going to make choices? Where will insurance actually fit in?

…Reporters may want to keep an eye on how insurance companies will try to get around the ban on pre-existing conditions. If they must cover sick people with all their expensive ailments, they will somehow have to bring money in the door to pay all those claims and make a profit on the side. What proxies for medical underwriting will they use? The new law sanctions age rating; in other words, looking at age in determining how much someone pays. While checking out Massachusetts, find out how older people, especially older women, are faring. In that state, insurers can charge an older person twice as much as a younger one for the same coverage in the same geographic area. Sometimes they must pay several hundred dollars more, making insurance unaffordable. Under the new law, insurers can charge three times more. While gender rating; that is, charging women more than men, will not be permitted, women who work for large companies with a predominantly female workforce can be charged higher rates until 2017.
Another story on the affordability beat will be employer wellness programs. HIPAA regulations allow employers to create wellness programs based on health factors. Workers who hit targets like having blood pressure readings below a certain number might get a discount on their premiums. But the value of the rewards can be no greater than 20 percent of the combined premium paid by the employer and employee. Workers who don’t meet the targets could pay higher premiums. The new law allows employers to offer a higher reward to “good” workers, up to 30 percent of the combined premiums. The secretary of the Department of Health and Human Services can increase it to 50 percent. Employers argued for flexibility.

[See an editorial in the New York Times by Dr. Sandeep Jauhar on just the troubles inherent in assigning “blame” to patients who don’t comply with best health practices.]
Noam Levey Los Angeles Times/Tribune Washington Bureau

Here are some stories you want to consider on a local level:
Insurance premiums aren’t likely to come down any time soon. Tracking what local insurers are doing, especially before a new regulatory regime is put in place would be worthwhile. Look for the kind of gaming that drug companies are accused of doing this year to boost prices. Tracking premiums in the individual market is very difficult, but it is worth checking with your state insurance commissioner, as many at least require insurance companies to report premium increases.

By Laura Meckler The Wall Street Journal

Small business: Many small businesses have opposed the bill, but they are eligible for tax credits if they offer insurance this year. Look at a small business that is eligible and see if they plan to offer coverage.
Medicare cuts: The health bill cuts Medicare reimbursement rates for many health care providers. One worth looking at is Medicare Advantage, the private managed care program that is offered in some parts of the country. Experts say these plans are, on average, overpaid by about 14 percent, and their rates will be cut by the new law starting next year. Insurers predict this will prompt companies to pull out of certain communities where it is more expensive to provide care. Is yours one of them?
20-somethings: Find some 20-somethings who will be newly subject to the individual mandate (starting in 2014) and see what they think. Are they resentful that they will have to buy insurance, or excited that they may get help paying premiums?

Data 2010

We have been thinking about data visualization, data storage, and data analysis lately.  Here are a few interesting ideas we are tracking, followed by a short guide for working with data:

The Economist recently ran an article on “data”:  the vast amounts of data, the surfeit of data, the potential of data, the headaches of data.  The Economist compared the shifts brought about by the speed and quantity of data generation and data exhaust (for individuals and societies)–in terms of scale and importance–to the changes brought about by the industrial revolution.

“Wal-Mart, a retail giant, handles more than 1m customer transactions every hour, feeding databases estimated at more than 2.5 petabytes—the equivalent of 167 times the books in America’s Library of Congress (see article for an explanation of how data are quantified). Facebook, a social-networking website, is home to 40 billion photos. And decoding the human genome involves analysing 3 billion base pairs—which took ten years the first time it was done, in 2003, but can now be achieved in one week.

…What we are seeing is the ability to have economies form around the data—and that to me is the big change at a societal and even macroeconomic level,” says Craig Mundie, head of research and strategy at Microsoft. Data are becoming the new raw material of business: an economic input almost on a par with capital and labour. “Every day I wake up and ask, ‘how can I flow data better, manage data better, analyse data better?” says Rollin Ford, the CIO of Wal-Mart.”

Wired’s Chris Anderson argues that the massive quantities of data available make “scientific theory obsolete.”  In The End of Theory, Anderson proposes that

At the petabyte scale, information is not a matter of simple three- and four-dimensional taxonomy and order but of dimensionally agnostic statistics. It calls for an entirely different approach, one that requires us to lose the tether of data as something that can be visualized in its totality. It forces us to view data mathematically first and establish a context for it later. For instance, Google conquered the advertising world with nothing more than applied mathematics. It didn’t pretend to know anything about the culture and conventions of advertising — it just assumed that better data, with better analytical tools, would win the day. And Google was right.

Allison Walker’s post in FastCompany called Mama, Don’t Let Your Babies Grow Up to Be Infographics introduced us to a gorgeous video by Motion Theory. While she (gently) mocks IBM’s commercial/spot, the data floating from that baby is very relevant to the work done in data collection and analysis at Health Plans. (It also reminds us of Harvard professor John Palfrey’s work, esp. see Born Digital.)

Even if we don’t have the math chops to analyze megabites of data, we can adhere to some principles in analysis.  The following is summarized from a posting by Nathan Yau on his terrific blog Flowing Data.  This is what you have to do, he says:

  • Pay Attention to the Details:  “The point is that trends and patterns are important, but so are outliers, missing data points, and inconsistencies.”
  • See the Big Picture: This means, don’t get so caught up in the details that you miss the point.
  • No Agendas: “This should go without saying, but approach data as objectively as possible. I’m not saying you shouldn’t have a hunch about what you’re looking for, but don’t let your preconceived ideas influence the results. Because if you go to length looking for some specific pattern, you’re probably going to find it. It’ll just be at the sacrifice of accurate results.”
  • Look Outside the Data: “Context, context, context. Sometimes this will come in the form of metadata. Other times it’ll come from more data.The more you know about how the data was collected, where it came from, when it happened, and what was going on at the time, the more informative your results and the more confident you can be about your findings.”
  • Ask Why:Finally, and this is the most important thing I’ve learned, always ask why. When you see a blip in a graph, you should wonder why it’s there. If you find some correlation, you should think about whether or not it makes any sense. If it does make sense, then cool, but if not, dig deeper.”

Conversations about Healthcare Reform have fomented conversations about patient outcomes.  Here are some interesting readings on this topic:


Jack Wennberg is a pioneer in using data to study clinical outcomes and geographic variations in treatment patterns.  He finds that where you live determines the amount of care you will receive, and that more care does not correlate to better outcomes.  Alix Spiegel on NPR takes a look at Wennberg’s work, and what it might say to us today:

In 2003, there was an enormous landmark study published by a Jack Wennberg protege named Elliott Fisher, who works at Dartmouth College. Fisher compared Medicare recipients with similar levels of sickness in areas throughout the whole United States. Fisher looked at places where elderly people used relatively few health care services and compared them with places where elderly people used a lot of health care services.

“The patients in the high-spending regions were getting about 60 percent more care; 60 percent more days in the hospital; twice as many specialist visits,” Fisher says. “And yet when we followed patients for up to five years, if you lived in one of these higher-intensity communities, your survival [rate] was certainly no better, and in many cases a little bit worse.”

Her conclusion?

… Fisher and other researchers estimate that almost one-third of the care given in our country today is that kind of care — care that isn’t really helping people.

The United States spends more than $2 trillion on health care every year. So the cost of that 30 percent unnecessary care annually? $660 billion.

imagesAtul Gawande also drew on the the work of Fisher and Wennberg in his must-read article appearing in the New Yorker in June.  Gawande, a prolific writer as well as a Boston area surgeon and Harvard professor, visited McAllen, TX–the second most expensive health care market in the country.

Congress has provided vital funding for research that compares the effectiveness of different treatments, and this should help reduce uncertainty about which treatments are best. But we also need to fund research that compares the effectiveness of different systems of care—to reduce our uncertainty about which systems work best for communities. These are empirical, not ideological, questions. And we would do well to form a national institute for health-care delivery, bringing together clinicians, hospitals, insurers, employers, and citizens to assess, regularly, the quality and the cost of our care, review the strategies that produce good results, and make clear recommendations for local systems.


Robert Pear and David Herszenhorn at the New York Times tell us that the Congressional Budget Office (CBO) has returned the Senate Finance Committee’s legislation for Healthcare Reform:

The much-anticipated cost analysis showed the bill meeting President Obama’s main requirements, including his demand that health legislation not add “one dime to the deficit.” Indeed, the budget office said, the bill would reduce deficits by a total of $81 billion in the decade starting next year.

The numbers from the CBO are not reassuring to those who have dug the trench and are willing to defend their constituencies against imposed healthcare reform.  Dennis Smith at the Heritage Foundation argues that

The Congressional Budget Office preliminary estimate of the Senate Finance Committee’s work is a devastating revelation. The bill is a platform for an enormous jump in federal spending, and yet it still leaves 25 million Americans without health insurance. The gross cost of new federal outlays increased from $738 billion to $829 billion. Meanwhile, the Baucus bill will accelerate, contrary to the president’s rhetoric, the government’s “takeover” of the health care sector of the economy.  Nearly half of the individuals who gain insurance will be through Medicaid, a poorly performing program that is insulated from any serious systemic improvement. Expanding Medicaid, a welfare program, is not health care reform.

There are other ways to frame the findings. The government plan surveyed by the CBO will “go unnoticed” by most Americans, writes Ezra Klein at the Washington Post:

The verdict? It will look a lot like our old health-care system.

Unless you’re uninsured, or on the individual market, this bill is not expected to affect you. CBO estimates that 29 million Americans who would’ve otherwise been uninsured will be covered. That’s a very big deal. Five million Americans who would otherwise have been left to the individual market will find a better option. And 3 million Americans who would’ve otherwise been in employer-based health insurance will be on the exchanges or, in some cases, on Medicaid. The insurance exchanges are projected to serve 23 million people come 2019, and 18 million of the members will be low-income and on subsidies.

That leaves 245 million non-elderly Americans who will pretty much be in the exact place they would’ve been otherwise.

Finally, as expected, the government planned legislation doesn’t go far enough for others.  To force action on the healthcare issue,  Nicholas Kristoff suggests that the members of Congress’ insurance patterns mirror the national demographic

I propose that if health reform fails this year, 15 percent of members of Congress, along with their families, randomly lose all health insurance and another 8 percent receive inadequate coverage.

Empowering Patients

Yesterday this article in the Atlantic by Clayton Christensen and Jason Hwang came across our desks. You probably recognize these fellows as the authors of The Innovator’s Prescription.  book_tip_sm(In case you haven’t been following Christensen’s rise to cult figure status, he is also responsible for the ubiquitous use of the word “disruptive” by anyone hoping to convince you they have a decent idea.)  Christensen and Hwang propose that we encourage patients to become more educated partners in health management. They point to the the strong communities for diabetics as a nascent, but successful, model and find that there are correlations between educated patients/better care/lower costs:

“Already, advances in scientific knowledge and medical technology are enabling some patients to monitor their health and control their own diseases. Insulin-dependent diabetics, for example, quickly learn how to manage their blood glucose levels at home by matching their insulin dosage to changes in their diet and physical activity. Many diabetics have also joined online communities to share information and advice, sometimes viewing each other as more trusted advisors than their own doctors. Diabetics who take their health in hand in this way find that the cost of care decreases dramatically, while the quality increases: it’s far more effective than relying on experts whom they may see only every few months.”

There are other voices ahead of Christensen and Hwang on the “patient empowerment” front (although not many as visible or as articulate). For instance, Diabetes Mine, started by Amy Tenderich, has been an online resource for people dealing with diabetes for four years and may be a front-runner in the field.   E-Patient Dave is a terrifically interesting blog written by a man who took on his cancer (and the medical establishment) and “stomped it.”  He then took his experience, expanded it, shared it, and has now commercialized it with a new business.

At the Medicine 2.0 Conference: http://epatientdave.com/

At the Medicine 2.0 Conference: http://epatientdave.com/

You can find Dave’s voice among others working in the “Participatory Medicine” arena at e-Patients.net. We liked a guest posting at this site by Amy Romano:

What if we could help a large population of highly motivated, influential health care consumers become empowered, engaged, equipped, and enabled? And what if they could develop these skills while they were healthy –before they face life threatening illnesses or need to manage chronic conditions? What if transforming the way these consumers participated in their care could reduce the burden of one of the most costly conditions in our health care system and improve the health of millions of people each year?

It’s all possible – if we make maternity care more participatory.

To be more informed about the participatory medicine movement, E-Patient Dave recommends a short video advertising an E-Patient Conference happening this fall in Philadelphia.  (You can also find Jason Hwang at this conference.)