The Great Healthcare Reform Debate Begins!

(or, What You Might Find Hiding In a Pile of Legislative Rocks)

 

The ghost of Tom Daschle wasted no time insinuating its reform agenda into the national healthcare debate. Last week I wondered aloud what sort of impact his policy recommendations (from his book, Critical) would have after he was forced to withdraw his nomination for Secretary of the Department of Health and Human Services.

It's now clear that the Obama administration grabbed as much of Daschle's playbook as possible before sending him into the shadows. Exhibit A: the American Recovery and Reinvestment Act of 2009. This is House Resolution 1, better known as the economic stimulus package. The 680 page tome contains the fabled $800+ billion of stimulating funds for every project a congress-person could dream up. As tends to happen with legislation set on the fast-track, enterprising politicians shove in pet-project after pet-project.

It's a sleight of hand trick. While we're frantic to approve funds that get the economy moving again, we don't pay attention to footnotes that create organizations such as the "Federal Coordinating Council for Comparative Effectiveness Research". Should policy making of this magnitude go in as a piece of legislative afterthought? Or should it be aired in the open? I'm somewhat split on this specific example because I believe we need significant change and the political process to achieve it is sure leave much scorched earth behind it. At the same time, no one ever said the democratic-republic form of government is pretty.

Back to the supply chain: I referred to this in a post last week. It's the federal version of our value analysis teams. This Council for Comparative Effectiveness Research would do as its title suggests: compare new products/procedures against what they're meant to replace and decide – based on clinical and cost data – whether the new one is a better clinical and economic fit.

I'm no political guy, but I've become engrossed in the process since reading Daschle's book. I know from my time in the healthcare industry that we must find a balance between introducing new technology and accepting the price hikes that inevitably follow. But I'm undecided on how much of this should be the purview of the feds.

Does the iPill Threaten Our Supply Chain?

(or, Not Exactly Your Mother's Aspirin)

 

I'm no slave to consistency, but I couldn't hold back a sympathetic sigh when I saw these stories juxtaposed on a single page of the New York Times. Let's call it a harbinger of what's ahead as we prepare to cross the Rubicon of national healthcare reform.

First is this story of our broken healthcare system, described as "on life support". According to the reporter, "it costs too much and saps economic vitality, achieves far too little return on investment and isn't distributed equitably." The article then highlights that litany of challenges with which we've all become familiar: limited insurance coverage, runaway inflation, malpractice insurance rates, and so on and so on.

I become amused reading the next story, directly below it: "'Fantastic Voyage,' Revisited: The Pill That Navigates". The writer chronicles the amazing iPill being engineered by Philips Research in the Netherlands. Medicine goes into one side of the capsule, and in the other is a miniaturized cluster of microprocessors, sensors, batteries, pumps, and motors. This is the real sci-fi stuff we all get excited to read about. Rather than waiting for an old fashioned tablet to dissolve as it works its way through your digestive tract, the iPill can be targeted to the specific part of your body that ensures maximum absorption in precise dosages. "It could be the next step in therapy," says a researcher on the project.

I have no bones to pick here, neither with the iPill nor the journalism behind the stories. But these articles, wedged up against each other, encapsulate (excuse the pun) one of the hairiest challenges in healthcare.

Intellectually, we know the system has to be reformed and that it will involve tough decisions by all of us. As hospital supply chain professionals, we recognize that the costs of expensive new technologies threaten our very solvency. When a manufacturer launches exciting devices like the iPill (not the best example here, so think pacemakers or spinal implants if that helps) and their sales force gets the clinicians all excited, we know we're going to have a situation on our hands. The old technology might have cost us $100, allowing us a modest profit at current reimbursement rates. If the cost of the new technology jumps to $1,000, it's rare we get to bump up the payer's bill. No, our hospitals are now eating the difference between cost and reimbursement.

Again, we know this intellectually. I would venture to say most clinicians know this on a rational level and perhaps even quite a few patients. But we are suckers for stories about the latest, greatest medical technologies. Manufacturers know this weakness. They see how emotions override our rational decisions when any new technology holds even the slightest possibility of a better clinical outcome.

Hypothetically speaking, the iPill may only produce better outcomes in one percent of all cases. But what if that one percent gives your patient or your child a chance at getting better? Well, we've all seen the rational lose out to emotional decision making.

We manage elements of this every day in our hospital value analysis processes. We've tried to create systems where the emotional gets subordinated to the cold, hard facts. But how does the rational (e.g. we know we need to contain costs in order to preserve a viable healthcare system) play out against the emotional (e.g. but that new, expensive medical device might help me, my child, my patient!) when the reform debates hit the political stage?

I think a storm is brewing.

Value Analysis Under the Federal Health Board

(or, The Devil You Know versus the Devil You Don't Know)

 

I don't know if the Obama administration comes out swinging on healthcare reform or if they save that fight for another day. They seem to have their hands full with the economic recovery package, but much of the scuttlebutt in Washington says the new president wants to take advantage of this honeymoon reserve of political capital. We'll see soon enough when he submits his first budget proposal to Congress.

In my last post, I wrote about Tom Daschle's blueprint for changing American healthcare. Driving costs out of the system is a critical component of reform, but it's hard to get there without making major structural changes to health insurance, technology infrastructure, and the political bodies that decide what procedures (and expensive preference items) get reimbursed. Then and only then does Daschle think we're ready to attack the inflated costs of providing healthcare.

The simplest changes frighten people. The best laid plans can bring with them so many unintended consequences that we're conditioned to stick with the devil we know over the one we don't. The Federal Health Board will be charged with taming the runaway inflation of healthcare costs. Daschle suggests this entity be politically insulated (like the Federal Reserve System) and so able to make the difficult choices about which new procedures demonstrate enough value to justify their expense.

Many hospitals have created value analysis processes to accomplish similar objectives. That's the devil we know. We bring together clinicians with department heads with contract specialists with finance staff and we tell them to choose the best products at the right prices. We think it works, and we pat ourselves on the back for the successes we see, but preference items costs keep inflating at more than 10% each year. It's not just threatening our bottom lines; it's threatening our solvency.

I'm interested to hear what you might expect from a Federal Health Board that takes on elements of this responsibility. Do we benefit from a centralized authority – with far more control over payers than CMS has today – deciding what procedures get reimbursed and which don't? Or which new devices show enough clinical promise to be covered? Does it do too much to reduce choice? Does it do enough to reduce costs? Share your thoughts on this devil we don't know.