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Sunday, April 19, 2015

Who coordinates the coordinators?

This is the first line of an article written by Paula Span and published this week in the New York Times (the-tangle-of-coordinated-health-care). It is good news that there is a recognition that coordination of care is an important and up to now under recognized element(s) of the delivery of care.  However, it should come as no surprise that the simple recognition and allocation of modest sums of funds should not solve the coordination problem.

Second to and perhaps equal to the development of technology, the ability of humans to work together to address problems and delivery of human wants and needs is one of the greatest achievement of humankind. I am reminded of the first chapter of the book, Microeconomics by Samuel Bowles where he describes traveling into a rural area of southern India to the village of Palanpur. He wrote:

Like the overnight train that left me in an empty field some distance from the settlement, the process of economic development has for the most part bypassed the two hundred or so families that make up the village of Palanpur. They have remained poor, even by Indian standards: less than a third of the adults are literate, and most have endured the loss of a child to malnutrition or to illnesses that are long forgotten in other parts of the world. But for the occasional wristwatch, bicycle, or irrigation pump, Palanpur appears to be a timeless backwater, untouched by India’s cutting edge software industry and booming agricultural regions. Seeking to understand why, I approached a sharecropper and his three daughters weeding a small plot. The conversation eventually turned to the fact that Palanpur farmers sow their winter crops several weeks after the date at which yields would be maximized. The farmers do not doubt that earlier planting would give them larger harvests, but no one the farmer explained, is willing to be the first to plant, as the seeds on any lone plot would be quickly eaten by birds. I asked if a large group of farmers, perhaps relatives, had ever agreed to sow earlier, all planting on the same day to minimize losses. “If we knew how to do that,” he said, looking up from his hoe at me, “we would not be poor.”
--Samuel Bowles, Microeconomics: Behavior, Institutions, and Evolution, pp. 24-25

The time, money and effort allocated to health care delivery has basically exploded within our economy over the past 70 years. The amount of money which has been invested in systems to coordinate care has been vastly outstripped by the investment to simply do more things, whether that be delivery of drugs, surgery, or other discrete interventions. The primary purpose of the payment mechanisms deployed to deliver these services has been to insulate the consumers from the cost of those services, not to assure that interventions are effective or wise.

Furthermore, this system underwent extraordinary expansion at the very time where a concurrent expansion in wealth and productivity was also experienced. Thus, this allocation and investment in health care services was not held to the same standards used to assess the wisdom of investment. By insulating the public of the cost, at least in the short term, they were not sensitive to whether this investment was a good investment in their needs and wants. They received a product(s) which appeared to be worth their investment, the size and scope of which they were blissfully unaware.

The lack of investment in coordination of services virtually guarantees that there are huge elements of waste. Because we experienced such dramatic economic growth, the magnitude of that waste could be masked, at least for a while. We are now reaching the point to where that waste cannot be hidden and business as usual cannot go on. However, how does one create effective coordination within a business which has undergone extraordinary growth in both size and scope when so little investment was made in coordination infrastructure?

The issue is not so unique, as noted by Dr. Bowles above. It is foundational to the effective development of any system which delivers basically any product or service to large numbers of people and is integral to any system with depends upon the specialization of labor. This is not a problem, the details of which will yield to proscriptive human efforts and planning, working off some master human plan. The track record of this approach has a perfect batting average, that being perfectly awful and uniform failure.

The title of the subheading immediately prior to the paragraph above in Dr. Bowles book is labeled simply "Getting the rules right". What are those rules which create the correct incentives which allow for complex systems which effectively coordinate human activities? Note that the rules to achieve this are not likely unique to health care environments and we just as likely to gain insights from circumstances divorced from health care delivery than from within.

Given  this historical context, the thought that Medicare or some other insurer could fix this problem by creation of a handful of billing codes to pay for "care coordination" is essentially laughable. The fact that a host of disconnected delivery entities has created new coordination issues in their attempts to fix care coordination problems should come not as a surprise.

Saturday, April 11, 2015

Gaming payments and price transparency

The WSJ published an article in February touching upon the timing of hospital discharges and optimal payments (Health Care Gaming). It should come as no surprise that hospitals know how to extract optimal payments for services they deliver. Their survival as durable entities depends upon this. It is not limited to hospitals in the health care realms. What they do is not against the law although the optics may be disturbing. Essentially every individual whose health care job depends upon supporting themselves financially through the labor they do is in the same boat and they do the same thing to some degree. One cannot help but become aware of what one does that produces margins for oneself or one's employer and what does not. If you are not bringing in more resources than one is consuming, you are not long to the business you are in. Health care is a business, whether one labels your specific entity as for-profit or non-profit. Not for profit entities still maintain their margins and are assessed for financial viability by the same metrics as for profit entities.

The price transparency movement in health care is gaining traction and this movement as currently focused tends to highlight where specific people or care delivery entities appear to extracting more value out of the system than they appear to be adding to patients. The data as currently released tends to highlight specific high billing physicians. This sort of information highlights people and entities which are probably not breaking the law, just exploiting quirks of the current billing and payment system. Many might be embarrassed by the data but only a few will be at risk for indictment. They deliver the services billed for. Whether the services are needed or add real value to patients is another question. Those questions can be raised for a large percentage of health care services delivered in general. Then there is a whole other layer of outright fraud which is layered on top of this where services not delivered are billed.

Health systems market services which generate margins. They have no choice if they are to survive. All business are based upon this.  Even the most minimally astute businessman in health care knows what services are lucrative to deliver.  They can not and do not market goods and services which lose them money, even if these services are in great demand and add value to consumers unless they have a philanthropic benefactor which allows them to operate at a loss. Even that cannot go on forever.

What health care services generate substantial margins? That depends upon what can be collected for the service and the cost of delivery. Cost reduction is all of the rage at this point since those who deliver health care services cannot control prices. That is because for most prices for individual services in health care are administratively derived and not subject to market forces.  The CPT coding lottery is completely arbitrary and has basically no self correcting capabilities. The price transparency movement is now identifying activities where prices are set too high, resulting in inappropriately extracting value from consumers and payers. However, there is of yet no mechanism for this movement to identify where prices have been set to low and the services are is short supply, have disappeared, or have been so resource starved that the quality of the services has degraded.

The loss of market pricing systems in health care has removed a key mechanism for when prices are too low and shortages ensue. Markets in health care can drive down prices but there is no mechanisms for them to correct upward if that is what is desirable. This results in interruptions of access to services which patients may need or want. Services artificially priced below levels to provide sufficient incentives to generate a consistent supply will be in short supply or simply cease to exist. When scarcity develops in true market based systems, the price signal informs relevant parties that a scarcity exists and prices adjust accordingly to prompt new suppliers to enter into the market. In the realm of administratively set prices in health care, no such mechanisms exist. No self regulating mechanisms can operate since prices are essentially fixed. Access to key services are lost because no one wants deliver them at the arbitrarily low prices which some person or agency has decided is the right value.

There is a certain irony here since the current mantra within health systems is to develop pathways for access as a key principle to capture market share. The problem here is there is little effort to define what the access is to. From those who see this from a macro level and have little understanding of the nuances of clinical care delivery, they are confused as to what the actual deliverables are in health care. The deliverables are not the appointment any more than the essential deliverables is having health insurance. Both insurance and appointments are means to an end, and that end is for the health care delivery system to act at the behest of patients to fix their problems and add value to their lives. The ability to get patients scheduled for an appointment is simply a potential first step in accomplishing those goals. In reality, ready access to the current model may not be the optimal way to address their needs.

As it currently stands, basically the only way for producers to monetize their expertise is to plug patients into inefficient legacy delivery systems which are more geared to extract value from patients than add value. Plug them into a hurried appointment. Work off some checklist of actions defined by PQRS. Collect their copay and bill a third party for the remainder. Maybe listen for a few scant seconds to their complaints. However, whether you meet their needs or not likely has little bearing on getting paid. They got access to something in a timely fashion, not necessarily what they needed or wanted.

Doctors who tinker with different models of payment under the label of concierge practices are often accused of unethical behavior. The reality is they provide services which do not exist in the current system because the price are arbitrarily set below a minimum level of support. There is nothing unethical about offering additional options to patients in a financially transparent way, especially when it creates availability of something of value which would not exist otherwise,  that being access to something they really want and/or need.

The real ethical problem comes from a flawed pricing system which creates opportunities to exploit financial arbitrage while adding little value to patients. Imperfect prices set by administrative means will always create these opportunities and humans, being humans, we always exploit them. This is not an approach that can be refined and fixed. Administratively set prices are perhaps useful accounting tools, but they do not and can not transmit essential information about real human needs and priorities. There is no real learning curve here. Any system which depends upon setting prices for goods and services by administrative means can not succeed and will ultimately hugely misallocate resources because flawed human agents will find ways to game the system better and faster than any set of humans can figure out how to stop them.

The simplicity of binaries

Complex human societies have developed over the past 10,000 years. The developments have been gradual but accelerating, especially over the past 500 years. The ability of humans to work together in complex organizations depends upon the existence of complex rules, some legal, but mostly non-legal. These rules evolved and continue to evolve. They are far from perfect. Any framework of rules must get buy in from those who follow them. Rules create boundaries for behavior and those who follow them by definition agree to give up some degrees of freedom of action. The assumption is that whatever is given up must be less than the perceived gains. Otherwise, the rules will not be followed.

The other aspect of rules is their complexity or simplicity. Complex rules require more effort to enforce and apply. Rules tend to become more complex over time as recognition of failure rates of simpler rules becomes evident.The assumption behind this trend is that additional complexity will result in correcting less than optimal outcomes and the tradeoffs involved will not out as a positive. That is not always the case.

The ideal rule depends upon clear distinctions between when actions are required and when they are not. The rule is either activated or it is not. This principle is not limited to scenarios where questions of legal or not legal come into play. Rules are used to govern all sorts of decisions. Where things get complicated is when what has long been appreciated to be governed by rules with unambiguous thresholds are found to be not so clear.

Perhaps my perceptions are not correct, but it appears to me  that we are moving to a more complex set of rules over time. I understand that my perceptions are biased and that my reconstructions of the past are likely biased toward a simplicity which never really was there. However, there are some many examples where the choices of the past appear to be some much simpler than they currently are.

When I was a child, we had trash. If something was viewed as something to be disposed, we threw it in a trash can. The big challenge we faced was to change behaviors such that people did not drop trash where they stood or tosh it out of their moving vehicles. We did not have a proliferation choices of where to put materials we wanted to dispose of. We just threw stuff in trash cans and we proud of the fact we did not litter.

Now I am thoroughly confused when I am faced with the proliferation of receptacles. I suffer from disposables anxiety. Am I throwing this in the wrong bin? Do they just get combined and end up in a land fill anyway? Is this some sort of huge scam?

The proliferation of choices is not limited to trash. Perhaps one of the most fundamental changes which has transpired (and continues to transpire) is the proliferation of choices associated with sex, marriage, civil unions, and partnering. It used to be that you had men and women, and some of those men and women chose to pair up with each other to form families and have children. Some men and women did not pair up and those did not have families. There were some odd circumstances where some men took on multiple wives but this was frowned on and was done only on the fringes of society or in countries where the assumption was they would outgrow this sort of behavior.

This simple binary state is gone. There are men who marry men and women who marry women. There are men who end not not wanting to be men and similarly women who decide they do not want to be women, and health care interventions which intervene to create some other state approximating the other sex. These individuals can go on to pair up with other individuals whose sexual orientation or state which can fall somewhere into some continuum, no longer representing the male or female binary  (Nature- Sex spectrum).

There are many other examples of where we moved form simple states with few choices to states with multiple choices. Europe had one church for a millenium until the Reformation. The Cold War was about us and them (Soviets). We saw the world in stark terms of good and evil. Now we have a world fragmented into various parties with interlocking and conflicting interests, lead by people who qualify as neither as saints or complete sinners. We confuse legal constraints with the only boundaries defining good and evil.  

We can long for some earlier state of the world  which was simpler but the reality is it was never so simple. The variations were not appreciated until relatively recently. Perhaps we did not have the  time or resources to make much of these distinctions. People in general were too busy simply trying to stay alive. Our predecessors defaulted to simpler constructs, not because they were evil but because they did not have the resources or reserves to accommodate a more nuanced view of the world.

It ultimately goes back to the curse(s) of sedentism. With the passage of time, we have tended to be better at harnessing resources which has created more opportunities to create social and legal complexities which previously could not exist. These complexities allow for the needs and wants of people to differentiate but this differentiation requires more resources and energy and drive us to work harder. They make our lives better but in many senses create a world that is more fragile and structures that are harder to maintain. No single change appears daunting by itself but layered on one another the complexities grow geometrically. Can we understand where additional complexities in social and  legal structures go beyond the point(s) of diminishing returns?