On Tuesday night President Obama laid down both a problem and a promise. He said, “we must also address the crushing cost of health care. This is a cost that now causes a bankruptcy in America every thirty seconds…and in each of these years, one million more Americans have lost their health insurance. It is one of the major reasons why small businesses close their doors and corporations ship jobs overseas.” And then he said the new budget would make “the largest investment ever in preventive care, because that is one of the best ways to keep our people healthy and our costs under control.”
Folks, keeping our costs under control and our people healthy will require a new era of collaborative medicine. What is collaborative medicine? It is a health-care system in which consumers and their physicians work together on an ongoing basis to avoid unnecessary illness and suffering. Imagine doctors who had the time to really help you or those you care about to stay healthy and well. Imagine if every person who needed help with their health had not only a dedicated online tool to help them manage their health, but also their primary care physician looking over their shoulder to help them follow their personal plan. In general, data shows that mindful and aware people manage their health better. The point of this post is that not only can we afford collaborative medicine — we can afford it with the funds already promised in the stimulus bill. Best of all, it will save us far more than it will cost us in the long run.
This is a simple proposal for how to get us there.
First I want to make a startling point. As I pointed out in my TEPR talk, out of the $2.3 trillion we spend on health care, incredibly less than 1% of it actually goes to the primary care physicians. Put differently folks, what we think of as medicine — which is seeing our doctor — leaves only about $20 billion in our doctor’s pocket (not counting specialists) out of the total of $2.3 trillion spent. Think what a small percentage of our total health care costs that means are going to our doctors. If you subtract $20 Billion from $2.3 trillion, you get $2.28 trillion. All the rest of that $2.28 trillion is going to insurance filing, insurance processing, hospitals, labs, medicines, imaging, and specialists.
If you want to think about this more personally, our national health care costs average about $7500 for each man, woman, and child and more than $15,000 for people who actually have, or are at risk of having, serious illnesses (probably only 100 million but I figured 150 million here just to be safe). Of that $15,000, less than $100 is going to the primary care physicians to treat you. Because of this, there is a shortage of primary care physicians which is why, when Massachusetts insured all of its citizens, the biggest problem became just getting an appointment. And, even if you can get an appointment, most doctors have no tools or time to really help you manage your health on an ongoing basis.
Really it seems that there are about 100 million people who need much more active management and care. These are the people who will cost us or are costing us so much money today. How can we help them? We can offer each primary care physician $100 for each at-risk or ill patient each year to provide collaborative online support to their patients and offer a monetary award to each patient who actually reduces his/her risk factors by even one risk factor. What will this cost and could it come out of the $20 Billion just approved for Health IT in DC?
At $100 per at-risk or ill patient, primary care physicians will earn $10 billion more, out of the $20 billion allocated to online innovation. That’s a tiny fraction of the $2.3 Trillion we spend today but it is a windfall for these doctors, like getting a 50% raise This will help attract some desperately needed freshly-minted doctors to primary care medicine. And because at least half of that $2.3 trillion is spent on treating preventable lifestyle diseases, it will not take much for our much-happier primary care docs to have profound impact on their patients lives: reducing just ONE one risk factor triggers enormous reductions in health care costs.
How much will it cost to deliver the required IT to support collaborative medicine between doctor and patient? As I pointed out in my talk at TEPR , you will find that those of us creating health IT online would have no problem delivering the tools to the doctors and consumers alike for collaborative medicine for a tiny fraction of $20 billion currently proposed by the legislation. I suggest that $3.6 billion is plenty to pay for systems will enable 100 million people to be helped by doctors, therapists, and coaches alike.
Data consistently shows that offering people a reward, even a modest one, for improving their health increases compliance. We have money left over for this. If $20 billion is being spent, and $10 billion goes to the doctors and $3.6 billion goes to the IT systems to support this, that leaves $6.4 billion for the 100 million Americans who have lifestyle issues that have led or are leading to disease. Figure that we’re shooting for 15% of them to remove a risk factor. That’s 15 million Americans. With $6.4 billion, we can reward each of them with several hundred dollars each. Even if, optimistically, 30% of them improve we can still provide about $200 per person as a reward. And the savings to the US of 15 million people dropping even one risk factor will be vastly greater than this. Dropping even one risk factor typically will cut someone’s expected annual health costs by $1000-$2000 – more when they’re older. Not to mention the reward to them of actually feeling better, being more mobile, and the peace of mind to those who love them. As tax payers we are going to be paying this bill anyway — we should try to cut it now.
My proposal benefits consumers and doctors alike. The doctors are getting paid more to deliver better care that is actually targeted, with the help of IT, at providing ongoing coaching and support for patients to encourage them to improve their lifestyles. Doctors are being paid more to do a better and enjoyable job. The consumers finally have tools to manage their health but with the added value of having the person they most trust in this matter, their primary care physician oversee their progress and plan. More doctors will become primary care physicians because the pay is better and the job is more fun, which will address the shortage issue we’ve seen in Massachusetts. It will mean fewer patients going to specialists and having lots of expensive treatments and stays in hospitals as they start to make the changes that help them avoid diabetes, heart disease, and the complications thereof.
We’re prepared to spend $20 billion on trying to improve Health IT anyway. Let’s spend it correctly.
Terrific post and terrific thoughts, Adam. It was great to see you deliver the pitch at TEPR, and I’m glad the slides are online. I’d *love* to see a fully animated version of the slides; the way you showed the progression year by year was gripping, compelling, irresistible. (Can you tell I appreciate it when something is communicated effectively?)
I got a vision today that the way we’ve been pumping money into our current healthcare system is a lot like a cancer, which grows uncontrollably by diverting well-meaning biomechanisms to grow new “pipelines” (blood vessels) to draw more nutrients (cash, blood) to itself, having lost all connection with why the mechanism exists in the first place.
It’s dysfunction at a biological level.
And in an instant I saw that we’d benefit from a hefty dose of what works for a lot of cancers, too: antiangiogenesis. Your proposal would divert the funds away from the dysfunction to something that serves system health.
I would like to know where that $20 billion figure for primary care visits is coming from? According the the National Health Expenditure (http://www.cms.hhs.gov/NationalHealthExpendData/downloads/proj2008.pdf) physician and clinical services accounted for about $500 billion (page 4 of the document) of healthcare spending in 2008. I am sure a lot of that is lab tests and specialist visits, but how are you getting only $20 billion for primary care? I just want to understand where the numbers are coming from.
Quick reply. It is a back of the envelope calculation I’ve tested with a bunch of people in the health care arena. I’m told that there are about 130,000 primary care physicians. i’m also told consistently that after the costs of malpractice insurance and insurance filing costs, the average primary care physician is grossing about $150,000 a year or less. So I multiplied 130,000 times $150,000 which yields $19.5 billion. It may be off, but hard to see how it can be off by a lot.
Hi, loved the way you broke it all down into numbers. I totally agree with the online approach and as IT service provider I know that such a system can be implemented for just millions. The approach should be divided into a central vision, standards, security, authentication … For governmental bodies to regulate. All central data and most crucial services should be offered through an SOA based portal. This should allow the private sector to create their own tools in different technologies, using the key webservices that are provided through the centrally managed Portal.
Anyways, loved your blog! Thnx. Feel free to check my ideas and numbers about Health 2.0.
Even if it’s off by 100%, it doesn’t change the fact that what PCP’s get out of the pie is ineffective relative to the value that they *could* create. Incentives are very important. There’s enough data liquidity in the system to move it effectively between patient, PCP, specialists, hospitals, labs, etc. You don’t need an EMR/PHR to do this. It helps with scale, but 90% of MD’s use faxes still as their channel of choice. But what’s really important is the relationship between a good doctor and the patient.
The model that I’ve been evangelizing is driven by the employer, since that’s where the money starts in the US. They can decide how much they want to spend relative to the ROI on the beneficiary. If you’ve got 3+ risk factors that are leading to an imminent $50K event, then it might make sense to spend upwards of $30K to intervene. Obviously, most people aren’t going to be in that situation (hopefully) but evaluating what their real risks are, what the potential cost of doing nothing is, and then balancing how much value the MD, the member, and the employer want to get out of that – well, there’s the solution right there.
1) $100 for care coordination. “A typical primary care physician who treats elderly Medicare patients must coordinate care with 229 other physicians working in 117 different practices, according to a study by researchers at the Center for Studying Health System Change (HSC), Memorial Sloan-Kettering Cancer Center (MSKCC) and the Dana-Farber Cancer Institute” in the February 17 Annals of Internal Medicine.http://www.rwjf.org/qualityequality/product.jsp?id=38949
2)Cost savings as a result of preventive care. NEJM Feb 14th 2008 “Sweeping statements about the cost-saving potential of prevention, however, are overreaching. Studies have concluded that preventing illness can in some cases save money but in other cases can add to health care costs.3 For example, screening costs will exceed the savings from avoided treatment in cases in which only a very small fraction of the population would have become ill in the absence of preventive measures.” Bascially people will live longer and cost more in the end. http://content.nejm.org/cgi/content/full/358/7/661
3) Compliance vs outcomes – Numerous employers have used financial incentives http://seattletimes.nwsource.com/html/health/2008798417_wellness01m.html to encourage healthy behavior and early statistics are encouraging, portraying a work force that has improved in 12 of 14 risk factors.
4) Other financial incentive models – Medical Home Model we are starting to see primary care docs opt out of the insurance system and change a monthly fee of $50 to 100 a month for primary care retainers, hour long visits, limited practice size (500) no admin staff and double their gross to over $400,000 a year. http://seattletimes.nwsource.com/html/pacificnw/2008628080_pacificprimary18.html
There is disconnect between who pays for care (consumers, employers government) and who benefits from the savings so do a join venture with insurance companies or self-insured employers if you have a viable business model. There should be more then enough resources without tapping the Government HIT funds for the private sector providers and consumers. Amazing to see private sector firms like yours Adam ponying up to the public trough so quickly? What happens in year 4 when the funds are gone? Leave that money for public health and critical access providers.
A couple of comments.
The typical primary care physician is getting only $100/patient today on average. This isn’t my proposal. This is current fact. This proposal actually doubles it for at risk patients. So no matter how low the proposal may seem to you, it is actually a 100% raise for the compensation for the at-risk patients (call them 1/4 – 1/3 of the panel).
Cost savings are only going to be realized when consumers are engaged in a dialog with their physicians and others and engaged in an ongoing manner. It is relatively incontrovertible that a huge amount of the expensive procedures and hospitalizations required by our system are directly due to avoidable diseases due to lifestyles which have changed greatly for the worse in the last 20 years. We have to try to address this because we have no choice. Waiting for the baby boomers to all get heart disease and diabetes Type II and strokes and trying to treat that will be worse.
Financial incentives do work and this is actually the lynch pin of my proposal.
It would be great if the employers will pay and they do indeed benefit, but you have to prime the pump and prove that this is changing lifestyles.
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