September 17, 2007

Consumers Behind the Wheel — HIT Can Make It Happen
By Elizabeth S. Roop
For The Record
Vol. 19 No. 19 P. 30

Regina Herzlinger, DBA, the godmother of healthcare, and other industry experts explain how HIT can fuel the drive toward creating a more transparent system.

“The U.S. health care system is in the midst of a ferocious war. The prize is unimaginably huge — $2 trillion, about the size of the economy of China — and the outcome will affect the health and welfare of hundreds of millions of people. Four armies are battling to gain control: the health insurers, hospitals, government, and doctors. Yet you and I, the people who use the health care system and who pay for all of it, are not even combatants. And the doctors, the group whose interests are most closely aligned with our welfare, are losing the war.”

This tantalizing opening paragraph sets the stage for Who Killed Health Care? America’s $2 Trillion Medical Problem – And the Consumer-Driven Cure, in which author Regina Herzlinger, DBA, describes in unflinching detail how a healthcare system controlled by insurance companies, hospitals, and government is killing consumers financially and medically.

“The whole healthcare industry is backward. It is not consumer-focused. It is all focused on the institutions,” says Herzlinger. “But it is not the institutions who should dominate a system which will serve consumers. They’ve got the wrong end of the stick.”

In her book, Herzlinger lays out her battle plan: a consumer-driven approach that calls for consumers, in conjunction with their doctors, to reclaim control of healthcare by wrestling control of insurance dollars away from the “killers” and using their purchasing power to create a system that is responsive to patient needs.

It is a system similar to Switzerland’s, but tailored to the unique demographics of the United States, that Herzlinger says will lower costs, increase quality, prevent the ruination of the economy, stop the denial of care and services, and encourage the genomic research that can fundamentally improve the practice and costs of medicine. It will also encourage revolutionary innovations in the supply of healthcare, including the following:

• a national system of consumer-based medical records that creates one information access point for patients and providers and ensures privacy with confidential access by only approved practitioners;

• the creation of “focused factories” that bring specialists and generalists into one integrated “stop-and-shop” system of care organized around special consumer needs; and

• the personalization of medical technology to meet the individual needs of the patient.

Finally, under Herzlinger’s plan, hospitals and all other medical organizations would undergo mandatory performance evaluations. Health insurance would also be mandatory, with subsidies provided to those unable to afford it otherwise.

Central to the success of Herzlinger’s vision is HIT, not only for the establishment of the national medical records system, but also for its role in collecting, analyzing, and conveying the kind of data consumers need to make educated care and insurance decisions based on price, quality, and outcomes.

In a consumer-driven world, “there is much greater recognition of the fact that the patient, which is such a strange term because it implies somebody passive and kind of a lump of meat, is actually a very active and intelligent person who needs to be informed,” she says. “The information sources are better today, but they are hardly good enough, and they don’t tell you about the quality of the providers. That is crucially important. You want to know how good that provider is and how good that hospital is. Don’t give me vague cotton candy kinds of generalities. We also don’t know the prices of anything.”

What Works, What Doesn’t
In Herzlinger’s system, a greater focus on healthcare informatics and wider-scale HIT adoption are key drivers. And while the industry is making progress, there is still a long way to go before it meets the demands of a consumer-driven environment.

On the plus side, the growing interest in personal health records (PHRs), particularly those that integrate with electronic health records (EHRs) and other healthcare resources, is a good first step toward providing consumers with the access and information they need to be proactive participants in their care.

Much like Quicken and Intuit revolutionized financial records for consumers, PHRs allow consumers to quickly and easily access the detailed information and resources they need to self-manage their care.

“The developers of PHRs that build linkages to different healthcare suppliers but keep the focus that the PHR will be maintained by the customer and not the provider will ultimately succeed,” Herzlinger says. “It’s a very smart strategy.”

Unfortunately, she adds, most of today’s HIT systems are gathering the wrong data for the wrong reasons. IT resources are being poured into “gaming the reimbursement system” rather than establishing price and quality structures.

“If one agrees that a consumer-driven system is coming, then consumers will want to know what your quality is and what your price is. In order for you to price accurately in a competitive system, you really have to know your price structure. Most hospitals don’t have a clue what their price structure is,” says Herzlinger.

Instead of focusing on gathering data specific to reimbursement issues, providers and facilities should focus on gathering and publishing statistics, such as mortality and morbidity by disease category and class of patient, on which consumers can base care decisions.

It may require a healthcare version of the Security and Exchange Commission to make it happen, but in a consumer-driven health system, making information available on factors such as risk-adjusted outcomes by procedures for hospitals and physicians is critical.

“I do not want to know whether they followed somebody else’s ideas about how to provide care. I want to know how successful they were in providing it,” says Herzlinger. “Do you want to know whether a manufacturer followed a recipe for making cars, or do you want to know the mileage, reliability, environmental safety, and price of that car?”

It is the same reason the concept of pay for performance, in its current state, worries Herzlinger. The idea of rewarding providers for improved quality is solid, but the reality is that in healthcare, pay for performance is really “pay for conformance.”

Unlike other industries, where pay for performance means paying for what we know to be quality and value, healthcare’s system rewards providers for following the payer’s guidelines for the provision of care. Herzlinger likens it to an auto insurance company telling car manufacturers that if they follow the insurer’s directions for building a car, the insurance rates for their cars will be lower and people will pay more for their car, regardless of its safety and performance ratings.

“It’s crazy,” she says. “We do need pay for performance; we have it in the rest of the economy. We pay for quality, we pay for good value, but we don’t necessarily pay more. In fact, we pay less for Toyota, which is in many ways a much better car than the Mercedes, but we know what the quality is. In healthcare, we don’t know that.”

For example, if a woman is going to have a mastectomy, the information she wants includes statistics on how many others like her and with her risk factors died, developed clots or infections, were readmitted, spent additional days in the hospital, etc. “That is what I’m interested in, not whether they followed someone’s recipe of how to perform the surgery,” says Herzlinger.

The Industry Weighs In
Herzlinger is not alone in her beliefs that HIT and informatics are keys to improving quality and reducing costs, as well as seeing her vision of a consumer-driven healthcare system come to fruition.

“HIT will play a formidable role. In fact, I think it is the very foundation for us to get to consumerism in the healthcare organization,” says Jim Giordano, president and CEO of CareTech Solutions, an IT and HIM services provider. “Healthcare is very much science, and science is data-driven. To come to good, scientific conclusions, you need to work with large data sets, and you need to collect that data. HIT is going to play a key, vital role in being able to pull that data together for analysis and then to empower us as consumers to use that information to make better healthcare choices.”

Giordano points to the emergence of clinical decision support systems in use by a growing number of providers as an example of how healthcare is already starting to shift its HIT focus from primarily reimbursement to a tool for making better care decisions that result in improved outcomes.

A bigger challenge, he says, is the sluggish acceptance of HIT among physicians. While 60% to 70% of care is provided by primary care physicians, only approximately 10% have adopted some type of electronic medical record system.

Another challenge is the lack of standardization in terms of the format and type of information that should be made available to consumers. The solution, he says, is for the government to take a bigger role in not only establishing standards but also in requiring the collection and publication of the data needed for true transparency.

“Without a format, or without a requirement of what is to be recorded, it makes it very difficult to have any interoperability between the patient and the caregiver, particularly if they have multiple caregivers,” says Giordano. “The technology exists already to provide transparency, so I don’t really think it is a technology issue. It is more of a political issue in terms of agreeing on who is going to collect the data, in what format, and in what type of technology it will be placed into so it can be shared easily. But the banks can do it, the retailers can do it, and from a technology perspective, healthcare can do it.”

J.P. Wenzlick, a consultant and publisher of HIT Strategies, a monthly newsletter for healthcare chief information officers, agrees with Herzlinger’s premise that transparency is desirable, and HIT can play a significant role in achieving the level necessary for consumer-driven healthcare.

The problem, he says, is not that the required data is not being collected, but rather the resistance from the industry to make it available in a meaningful way.

“In many cases, bits and pieces of information are available, but I don’t think it’s out there in any organized way. You can get information on some things but not on others,” says Wenzlick. “Recognize that it is not in the best interest of the physician, the hospital, or the practice to make that information available. So now you’ve got the American Hospital Association, the American Medical Association, and probably most lawyers in agreement that it’s not really a good idea … because it would be expensive to implement, it would provide information to their competitors that they don’t want to provide, and they don’t think it’s useful for the patient.”

Transparency is desirable, he adds, but “it’s going to take a long time and a lot of battles. … Can they do it now? Probably not. Will they do it now? No, that will [require] dragging and screaming.”

Wenzlick and Herzlinger also agree on another key concept of the consumer-driven system: The quality of outcomes should be based on patient satisfaction rather than what the healthcare system deems successful. That will require HIT systems and standards that allow longitudinal tracking over multiple episodes of care—and overcoming what are likely going to be the strident objections of the medical community.

“The successful outcome of hip replacement surgery on a 90-year-old patient is not based on whether they leave the hospital on time. It’s based, two months later, on whether they can walk or not. If they can’t, the surgery was a waste of time, energy, and money,” Wenzlick says. “Doctors don’t want to hear that. When they get done with something, they want to be able to know that what they did accomplished what they wanted to accomplish, not whether the patient’s long-term health was better. … Determining quality outcomes should be done by the patient, not by the medical system. That’s going to be a real challenge.”

Breaking Down Barriers
Ultimately, eliminating the barriers that stand in the way of Herzlinger’s vision of a consumer-driven healthcare system is going to take more than HIT. It will require employers, as the largest purchasers of healthcare, and consumers to stand up and demand access to the information they need.

“The technology is there; you’ve got companies like ours that are ready to implement it and have already brought some of it to bear,” says Giordano. “But I don’t think technology for technology’s sake is going to solve these problems. These are people problems. These are political problems and, unfortunately, technology isn’t going to fix them.

“As a technologist, I would very much like to see more technology deployed as this rush toward consumerism in healthcare starts to pick up steam,” he adds. “I’m envisioning a world where all of us have more information to make better choices about our healthcare and the healthcare of our loved ones.”

According to Herzlinger, HIT has the potential to “turn patients into smart consumers who get the best value for their money in insurance and health services,” which is the foundation of the consumer-driven system that she says will save healthcare.

“I’m willing to cross the line between being an intellectual and being a kind of activist to talk about it and take whatever knocks may come with that, and I’m sure they are coming,” she says.

— Elizabeth S. Roop is a Tampa, Fla.-based freelance writer specializing in healthcare and HIT.

The Path Toward ‘Godmotherhood’
Regina Herzlinger, DBA, the first woman to be tenured at the Harvard Business School as the Nancy R. McPherson Professor of Business Administration, is widely recognized for her innovative research, including early predictions about the unraveling of managed care and the emergence of consumer-driven healthcare and healthcare-focused factories—terms she is credited with coining.

In addition to Who Killed Health Care?, which was released in June, Herzlinger authored Market-Driven Health Care, which was released in 1997 and addressed the need to reform the way healthcare is supplied. She followed that with 2004’s Consumer-Driven Health Care, which reviews the way health insurance is supplied.

A senior fellow at the Manhattan Institute for Policy Research, Herzlinger is a frequent advisor to members of Congress and a sought-after keynote speaker on the topic of consumer-driven healthcare. She is a two-time recipient of the American College of Healthcare Executives’ Thompson Book of the Year Award, a three-time recipient of the Academy of Healthcare Executives Research Award, and has also received the Hospital Financial Managers Association’s Board of Directors award.

She has won Management Accounting’s research prize and has been selected numerous times as one of the “100 Most Power People in Healthcare” by Modern Healthcare. Her research has been profiled in industry journals and business publications such as The Economist and Fortune.

Accolades aside, Herzlinger credits her unique background as a tenured professor of business who happens to also work in healthcare as her ability to identify flaws in strategy and direction that others may miss. She views healthcare through an accountant’s eye, which is key.

“I know about a lot of businesses, so when I look at healthcare, it is not with the purview of someone who does nothing but healthcare,” she says. “I am familiar with and knowledgeable about many different businesses, so I can compare and contrast the woebegone status of healthcare vs. other businesses.”

As for being dubbed the “godmother” of consumer-driven healthcare by Money magazine, Herzlinger says she was flattered, but it was more a matter of exposure than it was of creating the concept.

“There are different points of time in civilization where a number of people get together and have the same idea,” she says. “I was just part of a movement, but because I write about it, I am the godmother.”

— ESR