A list of market strategies outlined by a maker of a “disruptive” hearing health technology is indicative of the challenge facing healthcare executives as more technologists adopt such strategies.

It is salutary to be reminded that forces other than technology shape the future of healthcare. A pundit points to major potential disruptions from:

• the hospital billing practices issue,
• demand for pricing transparency and resulting price competition (remember the $49.95 heart x-rays we wrote about last month),
• the trend to defined contributions and a new, market-driven retail orientation in healthcare, and
• the near certainty of another — potentially devastating — round of balanced-budget cuts that must eventually be made to repair the ravages of the Bush administration”s fiscal irresponsibility.

The billing practices issue alone has lawyers salivating and some hospitals palpitating.

The ambulatory surgical center movement is also raising hospital blood pressure as it continues to grow, fueled by medtech advances and venture capital.

Hospitals might relieve that pressure somewhat by heeding Methodist Healthcare”s object lesson in how to market a hospital”s surgery service to consumers, including video of procedures performed.

At the level of primary care, a potentially disruptive innovation (and a further sign of the trend to consumerism) is the growing spread of nurse-practitioner-staffed “quick clinics” in supermarkets.

The future of traditional primary care in the US is in growing jeopardy for other reasons as well, according to a physician who summarizes its current state.

A health futures organization predicts that primary care physicians may be ill prepared to handle a deluge of consumer demand for genetic testing in the next few years, resulting from advances in the tests and direct-to-consumer advertising.

A New York Times reporter echoes those sentiments, suggesting (to us) that doctors who fail to heed growing consumer demand for genomics-based diagnostics, or even fail to educate themselves about genomics, are abrogating their responsibility to patients and essentially taking themselves out of the future of medicine. On the other hand, this could be their savior, if the field of primary care moves quickly to embrace the accelerating changes in technology, genetics, and consumerism.

Another force pushing the trend to consumerism is a multistate Blue Cross/Blue Shield coalition encouraging direct transactions between doctors and patients for e-visits, deliberately taking themselves — the third-party payer — out of the loop.

A controversial proposed hospital in Tennessee has seen the future of healthcare, and it is reconstructive, obesity, and cosmetic surgery, and it confirms the trend we often refer to in HFD as “superhealth.”

An Associated Press article nicely summarizes the state of the art in another trend — toward patient simulators and away from cadavers for physician training — and shows that they are already halfway to the future only ten years after their introduction.

Introducing Disruptive Innovations

The CEO of an emerging company that developed a disruptive technology for the hearing health industry lists “key strategies companies must execute to successfully commercialize and market disruptive technologies,” in an article published in the Houston Business Journal. He defines a disruptive technology as one that “changes an industry in such a way that previous competitive and business rules no longer apply and typically disrupts competitors — not customers,” and he recommends the following strategies:

• Know the market. Analyze the market inside and out and identify barriers.
• Exploit uncertain opportunities. Be market-oriented, creating a market of current non-customers.
• Orchestrate the right team. Find the most talented people to turn the idea into something real.
• Align the insulators in the community and marketplace. Leverage all personal, business and community relationships to engage the right parties to help market the company and product.
• Identify partners for distribution. Hire strong salespeople with a proven track record in selling a “new concept” product to a market that generally is skeptical of change and new ideas. Target other organizations with well-established channels of distribution in order to create strategic alliances.
• Market the concept aggressively. Involve company employees, at all levels, in grassroots networking and marketing efforts to increase awareness about the impact of the product on the health care industry and the benefits of change. Identify and target influential leaders (medical and trade association directors, physicians who are strong patient advocates, and industry leaders) early on. Credibility and increased visibility are key — the company can gain both by garnering the support of pioneers in the industry and aligning itself with these influential leaders. Likewise, the sales representatives should identify and target the innovators and early adopters of technology who are more venturesome and eager to try new ideas. The early adopters are very influential and many times can serve as the “voice” of adoption in the diffusion process.
• Instill core values in employees. Develop the culture around core values, such as initiative, innovation and teamwork.

Reference: Wasden, Christopher (2004). “Winning acceptance for new health care products is tough task.” Houston Business Journal, July 9.

Non-tech Disruptive Factors

Preston Gee points to four signs that the healthcare industry “is on the verge of significant change–even disruption.”

1. “The Pricing Problem: Billing and Corrections.” Baseless or not, the recent class-action suits accusing hospitals of “uniformly and unfairly extracting the last farthing from those least able to pay . . . will not soon disappear or even dissipate.” The likely outcome, he says, is that not only will hospitals have to curtail their billing practices, they will also have to make their pricing transparent.
2. “Price Fishing.” Transparent pricing is inevitable because (1) Employees/patients are being forced to assume a greater portion of the economic responsibility for their medical care, and (2) “The current system of unencumbered third-party subsidization of cost is counterproductive, inefficient and ultimately untenable.” Physicians and hospitals are in turn forced “to compete like commodities on retail price for their services.” Yet “Most hospitals are so ill-prepared to deal with price competition that it would take months to educate the staff and re-tool the financial infrastructure,” and that leaves the door wide open for “competitors who have prepared for such a thing.”
3. “Firm Uncertainty.” The employer-sponsored model of US healthcare is “beginning to erode, as employers begin to shift the burden of responsibility and accountability to their employees” through “increasing co-pays, higher deductibles and greater portions of the paycheck going towards health insurance, [and] increased implementation of health spending accounts, insurance vouchers, defined contribution and a host of new arrangements . . . just around the corner.” The result will be bewildered, but also empowered, consumers. Providers must prepare for “a true retail orientation where the interaction is “one-on-one,” not the “one-for-many” architecture where insurance companies represent thousands of prospective customers at the negotiation table.” Again, providers who have prepared for this eventuality will win at the (potentially fatal) expense of those who have not.
4. “The BBA Boomerang.” Though not imminent (especially not in an election year), the burgeoning federal government deficit threatens another Balanced Budget Act doomsday. Last tme that happened, Medicare took the brunt and left hospitals reeling. They still are, and razor thin margins, depleted reserves, and declining investment income would mean that another budget balancing initiative “would likely cause many hospitals to go under [and would cause even more to] take a serious hit from which they would take a very long time to recover.”

“We are poised on the precipice,” writes Gee, “waiting for the “tipping point” that could propel the sector into a state of true market reality. Forces are swirling around that could significantly alter the entire landscape of the industry, catching healthcare leaders off guard and their organizations ill prepared. Therefore, savvy healthcare executives will take some time and expend some effort to consider these market forces. They will also keep a keen eye on the lookout for early warning signs, and develop a contingency plan for dealing with disruptive trends that would dramatically alter the way we provide service and conduct business.”

Reference: Gee, Preston (2004). “Signals On the Eve of Disruption.” HealthLeaders News, July 14.

Tsunami of Lawsuits

“High-profile law firms” are mounting a barrage of lawsuits against non-profit hospitals in the US, which represent 85 percent of the industry, reports Julie Appleby in USA Today. At least 31 lawsuits filed in federal court since June target nearly 300 facilities, alleging they act more like for-profit entities than tax-exempt charities. The hospitals are under attack for charging uninsured patients more than insured patients pay (through their plans) for the same services, and for aggressive collection practices such as placing liens on homes, attaching wages, and even arresting some debtor patients.

The lawsuits demand that hospitals refund money to uninsured but overcharged patients, stop the aggressive collections, and stop signing exclusive agreements with groups of doctors whereby some physicians get free use of the facilities while others are shut out.

Reference: Appleby, Julie (2004). “Barrage of lawsuits ‘huge wake-up call’ for non-profit hospitals: Attorneys known for megasuits are on a tear.” USA Today, July 19.

ASCs On the Rise

Like the discount airlines, ambulatory surgery centers (ASCs) are threatening their larger, established rivals by offering customers affordable and convenient service, a stock analyst told The Tennessean”s Keith Russell. The third ASC chain company to go public in the US, Symbion, raised $115.5 million in its initial public stock offering in February, joining AmSurg and United Surgical Partners International. Seven privately held surgery center chains currently exist. Russell attributes their rapid growth from about 2,400 in 1996 to more than 3,600 last year to advances in medicine and technology, which have “dramatically increased the number of procedures that can be performed in an outpatient setting.”

Surgery centers are “up to twice as profitable” as other providers and rely less on Medicare, making them attractive to venture capital. Symbion owns about three dozen surgery centers and manages eight more across a network of 20 states. It plans to acquire two to three centers and build three to four centers a year over the next three to five years. A new surgery center typically costs between $2 million and $7 million to build.

Reference: Russell, Keith (2004). “IPO positions Symbion for rapid growth.” The Tennessean, July 5.

How to Retail Surgery

Methodist Healthcare’s website offers an object lesson in how to market a hospital’s service to increasingly savvy healthcare consumers, including webcasts of procedures performed. There’s no point in explicating here—just click on the link to see for yourself.

MinuteClinics

In ten Target and Cub Foods stores in the Minneapolis-St. Paul area, MinuteClinics diagnose and treat about a dozen common ailments including strep throat, sinus and ear infections, and seasonal allergies. They also provide vaccinations and offer screenings for cholesterol and blood pressure problems. Service takes about 15 minutes on average, versus hours at the doctors’ office, clinic, or emergency rooms. The clinics’ slogan: “You’re sick, we’re quick.” The concept is catching on, writes Michelle Andrews in the New York Times, noting that similar ventures called FastCare, Quick Care, and MEDspot have opened in several US states.

The clinics are staffed by nurse practitioners and have a doctor available by phone during business hours. Patients can pick up a beeper then go shopping while waiting to be beeped into the clinic. A strep throat treated at a MinuteClinic would cost US$44, versus an average of $109 at a doctor’s office or $328 in an emergency room, according to the Minnesota Council of Health Plans. Most plans cover a MinuteClinic visit, requiring only a co-payment, typically $15 or $20. “But MinuteClinics’ costs are so low,” writes Andrews, “that some self-insured companies, like U.S. Bank in Minneapolis, have cut employee co-payments to as little as $5 if they use the clinic.”

Each MinuteClinic has a computer, a printer, and diagnostic tests and vaccines. Exam rooms have two chairs but no examining table. “For simple, rules-based problems, why should people have to wait for hours when they can go somewhere else and get it fixed in 15 minutes?” asked a healthcare consultant. In 2002, the average time spent in an emergency room was 3.2 hours, according to the US Centers for Disease Control and Prevention.

The president of the American College of Emergency Physicians said the retail clinics depend on the patients’ knowing “what they have before they get there,” and noted that what may seem minor ailments “often” turn out to be more serious. A supposed strep throat could be an abscess, a cold sore could indicate a sexually transmitted disease. He cautioned, in particular, that infants should “never” be treated at a quick clinic, because “they may have something that’s more serious that’s harder to pick up.” The president of the American Academy of Family Physicians also noted that recurrent problems are inappropriate for such clinics, and need a doctor’s attention. For example, recurrent bladder infections could indicate kidney stones or a tumor.

But an official at the American Academy of Nurse Practitioners asserted that nurse practitioners are trained to diagnose and prescribe for different diseases and are “certainly qualified” to handle the conditions presented at a quick clinic. MinuteClinic’s computers flag patients who come back repeatedly with the same complaint, so they can be referred to a doctor. MinuteClinic invested $15 million in software incorporating professional clinical guidelines for nurse practitioners to use in diagnosing and treating patients. The protocols do not let the nurse practitioner prescribe antibiotics, for example, without a positive test result. Other clinics also follow clinical guidelines but allow nurses more autonomy.

All clinics carry liability insurance that protects them from claims like those of medical malpractice.

Reference: Andrews, Michelle (2004). “Next to the Express Checkout, Express Medical Care.” New York Times, July 18.

Primary Care

A physician who went through a string of family physicians as one dropped her HMO, the next closed, the third turned her practice into a “concierge” or VIP program, and her children’s pediatrician left practice (tired of practicing “assembly line medicine,” inadequate reimbursement, bureaucracy, and malpractice insurance hikes) summarizes the state of primary care in the US in a thoughtful and credible article published in the Washington Post.

“Primary care is supposed to be the “medical home” — the place where patients receive preventive care and help in negotiating our increasingly complex health care system” from a physician who “should know not just the condition of a patient’s heart or kidneys, but the patient’s overall health and how the patient functions in the context of family and community,” she writes. But as well as the tens of millions of uninsured and insured-but-unserved Americans, only 51 percent of those lucky enough to have a PC doctor feels the doctor knows their medical history and life circumstances well. The situation is exacerbated by the increasing fragmentation of care as multiple specialists get involved in a case but with no-one in charge of watching the big picture, integrating information from the specialists, and coordinating the care, including the family care.

A 1999 JAMA (Journal of the American Medical Association) study found that almost all patients valued the role of the primary care physician as a source of first contact care and coordinator of care. Other studies “link a continuous relationship with a primary care provider to a wide range of positive health outcomes: higher trust between patient and physician, improved chronic disease management, fewer hospitalizations and emergency-room visits, timely immunizations and healthy behaviors.” It has also been shown to “cut costs by reducing the likelihood of lawsuits and reducing unnecessary services,” she adds.

A 1991 JAMA study of ten Western industrialized countries found that “primary [care] correlated with better health and public satisfaction in nine of the 10 countries, . . . [and in] the United States, states with more primary care physicians tend to have better health indicators.” But disruption of primary care — from insurance changes, for example — is common. Patients may be switched among Medicaid managed care or employer-sponsored plans without patient or provider knowledge, which is one reason why providers must re-confirm patients” insurance status on practically every visit, which is “not only poor service and a tremendously time-consuming chore, but it also risks delaying needed care.”

“As long as the health care system undervalues the most critical of doctor-patient bonds,” she concludes, “I — and others like me — may have to get used to being health care nomads.”

Reference: Cheng, Tina (2004). “Primary Loss: A Doctor-Patient Mourns a Once-Key Health Care Bond.” Washington Post, July 6.

HealthTech Predictions for Gene Therapy

The US health futurist organization Health Technology Center (HealthTech) predicts that continued expansion of genetic testing for newborn screening and predicting and diagnosing disease will result in a shortage of primary care physicians trained to evaluate tests and educate patients as a supplement to other genetic counseling services. It also predicts an acute shortage of genetic counselors and a shortage of clinical geneticists. CEO Molly Coye notes that “Effective interventions trail behind the dramatic improvements in technologies to diagnosis and detect genetic diseases. . . .”

Coye likens the probable impact of direct-to-consumer advertising of genetic testing with that of drug advertising by the pharmaceutical industry, and thinks it “likely that excitement over genetic discoveries will lead to premature development and use of genetic tests with patients choosing to pay for tests for reasons other than medical necessity.”

HealthTech”s report detailing these findings forecasts several advances in genetic testing over the next few years, including:

• Newborn screening will have the greatest impact on clinical outcomes, as early intervention reduces morbidity and mortality;
• Research will focus on tests for hemochromatosis, early onset Alzheimer’s disease, colorectal and breast cancers, rare forms of ALS, and maturity-onset diabetes of the young (MODY);
• Refined tests should reach the market for Cystic Fibrosis, Fragile X, less invasive pregnancy screening, early onset Parkinson’s disease, hearing loss and deafness;
• In the longer 5 – 10 year term, tests may become available for complex diseases such as asthma, osteoporosis, and cardiovascular conditions.

Reference: HealthTech (2004). “Health Technology Center Report Examines Future of Genetic Testing; As Testing Expands Clinical Geneticists, Counselors, and Trained Primary Care Providers in Short Supply.” Press release via Business Wire, July 13.

PIGD: Customer Demand, and Who Knows?

As consumers become informed about new genomics-based diagnostics – particularly for prenatal screening, newborn screening, and screening for cancer and other diseases — they want them. “Many,” reports Amy Harmon in the New York Times, are “demanding to know why screening tests for certain genetic conditions, including deafness, mental retardation and breast cancer, are not being offered to them — even, in some cases, when they ask.” One reason may be that the providers themselves are less well informed than their patients. Some may not have time to communicate “what can be complex information,” and some deliberately withhold information because of personal beliefs (about abortion, for example) or because of exposure to potential malpractice suits.

One basic problem, she reports, is that doctors who did not learn genetics in school do not have or do not make time to educate themselves about genetics, or about their patients’ history. “If you’re really going to start doing a genetic pedigree on every single patient that walks through your door, you’ll take a whole day,” a Harvard Medical School instructor told her.

Reference: Harmon, Amy (2004). “As Gene Test Menu Grows, Who Gets to Choose?” New York Times, July 21.

E-Visits Gathering Momentum

The Regence Group, which consists of the Blue Cross/Blue Shield plans in Oregon, Utah, Idaho, and Washington, is promoting e-visits via Medem, a web-based communication network founded by eight national medical associations, including the American Medical Association, to its 3 million members, its physicians, and its network of insurance brokers.

Unlike Providence Health Plans, which plans to reimburse US$40 for e-visits (including a $10 patient co-pay), Regence Group expects patients to pay directly for e-visits, through secure online payment. It will not reimburse physicians – the transaction is between the doctor and the patient, and third-party payers are not involved. It estimates providers will charge about $20, a spokesman told Robin Moody of the Business Journal of Portland.

The Medem partnership could quell health care purchasers’ concern that reimbursing for e-mail consultations will drive up premiums, and it may also soothe providers who are nervous about spending time on e-mail consultations for which they are not paid, the spokesman told Moody.

Reference: Moody, Robin J. (2004). “‘E-visits’ have potential to cut rising medical costs.” Business Journal of Portland, July 16.

Trend to Reconstructive Medicine

A proposed US$27 million general hospital in Tennessee would focus on plastic surgery, comprehensive breast care, and obesity surgery if approved by state regulators. The Cool Springs Institute would provide emergency room services, diagnosis and treatment of breast cancer, reconstructive surgery, and obesity surgery. Other local providers oppose the new hospital on the grounds that it would duplicate services.

Reference: Lewis, Bill (2004). “Investors send plans for Franklin hospital to state.” The Tennessean, July 17.

Patient Simulators

“Today,” says the Associated Press, “many doctors in training are making their first diagnoses — and their first mistakes — on plastic, wires and computer circuits rather than flesh and blood.” The AP is referring to “virtual patients,” some of which are “almost lifelike mannequins with plastic ears and hair, veins that can be injected, eyes that can move and interchangeable genitals [as well as] a pulse, a beating heart and lungs that breathe. The most sophisticated can be programmed to simulate every imaginable medical crisis and then respond as a doctor works on the “patient.”” Others combine video or computer images with tactile feedback giving trainees who insert needles or surgical tools into a plastic box “the sensation of cutting flesh or pushing through body parts such as the throat or colon,” while a video screen shows what a doctor would watch during the procedure, such as ultrasound images.

There is “no question” that simulation is “a wave of the future,” said an official of the American Board of Medical Specialties, which oversees certification for medical specialists, and therefore it is “a major goal of the medical education and evaluation system.”

“The top systems are pricey” (up to US$200,000) “but so realistic that experts predict they’ll become standard for training new doctors and for testing experienced ones who soon will face tougher recertification,” the article continues. Though barely 10 years old, simulators are already widely used for training military medics and nurses and medical technicians at community colleges. “At least half of the nation’s 120 medical schools already use simulators such as Medical Education Technologies Inc.’s Human Patient Simulator mannequin and Laerdal Medical’s SimMan to teach students and residents, or graduates completing training at hospitals.”

Not only do trainees seem to like them, teachers say advanced simulators offer “better surgery practice than cadavers, pigs or dogs.” Two studies have shown that surgical residents trained on simulators made fewer errors and operated more quickly than those who were trained in the traditional way “ observing an experienced doctor perform a procedure, then doing the procedure under supervision, then doing it independently, and later training others in he procedure. A simulator vendor”s study claims to show that its simulators can pay for themselves in less than six months because trainees can do procedures quicker and make fewer errors.

Simulators range in price from US$40,000 to “well over” $200,000, and that will not cover all skills. A “top-notch” simulation center covering multiple skills can cost $2.5 million, which is why some are building regional rather than single health system simulator centers for training doctors, nurses and “even teaching paramedics to handle biochemical attacks or other mass casualties.”

Reference: Unknown (2004). “New Doctors Practice on Virtual Patients.” Associated Press via New York Times, July 17.