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Disaster and disease vs. social cohesion
What do death rates during a summer heat wave in Chicago have to do with health care reform?
In the January 7 issue of the New Yorker, Eric Klinenberg has a fascinating article about the resilience of communities to disaster. This was especially timely in the wake of Hurricane Sandy, and in fact part of his article visits people trying to recover from its damage on Long Island. Dr. Klinenberg has been studying community responses to disaster for a couple of decades, most notably the heat wave during the summer of 1995 in Chicago. During that disaster, 739 people died. Analysis of the patterns by neighborhood found things you might expect. The poor died disproportionately to the better off. But there were some poor neighborhoods that had death rates that were lower than in the more affluent neighborhoods on Chicago’s North Side. Two neighborhoods on the poor and predominantly African-American South Side had mortality rates an order of magnitude different from each other. What does he make of this latter finding?
In response to disaster, communities have at least two categories of response: physical infrastructure and social infrastructure, he explains. Many communities around the world have gotten good at dealing with the kind of flooding we saw from storm surge during Sandy. They have installed dikes and seawalls, waterproofed utility lines, etc. A mass effort to install air conditioning in every apartment in Chicago would have been such a response. (Having air conditioning apparently reduced one’s odds of dying by 80%.)
Instead because Chicago now knows about neighborhood specific mortalities under these conditions, in hot periods they escalate welfare checks to the people they know are vulnerable there. Klinenberg thinks these high mortality rates are reflective of low social cohesion, and that the low mortality neighborhoods (the ones that don’t differ much in geography, income, or race from the higher mortality ones) have high social cohesion. There, people know who their vulnerable neighbors are on their block, and in their apartment building. They know this because they have lived there for years, and know when their neighbors usually shop for groceries, or visit the hair salon. The differences are not related to physical infrastructure; they are related to social infrastructure.
Put simply, lack of social cohesion kills.
So what if disaster response (or lack thereof) isn’t the only way poor social cohesion kills? What if the same factors also predict medical mortality? Re-admission rates to the hospital? Medication adherence?
What if building more hospitals, ambulances, and emergency rooms amounts to a physical infrastructure response to problems that are much more amenable to social infrastructure improvement? As hospital beds continue to proliferate while demand is falling, are we just building more seawalls behind seawalls because we only know how to finance building seawalls, and have no clue how to finance building sustainable neighborhood associations?
These questions I believe will become more and more prominent in our dialogue on progressing our American system for health optimization. The health care delivery system seems to be mostly a physical infrastructure solution, and an unsustainably expensive one. Developing a health optimization system seems to me to lead inevitably to a social infrastructure development system. No matter how good they are, it seems unlikely that professional repairmen will ever substitute for a neighbor knowing the signs you’re not well, and being willing to do something about it.
New Year’s Resolutions
Usually I begin the year with a resolution about weight loss, exercise, meditation, or some other health habit: you know, the usual kind. I will probably make some of these resolutions again this year, as in years past. But this year, I’m also resolving to blog once a week. I think I set up this blog about a year ago, and have been much less than diligent since about writing in it.
Part of this lack of blogging is related to the fact that I don’t entirely get its use and benefits, at least not yet. Fortunately, I have experience with not getting it, and persevering despite that. When I headed a company, I did networking the conventional way, meeting people in person, going to lunch, etc., for a full three years before I understood why. So I have some faith that some time down the line, this will get clearer for me.
Right now, here’s why I think we do this, in person or on the Internet. I don’t think one blogs purely to supply others with information. Most of what I could tell anyone about anything they care about has already been posted by Reuters or CNN an hour before I found out about it. We live in the information age, and about the last thing anyone needs is more information. People take long vacations on desert islands to escape that sort of thing.
Instead, if we are lucky, blogging give others insight into the way we think, and how that might be helpful in their own situation. I think I have shied away from posting partly because it seems odd to assume that the random firings of my neurons might be interesting/entertaining/thought-provoking for others. And, in the vast majority of cases, I think that will be right; people will read and think, “Not helpful”. But the beauty of the blogosphere is that those people can move on to someone else’s blog that they do find helpful. To all that remain, welcome. Both of you.
We live in an extraordinary time in so many ways, but germane to this blog, we live in the age of American health care reform. Some of you may have heard me speak about this, but there are a few core reasons why this is:
- We as a nation are out of money.
- We as private enterprises are out of money.
- We as individuals and families are out of money.
- I have slides to prove all of the above are related to the cost of health care.
- Other than that, it’s going very well.
Okay, there are other things at play here, which we will go into over time, but suffice it to say for now, being out of money has an amazing clarifying effect on one’s thinking. All the other things we will talk about here have been true for many years, even decades. But the one thing that compels us to have this conversation now, this topic that ranks just below having root canal for most of us, is that we are out of money to buy off the pain of real reform. I don’t know if anyone’s noticed, but the debate over entitlement reform is largely about one really big entitlement, the one we call Medicare. Yes, there is Social Security, but simply by changing the cost of living adjustment and raising the eligibility age some, we can take care of most of that problem.
But Medicare, there’s a problem that goes beyond actuarial analysis of the stability of an insurance pool. While it is technically an insurance program, it is so much more to so many people. In the simplest terms, it is hope. It is an amorphous institution in most of our minds, that attempts to buy miracles with pooled resources created by a collective agreement to pay into the pot, without know which miracles we will need for ourselves, of even if we will need them at all. Unfortunately, the price of this hope is going up at roughly two to three times the rate of general inflation, and it is crowding out other things that also create hope. But these latter things are for those closer to the beginning of their lives rather than those closer to the end. These are things like bridges, roads, schools, and other things that create future prosperity, for individuals and the American community as a whole. There is a commercial on TV right now that decries the tyranny of the “or”, the necessity of choice. Why can’t we have it all, it asks while the spokesperson does a funny dance?
We can’t have it all, because we never could, and we are having trouble believing that our perception of limitless resources was an illusion. We make popular movies in which against impossible odds, the hero/heroine saves the day, no matter what any stinking authority figure tells them. In the movies, the one in a million shot always comes through.
In a way that makes me a little sad, we are having to give up the illusions of childhood, and become adults. We are being asked by our posterity to recognize limits, that we will not be forever young, that we must choose the nuanced discussion over the sound bite, choose the understanding of others as being as complex as we feel ourselves to be, and just as sympathetically flawed. We have met the authority figures, and indeed they are us, only with wrinkles and lines that we do not recognize as our own in the mirror. These things all fall to us: the necessity for mercy, for difficult choices, and for prayers for wisdom in an imperfect world. None of these can be delegated or outsourced anymore.
DaVita acquires HealthCare Partners
Like the acquisition of Monarch by United several months ago, large for profit entities are finding value in ACO management infrastructures. This deal is for $4.42 billion in cash and stock: http://www.latimes.com/business/money/la-fi-mo-davita-health-deal-20120521,0,1684433.story
What’s going on here? What I think is happening is that sophisticated observers are seeing the movement to accountable care as inevitable, and they are placing bets on companies that can manage in that environment. Fixed population reimbursement plus variable payment for hitting quality parameters is how these companies operate, and this appears to be the most feasible solution in the market currently to running out of money to pay for FFS-driven health care. The future belongs to the efficient and effective, not simply the productive irrespective of value. HealthCare Partners is clearly in the former category.
The amazing clarifying effect of being out of money
When I talk to people about why this time around in health care reform is different from past efforts, most times I end up saying at one point or another, “Being out of money has an amazing clarifying effect on people’s thinking.” Sometimes people laugh, and other times people just stare back quizzically. For those other times, here’s the thinking.
First, health care is a marketer’s dream. There are few other products that people feel might result in their premature death if they don’t get it. (There are a bunch of products that will result in their premature death that sell well, too, but that’s another story.) Because of this draw, it’s been easy to sell to people, in increasing quanities and price. So compelling is the sell, that we were willing to incur hundreds of billions of dollars of debt as a nation over it in the past decade. We borrowed so we didn’t have to limit it, or face down the sellers of it to demand lower prices. We made it mostly painless for ourselves by separating widely the cost from the point of use using a mechanism called insurance. We use this kind of financing mechanism commonly in this society for really expensive things, and it’s very effective in mitigating any market forces to control costs.
But there comes a day of reckoning, even with products whose value we obfuscate to this degree. For a product this compelling, that’s when you’re out of money. And this is why this time is different. We are out of money in about twelve different ways. The federal deficit is a topic of dinner time conversation in households that do not contain economists. States are steadily defunding higher education, elementary education, roads, bridges, etc., because there is no money left after spending on health care. Employer contributions to health care premiums have more than doubled in the past decade, and employee contributions have nearly tripled. A Health Affairs study in September of 2011 showed that for the archetypical family of four, almost all increases in wages for the decade 1999-2009 were eaten up by a combination of inflation and health care costs. In other words, we are spending almost all income increases created through better productivity, on health care. Health care is the Thing That Ate New Jersey, or at least its budget.
So the obvious punchline: this cannot continue. After years of sustained denial, I am watching the health care industry begin to come to grips with the thought that this one isn’t going away. Many of us who have made whole careers out of building stuff that we knew we could use and get paid for irrespective of value to patients, are having to rethink the game.
Many of us will complain this is not fair, that the game should continue as it has, because it is the only one we know, and some good does come out of it. This will fall on the deaf ears of everyone who pays for this stuff, and are out of money–governments, employers, and individuals. It’s not so much that they don’t want to empty their bank accounts to pay for more growth for American health care; it’s that they already have, and there is no more in the cupboard. It’s time we start thinking about health care as a finite commodity. For while our good will and intent might be unlimited, our ability to fund even things we greatly value, is not.
The Innovation Advisors Program
As some of you may know, I was chosen to be an Innovation Advisor for the Center for Medicare and Medicaid Innovation in December of 2011. Since then, many have asked what that means. I have been telling people that what I know is what’s in the press release. I have since been to the kickoff meeting in Baltimore and know a little bit more. Here’s what it’s like.
The first thing that struck me is the people are both unassuming and wicked smart. I felt like a slacker because I sleep several hours each night. Eating lunch, riding on the bus, taking a coffee break–you start up a conversation and you get into areas that you usually can find only about three people to talk with you about in the country. You quickly realize there are at least four. I made an offhand remark about complex adaptive systems, and the woman next to me said, “I teach that at a major university.” Wicked smart. All of them.
Next is that the program is moderately unstructured, in the way Zen is unstructured. It is experiential and relational, but with metrics and outcomes. I think this is intended to engage both the limbic system and the cortex, i.e., the emotional and the rational brain, and like many Zen things, it’s mildly unsettling. Almost all of us have been quite goal-directed in life, and the lack of clear proximal anticipated outcomes is unnerving for many of us. Despite that, the mere sensation of being with one’s own people makes up for a lot of discomfort, and I think if you polled us privately about giving up our spots now, we’d all say no, or no way. I think it’s been a common experience for many of us that we are simultaneously attract to and frustrated by the same work. No different here.
I tried to connect this to a mental model, to access heuristics that would help me anticipate the feel of the experience. (Zen will tell you not to do this, but old habits die hard.) What popped to mind would be what I imagine a Silicon Valley incubator looked like in the 90s, without the ridiculous amounts of money and foosball tables. Bright people, coming out of organizations that are doing start up work, collaborating to find the idea fragment collisions that create new value. (For more on idea fragments, see Steven Johnson’s Where Good Ideas Come From.) In general, this is a low yield, high risk, high reward proposition. Most pitches to venture capital don’t get funded. But ten in a hundred are good enough to test, and one in a hundred/thousand changes markets. But that’s the cost of finding the game changer.
You might wonder what any of this is doing in the federal government, and particularly in a rule-bound agency like CMS. In fact, the tension between regulatory constraints and the creation of safe space for the failure inherent in experimentation is the key dynamic tension in the existence of CMMI. The acceptance of that tension is also a Zen exercise, and a worthy meditation for all of us involved in this project.
All things considered, I look forward to the journey. One of my life’s great pleasures is learning new things from people I like and respect, and CMMI was kind enough to introduce me to 72 new friends who fit that description. For that, I am truly honored and humbled. And despite my Zen meditiations to remain in the moment, I can’t wait to see what happens next. Stay tuned.
Let the games begin…
In this morning’s newsfeed, there is an item about United Healthcare’s intent to acquire Monarch Healthcare, a MSO supporting multiple IPAs in Orange County, California. Compared to AT&T’s rebuffed bid to acquire T-Mobile’s cellular business, I’m sure it will garner far less attention in the media.
But make no mistake, that was the firing of a starter’s pistol. United has been a thought leader among health plans, and it has steadily moved into ancillary businesses as they project profitability in their core business to be flat or declining for the next decade. Ingenix, the Lewin Group, Optum and others represent ways of leveraging an advantage in data, analytics, and now management infrastructure to emerging related businesses where the markets are less mature. There is simply greater profit to be made here before these related services become commoditized.
What this sets up is not simply competition among health plans for good clinical management infrastructure, but competition between the plan sector and the hospital sector. These sectors will increasingly compete for scarce primary care base and infrastructure to manage it. The result if they are not careful is another boom and bust cycle like in the early 1990s, where asset valuations get inflated and then toxic assets are disposed of in fire sales. (This bubble is already there in hospital beds, where many systems are constructing capacity that will never see its intended use.)
And what about the physicians? Despite a lot of rhetoric about how they should be in charge of this transformation, in most cases they will be in the back seat riding with those with greater access to capital. Their lack of retention of capital, despite healthy incomes for many years, will prove to be the Achilles’ heel, and result in lesser roles in governance of vertically integrated enterprises.
Want Healthcare LLC 