September 30, 2022

Prototype: Watsi, a Crowdfunding Site, Offers Help With Medical Care

The experience gave him an idea.

“I thought it’d be really cool if there was a Kiva for health care,” he said, referring to the crowdfunding Web site that allows donors to provide microloans to entrepreneurs in developing countries.

Over the next several months, he devoted his free time to creating a business plan for an online start-up that he named after the town where he got the idea. Watsi, which started last August, lets people donate as little as $5 toward low-cost, high-impact medical treatment for patients in third-world countries.

The procedures range from relatively simple ones like fixing a broken limb to more complicated surgery — say, to remove an eye tumor. But the treatments generally have a high likelihood of success and don’t involve multiple operations or long-term care.

Operated out of an apartment in Mountain View, Calif., Watsi works with nonprofit health care providers in 13 countries, including Cambodia, Nepal, Guatemala and Ethiopia. The providers identify patients meeting Watsi’s criteria; the providers themselves have been vetted by Watsi and its medical advisory team, which includes Dr. Mitul Kapadia, director of the physical medicine and rehabilitation program at Benioff Children’s Hospital of the University of California, San Francisco, and a half-dozen other doctors and medical professionals.

The profiles of the patients are posted on the Watsi site, and the online community begins donating. Medical care is given when the health partners decide that it is “medically appropriate,” Mr. Adam said. Sometimes that care is given before money is raised on Watsi, and the profile remains on the site so that fund-raising can continue. Watsi maintains an operational reserve for this purpose, he said.

Watsi represents the next generation of charities dependent on online donors, evolving the model started by sites like Kiva. With just a few mouse clicks, Kiva users, say, are able to lend money to a restaurant owner in the Philippines — and to examine her loan proposal and repayment schedule, to read about her and see her photograph.

Charities have long recognized the importance of photographs and narratives in soliciting donations. Watsi’s Web site, too, shows vivid images of its patients, and tells their stories. For example, a 9-year-old girl in Myanmar who needs eye surgery has had to miss a year of school because of her condition.

“People like to feel like their donation is making a difference to an individual,” said Timothy Ogden, managing director of the Financial Access Initiative at New York University’s Robert F. Wagner Graduate School of Public Service. “That’s how they like to give — where there’s a face and a personal connection.”

While Kiva offered pictures and much more from the start, information about its own operations was not always easy to find on its site. In 2009, when donors learned that loans weren’t going directly to the people in need but to microfinancing institutions that had already made the loans, there was an uproar.

Even though the model makes sense — microfinancers play an important role in vetting individuals, and by giving them a loan upon request, the borrower does not have to wait weeks or months for money to be raised online — Kiva was criticized for a lack of transparency. It has since clarified how it works.

The kerfuffle pointed out how much information the public demands in the Internet age, particularly when it comes to nonprofit groups, where “the general public is skeptical,” Mr. Adam said.

As a result, organizations like Watsi are trying  to extend their microlending transparency to themselves. On Watsi’s Web site, there is a Google Doc — an online document that can be shared by various approved users, and updated in real time — that lists details like the name of the doctor providing care, whether that care was delayed for any reason, a screen shot of the PayPal funds transfer, and whether the treatment was successful. The document also shows Watsi’s monthly financial statement, which lists the cost of office supplies, salaries and travel expenses. If any problems  occur during or because of treatment, donors are notified by e-mail.

Mr. Adam said his approach was partly in response to the Kiva controversy. But he said he found inspiration in other nonprofits like Nyaya Health, a nongovernmental organization started by Yale graduates that provides free health care in Nepal. Nyaya, which is a Watsi medical partner, has a health wiki that lets people upload the organization’s monthly financial reports and minutes from internal meetings.

“I think there’s a new batch of these nonprofits starting to emerge,” Mr. Adam said. “They’re dedicated to helping people understand how things work.”

Not that this makes everyone comfortable. After one patient who received funding from Watsi did not survive surgery, some health care partners were “a little spooked,” Mr. Adam said, given that the doctor’s name was listed on the Watsi site. “Doctors don’t want their names to be associated with failure,” he said, adding that as a result of that, some medical partners briefly stopped approving riskier treatments as a way to avoid more undesirable outcomes.

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Markets Slightly Higher Despite Services Data

The Institute for Supply Management reported that business growth slowed at service providers in the United States in June. Financial companies and health care providers reported the weakest results. The I.S.M. report followed a broad sell-off in Europe and another interest rate increase in China.

The Dow Jones industrial average rose 38 points, or 0.3 percent, to 12,607. The Standard Poor’s 500 index gained 1 point, or less than 0.1 percent, to 1,338. The technology-focused Nasdaq composite added 7 points, or 0.3 percent, to 2,832.

DuPont rose 2 percent, the most of any stock in the Dow, followed by Intel and 3M.

Some investors were surprised that stock indexes did not add to Tuesday’s modest declines following the weak economic report. Dorsey Farr, a co-founder of the Atlanta investment advisory French Wolf Farr, said attractive stock prices in technology and pharmaceutical companies helped the market rebound.

Financial companies fell sharply after Moody’s Investors Service downgraded Portugal’s debt late Tuesday. That raised fresh concerns about the strength of the European financial system and investment bank’s exposure to possible bond defaults. The Euro Stoxx 50, an index of companies in countries that use the euro, fell nearly 1 percent. Bank of America lost 2.2 percent. JPMorgan Chase dropped 1.5 percent.

China also raised a key interest rate for the third time this year in an effort to curb inflation. Many American companies have focused on the country as a source of profit growth and are hoping that interest rate increases there will not lead to an economic slump.

On Wall Street, General Motors gained nearly 2 percent after analysts upgraded the stock. The Walgreen Company rose 1 percent after the retailer said its June sales were higher than anticipated.

Trading was light during the holiday-shortened week as investors looked ahead to Friday’s employment report. Economists expect that the unemployment rate was 9.1 percent in June, unchanged from the month before.

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Medicare Plan for Payments Irks Hospitals

The administration plans to establish “Medicare spending per beneficiary” as a new measure of hospital performance, just like the mortality rate for heart attack patients and the infection rate for surgery patients.

Hospitals could be held accountable not only for the cost of the care they provide, but also for the cost of services performed by doctors and other health care providers in the 90 days after a Medicare patient leaves the hospital.

This plan has drawn fire from hospitals, which say they have little control over services provided after a patient’s discharge — and, in many cases, do not even know about them. More generally, they are apprehensive about Medicare’s plans to reward and penalize hospitals based on untested measures of efficiency that include spending per beneficiary.

A major goal of the new health care law, often overlooked, is to improve “the quality and efficiency of health care” by linking payments to the performance of health care providers. The new Medicare initiative, known as value-based purchasing, will redistribute money among more than 3,100 hospitals.

Medicare will begin computing performance scores in July, for monetary rewards and penalties that start in October 2012.

The desire to reward hospitals for high-quality care is not new or controversial. The idea can be traced back to a bipartisan bill introduced in Congress in 2005, when Democrats and Republicans were still working together on health care. However, adding in “efficiency” is entirely new and controversial, as no consensus exists on how to define or measure the efficiency of health care providers.

The new health care law directs the secretary of health and human services to develop “efficiency measures, including measures of Medicare spending per beneficiary.” Obama administration officials will decide how to calculate spending per beneficiary and how to use it in paying hospitals.

Administration officials hope such efforts will slow the growth of Medicare without risking the political firestorm that burned Republicans who tried to remake the program this year.

In calculating Medicare spending per beneficiary, the administration said, it wants to count costs generated during a hospital stay, the three days before it and the 90 days afterward. This, it said, will encourage hospitals to coordinate care “in an efficient manner over an extended time period.”

If, for example, an 83-year-old woman is admitted to a hospital with a broken hip, she might have hip replacement surgery and then be released to a nursing home or a rehabilitation hospital. When she recovers, she might return to her own home, but still visit doctors and physical therapists or receive care from a home health agency. If she develops a serious infection, she might go back to the hospital within 90 days.

The new measure of Medicare spending per beneficiary would include all these costs, which — federal officials say — could be reduced by better coordination of care and communication among providers.

Here, in simplified form, is an example offered by federal officials to show how the rewards might work. If Medicare spends an average of $9,125 per beneficiary at a particular hospital and if the comparable figure for all hospitals nationwide is $12,467, the hospital would receive high marks — 9 points out of a possible 10 awarded for efficiency. This measure, combined with measures of quality, would be used to compute an overall performance score for the hospital. Based on this score, Medicare would pay a higher or lower percentage of each claim filed by the hospital.

Federal officials are still working out details, including how to distribute the money.

Charles N. Kahn III, president of the Federation of American Hospitals, which represents investor-owned companies, said he supported efforts to pay hospitals according to their performance. But he said the administration was “off track” in trying to hold hospitals accountable for what Medicare spends on patients two or three months after they leave the hospital.

“That’s unrealistic, beyond the pale,” Mr. Kahn said.

Since 2004, Medicare has provided financial incentives to hospitals to report on the quality of care, using widely accepted clinical measures.

Much of the information is posted on a government Web site (, but it has not been used as a basis for paying hospitals.

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