January 20, 2020

Economic View: What Sweden Can Tell Us About Obamacare

While in Sweden this month as a visiting scholar, I’ve asked several Swedish health economists to share their thoughts about that question. They have spent their lives under a system in which most health care providers work directly for the government. Like economists in most other countries, they tend to be skeptical of large bureaucracies. So if extensive government involvement in health care is indeed a recipe for doom, they should have clear evidence of that by now.

Yet none of them voiced the kinds of complaints about recalcitrant bureaucrats and runaway health costs that invariably surface in similar conversations with American colleagues. Little wonder. The Swedish system performs superbly, and my Swedish colleagues cited evidence of that fact with obvious pride.

The United States spends more than $8,000 a person per year on health care, well more than twice what Sweden spends. Yet health outcomes are far better in Sweden along virtually every dimension. Its infant mortality rate, for example, was recently less than half that of the United States. And males aged 15 to 60 are almost twice as likely to die in any given year in the United States than in Sweden.

In fairness, those differences result partly from lifestyle. In Sweden, workers are more likely to commute by bicycle than by car, for example, and obesity is far less common. Absolute poverty and income inequality — both associated with adverse health outcomes — are also lower.

But when illness strikes, the Swedish health care system responds efficiently. Managers have exploited economies of scale by consolidating services into fewer but larger hospitals. The American system has also gone through consolidation, but, by contrast, boutique hospitals are also more common here — partly in response to demands from patients with very high-cost health plans. In large hospitals, CT scanners and other expensive diagnostic and treatment machines are in nearly constant use, versus only a few hours of weekly use in some small ones.

Larger hospitals with heavier patient flows also enable their staff to hone their skills through specialization and experience. If you are getting a knee replacement or coronary bypass surgery, you want teams that do scores of such procedures each month.

Doctors in the two countries also face different financial incentives. In the United States, under the fee-for-service model, they can bolster their incomes, often substantially, by prescribing additional tests and procedures. Most Swedish doctors, as salaried employees, have no comparable incentive.

Another important difference is that, unlike many American health insurance providers, the government groups that manage Swedish health care are nonprofit entities. Because their charge is to provide quality care for all citizens, they don’t face the same incentive to withhold care that for-profit organizations do. That more hip-replacement operations are performed per capita in Sweden than in most other countries is almost certainly a reflection of the generous care options rather than of any inherent deficiency in Swedes’ hip joints.

The Swedes also provide drugs and other treatments only when evidence establishes their effectiveness. People can spend privately on unproven treatments, but the government refuses to impose their cost on taxpayers.

IS there a catch? When I asked my Swedish hosts to describe any downsides to their system, several mentioned the waiting times for certain nonemergency services. One told me that whereas in the United States a wealthy or well-insured patient might schedule a hip replacement with only a week’s notice, in Sweden the wait could be as long as three months. He described such waits as a design feature, noting that they allowed facilities to be used at consistently high capacity, and thus more efficiently.

Obamacare also contains many evidence-based provisions for medication and other treatments. But at least in its initial stages, it will not be able to match the cost savings achieved in Sweden.

That’s because the legislation’s design was heavily constrained from the outset. Surveys showed that most Americans were satisfied with the existing health plans provided by their employers, so any new system that required people to abandon them would have been a political non-starter. As I discussed in an earlier column, however, such plans are an extremely inefficient way to pay for health care. They arose as an unfortunate historical accident during World War II, when employers used them to sidestep the wage controls that had resulted in extreme labor shortages.

Employer health plans have been disappearing steadily, and may one day be gone entirely. The encouraging news is that the Affordable Care Act was intended to foster the evolution of a new system that can capture many of the gains currently enjoyed by countries like Sweden.

For that to happen, however, Congressional critics must abandon their futile efforts to repeal Obamacare and focus instead on improving it. Their core premise — that greater government involvement in health care provision spells disaster — lacks support in the wealth of evidence from around the world that bears on it.

The truth appears closer to the reverse: Because of pervasive market failures in private health care markets, this may be the sector that benefits most from collective action.

Robert H. Frank is an economics professor at the Johnson Graduate School of Management at Cornell University.

Article source: http://www.nytimes.com/2013/06/16/business/what-sweden-can-tell-us-about-obamacare.html?partner=rss&emc=rss

Bits Blog: G.E.-Microsoft Venture to Create ‘Windows’ for Health Care

Peter Wynn Thompson for The New York Times

Any discussion of the challenge of trying to improve health care and curb costs with computer technology quickly turns to “silos.” Not the kind that store corn in Midwestern farms, obviously.

Information technology in health care is as fragmented and balkanized as the health care system itself. The technology silos in health care lead to two afflictions — captive patient and medical information, and the inefficiency of having to tailor code and programs for a bunch of proprietary software systems.

General Electric and Microsoft are announcing a joint venture on Thursday intended to attack the silos. The venture will borrow from a familiar playbook. “This industry needs a Windows-like platform,” said Peter Neupert, the head of Microsoft’s health solutions group.

His comment is corporately self-referential, to be sure. But what he means is something like a software operating system that standardizes many of the underlying tasks of running computer programs. The “platform” layer takes care of the computer plumbing, so software developers can focus their efforts on the layer above that — on applications.

That, in turn, can spur innovation and an ecosystem of developers and companies who build on top of the platform. That’s what Microsoft did so successfully with the personal computer. And it is what Apple, in particular, has done so well with smartphone and tablet software.

The G.E.-Microsoft venture hopes to lay the foundation for a surge in software applications that tackle rising costs and quality lapses in health care. “It is the developer community that is going to solve these problems,” said Michael J. Simpson, the G.E. executive who will be chief executive of the joint venture, which will be a new company. (Mr. Neupert, who plans to retire, will not join the new company.)

The new company is not yet named, but its headquarters will be near the Microsoft campus in Redmond, Wash. When it gets up and running next year, the company, Mr. Simpson said, should have about about 750 workers, recruits from Microsoft, G.E. and elsewhere. “This is a big bet,” he said.

It is a bet focused initially on big health care providers — hospitals and large physician groups. The new company will fold together health products from Microsoft including Amalga, its software for pulling lab test, radiology and other data in real-time into a patient’s electronic health record for diagnoses. G.E.’s contributions include Qualibria, advanced clinical knowledge software being developed in cooperation with two big providers, Intermountain Healthcare and Mayo Clinic.

Mayo Clinic, a customer of both G.E. and Microsoft, provided the initial prod to put their technologies together. The joint venture talks got under way in earnest five months ago with a meeting between Jeffrey R. Immelt, chief executive of General Electric, and his counterpart at Microsoft, Steven A. Ballmer. (The two have know each other since they were assistant product managers for Procter Gamble in the late 1970s.)

The new company will develop software that makes it easier to monitor and manage the health of not only individual patients, but also entire populations of patients with chronic conditions like heart disease and diabetes.

Next year, the company plans will introduce tools to make it easier for independent software developers to build applications that run on its platform technology.

The Windows analogy is intriguing, but it also may prove to be misleading. The PC business was a young industry when Microsoft rose to power. By contrast, there are several established health care software vendors likely to resist the G.E.-Microsoft strategy. Don’t expect Epic or Cerner, for example, to rush to build applications that run on the G.E.-Microsoft platform.

Article source: http://feeds.nytimes.com/click.phdo?i=9e3b9b3c1d1c22557829acb7851fece1

Health Care Is Inexorably Changing, Despite Legal Uncertainty

For the nation’s health care system, there may be no going back.

No matter what the Supreme Court decides about the constitutionality of the federal law adopted last year, health care in America has changed in ways that will not be easily undone. Provisions already put in place, like tougher oversight of health insurers, the expansion of coverage to one million young adults and more protections for workers with pre-existing conditions are already well cemented and popular.

And a combination of the law and economic pressures has forced major institutions to wrestle with the relentless rise in health care costs.

From Colorado to Maryland, hospitals are scrambling to buy hospitals. Doctors are leaving small private practices. Large insurance companies are becoming more dominant as smaller ones disappear because they cannot stay competitive. States are simplifying decades of Medicaid rules and planning new ways for poor and rich alike to buy policies more easily.

But how to pay for these changes, and what will happen to the 30 million uninsured Americans the law intends to cover, will be up in the air if the mandate at the heart of the law — the requirement that individuals buy health insurance or face a penalty — is struck down.

The election results of 2010 and stiff state opposition to the mandate also complicate the picture. Hospital administrators, insurers and doctors are counting on federal subsidies and coverage expansion that would result in a surge of patients with insurance to offset cuts in government programs that many fear could soon become draconian. Large health systems could then use their newfound clout to demand higher prices from private insurers even as federal and state governments pay less.

Other changes influenced by the legislation may leave some patients and doctors lost in the new land of giants. As medicine moves from a cottage industry to one dominated by large organizations, some patients with insurance will probably find their choices more limited. But their care may be better coordinated, as hospitals, doctors and even insurers join to streamline services.

“The system is transforming itself,” said Charles N. Kahn III, president of the Federation of American Hospitals. “But the success of these changes depends a lot on whether there is sufficient funding.”

Hospital systems are anticipating a major influx of federal funds and patients as a result of the law. In Maryland, for instance, the Johns Hopkins Hospital and Health System recently bought two suburban hospitals and is spending several hundred million dollars on computer systems to link its clinics and hospitals across the state. It has hired hundreds of primary care doctors and nurses, forged partnerships with urgent care clinics and expanded home health service to serve an expected flood of new patients.

“If the law is struck down, health care reform will have to continue one way or another,” said Patricia Brown, president of Johns Hopkins HealthCare.

Across town, Baltimore Medical System, a community health center, expects to expand its medical staff by 50 percent over the next three years to accommodate an anticipated increase in patients to 70,000 from 47,000.

“We are looking for new clinicians on a constant basis,” said Jay Wolvovsky, the system’s chief executive, who said that hiring would stop if the law were overturned and federal funding were in doubt. “We wouldn’t be able to expand and we’d be stuck where we are.”

In states like Texas, the law is deeply unpopular, and the medical association has a “Calendar of Doom” listing the timeline for important provisions of the law and other government rules. Still, changes in delivering medical care are taking hold, including a move away from small doctor practices that were predominant for more than a century.

Texas medicine will never be the same no matter what happens with the law, said Louis J. Goodman, the association’s chief executive, and older doctors blame a cascade of new rules and changes well beyond the new health law. “There’s a feeling among doctors here that government is crushing them,” Mr. Goodman said.

And even though critics say the law does little to reduce the costs of care, its passage touched off myriad efforts to pare widespread waste.

“The interest from the doctor and hospital community has accelerated,” Tom Richards, a senior executive at Cigna, said of efforts to exact savings and improve care.

Article source: http://feeds.nytimes.com/click.phdo?i=40a8075a5adfa1bc2dc61dd259c0f9ba

Doctors Discover the Benefits of Business School

As recently as the late 1990s, there were only five or six joint M.D./M.B.A degree programs at the nation’s universities, said Dr. Maria Y. Chandler, a pediatrician with an M.B.A. who is an associate clinical professor in the medical and business schools at the University of California, Irvine. “Now there are 65,” she said.

Mark V. Pauly, a longtime leader of the health care management program at the Wharton School at the University of Pennsylvania, said, “A light bulb went off and they realize that health care is a business.”

Dr. James S. Kuo, 47, said he was a third-year medical student at Penn when he decided to go to business school, too. After receiving his M.D. and master of business administration degrees, he jumped to a Wall Street job with a large health care venture capital firm.

Dr. Kuo went on to manage several heath care funds and later led several small health care companies.

Now he is chief executive of Adeona Pharmaceuticals, a company based in Ann Arbor, Mich., that is developing innovative medicines for the treatment of serious diseases of the central nervous system.

He is also nonexecutive chairman of MSK Pharma, a private company in La Jolla, Calif., that is led by his wife, Dr. Geraldine P. Kuo.

She is a specialist in muscular-skeletal medicine at the Veterans Affairs health care system in San Diego.

“In her work, she came across a medical need and an innovation to solve that need,” he said.

One of the latest universities to consider a combined program is Creighton, a Jesuit university in Omaha, which plans to begin offering a joint degree next summer.

Anthony R. Hendrickson, dean of Creighton’s school of business, said the program would be flexible, based on each student’s academic and business experience and personal goals.

He said total tuition would be $191,688, including four years of medical school and a year of business studies. At Duke, the total cost of tuition for medical school and a year and a half of business studies is $235,244.

Creighton, like many universities with business schools, also offers part-time courses for physicians alongside its classic short courses for executives of all types.

Statistics about the joint programs are sparse, said Dr. Chandler, who is president of the Association of M.D./M.B.A. Programs. But she estimated there were as many as 500 students total in the programs.

Some, like Tufts and Texas Tech, offer the combined program in four years, she said, and many programs offer special aid packages.

“All physicians need some kind of business training,” she said. “For example, some physicians with large research grants don’t know how to manage the money.”

As for the nation’s troubled health system, “we are not running the business side very well,” Dr. Chandler said. “Part of the problem is we don’t have physicians sufficiently involved. They have a fuller insight about what is needed.”

“Cue the theme music from ‘Jaws,’ ” said Professor Pauly, of Wharton. “Entrepreneurs have to know how to navigate with the desire of payers to hold down prices and control uses in health care.”

He added: “They have to know how to please pointy-headed bureaucrats. This is going to be one of the survival skills in the future in health care.”

Not all physician entrepreneurs come from the joint programs, of course. There are also business school graduates like Dr. Wendye Robbins, a fourth-generation doctor, who did her undergraduate studies at the University of California, Berkeley, and later earned her M.D. at the Medical College of Pennsylvania in Philadelphia.

Now she is president and chief executive of Limerick BioPharma, a small start-up in South San Francisco that works on transplant-associated metabolic diseases, specifically Type 2 diabetes. She founded Limerick with business partners in 2005.

With strong grades and support from the head of her medical faculty, she said, she was accepted as an intern at the Hospital of the University of Pennsylvania and then for a postgraduate residency at Johns Hopkins University. Then she was hired as an anesthesiologist and pain doctor at the University of California, San Francisco. Through her husband, who has a business degree from Wharton, she met venture capitalists. “They offered to fund the stuff coming out of my lab,” she said.

She left academics and started her first company, NeurogesX, which commercializes pain medicines.

After five years, she left the company and took a teaching job at Stanford because, she said, she wanted to stay in touch with students and patients.

Her advice to entrepreneurs-in-waiting: “Take a risk, step into the unknown. Don’t be afraid to fail. I’ve made plenty of mistakes and had plenty of disappointments.”

Article source: http://feeds.nytimes.com/click.phdo?i=0a3ab9245dacea64a82de46743456047