Future Now
The IFTF Blog
Interview Summary: Dr. Mark Smith, Calif. HealthCare Foundation, March 9, 2009
HC2020 Interview Summary: Mark Smith
Interviewer: Richard Date: March 9, 2009
1. His/her work
Interested in redsigning health care delivery to make it more efficient.
CUrrently, interest in focused on extending coverage, but we also need to
address the underlying delivery system if we are to control costs.
TRENDS/CHALLENGES
2. How optimistic about future of health/healthcare in 2020?
He is "fairly optimistic" -- there is a growing recognition that we cannot
achieve broad coverage if we leave the system as it is: "illusions have
been shattered" about the current system.
We are beginning to see enough tech-enabled innovations to bring about
a transformation of health care.
Two main drivers of positive change: Health IT, which can streamline care; and
studies of comparative effeciteness that can support evidence-based decision.
3/4. Biggest trends or challenges & responses
1) What do we do about hospitals?
They are important actors, politically and financially. They are
also the place where most resources are wasted, where improvements
in efficiency can have a real impact.
"Hospital management" is an oxymoron - no systems thinking;
their goal is to keep their rooms filled & sell additional services
Past changes to try to change hospitals by imposing capitation didn't work -
assumed that doctors would go against hospitals, but the did not.
Hospitals have the resources, capital, influence and know-how to efficiently
manage patients'care over time -- but today they don't have the right leadership
or the right incentives.
Need to creat "true physician-ospital organizations" with a reimbursement scheme
that "will allow hospitals to win. Need to create ORGANIZATIONS THAT ARE
LONGITUDINALLY RESPONSIBLE FOR A GROUP OF PATIENTS. Need to have an insurance
component, be "farther up the capitation stream" than current stand-alone systems.
They also need to be regionally dominant (don't need a 100% share of their market).
Examples of such systems: Geisinger, Intermountain Health System (Salt Lake),
ThedaCare (Minneapolis), VA. Kaiser is sort of like this, but they don't have
real competition, still pay above market rates for their staff (if Kaiser is so
good, why aren't their rates lower?).
Does NOT believe that insurance plans are the critical units: they are still
dependent on networks of providers, can't effect change themselves.
2) Power of the "guilds"
Biggest factor retarding change is the entrenched power of guilds that keep the
system rigid. There are thousands of rules about who can do what. The "regulatory
thicket" protects the guilds.
There are lots of examples in service industry of new models (e.g., JetBlue)
but this kind of innovation in health care isbeing blocked by the guilds.
One example of innovation in health care is the emergence of retail clinics,
but have been opposed by physician groups. Other innovative models:
- TelaDoc
- Diabetes America
Over time, the lack of affordability of health care will force change.
3) Rise of co-pays
This has been bemoaned as a negative trends making health care more expensive,
but it is having a positive effect by increasing pressure for more cost-effective
alternatives. Wal-mart has "transformed the market for prescription drugs by
introducing $10 drugs -- using its efficiency & buying power to updend the market.
5. Have these trends surfaced before?
6. Challenges/responses not on radar now?
Obama is currently focused on extended care, but he is waiting for "the other
shoe to drop -- paying attention to controlling costs, bringing in competition.
FUTURE SCENARIOS
7. Most preferable scenario
We achieve near-universal coverage in a heterogeneous system that offers
real choice. Health care resources are more equitably distributed and
shared.
DRIVERS: Investments in IT and comparative effectiveness are beginning to
pay off. Changes in reimbursement are leading to new entrants and forcing
the incumbents to change and become more efficient.
8. Most plausible scenario
We will have the same or larger number of uninsured, requiring more money
to fund the safety nets. Health insurance will include very high deductibles
System will fray, putting more pressure on the government to "do something."
Pain will be general but there will be no far reaching transformative change,
entrenched interests will maintain their power, block real change.
9. Most negative scenario
Health care experiences a "melt down" like the financial sector - hospitals go
bankrupt - are unable to meet their debt payments or payrolls. Each group fights
for itself - hospitals need bail-outs; doctors are angry, but unwilling to change.
Everyone gets their reimbursements cut.
10. Wrap-up
Recommended people to interview:
- Jamie Robinson, Berkeley
- Leonard Shaeffer - founder of WellPoint; first administrator of HCFA
- Bruce Vladek - former administrator of CMS
- Barbara Lubash - Partner, Verant Ventures, Orange County (Health care VCs)