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Doctor fees - where is the innovation?

Posted Oct 25 2008 4:40pm

Today the MSM had a good article from one of the premier journalists covering health, Milt Freudenheim about a CMS pilot project around the "medical home" -- which is simply a vehicle to motivate primary care doctors to provide 'better' care to patients with chronic or complex diseases.    The basic premise is that physicians can provide care that is both more effective (better outcomes) and costs less over the long run (prevents unnecessary acute problems) by 'monitoring' consumers during their every day life and not just when they visit the doctor with a problem.    Microsoft has actually designed HealthVault to enable this kind of 'connected care' using the Internet to enable communications and by enabling personal health devices to make it brain dead easy to get objective information from consumers on a regular basis.

The real question in my mind -- is why there has been so little innovation around how doctors figure out how to 'package' a bundle of services for consumers and charge them for it?

My wife likes to remind me of lots of examples where 'bundles of services' are both performed better than in traditional health delivery and consumers willingly pay for them.   The most obvious example is with veterinarians.   We have three dogs (just exiting the puppy stage -- all at 2 years old -- it is a long story).   We have a vet that makes house calls, has an electronic medical record for each of them, calls to make sure the Bella is taking her pills and that Mac's ear infection is clearing up -- makes sure that the routine vaccinations are done on time and so on.   She always calls to follow up on any given problem.    It is easy to connect with her by email or phone - -very unlike most folks experience with primary care.   Why is that?    It is not that we value pet health more than human health?    My hypothesis is that the vet business is largely a cash business -- and as a result it invests in technology and services (bundles) to attract customers in ways that a fixed price, reimbursement driven business does not.

John Goodman at NCPA has written extensively on this topic, you can learn more here.   The main point is there is not enough innovation on the supply side -- and one sees a lot more innovation (better outcomes at declining vs. rising prices in health) in the cash based businesses like cosmetic surgery and LASIK.   In general I think he is right -- and it has deep implications for future policy.

I also give credit to Chuck Kilo at Greenfield Health - who first convinced me (after beating me up in an argument) that true reform in health care had to start with how physicians were paid -- perhaps an obvious insight but one that is often missing in the debate of how to get to a better 'system' than where we are today.

The Freudenheim article points to the problem of a declining population of primary care docs -- and one of the reasons is the 'system' puts them in a box where they don't make enough money, they can't do a good job and to make more money actually means doing a worse job, not better.   How is that motivating or attractive?      I gave a speech a year ago -- to the American Society of Clinical Endocrinologists -- and foreshadowed the benefits of connected care through HealthVault (though it wasn't launched yet).   Many, many docs came up to me afterwards and said yes, they were using Excel or forms or other systems to get data from patients remotely - -but they were making less money while delivering better care -- how does this scale?    

There are other innovations going on outside of retail clinics and cosmetic surgery...but they don't get a lot of attention - perhaps they should.   I learned quite a bit about the economics of a physician practice from a real innovator on the delivery side (also in Seattle -- where concierge medicine got started); his name is Garrison Bliss and his latest venture is Qliance.    There is a whole society for folks trying to innovate on the supply side - -and they deserve support...because it may be innovations on the supply side -- some that will work and some that won't -- that will help us find the real answers to the dilemmas of improving health delivery and outcomes. 

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