In my previous post, I referenced a talk on innovation. I specifically said something like blah blah TED blah won't post the slides, blah blah. Ok, I lied. Here they are.  

Either by providence or hubristic filtering, a lot of the themes in these slides keep appearing in conversations, online and in person. I'll spare you two hour version here - I know you are thanking me in your heads. What follows is a very condensed, unpolished, "speakers notes" version for each slide. I've posted each image and links to videos, detail you'll see after the jump.
More than ever, healthcare is facing a unique set of challenges and opportunities. We have talked about reform before. We have even lived through changes - HMOs, capitated plans, the introduction of Medicare in 1960s. Yet, this time is different. There is increasing pressure on doctors, hospitals, employers, insurance companies and patients. The patient protection and affordable care act is bringing sweeping changes (many of them good). The solution - the way to react to these changes and challenges - is innovation.
On March 23, 2010, President Barack Obama signed the Patient Protection and Affordable Care Act into law. The PPACA brings major changes to the entire industry. Among those changes is increased access to care.

  • By 2014, 32 million Americans, who were not previously eligible, will qualify for Medicaid.
  • Employers with more than 50 employees will have to offer insurance or pay into a public trust
  • still leaves 23 Million uncovered - mostly illegal immigrants
One bucket - why does increased access to care matter? Today, those without care still contribute to the "bucket" of overall cost. They present in high-cost settings with acute needs (emergency rooms). With insurance, through PPACA, those patients can see physicians in lower-cost environments over longer periods treating less acute needs.; Rather than shifting the cost of their uncompensated ER visit to commercial insurance plans. This also creates challenges with access to care.
JAMA study shows primary care physicians expected to feel the crunch. By 2015 PCPs will have to double their panel size. Put another way, the American Association of Medical Colleges says we'd have to have 63,000 new doctors to cover all the newly enrolled people. Personal soapbox: is coverage the right thing? Absolutely! How the system adapts will require innovation.
We are also seeing data which highlights what we would suspect - our behavior isn't making access to care or costs any better. This study from JAMA looks at actual causes of death rather than morbidities. For example, a morbidity might be a heart attack, the actual cause of that heart attack could be a life time of smoking and inactivity. The findings speak for themselves: 40% of US deaths are because of behavior and lifestyle.
Employers are feeling the crunch too. Studies show, on average, 3-5% of employes make up 50% or more of healthcare costs for most organizations. Not included in that statistic, absenteeism and lack of productivity are also big drains. Look at the left most column, depression, when absenteeism is factored in, is the leading cost. Where is mental health coverage and support? As employers feel the proverbial pinch, they have put as much of the financial burden on the patients as patients will take.
Hospitals are increasingly challenged as well. In 2006 the American Hospital Association reported the average margin was about 7%. By 2008, when a mid-year sample was taken, it was upside down at -7.8%. Today it is closer to 2-3%. Hospitals do not have the disposable income for projects, acquisitions, etc they they once had. Medicaid typically reimburses hospitals well below the actual cost to treat. What affect will the introduction of 32 million new Medicaid enrollees have on margins? Likely we'll see the numbers shift out of charity and bad debt and into Medicaid buckets; surely there will also be further detrimental impact to the bottom line.
For insurance carriers, PPACA introduces new requirements for medical loss ratios. In short, plans (exempting self-insured employer plans) have to have a loss ratio between 80-85%. Today, 32% of people covered, would be covered by plans which do not meet that criteria. Medical loss ratios refer to how much of premium dollars go towards paying medical claims. An 80% MLR means $0.80 of each $1 of premiums goes to paying medical bills. Where's the rest go? Corporate overhead (read: jets, big jets). The wording of the slide is challenging, it comes from the Journal of Managed Care. Where do you think their interest is?
Patient centered medical homes are emerging as a trend. Basically PCMHs must:
  • be primary care focused
  • have navigators
  • have pay for performance contracts
  • practice holistic (whole patient) care
  • enhance access
  • Two components to that one- tech, eVistis
  • Mid-level providers
(told you this was going to be condensed!)
Big take away for PCMHs, they provide requirements for and structure for pay-for-performance contracts.
This slide is really a talking point about the ACO model. Too much to cover here. Basics:

ACOs have three points:

  • provider led orgs strong in primary care accountable for quality and cost across contimium of care for a population of patients
  • payments linked to quality and efficiency (cost reductions)
  • progressively more sophisticated performance measures to prove savings are acheived through improvements in care
Briefly, the idea of an ACO is to have one legal entity which helps conduct the flow of patient care, reduce costs, innovate treatment, bill for the care and dole out the payments to people involved in the care. The more innovative, the more you save, the more you save, the more you keep. The running joke is ACOs are like unicorns, everyone knows what they look like, no one has seen on. The reality is they do exist.

Now, not entirely apropos of ACOs, watch this video from CMS administrator Don Berwick.

shifting gears...
George Washington Carver. Big innovator. First got southern farmers to rotate legumes into their soil, thereby "fixing" the soil with nitrogen and increasing crop yields. Then, when confronted by angry farmers with tons of rotting peanuts, invented 300+ uses for peanuts including....wait for it... peanut butter. That's innovation. He took a problem, gave it a small twist and created a whole new cash crop for the south. Jimmy Carter is forever grateful.
Another innovator. In 1987 Apple had its biggest stock loss. Steve Jobs had already been fired. The stock tanked from $15 to $7. When Louis Ruckeyiser asked Jobs where Apple went wrong, he said Apple stood still and failed to innovate.  When Steve came back, he did the most powerful kind of innovation, disruptive innovation and he did it internally. They drastically cut the number of products they were selling. The streamlined the business and focused on innovations. This week Apple announced record setting financial results.
How does Apple do what they do? According to Simon Sinek, innovators like Apple think from the outside in rather than the inside out. Here, watch this, he says it better than I can.
Another example of innovation, this time in Healthcare. Mayo and others didn't invent social media; they innovated uses for it: patient communities, improved doctor patient communications, organizational feedback... if you are reading this blog, you know this innovation inside and out.
The rest of the talk focused on HOW to innovate. We have the need, we see that others do it and are successful, and this part is learning how to adopt the innovators tool kit. You'll see the slides in the slideshare link above. While I do not wish to be coy, this part is particularly hard to convey in pictures and snippets. Give me a call, tweet or email,
I'll come talk to you and your team about how to innovate. Is this what they call the "freemium" model?
Then you can...