By Dave Chase

First Posted at Forbes on 9/30/2013

Dave Chase, Forbes Contributor and CEO, Avado

Dave Chase, Forbes Contributor and CEO, Avado

Historically, the “do more, bill more” fee-for-service model of healthcare measured success by increased billings. In the fee-for-value era, we need a new framework for assessing healthcare results. Quality indicators are logical but they  are mostly geared towards measuring actions taken. We can borrow a concept from the energy sector for an additional metric.  We need a concept for removing waste and unnecessary care that could be inspired by a concept from the energy sector described in this blurb from Wikipedia for something called Negawatts.

Negawatt power is a theoretical unit of power representing an amount of energy (measured in watts) saved. The energy saved is a direct result of energy conservation or increased energy efficiency. The term was coined by the chief scientist of the Rocky Mountain Institute and environmentalist Amory Lovins in 1989, arguing that utility customers don’t want kilowatt-hours of electricity; they want energy services such as hot showers, cold beer, lit rooms, and spinning shafts, which can come more cheaply if electricity is used more efficiently.[1] Lovins felt an international behavioral change was necessary in order to decrease countries’ dependence on excessive amounts of energy. The concept of a negawatt could influence a behavioral change in consumers by encouraging them to think about the energy that they spend.

The healthcare parallel would be a “Negaclaim™” — i.e., an unnecessary claim avoided. This isn’t about simply denying care. Just as consumers aren’t interested in kilowatt hours, patients aren’t interested in claims — they want health restored and diseases prevented which can be done more efficiently and effectively. When individuals are fully educated on the trade-offs associated with interventions, they generally choose the less invasive approach. A nice byproduct is the invasive approaches are frequently more costly and medically unnecessary. The following are a few of many examples of how unnecessary care can be eliminated while improving the patient experience:

  • Day-to-day and chronic disease care: One of the key reasons Direct Primary Care (DPC) has proven itself to the the Triple Aim  leader is a proper primary care relationship involves time spent with patients to explain trade-offs of various medical options. DPC physicians have no financial incentive to drive people to/away from additional care with specialists and hospitals adding further credibility. Without explicit or implicit incentives to push for “more”, DPC providers have demonstrated reducing unnecessary utilization 40-80%. In contrast “hamster wheel” primary care has effectively turned primary care into milk-in-the-back-of-the-store — i.e., 7 minute drive-by appointments leave little time to do anything but direct patients towards additional costly items whether it’s ordering a prescription, test, hospitalization or specialist visit. In many cases, those could be avoided with a robust primary care relationship.
  • High Cost Procedures: Leah Binder wrote about what major employers such as Walmart, Loews, Pepsico and others are doing to reduce risk to their employees while also saving money in What We Can Learn From Walmart: How Our Healthcare System Can Save Lives and Dollars. Employees found that 40% of the transplants that were recommended by local hospitals were deemed medically unnecessary by top physicians at the Mayo Clinic and other nationally renowned facilities. Employees were thrilled to avoid risky (and expensive) procedures. It also sent a great message to employees that their employer valued them enough to send them to the medical centers in the world for second opinions.
  • End of Life: Quality of life is impacted dramatically by the end-of-life decisions we make. This was outlined in How Not to Die. As the doctor outlined the system is oriented to do more even if it is at odds with quality of life. Doctors themselves recognize this when they are the patient as described in Why Doctors Die Differently. While quality of life is the driving factor for patients and families, there is a second order benefit that the procedures that negatively impact quality of life are typically very expensive.

The problem in healthcare has been providers have been incented to do stuff by flawed reimbursement models that dominate our present healthcare system. Respected studies such as from the Institute of Medicine demonstrate that there is more than $750 billion in waste. PwC was even damning of the waste  stating that more than half of healthcare spending is waste. Despite this, incentives have driven providers to encourage more interventions and consumers have been led to believe that more is better even though, in many cases, less is more.

That has added a challenge for health insurers. The general perception is that health insurers reflexively deny claims (sometimes getting in trouble for that). This has resulted in health insurers having the lowest Net Promoter Score of any industry. Consumers have clearly decided that health insurers aren’t doing this for consumer benefit. Fair or not, they have concluded it’s simply for the financial health of the insurer. Clearly health insurers need a different approach if they want to improve their image and the health of their customers while ensuring their financial viability.

One incentive that has changed revolves around the Medical Loss Ratio (see Aetna’s explanation here). I’m not a compliance lawyer [I'd welcome anyone to chime in here that is] but one would think that investments in patient engagement initiatives would qualify as a “spending on healthcare” as opposed to excluded items such as network development, sales and marketing. In contrast to “customer service” reps focused on claims, an investment in patient engagement can have the same or greater effect on reducing claims while qualifying as a healthcare expense. Enter patient engagement.

Patient Engagement Is the Blockbuster Drug of the Century 
Leonard Kish made the case that if patient engagement was a drug, it would eclipse all blockbuster drugs before it. Kish cited results of studies showing benefit when patients were successfully engaged in their health.

Compared to those not enrolled in the study, coordinated care “patients have an 88 percent reduced risk of dying of a cardiac-related cause when enrolled within 90 days of a heart attack, compared to those not in the program.” And, “clinical care teams reduced overall mortality by 76 percent and cardiac mortality by 73 percent.

Rather than reflexively denying claims and building up a mountain of ill will, insurance companies should invest resources in helping their customers get engaged in their health. Their customers would, in effect, “self-deny” their own claims.

Note that when I describe patient engagement, I’m including family members and caregivers. Did you know that families provide care valued at more than $450 billion per year – more than our total spending on Medicare! Thus, much of what is outlined below speaks to caregivers (particularly with elderly patients), not just the patient. Having more resources/tools as a caregiver would be welcomed as most of us have no clinical background and are thrown into a caregiving role virtually overnight.

[Disclosure: My patient relationship management company is one of the organizations providing patient engagement tools to healthcare providers which is why I'm familiar with these examples.] 

Just about every myth has been debunked that patients of all types won’t get engaged in their health whether it’s low income diabetes patientsnative American populations or the elderly. However, providers are largely failing in their efforts at engaging patients as they haven’t had the incentives, tools or training.  Provider-patient communications guru, Stephen Wilkins, points this out clearly in a few pieces

Despite less than stellar results that Wilkins highlights, the initial attempts by providers at engaging patients are welcomed just as a muddy puddle of water in the Sahara Desert is welcomed. However, much more can be done.

Catalyzing Patient Engagement in Health Plans’ Best Interests

A wave of new requirements and challenges have crashed on top of providers. Insurers could help if they focus in the right areas and mindful of the challenges. JAMA recently wrote a piece highlighting one facet of patient engagement — shared decision-making (SDM). Physicians aren’t going to magically take on this challenge without a change.

The brevity of visits constrains the opportunities to address these elements of SDM. Furthermore, clinicians are not adequately trained to facilitate SDM, especially eliciting patient values and preferences for treatment.

[Note: Resources to train clinicians on patient engagement are emerging. One would expect that a host of continuing education courses will emerge. One example is HIMSS (the professional association for healthIT) released aseminal book on patient engagement that Forbes got an exclusive excerpt from recently.]

In the places where providers have successfully achieved the Triple Aim objectives with challenging patient populations, they have had payment aligned with outcomes. This unleashed teams, led by doctors, to get creative about how to tackle the challenges. While doctors are vital, they heavily use non-physicians for a substantial part of the interaction with patients. It turns out, for example, that doctors and even nurses can be less effective at effecting behavioral change in patients than non-typical care team members. Rather than being relegated to low-level tasks, medical assistants and health coaches play a vital role in the successful models. Once again, while the goal is an improve health outcome, there is a second order benefit that being more effective lowers costs by avoiding complications and the medical assistants and health coaches are generally paid less than doctors and nurses. Unfortunately, in a typical fee-for-service reimbursement model, these types of services typically aren’t compensated despite their impressive results.

Dr. Rob Lamberts described this problem in detail in Washington, We Have a Problem. His summary the conflict between people’s desires and healthcare’s flawed reimbursement framework.

This is why, I believe, any system that profits more from people with “problems” than those without is destined to collapse. Our system is opposed to the goal of every person I see: to stay healthy and stay on as few drugs, have as few procedures, and avoid as many doctors (and drug companies) as possible.

Health insurers have implicitly viewed their customers as adversaries by creating a claim-denying framework as the default. The smart health plans will figure out how to harness the consumer goal that Dr. Lamberts outlined — stay healthy and generally avoid doctors, drugs and procedures as much as possible. This isn’t some fanciful dream as it has been demonstrated (profitably, I might add) by the physician-entrepreneur organizations outlined in The Hot Spotters Sequel: Population Health Heroes.

It’s worth noting that this isn’t about minor tweaks to a fundamentally flawed model. Rather, as one physician-entrepreneur put it, too many models are “putting wings on cars and calling them airplanes.” Rather, it’s supporting proven models where they have rethought care delivery – here’s how one physician-entrepreneur describes rethinking care delivery from the ground up (video).

While financial rewards are important, most physicians are not motivated primarily by money but by autonomy, mastery and purpose. In the aforementioned successful models, the physician-entrepreneurs created their own autonomy and recognized the focus of their mastery and purpose had to fundamentally shift. A nice byproduct was the growth of “Negaclaims” as the educated and empowered patients better understood the significant risks of over treatment and errors.

Too frequently, health plans have tried to micro manage clinical processes. With proper financial incentives combined with move towards enabling clinical teams to become masters at driving patient engagement, the health plan is much more likely to achieve the outcomes they desire. As the Stephen Wilkins pieces linked to above illustrate, clinicians haven’t been trained or rewarded directly or indirectly for encouraging patient engagement. It should be no surprise that most haven’t achieved mastery in helping their patients achieve patient engagement. Instead, the language of medicine has been punitive and demeaning talking about “non-compliant” patients as though they were petulant criminals. That doesn’t further the partnership between patients and their care teams which is necessary for optimal outcomes.

Previously I outlined the strong business case for patient engagement. For those who have understood that business case, they have moved on to practice the 7 habits of highly patient-centric providers. It’s clear that past efforts by health plans to reduce claims have fallen short and created ill will and sub-optimal health outcomes. Putting the patient/member at the center need not be a marketing gimmick. Rather, it’s central to a winning strategy in the fee-for-value era.

Low Net Promoter scores for Health Insurance industry creates motivation to try new approaches