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Should Healthcare Orgs Be Required to Do Zero Cost Accounting?

Posted on August 31, 2018 I Written By

John Lynn is the Founder of the HealthcareScene.com blog network which currently consists of 10 blogs containing over 8000 articles with John having written over 4000 of the articles himself. These EMR and Healthcare IT related articles have been viewed over 16 million times. John also manages Healthcare IT Central and Healthcare IT Today, the leading career Health IT job board and blog. John is co-founder of InfluentialNetworks.com and Physia.com. John is highly involved in social media, and in addition to his blogs can also be found on Twitter: @techguy and @ehrandhit and LinkedIn.

During today’s #HITsm chat, Jeremy Coleman made a strong statement about what he believed every healthcare organization should have to do:

What do you think of Jeremy’s idea? Should every healthcare organization be required to do zero cost accounting? Should every hospital know what their trust costs is for someone to spend a night in their inpatient bed?

These are complicated questions, so let’s start the discussion and see if we can share and learn from each other. At the core of these questions to me is a larger question of whether the price of the services we receive in healthcare should be related to their costs. We all know this isn’t the case when we think about the obscene $20 aspirin you get in the hospital. They charge that price for services they offer because they can. Ok, that’s oversimplifying it, but not too much.

Given that costs aren’t associated with the price healthcare organizations charge for things, I wonder how valuable it is to know how much something costs a healthcare organization. Would knowing this information really change how a healthcare organization operates?

What I think we might find if we do this analysis is that the way things are priced in healthcare really makes no sense at all. However, I think it will also illustrate that there’s no easy path to change the way things are priced in healthcare either. It’s going to take a series of incremental changes that in aggregate will equal a dramatic change. I’m just not sure who in healthcare is patient enough to make these types of incremental changes. Plus, many vested interests will fight against these changes.

I wish I remembered who said this, but I recently read someone who said that insurance companies have hidden behind complexity for years. It’s in their best interest to have things so complex that they don’t make sense so that they don’t have to justify the costs. It’s not just insurance companies that have hidden behind complexity in healthcare either.

As Dan Munro, author of Casino Healthcare, often says, “No one group is to blame for the US Healthcare cost crisis because each segment of the industry is complicit.” Said another way, no one wants to mention that the Emperor has No Clothes. I’m afraid this is why we don’t want to do zero cost accounting and really know how much something costs us in healthcare.

“The Current Model for Healthcare is Not Sustainable?” – Why Not?

Posted on April 23, 2018 I Written By

John Lynn is the Founder of the HealthcareScene.com blog network which currently consists of 10 blogs containing over 8000 articles with John having written over 4000 of the articles himself. These EMR and Healthcare IT related articles have been viewed over 16 million times. John also manages Healthcare IT Central and Healthcare IT Today, the leading career Health IT job board and blog. John is co-founder of InfluentialNetworks.com and Physia.com. John is highly involved in social media, and in addition to his blogs can also be found on Twitter: @techguy and @ehrandhit and LinkedIn.

I’ve heard this phrase over and over:

The Current Model for Healthcare is Not Sustainable?

It’s especially prominent on social media and at conferences. Sometimes they change the word model to costs or some other related word. The message is clear. Healthcare is screwed up and people are pissed that it costs so much. On that I agree with them in many respects. However, I don’t agree that the current model isn’t sustainable. In fact, today I saw it and asked them why it wasn’t sustainable.

No one could give me a good answer.

However, to be clear I clarified that I wasn’t suggesting that we shouldn’t try to change the current model and that we shouldn’t try to stop the crazy healthcare cost curve. I also didn’t argue with the dire consequences that will happen if we don’t change healthcare from its current model. We should do all of those things.

It’s one thing to argue that we could or should do something and quite another to say that the current trajectory is unsustainable.

Healthcare has been surprisingly good at sustaining all of its bad characteristics. In fact, in many ways the bad things in healthcare are actually incredibly profitable.

In response to my question about why the current model is not sustainable I got the following story:

I was behind a lady at CVS who decided not to get her meds because she needed to pay her electrical bill. This cannot be sustainable.

A sad story and no doubt there are hundreds more like it. It’s heartbreaking to read and something we should work to fix. However, don’t wait for the healthcare organizations to fix it. This gets a little twisted, but think it through. If that lady chooses not to take her meds, what happens? Does the doctor get paid less? No. Does the hospital get paid less? No. In fact, if she doesn’t get her meds and gets really sick, the hospital is going to make a ton of money. (Yes, I know about value based care and hospital readmissions, but that’s a small percentage of overall revenue).

I’m not suggesting that any healthcare provider goes around saying that patients shouldn’t be compliant with their medications because it would be good for their hospital business. Even I’m not that cynical. However, if we were in any industry that’s what we’d want people to do. However, in other industries if you chose not to get your medications you’d have a bad experience (ie. you’d get sicker) and then you’d want to use me less. Healthcare is the opposite. If you get sicker you use me more.

The reality is that healthcare is not a true market. Go and read Dan Munro’s book Casino Healthcare to see what I mean. Healthcare is complex and it hides its issues behind that complexity.

I’m sure that some people reading this are going to offer up some pockets and small examples where this isn’t true in healthcare. Great. We need more of that and soon. We need it because healthcare is costing our nation too much money. We need it because healthcare is costing businesses too much money. We need it because many people aren’t getting the care they need because they can’t afford it. We need it for a lot of reasons.

However, we don’t need these changes because healthcare is going to collapse if we don’t change. In fact, to paraphrase Dan Munro, most in healthcare are profiting from its dysfunction. That’s why it’s so hard to change. Sadly, I don’t see anything that tells me we’ll stop paying either. The current model is surprisingly resilient and sustainable.

Of course, that’s not to say outside forces couldn’t change things. They can and they should. Patients are paying way too much for healthcare and we should be pissed and push for change. Businesses are paying too much for healthcare and we should be pissed and push for change. Government pays more for healthcare than anyone else and they’are paying too much for it. They should be pissed and push for change.

Just don’t expect providers or even payers to disrupt themselves. They’re all enjoying a shockingly sustainable business model. IT can only do so much when it comes to solving the business model issues.

Healthcare Price Transparency Driving Choice – Just The Wrong Direction

Posted on July 25, 2016 I Written By

Colin Hung is the co-founder of the #hcldr (healthcare leadership) tweetchat one of the most popular and active healthcare social media communities on Twitter. Colin speaks, tweets and blogs regularly about healthcare, technology, marketing and leadership. He is currently an independent marketing consultant working with leading healthIT companies. Colin is a member of #TheWalkingGallery. His Twitter handle is: @Colin_Hung.

Last month, the Healthcare Financial Management Association held their annual conference – #HFMA16ANI. The topics covered in the sessions and discussed in the aisles of the exhibit hall were wide-ranging. Financial patient experience, scoring based on propensity to pay, patient loans, financing options and price transparency were on the lips of many attendees.

The discussions on price transparency were particularly interesting. Attendees were not talking about transparency as the silver-bullet for reducing costs in healthcare like they were last year. Instead, attendees were talking about it as being just the first step in a long journey to a truly open market in healthcare.

Just a few years ago, price transparency was touted as the necessary catalyst for true consumer/patient choice in healthcare. It was believed that with detailed price information patients would be able to “shop around” for their care using price as a determining factor. Having this choice would mean healthcare organizations would have to become more price competitive – thus driving overall costs lower.

Check out this excellent post from Dan Munro @danmunro back in 2013 that captures the hope of price transparency at that time.

I believe that all the work around price transparency in the past few years has indeed pushed patients to make choices in their healthcare – just not the choices that we want.

This tweet from Annette McKinnon @anetto, a patient advocate from Toronto, during a recent #hcldr tweetchat perfectly illustrates the choices patients are making when they know the price of care:

Armed with price information, patients are not choosing to shop around for more affordable options, instead they are making the choice between forgoing care vs getting treatment. A Gallop poll found that in the US, 33% of families have put off medical treatment because of cost. That same poll shows that 22% of Americans have put off medical treatment for a “very” or “somewhat serious” condition.

So why aren’t patients taking the pricing information they receive and shopping around for cheaper alternatives? The biggest reason in my opinion is that patients do not have value transparency.

To me, value transparency is a state where patients purchasing healthcare services have a clear understanding of the expected outcomes, health benefits, disadvantages, risks and costs associated with it. In addition, patients would know how those services will be delivered (the workflow) and who is doing it. When a patient has access to this type of information and has the knowledge to interpret it, that’s when they have value transparency.

So what do we need to get to this state of value transparency in healthcare? Members of the #hcldr community had some interesting suggestions:

I believe that one day we will have value transparency in healthcare. Price transparency is an important first step. However, price in and of itself is not sufficient information to spur most patients to choose between different providers of care. In its current form, price transparency may be doing more harm than good for patients with chronic conditions that get worse without treatment – they may choose to forgo care due to cost only to end up in a more critical situation later because of the delay in treatment.

My hope is that someone will take today’s healthcare pricing tools and merge them with standardized quality metrics, crowdsourced patient experience data and provider histories to create a value transparency tool. In the meantime, the current crop of price transparency tools can at least help to reduce the fear of the unknown medical bill.

Patient Mismatching is Medical Error Problem, But We Don’t Treat It As Such, Why?

Posted on October 26, 2015 I Written By

John Lynn is the Founder of the HealthcareScene.com blog network which currently consists of 10 blogs containing over 8000 articles with John having written over 4000 of the articles himself. These EMR and Healthcare IT related articles have been viewed over 16 million times. John also manages Healthcare IT Central and Healthcare IT Today, the leading career Health IT job board and blog. John is co-founder of InfluentialNetworks.com and Physia.com. John is highly involved in social media, and in addition to his blogs can also be found on Twitter: @techguy and @ehrandhit and LinkedIn.

Dan Munro shared this recent stat about patient mismatching and medical errors.

I can’t say I’ve heard many people talk about patient mismatching as a medical error. I haven’t seen us treat patient mismatching the way we treat other medical errors and that’s unfortunate since it’s as much of a medical error as anything else.

I certainly hear many people talk about the challenges of patient mismatches. I also know of companies built just to work on the patient mismatching problem. However, it seems that most people just treat the problem as a feature that can’t be changed. It’s almost like we’re ok with a certain amount of patient mismatching. That’s wrong since accepting patient mismatching is accepting medical errors.

Many people look at patient mismatching and blame it on not having a national patient identifier. While we all agree that a national patient ID would solve some of the problem, it certainly wouldn’t solve all of the problems. Patient mismatching would still occur even if we had a national patient ID.

The best solutions I’ve seen so far to avoid as many patient mismatches as possible is to create an ongoing system for cleanup and biometrics. The later is a powerful solution and the costs to implement biometrics into your patient matching program has come down in cost. I hope we see more and more of it across all of healthcare.

Hospital EMR Adoption Chart

Posted on October 9, 2015 I Written By

John Lynn is the Founder of the HealthcareScene.com blog network which currently consists of 10 blogs containing over 8000 articles with John having written over 4000 of the articles himself. These EMR and Healthcare IT related articles have been viewed over 16 million times. John also manages Healthcare IT Central and Healthcare IT Today, the leading career Health IT job board and blog. John is co-founder of InfluentialNetworks.com and Physia.com. John is highly involved in social media, and in addition to his blogs can also be found on Twitter: @techguy and @ehrandhit and LinkedIn.

One way to look EHR adoption in the US is that 75% of hospitals have adopted at least a basic EHR. Or as Dan Munro observes from the chart below, 66% of hospitals still don’t have a “comprehensive EHR.” What’s your perspective on EHR adoption?

Epic’s Success in the Hospital EHR Market

Posted on August 17, 2011 I Written By

John Lynn is the Founder of the HealthcareScene.com blog network which currently consists of 10 blogs containing over 8000 articles with John having written over 4000 of the articles himself. These EMR and Healthcare IT related articles have been viewed over 16 million times. John also manages Healthcare IT Central and Healthcare IT Today, the leading career Health IT job board and blog. John is co-founder of InfluentialNetworks.com and Physia.com. John is highly involved in social media, and in addition to his blogs can also be found on Twitter: @techguy and @ehrandhit and LinkedIn.

I took Katherine’s post about Epic Being a Victim of Its Own Success and posted it on Google Plus to see what kind of conversation would happen (Note: You can find me on Google Plus here). Turns out, it’s already generated 15 responses with a bunch of interesting points of view.

Dan Munro just left the following summary of Epic’s success that I thought was definitely worth sharing on this site since it was thoughtful and useful to consider.

1) The KP deal (started in 2003) is estimated to run $4B over 10yrs
2) Kent Gale, president of KLAS Enterprises, a research firm known in healthcare specifically for its customer surveys said “…there’s a huge gap between Epic and the other vendors. That is probably the biggest differentiator. They are able to keep their commitments better.”
3) Epic ranked No. 1 in seven out of 20 categories in one of KLAS’ most recent survey (and they don’t sell products for several of the categories).
4) “They have a reputation for doing the right things,” said Thomas Handler, a physician and research director at Gartner.
5) Founded in 1979 with an initial investment of $70,000, the company now is conservatively estimated by Wall Street analysts to be worth $1.2 billion (2008).
6) Epic has never done an acquisition, has no debt and has been known to turn away business.
7) The company historically has hired only 2% of all applicants.
8) Epic receives about 40,000 to 50,000 applications/year.
9) Epic’s software enabled Kaiser, the country’s largest health system (outside of VA?), to confirm that Vioxx increased the risk of blood clots, leading to the prescription painkiller being pulled from the market.
10) The company rarely negotiates on price. There is one exception: It has been known to give breaks, such as waiving its annual maintenance fee, to struggling hospitals.

Certainly Epic has been doing very very well. I’m not sure anyone would argue against that.