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The Truven Health Blog


The latest healthcare topics from a trusted, proven, and unbiased source.


Walmart’s Move into Primary Care


By Michael L. Taylor/Friday, September 5, 2014
Mike Taylor imageLast year, Walmart announced a plan to provide full primary care services to consumers nationwide within five to seven years. With its latest announcement, as reported by The New York Times, it now intends to start fulfilling its promise. Starting with six clinics in South Carolina and Texas, Walmart announced its intention to open six more clinics by the end of 2014. Walmart stores are often in rural areas that are medically under served, and they may be leveraging their locations to provide medical services in these under served areas. A big winner in this new development may be QuadMed, the service provider who won the contract to partner with Walmart in this effort.

How Walmart intends to use these primary care clinics isn’t completely clear. The traditional QuadMed model has been to provide comprehensive primary care services and to be the patient’s sole primary care provider. Their clinics typically use primary care doctors, with nurse practitioners supplementing the care. Specialty care is typically referred to the specialists in the community, but QuadMed doctors provide all the primary care, even in the care of complex cases.

But in the Walmart deal, there’s a subtle difference. Nurse practitioners will be providing the care with oversight of physicians, but the physicians won’t actually see patients – just providing oversight. This is a different model that may have implications for Walmart. As reported in The New York Times, the QuadMed Medical Director, Dr. David Severance said, “In that circumstance (complex care patients), it’s our desire to get those individuals established with a primary care provider, preferably a physician within the community.”

This is a different approach for QuadMed. The Walmart clinics won’t be a primary care center, but will employ a nurse practitioner model that uses physician in the community for primary care, in some cases. This model has similarities to the Walgreens and CVS approach of “retail clinics” that provide a limited scope of services and don’t deliver primary care. QuadMed has provided more comprehensive services, that of a patient-centered medical home led by a strong primary care physician. Their clinics have an excellent track record of providing cost-efficient, high-quality care in a timely manner. This new model of care will need to be delivered with a mid-level approach and a partnership with a physician in the community. That may be tricky.

The Walmart approach to delivering outpatient care could fill an important void, especially in under served areas. I was surprised to learn the Walmart clinics will only be open 8:00 a.m. – 5:00 p.m. Monday through Saturday, and 10:00 a.m. – 6:00 p.m. on Sunday. I imagine the hours will expand over time to offer more evening hours to better compete with urgent care centers—especially in Texas, which doesn’t restrict free-standing emergency and urgent care centers. To be successful over time, the clinics will also need to accept their patient’s private insurance; this will be another change in the QuadMed model.

Medical care can be fragmented, with multiple physicians treating the same patients, but not communicating well. This fragmentation can lead to medical errors, inefficiencies and increased cost. The physicians overseeing the Walmart clinics should have a clear method of communicating with other physicians caring for these patients, ensuring all involved are aware of any diagnoses and treatments resulting from the clinic visit. There should also be a method to avoid duplicate lab tests and x-rays – a common problem in today’s medical care community. Well-run centers generally do a better job of using generic prescriptions, managing referrals to specialists, and avoiding unnecessary tests, especially CT and MRI exams. Since the actual care will be delivered by nurse practitioners, not by physicians, close oversight will be important to avoid these pitfalls.

This is a big step for Walmart, and I’m hopeful these clinics perform well. Will Walmart one day be the largest provider of primary care in the U.S.? Don’t be surprised to see that happen.

Michael L. Taylor, MD, FACP
Chief Medical Officer

Care Coordination Under Medicare


By Michael L. Taylor/Wednesday, September 3, 2014
Mike Taylor imageThe recent announcement by the Centers for Medicare and Medicaid (CMS) concerning payment for care coordination is a step in the right direction.

Dr. Matthew Press, an internist in academic medicine, aptly described how demanding excellent care coordination can be. In the August 13, 2014 edition of the New England Journal of Medicine, Dr. Press wrote of his work with a patient (Mr. K.) who had recently been diagnosed with a mass in his liver:

“Over the 80 days between when I informed Mr. K. about the MRI result and when his tumor was resected, 11 other clinicians became involved in his care, and he had 5 procedures and 11 office visits (none of them with me). As the complexity of his care increased, the tasks involved in coordinating it multiplied. I kept a running list and, at the end, created an “instant replay” of Mr. K.'s care (see diagram; also see animation, available with the full text of this article at NEJM.org). In total, I communicated with the other clinicians 40 times (32 e-mails and 8 phone calls) and with Mr. K. or his wife 12 times. At least 1 communication occurred on 26 of the 80 days, and on the busiest day (day 32), 6 communications occurred.”

Dr. Press went on to comment he doesn’t have a full-time practice, but splits his time between teaching and caring for patients, and acknowledged how difficult care coordination can be for a physician practicing medicine full-time.

Many primary care physicians have provided care coordination without compensation, but it’s hoped this policy change by CMS will drive improved outcomes. I should point out that care coordination is an integral part of the patient-centered medical home concept. It’s generally a process used by most organizations that provide care using a team-based concept that is value-based, not based on traditional fee-for–service reimbursement.

There will be challenges.  Most physicians are highly ethical, but there’s a potential for abuse and perhaps even fraud. I can imagine a physician hiring a nurse practitioner to do nothing but make telephone calls to elderly patients with several chronic diseases. The CMS requirement for the patient to agree, in writing, beforehand and the patient footing 20% of the bill should drive accountability, but this new program will require oversight. Is the $42 per month proposed by CMS enough compensation to make this worthwhile? I would expect that smaller practices won’t find this feasible at that rate of pay. The requirement that someone from the medical practice be accessible 24/7 may also give physicians some pause.

Even with the inevitable uncertainties of any new program, I think larger, well-organized practices will find this new policy helpful in caring for some of their most complex patients, and I’m hopeful many practices will integrate care coordination into their management of the care of these patients.

Michael L. Taylor, MD, FACP
Chief Medical Officer

Large Employers Continue to Manage Their Healthcare Spend


By Michael L. Taylor/Tuesday, September 2, 2014
Mike Taylor imageA recent survey published by the National Business Group on Health (NBGH) found large employers haven’t stopped trying new ideas to control their healthcare spend. Various consulting firms have predicted anywhere from a 4% to 9% healthcare cost increase for 2014, with a sharper uptick in 2015, so these strategies are very important. The medical spend trend in the past several years has been more moderate due to a combination of lingering effects from the recession and payment reform. What strategies will employers use to control costs in the future? Here is a partial list (in no particular order):
  • Employers will continue to implement higher co-pays and deductibles. This has been occurring for 20 years with the employer typically paying 70-80% of the cost and employees picking up the rest.
  • The use of high-deductible health plans (HDHP) will continue to grow, with deductibles above $1000. HDHP include the full cost of all prescriptions as part of the deductible, and employers expect that strategy to drive more transparency around drug costs and a higher demand for generics.
  • Employers will more carefully consider the use of spousal surcharges. The logic is that if a spouse has other coverage because they work at another employer, the spouse should take that coverage. Spousal surcharges run more than $100 per month, and are intended to incent the spouse to seek other coverage.
  • Large employers haven’t given up on wellness programs. We will see continued interest in financial incentives to change behavior, with a minority of employers incenting outcomes such as weight loss, tobacco cessation and physical activity.
  • Many employers haven’t found value in disease management programs and are looking into other ways to help employees better utilize healthcare services. The future of disease management programs is unclear, but providers are working hard to target these programs to patients who are most likely to benefit.
  • “Specialty drugs” or “biologics” are a growing cost issue. As has been reported by many, the new Hepatitis drug costs $84,000 for a 12 week treatment. Specialty drugs consume roughly 25% of the drug spend, but are projected to rise to nearly 50% in the coming years. Employers will likely use step therapy and prior authorization programs to manage these costs.
  • Interest in narrow networks will continue to grow, including incentives to receive care at distant medical centers and “Centers of Excellence.” Large employers with many employees at one location are studying the feasibility of contracting with only a few hospitals by offering the hospitals a larger volume in return for a lower unit price. I believe this will be limited to certain procedures (cardiac bypass, hip and knee replacement) rather than full alliances.
  • Employers will continue to drive “pay for value, not volume” payment reform. This is a newer trend, but I believe it will grow substantially in the next several years. Employers want to know they are buying high quality healthcare, and not paying for wasteful unnecessary care.
  • Employers are still considering more transparency tools to help their employees understand cost, but many employers are looking to their health plans to provide these tools.
  • Most employers have shifted their retiree benefit plans (especially for the pre-65 retirees) to an exchange, rather than allowing the retirees to remain on their traditional plans.
  • Some employers are looking to public or private exchanges. These conversations are less likely to be occurring for those who employ large numbers of knowledge workers; most of this activity will likely take place among companies that employ low-margin service employers.
Our clients are studying many options. There is no single clear strategy; every employer has a different culture, and a unique approach to managing costs. These choices are difficult for employers to evaluate, because there are so many variables and confounders that it’s difficult to know what parts of the strategy are actually working. Employers are depending more and more on data and analysis to understand all these moving parts. The one constant among all the variables will be the need for data and thoughtful analysis.

Michael L. Taylor, MD, FACP
Chief Medical Officer

ACO Executives Struggle to Estimate Degree of Financial Risk


By Michael L. Taylor/Wednesday, August 6, 2014
Michael L. Taylor imageA recent survey found many executives of Accountable Care Organizations (ACOs) are struggling to properly estimate the degree of financial risk their organization can bear. These organizations would benefit from an actuarial assessment of the ACO population for which they are intending to provide care, but many ACOs don’t have the many types of data needed to properly estimate risk. There are two areas of risk to assess:


  • The cost implications for those patients with chronic disease: ACOs need to not only understand the costs associated with chronic diseases such as heart disease, diabetes and cancer, but also the prevalence of these diseases in the population for whom the ACO is assuming risk
  • The cost implications for those without a chronic disease, but at risk for illness due to lifestyle risk factors: A large volume of scientific literature has consistently shown that, in a given population, as the number of risk factors increase, medical cost rises.
Doctors may have this information for the patients for whom they are caring, but they won’t have the data for an entire population. It’s difficult to predict costs without prevalence data.

Obtaining the data necessary to do this risk analysis is therefore necessary, but can be tricky for ACOs. Multi-year administrative claims data can demonstrate the burden of chronic disease, although typically this data isn’t held by any single provider. Regarding lifestyle risk, many large employers use “self-reported” data from health risk assessments for this purpose, but ACOs generally do not have access to these data. There are other factors to consider to predict costs in a population. Socioeconomic factors, level of education, and ethnicity all impact medical costs, but ACOs may struggle to obtain these data as well.

Successful ACOs will need access to these data streams and the ability to analyze the data to make financial predictions and create viable business models. They will also need to factor in the cost of obtaining these various types of data to include in the models. They will then need to partner with doctors and hospital systems to provide high-quality, efficient care in order to be financially viable. It can be done – we have customers that are assembling and integrating multiple data streams, performing and monitoring the analytics, and sharing the results across their enterprises – with careful planning, close coordination, and transparent governance.

Michael L. Taylor, MD, FACP
Chief Medical Officer

Using Big Data to Improve Quality and Reduce Costs


By Michael L. Taylor/Wednesday, July 16, 2014
Mike Taylor imageA new report on potential uses of big data for controlling cost in the hospital setting has just been published. The report, from Brigham and Women’s Hospital in Boston, appeared in the July 2014 edition of Health Affairs. Six areas of potential benefit were discussed:

  • High-cost patients
  • Preventable readmissions
  • Triage upon hospital admission
  • Decompensation of clinical condition while in the hospital
  • Adverse events, particularly renal failure, infections, and adverse drug reactions
  • Treatment optimization for those with chronic disease involving multiple organs
As the authors point out, these are six key areas for intervention to lower healthcare costs in the hospital setting, and using more diverse data sources to analyze these opportunities will be useful.

As I reflect on this report, it strikes me that this type of report would have probably not been published several years ago. Healthcare reform, particularly changes in the payment methodology, is driving this type of research. I understand the need to minimize the healthcare spend and agree these are six key areas for research. But, in my opinion, the more important clinical issue is the improvement in the quality of care and probable saving of lives from better care. This is the real issue and opportunity.

All six of these areas are a result of missed opportunities to improve care. These areas are inter-related: high-cost patients are often a result of those who are readmitted multiple times for the same condition, suffer complications, are inappropriately triaged, and have missed diagnoses or have adverse events. Some of these problems can be prevented medically, but some of these issues have broader root causes. Take readmissions – many cases are due to socioeconomic factors such as inability to pay for medications, poor access to outpatient healthcare, or inability to pay for home care. Doctors and hospitals have historically not been paid to consider and manage these non-medical factors that lead to increased medical cost. While no physician wants complications to develop in their patients, hospitals and physicians have never before been penalized if this happened, so there has not been a focus on preventing these complications. New payment incentives are driving these changes and new approaches to care are developing. The promise of higher pay for better value in healthcare of populations, not for providing more services to individuals, is leading to new solutions in these six areas. “Big data,” meaning information about socioeconomic factors, living situations and other new data sources, and then using these data in predictive algorithms, will improve our ability to care for populations, not just treat individuals. 

At Truven Health Analytics, we use data to understand high-cost medical care. As we work with the payers of healthcare, especially large employers, part of our study is high-cost patients. I consistently find these cases to be complex, often involving advanced cancer cases or complicated heart failure cases. Closer oversight of these patients, team-based care, and better methods to predict and manage complications is warranted in many of these cases. Accountable Care Organizations (ACOs), with a patient-centered focus and a population health strategy, are promising new approaches to improving care. The tragedy of many of these cases however, is the missed opportunity to prevent these cases from ever occurring. If screening guidelines were followed more universally, advanced colon cancer would almost never happen. Heart failure is usually due to multiple heart attacks that could be prevented by paying closer attention to decreasing risk factors. Not all high-cost cases can be prevented, but many could be avoided.

Why, as a nation, are we not doing a better job in managing the health of our population? The most obvious answer is because we aren’t focusing on and prioritizing disease prevention among our population. Up to 70% of healthcare costs are due to preventable disease, but our healthcare system hasn’t been paid to focus on this issue. But change is apparent. The healthcare industry is undergoing more rapid change at this time than I’ve ever seen in my 30+ years of being a doctor. The new clear message is this: the way to manage costs is to improve the quality of care for entire populations, including new ways to prevent disease. Technology in the form of implementing integrated electronic health records, using more diverse data streams, re-designing healthcare delivery, and better predictive analytics are all tools to improve the quality of healthcare in the U.S. This is the right path to reduce costs.

Michael L. Taylor, MD, FACP
Chief Medical Office

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