Sisyphean Wars

I'm going to talk about the new Star Wars. Spoilers are a given.

I've been thinking back to a very old post, What Lies Ahead?, where I tried to boil down the various futures envisioned in sci-fi to a handful of archetypes. Star Wars is arguably not sci-fi per se but it strikes me that its world is in many ways a very soft version of what I dubbed "The Wasteland":

The Wasteland

This future inherently assumes that the hubris of man will lead to his downfall. In The Wasteland, the human race has been partially or mostly destroyed and the remnants of humanity are locked in a constant struggle for survival. In most incarnations, it is the inevitable outcome of the Technocracy. For example, in Terminator and The Matrix the creation of advanced artificial intelligence ultimately backfires and leads to the destruction of much of the human race. In 12 Monkeys, human tampering with dangerous viruses kills most of the population and drives the survivors to a primitive existence underground.

The Wasteland is invariably post-apocalyptic. Regardless of whether he retains a measure of technological prowess, man has regressed substantially. His (perhaps foolish) primary goal is to regain what has been lost, often without any clear conception of how he will prevent history from repeating itself. I would classify the future depicted in the original Planet of the Apes as The Wasteland because it contains numerous themes of rebuilding a fallen society (the astronauts' entire voyage is designed for such purposes: of the woman astronaut, Charlton Heston explains "She was to be the new Eve" and it seems clear he has similar designs on the mute future-human Nova).

Star Wars, of course, is not post-apocalyptic and isn't quite as grim as the sci-fi movies that employ this trope. But it is a story of what happens after The Fall, when evil vanquishes good and a once great republic gives way to the yoke of tyranny and oppression. What virtue remains is stored in the outlaws and marginalized under the new regime: declared enemies of the state long-since resigned to seclusion; moisture farmers living beyond the reach of the Empire but not beyond that of local gangsters like the Hutts who rule their world; rebels living the smugglers' life in ice caves.  (Far from a unique circumstance in sci-fi: think of Firefly's losers of the Unification War, the Browncoats, who drift into ever less civilized outer reaches of their solar system.)

What the original trilogy promised us was life after The Fall. Restoration of an idealized past (a more civilized age). Good once again triumphing over evil. But that was only part of the allure. We got to follow the hero's journey; the interruption of his frustrated and mundane existence by his call to adventure invited us to quench our thirst for the same. His growing awareness of his dormant greatness and unrealized potential--nay, his destiny--resonated because it struck a universal chord of aspiration in all of us. And magic, infinite in its amazingness and utility to our hero, was real! Luminous beings are we! (Not this crude matter.)

And we got to explore the redemption of a man, not just a society. Iconic as he was, ever physically imposing and sinister, the Vader of Episode IV was ultimately the mundane administrator of a fascist bureaucracy. He was Eichmann with magic powers. Only a mysterious past and hints of motivation beyond the mere banality of evil made him something more and gave momentum to his evolution and illumination in the subsequent films. The denouement of Luke and Vader's journeys coincided: the moment when Luke, justifiably declaring himself at last a Jedi ("...like my father before me") definitively rejected the allure of the Dark Side, offered forgiveness instead of retribution to his fallen father, and placed his fate in the hands of Palpatine and Vader.

But now with Episode VII our perceptions are forever altered. Because now we know. When we watch our heroes in their moment of elation and triumph on Endor we know, as perhaps we should've always suspected, that it was not to last. Their futures held only pain, failure, and ultimately loneliness. For Luke, the failure to resuscitate the Jedi Order, loss of his family, and self-imposed exile. For Han and Leia, the loss of a child and the deterioration of their relationship. Despite references to a new republic, the rise of a new fascist state and superweapon suggest ongoing civil war at best, a galactic failed state at worst.

Three decades have passed but our heroes are as we met them: Leia dogged in her dedication to the cause of the rebellion/resistance but alone; Han a dashing ne'er do well ruffian, alone save for his walking carpet; Luke once more relegated to a lonely galactic backwater, removed from events shaping the galaxy and once more staring toward the horizon (the twin sunset traded for an endless oceanscape). Their victories, their very existence now only the stuff of legends.

The parallels--or anti-parallels as the case may be--between the original trilogy and the new one are obvious and enjoyable. A new young hero has been called to unexpected greatness; a father offers forgiveness to a son (with much different results than the Luke-Vader analog); and a long journey is only just begun. It seems likely we will be treated now not only to the story of Rey's journey  to mastering the Light Side, but the story of Kylo Ren's concurrent descent and mastery of the Dark side. And as fans of The Godfather know, the story of a man's descent into evil can be just as good.

But if, as many have noticed, Kylo Ren is what we wish Anakin had been in the prequels it's because his story promises to essentially be Anakin's (but better acted). Just as Rey's promises to be Luke's. Some have suggested that when Episode VII slipped beyond homage to rehash it damaged itself (see "Critics are going too easy on Star Wars: The Force Awakens"). And to be sure, this film and the journey it promises have reminded me of the immortal and oft-repeated line from the Battlestar Galactica reboot: All of this has happened before, and all of it will happen again. That isn't meant to be a criticism as that can be an important theme about the folly of man and the cyclicity of human events: indeed it's one that's often implicit in The Wasteland concept I mentioned above.

What's intriguing is the possibility that the Jedi, purveyors of the universal Force, are in fact the truest embodiment of the relativist absurd man in the Star Wars universe. Camus famously compared the plight of the man trapped in a seemingly meaningless universe to the mythical Sisyphus, doomed to roll the same rock up a mountain over and over for all eternity. The only palatable choice is to recognize the absurdity and continue the struggle anyway.

All Sisyphus’ silent joy is contained therein. His fate belongs to him. His rock is his thing. Likewise, the absurd man, when he contemplates his torment, silences all the idols. In the universe suddenly restored to its silence, the myriad wondering little voices of the earth rise up. Unconscious, secret calls, invitations from all the faces, they are the necessary reverse and price of victory. There is no sun without shadow, and it is essential to know the night. The absurd man says yes and his effort will henceforth be unceasing. If there is a personal fate, there is no higher destiny, or at least there is but one which he concludes is inevitable and despicable. For the rest, he knows himself to be the master of his days. At that subtle moment when man glances backward over his life, Sisyphus returning toward his rock, in that slight pivoting he contemplates that series of unrelated actions which becomes his fate, created by him, combined under his memory’s eye and soon sealed by his death. Thus, convinced of the wholly human origin of all that is human, a blind man eager to see who knows that the night has no end, he is still on the go. The rock is still rolling. 

I leave Sisyphus at the foot of the mountain! One always finds one’s burden again. But Sisyphus teaches the higher fidelity that negates the gods and raises rocks. He too concludes that all is well. This universe henceforth without a master seems to him neither sterile nor futile. Each atom of that stone, each mineral flake of that night-filled mountain, in itself forms a world. The struggle itself toward the heights is enough to fill a mans heart. One must imagine Sisyphus happy. 

Perhaps the Jedi penchant for retreating into exile when confronted with the futility of eradicating the Dark Side, only to re-emerge and continue the struggle by training a new generation, is indicative of a long reflection culminating in the realization of the absurd. Each must fail and learn the lesson anew.

While Leia toils with the conviction her foe can be toppled and Han returns to his meaningless diversion, smuggling, ("the only thing I was ever any good at"), Luke has apparently returned to the site of the original Jedi temple for reasons not yet clear. Has he realized the value of pushing his rock up the mountain, even knowing it will just fall to the bottom again, in time to train Rey? Will he return to raising rocks?

Because we know--and reflecting on the events after the "happy ending" of Return of the Jedi only drives the painful point home--that the Dark Side can only be temporarily defeated. And because the Light and Dark Sides of the force are inexorably entangled with the political fate of the galaxy, that means the Wars can never really end. Surely Luke's failure with his nephew has given him clarity on this point. (Contra the title of Episode IV, "[The absurd man] knows simply that in that alert awareness there is no further place for hope," as Camus put it.)

Now the question is where the franchise goes next (somewhere new? can it?) to engage us in the struggle anew.

Interlude: The Biggest Question

(This is part of a series: start here if you please.)

Perhaps you’ve caught onto the intractable problem at the core here. Adherents of the Market, denizens of the Polis—both have a valid point. Our care delivery is inefficient and too often not well-thought-out. Our prices are too high. As we noted at the beginning, the cost issue that’s come perilously close to tearing our system apart has two components: the prices we pay (an issue to which Marketeers are surely attuned) and the quantities we consume (of which the Polis-ians, with their focus on counterproductive volume incentives and the inefficiencies of disorganization, are acutely aware).

But we find ourselves in a situation where addressing one may exacerbate the other.

As insurer-provider negotiations have become increasingly bitter (and, in some cases, led to a cutting of ties), prices are a critical point of disagreement as large systems flex their market muscles to demand more than is sustainable, even as their allegedly better capacity to manage health and costs is supposed to be bending the cost curve. We're once again reduced to dueling giants battling over prices. As one consumer caught in the middle during the recent standoff between Blue Shield of California and the Sutter Health hospital system remarked, "While the whales fight it out, all of us little minnows get squished."

Yet if we break up the large systems (systems, the unifying concept of the Polis!) and devolve to the liberating chaos of the consumer-driven Market then how will we organize care to consciously overcome the inefficiencies of fragmented and myopic care delivery? 

The National Academy of Social Insurance examined the question of whether Integrated Delivery Networks (IDNs) are a good thing. They found little to give us hope.

There is scant evidence in the literature of either societal benefits or advantage accruing to providers from IDN formation. From the societal perspective, there is little evidence that integrating hospital and physician care has helped to promote quality or reduce costs. Indeed, there is growing evidence that hospital-physician integration has raised physician costs, hospital prices and per capita medical care spending. Similarly, hospital integration into health plan operations and capitated contracting was not associated either with clinical efficiency (e.g. shorter lengths of stay) or financial efficiency (e.g. lower charges per admission).  

From the provider perspective, the available evidence suggests that the more providers invest in IDN development, the lower their operating margins and return on capital. Diversification into more businesses is associated with negative operating performance. This is consistent with the management literature, which shows that diversification increases a firm’s size and complexity, in turn increasing its cost of coordination, information processing, and governance/monitoring.

The Oligarchs seem to do little to improve health or contain costs, despite their promise of being better equipped to assume and perfect population health management functions. A strong argument for the Market and its trust-busting ethos.

Yet health system CEOs will spout the Polis party line. Here's the head of Mount Sinai arguing in the Wall Street Journal that "Hospital Mergers Can Lower Costs and Improve Medical Care" by playing the population health management card:

However the populations is defined, in the near future a hospital's health-care delivery network will be paid a certain amount to care for a given population, and no more. In this model there is an incentive to keep patients healthy and out of the hospital to hold costs down. However, if expenses for proper care of its designated population climb above the level the hospital has been paid, the cost is borne by the hospital. 

This raises the stakes for all health-care providers. To mitigate that risk, hospitals need to broaden the populations they serve, and offer services that cover a larger geographical area. Without that wide range, there is too great a risk that costs beyond hospital walls during post-acute care, patients who are high utilizers of medical services, will unbalance the scales. Hospitals need a large pool to survive any increased medical needs and costly care. The larger net also allows hospitals to learn from different patient populations, such as the elderly, and make strategic decisions to improve their care. 

Stand-alone hospitals have neither the number of patients to manage the actuarial risk of population management, nor the geographic coverage to serve a large population. Hence the reason for allowing strategic hospital mergers 

Population health management means services must be coordinated so that primary-care physicians, specialists and hospital departments work together with all caregivers familiar with a patient's unique needs and status. This requires hospital systems to provide a full suite of services for their patient populations, warranting expansion through acquisitions of other hospitals, as well as physician medical practices and outpatient clinics.

But consider a recent NEJM perspective on the failure of a dominant health system earlier this year to acquire additional hospitals, allegedly in pursuit of a more robust population health management strategy:  Market-Based Solutions to Antitrust Threats — The Rejection of the Partners Settlement

[Massachusetts Suffolk County Superior Court Judge Janet] Sanders's ruling [against a pending merger] closes the latest chapter in the saga of Partners HealthCare, a system formed in 1994 as a merger between the world-famous Massachusetts General and Brigham and Women's Hospitals. Beginning in 2010, then Massachusetts Attorney General Martha Coakley presciently warned of Partners' growing pricing power, and her office issued several reports revealing that the merged entity often charged two to three times as much as other equal-quality systems treating patients with equally complex conditions. According to an independent agency created to control Massachusetts health care costs — the highest per capita health care costs among U.S. states — Partners was able to leverage its dominant hospital and physician network to extract favorable pricing from private health insurers. The agency opined that Partners' expansion plans were likely to continue increasing costs in these markets with no impact on quality.

Once again, the better-organized, Polis-oriented cost management systems argument vs. the Market-based, anti- price-setting consolidator perspective. Let them merge and test their claim that doing so will allow them to deliver better top-to-bottom care, or deny them that opportunity on the assumption that they'll just use it to drive up their unit prices.

Which leads us to what I consider to be perhaps the biggest health policy question of our time: should we allow health care providers/systems to integrate vertically and/or horizontally on the promise that they can better manage the health of populations and assume risk for rising health care costs? (Certainly this is the premise of the ACA's ACOs, though the FTC would and has argued that they're preserving competition and preventing consolidation.) And, if so, how? How do we do that while mitigating the risk that these new empires will use their increased market power to extort higher prices from health insurers at the negotiating table?

Maybe we see no obvious way to do that. But, lest the pendulum swing too far in favor of the Market's unaffiliated hawkers of individual health commodities, how do we build coordinated systems of care that meet the whole-person needs of the high-cost, high utilizers without the integrated health care Oligarchs (or some functional equivalent)?

This is, of course, merely the embodiment of the questions we've been considering all along. Communitarianism vs. individualism. Polis vs. Market. Organized "systemness" vs. the emergent wisdom of consumer-driven provider competition.

If you don't have a good answer to these questions, you can be forgiven. No one seems to.

In the final post of this series, I'll try to make some coherent sense of all this.

III. Universe B: The Health Care Market

(This is part of a series: start here if you please.)

The Market view is starkly different from the Polis concept outlined in the previous post. In some ways it’s better attuned to the individualized, consumer-centric trends beginning to dominate the health sector. It’s less interested in top-down systems thinking and more confident in the emergent behavior of bottom-up forcings.

Price Check, Please

The Market is significantly less concerned with volume than the Polis, though it irons out that wrinkle in turn. As documented in It’s the Prices Stupid and international surveys, the primary dysfunction of our system is wrapped up in its pricing mechanism.  We have fewer and shorter inpatient stays, buy less health care than our Western peers, yet we pay so much more per unit for everything we consume. And therein lies the bankruptcy, moral and otherwise, of our system. It’s why we can’t go on like this and why our teeming masses can’t access care; it’s also, for many Market adherents, why misguided attempts to extend access to those masses before or without addressing the pricing issue is a project doomed to failure (financial catastrophe, to be more precise).

Unnecessary volume may well be a problem, but individual consumers with the proper financial incentives will solve both the volume and the price problems. Let's meet one of the heroes of the Market philosophy: the deductible. This is the amount an individual puts toward insurance-covered health services from in-network health care providers before the health insurance plan kicks in to start paying its share (the deductible is an annual amount so once you've spent that much cumulatively, you're done with it for the year). Imagine you've got a $1,000 deductible and five different health care providers are providing a particular service at a range of price points:

Prices for a Particular Service Vary Across Different Providers

The deductible will make you more price sensitive, but generally only for those services priced below your deductible. In this example, you could save $250 by getting a procedure from Provider A. But if Provider A for some reason wasn't acceptable to you, the deductible would offer no help in choosing between Providers B, C, D, and E because your cost for each of them would be the same: $1,000, the full value of your deductible. The higher your deductible, the more health services will fall beneath it and the more competitive those particular services will be for your business. Deductibles, and the price sensitivity they engender on the part of consumers, are critical to the Market, and in general the higher the deductible the better.

In the Land of the Blind Monopolist, the One-Eyed Consumer is King

The fundamental philosophical precept defining the Market approach is that decision-making autonomy has been removed from the hands of the consumer and placed into the hands of third parties like employers and health insurers, dampening the incentive for cost consciousness. In the Market, the patient-as-consumer is once again empowered. Competitive forces are drawn upon to check—if not outright break—constantly rising prices in the health sector. Collusion, encouraged by government policy influenced by the Polis philosophy, is overcome by the sheer will of millions of price conscious shoppers finally, at long last, saying “no more” and voting with their feet and wallets.

In the Market, consumers begin to treat at least some aspects of the health care landscape like other commodities or consumer goods. Witness the rise of services like ZocDoc:

Online services such as ZocDoc and InQuicker are enabling patients with non-life-threatening conditions to schedule everything from doctor's office visits to emergency room trips on their laptops and smartphones — much like OpenTable users do with restaurant reservations. 

Hospitals and doctors increasingly are subscribing to the services to simplify appointment scheduling for patients who dislike waiting on hold and are comfortable doing everything from shopping to banking online.

With most of the services, booking is as simple as going to a website, entering a zip code and the kind of care needed, and checking available times. Patients can get a doctor appointment within a couple days, even if they're a new patient. And the services say most patients are seen within 15 to 20 minutes of their appointment, and when an ER backs up, patients with reservations are texted to come later.

Empowerment of the individual consumer requires greater price transparency for health services. But price transparency without the associated financial incentive on the consumer side is toothless at best, counterproductive at worst. Pioneers like the state of Massachusetts, which now requires insurers to make available to their subscribers the prices health care providers charge, and Blue Cross Blue Shield of North Carolina which is doing so voluntarily are showing how price transparency tools can work.

But let's go back to the example of having a $1,000 deductible. Imagine you log into your insurer's website for a handy, transparent price comparison for a health procedure and see the following:

	Provider A	Provider B	Provider C
Procedure Price	$1,000	$2,100	$5,000
Your Cost	$1,000	$1,000	$1,000

Huzzah, you've found that Provider A's prices are far lower than Provider C's. But they're all at or above your deductible, meaning it costs you the same thing to go to any one of them. So you may well assume (not-quite-correctly) that Provider C's higher price must reflect a commensurate higher quality, or you may decide that you'd be getting quite a deal by going to Provider C (paying only a grand for a $5,000 procedure--what a steal!). In other words, transparency with no "skin in the game" on your part may perversely push you toward the higher cost health care provider. If, on the other hand, you had a $3,000 deductible you might rule Provider C out right off the bat. In fact, it might well push you firmly toward Provider A. And this is the logic underlying the Market--price exposure puts you in the driver seat and thus rationalizes your choice.

Shoppers with higher deductibles are more price conscious

Just last week, Public Agenda released a poll showing how Americans understand and use prices in health care. Almost unbelievably, 57 percent of the insured and 47 percent of the uninsured weren't aware that different physicians might charge different prices for a given service. That's the definition of a broken market. As one might expect, the higher one's deductible, the more likely he is to try and learn about comparative price information (see the figure to the side, borrowed from their findings).

A powerful argument for higher deductibles (which may mean a $1,500 deductible, not a $6,000 deductible), if we accept that premise that consumers ought to take an interest in the price of the services for which they're shopping.

The Anti-System

A “health system,” so central to creating the integrated care experience of the Polis and providing the “whole patient” care experience touted by Dr. Gottlieb in the previous post, is a perversity in the Market. Monopolies or oligopolies, with common ownership and/or management of disparate actors in the health system, simply give consolidated entities the opportunity to drive up prices in their negotiations with payers who are themselves likely exhibiting the telltale symptoms of market concentration. Bilateral oligopoly, an idea we’ve touched on before, may be the only “antidote” (perhaps coupled with government regulation) to total price domination in this state of affairs, but a functioning market it does not make.

Bilateral oligopoly--costs balance, like a pencil on its tip, between dueling
giants. h/t to the Incidental Economist

The Market embraces disparate, un-entangled health care providers competing for business, providing the incremental health care services desired by the consumer and not colluding unnecessarily with erstwhile competitors. Patient information may be shared freely across providers insomuch as it belongs to the patient.

The Polis, in so many ways intricately linked with the philosophy (if not the model itself) of the patient-centered medical home, which is based on fostering a continuing, longitudinal connection between the patient and a clinical team led by a trusted primary care physician, stands repudiated! Here we have convenience medicine, an available physician or specialist a mere Open Table-esque app appointment away, the choice dictated by a brutish combination of price and availability at the patient's desire. So, too, with the rise of retail clinics that can handle minor ailments and urgent care clinics that treat pressing but not-quite-ER-acuity injuries or problems.

Of course, not all ailments are minor or cheap enough to be addressed through the convenience of a drop-in at the nearest Medical 7/11. The Market acknowledges this but relies heavily on a critical policy instrument, the consumer-directed health plan (CHPD), to retain some semblance of market dynamics as patients descend deeper into the Dante-esque lower layers of the health system. The CHPD is a high-deductible health insurance plan, coupled with a Health Savings Account (HSA) that allows you to pay for the insurance plan’s increased cost-sharing with tax privileged dollars you’ve stashed away for just that purpose. The HSA is meant to make the extra out-of-pocket spending you take on more palatable and manageable.

The theory, of course, is that the more financial responsibility one bears at the point of care, the more responsible the individual will be in identifying and choosing high-value health services. A critical overlap with the Polis! (Though the Market places more of the impetus for identifying value on the individual, while the Polis makes this a responsibility of the system itself.) But deductibles are limited, useful only for relatively low-cost, generally outpatient, services whose total price lies below the deductible. When one’s deductible is $1,000, his liability for the cost of an inpatient procedure remains $1,000 regardless of whether a hospital has priced a procedure at $20,000 or $35,000. Enter the reverse deductible: reference pricing. 

A reference price for a procedure set at Provider B's price of $55,000

Some organizing actor (perhaps an employer group, or theoretically an employer) chooses a particular price for a high-cost procedure. If you choose to get the procedure from a higher-priced provider, you pay the different between the reference price and your chosen provider's price. One example of this strategy resulted in the highest-priced providers dropping their prices dramatically, while other studies of this strategy have suggested we ought to check our enthusiasm for it until more data is in. Regardless, it's quite an administrative challenge to pull off effectively, and can only be used for select non-urgent procedures that lend themselves well to shopping and active consumer choice.

The Networks Pickle

The Affordable Care Act’s exchanges are an example of what competition is supposed to achieve. Insurers in these new marketplaces are forced to compete on a transparent, level playing field which means if they want to attract customers they need to keep their premiums (and thus their costs) down. And so they’re doing something they’ve rarely bothered to do in the past: they’re aggressively working to reign in costs. These insurers are clamping down on reimbursement rates to health care providers and they're not afraid to cut high-cost providers out of their networks if they won't play ball.

In my estimation, in the new era of the ACA health insurers have a handful of tools available to them to try and contain costs:

1. Smarter benefit design (pushing shoppers toward high-value services and providers) which inherently relies on greater cost-sharing through tools like deductibles, as does any Market approach
2. Active population health management to not only preserve health but address deficiencies in the health care delivery system that drive up spending (a Polis-inspired idea that in practice means assisting health care providers in this function), and
3. More selective provider contracting/network design to attack price growth growth, in part by taming or exiling unjustifiably high-priced providers (which is perhaps some sort of Polis-Market hybrid).

Historically the inability of insurers to credibly threaten network exclusion has weakened their negotiating hand and allowed health care providers to extort ever higher reimbursements. In the exchanges, this has (so far) been less of a concern. Even with federal subsidies cushioning the cost, exchange shoppers are incredibly price conscious and insurers have gambled--and won--on the assumption that shoppers will trade wide networks with every-doctor-in-the-book for lower premiums and narrower provider networks. Happily, McKinsey has found "no discernible differences in performance on these [quality] scores among the hospitals participating in ultra-narrow, narrow, and broad networks." In other words, the cheaper exchange plans offering fewer doctors and hospitals to choose from aren't generally offering a lower quality product.

But, as we might expect, the denizens of the Polis might find this narrow network Market concoction abhorrent! The Polis envisions a world built around integrated systems (like ACOs) that can effectively manage the health and costs of defined populations. They're purposive, designed systems. Cobbling together unconnected providers (even if individually they do well on respected quality metrics)--whose only formal relationship is appearing on the same page of an insurance website's provider directory--does not a coordinated system make, even if that assortment of providers collectively satisfies regulatory network adequacy requirements.

Preach it, Harold!

Harold Miller, president and CEO of the Pittsburgh-based Center for Healthcare Quality and Payment Reform, says narrow networks could undermine efforts to boost coordination of care. 

"The dictionary defines a network as a 'group or system of interconnected people or things.' But a health plan's network is typically nothing more than a list of providers," Miller said this week. 

"There may be no connections whatsoever among the providers on the list, and a short list of providers chosen based on price may be even less likely to have connections than a longer list… At a time when there is a strong national focus on improving coordination of care, forcing patients to use providers who don't have any connections to each other might result in lower prices for individual services but higher overall spending, since the providers in this kind of 'network' will be more likely to order duplicate tests, perform unnecessary services, and fail to prevent problems that require expensive treatment." 

Narrow networks have the potential to rattle care coordination, he says. "If the narrow network is the only choice the patients have, it's even more problematic because, almost by definition, it means that many patients will have to change doctors, which will disrupt continuity of care."

A valid (and confounding point). If you read the Speakeasy back in '09/'10--and I doubt you did--you know I was a big proponent of the "robust" (price-setting) public health insurance option proposal for health reform that ultimately failed. And the reason was that I thought only that threat of a lower-priced government competitor would drive insurers in the ACA's exchanges to really focus on cost containment. I'm happy to say I was wrong. There's no public option but good old-fashioned market competition in the exchanges has forced the exchanges' insurers to cater to price-sensitive consumers and one of the ways they've kept insurance plan costs down (up to 20%(!) below comparable employer-based insurance plans) is by narrowing networks to keep negotiated reimbursement rates low. A true Market solution! But completely disconnected from the Polis ideal of the integrated, thought-out system.

Paging Mr. Simon

As we have so many times in the past, we return to a fundamental concept: bounded rationality. People are not calculators. They’re human beings, with all the other burdens of life consuming cognitive bandwidth, all the other limitations of the cognitive process constricting the tidy picture of an arbitrarily rational being making decisions. And just as Herbert Simon put some limits on any economic theories based on infinitely rational human actors, some cold hard facts throw cold water on any ideas too deeply rooted in the rationalist Market philosophy.

Most people contribute almost nothing to national health spending;
a tiny sliver of the population accounts for most spending.

It's worth taking a moment to acknowledge the rationale for having an insurance model for financing health care in the first place (a concept that seemingly bewildered a prominent Marketeer, Milton Friedman). Whereas we accused the Polis of largely ignoring the elephant in the room--excessive prices for health services in the U.S.--we could accuse the Market, with its emphasis on consumer price sensitivity and the delicate mechanics of the HSA-high deductible health plan combo of ignoring another central facet of the American health spending: the concentration of health expenditures. In a given year, health expenditures are incredibly concentrated. Half the population spends virtually nothing on health care, whereas the sickest 5% accounts for about half of expenditures.

If it’s the chronically ill, those with multiple, complex conditions driving up spending then how can we expect a deductible to matter? How can we rely on any half-baked effort to make them “more discerning shoppers” to be successful? These are people who blow through deductibles due to the sheer volume of services they require. At best, the "price sensitivity" of the Market is best oriented toward the healthiest, lower-utilizing segments of the population. Those who account for only a small fraction--less than a fifth--of total health spending.

And so the Market seems to hit a wall when we consider the expensive, complex patients whose situation calls out for a Polis-esque organizational change in care delivery (emphasizing coordination, efficiency, and a whole-person approach to multi-faceted health challenges), just as the Polis seemingly ran into a  wall when confronted with the challenge of consistently higher prices for health services in this country. But before we consider some reconciliation of these ideas,  a brief interlude that puts our conundrum in concrete terms.

II. Universe A: The Health Care Polis

(This is part of a series: start here if you please.)

The Polis conception of the health system dominates health policy today. Visionaries like Don Berwick have dedicated untold hours to preaching its virtues and nudging the system in its direction. It’s a vision to which, in a previous life, I dedicated much of my time.

If It’s Broke, Fix It

In the Polis, the flaws in the health care are systemic, with inefficiencies and overspending stemming from fundamental misalignments between how care is paid for and delivered and how it ought to be under a rational, coherent system.

As a result the delivery of health care services is severely fragmented. Health care providers operate in narrow silos that focus on specific, specialized components of a patient’s problems without connecting their work in any meaningful way to a more holistic and complete understanding of a person’s health status.  Seizing on a wide range of literature convincingly demonstrating that this discord in health care delivery is driving up spending and resulting in costly and sometimes dangerous redundancies, errors, and missed opportunities (not to mention accounting for much of the purported physician shortage we face), reformers have pushed aggressively for more coordinated care across the entire spectrum of health services.

Accordingly, in the Polis, cohesive systems of care must be consciously designed, consistent standards of care must be agreed to, collaboration and buy-in for a team-based coordinated model of service delivery are essential. Ideally, health care ought to be a continuous process, with seamless handoffs between health care providers specializing in different domains of patient care. Each provider need not be a jack-of-all-trades but rather must be contributing to her component of a coordinated, holistic care plan. And a single point of human contact with medical knowledge, likely a primary care provider, must be conducting that orchestra of medical specialists to make sure that the total medical composition is played to perfection, for the sake of the patient.

Chasing Population Health Management

If the Polis was simply about applying a better, cheaper bandage that would be laudable enough. But it serves an even broader philosophy. It seeks not only to build a cohesive working system that rationalizes the delivery of health care, but also one that supports the maintenance of health in the first place. This approach, falling under the somewhat nebulous and oft-abused term “population health management,” aspires to both better coordinate medical services and integrate them with non-medical supports (be they social or behavioral, etc) essential to an individual's well-being.

We can get a sense of this philosophy from a quote shared by the recently departed CEO of a prominent integrated health system in the Northeast, Gary Gottlieb:

I’ll compete with anyone on cost and quality, if you give me the whole patient… People with hip replacements also have dementia…Someone with heart disease not taking his medication might also be depressed. We want to compete on how well we treat that whole patient.

Attending to only the immediate problem presenting isn't enough. Really tackling costs and improving health outcomes for a person requires a comprehensive strategy. Rather than a disjointed, piecemeal approach, health care providers must build relationships inside and outside of their walls to simultaneously address everything that makes a patient unwell. The ACA is a major driver of this philosophical shift, as the American Hospital Association attested in its report on Trends in Hospital-based Population Health Infrastructure:

Myriad factors are driving hospitals and care systems to address the nonmedical determinants of population health. Most notably, the Affordable Care Act implicitly and explicitly promotes a population health management approach to care delivery. Not only does this legislation expand health insurance to a majority of the United States population, it compels hospitals to address the socioeconomic, behavioral and environmental factors that affect people before hospital admission and after discharge. The ACA is accelerating the shift of reimbursement models from fee-for-service to value-based, a structure that promotes better health outcomes, improved quality of care, illness prevention and coordination across the continuum of care. Care systems are now being held accountable for the health of their patient population and are responsible for implementing health improvement strategies to address community health needs. Adopting a population-based approach to care that encompasses the spectrum of determinants of health is essential for care systems to thrive in the ACA era.  

To improve health outside their walls, hospitals and care systems must engage in multisectoral partnerships with community-based groups, health departments and public health organizations. By bringing together stakeholders from across the health care system and local community, hospitals can collaborate to identify population health priorities and develop strategies to address the health issues unique to their specific community. The federally mandated community health needs assessment process can provide a forum for enhanced collaboration between hospitals and their partners.

We're talking about nothing short of re-aligning the health care delivery system such that health, not sheer service volume, is its bread-and-butter. That's a big shift. And I'd be remiss if I failed to note that it's a shift that aligns almost perfectly with the insurance market reforms in the ACA, which move premium determination and benefit coverage decisions to the community, not individual, level.

Put Your Money Where Your Mouth Is: The Rise of Value-based Payment

But the plot thickens. If this is indeed the end goal, we find ourselves at present in a bizarre in-between stage. We can, if we squint, see the Promised Land but we need to lay down the infrastructure (policy, financial, and technical) to get us there. And that’s tricky. For instance, if we want to manage the health of populations and share information in real time between all participants in the extended care team tending to a patient, we need to shove health care into the 21^st century (or, arguably at least the late 20^th century) and get them on electronic health records that, through the miracle of structured data, can readily extract and give meaning to trends in the health of patients. But if the financial incentives underlying the system are still focused on churning out more services and billing more health widgets then, whatever its long-term potential for improving quality and managing health, converting to EHRs may just drive up spending by making it easier to quantify and bill for discrete services. And that indeed seems to be what has happened so far.

That volume-based approach to reimbursement bakes in an inherent bias toward delivering more and more services, as exemplified by Roemer's law that "in an insured population, a hospital bed built is a filled bed." Perversely, that means that the prevailing payment policy in the health care system effectively penalizes providers who do a better job and thus end up having to do less in the aggregate. This observation from the chief quality officer at Intermountain Healthcare, an integrated health care delivery system in Utah, sums up the challenge of improving in that environment:

Quality improvement is innately a preventive strategy. It achieves most of its cost savings by improving care “upstream,” thereby avoiding “downstream” failures and their associated recovery costs. Most clinical savings stem from reduced hospitalizations, reduced emergency department visits, and reduced resource consumption within care delivery episodes. David Clark and coauthors provide specific examples of the cost savings that resulted from clinical improvement efforts at Intermountain. Such savings extend well beyond savings from administrative improvements. 

Unfortunately, health care providers today are paid for precisely those care delivery episodes that quality improvement seeks to reduce. As Intermountain teams implemented clinical management, clinical outcomes improved and costs fell. However, our payments also fell—often even further than our operating costs. For example, although improvement in Intermountain’s appropriate elective induction rates saved the citizens of Utah more than $50 million per year through reduced payments, Intermountain’s costs fell by only about $41 million. Intermountain thus lost more than $9 million per year in operating margins. Implementing better care required us to invest in education, work-flow redesign, and new data systems. As we improved, the resources to drive further change disappeared.

If population health management is a new philosophy underpinning the delivery of health care, it needs a new model of reimbursement from health payers, like private health insurers or Medicare and Medicaid. How we pay for care heavily influences how doctors and hospitals provide it. Historically we've paid for each and every health care widget, with little mindfulness of the results they achieve or the cost efficiency with which they're selected. The result has been that service volume obsessed, uncoordinated, unfocused, and myopic non-system that the Polis is dedicated to upending.

The central conceit in the Polis is that we, as a society, aren’t getting enough value—read health, broadly defined—for  our health care dollar. And while the pricing of health services is necessarily a component of this, at a fundamental level this is a conception of the volume side of the cost equation being the problem. Not long before the ACA passed, Thomson Reuters famously estimated that $800 billion of our national health dollars are wasted annually on unneeded services, mistakes we should avoid, conditions we can better treat.

Proponents eagerly exploit that argument, pointing to vast waste in the American health system

resulting from poor coordination and dangerous volume incentives: duplicated tests, unnecessary procedures, a “do more” philosophy that neatly aligns with the “pay more” defeatism of many payers. With “better” (generally understood to be some variant of “streamlined”) care delivery, we can not only meet a patient’s needs with fewer resources, we can serve a fuller conception of the person. Health care becomes more than the sum of its parts. A well-functioning system of care thus generates savings beyond what it costs to put it all together.

This philosophy, that we must first pay for better care before we can expect to receive it, is taking off as reimbursements from public and private payers are increasingly linked to quality outcomes and cost efficiency. The Centers for Medicare & Medicaid Services has announced a goal of linking 90% of Medicare payments to quality or value by the end of 2018, and a coalition of prominent private sector payers and providers has pledged to get 75% of its payments in value-based arrangements by 2020.

Industry watchers from Catalyst for Payment Reform (the creator of the handy infographic above) to The Advisory Board to Fitch Ratings have tracked the explosion of value-based payment and risk-based contracting over the past five years, driven in no small part by incentives put forth in and the Polis-oriented philosophy pushed by the ACA.

Percentage of lives covered by ACOs, by hospital referral region

This shift in how care is paid for (giving health care providers some of their savings back if they do better—to avoid the Intermountain conundrum—and in some cases asking them to pay back some of the excess if their spending goes over a certain budget) has given rise to new modes of organization/delivery in the provider world. The accountable care organization (ACO), theoretically a tightly linked network of different kinds of doctors and hospitals working together collaboratively to manage the health of their patient populations, is proliferating rapidly.

And the health policy world is pinning much of its hopes on the Polis--both the tightly integrated organization of health care providers and the payment schemes put in place to nudge it. PricewaterhouseCoopers (PwC) looks at the expected drivers (and, working in the opposite direction, deflators) of medical inflation every year. Two of the three cost deflators they identify for 2015 are related to these kinds of ACA-supported delivery reforms: (1) "systemness," PwC's word for the holistic, coordinated vision of health care delivery embraced by the Polis, and (2) the financial champion of systemness, risk-based payments (the third deflator, price shopping, is one we'll meeting in Universe B).

I Come to White-Coat Caesar, Not to Bury Him, or: How I learned to Stop Worrying and Manage the Health of Populations

One of the most important organizational shifts all this entails is a rejiggering of the institutional logic that governs health care organizations, particularly those delivering care. To steal from Institutional Change and Healthcare Organizations:

Institutional logics refer to the belief systems and associated practices that predominate in an organizational field. . . Institutional logics provide the "organizing principles" that supply practice guidelines for field participants. Logics specify what goals or values are to be pursued within a field or domain and indicate what means for pursuing them are appropriate. Thus, logics tap into both the cultural-cognitive and normative dimensions of institutional environments. The logics are only salient to the extent that they affect action within the field--sometimes being carried by established participants, sometimes by outsiders who influence behavior within the field. 

If fundamental change in the health sector is indeed taking hold, this is where it comes from: the understanding of what health care ought to be and how it ought to be delivered held by critical actors in the health system is changing, and with it the way the entire field does business. The "goals or values" that the health sector is actively pursuing seem increasingly (thanks, in part at least, to the incentives and Polis-esque worldview being pushed under the ACA) to be embracing the Triple Aim--the notion that we ought to be simultaneously improving health, care, and holding down cost growth. Goals that are now being facilitated by agreements to be paid differently and to adopt new care models.

But few communities are truly democratic at their roots. The Polis—ruled, in the thought of antiquity, by the philosopher king—must give in to Michel’s Iron Law of Oligarchy, as all forms of organization ultimately must.  “Who says organizations say oligarchy.” For all the lip service—admirable and well-intentioned as it may be—to patient-centeredness, physicians retain control in the Polis. But more important than the role it provides the individual clinician, the Polis privileges the mighty Health System (ACO or otherwise), a conglomeration of disparate physician groups, hospitals, perhaps other components. If the name of the game is integration and coordination, then a (relatively) closed system of providers that collectively take on responsibility for the health of those patients who utilize them is what we're talking about.

Inherent in this concept of coordinated care is greater vertical integration in the health care system. Played out to its logical conclusion, the Polis ultimately promotes the formation of empires: vertically integrated systems capable of servicing the full continuum of health needs of their patients. The ultimate Health Care Oligarchs. This, for instance, is what the accountable care organizations forming under the Affordable Care Act are intended to achieve; while at present they preserve patient choice, allowing their patients to seek care outside them at their discretion, this is considered a serious weakness of the current model, not a strength.

For the alternative to the Health Care Oligarchs we must proceed to Universe B.

I. Squeezing Blood from a Stone

(This is part of a series: start here if you please.)

I have in the past recommended the fantastic book Policy Paradox by Deborah Stone. Besides being excellent, it had an outsized impact on me as a young convert to public policy from the staid world of physics. It coaxed me to abandon naïve ideals of policy as some sort of quasi-science mucked up by the messiness of political decision-making. It opened my eyes to the fascinating, unsettling reality that even (apparent) facts and figures are at their heart political/philosophical questions. This was the start of a fundamental shift in my worldview from which I've never quite recovered.

Much of the book is structured around Stone’s conception of political philosophy as a dichotomy between two philosophical constructs: the Market and the Polis. She didn’t capitalize them but, for allegorical purposes, I will. 

For many reasons, this Manichean picture of political decision-making strikes me as an apt model for understanding the two pre-eminent dueling narratives about the future of the American health system. Two competing philosophical visions of what health care can (and should) be. Delightful!

One centered on the individual and driven primarily by self-interest, the other oriented around the community and motivated primarily by the public interest. A key difference between the two is that in the latter “system” is not a structure that emerges merely from the myriad interaction of individual rational actors making decisions against some structured backdrop, but rather is a deliberate and purposive creation:

It would be as much a mistake to think that the market has no concept of public interest as to believe that the polis has no room for self-interest. But there is a world of difference between public interest in a market and a polis. In theory, the public interest or general welfare in a market society is the net result of all individuals pursuing their self-interest. In economic theory, given a well-functioning market and a fair initial income distribution, whatever happens is by definition the best result for society as a whole. In a market, in short, the empty box of public interest is filled as an afterthought with the side effects of other activities. In the polis, by contrast, people fill the box intentionally, with forethought, planning, and conscious effort.

The Market and the Polis distinctions characterize so many political-policy debates and health care is no exception.

For our purposes (considering the next steps in extending and improving upon the Demi-Decade of Cost Control), each primarily attacks a difference piece of the health care cost equation. When we think of costs we’re really thinking of health care spending, both in the aggregate (national health expenditures) and in our personal lives, when it comes to how much money flows out of our wallets and paychecks and into the health sector.

But, at the risk of oversimplification, cost is the product of how high the price is and how much we need to buy: 

The Market and the Polis distinctions characterize so many political-policy debates and health care is no exception. And they correspond loosely to the prices and quantity consumed components of this not-quite-real equation, respectively. I believe they give us the best window on the two prevailing theories of how we ought to go about maximizing quality while minimizing costs.

Onward to the Polis.

The Demi-Decade of Cost Control

Happy (slightly belated) fifth birthday, Affordable Care Act!

Nearly five years ago now, in The Demi-Decade of Coverage or: The Scalpel and the Chainsaw, I predicted that the ensuing five years or so (say 2011-2015) would be a coverage story, as millions of people gained health insurance. In that respect, mission partially accomplished: 16.4 million and counting so far. But while the ACA had many components that had potential to ultimately tame rising health care costs, that wasn't something we could anticipate to start seeing in the first demi-decade. Maybe not even in the second demi-decade:  "All of this means that we can't really expect real cost curve bending to happen until the second decade of the law's existence (the 2020s)."

Wrong!

Aided in no small part by the Great Recession, health care spending growth fell. But even as the

economy recovered, it stayed historically low. The last five years have been unprecedented. More and more observers, even those reluctant to look for culprits beyond the sluggish economy, are now recognizing that structural changes in the health care sector--real, lasting transformation of the way that industry does business--may well be taking root.

This first five years of the ACA era has indeed become not just the Demi-Decade of Coverage but also, surprisingly, the first Demi-Decade of Cost Control.

And now we find ourselves at a crossroads.

We're (largely) solving our health insurance coverage problem, but how do we simultaneously tackle our cost growth and quality improvement conundrums?

I'm about to lay out my thoughts on that in some depth through this series (these will become links as I get around to posting them):

I. Squeezing Blood from a Stone
II. Universe A: The Health Care Polis
III. Universe B: The Health Care Market
Interlude: The Biggest Question
IV: Untitled Synthesis

Let's begin!

Unsettling Thought of the Day

It's interesting to consider how seriously many noted thinkers take certain sci-fi-esque existential threats. When we think of artificial intelligence, do most of us really consider the culmination of the march of technological progress resulting in a Terminator- or Matrix-style struggle for existence a likely outcome? I would guess probably not. Ditto for the Search for Extraterrestrial Intelligence, the ongoing quest to find someone else, somewhere, that uses radio telescopes (or at least signals in the radio bandwidth). Would intentionally or unintentionally making our presence known to another galactic inhabitant result in an Independence Day-style brawl instead of a Contact-esque exchange of culture and knowledge? The worryworts among us aren't so sure.

When it comes to advancing artificial intelligence, some smart folks have warned against "summoning the demon":

“I am in the camp that is concerned about super intelligence,” Gates wrote. “First, the machines will do a lot of jobs for us and not be super intelligent. That should be positive if we manage it well. A few decades after that, though, the intelligence is strong enough to be a concern.” 

Gates’ concerns about AI come in the wake of Elon Musk’s remarks last year that artificial intelligence represents “our biggest existential threat” as a species and that toying with AI is akin to “summoning the demon.” 

Stephen Hawking, meanwhile, was even more blunt about it and told the BBC that “the development of full artificial intelligence could spell the end of the human race,” especially since “humans, who are limited by slow biological evolution, couldn’t compete and would be superseded.”

And there's an active debate in the SETI community as to whether we ought to just be passively listening for signs of others or if we ought to be taking a more active approach to attracting attention.

Physicist Stephen Hawking has argued against that strategy, saying that the signals could attract the bad kind of aliens depicted in movies ranging from "War of the Worlds" to "Independence Day." He imagines that our first contact with extraterrestrials could be like the Native Americans' first contact with Europeans, "which didn't turn out very well for the Native Americans." 

In Hawking's view, it's better to lie low, and science-fiction author David Brin agrees. During sessions at this week's annual meeting of the American Association for the Advancement of Science in San Jose, Brin faced off against Vakoch and the director of the SETI Institute's Center for SETI Research, Seth Shostak. 

"We've had some disagreements lately," Brin admitted.

He said the reason we haven't been hearing radio traffic from our extraterrestrial brethren could well be because "they know something we don't know." 

If the solution to the Fermi paradox, the reason we've never found evidence of any other intelligence in the universe (despite it otherwise seeming probable there could be a number of other civilizations out there), is that folks tend to "know something we don't know"--well, that's a rather ominous thought.