Health for life

According to this 2011 article in The Atlantic, the middle class is in trouble.  The Disease Management Care Blog agrees and wonders if they are ultimately doomed. Either way, there are important implications for health care in general and the care management industry in particular.

The amateur DMCB explains.

With the advent of the Gilded Age in the 1870s, the industrial revolution ushered in more than a century of heavy industry, railroads, mining, commercial farming and manufacturing that were powered by millions of skilled and unskilled workers. Wealth and power remained concentrated in an elite 1% plutocracy that had prevailed throughout most of human history, but a newly emergent "middle class" benefited from high wages and became an accepted part of the American political and cultural landscape.  Thanks to their labor, the quality of goods and services increased while simultaneously becoming cheaper.

While the middle class was in retreat at the turn of the millennium, The Great Recession suggests that their century-long party may be truly over. Global competition with the free movement of labor and capital combined with automation have made the costs of industry even cheaper. The plutocracy that has always been there can shrug off the effects of a recession, but the intrinsic value of traditional labor has popped, bubble fashion. 

In the last decade, persons in the nominal middle class with less than $90,000 a year in income have had flat wages and have been unable to increase their spending. Since 2000, American manufacturing - which has not only lost ground to China but become more mechanized - has lost about a third of its jobs. This has played itself out in geographic terms, where the elite hubs around Washington DC, San Francisco and Boston have high wage job listings, while cities like Detroit and Miami have been in the dumpster. In other words, much of the middle class is being hollowed out and being forced to downjob into personal services, retail and food preparation - while leading lives that are at risk for financial stress, partner conflicts, single parenting and troubled children.

In the meantime, the DMCB suspects that the "fat cat" billionaires so reviled by progressives are not any more numerous or fantastically wealthy.  The DMCB thinks that theyre only more visible.  It remains to be seen if government will be successful in moving wealth from that top 1% to the struggling 99%.  History suggests otherwise.

Long term implications for the health and care management industry:

Health care will sort into 1) high end, high touch, personalized care for a small elite that can not only afford it, but will be responsible for profitable top line revenue and 2) a strained publicly underfunded system with thin margins for the rest.  Care management providers will likewise sort into these two camps.  The first involves high margin value, the second involves low margin volume.  Given the disparate business models, its unlikely that single companies will be able to do both.

While universal access to affordable health insurance remains a bipartisan goal, high out-of-pocket costs combined with limited provider access for persons outside of the 1% will increase the popularity of cheap "DIY" care involving eHealth. This is a natural fit for the care management industry.

Lacking factory work, more workers than anticipated may be available as the U.S. population ages and the demand for personal health care attendants increases.

Classic health care "knowledge workers" may not be immune, since information tech and automation may enable machines to generate a differential diagnosis and read an x-ray, while cheap and highly trained remote labor may be able to deply robotics to perform routine surgeries.  For the care management industry, an on-line script that prompts a nominally-trained health educator may be able to replace nurse care managers.

Image from Wikipedia

The Disease Management Care Blog remembers when one of its patients with coronary artery disease suggested that he be given a course of an antibiotic to lower his future risk of a heart attack. The patient had done his homework, quoting literature that pointed to a possible infectious link to atherosclerosis. He also was aware of the theory that aspirins benefit had less to do with blood thinning than reducing underlying inflammation.

Fast forward to the Feb 2-8 Economist that has an editorial pointing out that U.S. legal expertise may not require the completion of three years of law school. Why not, it asks, cut the requirement back to two years or, even better, skip the school requirement entirely and license anyone who can pass the bar exam?

And then theres the Feb. 11 Wall Street Journal, where "Notable and Quotable" ers to the "BA Bubble." Charles Murray argues that a looming oversupply of college graduates may portend a decline in the employment value of a liberal education. Work careers may consist of serving as "apprentices" and "journeymen" before becoming "craftsmen."

All of which makes the DMCB wonder if the vaunted Doctor of Medicine degree may be vulnerable.

Why should physician education be immune from a perfect storm of over-priced graduate education, "alternative" web-enabled learning with on-the-job-training? The declining value of the formal credential may be less about the university degree and more about competency, turbocharged by flexible licensing and a discerning consumer.
 
Non-physician health care professionals are arguing that their expertise is enough to enable them to deliver babies, administer anesthesia, prescribe drugs and perform surgery. The DMCBs traditionalist colleagues argue that patient safety is at stake and that lay persons may not be able to discern all of the possible risks, benefits and alternatives. When things go occasionally wrong in the delivery suit, operating room or with a drug, they say a credentialed and experienced doc can make the difference between life and death.

The DMCB also remains impressed by the ready availability of medical information in the public domain that is enabling some laypersons to become astonishingly expert.  In addition to the patient above, think about the self-taught parent of a child with a rare condition or the plucky cancer patient who guides the oncologist toward choosing the right life-saving therapy.  Imagine what happens when IBMs Watson is fully commercialized and available to anyone at anytime.

The physician DMCB understands all the perspectives above, but given the decline of the BA and the law degree, it worries that the medical traditionalists may ultimately end up being on the wrong side of history.

While regulators and the markets sort all this out, this may open another business proposition for care management. As patients with chronic conditions continue to seek ways to better share in their self care, theyll also be seeking providers that best suit their needs and expectations.  In other words, the population health vendors can not only help with shared decision making, but provider selection making. 

More on this in a future post.

Image from Wikipedia

"I wonder how I can lose less money?"

The ever resourceful HealthHombre Blog quotes an interesting academic review paper to make an important point: many of the widespread assumptions of smooth sailing for the 106 new ACOs still remain unproven.

The DMCB agrees with this important HealthHombre insight. In addition to the many "known unknowns" (including just how physician-hospital organizations will perform in managing insurance risk), there are also the "known known" year-to-year random fluctuations in claims expense.  And, as the DMCB noted, theres the "unknown unknown" "antifragile" threats to a highly protected sector of the economy that could bring the whole ACO-thing down, 2008-style.

And heres a case in point that backs up HealthHombre.  "Wellspan" is a highly regarded and well-run hospital system that is local to the DMCB. This recent news report is telling because Wellspans success and challenges probably apply to other emerging integrated institutions that have an appetite for risk contracting.

According to the press report, Wellspan garnered an excellent credit rating because...

"766 physicians — more than 75 percent of those in the hospitals market — are affiliated with WellSpan, which [was] counted as a key credit strength."

But the bad news is that the rating also....

.....noted that WellSpans physician group, which employs 411 of those doctors, generated losses of $19.6 million in 2011 and $21.4 million in 2012 (bolding DMCB).

The DMCB has heard similar statements from seasoned health system administrators both locally and nationally.  If "physician integration" is supposed to be the bedrock of ACOs, how is it that the docs are responsible for millions of dollars in losses?  What is the likelihood that these organizations will finish December 31, 2013 in the black?

The Disease Management Care Blog continues to be beguiled by Meghan McCain, and not just because she could be a good match for one of the DMCBs unmarried spawn. Ms. McCains career may hold some early lessons in the coming style of 21st century leadership.

Way off topic for the health industry-oriented DMCB? 

Not quite.  It explains below.

As the DMCB understands it, the very blond daughter of Arizona Senator John McCain has a reputation for a liberal style of nontraditional Republicanism. That, combined with her namesakes political and media connections, has undoubtedly (and perhaps unfairly) catapulted her into the national spotlight.  She could have faded away along with her dads presidential ambitions, but she now has a web-TV gig that is a curious mix of 50% reality show (e.g., the travails of hanging taxidermy), 50% social commentary (e.g., her generations lackadaisical views on privacy) and 50% chatty self-promotion.

Thats not the point.  What is the point is that 20th century old-fashioned (in politics, think Ronald Reagan or in business, Jack Welch) leadership skills were honed by decades of practice practice practice in the written word, public speaking and retail networking. Once they mastered that, their formidable communication skills helped propel these very talented men into their very successful careers.

We dont know where Ms. McCains career trajectory will take her, and its very possible that she could ultimately fade away. The DMCB bets not. While her current views and public persona can come across as naïve and unpolished, this young woman is likewise practicing practicing practicing to master a newly emerging 21st century style of leadership that will rely on the broadcast word, media savvy and web-based networking.  By the time she is in her 50s, decades of experience combined with her other skills on both sides of the lens could make turn a diamond in the rough into a formidable force in business or politics or both.

Which brings the DMCB back to the business and politics of health care.

This has important implications for health industry leadership, including population health management. Simply avoiding the social media is no longer a formula for success. Smart hospital administrators are also mastering blogging to mitigate threats. Bad moments captured on YouTube can make health industry leaders look bad.  Branding without Twitter is now like personal injury attorneys without contingency fees. Boards of Directors cant ignore the threat of adverse media relations like this in their enterprise risk management.

And who will be best positioned in the coming decades to lead health care companies through these challenges?  Smart CEOs and executives who have a deep familiarity with leveraging TV and social media - thanks to decades of personal experience -  to engage their constituents and customers to choose their products and services instead of their competitors.   And if they go into politics, theyll be leveraging the same social media skill-set to get voters choose their ideas and to vote for them.

You go gurl!

Image from Wikipedia