Healthcare has been the embodiment of the irresistible force paradox, a classic paradox formulated as “What happens when an unstoppable force meets an immovable object?” We know that technology and empowerment of the individual have been the drivers of immense change in virtually every corner of our lives…except healthcare.

There are many efforts ranging from startups to convening thought leaders at events to public and private sector initiatives meant to change this dynamic. It’s clear it will take a broad coalition of these efforts to make the change most desire in the face of immense forces to protect turf. It’s natural that organizations collectively generating trillions of dollars of revenue won’t give up without a fight. In fact, it’s entirely predictable that they’ll use every “FUD” (fear, uncertainty & doubt) tactic in the book…and already have.

During my detour away from healthcare, I had the opportunity to play a leading role in shifting another entrenched industry that had been largely unchanged for 50-100 years — the media business. Today, digital media now surpasses even broadcast television for ad spending — an unimaginable thought just 10 years ago. Driving that media industry transformation was their own shift from fee-for-service to fee-for-value (or what is more commonly known in media as pay-for-performance or cost-per-click). I draw from what we did to accelerate that industry shift as well as my experience in shifting a technology ecosystem within healthcare. Having said that, the scale of this transformation and the degree of FUD that will be used to slow progress is of a much greater magnitude.

To complement the aforementioned efforts, I’m doing my part to accelerate the shift to a much higher performing system. We all have levers to positively impact — these are mine. The following is a brief summary of the levers I’m contributing to:

– The Future Health Ecosystem Today – Forbes exclusively published this report here. Like Mary Meeker’s Internet Trends report that it’s modeled after, it’s a big deck so will take some time to digest.

– Health Rosetta – This open source project is in response to the fact that purchasing healthcare unwisely leads to under-performance and using out-moded technology. In less than a year, the Health Rosetta has become a blueprint for wise healthcare purchasing that health coalitions are adopting, the investment thesis for a venture fund and the call-to-action for an upcoming documentary (more below) that highlights employers saving 30-50% per capita on health benefits.

– 95 Theses for a New Health Ecosystem – If the Health Rosetta is the “what” of the future health ecosystem, the 95 Theses are the “how”. That is, Leonard Kish and I curated a set of guiding principles for the winning approaches of the future. These were curated from the leading thinkers in healthcare. The 95 Theses were inspired by a ground-breaking proclamation called the Cluetrain Manifesto that was hugely influential in the development of the Internet. Cluetrain’s 95 Theses followed the model of Martin Luther’s 95 Theses that triggered the Reformation. We’re now in the process of expanding on each of the theses by having the leading thinkers bring each thesis to life. We’re thrilled to have contributors ranging from Susannah Fox to Eric Topol to Bill Gates to Esther Dyson to Jonathan Bush and many others.

– Documentary – The documentary referenced above has gone from a twinkle in my eye to now having a Peabody-winning (broadcast’s “Pulitzer”) and an Academy Award nominated director/producers digging into this project. The film’s goal is to be as transformative for the public consciousness as Super Size Me, Waiting for Superman and the Inconvenient Truth were. In a smart, funny and entertaining manner the film will both take on sacred cows that create massive collateral damage as well as provide inspiring stories of what happens when the Quadruple Aim is fully achieved. The film is in the development stage. We are starting to build the grassroots organization that will use the film as a point of activation to transform the industry through a partnership between clinicians and citizens — neither can drive the necessary change on their own. The “good news” is clinicians are even more dissatisfied with the status quo than regular citizens. When they see how much more fulfilling their professional lives can be, they’ll recognize they can leave burnout and dissatisfaction behind.

– Quadruple Aim & new seed stage venture fund — Put simply, I don’t believe the vast majority of the “changes” in healthcare are sustainable. Too many of the changes throw more technology and bureaucracy on top of an already-flawed process. It’s no wonder doctors and nurses are extremely dissatisfied (and it’s getting worse) when the 4th aim (improving the care team experience) is overlooked. Fortunately, in my study of the highest performing health plans/providers over the last several years and particularly the last several months (following leaving WebMD), I couldn’t be more optimistic about how achievable the Quadruple Aim is. So much so that I’ve created a seed stage called the “hf Quad Aim Fund” — the “hf” is short for Healthfundr. Ironically, despite the fact that VCs fund innovation, there has been very little innovation in venture capital — particularly in healthcare. Healthfundr took a fresh perspective to figure out what one would build to create a 21st century venture fund leveraging the power of technology and networks from the ground up. It stands in stark contrast to the myriad VC and P-E options I considered following my departure from WebMD.

About Dave Chase

Chase was the CEO & Co-founder of Avado, which was acquired by and integrated into WebMD and the most widely used healthcare professional site – Medscape. Before Avado, Chase spent several years outside of healthcare in startups as founder or consulting roles with LiveRez.com, MarketLeader, & WhatCounts. He also played founding & leadership roles in launching two new $1B+ businesses within Microsoft. 

Chase was named one of the most influential people in Digital Health due to his entrepreneurial success & writing along with luminaries such as Eric Topol, Patrick Soon-Shiong, & Vinod Khosla. He speaks to & consults with new ventures inside of established companies & high growth startups. Chase is widely published. The book Chase co-authored won the healthcare Book of the Year in in 2014.

I heard a variation of that quote when interviewing people for the patient-provider communication chapter of the book I’ve been co-editing and writing for HIMSS with Jan Oldenburg, Brad Tritle and Kate Christensen. For the organizations who’ve pushed patient portals the furthest into their patient base, email is always the place where things started. In other words, email is the gateway drug for patient engagement which Leonard Kish called the blockbuster “drug” of the century.

Physicians are understandably concerned about being overwhelmed by emails if they provide an option for secure messaging. As healthcare transforms, financial incentives have a big effect on the willingness to take on what many perceive to be “more unpaid work” (forgetting the fact that playing voicemail tag is also unpaid). Interestingly, the physicians who have given out their phone number or enabled secure email (without remuneration) haven’t found they are overwhelmed by any means. In the case of the groundbreaking Open Notes study, many of the doctors just heard crickets. For those who have proactively enabled email communications, they have experienced a number of benefits. See the section below on improvements in outcomes simply by having email. [Disclosure: One of the capabilities included in the patient relationship management system my company provides is secure email.]

Dr. Ted Epperly has been a family doctor for decades and describes his experience as follows:

“I give them both my phone number and a way to contact me via email. In 32 years of being a family physician I have had this privilege abused less than 5 times. On the flip side it has led to many occasions where I have been able to expedite care and save countless number of office visits, ER visits and hospitalizations. That is patient-centered care and I personally feel better for it.”

Dr. Howard Luks is an orthopedic surgeon also has experienced similar benefits.

“Physicians underestimate the fact that opening up a digital channel to facilitate post visit, post-surgery, etc. comments and questions can and does provide a very real ROI if you dive into the typical workflow pattern that evolves when a patient calls with questions. If my assistant or nurse is tracking me down after fielding a phone call, they are not available to perform work that will lead to income. If I can answer a question with a brief email it saves everyone time and enables him or her to remain active in meaningful tasks. So… there are tangible reasons why the use of digital communications in this day and age are worthwhile, but many are not savvy enough to realize the upsides and fear that they will be inundated with an enormous number of useless emails. I can tell you that it never happens and patients start most every email with ” sorry, but I …”. They are very respectful of the opportunity to engage in this format and they are very cognizant of the fact that it does take away from my other clinical related activities.

It is clear that providers can impact how their patients use secure messaging. Providers who suggest that their patients follow up digitally will introduce it with messages that state, “After you’ve taken these new medicines for a couple of weeks, please send me a secure message and tell me how you are doing.” They also advertise their willingness and ability to engage with patients via secure messaging knowing they will have more digital encounters than their counterparts who mention it rarely or not at all.

As providers do more of their visits via secure messaging, however, systems will need to think about new models for compensating providers that acknowledge writing a thoughtful message to a patient does take time and needs to be balanced with other work. Some organizations, such as Group Health, expect over a quarter of their doctors’ time will be spent responding to email. The most important driver is reimbursing on outcomes. When that happens, email simply becomes a tool like any other organization (outside healthcare) to enhance communication with their clientele.

Outcomes Improve with Secure Email

In a 2010 study done at Kaiser Permanente reported in Health Affairs of 35,423 people with diabetes, hypertension, or both, the use of secure patient-physician e-mail within a two-month period was associated with a statistically significant improvement in effectiveness of care as measured by the Healthcare Effectiveness Data and Information Set (HEDIS). In addition, the use of e-mail was associated with an improvement of 2.0–6.5 percentage points in performance on other HEDIS measures such as glycemic (HbA1c), cholesterol, and blood pressure screening and control.

Recently published data by the Lund Report indicates that Kaiser patients enrolled in their patient portal, which includes secure messaging with doctors, access to clinical data, and self-service transactions, are 2.6 times more likely to stay with the organization than those who are do not participate online (see more on avoiding system leakage in ACOs here). Countries such as Denmark provide incentives for doctors to communicate electronically reported in a Commonwealth Fund report entitled Issues in International Health Policy. The result: 80% of physician/patient communication in Denmark is asynchronous (i.e., people talking to each other serially rather than simultaneously). At first, that can sound high until we think about the rest of our lives whether it is conducting business or communicating with friends, where asynchronous communications (e.g., such as email, voicemail, or texting) are the norm.

Email can be one way to address the problem that patients remember so little of what they are told in the provider’s office. Other options include providing a clinical summary to patients after the visit (as recommended by Meaningful Use measures) and providing documentation of a care plan online for patients to refer to later.

 Written by Dave Chase, CEO of Avado and contributor for Forbes where this  article was first posted. Dave Chase can be found on Twitter  @chasedave

Used to determine whether a doctor is liable for medical malpractice. The standard of care is important because it determines the level of negligence required to state a valid cause of action.

It’s hard to overstate the implications of doctors being held to the Standard of Care. Many argue that the basis of unnecessary and duplicate procedures is the fear of malpractice. Doctors understand that in a malpractice case one of the key items that is analyzed is whether they met the Standard of Care. [Others argue that the “do more, bill more” reimbursement model has been at least as big of a driver. Regardless, malpractice concerns related to the Standard of Care are a big driver]

Comparing Two Blockbusters

Kish compares the statins blockbuster with the patient engagement “blockbuster”. [See Kish’s full article here.]

First, the evidence for blockbuster drugs. In Dr. Eric Topol’s book “The Creative Destruction of Medicine,” he takes a deep look at the evidence for statins, possibly the biggest group of blockbuster drugs over the last 20 years. Statins are a requirement of Meaningful Use Stage 1 clinical quality measures, as well as key measures for the CMS hospital quality measures used by many organizations, internal and external to the hospital, to grade the quality of care at a hospital. Prescribing statins, in many instances, is no longer optional. Topol states that “of every 100 patients taking Lipitor to prevent a heart attack one patient was helped, 99 were not.” These drugs cost $4 per day per patient and $1500 per year. While they are great at lowering cholesterol, it remains unclear that they do much to prevent heart attacks.

Now let’s take a look at a 2009 Kaiser study of coordinated cardiac care. Compared to those not enrolled in the study, coordinated care “patients have an 88 percent reduced risk of dying of a cardiac-related cause when enrolled within 90 days of a heart attack, compared to those not in the program.” And, “clinical care teams reduced overall mortality by 76 percent and cardiac mortality by 73 percent.”

Kish goes on to share another example from the VA that shows similarly astounding results and then asks the salient question.

Can you imagine if a drug reduced the need to go to the hospital by this amount? Again, it would be considered malpractice not to use it.

Expecting Restauranteurs to Teach Their Patrons How to Cook

Kish states the expected pushback from healthcare providers when they are held accountable for their patient’s actions.

All this is so different for healthcare providers. It’s like a great restaurant learning that their new business is going to be – in addition to continuing to provide a great in-restaurant experience – teaching people how to cook at home. What? This isn’t what we do! It’s impossible!

While this is an understandable perspective for them to have given that they haven’t been accountable for their patients’ actions, I think clinicians underestimate their own influence. Consider that Gallup’s recent ranking of the most trusted professions are as follows:

1. Nurses
2. Pharmacists
3. Doctors

Clinicians may not think in these terms but consider some of the less-than-pleasant things they regularly convince patients to endure. Whether it’s something that is life-threatening or not, doctors have proven to be persuasive. As I outlined in Doctors Success Hinges on Transactor to Teacher Transition, the root of the word doctor is teacher and it is through instruction of their patients that people are willing to deal with various disagreeable items such as the following:

• Oncologists convince their patients to endure chemotherapy with its well-known side effects of going bald and extreme nausea.
• Listen to just about any pharmaceutical advertisement to hear some nasty side effects — some are quite common.
• Surgeon’s regularly convince obese patients to staple part of one’s stomach (bariatric surgery) where studies have shown 1% of patients die and 40% have complications.
• When I worked in an OR, the nurses sensitized me to the significant risks of anesthesia yet most don’t question their doctor if they are told they are going to be put under for a surgery.
• Caesarean Sections: The rate has gone up more than 50% in the last 15 years for a whole host of reasons. Clearly doctors have influenced that whether it’s for outcomes or malpractice reasons. Women are well aware of a longer recovery time, scars and other side effects but trust their doctor’s judgment.
• Surgeons have convinced their patients to inject botulinum toxin (aka Botox) into the face of a patient on a regular basis. As Wikipedia states, “botulinum toxin can cause botulism, a serious and life-threatening illness in humans and animals.”

The efficacy of the items above are impacted by patients after they leave the clinic/hospital. The biggest difference is complications from the procedures above are an opportunity for additional revenue whereas they generally wouldn’t be in an accountable model. The key reason doctors, nurses and pharmacists are able to persuade is their trust and credibility. Not only are clinicians trusted, most remember their classmates who went into medical careers as some of the smartest people they grew up with.

Success Goes to the Behavioral Scientists

Doctors are human. As I’ve heard said, “if you want to understand a sales person’s behavior, study their commission plan. If you want to understand a doctor’s behavior, understand their reimbursement model.” As Kish stated, “It’s no accident that in both the examples here (Kaiser and the VA), the providers and the payers were tightly aligned, because the economics have to be aligned before any of this will work.”

At the root of the success of the Direct Primary Care organizations I have written about before who are the “Triple Aim” (lower cost, improve the patient experience and improve outcomes) champs is their understanding of criticality of building trust. It simply isn’t possible in a 7 minute “drive-by” appointment so common today. As in any relationship, trust is built on a firm foundation of communication. Read more on communication being the medical instrument of the future.

see photosGarrison Bliss, MDClick for full photo gallery: Qliance

If you would like to be notified when the seminal paper on Direct Primary Care is published this Fall, please contact me via my LinkedIn profile – http://www.linkedin.com/in/chasedave.

The related insight is recognition that it’s going to be impossible to succeed in a value and outcome based reimbursement model if the provider doesn’t recognize that 75% of healthcare spending is on chronic disease. The majority of decisions that most influence outcome are made by patients and their families — not clinicians. This is expanded upon in Health Systems Ignore Patients at their Own Peril. It’s particularly true in primary care which is why IBM has catalyzed primary care by changing how it buys healthcare.

However, it’s not limited to primary care. Two healthtech startup colleagues of mine are Eric Page and Russell Benaroya who previously owned sleep centers. While the industry benchmark for adherence to CPAP therapy programs was 40%, they achieve 79%. They have shared that their “secret” was building trust using techniques that are commonplace for consumer marketers. Much of that revolved around creating an emotional connection with their organization via their team members. Consumer marketers, for better or worse, understand how to change behavior. If they didn’t, we wouldn’t have any of these fashion or food choices.

An example of where the consumer marketer mindset must take hold was highlighted by the pioneer healthcare organizations who shared lessons learned. In a nutshell, proactive communication is the “inoculation’ to biggest fears these organizations have — system leakage (i.e., patients getting care outside of their network). If the organization isn’t top-of-mind at their patient’s moment of truth when some medical need arises, it’s guaranteed they’ll have significant system leakage. This is a disaster for organizations given a block of money to care for patients and then they have to pay a third-party health system for the services that those patients received when they “leaked” outside of the system.

What Comes Next After Blockbuster Drug Marketing?

Matthew Herper wrote last year that The Blockbuster Drug Comes to an End. For the fourth consecutive year, pharmaceutical advertising declined in 2011. Not surprising since between 2007 and 2012, drugs worth some $63 billion in sales lost market exclusivity. And between 2011 and 2015, the New York Times says, the total is $100 billion. Any business dependent on blockbuster drug marketing has taken a big hit with no end in sight.

Now imagine that the blockbuster “drug” is patient engagement. Already we have seen organizations such as Jenny Craig, Weight Watchers and online sites such as eDiets increasing their advertising. After all, managing one’s weight is a form of patient engagement. As patient engagement programs such as managing high blood pressure prove themselves, it’s only a matter of time before prime time TV and WebMD are filled with advertising that seeks to engage groups of patients in healthy behaviors.

Online media properties are particularly well positioned as they can target consumers based on attributes including what company they work for. It’s not hard to imagine General Motors or other large employers targeting ads to their employees while they are on WebMD or Yahoo Health. Rather than ad sales reps calling on the marketing department, they will start calling on the HR/benefits department. Who knows, they may start calling on the Finance/Investor Relations department. When public companies such as Safeway have demonstrated they can reverse healthcare hyperinflation, other public companies will find that a cost as significant as healthcare that is unmanaged is a dereliction of fiduciary responsibility. Broad reach and targeted sites such as WebMD and Yahoo Health may prove they can have a material impact on getting employees engaged in their health.

Med School Wasn’t Easy Either

There are 3 trillion reasons why healthcare has to change but also 3 trillion reasons why incumbent organizations are resistant to change. After all, one person’s cost savings are another’s revenue. The government has sent a shot across the bow of healthcare providers with the strings attached to Medicare reimbursement. In addition, the federal stimulus dollars driving the adoption of electronic medical records has been tied with the demonstration of “Meaningful use”. The second tranche of dollars is tied to requirements that were recently rolled out. The item that received the most pushback related to demonstrating patient engagement. The American Hospital Association came out strongly against these requirements. In response, the government lowered the requirement from 10% to 5%.

The professional associations representing healthIT professionals and the medical professions are responding with tools and training to help with the transition. For example, the association for healthIT professionals (HIMSS) has commissioned a book on patient engagement I was honored to be asked to co-edit and write the Patient-Provider Communication chapter. Patient engagement will be a major theme of the 2013 HIMSS conference which is likely to be their biggest yet with Bill Clinton, Karl Rove and others as speakers. The book will come out in advance of the conference to guide healthcare organizations into this new world.

One can certainly empathize with the challenge facing hospitals. How many organizations get penalized for the very thing they where rewarded for shortly before that? In the past, a hospital readmision to an organization operating like a hotel (i.e., more beds filled being a good thing) was great news. Starting October 1st, the U.S. starts to act like most of the rest of the world. That is, most hospitalizations are considered a failure in the system. That is, something wasn’t caught early enough to prevent hospitalization. Through the use of commonplace technology, places such as Denmark have dramatically reduced hospitals and hospitalizations — reductions of well over 50%. Fortunately, there is an overlap with consumer desires. For example, at one time more than 50% of people died in hospitals. Most people want a few simple things when they die. They want to be warm, dry, pain-free and with family. Today, 93% of people die at home as a result of remote monitoring, video conferencing, and house calls. As a nice byproduct, it’s also far more cost effective.

Virtually all clinicians will be expected to change like most other professions who’ve already had their work styles radically changed over the last 10-20 years. All of these changes make it clear that it’s a full employment act for change management consultants to help navigate these turbulent times. However, as the most trusted professions and with healthcare consuming nearly 20% of the economy, Voltaire stated it eloquently “With great power comes great responsibility.”

 Written by Dave Chase, CEO of Avado and contributor for Forbes where this  article was first posted. Dave Chase can be found on Twitter @chasedave

Featured image credit: HelloHealth

Written by Dave Chase, CEO of Avado and was also published in Forbes.
Matthew Herper‘s May 7th cover story reports on the billionaires at Cerner and Epic created by the HITECH Act. This was the $19 billion portion of the stimulus bill that is providing billions of subsidies for the adoption of electronic health records.

When this kind of money is being spent, it begs the question whether health systems are making the best use of that investment in modernizing the U.S. healthcare system.
On the one hand, it’s hard to argue with modernizing the record-keeping in healthcare that isn’t far beyond how medicine was recorded in the time of Hippocrates. Many thousands of lives are saved as a result of this modernization (e.g., avoiding deadly prescription errors) and it is why there is strong support from the current and past administrations to modernize systems. On the other hand, the companies benefiting most from the stimulus are running on 30-year-old technology architectures that have two significant shortcomings.

1. The core design principle of these systems was optimizing the rapidly fading “do more, bill more” reimbursement model where the “patient” isn’t much more than a vessel for billing codes.  For entirely logical reasons given the old reimbursement model, their success was measured by their ability to get as big of a bill as possible out as fast as possible. The shift to a value and outcome based model of reimbursement literally flips provider incentives on their head (e.g., hospitalizations are penalized rather than rewarded).
2. These systems were designed for a healthcare system in stasis. If there is one area of consensus about the future of the U.S. healthcare system, is that it’s destined to go through radical transformation.

Already healthcare providers are realizing that what they thought was going to be their 100% solution is really best optimized for just 25% of where healthcare dollars are spent (hospital-based care). Indeed, 75% of healthcare spend is directed towards chronic disease. Systems such as Epic and Cerner have their strength in automating internal workflows of hospitals and other clinical settings. In those high intensity settings, healthcare providers make the decisions that drive the patient health outcomes. However, with chronic disease, it’s an entirely different story. The decisions an individual (or their family) make drive the health outcomes. For example, does the patient fill a prescription and take it properly? Or do they make the necessary lifestyle choices to optimize their health?

Throwing Rocks or Birds at a Target: Manufacturing vs. Service Orientation
The healthcare providers who have demonstrated dramatically positive results with challenging patient populations recognize that there are two main care approaches. In a setting such as a hospital, many leading hospitals have adopted a manufacturing-based model borrowed from Toyota. However, with chronic disease, a service-based approach is necessary to effect behavioral change. In a manufacturing setting, with enough practice a machine will do what it is intended to do and doesn’t have a mind of its own. However, as anyone who has been in a service-based business knows, human interaction and a partnership-oriented approach leads to the best outcomes.

Let me draw an analogy (hat tip to Dr. Douglas Eby). Think about throwing a rock at a target. Like a manufacturing scenario, with enough practice a well trained professional can hone their craft and hit the target most of the time. Now imagine rather than throwing a rock, you are throwing a bird at a target. Perhaps you can impact 10-20% of whether that bird hits the target. However, the other 80-90% is going to be driven by understanding the motivations of the bird. Perhaps putting food or the bird’s babies at the target would be necessary to drive the bird’s behavior.

As with the bird example, doctors push patients toward a desired health target. However, only those organizations that have systems and processes optimized for engaging patients have had significant success with chronic conditions. SeeDIY Health Reform and Massachusetts and Alaska for more.

Disruptive Innovation in Care Delivery Must Have Rapid Iteration

“Necessity is the mother of Invention” Aesop

As highlighted in Nimble Medicine Changing the Face of Healthcare, the organizations driving breakthrough results aren’t tweaking an existing model. Rather, they have developed new models that get rapidly iterated. As one who has implemented traditional healthIT, the process is very involved with many months of planning before go-live. During that process, there is a ton of process planning and re-engineering before configuring the system to reflect what has been decided. Roughly speaking, process is weighted 80-90% toward pre go-live with 10-20% focused on post go-live to deal with go-live issues and some further training.

In highly dynamic environments, the pre and post live weighting needs to be flipped on its head (i.e., 20% planning, 80% analyzing, refining, testing, etc.). While some areas of healthcare will be stable, the most critical area to manage is where the greatest costs reside — chronic disease. Some best practices have begun to emerge, however one can expect a high degree of iteration to address the various areas of chronic disease management. One of Epic’s strengths has been its ability to address different workflows after significant customization. However, healthcare providers report that if they need to reorder workflow, the system has to be completely reconfigured with considerable time and expense involved.

Eric Page of Amplify Health has shared his experience doubling the national average for outcomes related to sleep disorders. He described their experience as one that involved constant testing and re-ordering of steps in the process. Sometimes, the changes were made day by day. I expect that rapid iteration will become the norm for the leaders of the next generation of healthcare delivery as they hone their craft.

In a piece for the New Yorker, Dr. Atul Gawande outlined how, early in the 1900s, more than40% of household income went to paying for food and food production consumed roughly half the workforce. Beginning in Texas, a wide array of new methods of food production were tested. After many pilots, tests and information dissemination, food now accounts for 8% of household budgets and 2% of the workforce. As a wide array of small innovations ultimately led to the transformation of farming, so too is a rapidly building wave of innovative new care and payment models leading to similar breakthroughs in healthcare. I call this Nimble Medicine.

Human Centered Design Will Trump Procedure Centric Design

“Listen to your patient, he is telling you the diagnosis” William Osler, M.D.

Health systems have begun with modest efforts to weave in the individual into the care process. Even simple secure messaging has been held up as a great breakthrough in medicine. That a technology (email) that has been around for 40 years is held up as a breakthrough, in and of itself, is a statement. I liken the limited efforts to invite the patient into the process to seeing a muddy puddle of water in the Sahara Desert — it’s a welcome improvement but far from the promised land. The healthcare organizations that will thrive (not just survive) are recognizing that a tweak to systems (both healthIT and business process) that were designed around the patient as billing vessel will fail miserably. As we’ve seen in many areas, tweaks to an architecture designed around a different model never succeed in the new paradigm.  If they did, AOL would be the leader in social media and Siebel would be leader in CRM. Before long, you will see the equivalents of Facebook and Salesforce.com emerge in healthcare.

Deflationary Economics Will Drive Healthcare

All men are prepared to accomplish the incredible if their ideals are threatened. -Maya Angelou

Underpinning virtually every business model in healthcare delivery has been an assumption of ever-increasing healthcare inflation. It’s not hard to predict that deflationary economics will drive healthcare in the future given the local, state and federal budget situations that are largely driven by healthcare costs (more on that here). While one expert warns of health care bubble another calls the upcoming period The End of the Third Bubble (PDF). It’s worth noting that those who thrived after past bubble bursts were those with lower costs structures and systems that were nimble.

Meanwhile, cost-cutting isn’t limited to the government. After all, it is employers who foot most of the healthcare tab and are starting to flex their muscle. For example, IBM has shifted from thinking about healthcare as an employee benefit to a large cost driver that will impact their profitability. IBM recently made a decision as to where to locate 4,000 new hires based on their analysis of where they received the best value from their healthcare expenditure. Consequently, they determined that Dubuque, Iowa was the best location to expand their employment. With wide cost differentials, it’s conceivable that CFOs and CEOs will believe that their fiduciary responsibility to shareholders will necessitate the kind of analysis IBM acted upon. This is a scary prospect for communities that are high cost locations for healthcare.

This may shift how communities think about economic development. It turns out that having a great ROI for healthcare may be of greater benefit than a tax break. Conversely, communities with expensive healthcare have what amounts to a healthcare “tax” that will push businesses away.

Many health systems operating at a loss or a razor thin margin, may wonder how they can deal with these changes. Smart healthcare providers are takinglessons learned from the newspaper industry’s colossal mistakes. The few newspaper organizations that have thrived realized that it can still be profitable to operate on a lower cost structure. With 62% of hospitals operating as non-profit, mission-based organizations, they should have a relatively easier time making the transition. They don’t have to explain to shareholders why a flat or declining top line revenue figure can be a good thing (assuming they get costs optimized for the new normal). However, I have seen both non-profit and for-profit health systems recognizing it is more capital efficient to create strong physician networks via open software solutions than acquiring practices and mandating a closed system.

As Zina Moukheiber reported, the proper cost structure and delivery model can be highly effective at providing care to groups of patients that many view as unprofitable (Medicare).  However, that is only true if providers stick to their old ways.

The New Normal
Most of healthcare’s optimization has been focused on hospital-based care. Even there, the new incentive framework takes into account what happens after a patient leaves. That is, there will be stiff penalties for hospital readmissions. Previously, hospitals have been rewarded when someone was readmitted. Consequently, there was little focus on addressing post discharge patient engagement.

However, the biggest changes are coming with the shift from a reactive to proactive model when it comes to chronic disease management. In the past, health systems waited for someone to present themselves at the hospital and that was viewed as a new revenue opportunity. Going forward, health systems will be responsible for people even when they leave the facility, and so will face an entirely new set of information technology demands.

To sum it up, to support the array of new demands, systems will need to be nimble, affordable and person-centered. These aren’t the adjectives typically applied to traditional healthIT systems. Just as we have observed the military frequently spending money on capital built for the last war such as aircraft carriers and other slow moving military tools. Over time, the military learned that it was as much or more important to focus on the hearts and minds of those they were trying to work with and that remote intelligence tools have been highly effective at winning battles. When it comes to managing chronic disease, winning the “hearts and minds” of patients and remotely monitoring health are similar skills not factored into systems developed for the legacy reimbursement model.

Facing all the new requirements in a dynamic environment, health systems should leave some dry powder around in their healthIT budgets. It’s only logical that an entirely new reimbursement model and set of requirements will create new categories of software.

About Dave Chase:

Dave Chase is CEO of Avado.com, a Patient Portal & Relationship Management software company, previously founded Microsoft’s Health business and was a consultant with Accenture’s Healthcare Practice.  He can be found on Twitter @chasedave.