Breaking the Triple Constraints, or, Why I Like Lasik

In an earlier post I suggested that lawmakers fix Medicare before asking the American people to support an even larger healthcare system. Controlling the cost of Medicare, without harming benefits, is essential to buildingthat trust. How can we do that?

In considering how it can be done, I can't help but think about Lasik, the elective eye surgery that many people get to correct their vision, and when successful, to live without glasses or contact lenses.It changes lives, but it's paid for entirely out of pocket.

When Lasik was first introduced, it was expensive, and few doctors could perform it. Years later, the cost has come down, the quality has gone up, and the number of doctors who perform it has increased as well.

Isn't this what we want for the rest of healthcare: lower costs, higher quality, more accessibility? And somehow, it happened without government intervention or subsidy. Adam Smith would be proud.

But how and why did it happen? Certainly the fact that it's an elective procedure played a part (elasticity of demand for you economics geeks out there). But there's an aspect of human behavior involved that I want to point to and suggest it might be the key to breaking the triple constraints of healthcare and here it is: knowing the cost of your care before you need it makes a material difference.

I found some testimony given to the House Ways and Means Committee which supports this idea.The original text is available here.

It's not a dry read - it's conversational and moves quickly.

I'll draw your attention to one specific part of the testimony, where Ha Tu of the Center for Studying Health System Change and Dr. Regina Herzlinger of the Harvard Business School are testifying about high-deductible plans (i.e., plans where patients have more financial skin in the game and therefore more of an interest in how much their care costs).

In the text, search for the words: "Mr. McCrery" to get to it quickly. They testify that evidence shows that as people become aware of the cost of care, they do two things:

1) Decide not to get the care, because they don't really need it (this applies mostly to elective procedures) but more poignantly,
2) Their outcomes improve because patients know how much it's going to cost them if they don't comply with their medication schedules, follow-up appointments, checkups, etc.

As the testimony cautions, we don't want to oversell the benefits of this model, but how much could we reform healthcare if consumers knew the real cost of care, and had more of a stake in their own healthy choices?

For example, heart disease is the leading killer of American men and women, and is highly preventable through behavioral changes such as smoking cessation and weight loss years before the adverse event happens. If you knew today that a heart attack would cost you $20,000 (and not just your $500 deductable) do you think you might take a little better care of yourself?

Put another way, if you can see how putting calories or fat content on restaurant menus might make a positive difference in diners' choices, it shouldn't be much of a stretch to understand how seeing the cost of your future care might positively influence your present choices.

In another blog entry I will walk through a simple example ofof how removing the insulation from cost that we have might have a positive ripple effect through the entire healthcare system.

Questioning A Given

Health information technology (HIT) is often cited as a means to achieve improvements in efficiency and savings. But, I was wondering today: has anyone conducted any studies on what, if any, tangible improvements a healthcare provider enjoys after the adoption of HIT.

I wanted to question the assumption that HIT makes anything better for providers. So let's start from the beginning and ask this question:

What precisely gets better with the adoption of HIT into a practice?

I did some Googling and searched some academic databases through my alumni accounts, and there are many individual studies and articles on the subject. I managed to locate a research article that first appeared in the Annals of Internal Medicine in 2006 by Chaudhry et al. that conducted a literature review of over 250 studies on the impacts of information technology on healthcare, which is a lot more exhaustive and scientific than my own random searching could ever hope to be. Here is a link to the original paper.

The results were interesting, and perhaps not what one would expect. According to the research, information technology improved healthcare in four key areas:

1) the adherence to treatment protocols
2) the surveillance of diseases
3) the reduction in medication errors
4) the decrease in utilization of care

The first three improvements can be grouped together as improvements in the quality of care: patients were treated according to the plans with the best clinical outcomes, more data on diseases were gathered and used to proactively identify high-risk patients, and mistakes in prescribing drugs to patients were reduced.

The fourth improvement is different in that it suggests a gain in efficiency. Apparently, when clinicians are exposed to the cost of a given treatment, especially in the areas of diagnostics and imaging, utilization of these services decreases. This does not imply that the patient's treatment outcomes were better as a result of this efficiency, just that the efficiency appeared.

There is a robust debate about the place of information technology in healthcare, and I hope that by understanding how it can help a practice we can help to set our expectations appropriately. If we can do that for ourselves, and for our clients, HIT implementations will have a better chance of being perceived as a success and might be used to do what they do best: get better information in the hands of our caregivers when they need it.

Advice for Healthcare Reformers

Our nation's healthcare system as been referred to with many labels: "broken" and "unsustainable" are two that there seems to be little argument about. Our President and the Legislature have been insisting that reform is not only necessary but imminent. It's going to happen, it's just a question of when. Healthcare reform is paramount, they say, because healthcare costs are rising as a proportion of Gross Domestic Product (GDP) at an unsustainable rate.

But more recently, a growing number of Americans have been expressing their concerns about the cost of "reform". On July 14, when the Congressional Budget Office issued its nonpartisan assessment that the latest healthcare reform bill being submitted would not only increase the national debt by over a trillion dollars over the next 10 years, but also that there would be no cap on that figure (meaning, it could be even more expensive), it dealt the supporters of big change in healthcare a significant setback. The original letter from the CBO is here.

In order to rebuild the American people's confidence that Washington can reform healthcare, my advice is to start with two human service programs it already manages on our behalf: Medicare and Social Security. Here's a chart that illustrates my point (click on it for a larger version):

[source data: Office of Management and Budget, Historical Federal Outlays, 1962-2008]

Side note: wherever possible, the data I present here are from primary source material. I am not giving you data regurgitated from a talking head somewhere. These are the data from the original sources. You can (and should) look this material up yourself and get informed.

If this truly is the time to reform healthcare, and our current slate of Representatives, Senators, and President are the people to do it, can they start by reforming a program already fully under their control? Show us how efficiently Medicare can be run, and how well costs can be controlled through efficiencies, then we will gladly buy into a new government-reformed healthcare system. Show us Medicare's costs can be contained; it's already the largest consumer of healthcare in the nation, and wholly under Federal control.

I believe that if Medicare or Social Security become models of government management excellence, then the American people will have no reason to fear that the system we have, as "broken" and "unsustainable" as it may be, will be worse off when Washington "reforms" it.

Healthcare's Triple Constraints

The other day I was reading an article in the WSJ about President Obama's press conference on the topic of healthcare in the United States.

In the commentary, and in thinking about the various positions on what needs to be done with the system, I was reminded of a useful metaphor I learned about in project management: the triple constraints.

If you're not familiar with the triple constraints, imagine an equilateral triangle. At each corner of the triangle is a constraint: cost, time, and quality. The concept is simple: pick any point within the triangle and you'll see what the trade-offs in your project will be at your chosen point. For example, if your spot is precisely between "cost" and "time", implying that you want the perfect balance of the lowest cost and fastest time possible, then you will be the farthest away from "quality" possible.

Applying this to healthcare, I would argue that the constraints in our current situation are:

1) Quality (receiving the best care from the best professionals with the best outcomes)
2) Accessibility (how many people can get the care)
3) Financial Sustainability (how long we can afford to pay for the care)

The picture looks like this (image just below):

So for example, if you were to pick a point that was on the line between "Quality" and "Accessibility", meaning we want the perfect balance of the highest quality possible and the most accessibility possible, we are the farthest away from "Financial Sustainability" possible.

In my opinion, another dimension of the debate is: who gets to choose where your particular point within the triangle is? In our pseudo-free market system, we consumers have our own ability to select where in the triangle we are. In single-payer, well-meaning Federal agencies would make the decision for you.

How confident are you that the point they pick and the one you would pick for yourself would be in the same place?