The Long March for Right Stuff in a Health Model—Part 2

In the first post in this “Right Stuff for Health” series, we looked together at the crisis of overhead in a medical delivery process aimed at non-systemic chronic and acute care.  This high-cost approach was contrasted with lower-overhead preventive and wellness care in a technologically linked cross-silo practitioner team model.  The linked health operations enabled informed, wide-area provider collaboration and advice to patients across public and community health, including primary, dental, pharmacy, and specialist practitioners.

[Edit note: added reference link for term, “diagnostic groups;” also refined the last sentence in each of two consecutive paragraphs, where the first of the two paragraphs began, “The shift described above…”]

We ended with an important point about tracking value — in any human activity, we need to keep score in order to know what works, what doesn’t, and what are the necessary trades to keep an overall mission moving forward.  And we added a critical corollary — how we choose to pay attention to the flow of value directly affects the effectiveness of the value that we create and transfer.

In today’s post, we need to look at this cycle of value.

Value emerges from some form of collaboration between capital and labor.  This is true for private firms, public agencies and activities, and mission-driven non-profit organizations.  There’s stuff; there’re people; together there’s value.

The key point here is that labor itself must include the health of labor, and we need to pay attention to that factor.

Why does labor include the health of labor?  Since the early 1980s, you may think it’s simply to attract workers by offering benefit incentives in lieu of take-home pay.

But systemically, there’s much more at stake to a region’s practical well-being.

Absent health, including family health, the systemic truth is that people can’t sustainably focus on learning, training, teaming, responding, and persistently doing and delivering.  In contrast, if we have all three of capital, labor, and extended family health, then we get sustainable productivity (value added to resources used) both for the places of work, and for the workers in those places.

And if a region pays attention to applying capital, labor, and health, that region will prosper over time relative to other places that may possess capital and labor, but that lack coherent, affordable systems of health for workers and families.

So what are the three ways to transfer value from creators, to the health system?

• Arbitrage subscription fees & ration usage across demographic risk pools;
• Share the effort to reduce the risk of chronic and acute care incidence; or
• Apply collaborative learning-doing-learning to prevention and remediation.

The arbitrage and rationing approach is carried out by the traditional US health insurance industry.  As a step forward, the big deal above is the risk sharing item.

Paying attention to risk sharing means supporting it at the working level by the continuous collaborative process of learning-doing-learning.  Four key operational accountability items drive the “paying attention” process within risk sharing (Note: MCO below refers to managed care organizations such as HMOs) –

• Claims administration is a competitive third-party MCO tracking and processing service to manage funds and rules provided by non-MCO payers (e.g., self-insured employers acting as health insurance payers, or tax-supported health payers like insurance firms offering Medicare Advantage services);
• Health risk assessments, i.e., annual or other medical check-ups as needed;
• Healthy behavior credits & inducements (sharing achieved savings); and
• Stop-loss insurance to protect self-insured payers; better outcomes result in lower actuarial rates.

So what tools do we have in order to pay for health care?  Let’s take a look at the two core payment types…

Payment types are the ways we decide to pay attention to the flow of value from value creators to health providers.  Today we use one of several flavors within two models –

• Cost-Plus models are where you pay until the money runs out, either as Cost-Plus-Fixed-Fee, or as Cost-Plus-Incentive-Fee if costs are less than a goal.
• Fixed-Price models are where there is a set price, either as Firm-Fixed-Price, like buying a hot dog, or as Fixed-Price-Incentive, like a set pay scale with a bonus for bettering a compound production standard for quality and volume.

Due to uncertainty in dealing with complex systems like human bodies, there is pressure to use cost-plus models in medical care.  It’s called Fee-For-Service (FFS).

Going forward with paying attention to the flow of value, it’s important to limit the open checkbook of Cost-Plus (FFS), but also to acknowledge medical uncertainty and regional cost differences.  One powerful idea is to use knowledge repository data to look at large numbers of cases for varying medical presentations and circumstances across varying treatment paths and results achieved in a given region, and also in similar other regions.

Then pick an underlying path of care by medical presentation that makes baseline medical and fiscal sense as a framework for progress payments.  This framework sets up Cost Outcome Paths (COPs) based on repository data and evolving experience for diagnostic groups, and specifically makes room for action-learning updates reflecting new medical experience and tools.

Let’s put this together just a little bit.  To allow for cases outside a framework-derived range of complexity, Chief Financial Officers for hospitals and other medical entities can backstop baseline COP progress payments with stop-loss insurance funded by actuarially-based annuities.  This allows for atypical contingencies, while preserving a living COP benchmark process for continually assessing costs, outcomes, and lessons learned from what went right, case after case in a reliability and resilience framework.

Clearly, effective health care includes the ability of the system continually to change as experience and tools expand.  So how do we deal with paying attention to change in health care thinking and practices?

First off, change happens over time.  Dynamic response is how we change over time.  The idea of time is constructive.  For example, events occur, people respond, and thus there are stories from which we can choose to learn.  The intentional process at play when paying attention is one of transition and creative balance.  The key to building a “paying attention framework” for healthcare as a system is to keep funds in balance as emphasis shifts to front-end prevention, wellness, and health, while awaiting funds liberated by reducing growth in back-end acute and chronic demand.

Here’s how it works.  The time to respond is mediated by the human body.  It takes a human body 6-12 months to respond to improved health and wellness care, such as nutrition, dental, physical therapy, reduced fats and sugars, exercise.  So it’ll take a year to see changes begin to manifest as benefits to populations.  Thereafter, improved population health then starts to show up as more sustainable health expenses and a more productive labor force.

Notice in this dynamic response, we’re shifting from one cultural emphasis to another.  Today the health framework at play among the public is, “Don’t touch me unless I’m broken.”  This reflects the cost of care from an individual perspective – we only decide to get care when it’s clear we’re individually in trouble.  Who can afford individually to take the time and expense to prevent the need for care before there’s a problem?

Alternatively, by treating care as a positive community and regional process aimed at reliable and resilient regional competitive performance, the common-sense goal is to treat ourselves individually at least as well as do building maintenance engineers and auto mechanics on the job.  They keep light bulbs lit, toilet paper available, and cars running by replacing bulbs, paper rolls, and oil on a preventive maintenance cycle and a vehicle inspection-maintenance cycle.

Think we can do at least that much in our overall approach and practice for health care?

The act of paying attention to the dynamic response process says we can demand more preventive and wellness as a cultural shift, and we can pay for it by letting go of the break-first acute care culture.  The cultural shift in the enabling dynamic response arc says we can respond effectively to incentives and resources aimed at community health networks that support self-management – the key is that we don’t need to go it alone.

The result is that a reduced growth in expensive care can release cash into a desired, far more stable, productive, and competitive quality care culture.

So where does this leave us?

Clearly, we’d be dim bulbs not to learn from experienced building engineers and car mechanics.  With incentives to get periodic health risk checkups, and with audited results-based cash incentives if we take smart action on checkup findings, we can share and directly benefit by personally paying attention to self care.

How can medical facilities support the paying attention process?  One example would be front-end community facilities that combine medical, dental, ER, and pharmacy services with hospital access as tiered hubs that anchor collaborative extended team care aimed at patients.  Technology tools can let dynamic resilient care teams easily come into focus for COP patient groups, and then flexibly re-group as needed going forward to the next COP patient group.

The energy in paying attention to dynamic care is not only whole-patient, it’s whole cycle.  It’s fully patient-centric across an always-extending medical knowledge repository continually fueled by team action learning.

This is a shared and predictable self care path that, all else being equal, cuts back on the presentation of sharp events like acute care or chronic onset.

Guess what… the cash follows the incentives.  If we want good health, and if we build operational tools like annual risk assessments and healthy behavior credits, including collaborative pharmacy network coordination and medicine protocol tracking, we can use some of the savings from avoided acute and chronic care to fund increases in less expensive actions for prevention and wellness.

We’d have better health, and lower bills.  This paying attention process is a good deal we’d be making with ourselves.

Lower bills, you say?  How’s that work?  All that working together sounds expensive.  Good question.  And here’s a way to look at a system aimed at health…

The shift described above toward the COP-enabled smart health path drives lower overall bills.  Why?  Because we’d be healthier as a population.  That’s the collaborative touchstone across public health, community health, hospital anchors, and medical-dental-pharmacy practice teams.  Collaboration also includes all of us as individuals and family members having and acting on context-aware costs and results for providers engaged in prevention and wellness as well as in chronic and acute care.

And just as the dynamic health framework connects patients with their friends and families, and with their co-workers and accessible community resources, there’s a corresponding cut in the need for the high-overhead, acute-care, fix-it culture.  We can go from an increasing incidence of painful, random, and costly “busted” cases.  We can go toward more sustaining and sustainable habits of ongoing awareness and health grounded in coaching, consults, and care coordination for medical-dental-pharmacy practices that work with each other as they connect with patients who are at the informed center of linked local and wide-area hands-on health teams that pivot on funded risk assessments and healthy behavior credits.

As the actuaries would dryly put it, that’s a new claims experience.  And it’s one that’ll save you dollars and misery, and you’ll feel more like a million.

Let’s put this into perspective for the participants involved in running health care…

The Chief Financial Officers (CFOs) in the health business are hungry for cash.  The Chief Information Officers are hungry for front-line service technology.  The Chief Executive Officers are hungry to build resilient and reliable operations and institutions.  The doctors and dentists and pharmacists and other practitioners are hungry to practice medicine and wellness that helps more people and keeps more people healthy.  The Managed Care Organizations (i.e., HMOs, etc.) are hungry to expand their administrative services.  And regions and states are hungry to nurture healthy, productive, and competitive economies that generate viable good jobs.

That’s one very full plate.

And there is a path to pull this together.  We have just shared a moment today to look at that path.  It starts with the CFOs.  If the CFOs are happy, we all can walk the path responsibly, from payers (employers & employees) on through.

One way to reduce the cash flow risk, and to support the dynamic goals, is to pursue more stable patterns of service delivery.  The systemic operational reality that represents the cleanest way forward is to expand a predictable preventive and wellness health culture, and to reduce reliance on the peaks, the valleys, and the high investments and hospital overhead and running costs of endemic acute and chronic care.

The beauty is that paying attention to collaborative, technologically enabled situational health will benefit people, populations, regional and state economies, and all the key operations in front-line hospital, practitioner, community, and training activities.

The message here is that it’s work, because change is work – but work isn’t magic if it’s teamwork.  Together we can build a healthy process for shared better health.

We can use reliable collaborative methods, connected technology, organizational success stories, relevant industrial processes, and cash-based personal checkups and incentives to transition to resilient professional operations that are right-sized for less expensive personal habits and more effective economic health.  We can connect systemic activities across teams, patients, and dynamic resources.

We can do it because we can choose to pay attention to connecting better personal health with better economic health.  We can decide to give better lives to all our children and grandchildren.