Bio+Tech was started as a monthly gathering to bring together the best and the brightest entrepreneurial minds in biomedicine and combine them with leaders in the SF tech start-up world.  The idea was that we have an amazing collection of biomedical entrepreneurial minds in SF and with the advent of bio-incubators and tech breakthroughs, the barriers to starting a bio start-up continue to drop.  There’s also a curiosity about biomedicine in the tech realm.  Who better to infuse biomedical and informatics start-ups with entrepreneurial energy and push biomedicine start-ups over the entrepreneurial hump than folks from this bastion of entrepreneurial energy? Plus, the biomedical start-up world doesn’t network nearly to the same degree as does the tech start-up world – that’s critical to the tech start-up world’s success in the SF Bay Area.  Thus Bio [plus] Tech – not just the same old biotech complete with high barriers, lack of networking and support.  Six months in to the Bio+Tech experiment I’d say that so far it’s been a success.

As a note: When I talk about biomedical entrepreneurship I mean that broadly – whether informatics, biotech, pharma, bio-energy, etc – it’s all welcomed and encouraged at Bio+Tech. And, I can’t emphasize enough that not only are we looking to bring together biomedical folks, we’re also looking to bring tech folks – developers, co-founders, start-up managers, etc – in to the mix.  You absolutely do not need a PhD in biophysics to join the group.  Just a healthy interest in bio or medicine – trust me, you’ll blend right in to the group!

Bio+Tech has grown from a group of 10 in January to an average of about 30 people at each monthly gathering.  To boot, that growth has been achieved solely through word of mouth.  I’ve been to a lot of meet-ups and gatherings where there’s lots of noise and very little signal – Bio+Tech has been purposefully kept small to keep the quality of the level of interaction high.  This set up was inspired, in part, by the SF meet-up Founder Dating, which requires an actual application and recommendations from other start-up folks.  Jess Alter and her crew do an amazing job!  Go check it out if you’re looking for a tech start-up or a techie person to help you build your start-up.  I also want to give a shout out to Vinnie Lauria and his Silicon Valley NewTech Meetup as the founding source of inspiration behind Bio+Tech.

Bio+Tech isn’t quite as complicated as Founder Dating and not as large as the SV NewTech Meetup, but to join the invite list you do need to demonstrate a basic interest in biomedical, tech or bio-energy entrepreneurship.  All too often a lot of biotech meet-ups are crowded with sales people and other vendors who are more interested in selling than sharing ideas, tips, contacts or starting businesses.  That’s not to say that we don’t accept sales people in to the group – you just need a genuine interest in creating a company or joining a start-up.

Michael Shuster speaks on the changing IP landscape and how that affects biomedical entrepreneurship.

Want to join us? Each month, the time and date of Bio+Tech will be posted on its webpage, with the location in SF to be announced. If you’re not already on the invite list, feel free to contact me at windmiller@gmail[dot]com and let me know why you’d like to attend.  Just a little paragraph with your interests and what type of company you’re looking to start or join, and a link to your LinkedIn profile – nothing too complicated.  In return, I promise to do my best to connect like-minded people at the meet-up.

We’ve had a couple bio start-ups find co-founders or developers – heck, there’s even been cross-pollination of neuroscience-principles back in to a tech start-up’s social media algorithms!  Yes, it’s a bit nerdy, but I can honestly say that out of the 6 gatherings so far, everyone who has attended has been someone I’ve really enjoyed talking with and sharing ideas.

Each Bio+Tech starts with a good bit of mixing and conversation.  It’s kept that way to maximize interaction and to warm things up.  We then get together to introduce each other to the group – with 30 people I’m always amazed at how efficiently we get through the group.  This is an opportunity to introduce yourself to the group and also spot others with like minded interests.  And, of course, we welcome solicitations for co-founders or technical help or any other start-up needs to the group.  This is a chance to network and find those you’d be interested in working with.

Starting in August we’re going to try to have monthly speakers as well.  It’s a highly informal 10-20 minute talk from people in the biomedical start-up or in the tech start-up world designed to bring ideas and prime the conversation.  We’ve had Michael Shuster, partner at Fenwick & West, speak on the changing landscape of Intellectual Property (IP) and how that’s affecting start-up strategy and execution.  A lot of biomedical start-ups are realizing that execution is just as important as securing IP to start-up success.  This isn’t news to tech start-ups, but this shift in perspective is somewhat groundbreaking in biomedicine start-ups.  We’ve got John Wilbanks, VP of science at Science Commons speaking at our August gathering on the open sourcing of biomedical data sets and tools and how that is altering and encouraging opportunities in the biomedical start-up scene.

And, Bio+Tech is purposefully kept free.  Whether you’re an undergrad or grad student, or on your 5^th start-up, everyone is welcome and encouraged to come.  I believe firmly that cost should not be a barrier to attendance.  And, please pass this along to people you think would be interested in Bio+Tech – that’s how we keep new, fresh ideas coming in to the group!

Looking forward to seeing you on August 18^th.

Have we been lulled to accept this as the typical patient relationship with healthcare?

Last month I attended the Microsoft Connected Health Conference in Bellevue, WA. It was an interesting conference because although there is close to $20B in ARRA stimulus dollars to be chased for electronic health records (EHRs) and health information exchange (HIE), “consumers” were on the tips of everyone’s tongues – they stole the show.  Everyone at the conference was talking about how patients needed to act more like consumers and providers and payers needed to treat patients more like consumers.  From hyperzealous entrepreneurs to entrenched Microsoft Research folks, “consumers in healthcare” was the topic on the tips of everyone’s tongue.

To me it seems all a bit funny and odd.  What does it even mean to be a consumer in healthcare?  Particularly, what is the difference between being a patient and being a consumer?  I think it has partly to do with how the “well” (AKA people who aren’t sick) interact with healthcare resources and to continue to be well. From healthy living and eating to tracking health information in a personal health record (PHR).  Taking control of your care and doing all that you can outside the care setting (hospital, practice, etc) seems to be an important aspect in transitioning from a patient to a consumer in healthcare.

I completely agree with the concept of utilizing consumer engagement techniques and practices to engage the well into keeping healthy.  From employing game mechanics (Nike+, rewards for consistent health monitoring, etc) to tracking healthy stats or improving an already healthy lifestyle should be encouraged at the consumer level. This includes thinking about how we as a population need to reconsider the foods we consume.  The overall goal for actual healthcare is to engage people more in their care – to both improve outcomes and to engage them on costs and potentially decrease costs.

Should patients act more like a consumer who's car shopping? What if we as patients were more aware of costs, benefits and risks?

However, another key part of being a consumer in healthcare is being aware of the cost of care.  Just like being a consumer at a car dealership, patients should be aware of the cost of the product they’re purchasing.  The only difference is that in healthcare patients have traditionally had costs paid for by insurance companies and therefore been aloof of what their care actually costs – both in terms of system resources and financially. Very few patients even do research prior to their care – some do, most despite the availability of vast knowledgebases on the web, few people take advantage of those resources as they do when making other large purchases.  How should taking more of a consumerist role affect care?  How can financial awareness in healthcare lead to better care, rather than the rationing of care? When was the last time you even looked at a medical bill or got a cost estimate for care prior to receiving that care?

We should already be encouraging patients to understand the cost of care.  However, one of the traditional roadblocks to making patients aware of costs is that it’s incredibly hard to get access to cost data.  Virtually everything else we consume has a transparent cost.  However, in healthcare there’s no real list of what certain types of care or procedures costs.  Except for those we have to pay for in cash, like cosmetic surgery.  As consumers we know more about what it costs to insert breast implants than we do about what a life-saving surgery (like an appendectomy) costs.  Costs are anything but transparent, and the odd thing to me is that insurance companies should be more open about cost structures – it might even save them money if people decline unnecessary, expensive care.

Traditionally, being a patient came with very few responsibilities with respect to the doctor-patient relationship.  You arrive at the doctor’s office on time, answer the doctor’s questions, listen to the care instructions and then take your medications or do your therapies.  It was and still is very paternalistic in that sense.  When these patient norms were set, the cost of care was incredibly low, but now more expensive drugs and techniques are taking over.  Nowhere in that traditional role were patients asked to  “think about cost” – it was just assumed that it would be covered.

Being a consumer implies that you have the freedom to walk away from a purchase or product if it’s too expensive.  Our medical ethos doesn’t allow for this in medicine.  Or at least it shouldn’t for the right care and therein lies the catch.  People need to understand cost and reduce their healthcare usage, while maintaining a high level of care.

With little mind to costs, America's healthcare rates are increasing at 8% per year. We need to get smarter with how we spend those dollars.

So, patients need to better understand what their care costs – how we do that is for another post.  But, for now I’d like to propose that patients remain patients, and we continue to consider how to leverage consumer principles and awareness to help drive patients helping to keep the cost of care down.  We’re spending an inordinate amount of time and effort trying to engage patients with their data.  I think connecting patients to their cost will have a much more dramatic effect, but it needs to be done carefully.

I’d like to suggest that while the concept of consumerism is being applied to being a patient, I think that patients should remain patients, but become more engaged with their care.  We should begin to act and think more like consumers when it comes to healthcare, but we still need to be patients at some point.  More on that in a future post.

What do you think? Do you want to know what your healthcare costs?  Should cost ever be a determining factor in whether someone receives healthcare?

It’s election day in the UK and it’s been an historical election – the first ever in the UK with televised debates.  While the UK election system is vastly different than the US, it’s also a much shorter season as well.  The Queen dissolved parliament on April 6th, meaning it’s been just about a month of elections – personally, that would be welcome to me here in the US!

I’m an observer (fan) of UK politics and enthralled by the House of Commons, particularly Prime Minister’s Questions.  You can watch them here.  Although, Gordon Brown is a bit of a bore, I got to see Tony Blair in his prime – what a show, indeed.

So, as a tip of the cap to our UK friends I’m posting this image – a bit of British propaganda from World War II.  Although it wasn’t widely used during WWII, it has become a more modern sign of the British stiff upper lip and resolve.  Personally, I like the image quite a bit.  You can buy them from several places online if you need a copy of your own.

I’ve got a job for you!  How does this sound – spend your college days studying away (sorry, only minimal time for parties) worrying about standardized tests, spend 7-8 years after college training for your job, go in the financial hole on average $160,000 and for the first 4 years of your career earn $45,000.  Sound good?  There’s more.

Spend the rest of your career jamming in as many clients as possible a day – maybe upwards of 20 or so – worry about malpractice insurance, be squeezed by Medicare. And, while earning a respectable salary, there’s really no hope of raises outside of adjustments for inflation.  In fact, there’s a high probability outsiders will likely attack your salary and maybe even reduce it.  Did I mention about mountains of paperwork and clients wanting your professional opinion for free?

Sounds a bit dramatic, but that’s the negative side – aka the con side –  that a person faces when deciding whether or not to be a General Practitioner.  I was sparked to write this post when a friend of mine – Ab Brody, PhD, NP – tweeted about a new Journal of the American Medical Association (JAMA) article laying out some of the challenges in recruiting MDs to General Practice.  The current healthcare reform debate has renewed the debate over the types of MDs we need to train.

Indeed, there are lots of benefits to being a GP – not the least of which is the satisfaction of getting to know families, helping people overcome day-to-day medical issues, etc.  It’s truly rewarding.  But compared to other professions and medical specialties I have no idea of why, from a financial perspective or even a career fulfillment perspective why anyone would choose General Practice.

Dermatologists – same professional satisfaction.  Sure, you have to look at the occasional butt pimple, but you can make a dramatic difference in someone’s life.  Career satisfaction?  Check!  Good hours? Check!  Oh, and on average they make $351,000 annually.  Or, 2.5 times what a GP makes.

I’ve done the math – a GP, making the average salary and with the average student loan debt load will never be able to purchase a house in San Francisco without significant additional income.  If that same physician buys a modest house in Atlanta, by the time they’re 65 they’ll have almost $500k in the bank.  However, that’s much less than what other careers bring in. It’s more than a lot of people, but given the struggles they went through to become physicians, it’s not all that much.

To be sure, I’m writing this post to be incendiary and provocative.  I truly believe that GPs will be the heart of healthcare reform here in this country and I hope we start treating them like so.  Why?  Because we need them – they coordinate care, they’re the first line and if trained the right way they can be beacons of savings – to the tune of several billions of dollars of savings each year.  But, we need to fix the factors that I spend time lampooning above.

How do we get more smart, young physicians to become GPs?

So how can we rectify this issue? I think that the first step is to come clean and admit that it’s, at least a little bit, about the money.  There’s absolutely nothing wrong with wanting to earn a great living.  If someone offered you a better lifestyle, more pay, better hours, wouldn’t you take it?  We need to change how we reward our GPs – base their income on outcomes.  Patient outcomes, that is.  Promote tort reform to help avoid frivolous law suits.  Provide scholarship opportunities to help them with the financial hole they face out of school.  And, to boot, pay them commensurate with other areas of medicine.  We’ll all benefit from that!

The demands we place on GPs are too great – the malpractice threats, the paperwork, diminishing incomes/reimbursements, etc.  It’s a tremendous burden even outside the financial disparities.  Add both of those to the pot and it’s a surprise anyone becomes a GP.

It’s also a reputation issue, too. Or at least that’s the way I’d argue it.  My medical school, for one, highly praised those who went to specialty residencies.  Let me be clear – I’m exceptionally proud of all my classmates and their choices.  However, the school did a super lousy job pointing students to general med.  I’d even say that it was actively passively dismissed though the school’s emphasis on specialties and choosing a competitive specialty as the highest success.  In fact, we really didn’t have a fantastic role model to emulate in the GP space – compared to access to the best heart surgeons, cancer docs, orthopods, etc in the world.  IMHO.  I’d say a lot of med schools actively dissuade the pursuit of becoming a GP through how the schools grade, praise specialties, elevate their leaders, etc.  Becoming a GP was passively aggressively looked down upon.

Lots has to happen between now and then – I’m really curious to hear your thoughts.  Should GPs be paid better salaries? What role should they play in our healthcare system?

© 2003 Mark Stivers - www.markstivers.com

It’s all a matter of perspective, I suppose.  It’s been a few weeks since I’ve gotten back to writing on Medicine Think and I’ve got some more entries in store.  For now, this comic by Mark Stivers caught my attention.  Head over to his comic blog – very funny stuff.

The comic just reminded me that during a time of such intense national debate – healthcare, taxes, finance reform, housing reform, student loan reform (and on and on) – sometimes it’s best to step back and gain a new perspective and consider the other side.

Combining medicine and technology hasn't always been smooth for people like diabetics

I’ve been thinking a lot recently about people’s [in]ability to integrate and think about a lot of different data points, particularly over time.  Specifically, I was thinking about consumer healthcare solutions that have been popping up.  I was advising a couple friends last night on an idea that they had in the consumer wireless space to help people manage a specific health condition – let’s say blood sugar for type 2 diabetics.  Seems like a noble goal, right?

I thought so too 3 years ago when I tried to create my first start-up, Element Mobile.  With our first product, CurrentCare, we were aiming to help diabetics easily, quickly and seamlessly track their blood sugar and other related statistics.  We were aiming for both type 1 and type 2 diabetics.  However, the interesting thing in the marketplace is that there’s about 1.5million type 1 diabetics (those who require insulin to live) and about 22.1million type 2 diabetics (tend to be more obese and insulin resistant) in the United States.  We were aiming for both populations with CurrentCare.

But, here’s the rub.  Type 1 diabetes patients tend to get used to a routine and learn how their body reacts to insulin and over time they lose the impetus to continuously and religiously track their blood glucose levels.  And, for the most part they do pretty well and live relatively healthy lives.  Type 2 diabetics tend to be individuals who haven’t taken as good care of themselves – if most were to lose weight and track their blood sugar levels (among many other lifestyle changes) they could probably get their disease under control and maybe even become totally healthy once again.

And, by “healthy again” I also mean that if they get back to healthy, they could avoid complications like heart attacks, toe and foot amputation, kidney failure (which requires dialysis), blindness, etc. Caring for complications of diabetes alone cost the US healthcare system about $116,000,000,000 a year – yes, $116 BILLION – and another $58 billion in associated costs.  That’s enough to scare the bejeezus out of me, but most type 2 diabetics don’t manage to control their blood sugar or attempt to lose the weight they need to avoid these ills.  Why?

One of the problems is that these complications occur many, many years after the initial onset of diabetes.  It takes 10-20 years of neglect (sometimes sooner) to run in to these issues.  It’s hard for type 2 diabetes patients to really be scared of something that’s 10, 15 or 20 years down the road, particularly if they don’t feel that bad today.  As a side note, type 2’s do report feeling worlds better if they kick the disease through diet and exercise, so there would be some immediate, near-term benefits to becoming healthy.

The same applies to people with high blood pressure, poor eating habits, or who are overweight, etc.  Most of these people feel “fine” today – they’re getting along just fine and don’t feel the need to change.  The punchline, however, is that 10-20 years down the road when the deleterious effects of a lifetime of neglect kick in, it’s almost surely too late to recover to 100% health.  This leads to the inherent problem with consumer healthcare and “health 2.0.”

If people aren’t inspired or driven to take care of their condition because they can’t see the deleterious effects that loom 15 years down the road, why would people be inspired to care for their conditions with new internet and wireless tools?  Even if these techniques and tools lower the barrier to adoption and make tracking super simple, for a vast majority of people it’s simply not worth it to care for or improve their condition.  It’s one thing to create an elegant solution and another to gain adoption among this population of people. Creating these solutions faces the problem of getting multiple types of users on board – providers, patients and payers.

All too often we only really care about our health when something is staring us in the face – like an illness or a cancer diagnosis or heart attack.  Or even something as joyous as pregnancy. And even then we go online, look up a few web pages, maybe do a bit more of investigative research and we’re satisfied.  Because of this, the opportunities to monetize these interactions and create a sustainable business is somewhat limited.

There’s an inherent human behavioral trait that’s just so hard to manage in a way that causes people to change.  However, the person or company that can solve this problem – to create a health tracking solution that gains steady user adoption and traction – will almost certainly win the start-up prize. But, until then, I think there are (unfortunately) going to be a lot of dead startups in the middle of the road. I think the answer lies more in consumer behavior rather than creating effective clinical solutions.

How are things going to ultimately change? Is it scaring people out of their wits to change? Is it substantially lowering the barriers to adoption? Is it some other intuitive device or solution? Or something completely different like incentive or disincentive programs that get people to change? What do you think?

Earl Butz, Secretary of Agriculture under Nixon and Ford, was primarily responsible to the reform of our agricultural policy that has led to the abundance of corn-based products such as high fructose corn syrup. His effects are still being felt 40 years since his time as secretary.

Earl Butz.  I’d like to argue that he might just be the most important name in the healthcare reform debate and an exemplar of how good intentions can have immense (pun intended) ramifications for millions of Americans 40 years on.

Ol’ Earl was Secretary of Agriculture under Nixon, but his lasting legacy is the farm bill that he introduced.  The bill provided financial subsidies for growing corn and was meant to encourage the mass planting of corn and other basic crops.  It allowed farmers, in fact it encouraged farmers, to grow more and more corn (among other effects). The original intention of the farm bill was quite nationalistic – to provide food at a more reasonable cost to millions of Americans.

With low priced corn and corn byproducts came the need for food “innovation.” In other words, how were food manufacturers going to utilize this new, cheap resource?  How would they make low cost food from corn and other subsidized crops?  The result was the widespread use of high fructose corn syrup and processed oils and other pseudo-synthetic chemicals to produce many of the foods that we now see in the “middle aisles” of the supermarket.  Everything from Coke to cereal to ice cream to granola bars are filled with the stuff.  Food prices have gone down, but many other things have gone up.

For those who’ve seen CornKing or Food, Inc or read In Defense of Food (Amazon reviews) are quite familiar with the long-term outcome of this farm subsidy strategy.  And because I’m overly-aware of the fact that I’m from now from California, I’m going to try to take a slightly different take, if to not sound not too left-coast-hippy-ish.  I’m going to talk about why I think, from a physiological perspective, why having so many corn-based products in our diet is a bad thing.

The deal is this – foods filled with these corn-based ingredients give you a feeling of fullness, but that fullness disappears very rapidly, especially compared to the way “natural” food is treated in the body.  With natural food you feel full, but that satiety lasts far longer – the types of sugars in natural foods are released more slowly and keep blood sugar at a good, steady state.

A USDA graph detailing the rise of high fructose corn syrup as part of our diet. Relatively unused until 1974, it now is the most widely used sweetener in US food.

The quick burst of sugar in high fructose corn syrup actually gives your brain a really big reward – a really “good” feeling, but it crashes fast.  That means you need more and more to continue feeling good.  Whereas with natural food you don’t get as much instant reward – rather, it’s more spread out over time.  Put another way, my hypothesis is that people who consume a lot of high fructose corn syrup based products are actually addicted to those foods.  It’s an actual addiction – the same goes for foods that contain the types of fats McDonalds and other fast food joints use – it’s a very similar and analogous principle.

To fully connect the dots, it seems pretty clear to me that the farm bill has created a market for cheap food (like corn syrup-based foods), and that many Americans over-eat those foods because they’re literally addicted to the food.  We’re short circuiting how the body is supposed to react to food, it’s making us addicted to high fructose corn syrup and other synthetic food, and it’s leading to an obesity epidemic.

But it’s even more relevant today during our healthcare debate.  The obesity epidemic is costing Americans $200-300 billion each year in medical costs alone, notwithstanding productivity and other losses.  We’re paying for our cheap foods through other healthcare and chronic care costs.  The problem is that those other health-related costs come many years down the road and that’s really hard for most people to understand and act upon in the present. This is a massive problem for healthcare reform today and will continue to drive up costs in the future.

The number of people in the US with Type 2 Diabetes - the current number is around 20-21 million people in the US.

We need to figure a way to get Americans off of this type of food.  Another addition that took a while for Americans to kick was smoking. The most effective tool against smoking proved to be rising prices in the form of increased taxes – not advertising or making people aware of the dangers of smoking.  When smoking became an economic drag, people stopped smoking.

However, food taxes are quite controversial. in that some people who consume these foods are economically challenged as it is – taxing this food would create a greater financial strain.  Additionally, linking smoking to lung cancer and other diseases was relatively easy compared to linking high fructose corn syrup to over eating, obesity and ultimately disease. But, then again, maybe we could also begin to subsidize healthy foods so that people can afford to purchase them instead of high fructose corn syrup based foods.

Ol Earl Butz yet again - I just love the hair and glasses myself.

Whether that’s a tax or some other sort of intervention, something has to happen to change this very fundamental human behavior.  Otherwise we’ll only reform part of our system with the proposed healthcare changes.  And if you think it doesn’t affect you, if you’re a tax-paying American it is affecting you.  You’re helping to subsidize this healthcare – whether through taxes or private insurance payments.  Healthcare reform without this type of policy and behavior reform will only go so far.  Altering farm subsidies may be too much change for now (given healthcare reforms, the wars, etc) – that’s why something like junk food taxes are somewhat appealing.

A farm bill and reform by ol’ Earl Butz in the 1970s still has far reaching effects today – even reaching in to your wallet – no ifs ands or Butz about it!

What do you think?  How can we fix things? What should we do to Ag policy to impact Healthcare Reform?

Afterthought: One simple solution would be to remove the corn subsidy.  But I’m not so sure that will work well.  Reason being that the subsidy supports so many farmers and a large portion of our economy.  If we were to get rid of that subsidy (and subsidize other fruits and vegetables), we’d need to do so slowly and methodically over years, if not decades.  But change needs to happen now – thus the sugary food tax idea.   However, as some of you may point out, that tax would go in to federal coffers, coffers that subsidize corn production, which in turn makes people heavy through sugary food – food we tax.  That’s a pretty bad cycle.  But it’s at least a start.  Something has to be done to curb America’s dependence on these foods.

Most people want the best health coverage possible, but is it possible Cadillac Health Plans are the wrong way to think about it?

Cadillac Health Plans and insurance remain a hot topic of conversation since I pondered Cadillac Health Plans several months ago.  Generally a Cadillac Plan provides many bells and whistles for its subscribers, but also comes with a much higher premium.  Taking that car analogy in a different direction, what if we could rethink what it means to have good health insurance and model it after car insurance? This would give people more control over their health and health spending, much like the car insurance model.  Now, that would be more like a true Cadillac Plan . . . . I digress.

In an earlier post about health insurance costs I talked how we (my wife and I) will pay about $12,960 for health insurance in 2010. It’s a pretty good plan – a PPO – one that has more degrees of freedom than other plans. But it still dictates how we spend the dollars that we’ve paid in to the system and incentivizes wasteful spending.  Moreover, why does everyone have to be on the same paradigm? Put a lump sum in, get some care out – why not create insurance products that work differently while at the same time creating social pressures to reduce unnecessary costs?

The annoying thing about this insurance plan is that we only used about $2,000 worth of the benefits.  So, in essence, we pay almost $13,000 in to the system and the system tells us what we can and cannot do and only allows us to use $2,000.  And that was only for costs that were deemed “appropriate and necessary” by the insurance company.  We had to pay another $1,500 out of our own pockets for legit physical therapy and dermatology treatments.

OK, so clearly that extra $11,000 that we paid in is a risk premium to cover catastrophic costs – if something happened to either one of us, I’m sure we’d be glad we had the insurance.  That said, $11,000 sounds like an awful lot, particularly when you consider that you probably pay only $1,000 or so a year in car insurance.  Why can’t healthcare be structured more like that?  The person pays for maintenance and routine care, while insurance pays for catastrophic and serious illnesses/conditions.

For instance, let’s say such a plan existed.  My wife and I could contribute $2,000 (more or less, depending on how much we wanted to put away) in pre-tax dollars to a Health Savings Account (HSA – yes, it rears its head again).  That $2,000/year per person could be used to cover sick visits to the doc, derm care, physical therapy or other costs – any way we saw fit.  Another benefit is that if we needed more money, we could pay out of pocket and submit those receipts on our taxes much like we do today – all care dollars would be pretax.  Best of all, those HSA dollars would roll-over year to year just like cash.

For catastrophic illnesses, we could purchase insurance much like we do for our cars.  Let’s say it would cost us $2,500/year per person for that insurance – that’s almost 3-4 times more than our car insurance covers and our car insurance covers about $100,000 worth of damages and injuries. Seems decently reasonable.

And, according to this simplified model, we’d still only be contributing $9,000 for our healthcare – that would leave an extra $4,000 in our pockets over what we’re spending today.  We’re not used to thinking about that money as coming out of our paychecks because it’s part of our benefits. But, you can be sure it’s affecting our take-home dollars.  Additionally, I’m sure spending money out of our HSA would also cause us to pay more attention where our money is going and help curb frivolous spending.

When looked at from another angle, the current state of doing business in healthcare it pretty bad. Why not completely change some aspects to make it work better?

What I’m proposing is that we as consumers gain more control in how we spend our healthcare dollars.  This insurance model could be similar to how car insurance works today.  You pay for your own maintenance costs (i.e. the HSA dollars) and then pay-in to insurance for catastrophic costs.

For example – let’s say you went in to the ER with abdominal pain and the doc suspects you have appendicitis and a CT scan is performed.  Lo and behold you need to have an appendectomy – that’s a pretty serious illness, which would be covered by your catastrophic insurance.  Everything from the CT scan to the operation and anesthesia.  All told, about $20,000 worth of care – easily less than most car accidents, and therefore it seems that there should be a feasible business model like car insurance in there somewhere.

I’m sure that I’m over simplifying the catastrophic insurance proposal and it might cost more per person per year.  Even so – if we paid $3,000-$4,000 a person per year for catastrophic insurance that would still save us money over what we pay today.  To boot, we’d have more control and responsibility over our day-to-day healthcare spending.

This plan won’t work for everyone and we’d still have to make a determination of how to provide care for the uninsured and current Medicaid patients, but I’m sure we could use a system similar to what we have today.  Additionally, chronic illnesses would also need to be addressed, but it’s most likely do-able if some of the current healthcare reforms go through.  This high-level model that I’m proposing is at least a new way to start thinking about the change we’d like to see. Maybe it would be a sub-component of larger change?  It’s a start.

Cadillac care, indeed.  Or at least modeled after insurance for Cadillac autos.  What do you think?  Curious to your thoughts!

My last post dove in to healthcare quality versus spending and introduced the Dartmouth Atlas as one of the key insight tools we have for healthcare spending and quality here in the US.  Essentially the Atlas takes a look at the entire country’s healthcare spending by using Medicare claim data as a proxy.  From this Medicare data the Dartmouth group can also glean quality of care data to pair with the spending figures.  And, for those of you wondering, yes, despite the fact that most Medicare patients are over 65, the data that can be gleaned from their data can highlight trends across the entire healthcare ecosystem.  Or, at least, it’s the best tool we’ve got.

I wanted to dive a bit deeper to look at regional differences in quality versus spending at a hospital by hospital basis. To take a look at the data provided by the Atlas and see if there were any high level trends that could inform the latest round of healthcare reforms.  I was wondering whether hospitals could provide high quality care in a cost effective manner.  In essence, the higher the quality of care, the better the patient outcome (and subsequently this saves the system money in the future from complications and further illness) – better outcomes for less money, aka a more efficient system.  Turns out it is possible to have high quality, yet more-affordable care.

Before I do that I want to recognize the limitations of the analysis of this work.  It hasn’t been blessed by a statistician or healthcare economist, etc.  It’s just looking at high level trends to show that, yes, there is pretty good evidence that quality healthcare doesn’t have to cost as much as it does today and that reform that properly aligns incentives can bring about not only savings but improved health outcomes.  In other fields, less spending often is equated with decreased quality.  In healthcare, this data indicates that it is possible to not only save money, but provide a higher standard of care at the same time.

Let’s break my analysis down by data type first.  I looked at overall spending per patient at hospitals during the last 2 years of that person’s life.  I’m not sure why the Atlas breaks the info down this way, but I was assured that this method does correlate to real world spending and is the easiest way to be consistent in collecting data.  That spending is reflective of the hospital’s overall spending habits.  The composite quality score measures how many patients out of 100 receive the right/highest quality of care.  So, if a hospital’s score is 85.4 that means that out of 100 patients that are seen in the hospital for a condition, 85 of them will receive the standard of care.

US Hospitals - total spending per patient in the last two years of life on the x-axis, and on the y-axis is an overall composite quality score. Upper left quadrant is the ideal - lower spending, yet high quality care.

For the country as a whole, you can see the plot of data for hospital spending (x-axis) vs quality (y-axis) – it’s quite a jumble, but all hospitals in the green quadrant are in the top half of being low cost (they spent less per patient), but are also in the top half of hospitals in terms of quality.  In otherwords, the hospitals in the green quadrant are low-spending, but high quality.  The opposite is true of the red quadrant – they are high spending, low quality hospitals.  It’s striking to see how many hospitals stray away from the top left part of the graph and it’s also striking how many high-cost, low quality hospitals exist across the country.  You can imagine that if all the hospitals in the red and white quadrants were able to change behaviors and become more effective and efficient just how much money the whole system could save.  And that’s not to mention massively improved outcomes.

To go a bit deeper with more meaningful numbers, I took the top 10% of US hospitals with low-spending/high-quality profiles and compared them to the remaining 90% of hospitals.  Overall, that top 10% spent $40,119 per patient, compared to $56,641 for high-spending hospitals for a savings of 28.9%.  The top 10% had a quality score average of 90.8, while the bottom 90% had a quality score of 85.7 – an improvement of 5.9%.  In summary, this means that the hospitals that perform at the top of the heap have a higher quality and they save, on average 28.9% of costs per patient.  Better outcomes, lower cost – it can happen, it does happen.

SF Bay Area Hospitals spending v quality graph. Click to expand.

However, it’s difficult to look at these stats on a nationwide basis because healhcare costs are more expensive (or less expensive) depending on where you live – just like every other living expense, healthcare is more expensive in expensive cities.  I took San Francisco (actually, the Bay Area) and Pittsburgh and subjected them to the same chart as I did the US.  The visual patterns are a little harder to discern, although in both cities you can still see that there are a handful of hospitals that have low-cost and high quality, while a majority are either high spending or low quality.  To me this means that there’s a lot of room for improvement across the board, even when looking at expensive and middle of the road metro areas.  While no clear pattern emerges, it is quite clear that most hospitals are not working as efficiently as they could be.  For you numbers oriented people, the top 10% in San Francisco saved 9.6% of costs and had 6.2% higher quality.  While in Pittsburgh, the top 10% saved 14.5% of costs and had 7.5% higher quality.

Pittsburgh Hospitals - spending v quality. Despite being a lower cost city than San Francisco, overall both cities have similar graphical plots.

There clearly are ways to save on healthcare expenditures, while still increasing quality.  Now, why is this in depth look appropriate for an entrepreneur blog that tends to focus on the biomedical sciences side of medicine rather than pure healthcare and policy?  Well, one reason is to help identify opportunities in healthcare for entrepreneurs.  Wherever there are inefficiencies in the system there is room for entrepreneurs.  However, the tricky thing is that it’s not so easy to just go start a hospital to introduce these changes de novo.  This change is going to require not only Congress, but the leads of hospitals to recognize the opportunities and to be entrepreneurial within their own hospitals.  Perhaps there’s even a market for efficiency tools from one hospital to the next – a sale of techniques that in the end save massive amounts of money and improve lives.  I wanted to point out these inefficiencies because I think they point to an opportunity for the right types of entrepreneurs to come in and make a difference.  I’m not sure how these ineffiiencies will be taken care of, but someone will figure it out.  I hope.  Put another way, if we leave reform only to politicians and insurance companies, more than likely we’ll have more of the same.

As a note, the higher the composite quality scores indicate not only better outcomes at that particular patient visit, but also tends to indicate a lower level of complications and ‘follow-on’ illnesses/diseases, thus saving the system a lot of money well in to the future in addition to the present.  Often these savings go unnoticed when thinking about healthcare reform.  The right care now not only amounts to savings in the present, but automatic savings well in to the future.

Here’s another curiosity of mine concerning the impending healthcare reform – do people really understand what they mean when they demand “good coverage” or the “Cadillac” of care plans?

Think about the etymology of that saying: “The Cadillac of . . . . ” In essence that means the cream of the crop – you can visualize a Cadillac vs Chevy and can most likely give me a list a mile long that details the differences and luxuries of the Cadillac.  Or Audi vs VW.  You get the picture.

But what does a “good” healthcare plan look like? Let alone the Cadillac of health plans?  Can you tell me? Sure – choice of doctors means something, but that choice most likely doesn’t make that big of a difference in your care unless you’re really, really sick.  Does a good healthcare plan give you the option of which hospital you can go to? Or how many days you can stay there? In other words, what is your definition of a good health plan and how do we apply that to the federal reforms?

One comment I often get is that a good health plan won’t jack up rates for pre-existing conditions or cut your insurance if you get diagnosed with a disease.  I agree, but to me that seems more like common sense – sort of “don’t be evil.”  I’ll add these more to the “duh” category for now.  If we as a country leave these provisions out, shame on us.

In medical school we spent many hours at a very famous cancer hospital in NYC – the top floor was reserved for VIPs, with wood paneling and a nursing/guard station at the elevators.  Needless to say, most medical students weren’t allowed anywhere close to the floor.  But, by all accounts, the patients on this floor didn’t receive any better care than those patients on other floors.  In fact, often times they were over hospitalized – too much care, which can be bad, too.  And, their cancer survival rate wasn’t any higher than any other floor – money can’t buy life extension.  Aside from security, this floor didn’t seem to add much to care, despite its Cadillac appearance. Is this good care? High quality care?

For now, I simply want to challenge the way we define “quality healthcare.” The next time you hear someone (or yourself) get enraged over healthcare reforms and the quality of care these reforms will bring, I ask you to reflect on what “quality of care” really means.  What does it mean to have the “Cadillac” of healthcare plans? It might not mean what you think. Is it outcome and health based? Or gold plated with valets at the door? Are these mutually exclusive?  My wager is that it’s not as easy to define the true differences as you may initially think.

This goes deeper than just high quality care – how we define quality care will affect all levels of healthcare reform.  My comment here is that we need to better understand what we mean when referring to high quality care and to be more careful in how it plays out in the coming reform.