Dale
Jarvis, a longtime healthcare consult and West Seattle resident,
came and spoke to InspireSeattle. Dale
has been working on health reform since George Herbert Walker Bush was planning
to fix the healthcare system in this country. (Did you know that 41 had a
plan?) Since the Affordable Care Act was signed into law in 2010, Dale has been
involved in health reform projects in 21 states, participating in a yet-to-be
told story of how 18% of the American economy is engaged in an enormous
transformation project that will affect every citizen – for the better. Dale joined
us to share his stories and interview us about what a new health ecosystem in
the Seattle area might look like. You
can learn more about Dale at his website:
www.djconsult.net .
Dale
showed very interesting slides that describe in multiple ways how healthcare in
the US vs other developed countries is high-cost and
low-quality. Dale described our system
as more accurately being called “sick care” in that it only acts after one gets
sick and is not run to keep us healthy.
Some interesting statistics included:
·
It costs all
Americans $1000 a year each to cover the uninsured and their repeated trips to
emergency rooms
·
45% of Americans
suffer from one chronic illness or another, and half of these folks see 3 or
more different doctors, typically higher cost specialists
·
These chronic
problems eat up 80% of the healthcare dollars spent.
·
The treatment
system is designed and run in a way that produces a huge number of errors
·
Only 3% to 5% of
healthcare dollars are spent on primary care
·
In 2009 in the
US, $2.5 trillion dollars were spent on healthcare (that’s $2,500,000,000,000)
·
30% of this expenditure
was lost to waste, amounting to $765 billion
·
Over 100,000
people a year will die in hospitals in the US by preventable issues (and can therefore
be called “death by healthcare”)
·
Here in Seattle,
Virginia Mason Hospital is actually one of the country’s very safest healthcare
providers
Dale
discussed how Tom Skully, who was the first President
Bush’s point person on healthcare, has been out talking to fellow Republicans
about “The President Wants You to Get Rich on Obamacare”,
describing how the transition within healthcare, including the Affordable Care
Act (AFA or Obamacare), are providing tremendous
opportunities to make money.
Dale
described an epic battle that is already underway in this country around health
and healthcare. Dale described it as
“disruptive innovation”, a concept defined in the 2009 book The Innovators Prescription. To illustrate disruptive innovation Dale used
the computer industry as a descriptive example.
Prior to the 1970s, big mainframe computers were the industry standard,
but each succeeding generation of computer was smaller, cheaper and easier to
use and therefore reached a broader audience of consumers. Novelty hit again and again, always
disrupting the existing computer market and allowing the industry to arrive at
better solutions. Computers evolved from
mainframes to minicomputers to PCs to laptops to handheld devices. Companies that didn’t keep up went out of
business. For a long time healthcare has
been the only major industry in the US not to experience disruptive innovation,
but it is happening now. Notice the
large number of healthcare CEOs that have been fired in recent times for not
innovating quickly enough.
Dale
described two areas of disruption:
1. Healthcare Professionals
2. Healthcare Institutions
In both
cases demand for more complex (and costly) care is being reduced.
Dale
suggested folks visit the
Patients Like Me website to educate us on our own healthcare issues. This website is also one example of how many
health issues can be resolved with less cost or complexity.
Dale
described the ultra-high cost of specialists.
How does this remain the case?
Dale explained there is an official medical board that sets pricing for
medical procedures, made up of 27 members, 25 of which are specialists and only
2 of which are primary care doctors.
Typically
a primary care doctor will make 1/50th what a specialist will for a
15 minute procedure. As a result primary
care doctors now frequently go out of business.
Often they are forced into a system where their role is to feed patients
into the more costly (and profitable) services of specialists and hospitals.
Hospitals
now call themselves “healthcare systems”, and have been in a major acquisition
mode. These acquisitions are an attempt
to ensure their own survival according to one of two strategies:
1)
Creating a
monopoly will remove competition and the need to change. But in truth, any healthcare system unwilling
to address inefficiency will ultimately go out of business.
2)
Alternatively,
healthcare systems may recognize that disruptive innovation is coming but by
making themselves the only player they can not only be disrupted but also be the
innovative force that
is moving forward successfully.
A new
and different approach to providing health (vs sick care) is Accountable Care Organizations,
or ACOs. They are spreading more of a
Group Health model through incentives to keep people well. Part of what ACOs are doing is working to
stop the fee-for-service approach. ACOs
push quality down the delivery system, and are designed to dramatically downsize
insurance companies. A good ACO team
includes primary care doctors, nurse practitioners, RNs, care managers,
dietitians, stress management experts and others to provide the majority of
needs to keep members healthy. If more
care is needed, quick referrals to specialists are also available. These organizations charge members a monthly
fee, typically $50 to $75. For this,
they provide care even on weekends and evenings. Basic characteristics of ACOs include:
·
Primary care only
·
Monthly fee
·
Save employers
20% to 30% in healthcare costs
·
Keep people out
of the hospital
·
A doctor will typically
have 600 to 800 patients (vs the standard 1500
patients/doctor in a “normal” system)
·
This allows the
doctor to know patients and spend more time on each appointment
·
Patients are also
likely to buy traditional health insurance but a “wrap-around” policy that
allows access to ACOs
Dale
described how the future is in Health and Wellness Centers, customized to a
neighborhood. This will be driven by the
expectations of the Millennial Generation.
Dale
described other key trends in the industry:
·
Health plans are
attempting to reinvent themselves
·
Private Equity
firms are making investments into healthcare
·
Rise of
non-hospital affiliated providers
·
New innovative
players
Pharmaceuticals
are structured to make their money off the sick care system. More sickness, more money.
For a
local example, Dale describe the situation currently in West Seattle:
·
81,000 people
·
Spend $552
million on healthcare annually!
·
30% is waste (~
$165 million)
·
Question: why not use some of these wasted dollars to create
Wellness Centers?
Regarding
Obamacare (the ACA), Dale said it’s a “great start”
but stated true change, needed change, must come from disruptive innovation,
just as it has in other industries. We
need to move from “healthcare systems” to “health delivery systems”. At this point even foreign countries that
have much better health outcomes than the US for far lower cost typically focus
on “sick care”, not health delivery.
Q –
Isn’t it likely that health and healthcare will go the way of climate change in
the US, with extensive denial and politicking and no real change or progress?
A –
Enough disruption is happening already in health that it won’t go the way of
climate change. Healthcare is 18% of the
US economy. The other 82% of the economy
pays for those inefficiencies or otherwise suffers the consequences from our
country’s poor health. We’re getting
screwed by sick care and the large majority will keep demanding change.
Q – What
about mental illness?
A –
Mental illness patients, on average, die 25 years younger than others. And a big reason for this is that we don’t
treat them holistically, which is another driver for needed change.
Dale’s Bio
Dale Jarvis is the founder of Dale Jarvis and Associates
LLC, a Seattle-based consulting firm. Dale has extensive experience helping
governments, health plans and healthcare providers redesign their organizations
to achieve better health for the populations they serve, better care for
individuals, and reduced costs. He has contributed articles to publications and
is a co-author of two books on healthcare system redesign. Currently Mr. Jarvis
is working with states, counties, and at a national level to help ensure that
the health needs of all Americans are addressed as health reform unfolds. You
can learn more about Dale at his website:
www.djconsult.net.