Image by mariachily via Flickr

I was fortunate enough to be able to attend the Rock HealthHealth Innovation Summit onJan.20th. It was the third day of a conference that highlighteddevelopment, design, and business issues around the potential for health care transformation through technology. The room was full, and the audience stayed until the end, even on a Friday afternoon.

Why? Because they knew something big was up. What’s up is the awareness of the Rock Health accelerator and the move to change a system only a young person from outside the industry could even hope to change. For three days, enthusiastic developers listened to cynics like me talk about business models, chasms, and challenges. I hope our doubts didn’t make a dent in their drive.

A year ago, there was no Rock Health, but more important, there was no community pulled together around the cause of health care innovation brought about by young people largely focused on digital and mobile technologies. A scant one year later, there is a vibrant health tech community in San Francisco, supported by large hospital systems, insurance providers, VCs, angels, entrepreneurs and mentors. The need is recognized, but until Rock Health, there hasn’t been a community. Health 2.0, another wonderful step in the direction of change, focused more on showcasing change than on financing or mentoring change.

The second class in the Rock Health program kicks off this week. Some of the grads from the first have already received additional funding or gotten to revenue.

They won’t all succeed. They have no concept of how complicated this industry is. But here’s the most important point: Rock Health has drawn together all the people inside and outside the system who want it to change, who are willing to take chances, and willing to support the effort to move the needle.

And thus I feel like 2011 was a tipping point for health care as an industry. After last year, for many reasons, it can’t remain the same. The larger providers and payers have already begun to circle the wagons around Obama’s health care reform law, because they are realists and know it’s not going to be repealed completely no matter who gets elected. So they’ve begun the journey toward bundled payments, Accountable Care Organizations, medical practice acquisitions, and better electronic health records. The battleships are slowly changing direction.

And the best part, Rock Health was founded and is run by women — the very people who make most of the health care decisions anyway.

Related articles

• A Dozen New Health Care Startups at Rock Health (ushealthcrisis.com)
• Rock Health Gathers Healthcare & Technology Stars: A Photo Gallery (xconomy.com)

The difficulties that health technology innovators will have breaking into the health care industry were no more clearly illustrated than by the talk given by Dr. Sam Ho, Chief Medical Officer of United Health Benefits Group, on the third day of San Francisco-based health incubator Rock Health’s  Health Innovation Summit. After two days of exciting stuff about design and development, CEO day presented the cruel reality of the market .

Dr. Ho began by admitting the system was broken. Payments, he admitted,  didn’t align with objectives, and outcomes were an afterthought.  But now things are in the process of change, partly because of the passage of Obamacare (although he didn’t mention it by name), partly because of the too-temporary tenure of  Dr. Donald Berwick at CMS, and partly because in a worldwide recession, we can’t afford our health care costs any longer.

So the big players, fearing innovation from without, have decided to try to innovate from within, and came up with a slogan called “The “Triple Aim:”  a slogan that embraces how to improve the individual experience, improve population health, and control inflation of per capita costs. Dr. Ho believes these three aims are separate now, but they must be aligned  to succeed.

For United Health, this means Care Management Programs, Transparency and Premium Designation Programs, Hi Performing Preferred Networks, Value-Based Benefits, and Value-Based Contracting. These can be read as forms of rationing and cost shifting by the more cynical among us. However, for him,  it mans developing more and more incentives for changing consumer behavior. For example, patent premiums will get lower and benefits richer if consumers enroll in a diabetes plan and stick to it. If they manage their blood pressure or lipid levels, they will also have richer benefits. But what if they try and fail? I’m all for outcomes-based medicine, but we have to be careful we are measuring things that are within the control of either patient or provider. And how do we judge?

Here at Health 2.0 there is definitely an air of transformation. Several initiatives that I had been following have come to fruition, or at least to critical mass, among them implementation of EMRs and patient communities. MedHelp now has over 12 million visitors a month, while millions of women annually visit the women’s social health site EmpowHER.com

On the electronic medical records side,  physicians have finally begun to implement EMRs in large numbers, because they are now subsidized by ARRA, the stimulus bill (you remember, the one that didn’t work?) to do so. In order to receive $50,000 to deploy an EMR, a physician need only buy one and demonstrate its “meaningful use” in his practice. For this year, to qualify for the Medicaid meaningful use incentive, all you had to do was purchase the software and go live in your practice. In the future, there will be other, more important qualifiers, such as the health outcomes of your patients. But for this year, just buy the product and begin to use it.

As a result, companies like Practice Fusion, which always made its software free, and is a (private) cloud-based platform have begun to grow by leaps and bounds. Founded in 2005, Practice Fusion grew by 400% in 2009 with the passage of ARRA now has 100,000 users and 21,000,000 patient records online. Next year, it is projected to have  100,000,000 records. Its iPhone app will launch soon, and its iPad app is being designed by one of the country’s top designers, who will speak at Practice Fusion’s user conference in November.

As part of an “exclusive” interview  with Practice Fusion’s founder and CEO, Ryan Howard, in which we took a pedicab ride around downtown San Francisco, I found out that within the next few years, users of EMRs like Practice Fusion will be able to choose physicians based on whether they have EMRs and allow the patient to have access to his or her data. After five years of waiting for the market to catch up with his innovation, Ryan has found himself sitting pretty, with open data ready for the new wave.

[ Aside: I also found out that in the early days of the company, Ryan actually took an insurance settlement check for an automobile accident and used it to make payroll instead of having his torn rotator cuff fixed. Yes, he's a hard core entrepreneur]

However, if you are a patient of the VA, of Medicare, or of any other insurer that is part of the Blue Button initiative, you can get your data today, by logging into VA.gov or Medicare.gov and registering online. Once you prove your identity, you will be given an opportunity to use the Blue Button  to download your data as a text file, or view it as a .pdf . You can save the data to your hard drive or send it to a PHR, such as Health Vault.

We appear to have “bent the curve” in health care spending last year; national health spending grew at a historically unprecedented low of  3.9%. That’s including all national health expenditures — private insurance, Medicare and Medicaid, and out-of-pocket expenses.

You would think this was a good thing, right?

But according to Deloitte’s new survey, not necessarily:

• In the United States, three in four (75 percent) consumers say the recent economic slowdown has impacted their health care spending.
• Forty-one percent are more cautious about spending, 20 percent have cut back on spending, and 13 percent say they have reduced their spending considerably.
• Sixty-three percent say their monthly health care spending limits their household’s ability to purchase other essentials, such as housing, groceries, fuel, and education.
• In an effort to save money, 36 percent of prescription medication users say they asked their doctor to prescribe a generic drug instead of a brand name drug.
• One in four (25 percent) U.S. consumers skipped seeing a doctor when sick or injured.

• Consumers believe that hospital costs (68%), lifestyle

choices (62%), and fraud (62%) are major drivers of

overall health care costs. Administrative costs (57%),

prescription drugs (54%), and defensive medicine

(51%) are also commonly cited.

• Over half (51%) of all consumers believe that 50% or

more of health care spending is wasted

• Of those believing that the system is wasteful,

49% feel that money is wasted because

individuals are not taking enough responsibility

for maintaining their own health.

• Consumers also blame redundant paperwork

(55%), defensive medicine (46%), lack of

adherence to evidence-based approaches (40%),

and extreme measures taken at the end of life to

extend life for a short period of time (35%)

Everyone in health IT is looking at the proliferation of mobile devices and wireless communications capacity and they are salivating. Now, they say, we are finally going to be able to monitor the vital signs, activity levels, food intake, lifestyle habits of patients and use all this information for prevention. Remote monitoring will bring about the Holy Grail in prevention. And prevention will lower costs.

Not so fast, Kimo Sabe.

For my birthday this year, I got an iPod Nano Watch. The new Nano has a pedometer built in and it uploads your data to Nike. I have been wearing it every day, even though that means I have to charge it every night (this is decidedly sub-optimal for a watch). Faithfully I count my steps and upload them. Rarely do I have get to 10,000 steps a day, except at BlogWorldExpoNY, where I went over the top twice. Most days a dog walk and a trip to the gym put me at 6,000 or so steps.

The Nano Watch replaced my Fitbit, which I wore faithfully all last year. The Fitbit was more complicated and gave me even more information. It tracked my activity, and if I wore it at night, it tracked my sleep patterns and told me how effectively I was sleeping. I also could log my food.

For months I found out that I have a banana and a frappacino for breakfast, some other kind of fruit in mid-morning, along with a diet Coke right before lunch. I then have a salad of some kind or a sandwich on one piece of bread for lunch, fish and a vegetable for most dinners, 2 glasses of wine, and about half a chocolate bar (dark) after dinner. Every once in a while it varies, but most days, that’s it. Oh, and I sleep at 97%.

I gave up the Fitbit because I had the knowledge. And what did I do with it?

Nothing.

The same thing I am doing with the data I am uploading to Nike. Nothing.

Why? Because now I have to make real changes, and the biggest thing I’ve learned from all these monitoring devices is that I AM NOT WILLING TO DO THAT!

There are certain things all the remote monitoring in the world won’t fix. I’ve read about the applications that will tell doctors whether I have taken my pills, too. But if I don’t want to take them, can’t I still refuse the reminder phone call? Or even thank the (probably robo-) caller, hang up and do nothing?

The technology, as usual, is far ahead of the user. And until it gets into our heads and convinces us that we MUST change, we probably won’t. This is the saddest part of all the talk about invoking “prevention” to lower healthcare costs. All of that requires participation by the patient. It’s not dictated by the provider, the payer, or least of all by the health IT product manager.

Anybody want a Wakemate? I have one of those, too.

I had the good fortune to flip the radio dial to CSPAN this morning and hear Dr. Donald Berwick talk about his job as director of the Center for Medicare and Medicaid Services (CMS). Berwick probably won’t be confirmed by a Republican Congress, but he is working day by day, and seems to be enjoying every minute of it. He busies himself re-organizing CMS around three major goals: better care, better health, and lower cost.

Berwick is an optimist. He has 100% confidence in the ability of health care reform to achieve success, he feels things are really on track right now in CMS, and he just wants to go faster, get more done before Congress drives him out. He says he’s been pleasantly surprised by the competence of the federal work force, its commitment, and its willingness to do new things.

According to Berwick, who began his career as a pediatrician, there are two ways to preserve Medicare and Medicaid. The first, the Paul Ryan way, is to cut services or send individuals out into the market with vouchers.

However, individuals who aren’t equipped with either the expertise or the bargaining power of the federal government are likely to find themselves in an inferior position in the insurance market: Berwick estimates that the value of a voucher, over time, might buy as little as 35% of the care a senior might need. Some seniors, arguably the most needy, wouldn’t be able to afford insurance at all.

Also built into the Ryan plan are gigantic cuts for doctors. Berwick believes most providers want to do the right thing, and holding the sword of Damocles over the heads of physicians doesn’t contribute to better care. He’d like to see this fixed once and for all.

Berwick has chosen a different road to saving money: lowering costs by delivering better care.Better care means more emphasis on prevention, fewer hospital infections, fewer re-admissions, and less unnecessary testing.

Berwick contends that as a nation, we face a choice about whether we are willing to improve the entire system or not. We know what to do, but we have to bring excellence to scale.And that is true not only in CMS, but in the private market as well.

We have to improve care so it doesn’t keep using scarce resources. When a hospital is able to reduce central venous line infections to zero, as some already have, that’s a big saving. The entire health care system can be trained to produce such measurable results.

Hospital-caused infections are expensive to treat and unnecessary. But until now, when those infections went away, the savings didn’t go to the hospital.
The Affordable Care Act has medical homes and bundled payments that will allow people who give better care to share in the savings, which Berwick believes can incentivize excellence.

Positive thinker that he is, Berwick was still shocked by the fraud and abuse numbers he confronted once he got inside the agency. An important minority of providers, he admits, cause tens of billions of dollars in losses, by essentially stealing money from taxpayers.

The good news, he says, is that we now know what to do. Once again, it comes down to prevention: screening providers in high risk areas.

And will happen to Medicaid in this time of crisis? Verso is says if Congress leaves Medicare untouched, Medicaid must be cut. The states are partially responsible for Medicaid payments, and most are under terrible budgetary pressure.

The same improvements are needed here as in Medicare: stress prevention, reduce infections, cut down on hospital readmissions. And 40% of Medicaid’s budget goes to people who are dual eligibles: people with chronic conditions and behavioral health issues who receive benefits from both Medicaid and Medicare.

Here again, Berwick is looking for efficiencies that will allow costs to fall. Although he’s a realist, he looks at health care from the perspective of the beneficiaries and their needs, rather than from the payer’s vantage point. That puts him at odds with both Congress and the states, both of whom are eying their budgets with despair and desperation,and have focused on CMS as the battleground on which the budget war will be fought.

Berwick, already mortally wounded by the refusal of the Senate to confirm him, operating day by day on a recess appointment, can only hope he gets enough done to prove his point before he’s expelled by the toxic politics of Washington.

My friend Robert Scoble just came back from Davos and spoke to Andrew Thompson of Proteus Biomedical, a company that keeps track of your medications and sends information about your health condition to your phone. If you are a provider, or an insurer, please adopt this as soon as it gets FDA-approved (going through the process now).

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Please listen. The medication’s effects are transmitted through the skin to the cell phone. The product tracks medication compliance and medical condition. It was working on an Android phone with Bluetooth. The information is stored on a bandaid.

The business model for this product should vastly decrease the cost of healthcare. Thompson: ” a drug to Proteus is like a song to Apple. The hardware, the data, and the content are all monetized separately like the iTune store.” does it.

Tech is loved, and health care is hated. That’s because tech is used by individuals to empower themselves. Healthcare is now used by governments and insurers. Thompson wants healthcare to be as empowering to the individual as technology.

I have been listening to the latest edition of “The Autobiography of Mark Twain,” and I’ve decided Twain has much to tell us. Especially about health care. We think we have come so far, and yet we keep coming up against the limits of medical science and the failure of the health care business model. They seem to go hand in hand.

In the autobiography,Twain says he prefers the annual payment model of medical care, where you paid the doctor a fixed sum in advance and he was available when you needed him, but not too often. Twain had a healthy skepticism about what doctors could do for him, and recognized that they often lacked this skepticism themselves.

Because the doctor often thought he knew more than Twain thought he did, Twain preferred the annual medical fee model to the one where he paid by the visit, and the doctor kept on visiting him even after he was well, simply to collect the fee. At the time, doctors in Europe were paid by the visit, and when Twain fell ill on a lecture tour, his problem wasn’t so much getting rid of the illness as getting rid of the doctor!

More than 100 years later, we are moving back to the lump sum payment model, having seen the glaring failure of the fee-for-service model and how it encouraged the medical profession to do more, rather than less, regardless of cost. We are calling it the Accountable Care Organization, or the concierge service model, but don’t delude yourself that doctors will really be paid for outcomes, which can’t be easily measured. Rather, they will be paid for financial outcomes: saving the system money. In other words, they will get a lump sum, either from the ACO or the patient, and will have to operate within those constraints.

Twain also lived in a time when you sent for the doctor and he came to you. After all, you were the customer. You would no more be forced to visit the doctor any more than you would be forced to bring your sink to the plumber.

As we move to remote monitoring, we are moving back to that model, too. You won’t come to the doctor’s office or the hospital campus; the information will come to the doctor without you, sent by your iPad, your cell phone, or your implantable device.

We’ve spent our way far beyond fee for service. In the future, for health care, we will get what we can afford.

Expensive and broken, our health care system serves no one well–not the patient, not the provider, not the payer.  And because it is fragmented by specialists, insurance companies, hospitals, ambulatory care centers, and primary care providers, no one must really take responsibility for an adverse user experience.

This week, I had an endoscopy. I had been having trouble with heartburn for decades, so my doctor was suggesting I be looked at to see if there was an ulcer or something else down there.

At first, I resisted endoscopy. I know my body, and I’m the widow of a radiologist who diagnosed ulcers by reading barium X-rays. Endoscopy was a rare recommendation fifteen years ago, expensive and reserved for the most extreme cases. Who would be a fan of having a tube with a light at the end shoved down her throat, so a professional could take pictures and slides? It requires sedation (similar to the kind that killed Michael Jackson), fasting, and missing a day of work.

And then a friend was diagnosed with esophageal cancer, and I figured I had better get my butt in there.

Dr. Kramer, my family doctor, a  Canadian immigrant, loves the US medical system because he can make a living here, but he sees a million patients a day. It’s a  routine one hour wait, which I fill with the iPad and the Mi-fi while my fellow patients watch soap operas.

Dr. Kramer sent me to Dr. Schwartz, a gastroenterologist.  Dr. Schwartz is one of those men with a fake cheerful exterior and no real compassion. He’s a technician.  When I filled out the large volume of paperwork his office sent me before the procedure, I should have known I was in trouble.  Every form was about releasing him from liability and sacrificing my rights except the one in which I indicated my history.

In one of the forms, I was asked to acknowledge that I knew he owned part of the endoscopy center.

I showed up at the endoscopy center, and the procedure was uneventful.  The nurses were terrific, the service was prompt, and it seemed as if it went well. Dr. Schwartz said he really didn’t see anything, although  I do have to wait for the biopsies. I followed the instructions, not driving, drinking, or making any complex decisions until the anesthetic wore off.

I thought I had put it behind me. Until the next day, when my insides began emptying suddenly and violently as though it were rejecting something.  I barely got home from my entrepreneurship class: I stopped twice on the road. This frightened me, because I never vomit. I know my body.

When I got home, I called Dr. Schwartz’s office. His phone person told me it might be the anesthesia, but it was uncommon for people to vomit after the procedure, and to call back later if I felt worse and she would talk to the doctor.

I called my primary care physician, and his nurse interrupted him and then told me he said I should call the gastroenterologist.

I called the endoscopy center, and they told me to call the doctor. Everyone was pointing fingers at each other, trying to avoid dealing with me. In the mean time, I was suffering. The endoscopy center finally located Dr, Schwartz for me, and he told me I had the flu, and that it was serendipity.

When I asked him a few more questions, he simply said “Gotta run,” in a tone that implied I was bothering him and I was a problem.

After lunch, I called my primary care doctor’s office, and they told me to come in. After the customary hour wait (remember how bad I felt), Dr. Kramer actually examined me, palpated my abdomen, looked in my eyes and at my face,  and told me that the endoscopy had probably caused a small swelling in my stomach when Dr. Schwartz took the cells for the slides, and that it would go away.

You could see that he was operating out of a knowledge of me (he had done this all before, and he was looking for changes and feeling inside me for changes), a broad knowledge of patients, and a lot of simple compassion and friendship.

He also told me that the drug he and the gastroenterologist had given me for suspected GERD (which I don’t even have) could have these side effects.

Armed with information and compassion, feeling much better (because illness has such a mind-body connection), I went home.

Today I feel fine:-)

But the social customer in me is unassuaged. Medicine is the only industry in which the customer is usually wrong, and the customer is routinely treated like a nuisance. It needs to be automated, like every other industry, and its workflow needs to be re-examined. It needs many business process innovations, such as supply chain integration and customer relations management.

In the field, this is called continuity of care. I hope Obamacare gets to unfold the way it was intended, because I am lucky to have a patient medical home (my primary care physician) and enough knowledge to get what I need. Not everyone is.

My perspective is shifting slightly on the issue of health care reform, and what’s possible and not possible, perhaps because a few weeks ago the Urban Land Institute held an event I attended at which Peter Fine, the CEO of Banner Health, was the featured speaker. While I was familiar with some of the things he said because I’ve been writing at UsHealthCrisis.com for a few years, his “spin” was new, because I’ve only heard one industry speaker recently — and that was a thought leader from Kaiser Permanente.

Let’s begin with the commonly accepted numbers. Right now, there are 37 million Americans over 65. By 2030, that number swells to 75 million, thanks to the Boomers.

An additional 37 million are uninsured, and soon to be covered by Obama’s reforms in one way or another. I suspect there will be quite a bit of shifting and juggling as insurance companies try to make this work. One has already left our area, and another has entered the market. For patients, that’s scary and confusing, and sounds like they won’t be able to “keep what they have” if they like it, because the company may decide to exit the market. California has already become the first state to offer an exchange similar to what all states must have by 2014.

What does this mean for the hospital system? Well, one of the goals of reform is to keep people OUT of hospitals, through prevention, less expensive treatment protocols, and comparative effectiveness research.

Health care people, at least those who manage large systems like Banner, must all be futurists. They are not unlike utility company executives: their role is to project out into the future and bet huge amounts of capital, and the risk of decision making in health care has just grown exponentially.

Banner is making its investments in some interesting areas — primary care and electronic health records (EHRs). Fine told us that his investment in EHRs in intensive care have actually reduced mortality 23%. When you think about how seriously ill most people are when they’re in intensive care, that’s a big number. They’re far down the road in health information technology, but now the financial risks are being put on hospitals to keep patients out of the hospital, which means a great emphasis on the outpatient environment. What will have to expand? Non-hospital ambulatory care facilities.

What will also have to expand? The primary care physician base that feeds into the hospitals. Although Arizona has a surplus of hospital beds, like every other state it has a shortage of primary care physicians, physician offices, and medical office space. In the future, physicians will have to closely align with hospitals — or be employed by them — because payments will be “bundled.” What does that mean?

Well, insofar as anyone knows, it means that health plans will pay for the patient, and everyone who cares for him/her will share. The hospital, the primary care doctor, the specialist, and the radiologist may get a lump sum to split proportionately. Depending on how the patient fares.

When you think of it, that’s a shocking change. In the future, the finger pointing will have to stop. Who missed the diagnosis? Who forgot to comply with the treatment plan? Who exposed the patient to an infection he didn’t have when he came in — that’a all going to be accounted for. Banner will start developing medical office space for its “captive”physicians in the communities where patients live, instead of making them come to the campus around the hospital, as we all do now.

This would be a big change. Communities now lag behind in physician offices, and are also having trouble attracting physicians. However, the availability of health care services is one of the first questions people ask when they buy a home, and health care is increasingly seen as a driver of economic development. Not to mention the imperatives of new legislation.

Given all the givens, we think the future will see more diagnostics, more primary care, more collaboration, and fewer “hospitals.” That’s a good thing; no one likes hospitals anyway:-)