Open Season

Where I live you can hear gun fire in the far distance hills at this time of the year. The first time I heard it was years ago when we first moved in. I was told it was open season.

Open what I asked? Open season was again the reply. Hunters were after quail and this was the time of the year when it was permissible. Elsewhere, deer and boars are the targets.

I came to conflate open season with open enrollment for health plans. When you think about it, hunters looking for quail are not a whole lot different than health plans looking for customers. There is only one time of the year when they are easily bagged.

For me, this is the time of the year when I get mail from Medicare Advantage plans seeking to lure me from traditional Medicare Part A and B. They make promises about extra goodies and lower premiums. I prefer to have more control over my healthcare including having a voice in whom my doctor is and what hospital I can utilize. Still, every year it seems the Medicare Advantage health plan hunters bag more prey. Seniors living on a fixed income have to make economic decisions.

For many employees of private enterprises this time of the year also provides an opportunity to make changes in health plans. That decision is often based at least in part by how much will be taken out of the person’s paycheck as a partial contribution to the premium paid by the employer.

A similar dynamic occurs for public employees who often have more health plans to choose from than is typically the case for private sector employees. The public employer will pay only a certain amount for health plan coverage. If a health plan’s premium is greater than that amount, the public employee pays the difference.

In a rational world where employees have an incentive to make decisions based upon economics, this annual dance of health plans should lead to those plans having lower premiums gaining more customers. That is what is happening with Medicare Advantage plans with their lower premiums and extra goodies.

It is not happening, though, for many private employers and most public employers. The reason is that employers don’t like confronting their employees with this kind of economic decision. Often, a floor for what the employer will pay is established based upon union agreements and/or political pressure. I saw this dynamic when I sat on a nonprofit provider owned health plan board which often had the lowest premiums but could not gain as many new members as it should have.

In California, Kaiser has a large marketshare. The inertial you must overcome for an employee to switch his health plan away from Kaiser is immense. I used to joke that Kaiser was like a cult and once an employee was captured that was it. In all fairness, a part of that “stickiness” was due to Kaiser effectively meeting its members’ needs, albeit at a higher premium than other plans.

It helps Kaiser,though, when an employer, particularly public employers, establish the Kaiser premium as what it will pay. Health plans which offer equivalent coverage for a lesser premium don’t gain new members in that scenario. Employees have no financial incentive to change their health plan. And so it goes and has for years in California.

I was recently asked in response to another blog entry what I would do to make health care more affordable. The first thing I would do is to make sure employees have real financial incentives when making health plan choices during open enrollment. I believe you would see health plans begin competing more robustly for members if they felt that lowering premiums would bring in more business. That does not happen now and until it does it will be open season for ever rising premiums.

The Right Answer

A few years before I hit the beach, my wife and I made our first trip to Great Britain. When we were in London and unsure of how to navigate the many historic sites, we did what many tourists did—we took the hop on, hop off bus to get to places. While that was not the most efficient way to get to a given site, we knew sooner or later the bus would reach our desired destination. Sometimes that meant a ninety minute ride to get to a place which was only five miles or so from our hotel.

By our third day, we were getting brave so we decided to try one of the famous black cabs of London. They were expensive as compared to a one day hop on, hop off pass but time is money too. We hailed a cab and with a $8o fare we arrived thirty minutes later at the Tower of London which was actually a combined fortress, royal palace and prison. Centuries ago unfortunates received a haircut of a non-financial sort there. Just a little off the top. Permanently.

That steep $80 dollar cab fare was, though, instructive in another way. The cab driver seemed very sad and I asked him if he was OK. He said that he would not normally be driving that day but his adult daughter had just died from breast cancer and he needed to raise money for her funeral. I felt awful for him.

The cabbie said that at least the family did not have to worry about her medical bills since she had been a patient of the national health service. I asked him how he viewed that health care provider for most citizens and he said it was satisfactory. Most people knew it was not “posh” as he put it, but what it had in long wait times and lack of amenties was more than made up by removing financial worries when one got sick. Still, he recognized that more citizens with means were availing themselves of a private healthcare system which has developed in order to avoid the inconveniences of the public service.

Later on that vacation, we found ourselves on a walking tour of the sites of Glasgow in Scotland. We came upon a particularly large, old and ugly building which our guide said was the Glasgow Royal Infirmary where Dr. Joseph Lister first promoted the idea of techniques to insure sterile surgery. It was located uncomfortably within easy walking distance of the famous Glasgow Necropolis, final resting place of posh Scottish Victorians who may not have had the advantages of sterile surgery.

Glasgow Royal Infirmary

I asked our Scottish guide what he thought about the public National Health Service. Being Scottish and therefore obstinate, he quickly pointed out that the public Scottish Health Service was somewhat different and definitely better than the English version. He too acknowledged that there were deficiencies in the public service but that was more than made up by not having to worry about the financial aspects of being ill. He also liked haggis, a Scottish dish primarily made of lamb entrails, so his judgement may need to be discounted.

I thought about the cabbie and the haggis loving guide as the Democratic candidates for President have been discussing their various health care schemes. In Great Britain, polls both formal and in my case very informal indicate that the public likes the National Health Service, warts and all. So at most, politicians nibble around the edges. No one wants to disrupt that service.

Here in the the United States polls consistently show that while citizens would like to see health care be more affordable, they do not want to lose their private health plans. Yet many of the Democratic candidates seemed to want to replace the private plans with a public scheme, contrary to voters’ desires.

How do you make health care more affordable without replacing existing private health plans? That is a question someone needs to ask. The right answer might make someone President.

A Toast To The Unsung

Last week marked an end and a beginning for me. That sounds more dramatic, perhaps, than the occasion merits but sometimes you have to let your inner drama king out to breathe.

NorthBay Healthcare hosted a special night for supporters to have a preview showing of its new $200 million wing at NorthBay Medical Center which will open for patients next month. This was the last project for which I can claim some responsibility as we began planning it in 2014 and when I retired in 2017 the financing had been secured and the steel was going up.

It’s a beautiful high tech facility full of the latest technological innovations. When we were designing it, we did not want to make compromises which might affect the care we would be delivering. Mission accomplished.

I was recognized at the beginning of the event by my successor who had to ride herd over much of the construction process and now will have to integrate it into the ongoing expenses of the organization. He is more than up to that task.

I felt both sad and also strangely liberated as I contemplated the building. Going forward, whatever happens at NorthBay will not bear any traces of me. Ego aside, a connection is being broken. Time for me to move on.

A special recognition and the focus of the evening was a bequest made to the building by a couple who have long supported NorthBay and other community endeavors. They are unassuming and do not seek recognition for their efforts. Nevertheless, their bequest of $5 million was the largest single gift the organization has ever received and recognition needed to be given.

As the ceremony finished and people began to take tours of the building, it occurred to me that others had an important role in making that building happen. Two NorthBay boards had to give approval for the financing and construction. Their trust in and support of management was not acknowledged. I did so later that evening in notes I wrote to each of them. Board members seldom get recognition for the tremendous burdens they carry.

There were three people who were instrumental to the project but were also not recognized that evening. NorthBay’s CFO who passed away unexpectedly last December built relations over a long period of time with financing entities. Their trust in him led to more buyers for NorthBay’s bonds than we had to sell. Thank you, Art.

Similarly, the Vice President and Assistant Vice President responsible for facility development brought the project in on time and under budget. They had to deal with the rest of us, our ideas, complaints and often uninformed opinions. They deserved recognition of the highest sort. I wrote them notes as well.

Which brings me to the real point of this entry. Positive recognition is so important to the people who make up an organization. It seldom is provided in sufficient quanity and yet it is always welcomed by its recipients.

We had at NorthBay an annual employee recognition dinner for employees who attain certain levels of tenure. We would have slide shows about each of them for dinner attendees to see. Then the employee would be asked to come to the front of the room to receive their award from me and have a photo taken with the board chair. Their families would be present to watch.

I often would get hugged by the recognized employee, no doubt breaking several federal and state employment laws in the process. I would always whisper to every award winner my personal appreciation for their dedication. Those moments were special, an opportunity for me to give a toast to the unsung. For that moment, they were the most important person in the room and their families could see that.

To my mind, you can never give enough recognition to the people who make an organization successful. That’s particularly true in healthcare where teamwork is necessary. Perceptive physicians and nurses know that their efforts would be for nought without the many other staff members toiling in the background.

So to me, that new wing at NorthBay Medical Center merits a toast to the unsung thousands of staff members who made it possible. Here’s to all of you!

Being Beloved

According to the story in Modern Healthcare, Blue Shield of California has formed a new company called “Altais”, the spelling of which my spellcheck keeps trying to change. Perhaps that is because it sounds like a terrible disease, as in “I have a bad case of Altais.”

Or maybe Blue Shield sees treating bad breath as a natural extension of being a health plan and Altais will be competing against Altoids. I know dealing with Blue Shield always left a bad taste in my mouth. Anything is possible when your spellcheck runs amuck.

In fact, Altais is Blue Shield’s latest attempt to stay relevant in a changing healthcare environment. Altais will offer management services to the ever decreasing number of physicians in California who have not joined with hospitals to form clinically and economically integrated healthcare delivery systems. The fox is trying to get into the hen house by pretending to be a good guy. Not going to work. The chickens have been to medical school and they are too smart to fall for that ploy.

Blue Shield of California is not the only health plan trying to escape being a commodity. United Healthcare is among the health plans now actually trying to acquire physician practices in a forlorn attempt to avoid not being relevant. That will be an expensive mistake when they learn that physician practices don’t behave the same way a spreadsheet full of actuarial statistics does. It’s the hubris of the ignorant.

It is not fun being in a boring business and that is what the health plan business is. Stand alone health plans (as opposed to hospital and physician owned health plans) really cannot be easily distinguished from one another. The role of any kind of insurance is to manage and hedge risk. Risk management is not the same thing as delivering a service or product. You don’t see auto insurance companies building cars.

Real people—not the “lives” as health plans refer to their members—do not particularly care what health plan they have as long as they have access to their preferred physicians and hospitals. After all, no one goes to Blue Shield’s or United Healthcare’s headquarters with an illness on a Sunday night. Or for that matter, try calling their customer service department for a phone consult.

It is not just health plans who envy the central role of physicians and hospitals in healthcare. The same week the Modern Healthcare article appeared, the New York Times published an op-ed by one of its former writers who bemoaned the fact that hospitals are “beloved”. Being “beloved” is apparently a bad thing in some quarters.

From her point of view, hospitals should be lumped with health plans and pharmaceutical companies as villains. Pundits love finding villains. It’s a living. This was also one of the points of a book she wrote a few years ago which after a brief period of hype disappeared from view. Her present frustration no doubt stems from that experience and perhaps from not being beloved.

Those darn hospitals and doctors really get in the way of the schemers who know better. The public just does not know how bad they are. Here is a message to the schemers of all types: the public does know who, when they have a healthcare need, they can rely upon.

Health plans are trying to weasel their way into physician practices in order to escape being a commodity. Pundits like the one who wrote the op-ed also know the sting of not being relevant. The fact that hospitals and physicians are the target of such actors is a compliment to how relevant healthcare providers are to the public.

Not being relevant is no fun. Being beloved is nice, though, and it is earned as a result of meeting real needs of real people.

Unnecessary Roughness

I’m back on my home beach after leaving Alligator Healthcare just ahead of Hurricane Dorian. Those kinds of thrills I don’t need.

Instead, it is now time for the thrills, despair and futility of Cal football. My fondest memories of my time as an undergraduate and graduate student in Berkeley include hiking up the hill with my pretty girl friend (who would become my wife) to the stadium. There I learned the value of tradition and the meaning of mediocrity as the Cal football team year in and year out struggled. Still, I held out hope that this would be the year we would go to the Rose Bowl. I am still hoping.

This week I again made the uphill hike to the stadium with my oldest son and an old friend, more slowly and with more determination. My wife, a realist, stayed home. She will be sorry. This may be the year we go to the Rose Bowl. The world needs more optimists and fewer realists. Except in my house.

In the years just before I hit the beach, Cal football was a source of additional frustration. Cal football was now sponsored by Sutter Health, a competitor to my organization. The stadium was plastered with Sutter Health signs. What’s more, sometimes Sutter representatives got to participate in the coin flip at the start of the game. Color me green for envy.

We more than held our own in the competition with Sutter and the other big guy in our service area, the Big K (Kaiser). As I have discussed elsewhere, we were nimble and they, like many Cal football teams, were ponderous. We were managed and governed locally and responsive to local needs. They were not. We more often than not scored a touchdown locally. They often fumbled. The home team won. The visitors lost. I could go on in this vein and it would be fun but I think you get the picture.

These thoughts were triggered by an article in the San Francisco Chronicle this week about a class action antitrust suit brought against Sutter in 2014 by employers and employer trusts that cover their employees’ health care costs. The trial begins this month. The plaintiffs contend that Sutter, because of its size, abuses its market power in negotiations with health plans and is able to force the health plans (the poor darlings) to agree to unfair contracts terms. Most of these plans dwarf both Sutter and the Big K in size but appear to want to be looked at the same way the USC football team looks at Cal–as victims.

Not to be undone, California’s Attorney General, who sues anything and everything, piled on last year with his own antitrust suit against Sutter, probably to compensate for all the years he served in Congress and did nothing. In football, this is called unnecessary roughness. In politics it is called grandstanding.

I know enough about antitrust law to understand that it is complicated for even the average attorney to comprehend, much less the average non-attorney like me. I do know that such legal suits are extremely expensive to bring to trial so the fact that Sutter is doing so indicates their faith in their defense.

Big systems like Sutter and Kaiser developed because of public policy decisions made by legislative bodies. Consolidation of hospitals and doctors into integrated systems was thought to result in more efficient and better quality care. No one really knows whether that is true and studies seem to be contradictory.

I do know that competing against Sutter and the Big K kept us on our toes. I also know that employers could do a lot more to control their health care costs but lack the courage to educate their employees and also confront their unions. In this game, the penalty is being called on the wrong team. We Cal fans know what that is like.

I never ever thought I would say this but GO SUTTER!

Alligator Healthcare

As I write this entry I am actually on a beach visiting my wife’s family in Florida. We do this every August or September to assure that we will be here during peak hurricane season. This eliminates the need to visit Disney World in order to experience a thrill.

There is another way to get a thrill in Florida. Alligators are ubiquitous. We stay in a hotel near a lushly landscaped outlet shopping center and sometimes have a snack in the center’s food court. There are places to munch your corn dog outside next to ponds. However, there are signs warning you while you are munching the corn dog to make sure an alligator is not munching you.

From the perspective of this Californian the healthcare world in Florida is wild and wooly in comparison to more staid California. At home there has been so much consolidation between hospitals and physicians that whatever competition that exists is at a level relatively remote to patients. Not so in Florida where the competition is like alligators staking out territory in the swamp.

Florida, of course, has a population with a relatively large proportion of senior citizens who are full time residents, refugees from high tax states in the eastern portion of the country. They are augmented every winter by snowbirds, seniors who are escaping harsh winters. Together they make a large market for healthcare providers. They also lower the average speed on freeways to about 30 miles per hour. Early bird dinners at 3 in the afternoon, though, are a real bargain.

The competition for patients makes for innovation. It was in Florida years ago that I first encountered the concept of a medical fitness center for both the healthy older adult and the rehabilitating senior. It was a beautiful facility and well utilized by people of a wide age range with programs tailored to the needs of the post-20s crowd. The medical fitness center shared a large building filled with outpatient services of its sponsoring hospital which was located on the other side of the city. A competitor’s hospital was nearby.

NorthBay Healthcare took its inspiration for its HealthSpring medical fitness center from such facilities. Like in Florida, the medical fitness center is part of a much larger outpatient complex. You can learn much by seeing how things are done elsewhere.

Then there are the physicians. The merger of physicians into hospitals to form integrated healthcare delivery systems is much less common than in California. In many instances, they compete with hospitals by operating various kinds of outpatient services. The hospitals, in turn, respond by opening their own centers. Patients have more choices and there is a degree of price competition although with the many Medicare patients such competition is limited.

Florida is still one place that encourages the utilization of hospital emergency services by posting on large electronic billboards on busy streets the current waiting times to be seen in the emergency service. These billboards are frequently located in their competitor’s territory. I have contended in this space that encouraging the use of hospital emergency services may be good from both a healthcare and marketing perspective (see “Excommunicated”, February 26, 2019). Florida hospitals certainly seem to think so given the characteristics of the populations they serve.

On this most recent trip I ran into the concept of free standing urgent care centers for children. I have not seen one of those in Northern California and certainly not twelve as is operated by one Florida healthcare system in an area with about the same population as the Bay Area. Their centers serve patients up to twenty-one years. The website for the centers show the current waiting time for each site. The evening I looked the longest wait was just eighteen minutes. Think about that if you come home from work to a sick child! This is the kind of idea which before I hit the beach always got me thinking and excited.

Alas, there is one kind of competition in Florida which I hopes stays there. Florida leads the nation in Medicaid and Medicare scams foisted on the unsuspecting public by con men and unscrupulous physicians. These kinds of alligators need to remain in the swamp.

I find Florida healthcare for the most part to be a refreshing change from California where competition is much more muted. We need a few alligators here not including the ones in Sacramento.

Payback Can Be A………….!

I am on vacation which some people think is redundant when you are retired. As I write this, I am somewhere between the Virgin Islands and the Bahamas. I was not going to post a blog entry this week because that is a no-no when you have left the beach to take a vacation. However, an article was published today that I could not resist briefly commenting on.

Dating back at least eight years in my old blog I wrote as NorthBay Healthcare’s CEO, I have criticized hospital ratings, the methodology used by the purveyors of those ratings and the motives of the organizations which issue them. In the case of the Medicare folks (CMS), their motives are relatively pure but their execution leaves a lot to be desired. Then there is the sanctimonious organization called Leap Frog whose rating methodology is a joke which they don’t get. The two other organizations (USA Today and Healthgrades) have their own murky motives for issuing questionable ratings.

When these organizations periodically issue their ratings, hospitals howl about the methodologies used and the misleading results. The hospital’s comments are dismissed as self-serving by the almighty raters. Sometimes they are just that. Most of the time though, the comments reveal real weaknesses in the methodologies used by the rating organizations to grade hospital performance.

Today the New England Journal of Medicine in its “Catalyst” publication published an article “Rating the Rater”. Among the conclusions was the following:

In this Rating the Raters initiative, we found that the current hospital quality rating systems should be used cautiously as they likely often misclassify hospital performance and mislead. 

Now guess who is howling? The loudest howler is the Leap Frog organization which can dish out the criticism but cannot take it. USA Today received a “B” rating, most likely as a result of a recent methodology change. CMS got a solid “C”. The two most problematic rating organizations got a “C-” (Leap Frog) and a “D+” (Healthgrades).

Their comments in response today are funnier than the comedians on my cruise ship. Payback can be a ……….!