How Not To Spend Money

Now that I have been on the beach for over two years I find myself beginning to question certain practices by healthcare providers.  Things that made sense to me when I was in an office rather than on the beach no longer make sense.

For instance, for some reason I have been attending University of California football games in Berkeley for over 50 years.  It is certainly not for the thrill of victory which seldom occurs.  In a sorry commentary, Cal fans were ecstatic last season when we won just enough games to be invited to the “Cheez-It Bowl”.  The Rose Bowl for Cal fans is the impossible dream.

Cal football games in recent years have been a further source of aggravation since Sutter Health, a competitor to NorthBay Healthcare, is an official sponsor of the football program and their logo is plastered around the stadium.  Losing football games is apparently not aggravation enough.

Sutter Health is also the official sponsor of the Oakland As baseball team which makes me happy that I am a lifelong San Francisco Giants fan.  Of course, Dignity Health is the “official health care provider” of the San Francisco Giants so if these two teams ever again compete against each other in the World Series, not likely this year, it will be Sutter versus Dignity.    May the best healthcare system win.

Recently announced deals have  moved beyond just plastering logos around stadiums. Whole geographic areas are being given new names.  Kaiser has struck a multi-year, multi-million dollar deal with the Golden State Warriors to name an 11 acre area around their new Chase Center Arena in San Francisco “Thrive City”.  I suspect the deprived homeless in the neighborhood will not be welcomed to pitch their tents in that swanky area.

Similarly, Dignity Health has struck a deal with the Los Angeles Galaxy soccer team to name their stadium “Dignity Health Sports Park”.  Now that Dignity has merged with Catholic Health Initiatives to form CommonSpirit Health, will they change the stadium’s name?  Hopefully, the team will play with a degree of dignity and commonspirit and there will be no flopping on the field at the first sign of contact. Many soccer players act more like gymnasts than “footballers”.

All these activities are usually deemed “community benefits” which is an obligation nonprofit organizations have to justify their tax exempt status.  The large system CEOs prattle on about how spending this money aids the community, not to mention the sport teams owned by fabulously rich individuals.  That’s hogwash.  They just want to make sure they have good seats at the games.

Nonprofit healthcare organizations should not be adding to the bottom lines of well off sports teams and they certainly should not be pretending anyone else benefits from their largess other than the sport moguls. Shame on them.

It is not just the big guys who get involved in these expensive deals.  Many smaller healthcare organizations sponsor events or other activities which are at best tangentially related to their missions.  The cost of these deals are proportionately less but still significant.

Viewing these activities from the beach I have to wonder whether the money could be better spent.  Should  sick people really have to bear the expense of these vanity activities?  Could the money be better spent on free vaccination clinics or free sport examinations for high school athletes?

I can hear the protests from the healthcare organizations which inappropriately devote their resources to non-healthcare uses. It is a branding effort they will say as if the fans really care. No, it is just a fun way to waste other people’s (patients) money.

I have no problem with advertising to the public about the services a healthcare organization has to offer.  I consider that a legitimate expense and a worthwhile endeavor. Similarly, any effort by healthcare providers to educate the public about healthcare concerns through publications, health fairs and the like should be encouraged. There is a benefit to that.

Spending millions of dollars over multiple years on what are essentially corporate vanity efforts is not defensible.   The next time you hear about layoffs by a healthcare system or the closing of a service or the increase in health plan insurance premiums, ask yourself if perhaps Thrive City should close instead.

From where I sit on the beach, healthcare providers lose credibility when they spend money this way.

Lawful Prey

When my father passed away in January, my siblings and I had to make the necessary arrangements for his funeral.  We turned to a trusted funeral director and began making decisions.

What casket should we select?  We saw a variety of caskets with prices attached.  We were not experts on “value” with regard to caskets and the prices were almost meaningless to us in a time of emotional turmoil.  We ended up selecting one similar to what we had chosen for our mother nine years previously.

We then had to choose from an array of other services, each with a price attached.  We did our best but we were not in a position to “shop” each item to see if we could get a better price.  In the end it was trust in the funeral director which guided our decisions.

I thought about trust and prices this week when President Trump announced an effort to make healthcare prices more “transparent’.  He was joined by both Democrats and Republicans in favor of such an effort.

It is all political sleight of hand.  For the purpose of this entry I am going to narrow the focus to hospital pricing, something I know a bit about.

At least in California, hospital prices are readily available at .  As the site explains:

“A hospital charge description master, also known as a chargemaster or CDM, contains the prices of all services, goods, and procedures for which a separate charge exists. It is used to generate a patient’s bill. As required by the Payers’ Bill of Rights, each hospital is required to submit a copy of its chargemaster, a list of average charges for 25 common outpatient procedures, and the estimated percentage change in gross revenue due to price changes each July 1.”

There are thousands and thousands of individual hospital prices in each chargemaster.  You cannot get more transparent than that.   Hospitals are required to maintain such detailed lists of prices by Medicare even though Medicare does not pay hospitals on the basis of its prices.

Medicare is a price fixer.  If you need to take care of Medicare patients, you have to accept their reimbursement which is driven by the vagaries of the federal budget.  The same is true for Medicaid (MediCal in my state).

The shortfalls from the poor reimbursement by these government programs results in cost shifting, i.e., charging patients with private insurance or no insurance more than would otherwise be necessary.  Here is a rule of thumb–the greater the number of Medicare and Medicaid patients served by a hospital, the higher will be its prices.

Selecting a provider though is more than just a matter of pricing.  If we have insurance or Medicare or Medicaid, we are for the most part unconcerned about prices. There are pundits who say that for  price transparency to work patients need to bear more of the cost of care they receive.  While I think that is true, it is not a viable position politically.

From my experience as a patient and as a healthcare manager now retired, trust in my physician’s judgement and in the hospitals where I have had a good experience has always been more important than pricing.  I don’t want the cheapest surgeon or hospital; I want the surgeon and hospital I have reason to trust.  That is what the worthies in Washington and Sacramento don’t understand.

So big deal.  We have transparency, at least in California, for hospital prices.  There is no indication that access to that information makes a significant difference in patient decision making.  Until patients have much more skin in the game, which is unlikely, that will remain the situation.

What is going on now is pure political posturing by both parties.  Here is a bit of advice I give to the poseurs in D.C. and Sacramento.  For all the years I was active in healthcare I had a quotation hanging in my office by John Ruskin, a 19th century critic and, ironically, a socialist.  It was the first sentence of the first paragraph of Ruskin’s “The Common Law of Business Balance” which follows:

“There is hardly anything in the world that someone cannot make a little worse and sell a little cheaper, and the people who consider price alone are that person’s lawful prey. It’s unwise to pay too much, but it’s worse to pay too little. When you pay too much, you lose a little money — that is all. When you pay too little, you sometimes lose everything, because the thing you bought was incapable of doing the thing it was bought to do. The common law of business balance prohibits paying a little and getting a lot — it can’t be done. If you deal with the lowest bidder, it is well to add something for the risk you run, and if you do that you will have enough to pay for something better.”

I hope people keep this “law” in mind as healthcare undergoes a necessary review of costs and benefits. What would be real “price transparency” would be to show side by side with real prices what Medicare pays for the same service. Then citizens would see the hidden healthcare taxes they are paying as the lawful prey of political hawks.


A New Song

Modern Healthcare in its May 13 issue contained yet another article about what makes an organization a “health system”.  It looked at what is now a decades long process of local hospitals being swallowed up by larger hospital chains, both nonprofit and for profit, to form much larger “systems”.

The article said that one pundit feels that “to qualify as a system, the organization must actively managed the cost of care by minimizing waste and eliminating avoidable clinical complications.”  It is the McDonald’s approach—-minimize costs and produce a consistent degree of quality.  Whether forming large hospital chains accomplishes that is debatable.

There is no question that when hospitals merge the excuse is always it will result in better care provided more cheaply.  After all, who would propose decreased quality at a higher cost?   Most of the time, though, what you are looking at is simple empire building and great opportunities for hungry consultants who feast on these arrangements.

There is a coterie of pundits who for the past twenty years have been making the case for big is better even though many of the bigs continue to struggle. The song has not changed nor have the singers. Time perhaps for a new song and new singers.

The May 15 issue of that prestigious medical journal, USA Today, contained an article about  the grades assigned by one pundit-laden organization to hospitals based upon care outcomes.  The methodology used by this organization is always a little shaky but I thought one finding was interesting.  Using the familiar A-F grading scale many of us endured before participation awards took their place, there were eight hospitals in the greater San Francisco Bay Area who earned a “D”.

A closer look at those eight  hospitals showed that five were part of large multi-hospital chains.  The other three hospitals were county hospitals.  There are in the Bay Area several relatively small and excellent healthcare systems which serve very limited geographic areas.  They had better grades than the large guys.  Nothing scientific about that finding but still kind of interesting.

My thesis for many years has been that locally based and focused healthcare organizations do a better job of meeting community health needs than the big guys and have a better chance at prospering even in a rapidly changing economic environment.

When you are subject to corporate offices with corporate  rather than local goals, you cannot do what needs to be done to best serve the community.  Maybe adopting the McDonald’s approach makes sense to central planners who don’t have to burden themselves with local conditions but it is detrimental to effective healthcare.

Furthermore, these big chains become burden by overgrown bureaucracies and absurd mission creep away from the core business of healthcare.  Their top managers become virtue seeking ambassadors of good will rather than focused managers.  The bigger the organization, the more this is so.

I had other comments on the fallacy of “bigness” in my “Big Blobs” entry here in January.

So what is the answer?  I believe that many of these larger healthcare organizations, particularly in the nonprofit sector, need to be unwound.  The fact that they even happened represents a failure of management and governance.  The lack of evidence to justify these increasingly complicated and odd-looking organizations speaks to that.

You can get quality care at a reasonable price but it needs to be a bottom-up, not top down approach.  The smaller and more locally based the healthcare system, the more likely this is to happen.

Small is better. That should be the new song.


Continue reading “A New Song”

The Happy Little Box

When you reach a certain point in life–like the age of 50–the indignities start to pile up in five year intervals. You get an unsolicited membership card from AARP welcoming you to their ranks.  Wait staff at restaurants insist that you take their senior citizens discount for dinner at 3. And, if you have a sadistic primary care physician, you begin to get scheduled for medical procedures you used to be thankful you were too young to have to endure.

After having spent the previous week on an actual beach, my wife and I spent last week back on the metaphoric beach of retirement undergoing the same medical procedure.  We have different primary care physicians but both apparently follow the same guidelines.

The procedure which both of us have experienced several times before requires that you have a companion willing to drive you home and stay with you for a few hours as you recover.  No Uber drivers allowed which is just as well given how their newly issued stock has performed. Thus, we had the procedure on separate days.

You start by fasting the day before.  You can have popsicles of a certain color and various clear liquids.  You need to keep hydrated for the ordeal to shortly follow. After midnight of the day of the procedure, no liquids are allowed with one terrible exception.

In the afternoon of the day before, you take your first step in the preparation.  You drink a vaguely cherry favored concoction which is washed down with 32 ounces of water over the next hour.  This first step will soon result in many other quick steps to the bathroom.

A few hours later after midnight, you repeat the process.  It is like the rinse cycle from hell.  If you are lucky, things settle down before you depart for the procedure.

Once at the location of the procedure, you sign a variety of consent forms notifying you of all the bad things which could happen to you.  You sign on an iPad although the signature looks nothing like what you would write on a piece of paper.  This high-tech approach gives you confidence.  You can have the consent forms printed out to take with you but having endured so much already, only a confirmed masochist would do so.

Soon you are taken  to your room where a sympathetic nurse sticks an IV needle into your arm and explains “conscious sedation” to you.  After what you have been through so far, conscious sedation sounds pretty good.

The actual procedure is a breeze.  You remember nothing and you have nurses fussing over you as you recover.  If you are lucky, you won’t have to have the procedure again for another five years.

If by now you have not guess what the procedure is, then you will have a big surprise waiting for you along with your AARP card when you turn 50 and every five to ten years thereafter. Enjoy life until then.

Recently I have noticed a commercial on cable news shows featuring a happy little box with arms and legs touting an alternative to what I outlined above,  You take the contents of the box with you into the bathroom, do what the instructions tell you to do and mail the result for testing.  Mind you, you are hearing all of this right after you have had your dinner.

The problem with this approach is that while the happy little box gives you a result, positive or negative, unlike the other procedure it does not intervene to remove possible conditions that may be a precursor to cancer which is the point of the whole exercise. The happy little box comes with significant limitations.

So why have I gone into such detail?  Aside from the fact that the procedure can and does save many lives, I find it a perfect example of the ability of our healthcare system to adjust to rapid change.  It is, in fact, one of many such examples of how agile our healthcare system is, especially in comparison to the sclerotic state of many other segments of our economy.

Colonoscopies–there, I finally have said the word–were made possible by technological innovation rapidly adopted.  At first, the procedure was done within the confines of a hospital.  Then, as I recall, a few doctors started outpatient centers which did only colonoscopies.  This prompted hospitals to include the procedure in their new outpatient surgery centers at a greatly reduced cost as compared to doing it in the hospital. You see this process of adjustment and change occurring all the time in healthcare.

The pace of technological change in healthcare is accelerating.  New developments in individually tailored cancer treatments, continued development of robotics in surgery and new imaging techniques will test the agility of our healthcare system.  Don’t bet against our vibrant healthcare system and its component parts.

As for the happy little box, it represents a further technological refinement for people who needlessly fear colonoscopies.  If the happy little box tells you need to see a doctor, then you best do so. Better yet, go all the way with the scope.





Health Plans Are Dumb And Medicare May Be Getting Smarter

Last week I was actually on a beach for the first time since I retired in 2017 and two healthcare developments caught my eye.  I know, I know–I probably should have been thinking of alcoholic concoctions with little umbrellas and sunsets but I don’t drink and if you have seen one sunset you have seen them all.

The first development was a tired old story of stupidity on the part of a health insurance plan.  Once again a health plan had tried to renegotiate a contract with a provider and having failed to achieve its goals of vastly cutting reimbursement, terminated the agreement.  The result, hundreds if not thousands, of people will be forced to try to find new doctors.  This was probably not what their employers had in mind when they signed their contracts with the health plan.

Health plans don’t seem to get it.  As third-party intermediaries, they have become commodities with a limited purpose.  In an era where direct contracting will probably become the norm, the need for health plans as we currently know them is coming to an end. Every time you see a health plan put itself in this position, you are seeing its death throes.  Call it health plan suicide by stupidity.

In the particular case at hand, the health plan sent a letter to all the contracted doctors saying they had to sign an attached agreement if they wanted to continue to see their patients, not realizing the doctors were part of the healthcare system with whom they had just terminated the agreement.  The entry bar to management in health plans is clearly low and getting lower.

This is just one more example of large health plans not really knowing the local markets where they are marketing their product.  The corporate empty suits don’t understand that brute force does not work anymore.  As long as they think they are going to make their bonus numbers, they will make stupid short-term decisions.

People really could care less about the name on their health plan as long as they can access their physician of choice and to a sightly lesser extent their hospital of choice.  That is the reality facing health plans and that is why you are seeing strange mergers like drug store companies (also an endangered specie) and health plans coming together to seek a synergy which does not exist.  Are they drug stores with a plan or health plans on drugs?

More to the point, in an era where waits to see primary care physicians and specialists are  long, a threat to physicians to take away patients is not very viable.  Access to primary care doctors is becoming a real problem.  Health plans, always with one eye on Wall Street, don’t really care about patients who become pawns in their silly game.

Add to this the fact that many hospitals run full most of the time and the threat of health plans to take patients elsewhere becomes even sillier.  Integrated healthcare systems were developed so that care could be coordinated and better outcomes realized.  Health plans often get in the way of better care with their disruptive behavior.

The answer to all this which is slowly but surely evolving is the development of nonprofit health plans which are part, not apart, of integrated healthcare systems. Only then will the twin goals of better quality and better cost control be achieved.  In the meantime, watch the existing health plans cut their own throats.

The other development which caught my eye on the beach was the announcement by Medicare of yet more pilot programs to further their goal of “value-based purchasing”, another way of saying rewarding and punishing providers if they don’t meet certain, ever-changing and poorly defined quality goals. Medicare’s previous pilot programs in this regard have been failures although the pundits try to hide that fact.

Two of the new proposals by Medicare would compensate primary care physicians on a  monthly basis per patient.  The two proposals differ by the degree of risk assumed by the physicians.

At first glance, this sounds like capitation in a fancier dress.  A closer look, though, shows it may be more like a subscription model which is gaining favor in other areas of the digital economy.  Even now, you can “subscribe” to a car or have an Amazon Prime subscription. If this is the case, and Medicare can resist its natural impulse to make something simple more complicated than it needs to be, it may be on to something.

There are lots of details yet to come about Medicare’s proposals but at least they deserve credit for thinking differently as they also try to meet the twin goals of better care and cost containment.  Health plans might think about this as they slowly kill themselves.

Health plans are dumb and Medicare may be getting smarter.


Why Do We Have Hospitals?

Many years ago when I was newly promoted to Chief Operating Officer of a large hospital in Berkeley, I was asked by the Chief Nursing Officer who had been my peer but was now my subordinate this question:

Why do we have hospitals?

I offered several fumbling answers, each of which she told me was wrong.  I was beginning to think she was trying to put newly promoted me in my place when she gave me the correct answer:   Because patients need nursing care.  That’s the reason they are admitted.

She was right then and she would still be right today.  The fundamental reason why patients are in the hospital is because after everyone else has had a go at them, they require the care and attention of a nurse to recover.

While nursing care continues to become more dependent on technology and requires increasingly more education and training, it still is at its core a one-to-one relationship with the patient.

My introduction to the profession of nursing took place as part of my graduate education.  I was in the minority of my graduate program cohort in that I had no clinical background.  That’s how I found myself doing the duties of a nurse’s aide in a Bay Area hospital for four months before my first semester.

I worked alongside nurses and saw them using both high-tech and more importantly high touch in their care of patients.  One situation I will never forget was watching late one night from across the intensive care unit a nurse brushing the hair of a seriously ill teen age girl who was crying, offering her comfort with her words.  I watched that girl get calm and for the first time understood the importance of nursing.

Another time I was working in the emergency service when an elderly woman in cardiac arrest was brought in.  She had been on a passenger train when she fell ill.  My job was to fetch things for the doctors and nurses as they tried to revive her to no avail.  When the patient was declared dead, one of the nurses asked me to remain in the room with her and the patient.  She told me that what we were about to do was as important as all the efforts to save the patient’s life.  Our job was to prepare the patient to be seen by her husband who was waiting elsewhere in the hospital.  She said it was important that he see his wife as he remembered her and not as someone with tubes and other equipment connected to her.  That nurse taught me that caring for the patient sometimes means caring for others as well.

I saw other nursing interventions that continue to move me emotionally even many years later.  Often, it seems that the only person taking the time to truly understand the concerns of patients is the nurse.

I am proud that there are now nurses in my family.  It is a great profession with many avenues of opportunity.  Whenever I can, I encourage young people to explore nursing as a career.

While the nursing profession now has many important roles outside the hospital, I remain partial to hospital nurses because, after all, that’s why we have hospitals.

May 6 is National Nurses Day and that week is National Nurses Week.  If you know a nurse, give her or him a thank-you for what they do.  They deserve the recognition.




Remember The EMR!

I have been railing against the roll-out of the electronic medical record (EMR) since I first started blogging when I was CEO of NorthBay Healthcare.  I have continued whining about EMRs in this space.  I have become a serial whiner.

At times I feel like I am beating a dead horse except this horse is not truly dead.  The EMR horse continues to consume oats and spew out you-know-what at the other end.  It’s a mess.

My latest bout of EMR whining is prompted by an excellent article in the April issue of that well-regarded medical journal–Fortune Magazine.  It relates the EMR follies and how good intentions were subverted by poor planning, political posturing and the law of unintended consequences.  Business as usual in D.C.  It is a must read.

Health policy makers (also know as pundits) and politicians on the hustle are a toxic mixture.  It never ceases to amaze me how ignorant these people are about the actual delivery of healthcare.  Yet it is these people we rely upon for considered reform of health care.

As the Fortune article points out, the push to have national adoption of the EMR was because it was viewed as a shovel-ready endeavor which could help with economic recovery from the recession of 2008.  However, the shovels were not ready, physicians and hospitals were not consulted and the providers of EMRs were selling a product which complicated the delivery of care and in many instances caused injuries.

The EMR vendors saw explosive growth after 2010 when healthcare providers were under the gun to adopt EMRs.  The federal government created financial incentives to adopt the EMR as well potential penalties for not doing so.  The EMR vendors as a group were not ready for prime time but they sure prospered.   Their revenue growth was impressive and matched only by their ability to not deliver on their promises.

As I have related recently, we now have scribes entering medical data so that physicians can be freed from that task and devote more time to attending to their patients.  Costs have not gone down as a result of the EMR; they have increased substanially.   And because of the poor design of the EMRs, the quality of care has often been affected.

Making the EMR work to the benefit of providers and patients is now a rescue effort that is likely to involve significantly more expense.  Even most of the early proponents of the EMR including former President Obama are expressing regret about how a good idea turned into a fiasco.

Has the lesson been learned that a good idea is not necessary amendable to uninformed political intervention?   The answer is a resounding “No!”

“Medicare For All” has again reared its head, promoted by a multi-millionaire socialist (only in America is that possible) senator with the 150 Democratic presidential candidates all supporting it.  The other party meanwhile seems to be pretending there is not a problem in terms of healthcare coverage.  Both sides give new meaning to the term “useful idiots”.  Actually, the term should be “useless idiots”.

We have a problem.  Medicare for all is not the answer.  It is an empty slogan meant to be defined in multiple ways.  There is political safety in vagueness.

Doing nothing is likewise not the answer although that seems to be the default position of the other party.

Adopting a solution for political purposes will repeat the EMR fiasco.  Wiping out the health insurance business which needs to be reformed but not eliminated will have its own unintended consequences.  Doing anything that increases demand for healthcare without providing more trained providers will simply make access even more difficult.

Solving the vexing problemn of universal coverage is going to require much more thought than blindly adopting a nonsensical slogan like “Medicare for All”.  A much better slogan would be:

“Remember the EMR”.

A poor memory will result in yet another fiasco and more importantly no improvement in coverage.


The April 17 Wall Street Journal contains an excellent column written by two academics, one of whom frequently writes healthcare related articles for the Harvard Business Journal. The article critically examines “Medicare for All” and contrasts the failing Canada model with much more successful universal coverage models in Germany and Switzerland, both of which maintain a robust private healthcare sector. The last paragraph nicely summarizes the authors’ point:

 Con­sumers and the pri­vate sec­tor drive the health-care sys­tems in these coun­tries, which ac­com­plish ex­actly what Mr. Sanders and his sup­port­ers say they want—uni­ver­sal cov­er­age, con­trolled costs, high qual­ity and ready ac­cess. In con­trast, Cana­da’s ex­pe­ri­ence shows the dan­gers of the Medicare for All model.

 So once again, Remember the EMR!