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Healthcare Costs Video

Posted on December 1, 2017 I Written By

John Lynn is the Founder of the HealthcareScene.com blog network which currently consists of 10 blogs containing over 8000 articles with John having written over 4000 of the articles himself. These EMR and Healthcare IT related articles have been viewed over 16 million times. John also manages Healthcare IT Central and Healthcare IT Today, the leading career Health IT job board and blog. John is co-founder of InfluentialNetworks.com and Physia.com. John is highly involved in social media, and in addition to his blogs can also be found on Twitter: @techguy and @ehrandhit and LinkedIn.

In all the crazy discussions that are happening about healthcare, it’s always frustrating to me that so few of them talk about healthcare costs. Politicians are talking a lot about healthcare insurance and coverage. Those in healthcare IT talk about meaningful use, MACRA, and over regulation. No doubt there are challenges associated with insurance coverage and with health IT regulation. However, none of them will move the needle on how much healthcare is costing this nation.

Sometimes it takes a little bit of humor to illustrate the point and that’s what this video from Adam Ruins Everything does with healthcare costs:

Not exactly a Fun Friday video like we usually do, but kind of. The saddest part of this video though is near the end when she asks what can be done to fix the problem and he says nothing. Rolling back healthcare costs is the real issue with healthcare today and there are a lot of entrenched interests that want nothing to do with it.

Exchange Value: A Review of Our Bodies, Our Data by Adam Tanner (Part 3 of 3)

Posted on January 27, 2017 I Written By

Andy Oram is an editor at O’Reilly Media, a highly respected book publisher and technology information provider. An employee of the company since 1992, Andy currently specializes in open source, software engineering, and health IT, but his editorial output has ranged from a legal guide covering intellectual property to a graphic novel about teenage hackers. His articles have appeared often on EMR & EHR and other blogs in the health IT space.

Andy also writes often for O’Reilly’s Radar site (http://oreilly.com/) and other publications on policy issues related to the Internet and on trends affecting technical innovation and its effects on society. Print publications where his work has appeared include The Economist, Communications of the ACM, Copyright World, the Journal of Information Technology & Politics, Vanguardia Dossier, and Internet Law and Business. Conferences where he has presented talks include O’Reilly’s Open Source Convention, FISL (Brazil), FOSDEM, and DebConf.

The previous part of this article raised the question of whether data brokering in health care is responsible for raising or lower costs. My argument that it increases costs looks at three common targets for marketing:

  • Patients, who are targeted by clinicians for treatments they may not need or have thought of

  • Doctors, who are directed by pharma companies toward expensive drugs that might not pay off in effectiveness

  • Payers, who pay more for diagnoses and procedures because analytics help doctors maximize charges

Tanner flags the pharma industry for selling drugs that perform no better than cheaper alternatives (Chapter 13, page 146), and even drugs that are barely effective at all despite having undergone clinical trials. Anyway, Tanner cites Hong Kong and Europe as places far more protective of personal data than the United States (Chapter 14, page 152), and they don’t suffer higher health care costs–quite the contrary.

Strangely, there is no real evidence so far that data sales have produced either harm to patients or treatment breakthroughs (Conclusion, 163). But the supermarket analogy does open up the possibility that patients could be induced to share anonymized data voluntarily by being reimbursed for it (Chapter 14, page 157). I have heard this idea aired many times, and it fits with the larger movement called Vendor Relationship Management. The problem with such ideas is the close horizon limiting our vision in a fast-moving technological world. People can probably understand and agree to share data for particular research projects, with or without financial reimbursement. But many researchers keep data for decades and recombine it with other data sets for unanticipated projects. If patients are to sign open-ended, long-term agreements, how can they judge the potential benefits and potential risks of releasing their data?

Data for sale, but not for treatment

In Chapter 11, Tanner takes up the perennial question of patient activists: why can drug companies get detailed reports on patient conditions and medications, but my specialist has to repeat a test on me because she can’t get my records from the doctor who referred me to her? Tanner mercifully shields here from the technical arguments behind this question–sparing us, for instance, a detailed discussion of vagaries in HL7 specifications or workflow issues in the use of Health Information Exchanges–but strongly suggests that the problem lies with the motivations of health care providers, not with technical interoperability.

And this makes sense. Doctors do not have to engage in explicit “blocking” (a slippery term) to keep data away from fellow practitioners. For a long time they were used to just saying “no” to requests for data, even after that was made illegal by HIPAA. But their obstruction is facilitated by vendors equally uninterested in data exchange. Here Tanner discards his usual pugilistic journalism and gives Judy Faulkner an easy time of it (perhaps because she was a rare CEO polite enough to talk to him, and also because she expressed an ethical aversion to sharing patient data) and doesn’t air such facts as the incompatibilities between different Epic installations, Epic’s tendency to exchange records only with other Epic installations, and the difficulties it introduces toward companies that want to interconnect.

Tanner does not address a revolution in data storage that many patient advocates have called for, which would at one stroke address both the Chapter 11 problem of patient access to data and the book’s larger critique of data selling: storing the data at a site controlled by the patient. If the patient determined who got access to data, she would simply open it to each new specialist or team she encounters. She could also grant access to researchers and even, if she chooses, to marketers.

What we can learn from Chapter 9 (although Tanner does not tell us this) is that health care organizations are poorly prepared to protect data. In this woeful weakness they are just like TJX (owner of the T.J. Maxx stores), major financial institutions, and the Democratic National Committee. All of these leading institutions have suffered breaches enabled by weak computer security. Patients and doctors may feel reluctant to put data online in the current environment of vulnerability, but there is nothing special about the health care field that makes it more vulnerable than other institutions. Here again, storing the data with the individual patient may break it into smaller components and therefore make it harder for attackers to find.

Patient health records present new challenges, but the technology is in place and the industry can develop consent mechanisms to smooth out the processes for data exchange. Furthermore, some data will still remain with the labs and pharmacies that have to collect it for financial reasons, and the Supreme Court has given them the right to market that data.

So we are left with ambiguities throughout the area of health data collection. There are few clear paths forward and many trade-offs to make. In this I agree ultimately with Tanner. He said that his book was meant to open a discussion. Among many of us, the discussion has already started, and Tanner provides valuable input.

Symptoms of the Healthcare Debate

Posted on August 19, 2016 I Written By

John Lynn is the Founder of the HealthcareScene.com blog network which currently consists of 10 blogs containing over 8000 articles with John having written over 4000 of the articles himself. These EMR and Healthcare IT related articles have been viewed over 16 million times. John also manages Healthcare IT Central and Healthcare IT Today, the leading career Health IT job board and blog. John is co-founder of InfluentialNetworks.com and Physia.com. John is highly involved in social media, and in addition to his blogs can also be found on Twitter: @techguy and @ehrandhit and LinkedIn.

This healthcare cartoon seemed to capture my feelings about much of the healthcare debate that’s happening right now. It’s even worse thanks to the current presidential race.
Healthcare Cartoon - Symptoms of the Healthcare Debate

This cartoon might offer a much simpler explanation for the healthcare cost challenges we face:
Healthcare Costs in the US

A part of me just wants to turn it all off, but it’s a battle that’s too important to ignore. Have a great weekend!

The Health Insurance Demand Problem

Posted on July 11, 2014 I Written By

Kyle is CoFounder and CEO of Pristine, a VC backed company based in Austin, TX that builds software for Google Glass for healthcare, life sciences, and industrial environments. Pristine has over 30 healthcare customers. Kyle blogs regularly about business, entrepreneurship, technology, and healthcare at kylesamani.com.

A family friend was recently admitted to the hospital after a traumatic motorcycle accident in Colorado. He’s not in great condition, but he’s hanging in there. In light of having just written this post about the cost of highly acute care, I couldn’t stop pondering about his health insurance.

Health insurance is a bizarre creature. Unlike other forms of insurance, people actually want to consume what they’re insured against, defying the very premise of the insurance model!

Confused? Let’s dive in.

No one wants to consume traditional insurance

People never file claims for traditional forms of insurance unless something bad has happened, like car or home accidents, natural disasters, or death (covered by life insurance). In some of these cases (like minor fender benders), the insured customer often elects not to file a claim in order to avoid a premium increase. When people do file traditional insurance claims, that means something sufficiently bad has happened, and the insurance system kicks in place to recoup the damages.

People do want to consume healthcare insurance

Healthcare insurance is a wildly different animal. Only a small percentage of total hospital admissions are highly acute, catastrophic cases. A large majority of the care delivery system services non-catastrophic cases, from preventive care to counseling, scheduled (and elective) surgeries, and skin rashes, for example. Patients want as much (non-catastrophic) healthcare as reasonably possible, and they want their insurance companies to pay for it.

This is a classic principal-agency problem. The person making financial decisions isn’t bearing the cost of those decisions; in fact, the person making financial decisions is empowered to blindly spend without thinking. To make matters worse, many healthcare providers encourage patients to consume costly diagnostics and procedures with little regard for value, knowing that insurance companies will pick up the tab.

Realigning incentives

As it currently stands, this system breaks most of the basic assumptions of capitalism: the principal-agency problem, pricing information, and ability to compare producers/providers.

Reducing demand and utilization of healthcare resources is impossible. Since patients are currently incentivized to demand unlimited care without caring about cost, supply will always find a way to satisfy demand. So, how can we realign the incentives to fix the system?

The only way to reduce demand is to make patients accountable for their own healthcare expenses. With the insurance customer suddenly conscious of the cost and value of their subacute healthcare consumption, providers will be incentivized to compete and offer lower costs.

Thus, insurance companies should provide patients “catastrophe-only” plans. These plans would fully and generously cover highly acute care needs, like trauma, cancer, or stroke care. However, like a vehicle insurance plan without comprehensive coverage, the cost of treating the medical equivalent of a keyed car (e.g. a purely speculative blood test) would fall to the individual.

As CEO of a company in the healthcare space, it pains me to know that I’m contributing to the healthcare incentive problem by providing employees with a traditional healthcare plan. But until healthcare insurers offer catastrophe-only plans, patients will continue to blindly consume. In fact, even the Affordable Care Act failed in this light; the national and state-based exchanges don’t offer a single catastrophe-only insurance plan. They are all bundled and are ripe for unbundling.

You Better Stay Healthy, or Else…

Posted on June 23, 2014 I Written By

Kyle is CoFounder and CEO of Pristine, a VC backed company based in Austin, TX that builds software for Google Glass for healthcare, life sciences, and industrial environments. Pristine has over 30 healthcare customers. Kyle blogs regularly about business, entrepreneurship, technology, and healthcare at kylesamani.com.

As I read Jonathan Bush’s new book, Where Does It Hurt? the most salient problem that Bush discusses is that hospitals can’t effectively measure or attribute their costs. As a result, they can’t make good decisions since they don’t know how to attribute costs and revenues.

Although this has been widely known for sometime, the implications of this are particularly interesting. Since hospitals don’t know how much it costs to actually deliver care (especially multi-faceted, complicated care), their various revenue streams are effectively subsidizing their expenses in an almost random manner. Accounting for costs and attributing revenue is nearly impossible.

Bush notes that more focused care centers – such as standalone labs, imaging centers, and minute clinics – can afford to offer many of the same services as hospitals with equal or greater quality at a lower cost. They can achieve this because they have dramatically less operational overhead than hospitals and have staff performing the same core basic functions repetitively. Indeed, practice makes perfect.

There are hundreds of companies all over the country building healthcare practices based on this very premise: labs, imaging, procedures, home health agencies, ASCs, birthing centers, cath labs, urgent care, retail clinics, and more. Focused-centers are slowly eating away at hospitals by providing better services at lower costs.

Today, hospitals make enormous profits by dramatically marking up routine procedures and services. But that won’t continue forever. As the ACA pushes patients towards high-deductible plans so that patients act more cost consciously, they will seek the more affordable alternatives. Patients will not agree to pay a $300 ER copay and $2000 MRI when the urgent care center down the street offers a $99 copay and $400 MRI. As patients make better decisions, hospitals will lose some of their easiest, most profitable revenues: extremely marked up lab tests, images, procedures, etc.

What will hospitals be left to do when their easiest, most profitable revenue vanishes? They will shift focus to what they do best: performing miracles. Hospitals will compete for high-end services such as-complex surgeries and intensive care. However, because routine services subsidize the hospital’s overhead, they currently offer surgeries and intensive care at a “discount.” When hospitals can no longer subsidize their complex care with routine care, hospitals will raise prices for the highest acuity services that can’t be performed elsewhere. If you thought acute sickcare was unaffordable, think again. The cost of complex care is going to grow dramatically in the coming years.

Why Is It So Difficult To Reduce The Cost Of Care?

Posted on April 17, 2014 I Written By

Kyle is CoFounder and CEO of Pristine, a VC backed company based in Austin, TX that builds software for Google Glass for healthcare, life sciences, and industrial environments. Pristine has over 30 healthcare customers. Kyle blogs regularly about business, entrepreneurship, technology, and healthcare at kylesamani.com.

By refusing to pay for readmissions within 30 days of discharge from a hospital, Medicare has sent a strong message across the healthcare industry: < 30 day readmissions should be avoided at all costs. As a result, providers and vendors are doing everything in their power to avoid < 30 day readmissions.

This seems like a simple way to reduce costs, right? Well, not quite…

The vast majority of costs of care delivery are fixed: capital expenditures, facilities and diagnostics, 24/7 staffing, administrative overhead, etc. In other words, it’s extremely expensive just to “keep the lights on.” There are some variable costs in healthcare delivery – such as medications and unnecessary tests – but the marginal costs of diagnostics and treatments are small relative to the enormous fixed costs of delivering care.

Thus, Medicare’s < 30 day readmission policy doesn’t really address the fundamental cost problem in healthcare. If costs were linearly bound by resource utilization, than reducing readmissions (and thus utilization) should lead to meaningful cost reduction. But given the reality of enormous fixed costs, it’s extremely difficult to move down the cost curve. To visualize:

Screenshot 2014-04-14 23.46.37

Medicare’s < 30 day readmission policy is a bandaid – not a cure – to the underlying cost problem. The policy, however, reduces Medicare’s outlays to providers. Rather than reduce (or expand, depending on your point of view) the size of the pie, Medicare has simply dictated that it will keep a larger share of the metaphorical pie for itself. Medicare is simply squeezing providers. One could argue that providers are bloated and that Medicare needs to squeeze providers to drive down costs. But this is intrinsically a superficial strategy, not a strategy that addresses the underlying cost problems in healthcare delivery.

So how can we actually address the fixed-cost problem of healthcare? Please leave a comment. Input is welcome.

Healthcare Pricing, Wiki Style EMR Editing, and Quantified Self Data – @nickdawson Edition

Posted on August 4, 2013 I Written By

John Lynn is the Founder of the HealthcareScene.com blog network which currently consists of 10 blogs containing over 8000 articles with John having written over 4000 of the articles himself. These EMR and Healthcare IT related articles have been viewed over 16 million times. John also manages Healthcare IT Central and Healthcare IT Today, the leading career Health IT job board and blog. John is co-founder of InfluentialNetworks.com and Physia.com. John is highly involved in social media, and in addition to his blogs can also be found on Twitter: @techguy and @ehrandhit and LinkedIn.

It’s time again for my roundup of interesting EMR, EHR, and Healthcare IT tweets. Today’s tweets all come from Nick Dawson. I don’t know Nick really well, but see him online quite a bit. Plus, I did a Google Plus hangout with him after TEDMED. He’s a very interesting guy and these tweets illustrate some of his thinking.


I’ve been hearing more and more of these cases and many of them are not even international. I’m not sure if the shift is because of the growth in high deductible plans, but there’s definitely a shift happening as far as awareness of what healthcare really costs. I hope we see a sea change in this regard.

Also, don’t underestimate the medical tourism part of this. I think there are going to be regions of this country and around the world that are going to battle for medical procedures. Eventually we’ll know that certain regions of the country are known for certain medical specialties just the same way we know Texas has oil and Nebraska has corn.


Just the thought of this will make many doctors stomach’s churn, but I like the concept. It would definitely need to be refined so there was a well defined chain of who edited what and when. Not to mention some sort of method for knowing when something was modified and by who. A novel concept, but not one I think we’ll find anytime soon.


I love to read stuff like this. I wonder if Nick pays for the action that happens. This is what really has doctors scared. Nick saved a visit, but the doctor missed out on the revenue that visit would have generated. It’s also why we need to start reimbursing doctors for online visits.

Major Healthcare Issues I Think IT Could Help Solve

Posted on November 16, 2012 I Written By

John Lynn is the Founder of the HealthcareScene.com blog network which currently consists of 10 blogs containing over 8000 articles with John having written over 4000 of the articles himself. These EMR and Healthcare IT related articles have been viewed over 16 million times. John also manages Healthcare IT Central and Healthcare IT Today, the leading career Health IT job board and blog. John is co-founder of InfluentialNetworks.com and Physia.com. John is highly involved in social media, and in addition to his blogs can also be found on Twitter: @techguy and @ehrandhit and LinkedIn.

Yesterday and today I spent my time at the Accountable Care Expo in Las Vegas. It was a small intimate event, but those that were there were some really smart people who knew a lot about healthcare and about accountable care organizations. It was quite the education for me. Plus, as with most learning, as I learned more about ACOs I realized how much more I still don’t know.

During the conference I started to think about something I’d heard quoted quite a few times. At this conference they said, “3% of patients are consuming 60% of healthcare dollars.” I’ve heard a lot of different numbers on this. I remember hearing that 10% of patients have 80% of healthcare costs. Regardless of the exact numbers, I’ve heard this enough to believe that a small number of patients drive a abnormally large portion of the healthcare costs in this country.

When you think about this, it becomes quite clear that these “expensive patients” are likely those with chronic conditions. That’s the easy part. The harder part is that I’ve never seen anyone analyze the makeup of the 3-10% that are driving up healthcare costs. For example, what if 90% of those “expensive patients” are chronic patients over the age of 65. Solving this problem would be very different than if we found that 50% of expensive patients are diabetics under the age of 20.

How does this apply to health IT? First, health IT should be able to sort through all the big data in healthcare and answer the above questions. How is anyone going to solve the problems of these “expensive patients” if we don’t really know the makeup of why they’re so expensive?

Second, I believe that some health IT solutions can be implemented to help lower the costs of these chronic patients. I’ve seen a number of mHealth programs focused on diabetes that have done tremendous things to help diabetic patients live healthier lives. That’s a big win for the patients and healthcare. We need more big wins like this and I think IT can facilitate these benefits.

Since this post has taken a slight diversion away from my regular topics, I wanted to look at another thought I had today about healthcare. This tweet I sent today summarizes the idea:

All of the numbers I’ve seen indicate that hospitals are the most expensive part of healthcare today. Hospitals are just expensive to run. They have a lot of overhead. They work miracles regularly, but they come at a cost. While more could always be done, I feel safe saying that many hospitals have squeezed out as much cost savings they can out of the hospital. This means that in order to save money in healthcare we can’t strip more cost savings out of hospitals. Instead, we need to work to keep patients from going to the hospital.

There are a lot of ways to solve this problem (I heard of one payer putting instacare clinics next to ERs to save money), but the one I hear most common is the need for primary care doctors to have a more active role in the patient care. If they had a more active role once a patient is discharged from the hospital, then fewer patients would be readmitted to the hospital.

How then can we structure a program for primary care doctors to be paid to keep their patients from being readmitted to the hospital? That’s the million dollar question (literally). Everyone I know would happily pay a primary care doctor a half a million dollars in order to save millions of dollars in hospital bills. That extra money might also help us solve the primary care doctor shortage that I hear so many talk about.

I can’t say I have all the solutions here, and I don’t expect these things to change over night. Although, I think these will be important changes that will need to happen in healthcare to lower costs. Plus, I think IT will facilitate an important role in making these changes happen. Imagine something as simple as an HIE notifying a primary care doctor that their patient was admitted or discharged from the hospital. This would mean the doctor could go to work. Now we just need to find the right financial mechanism to be sure they act on that notification.

I’ll be chewing on these ideas this weekend. I look forward to hearing other people’s thoughts on these issues.