Investigatory Journalists Expose McKinsey’s Soft Facts

Win One for the Investigatory Journalists

Dear US News Media,

Do you understand that the world does not revolve around you and your do whatever it takes, ruin as many people’s lives, so long as you can make a name for yourself as an investigatory journalist, no matter how many friends you lose or people you leave dead and bloodied along the way, just so long so you can make a name for yourself as an investigatory journalist, no matter how many friends you lose or people you leave dead and bloodied and dying along the way?

Sincerely,

McKinsey & Company

You (should) recognize the above quote from Zoolander, a fine film about the perils of the status quo’s fleeting and shallow obsession with fame and beauty. It came to mind given the recent controversy over a report released by McKinsey & Company on the effects of the Accountable Care Act (read: Obamacare) on levels of employer coverage. The usually solid management consulting firm really bit it on this one. A brief history:

• McKinsey & Company released a report two weeks earlier that definitively forecasted that about a third of employers would “definitely or probably” drop coverage for employees when the mandate takes place in 2014.

• This was a very bold, out of left field prediction that was not in line at all with other analysts’ predictions. The Congressional Budget Office (CBO), who scores and evaluates policy, and the Urban Institute, had entirely different predictions, even indicating that a class of small businesses may see improved coverage due to reform.

• As this study was such an eyebrow raiser, a slew of “investigatory journalism” ensued over the next few weeks, revealing a flawed methodology, controversy about the study’s authors and dubious conclusions all around. Some of these were described in a blog post by Nancy Ann DeParle, Deputy Chief of Staff at the White House.

• McKinsey posted a proviso in response. The thing is, it does not own up to the poor scientific rigor or their shoddy conclusions – rather they backpedaled about the “intent” of the survey, saying it was never intended to be compared to economic analyses.

In a nutshell, the report claimed hard impacts based on soft reasoning. The report turns out to be based on qualitative, casual surveying of employers – which is okay, and useful as a barometer in many cases – but carried strong language that suggests employers will be dropping coverage. The people surveyed did not all even understand what the ACA mandates meant, did not know their firm’s own medical insurance situation, and were not provided with any of this information as part of the “research” before being asked their opinions or assessments.

The real story here is one of PR and leadership. McKinsey dropped the ball on handling this situation properly. Everyone makes mistakes, and the way these large consulting firms often work, a team releases a story, the abstract gets sent to leadership, gets approved, and the piece is published. Fact checking is part of the process, but this particular report had few facts to begin with. We can at least give credit to McKinsey for not throwing their own people under the bus.

However,  in an era where crowdsourcing has upped the ante on accountability, give credit to the investigatory journalism that called out McKinsey for the sham facts they tried to inject into an already confusing and politically explosive health care reform environment. McKinsey’s brand will take a hit for this, and that’s a good thing. I suspect they’ll regain credibility soon enough however, so it may be too soon to start Eugoogoolizing them.

Silos, Bullets, and Billions

In light of health plans, vendors, hospitals and providers starting to get a sense of all the bullets they’ll have to dodge as a heavily regulated transformation process unfolds in the US healthcare system, here are some “bullets” related to recent events. We start with the AHIP conference last week:

• An interesting real-time poll at Deloitte’s presentation to the AHIP conference shows how health plans are thinking about health reform from a different vantage point. With regard to Accountable Care Organizations, the payer community is more worried about margins and rates than about implementation and technical feasibility. There is certainly a disconnect between payers, providers, and other stakeholders in these reform efforts.

• Chilmark Research, who was also in attendance, analyzes this disconnect with some examples. While I was not in San Francisco for the “confab” last week, having been part of the insurance world for the last three years I understand this phenomenon a little bit. Health insurers are focused on health reform, mandates, health insurance exchanges, not to mention market consolidation among providers and a latent arms race between payers and providers.

• Case in point – while ACO dialogue grows white hot (look at the 12 month Google search history), the IT industry is focused on the technical, the providers are focused on the money, and the payers are focused on the providers. AHIP filed a 22 page memo with the FTC at the end of May regarding their antitrust concerns around the shared savings program. They have two take-away points:

1. Since this is a new program on a new scale, administrators should be more stringent with oversight and review (read: monitor and regulate providers closely)

2. Administrators should review all program participants (i.e. providers) to safeguard against consolidation, which will bring a “potentially significant cost to consumers.”

• The letter also proposes a mandatory antitrust review for ACO’s involving > 50 percent of the provider market, but exempts ACO’s involving <30 percent of that group. This means that if a region came together and decided to form a thoroughly integrated delivery system with the majority of the hospitals and practices plugged in and sharing information, it would raise a red flag? Is anyone else’s head scratching right now?

• This also raises a flood of questions – How do you define markets – using HRR’s ? What about cost-shifting on the commercial side – isn’t this inevitable, and won’t it exacerbate already documented commercial price variation? Are “small h” health information exchanges supposed to be based on a defined provider market, and if not who is going to pay for them? The most important question, however is at what did we stop talking about building a better system for patients and devolve into jibberish?

• This brings us to the best blog post I’ve read in a while. Are federal health reforms just expensive political gesturing, or meaningful efforts to lower healthcare costs? As a nation, we’ve been using soft economic jargon to create a feel good dialogue about “addressing” health care costs, rather than lowering them.

• A vendor association wants alignment of multiple federal quality measurement initiatives such as MU, PQRI, E-Rx. Great idea – For all the talk of a measurement based, outcomes-oriented, ‘accountable’ health care environment, the current garden salad approach to performance measures is like asking baseball and basketball players to use the same scoring system. Unfortunately, this seems unlikely to happen, and will probably factor into a delay of stage 2.

• A KLAS report identifies top IT consultant/advisory firms based on several attributes. It’s interesting to try and get a handle on this landscape given how much Health IT money will be made by consultants in the next decade. One report put it at over $ six billion within the next four years – A compound annual growth rate of over 18 percent seems unreal. To paraphrase Mel Brooks, it’s good to be in Health IT.

We are Stepping on Eggshells

…as a society when it comes to health care costs at the end of life. This is a controversial topic politically, but it is a no-brainer in most other cases. If someone has an advanced illness and they are very old, we don’t have to cure them just because we can. In many cases it doesn’t make a big impact on anyone’s quality of life or their longevity. In all cases it costs us a whole lot of money.

We have done a great job advancing medical science, and a great job of understanding the economics of health care delivery. Unfortunately, the two sides are not talking to each other, and we are burning billions each year because of it. Check out my latest Healthglobe post for more.