Kobe, on Desire

“Sometimes you want something so much that it slips away from you because you’re holding on too tight. You have to be patient. Even though you want it, you have to understand the best way of going about getting there. You have to stay focused on that. You can’t allow frustration or urgency to kind of choke the process.” – Kobe Bryant

Celebrating World Markets

…may be shortsighted. Homi K. Bhaba poignantly explains further:

“There is a kind of global cosmopolitanism, widely influential now, that configures the planet as a concentric world of national societies extending to global villages. It is a cosmopolitanism of relative prosperity and privilege founded on ideas of progress that are complicit with neo-liberal forms of governance, and free-market forces of competition. Such a concept of global development has faith in the virtually boundless powers of technological innovation and global communications. It has certainly made useful interventions into stagnant, state-controlled economies and polities and has kick-started many societies which were mired in bureaucratic corruption, inefficiency and nepotism. Global cosmopolitans of this ilk frequently inhabit ‘imagined communities’ that consist of silicon valleys and software campuses; although, increasingly, they have to face up to the carceral world of call-centres, and the sweat-shops of outsourcing. A global cosmopolitanism of this sort readily celebrates a world of plural cultures and peoples located at the periphery, so long as they produce healthy profit margins within metropolitan societies. States that participate in such multicultural multinationalism affirm their commitment to ‘diversity’, at home and abroad, so long as the demography of diversity consists largely of educated economic migrants – computer engineers, medical technicians, and entrepreneurs, rather than refugees, political exiles, or the poor. In celebrating a ‘world culture’ or ‘world markets’ this mode of cosmopolitanism moves swiftly and selectively from one island of prosperity to yet another terrain of technological productivity, paying conspicuously less attention to the persistent inequality and immiseration produced by such unequal and uneven development.”

(from Preface to the Routledge Classics Edition of ‘Location of Culture’)

I was most recently reminded of the one-sidedness of such glorification of ‘world markets’ in reading this article about Bangalore. Think about the last article you read about India. I bet it was either about a lot of people who died in some natural disaster, or about  the market potential of the region (or the failure of that potential to actualize).

“Zakaria for Sale”

Here is a trenchant look at one of today’s renowned pundits. Does his intricate web of speaking engagements, honoraria, and written endorsements make him an unfit journalist? Or are our “thought leaders” exempt from scrutiny?

“Intellectual,” however, does not seem the most apt term to apply to Zakaria. His authority seems to be grounded not so much in the power of his intellect (though he is very smart) as in the power of his influence—the simple fact that so many people, especially important people, talk and listen to him. He is what contemporary parlance calls a “thought leader.” And as a thought leader with multiple platforms and rich compensation for airing his perspective, he is also a “brand.” When people pay Zakaria for comment, they are not so much paying him for the intellectual process he has taken to form it, but for the comment itself and the sanction it grants. Zakaria’s opinion is a seal of approval that confirms smart and eminent people—people like Zakaria, who strategize at the Aspen Institute, attend the G8 Summit, or talk shop with CEOs and consultants at conferences on energy security—think one way, and therefore you should too.

(hattip to 3QD)

Mark Bertolini at HIMSS

Mark Bertolini, Aetna’s CEO, gave a nice talk this afternoon. The victim of a bad ski accident that left him with neuropathy, a fractured neck and a still immobilized left shoulder,Bertolini is also a father to a son with a rare genetic disorder, to whom he has also donated a kidney. He’s also one of the few Fortune100 CEO’s who tweets. He covered the challenges of healthcare reform in today’s environment, as well as introduced Aetna’s latest foray into consumer healthcare in iTriage. Here are a few of the interesting thoughts that I wrote down:

• The Future of healthcare lies in Uncommon Connections.
• Healthcare to the patient today is like a hockey game: everyone has their own puck.
• Supply and Demand: In 8 years, we’ll have a 90k physician shortage. In 17 years, all baby boomers will be 65 or older.
• Introducing efficiency into our health care system is the only way forward. No Margin, No mission.
• Consumers are becoming more prepared to discuss their health than their doctors are. This is a one-way street: 500 million consumers around the world will be using health care apps in 3 years.
• It’s important to differentiate between “patients” who receive medical procedures and “consumers” who want to fit health more broadly into the rest of their lives. Convenience will be King for the latter.

 

Biz Stone at HIMSS 2012

Biz Stone just gave a keynote at the HIMSS 2012 conference. Here are the high level takeaways from his speech.

Lessons from Biz’s life

• We’re not built for understanding a world of limited information. Einstein said “Info is not knowledge.”  More info is not more knowledge…we need understanding to go with it.
• It’s not a triumph of technology, it’s a triumph of humanity.
• Opportunity can be manufactured.
• Creativity is a renewable resource.
• To succeed spectacularly, be ready to fail spectacularly.
• There is compound interest in altruism. Start now and align yourself with a cause. Over time you will have an impact.

Seven Assumptions

• We can change the world, build a business, and have fun. (You need all three)
• We don’t always know what’s going to happen
• There is a creative solution to any problem
• There are more smart people outside our company
• We will win if we always do the right thing for our users
• The only deal worth doing is a win-win deal
• Your co-workers are smart and they have good intentions

The Evergreen State’s Insurance Rate Hikes

Washington is called ‘the evergreen state.’ The name apparently also applies to the health insurance plans in the state. The state insurance commissioner is trying to make three of the state’s biggest insurers cough up their surplus cash reserves. The way it’s supposed to work under the Affordable Care Act, states can only hike up premiums by a certain percentage each year, which needs to be approved by the state commissioner.

The problem is, while these three companies have been jacking up rates year over year (as any insurance plan in the country probably does), they’ve been stockpiling a collective $2.4B in cash (as any insurance plan in the country probably does). The irony is that these are ‘not-for-profit’ insurers. (Now, I consulted for not-for-profit insurance plans for several years, including one of the plans featured in the story, and despite the easy sarcasm you can come up with, I really do think that we’d all be better off if our health plans weren’t reporting ‘profits’ made from our health to shareholders. But that’s a different story.)

Look at these two graphs, it really tells the whole story:

 

Of course, a healthy health plan needs some levels of reserves in order to cushion against the risk of insuring millions of lives. That’s just how insurance works. What level of surplus or cash reserves is acceptable, however, is a more nuanced question. What the commissioner wants to do is to make health plans dig into those deep pockets before asking beneficiaries to cough up more dough year over year. Alternatively, there’s even the idea being tossed around that those health plans ought to issue refunds. It will be interesting to see how this plays out, because it could easily have national ramifications for non-profits around the country.

Doctors and Technology: Working Together to Improve Value

A recent article and accompanying editorial from the Annals of Internal Medicine covered the topic of value and cost in healthcare. It was an interesting read because unlike most of the policy/pundits’ takes on the issue, it revolved around the physician’s role in addressing the challenge of high costs. As clinicians are at the point of care, the article specifically focused on the decision to order screenings and diagnostic tests.

There is a distinction between cost and value in medicine. High costs are not necessarily ‘bad,’ so long as they provide appropriate amount of benefit for the amount spent (think of it as a high ROI). This is the definition of value. In the article, the authors identified 37 procedures selected by a physician workgroup which “clinicians often use in a manner that does not reflect high-value, cost conscious care and does not adhere to currently available clinical guidelines.” In a phrase, evidence-based medicine (or depending on the political cycle, the death panel.)

Assume for a second that X is the number of tests ordered by a physician today, and Y are the number of those tests that are unnecessary. Where we ought to be heading then, is to maximize the value of “Y.” There are two parts to this: Physician behavior change, and system improvements.

• Physician Behavior Change: The article outlines three driving principles surrounding improving judgment related to ordering imaging or other diagnostic tests: Don’t test if the result won’t change patients’ outcomes. Don’t test if there’s low probability of a disease, because you raise the risk of a false-positive diagnosis. Don’t consider just the cost of the immediate procedure, but also the downstream associated costs. To some extent, these three principles all hinge on the availability of dependable, rigorously tested guidelines that physicians actually trust.
• System Improvements: But even if we ask doctors to get it right every single time, it won’t be enough to optimize the X-Y value equation. The editorial had an important point that doctors may sometimes order exams just because it’s easier than tracking down the old test. It’s important to see this as an area ripe for a health IT intervention. For example, a Humana study with the Wisconsin Health Information Exchange showed that ED Patients whose data was referenced on the HIE cost $29 less on average than their control counterparts. The savings came nearly entirely from reduced imaging and diagnostic costs.

Healthcare is one of the most complicated fields there is, and part of that is because of the miasma of stakeholders: Doctors, Nurses, patients, family members, administrators, vendors, payers, policymakers, just to name categories. With a huge problem like ballooning healthcare costs, it will truly take a village to work together. Overuse of imaging is a clear opportunity area: One CBO study has estimated that up to 5% of our nation’s GDP is wasted on redundant testing in healthcare. Identifying a specific problem like this, and then figuring out how to dovetail advancements in medical efficiency and evidence-based medicine with the promise of new but proven technology will be the path forward to lowering avoidable costs in our healthcare system without compromising the quality of care and level of patient safety.

Small Businesses and the Job Creation Myth

Texas governor and Republican presidential nominee-hopeful Rick Perry released his economic recovery plan this week. Among other conservative policies, it includes a flat tax provision. In a video interview explaining – and I use that word loosely – his plan, Perry harps on the idea that easing up tax and regulatory burdens on the wealthiest folks will incentivize them to invest capital into businesses – i.e. job creation.

How well this plan would actually work is a debate I’ll leave to others. I was more interested in the continued allusions to the mystical job creation engine. Political candidates and average Americans, myself included, have a tendency to romanticize small businesses. This is largely due to a casual lumping of small businesses with entrepreneurship into the same slice of American Pie.

In the post Steve Jobs era, the search for the next Apple, Facebook or Google is running full steam. In the post Office Space, 4 Hour Workweek era, startups and self-employment have become the new thing. But is entrepreneurship really the same thing as small business, and can we pin our hopes for new jobs on a collective set of fantasies and daydreams and VC funding? Probably not. While everyone wants to be rich, the majority of small business owners interviewed by two UChicago researchers stated their motivation was the freedom and flexibility, as opposed to a plan to grow.

Here’s some more dirt on small businesses in America:

• 90% of companies in the US are small businesses hiring fewer than 20 employees.
• Just over 60% of small businesses have 4 or fewer employees.
• Big companies (defined here as 20+ workers) hire 80% of workers in the country.
• The strongest economies have more workers in large companies (read the Yglesias quote)
• Small businesses tend not to grow well – 80% of small businesses between 2000 and 2003 didn’t add a single employee.
• Between 2007 and 2010, small business failure increased by 40%.

It’s kind of a mixed bag. Small businesses are undeniably a vital part of our economic makeup, and a growing part of our national identity. But do they really carry the cure for our economic woes?

With regards to economic development, which is essentially what the jobs-creation debate is all about, we can turn an eye towards emerging markets to see what’s been successful there (If you’ve read this blog before, you know that means India) The answer? Big companies are the king of the jungle. Big companies employ the richest people in all nations, have drastically higher rates of productivity, and are the biggest job creation engines in their local and regional markets. A pair of Dartmouth economists summarize: “hope of economic development lies in the creation of large registered firms, run by educated managers and utilizing modern practices.” An MIT study found that in India the average microenterprised shop pulls in $133. A year. People long for a job at a brand-name firm – for workers, big company jobs mean better benefits and higher salaries. The conventional attitude in countries who are adding jobs daily is just that, conventional: work for a big name company if you can. Only two percent of the recent graduating class at India’s top B-school started new businesses, for example.

However, common sense tells you that in developing countries, where people are looking to “make it” in the big cities with flashy jobs, there is a social status associated with working at a high end firm. One of my cousins in India has worked for Infosys and now works for Cisco, and he feels like kind of a big deal. Just as the corporation has been part of the modern worker’s identity in America and other capitalist economies, we’re seeing that idea take root around the world. But those cultures, who can tend to look westward for popular inspiration, aren’t immune to the lure of being one’s own boss. Case in point, my other cousin (the younger brother) is more entrepreneurial and left his job at Wipro to look for an overseas position or a startup idea.

The facts say that starting and growing a business anywhere is just plain harder. They have tighter profit margins and thus less room for mistakes. There’s diminished access to credit markets, particularly in a bad economy when much bank lending has dried out. For small manufacturers, despite the rise of Web-enabled production arbitrage (see: alibaba.com) they often have less access to export markets. The list goes on.

Despite this, people get dollar signs in their eyes thinking about their homegrown company, which has now been reduced to some pages of code, folding into a lucrative corporate acquisition, or being the next household name your grandma is using on her iPhone. In doing a recent market research project about the mobile health and tele-health markets, I was dumbstruck by the dozens of startups who have secured thousands to millions of dollars in funding. There’s also the intrinsic appeal: the thrill of the chase. Having ventured out on my own over the last five months and having been involved with startups for over two years now, I can attest to the creative rush and simple fulfillment of flexible hours and more project ownership. Working remotely is nice, too.

Pinning our hopes of economic recovery on small businesses then, seems less a practical idea, and more of a populist appeal. This seems fine in theory – but it is troublesome when policy positions that are supposed to help turn things around are based on scoring political points rather than facts.

So while no one’s hating on the new American dream of entrepreneurship, or saying small businesses are trivial, we should be careful not to conflate the two in terms of job growth for our nation. Jobs happen when companies grow. Big companies can grow at a faster clip. So in theory, it should make sense to we focus our big guns (corporate policymaking) on helping big businesses do well. But is Perry right about easing up the tax burden on the top of the pyramid? The Occupy Wall Street movement doesn’t think so.

The problem is when additional money is siphoned towards the top rather than getting re-invested and re-distributed. OWS and the 99% movement is the angry cousin of the idealist entrepreneur. Part of the appeal of small businesses is emotional – you know these people, you can see them in your neighborhood, and they aren’t tooling around in corporate jets on taxpayers’ bailout money. So while small business growth can’t provide the shot in the arm for job creation that we need, corporate America has proven it’s an irresponsible steward of our human resources. Maybe everyone should just start their own business.

Moonshine and Fool’s Gold

The social media bubble is inflating.

I was out in Boston yesterday with some friends. We wound up on a roofdeck for a while with a terrific view of the Prudential building in front of a near full moon:

While admiring this backdrop we discussed future plans, travel, relocation. Two of the people I met both mentioned they’re headed west in the coming months. One was a girl who had just finished her undergrad degree and was headed to the Bay Area to find a job in in marketing, PR or social media.

When I suggested to her that tweeting, blogging and using other SM outlets were an underrated way of finding connections and landing jobs, particularly in SF, she rolled her eyes. She didn’t have a Facebook or Twitter account and ‘really couldn’t be bothered with the whole social media thing.’ When I asked why she was looking into a social media job if she didn’t believe in it, she responded, ‘because that’s the big up and coming thing now.’

The funny thing is, I had just read an article  earlier in the day about the startup culture out west in Silicon Valley – this scene illustrated it perfectly. For all the young, intelligent talent and promising tech startups out there, there seems to be a general sense of complacency when it comes to tackling new challenges. Instead, so many new businesses seem to be re-hashes of the same few ideas, focused on specific market segments or niche audiences. Even worse, the promise of social media as a true force for making society better is being increasingly glossed over as businesses integrate web engagement into their operations. Things will probably continue down this road as we start inflating the bubble with IPOs over the next few years.

Without getting too cynical, it’s worth noting that the social media startup scene is not without its share of altruism. The second soon-to-be-San-Franciscoan was a guy a  few years out of school who was joining a company to work on ‘a Tumblr clone geared towards people with Autism.’  With so many photoshare clones, check-in plug-ins and recommendation apps, it was nice to hear about a more solution-oriented idea of leveraging social media taking root through a startup company.

I’m sure there are plenty of others who are working on ideas that are going to change the world for the better. Those with true passion and vision are probably too busy working  to be drinking beers on a rooftop, anyhow. The bottom line is, people go where the money is, and it’s well documented that social media is a new goldmine. Launching the next foursquare will be tough – but  improving the design of existing products, apps or programs is frequently a quicker path to entrepreneurial success.

It is always bothersome to see people settle for jobs that they are not really excited about – particularly when they are young and talented (both folks above went to top 20 universities.) The silver lining however, is twofold: One,  new ventures, however unoriginal, are cementing the legitimacy of social media startups as viable ideas through securing funding and paving the way for future innovations; Two, they are helping people gain employment and pumping money back into the economy.

Edit: just saw this on techcrunch.

Coakley Redux: Capitated America

EDIT: My father, a primary care physician of 30+ years, told me this post was way too nerdy for its own good. A better version appears at Healthglobe.

The Attorney General of Massachusetts, Martha Coakley, gained broad popularity in the health policy world last year when she released a report detailing the findings of a comprehensive market survey of providers and health insurers in the state of Massachusetts. Its release coincided with the emergence of a national dialogue about Accountable Care Organizations, and provided timely insight into the issue of market consolidation. I wrote about some of these issues earlier this year.

The original report’s primary finding was that those health care providers who charged the highest prices did not deliver demonstrably higher quality health care. Rather, they were reaping the benefits of an advantageous market position through network dominance, strategic partnerships and by exercising this clout over health insurers. As Massachusetts was the first state to implement universal coverage, this raised a red flag for the rest of the nation, whose collective eyes were fixed squarely on the health reform bill: simply covering more people will not be enough to fix our nation’s health care cost problem.

Global Payment is Expensive

Coakley released a second report on June 22. In addition to building on the conclusions of the first report, it delivers a set of insights about the nuances of building effective financing mechanisms in the current health care market. The six conclusions outlined are all worth reading, but the most interesting conclusion was as follows: “Globally paid providers do not have consistently lower total medical expenses.”

I’d agree with you that the headline “Capitation won’t always save money” is not groundbreaking news. Skeptics have been questioning the viability of global payments in the light of the start up costs of building ACOs as well as the ability of bonus payments to offset the perverse FFS incentives widely in place throughout the delivery system. Coakley adds a layer of evidenced analysis however, suggesting that capitated payments can work, but should not be considered a magic bullet by any stretch of the imagination.

Capitation might work, but there are a quite a few issues to iron out. First of all, any cost savings achieved will need to be reinvested into risk management and care coordination activities. The report contains an analysis of Blue Cross Blue Shield’s (BCBS) Alternative Quality Contract (AQC), which is an arrangement with six state providers to lower the total medical spend over a five year contract period while maintaining high quality scores. In the first year of the program, costs actually increased an average of 10 percent for those doctor groups, compared to 1.7 percent for non AQC providers. Part of this is because BCBS paid more for quality, another reason is because of infrastructure investments. While these increases are built into the program (and should not be taken as a criticism of BCBS’ foray into value based purchasing), they illustrate that before it will save you money, high quality health care can be expensive to set up.

• IT Sidenote – During the recent Health IT Summit in Washington, DC, BCBS of MA spoke on a payer panel about their AQC program. The speaker revealed the sophisticated data exchange model between the plan and provider: Excel spreadsheets that BCBS e-mails to providers, who populate it and send it back. This shows that A) it’s not just about the IT systems, but B) there aren’t these types of compatible, functional software solutions out there yet.

Second, global payment rates can be high; this can potentially deter physician referrals and/or muddle the incentive to bring down utilization. Third, relationships hold a trump card over price – physicians will refer to, and patients will seek care from, the specialists and hospitals who they know and trust.

More broadly, Massachusetts shows us that capitation needs some policy adjustments before being unleashed more broadly in the market. Providers are not used to managing insurance risk; capitation may spur further consolidation as practices try to safeguard against unpredictable costs by applying upward pressure to prices. Also, specifics of capitation need close monitoring – for example, if provider group A sets a budget of $200 per member per month but spends $205, and provider group B sets a $250 budget and spends $245, Group A may get penalized even though they are spending considerably less than Group B, who may get a bonus for “saving money.” As always, the devil is in the details.

Coakley is saying that as health reform moves forward, it is not the policy ideas that will drive success. It will take concerted efforts and hard work from all stakeholders – officials, providers, payers, patients, who all remain ensconced in their own worldviews. We can all agree to teamwork and cooperation as general platitudes – but the report suggests that a halfhearted reform will likely lead to further market inequity – meaning even further price and quality variation (emphasis added):

“We should not expect to fix the system by shifting the risk and responsibility for efficient care management from health insurers to providers through Accountable Care Organizations (―ACOs‖). A shift of payment methodology by itself is not the panacea to controlling costs. Moreover, the information we reviewed shows that the shift to global payments without other fundamental changes may not only fail to control cost, but may exacerbate market dysfunction and market inequities by establishing widely different per member per month rates based on historic pricing disparities.”