by Brian Eastwood

Fixing Healthcare Requires Netflix-Like Disruption

Dec 09, 20137 mins
Healthcare IndustryInnovationIT Leadership

Healthcare is broken. No one disputes that. No one lacks perspective on how to fix it, either. The challenge, though, is disrupting a system that makes more money treating sickness than it does preventing it. Technology and innovation can play a part, but so can flipping the entire care model on its head.

“I need to see a doctor.”

For centuries, that has been the lament of the sick, the wounded and the troubled. As advances in modern medicine help people live longer, surviving conditions that in the past would have killed them, more and more people say that every day.

To Fix Healthcare, Organizations Must Be Disruptive

Over time, this has placed tremendous strain on the healthcare industry. This is true in all parts of the world — but perhaps nowhere more so than the United States, where healthcare spending will approach $2.8 trillion in 2013 and reports that the yearly rate of increase is falling counts as “good” news.

There’s no shortage of ideas about how to fix what the Institute of Medicine deemed the quality chasm back in 2001. The federal government is encouraging providers to use electronic health records (and penalizing those who don’t), requiring a switch to the ICD-10 code set to identify diseases and treatments for billing purposes, establishing state-run health information exchanges to better share patient data, and implementing broad-based healthcare reform aimed at phasing out the lucrative fee-for-service payment model.

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However well-intended, such initiatives, so far, aren’t yet working. More than one speaker at last week’s MIT Innovations in Healthcare Conference described healthcare in the United States as “embarrassing,” while another half-jokingly thanked the audience for letting its tax dollars fund the care of dual-eligible, frequent-flier patients in Camden, N.J. — one of whom made 113 emergency room visits in a single year.

The conference, a joint product of MIT’s Sloan School of Management and its Industrial Liaison Program, covered a wide range of topics, from entrepreneurship and academia’s role in innovation to patient engagement and data analytics. As the event progressed, though, a common theme did emerge — perhaps patients don’t need to see a doctor right away, or even at all, to solve many of their health problems.

Healthcare Facing ‘Blockbuster Video Moment’

Dr. Jeffrey Brenner, executive director and co-founder of the Camden Coalition of Healthcare Providers, says healthcare is at its “Blockbuster Video moment.” The industry faces a Netflix-like disruption. Healthcare can either point to patients who begrudgingly continue to visit the nation’s volume-based, fee-for-service hospitals and call them satisfied, much like customers wandering the aisles of a video store on a weekend night, or it can embrace change before the bubble bursts.

Brenner’s healthcare delivery organization aims to do nothing more than bend the cost curve in one of the nation’s poorest cities. (He’s the one who thanked taxpayers for their support.) A 9-year analysis of the city’s three hospitals ERs showed that most visits involved low-income mothers and their children in need of care but unable to get appointments with a physician. The hospitals happily oblige; treating head colds is more profitable and easier than addressing more complicated conditions, as there are no referrals or consultations to manage.

Healthcare’s bubble stems from an industry with too many hospital beds, too many machines doing too many unnecessary tests, and too many specialists earning too much money and enjoying too much influence, Brenner says. There’s isn’t a shortage of doctors, he continues, but, rather, too many.

As Brenner sees it, healthcare needs half as many doctors, twice as many nurses and three times as many health coaches. Rushika Fernandopulle, co-founder and CEO of Iora Health, agrees.

Iora Health, with practices in four states, emphasizes the importance of team-based care. Each day begins with a practice-wide huddle; a doctor may lead one day, the secretary the next. There are no offices or “reserved” parking spaces. Practices have up to four times as many health coaches as physicians. Empathy drives decisions; physicians, nurses and caregivers are essentially asked to treat each patient like their own mother, Fernandopulle says.

Why do we need a dramatically different approach to healthcare? As Fernandopulle put it, you don’t build an airplane by putting wings on a ship. You build an airplane.”

Empowered Healthcare Employees Make Better Decisions

Such an approach isn’t limited to small practices. Kaiser Permanente, an integrated delivery network that operates in nine states, has been regarded as an agent of change for 70 years, says John August, associate director of the Healthcare Transformation Project at Cornell University Institute of Labor Relations. (August previously served as Executive Director of the Coalition of Kaiser Permanente Unions.)

Faced with the threat of strikes in the early 1990s, Kaiser responded by creating a labor-management partnership through which employees help determine performance-based outcomes. Such empowerment convinces employees that they are, in fact, part of the solution, August says. Once such solution: The proactive office encounter, in which a receptionist analyzes patients’ records while they wait for an appointment and schedules them for preventive screenings they would otherwise miss.

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The process is admittedly one filled with fear and failure, August says — understandably, some receptionists were reluctant to tell unknowing patients they needed cancer screenings. That’s all the more reason to make sure everyone in the office goes through the disruptive process together.

Every Bill for Hospitalization ‘Cost of Missed Opportunity’ to Do Better

It is, indeed, a disruptive process. Healthcare today approaches each office visit with what Brenner calls a “one-size-fits-all hammer” — whether an office visit is an annual physical or a post-operation follow-up, it’s unlikely to last more than 15 minutes. Clearly, this doesn’t serve patient’s needs.

It costs a lot of money, too. Recurrent hospitalizations for predictable complications relate to chronic health bring aggregated costs to the system, says Dr. Robert J. Master, CEO of the Boston-based Commonwealth Care Alliance. Put another way, $11,000 for a hospitalization represents the “cost of a missed opportunity.”

Fixing this means transferring risk to a clinical body that’s help accountable for patient care, Master continues. This, in turn, means redesigning the healthcare delivery system into one with interdisciplinary clinical teams who provide care in multiple locations; individualized care plans that promote home and community care; an attitude that views “primary care” as a concept, not a facility, and 24-7 availability in all settings, at all times.

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Yes, it’s hard — but since 2004, the Commonwealth Care Alliance’s senior care program, with 100 interdisciplinary teams working across 33 facilities, has seen half as many “expected hospitalizations” as similar fee-for-service organizations, Master says. “If it works right, the perception is more services, but costs are mitigated.”

‘Locked Knowledge Base’ Leave Costly Healthcare Routines in Place

In today’s environment, though, Kaiser and Commonwealth Care are the exception and not the rule. By providing greater incentives for treating sickness than not preventing it, and by doing so for so long, healthcare has made it increasingly difficult to challenge the cultural, political and financial forces that stifle innovation, says Dr. Heidi L. Behforouz, director of the Prevention and Access to Care and Treatment (PACT) Project at Boston’s Brigham and Women’s Hospital. “We have a lot of innovations,” she says. “The problem is finding the systems that accommodate them.”

Partners HealthCare is another such system, having rolled out an iPad app that asks patients a variety of health, wellness and quality of life questions. Patients see the data as a gauge, like a speedometer, highlighting their values or scores and comparing them to the norm. On the back end, the data is normalized, helping Partners quantify, trend, aggregate and compare data sets, says Dr. Gary L. Gottlieb, president and CEO of Partners HealthCare.

But most of modern medicine is defined by the “locked knowledge base,” with information of all kinds — training, educational, clinical and financial — kept in silos, says Lincoln C. Chen, president of the China Medical Board.

With no link between knowledge and the training cost associated with gaining it, restrictions on task shifting remain in place. That means receptionists can’t recommend a preventive screening, health coaches can’t call a patient at home and stitches cost more than $500 apiece.

Until this change happens, Chen says, patients will continue to say, “I need to see a doctor” — and the healthcare system will intuitively respond without acknowledging that each appointment only exacerbates the imbalances in the system.

Brian Eastwood is a senior editor for He primarily covers healthcare IT. You can reach him on Twitter @Brian_Eastwood or via email. Follow everything from on Twitter @CIOonline, Facebook, Google + and LinkedIn.