Should Hospitals Advertise?

by JHI Staff on August 13, 2013

A recent article in The New York Times by reporter Elisabeth Rosenthal raised questions about the way hospitals put together advertising related to the latest U.S. News & World Report “Best Hospitals” ranking. The Times article is a bit of a confusing knot, mixing together questions about the trustworthiness of hospital rankings, the appropriateness of advertising of rankings, and the appropriateness of hospital advertising in general, which are really three separate issues.

As I’ve written here and here, I have mixed feelings about rankings (probably biased by the fact that The Johns Hopkins Hospital has ranked in the top spot nearly every year).

In terms of advertising around the rankings, I agree with Rosenthal and some of the sources she quotes that it can be problematic, in part because it’s easy to use ranking information in a misleading way, and also because it raises at least perceived conflict-of-interest risks for rankers, who charge good money for the privilege of advertising associated with the rankings. The article suggests some of the advertising claims are abusive with the truth, and notes that health care ads are poorly regulated. I think those are plausible claims.

But the article goes on to criticize the fortune spent on hospital advertising—and not just advertising specifically around the rankings—as not returning much value to patients in an era where we are all staggering under health care costs and badly need to trim waste and make hospitals more efficient. To quote from the article:

For American hospitals large and small, it clearly pays to advertise, particularly in these tough economic times and with the Affordable Care Act poised to throw tens of millions of newly insured patients into the market. But for patients the rankings and, especially, the subsequent promotions generally have limited benefit, experts say….If such advertising often adds little in the way of useful information, it certainly adds to health care costs. Hospitals with more than 400 beds spent an average of $2.18 million on advertising in 2010, surveys have found. “We’re pushing $3 trillion in health expenditures, and one-third of that is waste,” said Dr. Eric Topol, chief academic officer at Scripps Health in California. “Those TV commercials saying ‘I got my cancer care at X hospital’ are a shame, definitely wasteful.”

I understand Dr. Topol’s skepticism. But one problem with this line of thinking is that advertising in any industry sector is rarely claimed by anyone to be a source of highly useful, top quality, trustworthy information for potential customers. It’s meant to influence potential customers by raising their awareness of the hospital’s claimed strengths, and by helping to establish positive associations with the hospital. It probably is a source of good, helpful information in many situations, but I don’t think most people see that as the main point of advertising.

Since, as the article notes, “it clearly pays to advertise,” it’s obvious that a hospital that doesn’t advertise would be at some disadvantage compared to others, presumably meaning it would get fewer patients, take in less revenue, and have to reduce its budgets—probably by a lot more than the cost of the advertising itself, since no one would advertise if there weren’t a belief that it brings in more than it costs. Many hospitals are hard-pressed as it is to invest in the people and tools they need to provide high-quality, safe care, and a lowered budget wouldn’t help. Some hospitals barely stay afloat at all. In other words, hospitals practically have to advertise, just to not lose ground in ways that absolutely could hurt patients. In that sense, advertising does return value to patients.

Of course, if every hospital in the U.S. agreed to stop advertising altogether, or to severely limit it by some formula, then in theory the advertising money saved by the entire health care industry could be channeled to better patient care. But aside from the fact that this sort of drastic and even bizarre move is hugely unlikely, it would probably carry all sort of unintended consequences relating to what hospitals would do in advertising’s place to ensure they got their fair share of patients.

Actually, though, I think there’s a bigger underlying question here that the article is sort of dancing around but never quite articulates: Should hospitals act like other businesses? Should they be aggressively marketing their services, and trying to find ways to raise their profit margins to fund improvements and the acquisition of new technology? Aren’t these sorts of pure business behaviors and goals at odds with the mission of trying to improve patients’ and communities’ health and saving lives?

I think the answer is: No, hospitals shouldn’t be exactly like other businesses. But they can be almost like other businesses in most ways, and can do an even better job in fulfilling their health-related mission as a result of it. Indeed, not running a hospital like a business invites a whole new set of potentially serious negative implications for patients.

But that’s a topic for another post.

Photo credit: wpmu.org

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The Seven Universal Hospital Board Room Conversations

by JHI Staff on August 9, 2013

I’ve been to meetings in more than 200 boardrooms in hospitals, health ministries and health care agencies around the world. These meetings have taken place in countries on five different continents. Some of them were in the most industrialized countries in the world; others were in developing countries. The cultures of the organizations and the local populations varied wildly. Some of these organizations had been around for decades; others had just opened. Some were giant medical centers; others were more like very large clinics.

What is striking to me in thinking back on all these meetings at all these different organizations is that in every case, the organizations were struggling with basically the same set of issues. Here’s a brief rundown of the apparently universal list of challenges health care providers are facing:

  • How to establish and maintain a highly trained clinical, administrative and technical-support workforce big enough to fully service the patient population
  • How to get fully reimbursed by the government, insurers or patients for all the services provided
  • How to hold down costs relative to other good and services in the local economy
  • How to nurture staff-to-patient and intra-staff interactions that enable clear communication and good relationships
  • How to establish a reputation for top-notch service quality
  • How to maintain a flow of capital sufficient for growth
  • How to afford and set up an effective information technology infrastructure

I think there’s good news and bad news in the apparent commonality of major problems faced by health care organizations of all types, everywhere. First, the bad news: the fact that everyone is struggling with these same issues, and has been for decades, suggests that these are fundamental challenges deeply rooted in the very nature of providing health care. And that, in turn, means that there won’t be any easy, sure, quick, simple solutions to any these problems.

The good news: As we make progress through hard work and innovation—and progress really is being made, here and there—the resulting improvements should in many cases prove portable and transferrable. That is, since the problems are universal, we may only need one organization somewhere to figure out at least a partial solution that can then be disseminated and adapted to health care organizations everywhere.

Of course, making solutions as universal as the problems requires some means of porting solutions between organizations. I think that’s one reason that collaboration is becoming increasingly important in health care. But collaboration can’t stop at the borders between countries. It will take a globally collaborative health care industry to make sure we have the best chance of creating, identifying and nurturing potential solutions wherever they happen to emerge, and promulgating them everywhere.

That global industry is just starting to come together now. Johns Hopkins Medicine International has been a big part of it from early on, but we want to see it grow well beyond us and a handful of other key players. I think that will happen over the next several years. And given the potential population-wide benefits of solving these thorny problems, it won’t happen a minute too soon.

It will certainly make some of those boardroom meetings more exciting.

By the way, I now have the honor of being a member of LinkedIn’s “Influencer” program, which means my LinkedIn posts about leadership and the health care industry are widely distributed among that social network’s members. You can check out my first few LinkedIn posts here:

www.linkedin.com/in/stevethompsonjh

Please let me know what you think, and please do tell me if you have any suggestions for topics you think I should address.

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There’s a new book out that addresses the raging debate over how to lower health care costs and improve outcomes in the U.S. Affordable Excellence: The Singapore Health System, by William Haseltine, head of an international health care nonprofit, holds up Singapore as an example of a country that has been able to provide better health care to a larger percentage of its population—virtually all of it—at a lower cost than the U.S. (The Kindle edition of the book is currently free, by the way.) Haseltine summarized some of his points in an article published on journalist-analyst-academic-talkshow host Fareed Zakaria’s CNN website. An excerpt:

We spend almost 18 percent of our gross domestic product on health care—an astounding amount of money translating to $2.8 trillion dollars per year. In contrast, Japan spends just over nine percent of GDP; France is below 12 percent; and the United Kingdom spends 9.5 percent....A recent survey by the National Institutes of Health looked at health care outcomes in high-income countries around the world, and we simply did not measure up....the unavoidable conclusion is that our system simply does not deliver....Countries like Singapore, South Korea, Japan, and Taiwan have developed systems that are better and less costly than ours. They spend roughly half the percentage of their GDP that we spend on care, yet they are healthier than we are, and their medical outcomes are in many cases measurably better than ours.

One of the specific recommendations that Haseltine offers for the U.S., based on what Singapore and others have done, is introducing higher co-payments for patients—getting them to have skin in the game—so they shop for better value and avoid wasting money on unnecessary forms of health care. This comes with a responsibility to make sure patients know exactly how much services really cost so they can be smarter shoppers. Another is to pay providers a relatively set fee to treat a patient with a given condition (so-called “bundled payments”), rather than being paid for the specific treatments and services they provide, to incentivize providers to produce the best results for the lowest cost.

I’m a big fan of looking for lessons from other countries to improve the U.S. health care system. In fact, I’ve written here before about what we can learn from Singapore (where Johns Hopkins runs a medical oncology facility).

Although I’m completely behind exploring internationally for ideas for improving health care value and outcomes, I fear it’s not always done with a sufficiently balanced approach. Yes, we should be looking for inspiration and new directions, but we also need to bring a bit of skepticism and a lot of context. For starters, and again as I’ve written here before, U.S. health care isn’t actually as bad as it’s made out to be when you take various factors into account. (Haseltine brings some of these points up, too.) But more important, the solutions that other countries have adopted, including Singapore, aren’t quite the panaceas they’re sometimes made out to be, both in terms of the results they produce, and in why they might not work well in the U.S.

Zakaria himself is an outspoken proponent of the U.S. adopting “better” health care systems from elsewhere in the world (for example here and here). I have great respect for Zakaria’s opinions, but on this subject he doesn’t seem to dig deep enough to spot the actual and potential problems with other country’s systems.

Here’s an excerpt from a Forbes article by Avik Roy, senior fellow at the Manhattan Institute for Policy Research, that highlights where Zakaria may be glossing over some of the challenges. Among Roy’s observations:

Zakaria opens by repeating some of the misleading statistics that are often tossed around about American health care. We have poor life expectancy (debunked here). We have poor infant mortality (debunked here). Etc. He then goes on to praise Britain’s National Health Service as a worthy model, soft-pedaling its terrible health outcomes, arbitrary rationing, and rapid cost growth. “Britain’s government-run system provides good care for all, and is more cost-effective than one might imagine,” Zakaria cheerily claims, while grudgingly conceding that “the quality of its care can shift as funding waxes and wanes.”

Then, after noting how Zakaria holds up Taiwan’s revamped health care system as a role model, Roy points out some issues with that country’s system:

Recent health spending growth in the Taiwanese system is similar to that of the United States: about 5 to 6 percent a year. While the Taiwan government has succeeded in raising premiums twice to cover the rapid spending growth, these premium increases have been unpopular, and it’s likely that future governments will find it difficult to enact further premium increases. “Don’t expect politicians to do something unpopular like that very often,” notes Zakaria.

Already, the Taiwanese system is spending more on health care than it is taking in on premiums, and borrowing to finance the rest. The government is starting to ration care to keep spending in line with revenues. When Taiwan’s single-payer system is 50 years old, like Medicare is today, it’s more likely to look like a failure than a success. Voters hold the line on premium increases, but have no control over system-wide spending. It’s a recipe for disaster.

Taking on Zakaria’s claims that Switzerland is “a version of Obamacare,” Roy says this:

“Imagine an alternate universe in which a version of Obamacare has been the law of the land for almost two decades,” says Zakaria in introducing the Swiss system. Huh?....While it’s true that one segment of Obamacare is similar to that of the Swiss system—the state-based exchanges for some lower-income individuals—the huge, and central, difference between Switzerland and Obamacare is that Switzerland applies this same model to the poor and the elderly. Obamacare, crucially, does not: instead, it leaves Medicare’s core structure intact, and indeed massively expands Medicaid to 17 million more people.

Not only that, but those who have tried to apply Swiss-style reforms to Medicare, like Paul Ryan, have been excoriated by the White House for seeking to impose a “radical” system that would force Medicare to “wither on the vine.” None of this, for whatever reason, bears mention in Zakaria’s program, in which he implies that conservatives are nutty and misinformed for allegedly opposing Swiss-style health care in America. Actually, it’s Zakaria who is misinformed.

If Obamacare truly converted the American system into Switzerland—by privatizing Medicare and Medicaid, and using the savings to expand coverage to the uninsured—President Obama could have gotten bipartisan support for his proposal. He proposed nothing of the sort.

I don’t mean to pick on Zakaria—he’s a brilliant, insightful commentator on many issues, and has some very smart observations to make about health care. But as much as I support the idea of looking at other country’s systems to see how they could help the U.S.—or any other country looking for better health care—we need to be very careful about thinking anyone has it figured it out yet. It’s largely a matter of trade-offs and adapting lessons from others, then integrating them into another system. Making health care work involves recognizing and understanding those trade-offs so that we can wisely choose among them.

Photo credit: cbia.com

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Paul Rothman, Dean of the Johns Hopkins School of Medicine and CEO of Johns Hopkins Medicine, recently announced our institution’s new strategic plan. The plan was developed over the last several months with the input of hundreds of faculty, staff and trustees. I hope many of you will take the time to look at it—it’s not a long read. I won’t excerpt it here, but what I’d like to emphasize is that of the six strategic priorities that compose the plan, global impact is explicitly listed in three of them.

Given our history, that isn’t surprising. Going back all the way to the mission laid out for us by Mr. Johns Hopkins himself, this institution has had an  impact well beyond the population that happens to live close to our hospitals—and even well beyond those who travel here to our hospitals from afar, as many do. (Helping to ease the challenges of traveling for care is an important part of what we do here at Johns Hopkins Medicine International.)

Johns Hopkins Medicine’s aim to have global impact has been embedded in our tripartite mission—patient care, medical research and medical education. Thus, for example, training new generations of outstanding physicians, most of whom will end up serving patients in other cities and countries, enables the institution to have impact on the quality of care for patients throughout the world.

In addition, by fostering the development of breakthroughs and new treatments in our research, we help discover and clarify for clinicians and health care systems around the world which practices and tools they need to help patients achieve better outcomes. Consider, for example, the work of  Johns Hopkins’ Armstrong Institute for Patient Safety and Quality, whose work and expertise has been drawn on by hospitals all over the U.S. and the world.

We also have the Bloomberg School of Public Health, whose faculty have been leaders in studying and implementing ways developing countries can enlist policy, education and outreach in order to improve population health and safety.

What we’re doing here at JHI is yet another, very different yet complementary approach to global impact. It’s an approach that’s a more recent addition to this already impressive line-up, as well as one that has required our doing a lot of pioneering work in a field that barely existed two decades ago. Our mission at JHI is to help other countries strengthen health care delivery, and where possible to help those countries create their own tripartite health care infrastructures. Working with local institutions, be it government agencies or private organizations, we help make sure these efforts have the needed expertise, practices, people and management required to get such ambitious projects off the ground, and to help them thrive and remain sustainable enterprises.

Whether it’s collaborating to help establish a series of local primary care clinics, as we’re doing in India; or adding specialty care to existing hospitals, as we’re doing in Peru; improving the clinical research infrastructure, as we’re doing in China; or helping to build and operate an entire tripartite medical center, as we’re doing in Malaysia, we’re trying to give populations everywhere a chance to get local access to the sort of high-quality, safe health care institutions that many Americans take for granted.

That these efforts have become a part of the overall Johns Hopkins Medicine strategic plan makes us very proud. Our colleagues throughout Johns Hopkins have long set an incredibly high standard of achievement and impact, and we are doing everything we can to be worthy of standing alongside them with our piece of the mission.

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When U.S. News & World Report’s “best hospital” rankings came out last year, I took the occasion to note here in this blog that The Johns Hopkins Hospital, after more than two decades of being the top-ranked hospital in the U.S., was knocked down to number two, behind Massachusetts General, following a methodology change in the ranking system.

Well, this year’s rankings are out, and I won’t pretend to be anything other than proud that we’re back to being ranked as the best hospital in the U.S.

It’s only fair to mention, however, that we need to be careful about reading too much into rankings, which are subject to a number of biases and interpretations. We know there are always ways in which we can, and must, do better. For one thing, medicine and health care are constantly identifying new treatments and practices, thanks in large part to the vast research enterprise going on here at Johns Hopkins and at many academic medical centers around the U.S. and the world. But in addition, this is a time of enormous challenge for health care, one in which we are trying to extend high-quality care to more people, improve health outcomes across the board, and—perhaps most challenging—do it while driving down costs and increasing value.

What’s more, whatever we achieve as a health care provider, as a research institution, and as a source of medical education in and around Baltimore, it wouldn’t by any means completely fulfill the Johns Hopkins Medicine mission. This institution has clearly stated from day one of our 124 years that it is dedicated to improving the health of all humanity. Whatever we can do for patients here, we will still have far to go as long as patients everywhere can’t get the same great care from their local hospitals and clinics. And ultimately, as part of that goal, we want to help ensure that populations everywhere are served by their own superb medical schools and top-notch medical research programs, because the best hospitals are dependent on them.

It would be nice to hang onto our top ranking in the years to come. But what’s more important is that we make progress in our broader mission, here and abroad—and let humanity be the winner.

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A Surgical Crisis in the Developing World

by JHI Staff on July 16, 2013

Anyone interested in the health challenges faced by the populations of developing countries should take a look at the article about the need for more surgeons in these countries in the spring issue of Public Health from the Johns Hopkins Bloomberg School of Public Health. It would be hard to more succinctly communicate the scope of the problem better than these excerpts from the article:

Of the 234 million major surgeries performed in 2008, only 3.5 percent took place in the poorest countries, whose people account for 35 percent of the world’s population. The World Bank estimates that 11 percent of the global disease burden is treatable by surgery. Two billion people have no access to surgical care....

[Bloomberg School researcher and physician Adam] Kushner and colleagues in Sierra Leone undertook a population-based survey to determine the prevalence of untreated surgical conditions in a country of 6 million, [and which has] approximately 10 formally trained surgeons....The researchers found that 25 percent [of the population] had a condition that needed surgical attention, and 25 percent of deaths in the previous year might have been averted by timely surgical care, primarily for pregnancy complications, injuries and abdominal conditions....Based on the Sierra Leone results and findings from a similar study in Rwanda, [Surgeons OverSeas] estimates that 56 million people in sub-Saharan Africa currently need surgery.

I think a lot of people in health care have overlooked this situation. For more than a century, the emphasis in bringing better health care to the developing world has focused on treating and preventing infectious disease. In the past few years, it has been slowly shifting to preventing and better managing heart disease, diabetes, cancer and other non-communicable diseases (NCDs). One of the main goals of programs to combat NCDs is to prevent or get control of illness before it gets to the point of requiring surgery. But there’s no getting around the need for surgery, and it’s often a matter of life and death.

In Johns Hopkins Medicine International’s work around the world, we’ve become all too familiar with the challenges of bringing high-quality, safe, surgical and specialty care to regions that haven’t had enough access to them. (And as the Public Health article notes, Johns Hopkins Medicine’s Global Surgical Initiative stands among the U.S. medical schools and hospitals that have established formal programs to help bring more and better surgery to the developing world.) The main problem is a lack of people in developing regions who are qualified to provide this higher-level care, and a lack of the resources and infrastructure needed to train future generations of specialty care providers and surgeons, who need several years of training beyond what primary care doctors require. (There’s a desperate need for more primary care doctors too, and skilled nurses are always in short supply…)

Bringing surgeons and other providers in from the U.S. and other more advantaged parts of the world may be the best way to address the problem right now. But while we should do as much of that as possible, we also need to continue to work on the only viable long-term solution: helping countries gain the capability to train their own providers, including specialty care physicians and surgeons. That’s an enormous task, and will take decades. But that’s no excuse for not starting now. We at JHI have certainly been thinking about lower-cost models for establishing the needed infrastructure and processes in less-industrialized regions. We haven’t come close to solving the problem yet, but we’re in it for the long game.

And speaking of trying to do something about the problem, I should point out that the Johns Hopkins University School of Medicine is among the sponsors of an upcoming event addressing this topic. Here’s an excerpt from the online description:

The International College of Surgeons (ICS), the International Federation of Gynaecology and Obstetrics (FIGO), the World Federation of Societies of Anaesthesiologists (WFSA), Johns Hopkins University School of Medicine, and the Ministry of Health of the Government of the Republic of Trinidad and Tobago invite you to join the inaugural World Congress of Surgery, Obstetrics, Trauma and Anesthesia (WCSOTA), taking place October 16-17, 2013, at the Hyatt Regency Trinidad, Port of Spain, Trinidad and Tobago. This premier meeting will bring together regional and international experts from the public and private sector to share the latest research, technology and innovation surrounding the global delivery of surgery, obstetrics, trauma, anesthesia and nursing.

Call for Abstracts: Submission Deadline: Thursday, August 1, 2013

We invite you to submit an abstract to be considered for oral or poster presentation at the WCSOTA. The WCSOTA will focus on addressing global surgical care challenges within the context of accessibility, sustainability and evidence-based practice, encouraging collaboration and knowledge sharing across disciplines....

I hope anyone in a position to be a part of this cause will consider participating.

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“Big data” has been a hot topic for the past several years. The term can refer to making use of any massive, complex collection of information, but one important application is that of building and then “mining” massive databases of information about consumers. This form of big data is supposed to provide organizations with insights about their customers that can help with creating, improving and selling products and services. That includes health care, where big data is envisioned as allowing crunching through a vast ocean of patient information in order to lower the cost and raising the quality of health care.

On the other hand, big data has been getting some mixed press lately. An article in The New York Times, for example, noted how big data hasn’t always delivered on promises to make cities more livable. A CIO magazine article was among those reporting how the person who masterminded the Obama campaign’s brilliant use of technology in marshaling supporters online recently declared that “big data is BS.” And a long, thoughtful article in Foreign Affairs (behind a pay wall) detailed some of the reasons why big data, though in many ways an exciting development, may in some cases be hard to pull off and disappointing in what it can deliver.

I do happen to believe big data will be a boon to health care. As health care focuses more and more on chronic illnesses such as cardiovascular disease, cancer, diabetes and Alzheimer’s, a lot of provider emphasis will shift away from expensive hospital-based treatments for acute episodes (such as cardiac surgery), and toward ongoing, simple, outpatient and even home-based preventive efforts (such as controlling diet and monitoring blood pressure). The latter sorts of care can be much more successful if big data is there to alert clinicians as to which patients need outreach or close watching in order to head off serious illness, and to generally keep patients healthier—all at a much, much lower cost than waiting for these patients to become seriously ill and require hospitalization.

But having said that, I agree that a certain amount of skepticism is appropriate when it comes to treating big data as a panacea, or even a game changer. For starters, data mining won’t be able to catch all the complexities of which patients need what interventions. No computer yet invented can match the power of the computer sloshing around in the skull of a highly trained clinician when it comes to recognizing that a patient may be heading for trouble, and deciding what steps—including simple monitoring—need to be taken to maintain or restore that patient’s health. Big data may help keep many patients from slipping between the cracks of health care attention, but the need to get patients in front of good clinicians won’t go away, and may in fact increase.

Equally important, the sorts of big changes we need to make in health care in order to significantly lower costs and improve outcomes must go far beyond doing a better job of gathering and analyzing patient data. We need to be able to provide far more primary care. We have to completely revamp the way health care providers are reimbursed. We have to get consumers to adopt healthier behaviors, and make wiser choices about how to spend their health care dollars—and we should get employers and insurance companies to give them plenty of incentive for doing so.

So yes, let’s push ahead with pulling together more data and doing more with it. But let’s not allow our hopes for it to justify putting off tackling the bigger challenges in front of us.

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I saw an interesting article in the journal Foreign Affairs recently that traces the rise in popularity of a programming language called Lua for building webpages and software interfaces. To summarize, the language was developed by three relatively obscure researchers in Rio de Janeiro, Brazil, and ended up being enlisted by the developers of World of Warcraft and Wikipedia, two of the best-known software and online services in the world.

Normally I would quickly glance over the story of a programming language, and I wouldn’t know World of Warcraft if I woke up inside it. But this story caught my eye because it touches on a theme that we think about here at Johns Hopkins Medicine International quite a bit—namely, the push and pull between local and global approaches to building and upgrading health care infrastructure.

The term “global” is a little misleading in this case. We’re definitely global, as in worldwide, and even call our emerging field global collaborative health care. The key issue here, rather, is that a solution can be specifically suited to the needs of a local environment, or it can be designed as a “one-size-fits-all,” or universal, solution.

In the case of a programming language, “global” and “universal” are more or less the same thing, because what makes a programming language globally popular is how universally it can be applied. As the Foreign Affairs article puts it:

The world of software is dominated by network effects: The more people use a piece of software, the more valuable it becomes. This is particularly true for programming languages. For engineers, going with widely used languages means access to more jobs that require knowledge of those languages and more ready-built modules in that language to repurpose. For employers, using a popular language makes it possible to hire from a larger pool of engineers.

Not so much in health care, it turns out. Johns Hopkins Medicine has a global reputation for excellence in health care, research and education. Many people from around the world, as well as the U.S., come to Baltimore to entrust their care to us and work alongside us. But that’s a very different thing from saying that what we do here in Baltimore is universal, in the sense that it would work well in any other place in the world. In a sense, we’ve developed a local solution that has won us a global reputation.

That what we do in Baltimore is not a universal solution is something we learned the hard way when we first started collaborating overseas in the 1990s. We had assumed that our practices and processes and even some of our people could be neatly transplanted to other countries in order to create Johns Hopkins-like hospitals in those places. Since global collaborative health care didn’t fully exist yet, there was little evidence to suggest that wouldn’t be the case.

We quickly learned that wasn’t the case. Different countries, and even different parts of the same country, typically have different ideas about what makes great health care, how it should be delivered, and who should be delivering it. It seems obvious now, but at the time it was a bit of rude awakening. In the early days we had to struggle to learn how to adapt what we do here in Baltimore to others’ specific needs, resources and cultures—all in collaboration with our partners, of course. And now we go into each new project assuming that we’re going to have to rethink much of what we’ve done elsewhere in order to be successful. Knowledge transfer is very much a two-way business for us.

Software, in fact, may be the exception more than the rule when it comes to the global appeal of universal solutions. The network effect doesn’t much apply to food, entertainment, or cars—a Volkswagen isn’t more useful or appealing to a U.S. consumer because identical models are popular elsewhere in the world. Most products and services are more successful when they’re tailored to local needs and preferences, and that’s very true of health care.

Of course, that doesn’t mean there aren’t aspects of health care that are fairly universal. If we had to completely reinvent health care every time we came into a new project, global collaborative health care wouldn’t be much of an industry. Many of our practices, such as improving patient safety, mentoring younger clinicians, and promoting the importance of nursing, have all so far proven applicable and even necessary in every country we’ve worked in. As with so many things, the best solutions come from finding the right balance between two opposing approaches—in this case, providing the aspects of health care that make sense to just about everyone, and those aspects that might vary from region to region.

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A few months ago, Steven Brill’s cover story in Time magazine (behind a pay wall) about health care costs opened a lot of people’s eyes to discrepancies, inequities and a lack of transparency in hospital pricing in the U.S. Brill argues in the piece that controlling the way health care services are priced would go a long way to fixing what ails the U.S. health care system, which is famously regarded as failing to deliver the bang for the buck that many other countries get from their health care systems.

Brill is hardly alone in pointing the finger at pricing problems; it’s a common refrain these days. But I think it’s somewhat off the mark. It’s true that pricing needs to be transparent, and it’s also true that some people get whacked paying much more than others for the same services, due to uneven insurance coverage among other reasons. But pointing at these pricing problems as the essence of the problem doesn’t really come close to getting at why costs are high in our system.

Let’s step back and look at the big picture. Are hospitals raking in obscene profits? For the most part, no, hospitals typically struggle to break even. That should pretty much make it clear that the problem isn’t price gouging, because a lack of profits means pricing is only enough to cover costs. One could argue that physicians and administrators and others in hospital systems are paid too highly, but that’s a complex issue—there are the huge financial and time burdens physicians take on in training, for example—and it’s not something that most people see as the essence of the problem. Do health care insurers make too much money? Some might claim so, but again, it’s not at all clear that’s a major contributor to high health care costs, given the risks these companies take on. And we know the government isn’t making money on health care.

If no major party is getting ridiculously rich off of health care, then pricing can’t be the problem. The pricing is simply driven by the costs. There might be any number of pricing schemes for covering those costs, and sure, it’s fair to argue that a more transparent, consistent one that fairly distributed the burden would be better. After all, as Brill ably points out, some people end up, through bad luck and weak coverage, getting hit with ridiculous bills—though one might also point out the huge percentage of Americans who get very small bills for enormous levels of service, the flip side of our strange pricing system.

But play with pricing schemes all you want, it wouldn’t lower what people pay on average—it can’t, if the costs don’t change. If you want to solve the problem of high health care prices, you have to solve the problem of high costs.

Very generally speaking, there are two ways to do so: Change how much care is delivered, of what sort, and to whom; and change how efficiently it’s delivered. Obviously we’d like to avoid lowering costs by having to provide less care than is needed, or by providing worse care, or by offering it fewer people. (Though we could in theory get people to opt for less-expensive but still-effective forms of care, when such alternatives exist—a topic I covered in a previous post.) Thus the changes really have to get at finding new types of care that can be delivered in new ways that are at least as effective as what we have now—and hopefully more so—and delivering it more efficiently and cost-effectively.

The health care field is scrambling to do exactly that. No one knows exactly how this will play out, as is made clear by a recent article in HealthLeaders Media that looks at how the financial world is scratching its head over how to rate the financial viability of hospital systems given all the coming changes. But there is general agreement on a few key points: Health care needs to switch from basing its revenues on how much care it provides to how healthy it makes patients; it needs to focus on and better manage serious, chronic illness; it needs to place an enormous emphasis on preventive care; and it needs to turn to technology to deliver many of these services in a more cost-effective way.

I think all these things will happen in the U.S. I know we at Johns Hopkins are working to make it happen here and elsewhere in the world. But if the public and policy-makers place all their emphasis on rejiggering pricing schemes instead of on the true costs of health care, the progress may not be as sure and swift as we might hope.

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A recent study essentially made the case that hospitals are financially incentivized to botch surgery on patients. The prominently published study was co-conducted by highly respected surgeon Atul Gawande, who is with Boston’s Brigham & Women’s Hospital (and who is also a celebrated popular writer on medical care). From Healthleaders Media’s coverage of the study (linked to above):

The report, published in [the April 17] Journal of the American Medical Association, was prepared by Sunil Eappen, MD, Gawande and others. It analyzed 34,256 surgical discharges from an unidentified 12-hospital system in the southern part of the country. The analysis revealed that private insurers paid $55,953 when the patient had a surgical complication but only $16,936 when the procedure went without a hitch−more than three times or $39,017 more.

Some 1,820 patients experienced one or more complications from their surgeries in this system. For Medicare, the cost difference was much smaller, but still significant. When patients had a complication, the federal government reimbursed hospitals $3,629, compared with $1,880 if the surgery was complication-free, or $1,749 more. In the hospital system studied, 40% of the patients were covered by private insurance, so complications represented a substantial profit for that organizations, Gawande says.

Gawande says he doesn’t think health care systems are even aware of the large revenue boost involved in surgical complications. But it’s really kind of obvious, when you think about it. When a mistake leads to a patient needing a lot of extra care, hospitals bill for that extra care. So, yes, they make more money on it.

Gawande also makes a point of saying that he doesn’t think physicians or hospitals are deliberately inviting errors in order to boost profits. But he does think the higher revenues from complications are contributing to a safety problem. From that same article:

Gawande insists that hospitals are not making essential quality improvements to avoid complications, even though many strategies have been proven effective. “It’s no surprise that [hospitals] have not made the major kinds of investments in quality control that you might expect, given these kinds of cost figures we’re seeing,” says Gawande....

I’m a big believer in the importance of financial incentives for improving health care, and for lowering costs. As I’ve previously written here, for example, the fact that U.S. patients don’t have any “skin in the game” when it comes to health care—that is, the costs of more-expensive-than-necessary forms of care don’t come out of their pockets—is probably one reason it’s hard to hold down health care costs here.

But having said that, holding up these apparent incentives as a factor in the rate of medical mistakes doesn’t really cast much light on the problem of medical errors, nor on patient safety in general. Whatever extra short-term revenues might come out of higher patient-complication rates, I think physicians and hospitals are not only dedicated to lowering error rates because it’s the right thing to do, but because they are also focused on the longer-term costs of errors. There are serious liability risks to medical errors. And there is also the potential for taking a big hit to the bottom line if a community becomes aware that a physician or hospital is associated with high error rates. Given that these rates are often published, and that errors can make headlines, it really doesn’t seem like a great business model to pursue a lack of safety to make a quick buck.

Everyone at Johns Hopkins, for example, is very focused on patient safety, thanks in part to the leading role that Peter Pronovost and our Armstrong Institute for Patient Safety and Quality have played throughout the world in establishing processes and providing education and training for improving patient safety and reducing medical errors.

In addition, collaborating on better patient safety is one of the most in-demand services we provide in other countries. Through training, mentoring, metrics and the pursuit of accreditation, we’ve seen error rates drop substantially at most of the health care systems working with us. Never—not once—have I heard any of our collaborators anywhere express any concern about how an increase in patient safety might adversely affect the bottom line. (And our collaborators are usually pretty sensitive to that bottom line, and tend to be very outspoken about any concerns they have about it.)

That’s not to say that health care systems don’t have an incentive problem. Here in the U.S., we have the giant challenge of a system in which hospitals and physicians have long been paid according to how much service they provide—the more treatment they give patients, the more they’re paid. I think it’s extremely rare for reputable physicians or hospital systems to provide patients with more care than is good for them—let alone to purposely make mistakes—in order to increase revenues. But it takes a lot focused, ongoing effort to find the very best ways to both provide top-quality, safe care and hold down costs. If the incentives aren’t there to spur and reward such efforts, they may happen much more slowly, or not at all.

There’s a lot of effort going on now in the U.S. to try to convert to a system where hospitals and physicians are instead paid to some extent according to how good a job they do in improving and maintaining patient health and in lowering the cost of care, even if that entails less rather than more treatment, such as through preventive care. Gawande et al did a great job in bringing the perverse short-term incentives of medical errors to light, but I think we’ll achieve a lot more in patient safety, as well as in quality of care and better health care values, if we focus on the bigger incentives picture rather than on the short-term one.

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