Friday, January 30, 2015

Colon Cancer Screening

Screening for colon cancer creates some interesting challenges.  I've never spoken with anyone who looks forward to a colonoscopy.  But finding colon cancer early through appropriate screening makes it a very survivable cancer.

A recent article focuses on other tests that can be used for first time screening.  For some time there has been the fecal occult blood test and the fecal immunochemical test.  These are very inexpensive and can be performed in or distributed by primary care providers.  The FIT is able to detect approximately 80 percent of colon cancers. And if it is done on an annual basis (rather than just once every ten years) then there is a good chance that a colon cancer that is not very aggressive would be caught a second time through.

There is a new test which is more expensive but requires very little change in normal behavior from the patient.  And while the article does not describe the test's sensitivity (i.e., ability to detect cases) if the sensitivity is higher than 80 percent that could make the extra expense worthwhile.

But, does this mean that these cheaper and less invasive tests will assure that everyone is getting colon cancer screenings at appropriate times and will they help to save money?  

Unfortunately, the answer may be no.

First, tests that are designed to be repeated annually rather than once every ten years could end up costing more if people actually use them annually.  It really depends on the relative price of the two tests.

Second, while sensitivity is important because we don't want to miss cancer cases, specificity is also important.  Specificity is making sure that we correctly identify the people who don't have cancer.  If we incorrectly suspect that someone has cancer we may put them through additional costly follow-up procedures that may create risks.  

Third, even the article referenced above states that based on a combination of family history and other risk factors, the less invasive tests are not necessarily optimal for everyone's first test.

So, while individuals may find less invasive tests more palatable and increase the screening rate and the lower cost per test is a good thing, without a modeling exercise to explore the various facets of how many are detected, how often people are screened, and how much money is saved as a result of earlier treatment, new best practice recommendations cannot yet be made.  

And if and when policy is changed will the consumers, the physicians (and which among them) or the insurers be winners?  

Friday, January 23, 2015

Nursing Staff Levels and Payments Related to Outcomes

An interesting news item describes a study that was planned in the state of Minnesota but that was unable to be completed.  Some say that the hospitals chose not to provide information.  The hospital association in the state claimed that providing the data would have place an undue burden on the members of the association.  Regardless, it is worth considering what the study was trying to examine.

There have been a number of studies that have asked the question, "What happens when there are lower levels of nurse staffing in a hospital?"  And, as the news item points out, there are some studies that suggest that lower levels of nurse staffing have been associated with failure to rescue after surgical complications, falls, medication errors, and missed aspects of nursing care.

The challenge is that few studies have shown that after a change from a lower level of nurse staffing to a higher level of nurse staffing there is an improvement in these types of outcomes.

Why might there not be?  Perhaps in cross-sectional observations hospitals with higher nurse staffing have other positive characteristics that encourage better outcomes.  In this case, if a hospital simply hires more nurses, that may not solve the problems.  The problems may continue if there are not other structural and systematic changes made in the hospital.

As hospital and health system payments become more dependent on outcomes, what should a hospital do?  If the hospital does not hire more nurses and has poor outcomes, the hospital will have to bear the costs of the extra care for complications without reimbursement.  This could lead to losing money.  If, on the other hand, the hospital hires more nurses it would have to spend more money up front.  The key question is whether this is less costly (and whether it is more predictable) than the cost of poor outcomes.  In addition, it should help to improve the hospital's reputation and bring in more patients.  And if the hospital hires more nurses but there are not other systematic changes that may be necessary, then the hospital will definitely lose financially compared with where it is now.

As we move ahead, having information on the value of increasing nurse staffing (or any other type of staffing in hospitals to improve outcomes) will help to make better resource allocation decisions.  Failing to provide this information is unfortunate.  Hopefully in the future Minnesota hospitals can provide information at the unit level to shed some light on this subject without overburdening their data systems or another state will take up the challenge to conduct such a study.      

Saturday, January 17, 2015

Patient-Centered Supply Chain

In thinking about interesting health care finance topics, the article here caught my attention.   The article discusses the concept of building a so-called "patient-centered supply chain."  The key is to understand what the incentives are, when the incentives push toward this type of arrangement, and how it can help a hospital or health care system particularly as the incentives for achieving better patient outcomes (and not simply providing care for the patient) are made stronger.

The most important thing to recognize is that, in theory, there may always have been incentives pushing this direction.  Specifically, one might ask "why wouldn't an organization want to set up a supply chain that reflects a focus on optimizing the outcomes of patients?"

There has always been a tradeoff between making sure that there is always an abundance of resources at hand for any patient anywhere in the system at any time (which has particularly high costs for inventory that is being held) and the idea of getting the right resources to specific patients just in time--while not being late.  That will lead to lower costs of holding inventory but it takes an investment to set up the information system and change the business practices that will drive the patient-centered supply chain.

Information systems can become more interlinked so that hospitals can link patient conditions and patient care to inventory systems that control where their supply is held and the companies that supply them.  Analytics can be used to predict and anticipate the resources that are needed to care for patients with specific conditions.  Inventory can be held in central locations that can then be sent to the patient care locations on an as needed basis.  As systems grow larger there is a greater opportunity to set up this type of system with centralized inventory control and distribution across the system.

A business must make a decision on the basis of the costs of the information system, the costs o the analytics, the costs of the changing business practices (how supplies are moved) against the savings from reduced holding costs of inventory and the potential savings from improved patient outcomes.  As health care financing changes to focus more on incentivizing the achievement of improved patient outcomes, there will be a stronger and strong incentive to adopt new practices.  

Monday, January 5, 2015

Market Segmentation for Personal Training and the "Information" Economy

In the Wall Street Journal on January 2, there was an interesting article about personal trainers.  In this article it talked about trainers who work at gyms and trainers who work privately.  The latter type make more money per hour, but the downside, as described by the article, is that these individuals have to find their own clientele.

The article described a number of different market segments to which different trainers have appealed.  Individuals who want very challenging workout three days a week for ten minutes a day.  Plus sized women.  Type-A personalities in general.  Even personal trainers for the dogs of otherwise fit people.  (Although my personal experience is that, at least with larger dogs, I'm willing to give up some of the time I would otherwise use for more intense fitness activities to combine spending time with my dog, my dog's fitness, and a little less intense fitness activity for myself, but that is a matter of personal preference.)

An interesting fact to consider is that at least in the New York City area some  personal trainers can charge up to $100/hour.  That is a pretty hefty price to pay for fitness.

The key is market segmentation.  Defining a very narrow niche of the market in which, if the person is able to offer a service that is directly relevant to that narrowly defined group, the group is willing to pay a large amount and would not change the quantity demanded much with any price change.  In this case, the trainer can find a relatively small number of individuals, charge a high fee, and make quite a bit of money.  Perhaps even making economic profits by recognizing not only an important segment of the market but also differentiating the service in a way that creates few substitutes for exactly what the personal trainer is providing.

What does this suggest more broadly?  There are many services for which no one will ever be able to charge $100/hour.  But as individuals lead increasingly busy lives and are looking for someone to help to hold them accountable, to offer new insights that they cannot get from friends and family, and to provide expertise that they do not have, people will probably be willing to pay for clearly differentiated services.  This is a terrific example of the "information" economy.  This has nothing to do with information technology.  It has everything to do with being rewarded for having information, understanding those who want the information, and understanding how to communicate that information to those who want it and have the resources to pay for it.