I have been in healthcare since completing grad school in 1974: in that period, no trend has been more consequential to the industry than its adoption of information technology in the healthcare delivery system.
Until 2009, hospitals, physicians and others in healthcare delivery used information technology almost exclusively to get paid by insurers, Medicare, Medicaid and others. Then, on February 17, 2009, with the passage of the HITECH Act (Health Information Technology for Economic and Clinical Health) as part of the American Recovery and Reinvestment Act of 2009, things changed. That law set in motion the adoption and use of information technology to structure, collect and exchange data about patient care from every touchpoint in the industry. Arguably, it forced the health delivery system into the information age with the bodacious aim that it be built on electronic medical records accessible to and used by providers and patients to improve health and reduce costs.
Epic CEO Judy Falkner saw it coming along with a handful of others. She founded Epic Systems Corporation in 1979 in Wisconsin with 1 and a half employees “to help people get well, help people stay well, and help future generations be healthier.”
Today, it’s still a private company that’s employee owned based on Verona, Wisconsin. It employs more than 10,000 and operates globally. Hospitals that use its software held medical records of 54% of patients in the United States and 2.5% of patients worldwide. It invests 38% of its revenues to research and product development—significantly more than what’s spent by its major competitors. Per KLAS, it has a slight edge over Cerner in terms of overall market share in hospitals—28% and 26% respectively– but dominates the over 500-bed category with a 58% share of the market vs. Cerner’s 27%.
Last week, Faulkner threw a grenade at the government’s push to connect the health delivery system. She sent a letter to several hospital leaders asking that they join Epic in pushing back from the proposed interoperability rule by HHS. In essence, it requires IT companies to make their health records software interoperable to facilitate data sharing with outside organizations and give patients free and direct access to their medical data via third-party smartphone applications. In other words, share the company’s secret sauce in the interest of the greater good. She advised hospital leaders “We are concerned that health care costs will rise, that care will suffer, and that patients and their family members will lose control of their confidential health information.”
Epic’s pushback is understandable. It has invested billions in its own solutions like Care Everywhere, its health information exchange software and Share Everywhere, which allows patients to authorize any provider who has internet access to view their record in Epic and to send progress notes back.
In the U.S., 96% of hospitals and 78% of physician offices use electronic health record technology today (Office of the National Coordinator for Health Information Technology). A lot of money has been spent and, in many cases, reluctantly. The industry is growing at 16% annually and is expected to reach to $400 billion globally by 2024. HIT is an attractive market at home and abroad: Epic intends to play a major role.
The transition from a health delivery system that’s disconnected, impersonal, data-rich and information poor to systems of health that empower individuals to manage their own health requires breaking down barriers that constrain access to data. It’s not without risk.
The intellectual properties of developers who spent years and billions to create solutions can be compromised if appropriate protections are breached. The financial interests of investors and inventors can be nullified if private interests are set aside in the pursuit of the greater good. The public’s demand for a private system of health that allows them to choose hospitals, physicians and treatments based on accessible data about their options can be muted unless person-centered care includes unfettered access to data across the system. Their concerns about the security and privacy of their personal health information are real but solvable. All are legitimate risks that are manageable.
In the transportation industry, regulatory controls allow private companies to compete. Some like Southwest have even chosen to keep their schedules from the grasp of their competitors’ Sabre system and disruptors like Expedia while adhering to the transportation system’s data sharing and interoperability requirements. The same dynamic is at play in our banking system and others. Open sourcing is a strategic step big names like Microsoft have successfully navigated transitioning their corporate strategy from proprietary protection to accelerated development, collaboration and innovation.
Epic is successful today and will be tomorrow. But the health delivery system’s transition to systemness is dependent on information-technologies that are interoperable without constraints imposed by their sponsors and developers.
CEO Faulkner’s concern about the HHS rule is understandable and she’s not alone. But my hunch is middle ground will be found so the system’s transition to data access, transparency and connectivity is achieved. Epic will play a key role. But the company’s willingness to challenge HHS is a flashpoint.
RAND: Medicare over-payments to surgeons
For most surgical procedures, Medicare and many private insurers reimburse physicians with a single bundled payment that covers both the procedure itself and related postoperative care during “global periods” encompassing post-op visits up to 90 days for specified procedures. The current methodology for post-op visits is based on physician surveys which the RAND researchers found overstated actual visits. They calculated that Medicare overpaid surgeons 28% ($2.6 billion) in 2018 as a result. NOTE: Because of Medicare’s budget-neutrality policy, lower payments for surgeons could benefit primary care and other non-proceduralist specialties.
Mulcahy et al “Using Claims-Based Estimates of Post-Operative Visits to Revalue Procedures with 10- and 90-Day Global Periods” RAND 2019
Cigna: loneliness increasing especially among men and younger adults
Cigna’s 2020 Loneliness Index released last week showed “America’s loneliness epidemic is getting worse, with three in five adults (61%) reporting they are lonely, a seven percentage-point increase from 2018… These results come against the backdrop of a rising mental health crisis in America, with more than 46 million people living with a mental illness.” Highlights, based on interviews with 10,400 adults 18 or older:
Loneliness is higher among men, young adults (18-22) and those living in urban and suburban communities.
Social media has a major impact on loneliness with very heavy social media users significantly more likely to feel alone, isolated, left out and without companionship
Loneliness has implications for the business community: lonely workers say they are less engaged, less productive and report lower retention rates. 12% of lonely workers say they believe their work is lower quality than it should be.
Cigna 2020 Loneliness Index
Bipartisan Policy Center: voters prefer Affordable Care Act fix to other options
Of 1988 voters surveyed by Morning Consult, 56% say health care is one of the top three issues in their 2020 vote choice. Highlights:
Support for improving the health care system is favored over repealing and replacing the Affordable Care Act or a “Medicare-for-All” single-payer system by a plurality of Democrats (46%), independents (38%), and Republicans (32 %).
Health care is a top priority for voters regardless of party heading into the 2020 presidential election (66% of Democrats, 54% of Independents, and 46% of Republicans).
Among all voters, out-of-pocket expenses (64%) and prescription drug costs (57%) ranked as their most significant health care concerns.
“Morning Consult/BPC Poll: Improving America’s Current Health Care System Receives Most Support of Leading Reform Plans” Bipartisan Policy Center January 2020
Pharma Support for Patient Support Groups Not Transparent
Researchers analyzed funding sources for not for profit patient groups to determine levels of corporate sponsorship. They found 20% to 83% of patient groups had relationships with drug manufacturers but only a quarter of organizations receiving monetary support disclosed their relationship online.
“Corporate sponsorship of patient groups” BMJ 2020; 368 doi:
Commonwealth Funds: Primary care role comparisons in developed healthcare systems
The 2019 Commonwealth Fund International Health Policy Survey of Primary Care Physicians in eleven high-income countries found substantial proportions of US physicians did not routinely receive timely notification or the information needed for managing ongoing care from specialists, after-hours care centers, emergency departments, or hospitals compared to clinicians in other countries. Primary care practices in countries including the US, are not routinely exchanging information electronically outside the practice.
Doty et al “Primary Care Physicians’ Role In Coordinating Medical And Health-Related Social Needs In Eleven Countries” Health Affairs January 2020
S&P: Healthcare returns lowest in election year but better in other years
Comparing the 11 sectors included in the S&P 500 which increased 31.5% last year, health-care stocks were the next-to-worst performing sector in the S&P 500 in 2019 increasing 20.8%%, after energy (+11.8%). That’s in contrast to 2018 when healthcare stocks performed best (+6.5%) as other sectors struggled. So far in 2020 YTD, the shares are slightly underperforming the broader market, rising 2.5% versus a gain of 2.8% by the S&P 500. Technology stocks increased 48% in 2019 leading all industries and are up 5.8% in 2020 YTD. Since 2007, the annual performance of the S&P Healthcare Index has beaten the overall S&P (+11.08% vs. +8.81%) ranking its third behind information technology (+13.79%) and consumer discretionary (+11.21%).
American College of Physicians endorses single payer/public option
The professional society that represents 143,000 U.S. general internists and residents endorsed two options at odds with the American Medical Association. ACP members favor a single payer or public option over the status quo. AMA’s posture has been changing: a vote to endorse Medicare for All fell short 53%-47% in its House of Delegates meeting in June but in August announced it was leaving the Partnership for America’s Health Care Future which represents several trade groups opposed to Medicare for All.
“Envisioning a Better Health Care System for All: Reducing Barriers to Care and Addressing Social Determinants of Health” American College of Physicians January 21, 2020
Update: Supreme Court passes on expedited ACA decision
Last Tuesday, the U.S. Supreme Court rejected a request from Democratic state officials in 21 states and the House of Representatives to expedite their decision to hear an appeal of a December 18 ruling by the New Orleans-based 5th U.S. Circuit Court of Appeals that the law’s “individual mandate” requiring people to obtain health insurance is unconstitutional. The appeals court ordered a TX federal judge to reconsider what parts of the health law can remain in place which is the rationale for the SCOTUS decision to delay its review of the ACA until after its current term ends in June 2020.
As part of the GOP-led Tax Cut and Jobs Act (2017), Congress reduced the penalty under the insurance mandate to $0. In a court action, GOP-led states argued the elimination of the tax rendered the mandate unconstitutional. The appeals court has ordered a federal judge in Texas to reconsider what parts of the health law can remain in place, but the Democratic-led states and House were seeking to have the Supreme Court go ahead and rule that the entire law remains valid.
Politically, the SCOTUS decision means the Affordable Care Act will remain in place during Campaign 2020 thus putting less pressure on GOP campaigns to offer a replacement.
“Supreme Court won’t fast-track Obamacare case” Politico January 21, 2020
California Considers Declaring Common Pain Killer Carcinogen
A fight is coming to California over whether to list one of the world’s most common over-the-counter drugs as a carcinogen, echoing recent high-profile battles over things like alcohol and coffee. The drug is acetaminophen, known outside the U.S. as paracetamol and used to treat pain and fevers. It is the basis for more than 600 prescription and over-the-counter medications for adults and children, found in well-known brands like Tylenol, Excedrin, Sudafed, Robitussin and Theraflu.
Mulcahey et al “Payment for Services Rendered — Updating Medicare’s Valuation of Procedures” January 23, 2020 N Engl J Med 2020; 382:303-306