The "secret sauce" of Kaiser Permanente

Financing and Payment Strategies to Support High-Quality
Care for People with Serious Illness: Proceedings of a
Workshop

A recent report by NASEM explains in one paragraph what is the key factor of succesful Kaiser Permanente model:

The “secret sauce” that enables Kaiser Permanente to deliver high quality care, explained Annet Arakelian, executive director of Medicare strategy and care delivery at Kaiser, is the way it has aligned its revenues and expenses. Kaiser’s revenue comes from the Kaiser Foundation health plan that collects premiums from groups, individual members, and some prospective contracts with government payers. Expenses go through a hospital
service agreement with Kaiser Foundation hospitals and a capitated medical service agreement with the Permanente Medical Groups that employ the physicians who work at Kaiser hospitals and clinics. The hospitals and foundation are nonprofit organizations, while the medical groups are for profit agencies with their own board of directors and governance processes. Incentives are aligned across the hospitals, health plan, and medical groups on quality metrics, as well as financial and regulatory initiatives.

Great definition. This is the ingredient for success. And you'll understand why it is so difficult to replicate in a private world with vested interests between different stakeholders: insurers and providers. The nonprofit element of the foundation and hospitals is crucial.

Second statement. Regarding the report on how to pay for serious illness:

Susan Wang, regional lead for shared decision making at the Southern
California Permanente Medical Group, explained that Kaiser’s approach to
comprehensive financing of serious illness care begins with a population
health perspective, which stems from the capitated arrangement that features
a fixed payment per person enrolled in its medical groups. “Because
we are capitated, we are accountable for our entire membership, it behooves
us to touch our patients at every opportunity,” said Wang

Summary: Kaiser has a patient centered strategy. Finance follows the patient not the specific illness. Great. Agree.

The media and the Theranos incredible deception

On Theranos failure, highly recommended for journalists.
From CBSNEWS, a basic piece to understand the power of the media in creating and destroying (false) value:

Was the media duped by Elizabeth Holmes?
A conversation with 60 Minutes about media coverage of the rise and fall of Elizabeth Holmes and her hot startup, Theranos

The biggest financial heist in history

BILLION DOLLAR WHALE
The Man Who Fooled Wall Street, Hollywood, and the World

In 2009, with the dust yet to settle on the financial crisis, a baby-faced, seemingly mild-mannered Wharton grad began setting in motion a fraud of unprecedented gall and magnitude – one that would come to symbolize the next great threat to the global financial system. His name is Jho Low, a man whose behavior was so preposterous he might seem made up.

An epic true-tale of hubris and greed from two Pulitzer-finalist Wall Street Journal reporters, Billion Dollar Whale reveals how a young social climber pulled off one of the biggest financial heists in history–right under the nose of the global financial industry–exposing the shocking secret nexus of elite wealth, banking, Hollywood, and politics

This book is specially helpful to understand our times. There are value creators and at the same time value extractors. Beyond them there is the greatest fraudster, Jho Low, a guy that stole $3.5 billion from Malaysian sovereign fund 1MDB, and helped former Malaysia president to get $700m.The total amount of the heist could be $6.5 billion, 2.5% of Malaysian GDP. If you want to know the details, just read the book.
It is strongly recommended to understand the corruption of the global financial system and audit firms  (Goldman Sachs, Deloitte et al.). This guy would not have been able to commit any theft without their help.
Once you have started the book it will be difficult to stop. Right now, there are others following Jho Low's path and value extractors are among us. Our institutions are extremely fragile tackling these issues. Just take this week cum/ex fraud:.

The German finance ministry said it was aware of 418 different cases of cum-ex tax fraud with a combined value of €5.7bn, adding that any guess about the total damage caused was “speculation” as the investigations were still ongoing.

An investigation published on Thursday by Correctiv, a German non-profit investigative journalism group, and 19 news organisations, cited leaked spreadsheets that show “an organised theft from the tax coffers of at least ten European states, besides Germany” that it claimed had cost taxpayers about €55.2bn.

Forecasting global life expectancy and morbidity

Forecasting life expectancy, years of life lost, and all-cause and cause-specific mortality for 250 causes of death: reference and alternative scenarios for 2016–40 for 195 countries and territories

Key messages from The Lancet article:

Global life expectancy was projected to increase by 4·4 years (95% UI 2·2–6·4) for men and 4·4 years (2·1–6·4) for women by 2040, to 74·3 years (72·1–76·4) and 79·7 years (77·4–81·8), respectively.

Compared with the past, global progress in extending life expectancy was forecasted to be slower from 2016–40. This trend resulted from forecasts of slowed advances on key drivers such as SDI; worsening of several risks, particularly high BMI; and stagnated gains on cardiovascular diseases, which was a major factor in historical improvements in life expectancy.

Genome sequencing, what's it worth?

Evaluating the Outcomes Associated with Genomic Sequencing: A Roadmap for Future Research

The health economic evidence base for WES -whole exome sequencing- and WGS -whole genome sequencing- is very limited . A recent literature review identified just eight economic evaluations of either WGS or WES, six of which were cost-effectiveness analyses using diagnostic yield as the outcome measure. Only two publications presented cost-utility analyses using quality-adjusted life-years (QALYs) as the measure of health outcomes, as recommended by most health technology assessment (HTA) agencies. However, neither of these cost-utility analyses provides information on health outcomes that HTA agencies can use to inform the translation of NGS technologies into clinical practice for specific disorders.

Last May I wrote a post on this topic. Now James Buchanan and Sarah Wordsworth provide a roadmap for future research with three steps.

First, it is crucial that health economists generate evidence on the clinical utility of genomic sequencing using the methods and metrics that are recommended by HTA agencies. Here, we are primarily referring to the use of preference-based HRQoL instruments such as EQ-5D questionnaires to generate utility weights that can be used to calculate QALYs 

If there is reason to believe that patient wellbeing will change after undergoing genomic sequencing (for example, supportive qualitative evidence), but commonly used HRQoL instruments show no effect, a second step would be to explore the use of alternative health-state valuation techniques to generate utility weights within the QALY framework. The time-trade-off (TTO) technique is one such approach

A third step would be to make full use of existing evidence on the diagnostic yield of WGS and WES. Studies that link this evidence to patient survival and quality of life (for example, trials or observational studies with long-term follow-up), could inform decision making regarding the translation of these technologies into clinical practice.

Unfortunately, it is easier said than done. I'm dubious regarding the potential of QALYs on assessing value of such technology, despite I have no alternative solutions right now.

Exhibition at Saatchi gallery

Geisinger (it is not any fiord)

A suggestion for weekend reading: excellent interview by Eric Topol with the Geisinger Health System CEO, in Medscape.

Regarding genetics in clinical practice:

Our approach is based on asking, "What if we did whole-exome sequencing on our entire population?" We started this to see whether we could find medically actionable genetic conditions that we could do something about. We are 200,000 patients into it—or I should say, research subjects, because we started with research—and we have found that 3.5%-4% of those people have something actionable: BRCA, malignant hyperthermia, Lynch syndrome, genes associated with cardiac arrhythmia.

They are unique.

And this is what happens at Sotheby's after the purchase for$1.4m

Banksy is a genius 

As time goes by

The order of time

I've just finished the book I started this summer: The order of time. It's quite difficult to enter in physicists territories, and time is the last frontier and a mystery. But Carlo Rovelli does a great job explaining in easy terms such complicated things.

This is the disconcerting conclusion that emerges from Boltzmann’s work: the difference between the past and the future refers only to our own blurred vision of the world. It’s a conclusion that leaves us flabbergasted: is it really possible that a perception so vivid, basic, existential—my perception of the passage of time—depends on the fact that I cannot apprehend the world in all of its minute detail? On a kind of distortion that’s produced by myopia? Is it true that, if I could see exactly and take into consideration the actual dance of millions of molecules, then the future would be “just like” the past? Is it possible that I have as much knowledge of the past—or ignorance of it—as I do of the future? Even allowing for the fact that our perceptions of the world are frequently wrong, can the world really be so profoundly different from our perception of it as this?

All this undermines the very basis of our usual way of understanding time. It provokes incredulity, just as much as the discovery of the movement of the Earth did. But just as with the movement of the Earth, the evidence is overwhelming: all the phenomena that characterize the flowing of time are reduced to a “particular” state in the world’s past, the “particularity” of which may be attributed to the blurring of our perspective.

 As The Guardian review says, the book is "an expression of the scientific desire to know and understand the world". Rovelli's message: time doesn't go by, time doesn't really exist as we imagine, it is only our construct.

La rumba del temps by Joan Miquel Oliver

Insuring biomarkers coverage

From the Past to the Present:Insurer Coverage Frameworks for Next-Generation Tumor Sequencing

Technology is one step ahead regulation and coverage. Sounds normal. However, the size of this step may be bigger than you think if we refer to next generation sequencing biomarkers. A new article in Value in Health journal covers this topic in detail.

One of the challenges of insurance coverage for next-generation sequencing is that it pushes the very boundaries of the underlined framework used by insurers in coverage decisions.  For example,to receive insurance coverage, a medical technology must be determined “medically necessary” and not “experimental/investigational.” Next-generation sequencing blurs the boundaries between these two concepts, making coverage decisions difficult.

Therefore some trade-offs are unavoidable. Inside the article you'll find them.

Anoro, Barnadas gallery

Healthcare services governance

The Firm Divided
Manager-Shareholder Conflict and the Fight for Control of the Modern Corporation

There is a unique feature of health services,- where public or non-profit organizations play a major role- it requires a deep understanding of the governance of the firms and its conflicts.
A new book provides a summary for private firms. In my opinion, most of the recommendations are applicable to public and not-for-profit organizations.

There are many partial solutions to manager–shareholder conflict, but none of them
work perfectly. In fact, even when they are all combined, the outcome is far from perfect. In some solutions, shareholders and directors play a hands-on role, taking responsibility themselves for keeping managers in line. In short, they monitor. Shareholders do some monitoring themselves; the rest they leave to a board of directors, which they elect—but everyone is involved in managing the managers. Directors play more of a hands-off role in the next set of solutions.

They set a few ground rules that executives must follow, create few incentives, and then step back and allow events to unfold. That is, they motivate. 

However, directors cannot do everything themselves, so in the third set of solutions they enlist outside parties to do some of the monitoring and motivating on their behalf. They delegate. These outsiders have their own selfish reasons for getting involved, but their presence can still benefit shareholders. 

As a last resort, and the last time that shareholders are even indirectly involved in the game, shareholders can sell, or threaten to sell, their shares to another firm. Selling is the ultimate hands-off policy. 

All of these approaches to corporate governance occur in a world of rules and regulations. That is why there is a final solution to manager–shareholder conflict, of which shareholders are entirely passive beneficiaries: the fight to change the rules of the game. These are the key steps to effective corporate governance: monitor, motivate, delegate, sell. The rules of the game matter as well.

Definitely, the last resort doesn't apply to publicly owned and nonprofit organizations. For private managers, this is a real threat, not replicable elsewhere. It is precisely for this reason that governance matters and an additional effort should be devoted.

Economics of ownership in healthcare

Private Provision of Publicly Funded Health Care: The Economics of Ownership

You'll find an interesting review of public private provision by Martin Chalkley in this brief. It says:

Viewed through the lens of economics, concern over ownership arises from the impossibility of complete contracts between purchasers of health care and providers of health care. Were complete contracts feasible they would render the question of ownership redundant. But contracts will always be incomplete: it is not possible to specify in advance all of the relevant circumstances around the care of every patient who is to be served, so as to ensure that they receive appropriate quality of care at a cost that reflects complete efficiency and does not leave the provider either with unsustainable losses or supernormal profits.

But the existence of the collective purchaser(s) for health care means that purchasers have power that individual consumers in other sectors do not have. NHS purchasing arrangements have the potential to ensure that private ownership does not lead either to a ‘race to the bottom’ – sacrificing quality in order to cut costs – or to supernormal profits being earned – which would siphon off NHS funds that could otherwise be used to deliver more health care.

And the final statement:

 We conclude overall that when considering the ownership of health care providers in a publicly funded health care system, statements such as “public good, private bad”, or the other way about, are misplaced. All health care providers require regulation. All health care providers require carefully thought out contractual arrangements that recognise the incentives and constraints they operate with – and these do differ between ownership types. The collective nature of health care purchasing provides the means for achieving this.

That's it. A clear message for any open-mind politician.

Are we paying too much for pharmaceutical innovation?

Economics of the Pharmaceutical Industry

The question of whether innovation is too high or too low is a first-order—perhaps the first- order—policy question in the economics of the pharmaceutical industry. Yet, economists have not produced a definitive answer. At best, we have suggestive analyses that point to the low rate of surplus capture by innovators, and modeled estimates suggesting that the social return to innovation is positive on the margin. While helpful, these findings each require a speculative leap in order to draw an inference about the social efficiency of innovation. Much rides on the answer to this question. If innovation is indeed excessive, then public and private payers are wasting money paying excessively high rewards to firms producing innovations. In contrast, if innovation is too low, lives are being lost prematurely due to a lack of medical progress.

This is the "answer" that Lackdawalla gives in an interesting article in Journal of Economic Literature (more details inside). If you want a review in 50 pages of the main issues surrounding the industry, this is the article you have to read.

Courtauld Impressionists exhibition at the National Gallery
Video

Lamarck returns

Lamarck's Revenge: How Epigenetics Is Revolutionizing Our Understanding of Evolution's Past and Present

I've just started to read this amazing book. Chapter 1 says:

Charles Darwin espoused evolution as driven by natural selection. However, an earlier theory, proposed more than a half century before the first publication of Darwin’s greatest work, came from a naturalist whose life and work were limned by the flames of the French Revolution.

Lamarck arrived at a three-step process in what was to be the first really rational explanation for what we now call “organic evolution.” First, an animal experienced a radical change of the environment around it. Second, the initial response to the environmental change was some new kind of behavior by that animal (or whole species). Third, the behavioral change was followed by morphological changes that were heritable in subsequent generations. This proposed process came to be named after its author. Today, a variant on what Lamarck proposed is sometimes called “neo-Lamarckism,” but more often “epigenetics,” or “heritable epigenetics.”

Jean-Baptiste-Pierre-Antoine de Monet, Chevalier de Lamarck, had a different view about heredity and why animals changed through time. His scientific beliefs were that things that happen to us during our lives can change what we pass on to our next generation, and perhaps into even further generations. Darwin knew well what Lamarck theorized. Darwin believed that his own theories about evolution could not coexist with any aspect of what Lamarck postulated. We now know this is no longer the case.
Lamarck’s Revenge looks anew at what are, perhaps, humanity’s most basic questions: the “where,” “when,” and “why” of getting to the present-day biota on this planet. But the vehicle to do this is by asking specifically about the “how.” What were the evolutionary mechanisms, the balance between Darwinian and neo-Lamarckian (aka heritable epigenetics), that produced not only our physical biology but some aspects of our heritable behavior as well?

Here are some possibilities. First, that the process known as epigenetics combined with periods of extraordinary environmental change has played a far greater role in what is called the “history of life” than is accepted by all but a small cadre of revolutionary biologists. This is perhaps most decisively shown through the epigenetic process of “lateral gene transfer,” where on a given day, in a given minute, some organism is invaded by another and a product of that invasion is the incorporation of vast numbers of new genes, making the invaded creature something else again, neither the invader nor the invaded. This is known.
Second, new evidence points to a probable role of epigenetics in producing rapid species transitions by mechanisms other than lateral gene transfer. Science has discovered that major evolutionary change of a species can happen a thousand times faster by epigenetics than by the process demanded by the Darwinian theory of single, random mutations along a creature’s genome or DNA (or, in some cases, RNA). This is most likely to occur during and immediately after rare, major environmental perturbations (such as mass extinctions and their aftermath).

Commercial determinants of health

Systems Thinking as a Framework for Analyzing Commercial Determinants of Health

Unhealthy commodity industries (UCIs) are defined as industries in which a significant share of their product portfolio comprises unhealthy products including tobacco, alcohol, energy‐dense and low‐nutrient foods and beverages, and gambling services.

Unhealthy commodity industries actively design and shape the NCD policy system, intervene at different levels of the system to gain agency over policy and politics, and legitimize their presence in public health policy decisions.

Reviewing health systems

Spain Health system review

The series Health systems in transition by WHO is a helful source to understand the current state of healthcare. Now you can red the updated version for Spain. Check p.68 and you'll have to reduce the number of members with private insurance by 1.5m, because income protection products have been added,, and they don't reflect health insurance, they are "income insurance". Anyway, in p.61 you'll find the size of administrative costs, 3%. This is one of the reasons why the spanish health system is so cheap. But if you split between private and public you get the following: private insurance premiums are 10% approx of public expenditure, and represent half of administrative costs.I know that the estimation is quite difficult, but anyway, this is what the table says.
A big effort and a very helpful text for anyone interested in understanding the health system.