Originally published on Forbes.com

Let’s flash back to 2010. It made so much sense that any healthcare reform act would include a mandate that required hospitals to aggressively implement electronic medical records (EMR) so patients could finally have access to their own personal health data.

There wasn’t much push-back from either side of the aisle on this condition known in the Patient Protection and Affordable Care Act (PPACA) as “meaningful use.” After all, the information age was upon us yet hospitals were still photocopying records, charging patients for the copies, and telling the patient they needed to come back in 72 hours to retrieve the records. Hospitals frowned upon the process as it usually symbolized a potential lawsuit on the horizon.

It seemed that Americans as a whole were united that meaningful use was a positive step to empower the patient to be involved and educated in their own health management. But one year went by and then three or four, and, despite the threat of penalties for missing implementation deadlines, the hospital industry lobbied successfully to limit these requirements to implementing components of the EMR that helped them maximize revenues.

The top three EMR vendors became so powerful, it was not uncommon for them to pass up on opportunities to work with small and midsized hospitals and health systems. I know, as I was one of the CEO’s who was told, “You’re not big enough for us to justify working with you.“ What about those big hospitals that did work with these top vendors? They were often boot-strapped for years and unable to fulfill other priorities as a result of the cost allocated to their EMR implementation. It was a highly publicized nationwide epidemic for many hospitals.

Despite great profitability for the vendors, little was done in regard to making a patient’s personal health record more accessible and most hospitals made almost no progress in the initial five years after PPACA passed. In 2016, as a handful or EMR vendors rose to the top and captured the majority of the core hospital market, Congress called several of their leaders back to Capitol Hill to address the lack of progress and implemented new, heightened expectations around implementation and compatibility.

It makes sense if you break it down into a timeline:

• Congress requires EMR implementation in PPACA in 2010. The EMR space explodes in 2011 as a result, and hospitals are the sole payer to EMR vendors
• Despite ObamaCare prioritizing patient access, population health, and staying healthy at home, hospitals had little financial incentive to enhance access or keep patients healthy at home into 2015.
• Prior to 2016, almost no hospital dollars were spent on EMR vendor software that supported access or population health, and therefore the EMR vendors had little incentive to prioritize these needs as well. Then Congress stepped in by 2016 and asked EMR companies and hospital leadership to focus more on compatibility and access.

But in early 2018, just as health systems started shifting their meaningful use priorities toward patient access, a strange thing happened. A few technology companies much larger and influential than those in the EMR space entered the electronic patient record discussion.

Have you ever heard of Apple? What about Amazon or Google?

These companies have a global reach that makes the EMR vendors’ footprint look almost irrelevant. In January 2018, Apple announced a partnership with several major health systems to make patient records accessible on their mobile phones. In that same month, Amazon announced it was partnering with JP Morgan and Berkshire Hathaway to rethink how healthcare benefits are offered to employees. Within a few short months, Google made a number of announcements and key hires as it moved into the healthcare delivery space as well.

While its unlikely Apple, Amazon, and Google will prioritize becoming major EMR providers in coming years, it’s not at all unlikely that this goal is within their long-term plans. More importantly, these global tech giants realize that the EMR is not the most critical information available in the healthcare process. Much more important than the EMR is the HIPPA-compliant, cloud-based parallel that allows patients and caregivers to converse and get educated from their mobile device. Think of a group text, or the Slack Application, specific to healthcare. There are already several effective patient management apps out there. These applications vary in scope, but Stellicare, MeUCare, and LoopdIn are all examples of applications currently available to the consumer that help manage a patient’s sensitive health information.

Remember, in the model of the future, when a patient is hospitalized, more often than not it will be a failure of the population health system. The focus of healthcare in the future is on being healthy at home, which requires self-management and caregiver education. These applications enhance those skill sets. I have lived this personally as my mom is currently in the advanced stages of Alzheimer’s Disease. My family has used a group text to accomplish this, but these new applications not only allow us to opt-in any doctor, pharmacist, caregiver, or family member, they also allow us to download instructional videos and resources.

As a result of this excessive EMR spending, hospitals pass the expenses onto the consumer and businesses in the form of rate hikes and the cost of healthcare in America continues to skyrocket. The meaningful use requirement is no doubt one of the contributing factors to healthcare’s continued hyperinflation.

So here’s the good and the bad of President Obama’s meaningful use experiment: big EMR vendors built up power and influence and, just as it peaked, several companies with much greater influence entered the arena and forced the EMR vendor back to the table to re-prioritize. Depending on how quickly Apple, Amazon, Google, and others enter the arena, the success and livelihood of these top EMR vendors may be on the line. EMR vendors’ failure to prioritize population health software and applications may cost them in the long run.

If Apple, Amazon, Google, and others create more effective means of managing and making accessible patient information and records, will Obamacare’s meaningful use requirements prove to be the biggest waste of billions of dollars in the history of American business? Time will tell.

Dr. Josh Luke is an award-winning Futurist, hospital CEO, two-time Amazon #1 best-selling author, and a member of the faculty at the University of Southern California’s Sol Price School of Public Policy. He is a well-known public speaker on the topic of healthcare affordability and transformation and writes regularly for LinkedIn as The Healthcare Affordability Authority. Visit www.DrJoshLuke.com for more information.

Maryland wants residents to know how expensive certain hospital procedures are. The images featured in this post come from a recent advertising campaign.

Believe it or not, this campaign may prove to be a milestone in the long and arduous road to healthcare affordability in America. Simply put, hospitals are thriving businesses and always have been.

Hospitals play on the emotions of Americans who often can’t afford care. Until recently, hospitals were not even required to prove that the patients they admitted met the minimum criteria for hospitalization – leading to massive abuses of the system.

The hospital model, in a nutshell, was simple: find any justification we can to admit every patient we can and then bill the insurance company for payment. This model, known as Fee-for-Service, led to the golden age of hospital success in America. I nicknamed it “The Fee-for-Service Free-for-All.” There was no accountability whatsoever and, as a result, the Federal Medicare fund is expected to be empty in the next twelve-to-eighteen years unless something changes.

The beginning of the end for this methodology was the Affordable Care Act (ACA), or Obamacare. The ACA implemented a series of initiatives requiring hospitals to meet minimum criteria for admission, or payment would be withheld and fines could be issued.  The ACA also forced the hand of hospitals to transform into value-based care models.

Much like the Medicare Advantage model, those who manage care in value-based care are provided allocated dollars for each patient by the Federal Medicare fund. As a result, all costs incurred by an individual patient for care in a month are accounted for by the private Medicare Advantage company as expenses. If any money remains at the end of the month, that residual becomes your profit margin. If you overspend the allocation, then it comes out of your own pocket. In healthcare, we call this a “risk model.” The government is forcing hospitals to enter risk arrangements to reduce over-utilization on patient services and, ultimately, reduce costs.

In short, Obamacare forced hospitals to transform away from a Fee-for-Service model and into value-based care models. This means every patient a hospital justifies for admission becomes an expense to the hospital and not a revenue opportunity. That’s a 180-degree turn!

For the record, this is not a politically-driven issue. The fact is that our Medicare fund is running dry at an alarming rate and the government needed a model that requires accountability.

In comes Maryland!  While most states are slowly crawling towards value-based care with many hospitals doing everything they can to try to get Obamacare overturned, Maryland was one of the first states to adopt a Total Cost of Care Model.

Total Cost of Care takes value-based care way above the level of the hospital or insurer. The state looks at the total Medicare Dollars spent on each provider annually and allocates the appropriate ratio or percentage of dollars of the overall state fund to each provider, including hospitals and physicians.

Think of Total Cost of Care like this: Instead of the hospital getting $1241 each month to be responsible for your mom’s care, as it would in an Accountable Care Organization or full-risk HMO, the Total Cost of care model sees the hospital allocate a specified amount for the year. For example, the state would give a hospital $48.2 million and say, “That’s all your getting from us for all the patients you care for this year. So, good luck!”

As mentioned earlier, while the rest of the country is mid-way through a slow crawl towards transforming to value-based care that began sometime in 2010, and will likely be complete by 2020, hospitals in the state of Maryland were forced to complete the transformation overnight, or risk financial failure.

As it stands, every patient admitted to the hospital, or provided a service by a hospital, in Maryland is simply an added expense to the hospital’s ledger. It’s a consolidated bottom line. The hospital receives a large allocation from the state annually, and every service provided after that is an expense. It’s an entirely different mindset; the hospital is the de-facto insurer now.

When you see an article stating that a single state in the United States of America is advertising the cost of hospital procedures, expensive ones at that, it may first give you pause. But when you realize that state in question is Maryland, a state bold enough to pave the way on converting to this model, it comes as no surprise.

In an effort to end the long-entrenched practices of over-admitting patients and over-ordering often unnecessary tests, Maryland and its hospitals made the bold choice to transform to the role of the insurer overnight. So the state and its hospitals are now the banker and, every time you access care, it costs them.

When you have a basic understanding of how Maryland is ahead of the game on value-based care, it is no wonder that its state hospitals were the first to say, “Let’s advertise our prices to weed out those patients who may not truly need an expensive procedure.” It’s the same tactic insurers have been using for years.

It’s the right move and the next step in this transformation. Just ask the insurer; it’s the oldest trick in the book, and the program was extended and expanded through 2023.

Dr. Josh Luke is a celebrated speaker, award-winning Futurist, LinkedIn Influencer, a faculty member at the University of Southern California’s Sol Price School of Public Policy, and author of Health-Wealth: Is healthcare bankrupting your business? 9 Steps to Financial Recovery. Drawing on his experiences as a hospital CEO, Dr. Luke delivers engaging and entertaining keynotes that teach audiences simple concepts on how individuals and companies can save thousands on healthcare. For more information on Dr. Josh Luke, please visit www.DrJoshLuke.com.

Original article link is available here.

They have their CEO. Now what?

Everyone wants to know what Dr. Atul Gawande plans to do now that he has been named Chief Executive Officer of the Amazon, Berkshire Hathaway, and JP Morgan (ABJ) partnership to create a new healthcare delivery model.

Since it’s the number one question I get asked nowadays, I thought I would provide an updated answer on my perspective.

Amazon is the 800-pound gorilla.

The others will follow Amazon’s lead as it has the infrastructure to scale direct-to-consumer as well as on the retail and wholesale side. When reviewing Amazon’s recent history, you’ll find many clues as to the preferred business tactics it employs that will transfer easily to healthcare.

Let’s take a look at a few of those clues:

• Amazon has the supply chain in place and has redefined how consumers acquire goods and services in multiple industries, starting with books and expanding to, well, whatever you need. Before you say, “But healthcare is different,” buying books, clothing, electronics, and niche products used to be different as well. Then came Amazon.
• Amazon has a successful track record of eliminating waste and middlemen throughout the supply chain. This problem is especially out of control in the healthcare delivery space. There are multiple middle-men at every step of the way.
• Amazon has the buying power to stop old tricks and gaming by industry juggernauts. We’ve already seen it work around blocking attempts from Big Pharma when Amazon successfully acquired PillPack.
• Amazon will identify the largest areas of wasteful spending on healthcare for employers and employees. Three likely targets for reducing wasteful spending will be:
  • Pharmaceuticals
  • Chronic disease management
  • Over-utilization of primary care

Let’s break these points down.

Reducing the cost of drugs for both corporations and employees is an obvious starting point and Amazon is already making strides. Although industry incumbents will undoubtedly resist and throw up roadblocks every chance they get, if anyone can work through these treacherous waters it’s a team of Jeff Bezos and Warren Buffet. Amazon has the supply chain, retail outlets, and delivery team in place as it is so they are well prepared for this transition.

Dr. Josh Luke is a former hospital CEO, acclaimed speaker, healthcare futurist, and best-selling author of Health-Wealth with ForbesBooks. Learn more at health-wealth.com.

Original article link is available here.