New Year’s Resolution? Let’s Make it about Cost

This post was first published on Project Millennial.

2013 has been the year of the (botched) insurance expansion. But if the experience of other countries is any lesson, we should hope for political attention in 2014 to be devoted to another looming issue.

Over dinner with a few panelists at the Lown Conference, I learned about their involvement with the World Bank’s Universal Health Coverage (UNICO) Study Series, a comparative analysis of efforts to achieve universal coverage in 22 countries and Massachusetts (“the People’s Republic of Massachusetts”, as one panelist fondly called it).

And Then Came the Cost Issue

Befittingly, this People’s Republic was recently profiled in Health Affairs for lessons learned from its experience with cost containment, an issue it has been grappling with since achieving near-universal coverage in 2006.

Lesson number one?

“The first lesson is that the implementation of near-universal coverage triggered a new political resolve to address the difficult challenges of cost containment.”

In other words, achieving near-universal coverage subsequently made the cost issue too dire to ignore. While there is debate over whether insurance expansion accelerated cost growth (some say yes, others no), the facts are that Massachusetts’ per capita health spending is 15% higher than the national average, and that it has the highest individual market premiums in the country.

(Update: Medicaid expansion increased ER use by 40% in Oregon, so it’s not an inconceivable hypothesis.)

Interestingly, the same sequence of events is playing out halfway across the world.

Taiwan’s Looming Health Budget Challenge

After returning from Boston, I had the opportunity to grab lunch with an individual who was involved with Taiwan’s health sector for a number of years. Through that, I learned that Taiwan is facing a remarkably similar cost challenge.

Taiwan’s National Health Insurance (NHI) system has been lauded as a model for developed nations. Established in 1995, it expanded coverage from 57% to 97% within a year. But as might be expected, this coverage expansion unleashed a surge in utilization, nearly doubling outpatient visits, hospital admissions, and use of ED services among the previously uninsured. Since then, growth in outpatient visits, ED visits, and surgeries has vastly outpaced overall population growth.

To date, Taiwan has addressed the cost containment problem partly through aggressive price setting—sometimes below the cost of providing those services. Yet ironically, this has pushed providers to rely on increasing utilization as their only survival lever. This supply side-induced demand, along with low co-pays, no gatekeepers, and the political difficulty of raising premiums has created a financial situation where NHI expenditures have outpaced revenues almost every year since 1998.

Price controls will likely only work in the short term. In the long term, the NHI will need to alter its incentives to reign in over-utilization while encouraging greater provider efficiency, much as BCBS has done in Massachusetts. Shifting to a DRG-based payment system by 2015 is a good first step.

We concluded our conversation with a pronouncement that struck me: “China’s health system is about 20 years behind Taiwan’s in its evolution, so I think it can learn a lot from Taiwan’s experience.”

Marching Toward Cost Escalation in China

There’s a lot of wisdom in that statement. To date, most reform efforts in China have focused on expanding access, particularly in rural areas. As described in this UNICO report, insurance coverage in rural China had plummeted from 90% of the population to less than 10% with the collapse of the commune system in the 1980s. In the last decade, through a series of programs and reforms, China achieved 93% insurance coverage nationally, and just announced this past August that it had achieved 99% rural insurance coverage. While the accuracy of the numbers can be disputed, there’s no doubt that a lot more people now have access to health care services.

Which raises the specter of cost escalation in China’s not too distant future. Alarmingly, insurance expansion in urban China has been found to lead to such supply-side demand inducement (e.g. unnecessary treatments, expensive technology) that getting insured can actually increase one’s financial risk. Furthermore, China’s current insurance schemes have been criticized for being too narrow in scope (not enough procedures covered) and depth (not enough reimbursement). If China deepens the value of its existing benefits (as is much needed), we could expect demand to surge even higher.

Seek Truth from Facts

I’ve breezed through a lot of details to keep this post manageable, and for those who are interested, there’s a wealth of information in these papers on the reforms in Massachusetts, Taiwan, and China.

But the experience of all three shows that upon achieving near-universal coverage, cost containment issues are sure to follow. It would therefore seem like a prime opportunity to seek truth from the facts of the trial-and-error already happening in other countries. As our nation’s health care marches toward a costly ruin, perhaps the time is ripe for a UNICO-like study series on cost containment.

China’s Third Plenum: Reform is Coming

This past week, Washington was gripped with President Obama’s surprise announcement that you can really keep your health care plan, period. Halfway across the world, China and China-watchers were gripped with another set of announcements:

The results of the Third Plenum of the 18th Central Committee of the Chinese Communist Party (CCP).

So What in the World is a “Third Plenum”?

The Plenary Sessions are meetings of the Central Committee, a subgroup of the National Congress. The Third Plenary Session (“Third Plenum”), which occurs once every five years, is the meeting during which leaders introduce new economic and political reforms. This year’s Third Plenum opened one week ago (Nov 9) and ended last Tuesday (Nov 12).

(For more details, here’s a great explanation of the Plenary Sessions, complete with infographic.)

To underscore the importance of this past week, it’s important to understand what’s happened during prior Third Plenums (Plena?):

  • In the 1978 Third Plenum, Chairman Deng Xiaoping consolidated power, introduced radical economic reforms that propelled China’s remarkable economic growth, and implicitly attacked the cult of Mao, repudiating the Cultural Revolution.
  • In the 1993 Third Plenum, Premier Zhu Rongqi announced the socialist market economy (no contradiction there) and loosened China’s state-owned sector.

So it’s no surprise that analysts excitedly awaited the results of this year’s Third Plenum, especially notable for being timed with the first year of Chairman Xi Jinping’s rule.

They Were Disappointed…Prematurely?

Shortly following the conclusion of the Third Plenum, the CCP released a vaguely-worded communiqué through Xinhua, its state news agency. It was immediately attacked for being heavy on jargon and short on specifics, tempering its promises of economic and political reforms with repeated nods to the “leading role of the state-owned economy”.

Notably, what the communiqué did not mention included:

  • No mention of financial sector liberalization (the Swattie in me wonders if this is necessarily a bad thing)
  • No push for further urbanization (likely because this would require overhauling the age-old hukou system)
  • No indication that President Xi would take on the state-owned enterprises (which dominate China’s oil, aluminum, coal, banking, telecommunications, electricity, transportation and other fields)

Immediately following the release of the vague communiqué, global stocks dipped, headlines called the Third Plenum “disappointing” and “a dud”, and analysts called previously optimistic expectations “sanguine and naïve”, claiming they overestimated Xi and Beijing’s actual power over the rest of the country.

But in the best post-communique analysis I’ve seen, Zachary Keck at The Diplomat argues that disappointment with the Third Plenum is premature. And precisely because it lays the groundwork for helping Xi consolidate enough power to drive through subsequent reforms.

Specifically, the communiqué created two new political bodies that helps Xi consolidate power:

  1. A new state security committee, analogous to the U.S.’s National Security Council. As Keck argues, this new committee is likely meant to “ensure stability as the reforms progress”, which bodes poorly for human rights, but signals the CCP is serious about implementing reforms.
  2. A central leading group reporting directly to top leadership, rather than to the government. This would assist Xi in pushing through reforms by sidestepping the bureaucratic red tape—precisely addressing the problem of limited central power that Beijing faces.

Hot off the Presses: A Blueprint for Reform

And right on cue, the CCP released a new blueprint for reform yesterday, with many more details on specific reforms. These include:

  1. Loosening of the one-child policy. Urban parents can now have two children if either spouse is an only child (previously, both had to be only children).
  2. Abolishment of labor camps, which have been used to imprison people for up to four years without formal arrest or trial. (Unclear how heavily this will be enforced in practice.)
  3. Strengthened rural property rights, allowing farmers to gain more profit from land sales to local governments (hopefully resulting in fewer of these).
  4. Loosening of the hukou system, which may eventually alleviate social and health care access issues for migrants.
  5. Economic liberalization and reforms. A system for insuring back deposits, fewer restrictions on offshore securities investments and M&As, looser pricing controls for energy, water, and telecommunications, and other financial changes I’m not well-versed enough to understand.
  6. Environmental protection-based growth incentives. Specifically, local governments wouldn’t be judged on economic performance alone, but also on environmental protection efforts. That’s cool.

And finally…accelerated health reform. Overhaul of public hospital system, more community hospitals, changes in doc pay, and catastrophic health insurance. I hope to explore the details more in a later post, but for now, this great interview with Shanghai’s former mayor Shen Xiaoming about health reform in Shanghai may provide some indication of where China’s health system is headed.

SEER 2012 Commemorative Video!

This now up on Youku (Chinese YouTube), picture slideshow from this year’s project!

For some reason it requires a password to view, enter “seer” into the box that pops up and click the button labeled “确定” to the right. Also, the beginning is a little…epic (must be the video editor program), but if you skip to 4:20 you’ll see the slideshow of pictures from the field.


The SEER Project: Year Two

“Our experience with the traditional ‘screening model’ in which low level eye care workers identify patients with visual impairment and refer them on for more definitive care is that very few patients follow that advice. Furthermore, because their diagnostic skills are limited, these health workers may turn away all but the most advanced cataract patients and refer irreversibly blind patients for surgery, resulting in inconvenience and disappointment.”

This excerpt, taken from a 2005 article reviewing experience from two rural cataract surgery programs in east Africa, resonates with me as I ruminate over the news that our new group of local volunteers just returned from the second implementation of SEER Project, exactly one year after we had launched it for the first time. Two key differences about this year’s project. First, although my generous funding through Swarthmore’s Lang Center had expired with my graduation, we were able to secure funding from Google through their Fifth Annual Social Entrepreneurship Competition. Second, for a number of reasons, I was unable to return to China this summer, and was limited to coordinating via email and skype–which meant that all of the on-the-ground preparation and implementation was carried out by the local volunteer team and driven by one especially dedicated and amazing returning team member. Bravo to their efforts.

Now that they’ve returned from the internet black hole that is rural China, I’m looking forward to hearing details of their trip–mostly about the successes they had, but also about the challenges they faced. And if past experience is any indicator of the present state of affairs, I’m willing to bet certain challenges intrinsic to a Village Health Worker-driven screening model will remain, which brings me back to the opening excerpt of this post:

1. Only a minority of patients will follow the screening advice. It’s usually bad taste to cite oneself, but since it’s the only published figure from the region I could find: it appears that only about 30% of patients referred for cataract surgery ultimately show up at the hospital–and that’s for screenings done by ophthalmologists, who have more credibility than VHWs.

2. Not all of the patient referrals will be accurate. It’s an unavoidable reality when personnel shortages require you to train VHWs with little understanding of the myriad eye diseases that can make a cataract patient “unfit for surgery”. Based on numbers from last year, about half of the patients referred by VHWs were not deemed eligible for surgery, either because the cataract was not “mature” enough yet for the doctors to feel comfortable operating, or because another eye condition (like diabetic retinopathy) had already done significant permanent damage to the retina, making removal of the cataract pointless.

These challenges can be incrementally reduced by improving the quality of training, clarifying criteria for referral, exploring innovative ways to build trust between VHWs and villagers, etc. I’m hoping that the successful completion of this year’s program, led and implemented by local volunteers, represents a promising first step toward more opportunities to do all of the above in the future. But above all, the SEER program was never designed to replace the ophthalmologist-led outreach screening sessions, only supplement it. Unfortunately, with the end of the funding for the pilot outreach program that was started back in 2010, we’re already starting to hear from some of the hospital directors that they plan to stop carrying out screenings.

Which would be a real shame, considering that they haven’t yet reached what I believe to be their full potential, exemplified by the extensive programs by hospitals such as Aravind and Sankara Nethralaya in India, which can reach surgical volumes of 300-400 patients. A day. And while I still remember hospital directors from two years ago telling me that the India model will never work in China because China is “different”, I think the difference begins in the attitudes held by those with the power to do something about it. “Clinicians are part of the teams in the field and at the hospitals, but they are not expected to run the programmes,” writes the article about the two east African programs. It was the same in India, where they had entire staff and project managers dedicated to reaching out to community partners and working to make sure every day on the calendar was filled with patients ready for surgery. In China, it’s done by already-overworked (and undercompensated) doctors, doctors who were probably the first to advocate for putting the screening programs on the chopping block.

The sense that I get is that the hospitals in China dipped their toe into the waters of community eye care, were skeptical of the initial results, and jumped right back on land. Unlocking the full potential of outreach screening programs would require going the whole nine yards: hiring specific program management staff, clearly defining separation of responsibilities, setting up regularly scheduled screenings (instead of doing it “when patients run out”, as is currently done), and fostering a network of community partners with direct access to the patients who can play a counseling and follow-up role–VHWs, for example. We’re currently working on writing up an analysis of focus group research exploring ways to improve the success of a rural cataract surgery program. No spoilers here, but I’ll just mention that while the surgeons are still the most important part of any cataract surgery program, much more attention will need to be focused on the role of hospital management and non-physician personnel.

The Black Box of the Patient Experience

Got back last weekend from a whirlwind trip, beginning with a talk by hot-spotting doctor Jeffrey Brenner (featured in the New Yorker) at Penn, followed by hopping on a bus to attend Unite for Sight’s Global Health and Innovation Conference at Yale. The experience gave me a lot of thoughts to write about, and (as you can tell) I’m already behind on writing them, but I’d like to begin with a blurb about the patient experience.

The patient experience, which—judging from the themes I heard this past weekend, and from my own experiences—remains a big black box for many health program managers and even doctors.

Dr. Brenner talked about a diabetic patient in his network who, despite doctors’ repeated (and increasingly frustrated) attempts, could never seem to control his blood sugar. He insisted he was sticking to the prescribed regimen of insulin shots, but the tests (and repeated visits to the emergency room) said otherwise. “Noncompliance,” doctors would conclude dismissively (or, more politely, “non-adherence”). Until Dr. Brenner and a social worker decided to visit this patient in his home.

Where they observed him religiously take out in insulin need, put it into the bottle to draw out the medication, and proceed to give himself 50 cc’s of air. This patient had vision problems, and did not realize that the need was not fully submerged in the insulin.

It was striking to me to hear a similar experience relayed at Yale by a doctor from Partners in Health, but this time not from the streets of Camden, but from the villages of Rwanda. A rheumatic heart disease patient was not managing the condition well, despite being given the necessary medications. A community health worker finally visited the patient in his home, where he learned that the patient was following what he thought to be the doctor’s orders: take the big pill when it’s hot, and take the small pill when it’s cold.

I believe that these two strikingly similar stories represent more than isolated cases. Rather, I think they reveal a failure of the monitoring system, and an inability to reach out and understand the patient experience. Reflecting on my own experiences in China, I realized that no one—not the charity organizations, not researchers in Guangzhou, certainly not myself, and not even the doctors at the county hospital one level up from the village—fully understood the patient experience in deciding whether or not to accept cataract surgery. We have theories and scattered evidence based on imperfect surveys, but if we truly understood it, coming up with effective interventions wouldn’t be so hard.

It’s all a black box to us.

As we move forward, and payment system reforms force us to look beyond the four walls of the hospital or clinic to the pre-admission and post-discharge status of patients, we will need to develop stronger monitoring systems. Task-shifting to non-physician health care workers (and community health workers in developing countries, here’ a shout-out to an organization working on this issue that had some great presentations at the conference) will become crucial to this effort, given the short supply and limited time constraints of doctors.

“No Evidence Appears to Exist”

Here are a few enlightening excerpts from a comprehensive review of health service delivery in China:

On provider payment reform: “In the rural sector, alternatives to FFS [fee-for-service] have also been tried, although no evidence on impacts appears to exist.”

On privatization and ownership: “Very few studies rigorously assess ownership differences of inpatient care in urban areas.”

On integration: “The benefits of vertical integration of village and township providers have not been evaluated formally.”

On management reforms: “To date, very little is known about the impact of management reforms.”

Don’t get me wrong, the article was systematically well written. The problem appears to be that good evidence for health systems reform just doesn’t exist in China.

Which is a real shame, considering the amount of leeway the national Ministry of Health has given local governments in implementing health care reform, and the wide variability that exists in terms of governance, ownership, financing, and management. It’s an abundant godsend of natural experiments, and there is a wealth of information to be gleaned—information that could not only be used to guide future reforms in China but which could also reveal insights about the fields of health economics and health systems in general.

Back in May, a member of the Dean McGee Eye Institute team I worked with had told me that one of the biggest challenges they were facing was a dearth of clear prevalence data. Indeed, estimates for the prevalence rate of cataracts in China varies from 2.5 million to 6.7 million, and estimates for the incidence range from 400,000 new cases per year to 1.3 million. I’ve been told that there are not many people working on health systems and policy research in China. Literature searches on the topic seem to turn up the same small group of big name researchers, i.e. Winnie Yip, William Hsiao, Meng Qingyue, etc. I wonder if the lack of good monitoring and evaluation systems is a deterrent for many researchers looking to enter the field.

On the other hand, experiences in China these past two summers have shown me that hospital doctors and administrators simply abhor having to fill out more forms and records. What’s needed, I think, is a system that is convenient—even necessary—for doctors to use every day from a clinical standpoint, which also happens to serve the function of data collection and report generation. If you could design and implement a system like that (say, an electronic medical records system) across hospitals in China, you could gain access to the goldmine of information currently sitting right under your very nose.

End of SEER…?

August 13: Yun’fu City

It seemed to simultaneously last forever and pass in a blink, but at the end of week two we once again found ourselves regrouped in Yun’fu city. Over two weeks, we had trained 29 VHWS, provided screening for 594 villagers and referred 245 for treatment.

Yet many aspects of a project like this are difficult to measure in numbers, and can only be gauged by discussion and reflection. On our last day in Yun’fu City, we gathered over a meal to reflect on the two weeks’ experience.

All of the volunteers who spoke up remarked that the experienced had “exceeded their expectations”. None of us—myself included—had expected so many villagers to show up for screening, a testament to the depth of the problem that still exists. After some initial reservations, almost all of the VHWs warmed up to our intentions, and many volunteers resolved to remain in contact with their group’s VHW in the weeks to come. For some of the volunteers, this was their first time living and working in rural China, and as they go on to become doctors in a health system heavily biased toward urban populations, there experiences here will likely continue to remind them of the healthcare need in this country.

The volunteers weren’t the only ones to gain from these interactions. During my meeting with Dr. Li of YPH at the end of our week’s activities, she told me that a VHW had called her one day. “These volunteers…are they for real, or are they liars?” he had asked. When she asked him to elaborate on his suspicions, he remarked, “They come all the way down here from Guangzhou, pay for all of their own expenses, live in incredibly difficult living conditions, and work all day without pay.”

She told me she had laughed and responded, “I guess volunteers just have a different mindset.”

Our experiences during these two weeks have pointed to one critical conclusion: a VHW-training program cannot be effective and sustainable without subsequent one-on-one training in the villages themselves. As a testament to this, there were 7 VHWs whose villages we unfortunately could not visit because of time and personnel constraints. As of now, not one of them has referred a patient via our electronic referral system. For a training like this to be sustainable, you need additional guidance in the field, you need active awareness-raising and patient education, and you need people with the time and enthusiasm to show the VHWs that you are as serious about this as you want them to be.

In our case, that was the role that the volunteers played. Of course, you do not necessarily need medical student volunteers to achieve this function. But the ZOC is already short on personnel, and as Dr. Li had remarked, “Volunteers just have a different mindset.”

Dr. Wang of the ZOC must have recognized this when he asked us, “So do you volunteers intend to make this into an annual thing?”

From the content of our discussions, the answer to that question is an overwhelming, “YES.”