Big Pharma and Global Health


The increasing importance of the pharmaceutical industry in global health and development

Posted by Debbie Koh

Take a moment to think about the last time you bought some medication. Maybe you went to your local Duane Reade/CVS/RiteAid to pick up an over-the-counter drug. You might have debated over a brand name versus a generic, or what was covered by your insurance, but the whole process probably didn’t cause you too much anxiety. You probably don’t stop to think if your provider was able to prescribe that medication in the first place, if it was stored properly, or if those meds might even be a useless or possibly harmful counterfeit.

Now, place yourself in another setting. You know you need some medication and you walk into a pharmacy.  The shelves are pretty dusty and filled will medications, labeled and unlabeled. You describe what’s wrong to the guy behind the counter. He listens, and cuts off some tablets from a larger foil-wrapped strip. “Take these twice a day for one week,” he says. Are you thinking about some of those questions now?

For pharmaceutical companies, the developing world is an untapped market that is poised for growth. Recent developments, such as a landmark decision by India’s Supreme Court to reject a patent application for a cancer drug made by Novartis, seem to be protecting generic manufacturer’s ability to continue making low cost drugs available to this market. Other companies are trying to make their products available at competitive prices (the latest example: two name-brand HPV vaccines are now available for less than $5 per dose).

Creating a reliable pharmaceutical regulatory and distribution system hasn’t been a particularly trendy or popular priority in global health and development. But, as the focus around international aid shifts increasingly toward ownership and sustainability, it’s increasingly important to ensure that people can access high-quality, affordable medicines outside of donor-funded supply chains.

Debbie graduated from Wagner in 2010 with her MPA in Health Policy and Management, International Health. She returned to her native California in 2011 and currently works for Venture Strategies Innovations. Follow her on Twitter at @thedebkoh or connect via LinkedIn. All views expressed are her own.


What if we just gave them money?


Cash payments as a baseline measure for program performance

Posted by Debbie Koh

What if every nonprofit that focused on poverty alleviation had to prove they could do more for the poor with a dollar than the poor could do for themselves? – from “Want to Help People? Just Give Them Money”

The idea of giving people money (or cash transfers) isn’t new. I gave some examples of cash transfer programs in Mexico and India in my last blog post. But what I found thought provoking about this quote, from a Harvard Business Review blog I read last week, was the idea of using cash transfers as a baseline measure for program performance.

Is the money spent on the programs we hope will help people more effective than giving that same amount of money directly to them? How do we know that providing a health intervention is more useful than providing a cash payment to someone instead?

The short answer is, we don’t know.

It’s easy to think of examples that could tip the scales either way. A large-scale vaccination program that involves provider training, medical supplies, and community education confers important health benefits to beneficiaries and contributes to a public good when a large population is immunized.

On the other hand, the entire cost of implementing and administering program (i.e. including direct and indirect costs) utilized as a direct cash payment could potentially provide greater benefits to the recipients. The payment might allow a parent to pay their child’s school fees, for example. This more educated child might experience long-term benefits (higher income, better health outcomes, for example) that exceed what they would’ve received via the health program.

Of course, a cash transfer system would still end up needing staff, monitoring, evaluation and other administration costs that would cut into the total payment amount. But, I think this idea is still useful as a thought experiment, and challenges students and practitioners to think critically about how effective we are in our hoped for or current public service careers with the resources that we have.

Debbie graduated from Wagner in 2010 with her MPA in Health Policy and Management, International Health. She returned to her native California in 2011 and currently works for Venture Strategies Innovations. Follow her on Twitter at @thedebkoh or connect via LinkedIn. All views expressed are her own.


Do Health Care and Profits Mix?


Posted by: Joel Wittman 

The debate continues: can a social service such as health care operate in a profit-generating mode?  Undoubtedly, there are fierce opinions on both the pro and con aspects of this question.  Those who support the notion that health care can operate as for-profit entities point out that the financial difficulties encountered by not-for-profit health care providers.  Their mantra is “No Margin, No Mission”; the patient population will receive fewer, or no, services if health care companies are not managed in financially responsible and profitable ways.  On the other hand, those who favor the realm of the non-profit universe contend that the quality of care is compromised and patients not receiving care because of the emphasis in the profit mentality.  So, who’s correct?  It’s a difficult conundrum to address.

An article in the January 8, 2013 edition of the New York Times focused on this issue.  The article appears below:

Health Care and Profits, a Poor Mix

By EDUARDO PORTER
Published: January 8, 2013

Thirty years ago, Bonnie Svarstad and Chester Bond of the School of Pharmacy at the University of Wisconsin-Madison discovered an interesting pattern in the use of sedatives at nursing homes in the south of the state.

Patients entering church-affiliated nonprofit homes were prescribed drugs roughly as often as those entering profit-making “proprietary” institutions. But patients in proprietary homes received, on average, more than four times the dose of patients at nonprofits.

Writing about his colleagues’ research in his 1988 book “The Nonprofit Economy,” the economist Burton Weisbrod provided a straightforward explanation: “differences in the pursuit of profit.” Sedatives are cheap, Mr. Weisbrod noted. “Less expensive than, say, giving special attention to more active patients who need to be kept busy.”

This behavior was hardly surprising. Hospitals run for profit are also less likely than nonprofit and government-run institutions to offer services like home health care and psychiatric emergency care, which are not as profitable as open-heart surgery.

A shareholder might even applaud the creativity with which profit-seeking institutions go about seeking profit. But the consequences of this pursuit might not be so great for other stakeholders in the system — patients, for instance. One study found that patients’ mortality rates spiked when nonprofit hospitals switched to become profit-making, and their staff levels declined.

These profit-maximizing tactics point to a troubling conflict of interest that goes beyond the private delivery of health care. They raise a broader, more important question: How much should we rely on the private sector to satisfy broad social needs?

From health to pensions to education, the United States relies on private enterprise more than pretty much every other advanced, industrial nation to provide essential social services. The government pays Medicare Advantage plans to deliver health care to aging Americans. It provides a tax break to encourage employers to cover workers under 65.

Businesses devote almost 6 percent of the nation’s economic output to pay for health insurance for their employees. This amounts to nine times similar private spending on health benefits across the Organization for Economic Cooperation and Development, on average. Private plans cover more than a third of pension benefits. The average for 30 countries in the O.E.C.D. is just over one-fifth.

We let the private sector handle tasks other countries would never dream of moving outside the government’s purview. Consider bail bondsmen and their rugged sidekicks, the bounty hunters.

American TV audiences may reminisce fondly about Lee Majors in “The Fall Guy” chasing bad guys in a souped-up GMC truck — a cheap way to get felons to court. People in most other nations see them as an undue commercial intrusion into the criminal justice system that discriminates against the poor.

Our reliance on private enterprise to provide the most essential services stems, in part, from a more narrow understanding of our collective responsibility to provide social goods. Private American health care has stood out for decades among industrial nations, where public universal coverage has long been considered a right of citizenship. But our faith in private solutions also draws on an ingrained belief that big government serves too many disparate objectives and must cater to too many conflicting interests to deliver services fairly and effectively.

Our trust appears undeserved, however. Our track record suggests that handing over responsibility for social goals to private enterprise is providing us with social goods of lower quality, distributed more inequitably and at a higher cost than if government delivered or paid for them directly.

The government’s most expensive housing support program — it will cost about $140 billion this year — is a tax break for individuals to buy homes on the private market.

According to the Tax Policy Center, this break will benefit only 20 percent of mostly well-to-do taxpayers, and most economists agree that it does nothing to further its purported goal of increasing homeownership. Tax breaks for private pensions also mostly benefit the wealthy. And 401(k) plans are riskier and costlier to administer than Social Security.

From the high administrative costs incurred by health insurers to screen out sick patients to the array of expensive treatments prescribed by doctors who earn more money for every treatment they provide, our private health care industry provides perhaps the clearest illustration of how the profit motive can send incentives astray.

By many objective measures, the mostly private American system delivers worse value for money than every other in the developed world. We spend nearly 18 percent of the nation’s economic output on health care and still manage to leave tens of millions of Americans without adequate access to care.

Britain gets universal coverage for 10 percent of gross domestic product. Germany and France for 12 percent. What’s more, our free market for health services produces no better health than the public health care systems in other advanced nations. On some measuresinfant mortality, for instance — it does much worse.

In a way, private delivery of health care misleads Americans about the financial burdens they must bear to lead an adequate existence. If they were to consider the additional private spending on health care as a form of tax — an indispensable cost to live a healthy life — the nation’s tax bill would rise to about 31 percent from 25 percent of the nation’s G.D.P. — much closer to the 34 percent average across the O.E.C.D.

A quarter of a century ago, a belief swept across America that we could reduce the ballooning costs of the government’s health care entitlements just by handing over their management to the private sector. Private companies would have a strong incentive to identify and wipe out wasteful treatment. They could encourage healthy lifestyles among beneficiaries, lowering use of costly care. Competition for government contracts would keep the overall price down.

We now know this didn’t work as advertised. Competition wasn’t as robust as hoped. Health maintenance organizations didn’t keep costs in check, and they spent heavily on administration and screening to enroll only the healthiest, most profitable beneficiaries.

One study of Medicare spending found that the program saved no money by relying on H.M.O.’s. Another found that moving Medicaid recipients into H.M.O.’s increased the average cost per beneficiary by 12 percent with no improvement in the quality of care for the poor. Two years ago, President Obama’s health care law cut almost $150 billion from Medicare simply by reducing payments to private plans that provide similar care to plain vanilla Medicare at a higher cost.

Today, again, entitlements are at the center of the national debate. Our elected officials are consumed by slashing a budget deficit that is expected to balloon over coming decades. With both Democrats and Republicans unwilling to raise taxes on the middle class, the discussion is quickly boiling down to how deeply entitlements must be cut.

We may want to broaden the debate. The relevant question is how best we can serve our social needs at the lowest possible cost. One answer is that we have a lot of room to do better. Improving the delivery of social services like health care and pensions may be possible without increasing the burden on American families, simply by removing the profit motive from the equation.

 

Granted this is one person’s view of the matter. What are your thoughts?  In my course, “The Business of Health Care”, this issue is a key component of the subject matter.  Care to learn more and hear both points of view?  Register for the class.  I look forward to meeting you.

Joel Wittman is an Adjunct Associate Professor at the Wagner School of Public Service of New York University.  He is the proprietor of both Health Care Mergers and Acquisitions and The Wittman Group, two organizations that provide management advisory services to companies in the post-acute health care industry. He can be reached at joel.wittman@verizon.net.


The Hidden Healthcare Election


Posted by Errol Pierre

It’s Healthcare, Stupid!
James Carville famously coined the phrase “The Economy, Stupid!” while he was a campaign strategist for the 1992 Clinton Presidential campaign. Fast-forward to 2012 and for good reason both campaigns seemed to take heed to Carville’s advice. For good reason, the unemployment rate hovers around 8%.  On top of that 40% of the unemployed have been jobless for more than 6 months. The labor force participation is barely 64%. Lastly, more than 8 million people last month were employed only part-time specifically due to economic reasons.

However, there seemed to be an undercurrent of Healthcare specific issues in this election that never really surfaced or was given its due attention.  Many of these issues revealed themselves in the exit polling of the most contentious battle ground states.

Obamacare & Florida
16% of the U.S. population lacks health coverage. Obamacare would provide substantial subsidies to individuals that otherwise could not afford insurance. Even though Mitt Romney has proven experience with health care by being the first Governor to ever pass universal healthcare legislation in a state, he ran to repeal President Obama’s healthcare bill even though it closely mimicked the Massachusetts bill Romney himself signed into law just 3 years prior.

Florida has the highest uninsured rate and uninsured population of any battleground state standing at 20% and 4 million people respectively. Over 90% of the uninsured population falls below the 500% federal poverty level ($55,000 for an individual). In Florida roughly 50% of the electorate earns below $55,000 a year. Exit polling showed Obama carried 60% of that population with Romney winning only 40%.

Auto Bailout & Ohio
November 18, 2012 will mark the 4 year anniversary of Mitt Romney’s infamous New York Times Op-Ed entitled Let Detroit Go Bankrupt. Romney called for a managed bankruptcy for General Motors, Ford, and Chrysler standing in strong opposition to a pure bailout. He also called for the heads of the companies to step down and acknowledged that autoworker benefits, including health care, would need to be reduced in order to alleviate the $2,000 burden of additional costs Detroit cars had that made their cars foreign counterparts did not.  During the last leg of the Presidential election, Mitt Romney became unpopular in parts of Ohio for this stance. In fact, President Obama ran on the auto bailout with his Vice President claiming, “Osama Bin Laden is dead and General Motors is Alive!”

The Obama administration ended up moving forward with a plan that very much resembled the Romney Op-Ed. The Obama plan called for the heads of the car companies to step down, sought to have GM and Chrysler pursue Chapter 11 bankruptcy filings, and acknowledged that auto unions would face “belt-tightening in wages, healthcare, and retirement benefits”.  In the end, based on Ohio exit polling, 56% of Ohio voters approved of Obama’s auto bailout and Romney was never able to properly articulate how close his auto plan was to the President’s.

Minority Unemployment Rates & Ohio/Nevada/Colorado/Virginia
The majority of the country receives their health insurance from an employer-sponsored program. That means a job is more than just a paycheck, it’s a means to get health coverage as well. The unemployment rate for African Americans is 14%; six percentage points higher than the national average. Obama won 89% of the African American vote in Nevada, 93% of the African American vote in Virginia, and 96% of the African American vote in Ohio. The unemployment rate for Hispanics is 10%; two percentage points higher than the national average. In the battleground state of Colorado, Obama won 74% of the Hispanic vote. In Nevada  Obama won 69% of the Hispanic vote. In the end, Minorities were convinced that President Obama could grow jobs that offer comprehensive benefits like healthcare better than Mitt Romney.

Abortion & Ohio
Abortion is indeed more than a religious issue. It’s a healthcare issue as well.  Mitt Romney went on record vowing to defund Planned Parenthood during a campaign stop in Ohio. This was after Republican candidate, Todd Akin, interjected the phrase “Legitimate Rape” into the American lexicon justifying it as information he garnered from physicians. Overlay these two instances with Ohio exit polling and we witness that 56% of voters believe Abortion should either always or mostly be legal.  As a result, Obama won 80% and 63% of those votes leaving Romney on the losing end of an important Ohio issue.

Errol Pierre is the Assistant Vice President of Product Management at a regional health insurance company focused on business development, sales, and strategy planning around Health Exchanges. He is currently pursuing a degree in Health Policy and Management with a specializing in health finance. He can be reached at errol.pierre@nyu.edu


What’s Behind the Slowdown in Health Care Costs?


Posted by Joel Wittman

In my article in the September blog, I wrote about a systemic approach to containing health care spending.  I thought this article about the slowdown in health care spending would also be of interest. 

Democrats on the campaign trail have warmed up to health care in recent months, touting the benefits of their mammoth 2010 law. While trumpeting popular provisions such as coverage for preexisting medical conditions, Democrats are also linking the Affordable Care Act to a recent slowdown in the rise of health care costs.

Former President Clinton delved into the subject at his convention speech in Charlotte, N.C., suggesting that President Obama’s health care law produced the slower-than-average growth in health care spending in 2010 and 2011.

“Health care spending has been under 4 percent in both years, for the first time in 50 years,” Clinton said.

Health care spending increased by just 3.9 percent in 2010 and 3.8 percent in 2009. And within Medicare, the spending slowdown has been even more dramatic: Instead of the program’s average 6 percent annual increase per beneficiary in recent years, 2010’s rate was 0.2 percent. In 2011, it was 2.8 percent. This benefits household budgets but also the government’s coffers since the longer-term costs of Medicare and other health entitlements pose huge fiscal challenges for the nation.

But economists on both sides of the political spectrum say that a variety of forces are at work in the more restrained increases in health care spending. One factor is a weak economy, which means Americans might opt to postpone elective procedures like cataract or knee surgery to avoid out-of-pocket costs that aren’t covered by insurance. Or they might skimp on costs like prescription drugs. When fewer people visit the doctor or when people cut back on prescription-drug purchases, insurance companies see lower costs and that can eventually translate into cheaper premiums for consumers.

The Kaiser Family Foundation found that the average family premium for employer-sponsored health insurance rose to nearly $16,000 a year, about a 4 percent increase from last year. The numbers might give many Americans sticker shock, but it was a smaller rise than expected. KFF President Drew Altman said that it’s too soon to tell what the cause is, exactly.

David Cutler, a Harvard economist and frequent adviser to the Obama campaign, told the New York Times this week that the Affordable Care Act’s efforts to control costs were contributing to the slowdown.

“The slow economy is only part of it,” he told The Times.

The good numbers are fodder for Democrats on the campaign trail to argue that Obama’s health care law did, in fact, slow down health care costs. The law primarily saves money by slashing $716 billion from Medicare payment rates to hospitals and private Medicare plans. Those cuts just went into effect this year, and at least on the hospital side, they are contributing to the slower-than-expected growth in Medicare spending in 2012. But those cuts were largely put in place to offset the cost of helping an additional 30 million people get insurance coverage, not to stem the rising cost of health care.

There are also several pilot programs in the Affordable Care Act that reward hospitals and doctors with federal funding if they successfully save money by using new delivery methods, most of which emphasize greater coordination between health care providers. Many of those programs just started in the past year and haven’t been operating long enough to see savings.

As far as consumers’ pocketbooks are concerned, the law also included a new rule for insurance companies that limits how much they can spend from premiums on things like advertising and salaries. That went into effect in 2011, and consumers started seeing the dividends of that rule last month: the Obama administration reports that insurance companies paid back more than $1 billion to American consumers this year.

Gail Wilensky, a former top health official in the George H.W. Bush administration, said she hoped it was true that the health care law was contributing to a lasting trend of lower health care inflation. But Wilensky said in an interview, “Whatever is going on, it’s very hard to attribute it to anything in the ACA. It was starting before that.”

Wilensky said that though the slowdown in health spending outpaces the decline in incomes tied to the recession, that calculation does not include other losses in wealth that impact how much people spend on health care.

“It was not just job loss, but in a way that has been unusual, it was wealth loss, as reflected by the decline of the stock market and, for many people, the decline in their home values. That is such a big, big part of middle-class American’s wealth position, and we underestimate if we only look at income loss,” Wilensky said.

She also pointed to a slowdown in spending that occurred in the 1990s as health-maintenance organizations restricted health services. Eventually that spending slowdown was reversed as doctors, hospitals, and patients pushed back against insurance-company restrictions.

Robert Berenson, a fellow at the liberal-leaning Urban Institute, said that the talk of health care reform in general, and not the specific policies of the Affordable Care Act in particular, could potentially be credited with the spending slowdown.

“I do think it’s more of an environmental phenomenon that the world is going to change,” Berenson said in an interview. “I think something real is going on related to all the proposals for new payment models, and physicians and others are getting the message.”

In other words, the health care industry has seen the writing on the wall: They will no longer get paid for every single test and procedure they do.

Berenson, who spent 20 years practicing as an internist, said it might be that doctors are tired of getting criticized for not paying attention to costs.

“I suspect physicians are tired being criticized for not being able to restrain themselves,” Berenson said. “It’s more health reform in general, rather than specific provisions that are associated with ACA.”

Joel Wittman is an Adjunct Associate Professor at the Wagner School of Public Service of New York University.  He is the proprietor of both Health Care Mergers and Acquisitions and The Wittman Group, two organizations that provide management advisory services to companies in the post-acute health care industry. He can be reached at joel.wittman@verizon.net.


Medicaid Health Homes – The New York Story – Part 1


Posted by Professor John Billings

New York, like most states, is moving rapidly to implement a new initiative to provide care coordination/management to high risk Medicaid patients.  Stimulated by the 90-10 federal match rate that was established in the Patient Protection and Affordable Care Act, the New York Health Home Initiative is initially targeted at more than 700,000 Medicaid recipients who have at least two chronic conditions or a serious and persistent mental health condition.  In 2009, New York spent more than $8.7 billion for these patients, and the goal of the initiative is to improve health outcomes and reduce costs through improved care management and coordination that lowers rates of hospitalization and emergency department use.

In New York, the Medicaid program will pay a monthly fee to a “Health Home” to manage and coordinate care for each qualifying patient.  The fee is expected to range from about $50-$350 per patient per month depending on the level of risk as determined by the patient’s CRG acuity score and predictive modeling on the risk of a hospital admission in the next 12 months.  As currently envisioned, for patients enrolled in managed care, the fee will paid to the managed care plan where the patient is enrolled, and the plan will determine where the “Health Home” will be located and how the care coordination fee will be distributed.  For fee-for-service patients, the state has asked for submission applications from providers interested in qualifying as a Health Home, and the state will assign patients to a Health Home based on prior outpatient utilization patterns (based on a “loyalty” analysis), or based ED/inpatient use or geographically for patients with no recent outpatient utilization.  The program will be implemented in three phases beginning with 12 counties (including Brooklyn and the Bronx) in January, 2012, with an additional 14 counties expected in April, 2012, and the remaining 35 counties expected in June, 2012.  For further information on New York’s plans, see:  http://www.health.ny.gov/health_care/medicaid/program/medicaid_health_homes/.

From a policy perspective, this initiative and its roll-out are of significance along multiple dimensions.  First the level of interest among providers has been enormous – the State received more than 200 letters of intent for applications to become a Health Home, with more than 90 in New York City alone.  Of course, with new money on the table in a time of Medicaid cutbacks, perhaps that’s not all that surprising.  But of more policy import is the extent to which the letter of intent process generated an unprecedented level of dialogue among medical, behavioral health, and social service providers, many of whom had no prior history of interaction.  Again, perhaps this is not so surprising – these are complex patients, with multiple conditions, often with a history of substance abuse or mental illness, many with housing problems, and many isolated with little or no social support structure.  Some potential applicants went solo or brought and handful of providers and community based organizations together.  But most applicants listed scores of medical provider organizations, behavioral health providers, social service providers, and other community based organizations, with four from New York City listing more than 100 organizations coming together for a potential Health Home application.

On one level, watching this diverse group of providers crawl out of their silos and begin to talk about what would be needed to coordinate the health and social needs was quite exciting.  But it also demonstrates the extent to which the current “system” is fragmented, with little integration within the medical care sector, but also little existing coordination (forget integration) between and among medical care providers, behavioral health providers, and community based organizations interested in the health and welfare of this vulnerable population.

This response also illustrates some of the challenges facing prospective Medicaid Health Homes (and the rest of health care services for that matter).  What will it take to be successful?  Optimally Health Homes would have the following capabilities and characteristics:

  1. A multidisciplinary approach for individualized needs assessment and care planning for participating patients;
  2. Integrated/organized/coordinated health and social service delivery system;
  3. Some sort of care/service-coordinators/arrangers, with a reasonable caseload size, a clear mission (to improve health and to reduce costs), an ability to engage and build trust with the patient, and a capability of respond to non-medical issues/needs
  4. Core IT and care coordination support capacity to track patient utilization in close to real time and to mine administrative data to help target interventions/outreach, provide feed-back to participating providers, and to examine utilization patterns that will allow continuous improvement and re-design intervention strategies;
  5. Ability to provide real time support at critical junctures, including ED visits (to help prevent “social admissions”, hospital discharge (to help develop effective community support/management planning), and or patient initiated contact for help for an emerging crisis; and
  6. Incentives/reimbursement policies to encourage and reward “effective and cost efficient care”, most notably to reduce hospital admissions and ED visits.

And how much of this currently exists?  How much is achievable in the short run?  Well, items 1 and 3 seem do-able.  The care coordination fee can help support the needs assessment and the costs of care coordinators.  The rest, not so much.  The biggest challenge will be coping with the fragmented medical, behavioral health, and social service delivery non-system.  It’s fine to come together on a letter of intent (talk remains fairly cheap) – it’s another matter to actually function as at least a quasi-organized, coordinated “system”.  The challenges of exchanging data among the non-integrated Health Home participants will be also daunting – just sharing and updating a patient care plan is likely to be difficult for some orgnaizations.  Assuring that the care coordinator knows in real time that a patient is in the ED or about to be discharged from the hospital present much bigger challenges, especially for the 30% or more Health Home patients not currently enrolled in managed care.  Of course, when the Medicaid card is swiped, Albany knows, but getting that information to the Health Home and its care coordinator is not currently including in the planning.

And what about incentives?  Clearly hospitals have the most to lose here, since the goal is to knock out hospital and ED visits.  In a managed care world where the hospital is included in some global capitation arrangement, incentives are somewhat aligned since the hospital can share in the savings.  But that sort of arrangement is relatively rare for most of managed care, and for fee-for-service patients, it is not existent.  Some form of shared savings arrangement for the Health Home Initiative is contemplated by the State, but currently it is just that:  contemplated.  Progress here will be critical to success of the initiative.

And as to success, what do we know about similar initiatives?  Well, another important policy issue related to Health Homes is that once again we are embarking on a major initiative without much evidence that it is likely to work.  It certainly sounds good on paper – care coordination makes sense and there is plenty of evidence that a lot of hospitalizations and ED visits are preventable/avoidable.  But less is known about how to do the preventing and avoiding.  This faith-based approach to policy making is actually pretty typical for Medicaid and most of health care.  Think back over the last 10-15 years for the last great Medicaid initiative:  enrollment of massive numbers of Medicaid patients in managed care.  What did we know about the effectiveness of managed care in improving outcomes and reducing costs then?  About as much as we know now for Health Homes.  And what do we know about how Medicaid managed care has worked so far:  shockingly little on some dimensions.

What is a bit frustrating on Heath Homes is that New York currently has an initiative that looks and smells a lot like Health Homes:  the Chronic Illness Demonstration Project (CIPD).  A monthly fee is paid to six demonstration sites to coordinate and manage care for fee-for-service patients at high risk of future hospitalization.  There is even a shared savings pool for projects that actually reduce costs (after including the costs of the intervention care coordination fee).  Unfortunately, the federal funding for Health Homes came along before we know how well and for whom CIDP is working.  We are going from a demonstration with a couple thousand patients to a ramp-up that ultimately may involve more than 700,000 patients.  Pretty classic.

This is not to say moving ahead with the Health Home Initiative is a bad idea.  The State has moved forward in a refreshingly open and transparent way, trying to keep the health community well-informed and trying to respond where possible to concerns of those likely affected as it rolls out the initiative.  And new federal money is new federal money.  And more coordination can’t be a bad thing.  And getting a broad range of medical, behavioral health, and community based social services providers to work together is fabulous, and it may stimulate more lasting and broader integration or at least coordination among these providers.  Perhaps even the first baby steps toward something that feels like an Accountable Care Organization?  One can only hope.  But what is fairly certain is that things are likely to get a bit messy along the way.  With the magnitude of change required to make Health Homes work, no one will get it all right the first time.  The goal should be to learn as much as possible along the way.  And it is important the State remain flexible and make necessary adjustments as the initiative is rolled out – the speed at which the initiative is being implemented should not be allowed to foreclose opportunities to encourage more lasting and fundamental change.  But stay tuned, it will be an interesting ride.

John Billings is an Associate Professor of Health Policy and Public Service, and the director of Wagner’s Health Policy and Management Program.  His research focuses on understanding  the nature and extent of barriers to optimal health for vulnerable populations.  He can be reached at john.billings@nyu.edu.