Medical Device Daily Associate

SAN FRANCISCO — “I personally don’t look for the federal government to lead [healthcare change], at least in the short-term. No one there has a mandate for change.”

Harsh words, particularly coming from David Brailer, MD, the first National Health Information Technology Coordinator in 2004, until leaving the post to become vice chairman of the American Health Information Community, a federally chartered commission (Medical Device Daily, April 21, 2006).

In a keynote lunch presentation at the JP Morgan Healthcare Conference in the Grand Ballroom of the Westin St. Francis, Brailer challenged the healthcare industry to step up its efforts to innovate to fill the breech left unfilled by government.

“I want to see the private sector flourish,” he said, “and really take its appropriate role in helping organize the healthcare industry and really bring it better value in the future.”

Brailer, who has also been involved on the business side of healthcare via his founding and involvement in CareScience (Philadelphia), pinpointed three fundamental challenges to U.S. healthcare.

The first, he said, is the “unabated cost and affordability crisis.” While he noted that inflation in healthcare spending is at its lowest levels since 1999, “it’s still 2.4 times the consumer price index.”

And he argued that this inflation is different than in the past, when price increases were the dominant factor. “Now it’s dominated by volume increases,” he said. Thus, he argued that 80% of the price increases over the past three years have been driven by more procedures done on the same group of people, with “huge implications for policy and what it means to the industry.”

He said the second challenge is a “quality crisis.” Though “we’re now more than a decade into knowing that 100,000 Americans die from a medical error every year,” he charged that basic safety issues still aren’t being addressed.

Thirdly, he said that a patient in this country can’t find out which hospital has the best safety record, “because we can’t compare quality, or certainly prices, as we shop around for better healthcare. It’s a tremendous challenge and it’s one that still gives us consternation . . . .”

Despite these negatives, he cited one encouraging healthcare trend: the rise of the “radical consumer” – that is, “someone who becomes an expert in their disease, who becomes a self-advocate who manages their illness and holds doctors to account, but they’re still a small share of the total patient population.”

But he suggested that this healthcare radical is the exception proving an unfortunate rule.

U.S. healthcare, he said, allows American citizens to avoid making the tough healthcare decisions. “We’ve protected them from the dynamics, the costs and the operations of healthcare, and what we’ve gotten are pacifist patients, not activist consumers.”

Regardless of what the federal government does — or more to the point, doesn’t do — Brailer said that industry will play the leading role in healthcare change.

“The more official Washington neglects the issues in healthcare, the more openings it gives to the private market to evolve, to innovate, to experiment. I call it policy-making by neglect,” and he called this “a very common form of policy-making” in Washington.

Similarly, Brailer noted recent moves by the states to take the helm of healthcare change.

“We’ve seen Massachusetts announce its access to care, its universal insurance plan. We’ve seen California yesterday one-up that with a broader plan with a bigger reach. A strongly worded financing mechanism that involved not taxes but fees imposed on business and providers.”

Brailer argued that these state initiatives will have to be carried out in an environment of budget neutrality, which he said means “in most states, not raising taxes or fees to pay for budgetary expenditures.”

The one source for providing the states the funding to support these initiatives, he said, is the “33% of healthcare spending that is caught up in waste, inefficiency, errors and the treatment of errors.”

And with heightened consumer interest in healthcare delivery, Brailer said he expects that the level of innovation in healthcare organization, delivery and financing “is going to increase dramatically.”

There are great innovations on the way, some of course coming from the JP Morgan Healthcare attendees, he said.

“Many of these [innovations] have a role to play in a healthcare industry that is consumer-driven,” but requiring a business model that can sustain them through the “perverse incentives that we see today.”

Such innovations, he said, are not simply a new molecule or device — “they’re innovations that can extract more value in care delivery by making it a more cost-efficient, higher in quality and more responsive to what our consumers want as opposed to what we say they want.”

Some things to look at in the next several years that may be important to spur growth include cost reductions that drive things such as the increasing use of high-tech disease management via call centers.

“This will open disease management to many more diseases than the three-to-five high-ticket diseases that we see managed today,” he said.

And he cited advances in in-home monitoring to keep patients autonomous, and living independently as another promising effort. “Remote delivery of medical services is a tremendously promising area,” he said, “whether it’s telepresence, traditional telemedicine or some alternative in between. This increases competition among physicians.”

Predictive genomics and pharmacogenomics, and, of course, the electronic health record were among other key areas that will drive change, he said.

He charged that though the federal government will “take up and support solutions that add value,” it will “do nothing to bring them to market or help them to enjoy commercial success.”

This task he gave to those attending the conference.

“What you do, I would argue,” he said, “will largely determine where we are two years from now with respect to new ideas, to new opportunities, and to new rewards in how our healthcare system operates.”