Pricing, Product and Audience: Theranos and DTC Blood Testing

Is the Population Health Blog due for a meal of humble pie?

In this prior post, the PHB was "long" on Theranos' prospects.  Since that was written, Medicare has alleged that a company lab was a "jeopardy to patient health and safety," a peer-reviewed study showed troubling test inaccuracies, the Securities and Exchange Commission (SEC) has opened an investigation, higher ups have left the company, years of test results have been "voided"  and founder Elizabeth Holmes faces the prospect of a ban from doing business with Medicare and Medicaid.

Talk about humble pie.

In this well-written Viewpoint published in JAMA, Stanford's John Ionnidis composes a Theranos requiem that ultimately questions the virtues of the company's low-cost and direct-to-consumer blood testing. He argues that while the solution of self-diagnosis and early treatment only sounds revolutionary. That pales in comparison to the far larger problem of misdiagnosis that leads to the reality of overtreatment.

Good point.  But, while Theranos' prospects are clouded, the PHB is still long on the underlying three point business model.  Theranos got one right, and the other two are within reach.

To wit,

1) The pricing is uncoupled from opaque insurer-based fee schedules and based on rational consumer-driven price points.

2) The product is health insights, not blood testing data.

3) The audience needs to understand the value-based outcomes  

 

The PHB explains:

1) Theranos stumbles over internal quality control and regulatory compliance issues will play out, and after a sufficient number of heads roll, will be addressed.  Once that's settled, consumer interest in being able to circumvent insurance and "buy" transparently-priced and OTC blood tests should remain considerable. Medicare's fee schedules are ultimately "cost-plus" which includes the costs of a highly inefficient care system. Think about that $500 stitch and it's little wonder why consumers are so willing to beat a retail path to Walgreen's door.

2) Consumer insights about screening blood tests come from combining the data with pre-test odds, sensitivity and specificity.  While a smart physician can certainly help patients navigate an abnormal liver test or a high cholesterol, distance technology combined with consumer-friendly machine intelligence (here's a simple example) can also. It's simply a matter of industrializing and democratizing what we've known for decades. And once consumers can understand tests' imperfections, things will equilibrate between under and overtreatment

3) For many reasons, healthcare is a different business. Among the many reasons for that is that "success" is particularly dependent on the need to understand the short and long term outcomes and costs (i.e. value) of any new care model. That means committing considerable resources to study, document, internalize and publicly report what was achieved at what price. An audience of scientists, regulators, providers, insurers, buyers, politicians, physicians and bloggers want to know: does open-range testing for Hepatitis C paired with education on false positive test results reduce the incidence and costs of cirrhosis or liver cancer?  Does consumer self-ordering blood glucose levels combined with post-test odds reporting increase awareness of otherwise undiagnosed diabetes and increase claims expense? Does DTC pregnancy testing.... oh, wait, we know that one. You get the picture.

 

If not Theranos, then some other company will profit from putting patients in at the center of lab testing.  The genie is out of the bottle.

19th Hedda Gabler's Lessons for 21st Century Health Information Technology

It's the 17th of May, which means it's Norway's Constitution Day.  Sort of like July 4th.  Which reminds the Population Health Blog.....

If you are in D.C. in the coming weeks and have an interest in health information technology (HIT), you may want to check out the Studio Theatre production of Norwegian playwright Henrik Ibsen's Hedda Gabler. 

 

The Population Health Blog explains.

In the two and a half hour production, Hedda struggles to reconcile her human dysfunctions with the rigid etiquette of an aristocratic age. As her dilemmas unfold, her academic husband George delights in analyzing societal trends while being unable to see the disaster unfolding in his own home. George ironically delights in knowing more, but is aware of less and less. 

 

There's far more to the play, but what can this 19th century masterpiece teach about HIT?

While Hedda has her issues, she's still being victimized by a complex set of external social determinants.  The PHB suspects playwright Ibsen was intrigued by the impact of rigid social norms in late 19th century Europe.  His play examines their implications for otherwise smart people who can't and/or refuse to adapt. 

Is Hedda's resistance to be reviled, or admired?

Sound familiar?  Instead of a mansion decorated with dying bouquets, we have hospitals filled with the fading economics of piecemeal work. Physicians are working harder than ever to help their patients, but a new technocracy is advancing a new set of expectations.  And the mainstream HIT Georges are so fascinated by making meaningful use meaningful, they are likewise unable to see the forest past all the trees. 

The Latest Health Wonk Review Is Up

"If elected, I'll....."

Wright on Health pivots to an excellent "general election edition" of the Health Wonk Review.  After reading it, you'll be better informed than either Hillary or The Donald about health policy. 

Too bad you can't do anything about it, but enjoy, eh?

Governance Advice for Hospital Boards: Population Health

"For 60 or 90 days of post-discharge care?"

Writing in the April 26 issue of JAMA, Michael Jillinek of Lahey Health has some important advice for healthcare organization boards of directors.

As income shifts from fee-for-service to global payments, the insurance risk transfers that underlie much of "population health" are an important threat to these enterprises' viability.

After a compact and well-written summary of the growth of population health, he offers six suggestions for these boards:

1. Plan on having "forthright discussions" about the difficult tradeoffs between still-remunerative fee-for-service activities (such as high-dollar imaging, lucrative surgical services) and having to invest in the Triple Aim (care coordination personnel, improving quality measures for persons with chronic illness).

The Population Health Blog suspects most boards will ask why they can't have both the FFS cake and the global payment icing. If that's the case, these boards need to plan on having forthright and very lengthy discussions. It's organizationally difficult to have one mission on the 4th floor of the hospital and another in the emergency room.

2. If the organization's employees are enrolled in a "self-insured" health plan, bring them into a population health program sooner rather than later.

Not only is this an important opportunity for a board to understand the revenue versus savings versus expenses involved in driving the clinical and care experience outcomes of population health, its only right to take this for a personal test drive before subjecting your patients to it.

3. Look for common ground between old fee for service and new global payment arrangements.  The author suggests reducing readmissions is a good start.

The PHB suggests boards ask their management teams to also pursue the care coordination "chronic care management" payments offered by CMS.

4. Start demanding population health metrics from your management team, "such as details of total medical expenditures."

More details on the work of measurement can be found here.  The PHB has also humbly suggests here that health organizations should be prepared to invest significant resources - and discipline - into the process.

5. Invest in primary care, care coordination teamwork and pursue "population health pilot programs."

Since the PHB believes well-intentioned CMS' programs are star-crossed (see here and here), it suggests working with local commercial insurers for starters.  As it reviews resources like this, they seem to have a better track record. 

6.  Ask your management team to be open population health contracting.

Hear hear, says the PHB.  But it also cautions that the board needs to have individuals with the kind of industry knowledge necessary to provide oversight of these contracts.  

Image from Wikipedia