Entries in Riddle, Clive (282)

Wednesday
Aug202008

The Venus and Mars of Actuaries and Underwriters

By Clive Riddle

For many of us, what goes on behind the closed doors of actuarial and underwriting offices, if not the stuff of Tom Clancy novels, is still a bit mysterious. Many of us in fact confuse the two functions, thinking that they are interchangeable terms to be applied within an organization, when in fact, they are not. In this month's Predictive Modeling News, editor Russell Jackson interviews actuary Joseph N. Romano ASA MAAA, and underwriter James A. Minnich, discussing what Russell refers to as " the Martian and Venusian aspects of each side.”’

Russell cited a recent predictive modeling conference presentation the two, representing Ingenix, had given where they addressed the “stereotypical extremes of actuaries and underwriters. Here are characteristics of the stereotypical actuary: conservative, analytically accurate and precision-seeking, medium- to long-term focus, action-oriented, but with limited urgency, financially results-oriented and biased, program-oriented, a shy, quiet numbers person with some people skills. Here, on the other hand, are characteristics of a stereotypical underwriter: moderate to conservative, analytically accurate but flexible, short- to medium-term focus, responsive and oriented to fast-paced action, balances financials with growth, customer-oriented, an approachable “people person” with good conversation skills. The best actuaries and the best underwriters, the two said, understand those extremes and have a little bit of both in their approach.”   
 
Russell asked the two point blank,  what is the difference between what actuaries do and what underwriters do?. Joe Romano the actuary responded "There are a lot of different ways to describe the roles, of course, especially around pricing. That’s where the two disciplines -- actuary and underwriting -- intersect, interact and overlap. Actuary also does reserving and other peripheral activities, but the primary interaction is on pricing. I would argue that an easy definition is that actuary tends to look at macro activity, at issues in the aggregate. Underwriting, on the other hand, while staying aware of that aggregate, works more with the specifics, with a particular group, for example." Jim Minnich the underwriter added "I’d also use that 'micro' and 'macro' distinction. Also, I’d add that actuary is responsible for coming up with the revenue you need on a per-member-per-month basis, on average, for a set of benefits. The underwriter does the analysis on a group-by-group basis, to do a risk assessment to determine if the group is average, healthy or sick. Underwriting starts with the average revenue needed, then the underwriter adjusts it to the particulars of the group. There’s another dynamic at play, too. None of this happens in a vacuum, so the 'best practice' is where they’re linked together -- actuary, underwriting and sales. What if the PMPM rate is consistently too high to be supported by the market? We need to make sure we get enough revenue, but we have to strike a balance between profit and growth. Sales is focused on growth, while underwriting and actuary focus more on the profit piece."

This led Russell to ask them, is there a difference between medical and financial underwriting? Romano replied "There is, indeed. A medical underwriter traditionally is someone who reviews individual health insurance applications, which typically include health questionnaires. So medical underwriting looks at the presence or absence of diabetes, cancer and other chronic conditions to determine the medical health status of the applicant. The financial underwriter, by comparison, works on smaller groups with the other underwriters, but is much more similar in actual function to an actuary, using algebraic calculations to determine the rate needs for a particular group."

Russell Jackson comments that "It doesn’t sound exactly like one is from Mars and the other from Venus, to borrow from the book title, but it sounds like personality types could contribute to a disconnect between actuaries and underwriters." He then asks if  there any way to account for that in staffing, or in setting up communications processes between them?  

Romano tells Russell that "part of what attracts people to the different professions, absolutely, is differences in personality traits. Both disciplines are math-oriented, of course, but while the typical actuary is a math major, an underwriter may be a math major, but we also find folks with a lot broader backgrounds in underwriting because those professionals need a math bent but other skill sets as well. It gets into the different scopes of training the two disciplines undergo; for example, the actuarial profession has a formal examination schedule. The point is, if you have the wrong kinds of interactions between the stereotypes of actuaries and underwriters, you can have problems. But when you get the right kinds, when you get the interactions of people who recognize the stereotypes but who really understand each other’s disciplines, you have the best possible scenario -- the underwriter who understands the actuary’s introversion or the sales agent who understands math. That’s the ideal interaction of the disciplines, and that starts with the interaction of the individual actuaries and underwriters themselves."

Minnich weighed in as well. "I was trained in the early 1980’s at an insurer, and I was surprised that, in that office, we had 50 underwriters, but only five or so of them had math backgrounds. Mine, in fact, is in theology, and I once taught religion to high school students. In other words, you find a wide variety of backgrounds in underwriting, but it’s rare to find an actuary who doesn’t have a math background. Of course, there are stereotypes, too. Are all actuaries very analytical and introverted? Are all underwriters a little less extroverted than sales agents and a little less technically adept than actuaries? Are all sales agents very extroverted with very limited math aptitude?"

Russell also asked how valuable is a formal education program to train each discipline about the other and about respecting the differences between them?  Romano responded that "The Society of Actuaries’ educational processes continually evolve, and we’re trying to get more than math major personalities in terms of thought processes, more of a business orientation; in fact, we talk about the same issues for actuarial and for predictive modeling audiences. There’s great interest in people understanding how they work together. A challenge for better integration of actuary and underwriting, though, is the fact that, while underwriters attend educational forums as well, I don’t know that we have a formal approach to learning each other’s discipline. We have opportunities for that kind of education, but I don’t know that you’ll see it formalized. Rather, that integration is really going to result from the dynamics of people working together and sharing information."

Minnich tells Russell that "My background is in underwriting, so I’m aware of something of an unspoken dynamic; unspoken but worth knowing about. In a traditional insurance company 25 years ago, the actuary held a role that was higher than the underwriter’s. In many cases, the actuary was responsible for coming up with what was needed as far as averages, but also for the formulas the underwriters would be expected to use to go from the average to a community rate for a particular group. It was very clear that, stature-wise, the actuary was much higher. In fact, there are still actuaries working with clients who don’t like to turn the case over to underwriting because everyone knows that “an actuary can underwrite, but an underwriter can’t actuary.” That dynamic is certainly changing, but there’s still some underlying tension out there. What’s changing it? With the advent of HMOs, you see smaller, regional plans that, because of their size, couldn’t afford to hire an actuary. So they’d look to the underwriter on staff to do the traditional actuarial duties and hire an outside firm for consulting actuarial functions. Now, at the huge insurance companies, which have huge actuarial staffs, some of the more stereotypical actuaries still exist. If that person is one of, say 30, actuaries, he or she may not ever have to interact directly with underwriting or sales. But in the smaller plans that have cropped up, if you’re the only actuary, you don’t have that luxury. The good news for all of us is it’s the actuaries who have personalities closer to underwriters and sales agents who will advance. Likewise, it’s the underwriters who are analytical who will succeed."

For More Information:

Predictive Modeling News
www.PredictiveModelingNews.com

Sunday
Jun222008

Health Care Is Personal: In Memory of Karen

By Clive Riddle

Just a few months into my first administrative position at a hospital in 1981, just a year out of college, I remember feeling pleased with myself as I edited the Radiation Therapy Center feasibility study I had just spent countless hours and days preparing. It was a thick report full of projections, tables, charts, and narrative. Then in the background, I could year the sobbing outside my office.

My office had been converted from an admissions room, and was situated next to a quiet area for families, off the main lobby. I had never really paid attention my surroundings. I was too into my new job. But the sobbing persisted, and at some point I had to leave my office for a meeting. As I rounded the corner I spied the family, grieving for a loved one that had just passed away upstairs.

In the years to come, as I progressed in my career, becoming CEO of a regional provider owned health plan, I was typically far removed from the actual rendering of health care. Instead I was immersed in the business of it: budgets, monthly reports, department head meetings, actuarial projections, marketing campaigns, contract negotiations, board meetings, personnel issues.

Now and then, but never often enough, I tried to remind myself of that day outside my hospital office, so early in my career, when I first learned that health care is personal, and can not so lightly treated as just another business or commodity.

During my more than dozen years running that health plan, I had the great pleasure of working every day with Karen (Hutcheson) Speziale. She was the Chief Operating Officer of the plan, and she made the plan run, and run well. Karen passed away this past week, after a six and a half year battle with cancer. Karen should have been with us for at least a couple of more decades.

I remember sitting in my health plan office with Karen and our Medical Director, making decisions on proposed benefit and coinsurance levels for the coming plan year. We set a higher coinsurance level and benefit limitation for Total Parenteral Nutrition (TPN), which was at the time increasingly being used in the treatment of Crohn’s Disease. Years later, one of my children would be diagnosed with Crohn’s. We also set various new benefit parameters for several different prescription and treatment options for cancer.

Health care is personal.

After I left that health plan to start MCOL, Karen went on to take a position with Kaiser Permanente, developing and then managing their expansion in our market. Kaiser is now the dominant health plan in our area. Later, Karen moved away to San Diego, and really flourished there.

Karen volunteered significant time in elementary school classrooms. She became the advisor for the local chapter of her Sorority at the university. She spent countless hours on other civic activities. Several of her former department heads from our old health plan remained the closest of friends with her, taking really cool vacations together, and staying in constant touch. She also kept very close ties with her family. When Karen’s illness required that she fully retire from her job, she continued all her contributions to the community.

I very recently took a quick trip to visit with Karen. She had just returned from a visit to the Kindergarten class where she helped the kids learn to read. They had put on a program just for her. On the wall in her office was a plaque recently given to her by her Sorority as the national “Alumna of the Year.” The perpetual annual award will now bear her name.

Karen’s investment in community time should serve as a wake up  call to all of us working on the business side of health care, to put and keep some balance in our lives, as Karen did.

Karen shared with me how recently at the hospital she had an hour long conversation with a nurse on what was wrong with health care. Karen laughed about it, but its hard to argue that there is something significant that needs to be done with health care. We can start by remembering how personal it is.

Anyone reading this who knew Karen Speziale might be interested to know that donations in her memory can be made to San Diego Hospice at www.sdhospice.org

Monday
Jun162008

International Health Care Data and Comparisons

By Clive Riddle

With this election year, health care is a central topic of discussion for Presidential and Congressional candidates. Inevitably, references are made inferring either superior or inferior performance of the U.S. health care system compared to various other countries.
So just what kind of current data is out there reflecting various attributes of international health care? Below is collection of selected international health care factoids, compiled by Global Health Resources this year:

Health Spending And Insurance Systems in Seven Countries, 2007

Australia

Canada

Germany

Netherlands

New Zealand

United Kingdom

United States

National health spending

Per capita (U.S. $PPP)*

$3,128

$3,326

$3,287

$3,094

$2,343

$2,724

$6,697

Percent of GDP*

9.5%

9.8%

10.7%

9.2%

9.0%

8.3%

16.0%

Percent of primary care practices with:

Any financial incentive for quality

72%

41%

43%

58%

79%

95%

30%

Electronic medical records

79%

23%

42%

98%

92%

89%

28%

Percent uninsured

0%

0%

<1%

<2%

0%

0%

16%

*PPP is purchasing power parity. GDP is gross domestic product

Source: Toward Higher-Performance Health Systems: Adults’ Health Care Experiences In Seven Countries, 2007
Health Affairs, October 2007
http://content.healthaffairs.org/cgi/content/full/26/6/w717

Cost of Medical Procedures: United States and Abroad (in US dollars)

Procedure

United States

Costa Rica

Mexico

Korea

Heart bypass

$130,000

$24,000

$22,000

$34,150

Heart-valve replacement

$160,000

$15,000

$18,000

$29,500

Angioplasty

$57,000

$9,000

$13,800

$19,600

Hip replacement

$43,000

$12,000

$14,000

$11,400

Hysterectomy

$20,000

$4,000

$6,000

$12,700

Knee replacement

$40,000

$11,000

$12,000

$24,100

Spinal fusion

$62,000

$25,000

N/A

$3,311

Source: Medical Tourism Association, 2007 Survey

Procedure

United States

Costa Rica

Mexico

Korea

Heart bypass

$130,000

$24,000

$22,000

$34,150

Heart-valve replacement

$160,000

$15,000

$18,000

$29,500

Angioplasty

$57,000

$9,000

$13,800

$19,600

Hip replacement

$43,000

$12,000

$14,000

$11,400

Hysterectomy

$20,000

$4,000

$6,000

$12,700

Knee replacement

$40,000

$11,000

$12,000

$24,100

Spinal fusion

$62,000

$25,000

N/A

$3,311

Source: Medical Tourism Association, 2007 Survey

The Cost of Medical Procedures in Selected Countries (in US dollars)

Procedure

US Retail Price*

US Insurers' Cost*

India**

Thailand**

Singapore**

Angioplasty

$98,618

$44,268

$11,000

$13,000

$13,000

Heart bypass

$210,842

$94,277

$10,000

$12,000

$20,000

Heart-valve replacement (single)

$274,395

$122,969

$9,500

$10,500

$13,000

Hip replacement

$75,399

$31,485

$9,000

$12,000

$12,000

Knee replacement

$69,991

$30,358

$8,500

$10,000

$13,000

Gastric bypass

$82,646

$47,735

$11,000

$15,000

$15,000

Spinal fusion

$108,127

$43,576

$5,500

$7,000

$9,000

Mastectomy

$40,832

$16,833

$7,500

$9,000

$12,400

* Retail price and insurers' costs represent the mid-point between low and high ranges
** US rates include at least one day of hospitalization; international rates include airfare, hospital and hotel

Source: Medical Tourism: Global Competition in Health Care, National Center for Policy Analysis, November 2007
http://www.ncpa.org/pub/st/st304/st304.pdf

Wait Time to get an Appointment in Seven Countries

Percent of adults who waited 6+ days for an appointment to see regular medical doctor

Canada

30%

United States

20%

Germany

20%

United Kingdom

12%

Australia

10%

Netherlands

5%

New Zealand

4%

Source: Fixing the Foundation: An Update on Primary Health Care and Home Care Renewal in Canada, January 2008
http://www.healthcouncilcanada.ca/docs/rpts/2008/phc/HCC_PHC_Main_web_E.pdf

Percent of adults who waited 6+ days for an appointment to see regular medical doctor

Canada

30%

United States

20%

Germany

20%

United Kingdom

12%

Australia

10%

Netherlands

5%

New Zealand

4%

Source: Fixing the Foundation: An Update on Primary Health Care and Home Care Renewal in Canada, January 2008
http://www.healthcouncilcanada.ca/docs/rpts/2008/phc/HCC_PHC_Main_web_E.pdf

Access to “Medical home”* Among Adults in Seven Countries, 2007

Australia

Canada

Germany

Netherlands

New Zealand

United Kingdom

US

59%

48%

45%

47%

61%

47%

50%

*Medical Home: Has a regular doctor or place that is very/somewhat easy to contact by phone, always/often knows medical history, and always/often helps coordinate care

Source: Toward Higher-Performance Health Systems: Adults’ Health Care Experiences In Seven Countries, 2007
Health Affairs, October 2007
http://content.healthaffairs.org/cgi/content/full/26/6/w717

Out-of-Pocket Expenses for Medical Bills in the Past Year in Seven Countries

(in U.S. $ equivalent)

Australia

Canada

Germany

Netherlands

New Zealand

United Kingdom

United States

None

13%

21%

9%

38%

12%

52%

10%

$1-$100

11%

17%

17%

15%

17%

12%

9%

More than $1,000

19%

12%

10%

5%

10%

4%

30%

Source: Toward Higher-Performance Health Systems: Adults’ Health Care Experiences In Seven Countries, 2007
Health Affairs, October 2007
http://content.healthaffairs.org/cgi/content/full/26/6/w717

Mortality Amenable to Health Care in Selected Countries*

Deaths per 100,000 population

Country

1997-98

2002-03

France

76

65

Japan

81

71

Spain

84

74

Australia

88

71

Sweden

88

82

Italy

89

74

Canada

89

77

Netherlands

97

82

Greece

97

84

Norway

99

80

Germany

106

90

Austria

109

84

Denmark

113

101

New Zealand

115

96

United States

115

110

Finland

116

93

Portugal

128

104

United Kingdom

130

103

Ireland

134

103

*Deaths from certain causes before age 75 that are potentially preventable with timely and effective health care.
Source: Measuring the Health of Nations: Updating an Earlier Analysis, The Commonwealth Fund, January 2008
http://www.commonwealthfund.org/usr_doc/1090_Nolte_measuring_hlt_of_nations_
HA_01-2008_ITL(web).pdf?section=4039

 

Cost-Related Access Problems in Seven Countries, 2007

 

Australia

Canada

Germany

Netherlands

New Zealand

United Kingdom

United States

Percent in past year due to cost:

Did not fill prescription or skipped doses

13%

8%

11%

2%

10%

5%

23%

Had a medical problem but did not visit doctor

13

4

12

1

19

2

25

Skipped test, treatment or follow-up

17

5

8

2

13

3

23

Percent who said yes to at least one of the above

26

12

21

5

25

8

37

Source: Health Care: Solutions Without Borders, The Commonwealth Fund
http://www.commonwealthfund.org/aboutus/aboutus_show.htm?doc_id=597055

For More Information:

Global Health Resource
www.globalhealthresources.com

 

Tuesday
Apr222008

What's the current state of things in the Convenient Care Industry?

By Clive Riddle

After attending two sessions on retail medicine at the World Health Care Congress today, here's what we found out:

John Agwunobi, MD, EVP Professional Services for Wal-Mart shared the following statistics for Convenient Care visits at Wal-Mart locations, through their various contracted providers:

  • adults comprise 79% of visits, 21% of visits are for children
  • 55% of patients have no insurance coverage
  • Patient surveys indicate, had the Wal Mart convenient care location not been available, 40-50% of patients would have seen a primary care physician; 20-35% of patients would have used an urgent care facility; 10-15% would have gone to an ER; 5-10% would have foregone treatment
  • 90+% of patients indicate overall satisfaction
  • 25-40% of visits are for immunizations & screenings; and 60-75% of visits are to treat common illnesses

Doctor Agwunobi also discussed the Wal-Mart $4 Generic Prescription program, which is offered to all Wal-Mart customers and is proactively promoted through the Convenient Care locations. The program involves 361 generic prescriptions covering up to 95 percent of prescriptions written in the majority of therapeutic categories. Nearly 30 percent of $4 prescriptions are filled without insurance. The $4 prescriptions now represent approximately 40 percent of all filled prescriptions at Wal-Mart.

Web Golinkin, President and CEO, of RediClinic discussed RediClinic customer experiences, noting that RediClinic is a partner of Wal-Marts. Mr. Golinkin is also President of the Convenient Care Association and shared the following insights regarding the Association and industry as a whole:

  • There were 150 clinics when the Convenient Care Association founded less than two years ago to more than 950 today nationwide, with 1,500 projected by the end of 2008.
  • Overall, the clinics have treated more than 2.5 million patients in 36 states
  • Surveys indicate 16% of consumers have tried a clinic and between 34 to 41% say they intend to

Golinkin stated the potential obstacles or events that could slow industry growth would be if:

  • The industry suffered future systemic clinical quality issues
  • A shortage and/or increased cost of Nurse Practitioners (NPs) and Physician Assistants (PAs) occurred
  • If various states continue with additional regulatory impediments (clinic licensure requirements, restrictions on NP/PA scope of practice and prescriptive authority, physician oversight requirements, corporate practice of medicine prohibitions, etc.)
  • If increased Operator/business model failures occur. He noted that there have been some failures, commented that this should be expected with any industry having relatively lower barriers to entry but higher ongoing working capital requirements. He felt there will be a shakeout with consolidation.

Michael Howe, CEO of MinuteClinic, states their organization's strengths include:

  • They are "Right Size” engineered for efficiency and high quality
  • Proprietary Electronic medical record system embedded with standardized “best practice” protocols
  • Facilitates measurement of results and continuous quality improvement
  • Interoperability drives continuity of care back to the Medical Home
  • Consumer friendly - with convenient locations in consumer pathway, and “Lifestyle conscious” hours and “walk in” scheduling
  • “High touch” capability of practitioners drives compliance
  • Patient Referral system facilitates the creation of “Medical Homes”when lacking

He cited an independent external research study conducted by Market Strategies in April 2007 indicating a patient satisfaction rate, as well as the percent likely to recommend, of 97%. He noted that MinuteClinic adheres to national standards of practice guidelines, (which have been adopted by their Association) but also is the first retail health care provider to be Joint Commission accredited.

Howe also cited a peer reviewed study from September 2005 through September 2006 of 57,000+ MinuteClinic evaluations of acute pharyngitis, looking for outcome measures to include adherence to best practice treatment guideline in presence of negative or positive RST, use of back up confirmatory strep culture testing in presence of negative RST, and documented rationale when antibiotic was prescribed in presence of negative RST. The study indicated an overall adherence rate of 99.15%.

Monday
Mar312008

e-Visit Data

By Clive Riddle

Patient online e-visits, introduced at the start of this decade, continue to gain momentum as technologies improve, consumer demand increases, experience from prior pilot studies becomes more widespread and major health plans advance and adopt e-visit initiatives. Here's a collection of some recent data on e-visits, compiled in MCOL's March @How-TO newsletter:

  • Trinity Clinic in Whitehouse, Texas, reports e-visits average five minutes, compared with 15 to 20 minutes for comparable office encounters, and averages one to two billable e-visits per month per doctor (1)
  • Medfusion, an e-visit vendor, has process half a million e-visits for about 2,500 physicians during the last three years (1)
  • McKesson's Relay Health, an e-visit vendor, charges physicians $25 per month per doctor for use of the web visit tools (2). RelayHealth, has 15,000 subscribing physicians (3)
  • Manhattan Research survey results found 31% of physicians reported using some type of online communication with their patients in the first quarter of 2007, up from 24% in 2005, and 19% in 2003 (3)
  • "National surveys suggest that the majority of online consumers now desire e-mail access to their physician and are willing to pay about $25 for an online consultation. A recent Wall Street Journal Online/Harris Interactive Poll found that 62 percent of patients said the ability to talk to a physician electronically would affect their choice of doctors and a Harris Interactive poll conducted in 2006 found that 74 percent of patients would like to use e-mail to communicate directly with their physicians." (3)
  • "A recent Kaiser Permanente study of patients who used the medical group’s secure e-mail system between 2002 and 2005 to access their physicians found that they phoned their physicians nearly 14 percent less than did patients not using the system, while each doctor averaged about two e-mail messages per day." (3)
  • "A two-year study of a pediatric rheumatologist’s e-mail and telephone interactions with 121 patient families, published in last October’s Pediatrics, found that the physician received an average of 1.2 e-mails per day, while answering patient questions by e-mail was 57 percent faster than using the telephone." (3)
  • "75% of patients polled in the 2007 WSJ/Harris poll reported that their doctor does not currently offer e-Visits or other e-services" (4)
  • "Blue Shield of California has estimated that the use of online patient-provider communications tools by its members will save the organization $4 million a year in office visit claims." (4) 

(1) Demand for e-visits grows but uptake still sluggish
Managed Healthcare Executive, November 1, 2007
http://managedhealthcareexecutive.modernmedicine.com/

(2) Physicians diagnose their patients via mouse calls
Akron Beacon Journal, March 10, 2008
http://www.statesman.com/life/content/life/stories/health/03/10/0310housecalls.html

(3) Online physician communication 
Physicians News Digest, March 2008
http://www.physiciansnews.com/cover/308.html 

(4) e-Visits:The Tipping Point - Are We There Yet?
Rhondda Francis, TransforMed, 2008
http://www.transformed.com/e-Visits/e-Visits_Are_We_There_Yet.cfm