The Myth of the Sovereign Consumer 

By Kim Bellard, May 22, 2014

The title of this post comes from a provocative article by Bruce Vladeck in a recent Health Affairs Web First edition focused on provider consolidation.  I'll get back to Dr. Vladeck, but anyone who has been following my posts knows that provider consolidation has been a source of much concern to me, so the four articles in this HA edition were of much interest.

Paul Ginsburg and Gregory Pawlson's
article takes it as a given that providers have been consolidating, are going to consolidate, and that, left unchecked, this would tend to raise prices.  They outline a fairly comprehensive list of potential strategies to deal with this impact. 

article, from economist Martin Gaynor, reviews the issue of consolidation, some of the research on it, and the various ways that competition is regulated. 

A third article, from MD/JD Professor William Sage, suggests that the problem is not so much provider consolidation as it is "getting the product right."  He argues that much of our health care system isn't as competitive as it could be because a "..long history of regulation and subsidy has distorted prices, quality, and innovation." 

The fourth, and most fun, article was from Dr. Vladeck.  He doesn't seem as worried about either provider consolidation or the ultimate need for government rate setting (although he acknowledges it is not politically likely).  He views the Sage and Ginsburg/Pawlson articles as being based too much on what he calls a "fundamentally obsolete conceptual model": the myth of the sovereign consumer. 

Dr. Vladeck seems skeptical of Sage's proposals to redefine the product, and sees consumers as being clearly worse off than twenty years ago, especially since:

...consumers are regularly inundated with self-serving or downright erroneous information from health insurers, providers, and entrepreneurs alike about health care services and their use that carries the implicit message that any illness or financial difficulty is essentially the fault of the consumer.


Dr. Vladeck concludes that large payors, including the government, may be the best bet to control prices, but concludes that "instead of continuing to try to impose axiomatic and solipsistic theories on a reality to which they increasingly fail to apply, we need to figure out what kind of health care system we really want and how much we are prepared to pay for it."

I don't disagree with his conclusion, just most of what preceded it.

Chip Kahn, President of the Federation of American Hospitals, used the HA edition to
post his thoughts on consolidation.  Not surprisingly, he's all for it, citing what he sees as the more ominous consolidation on the health plan side. 

Neither Mr. Kahn nor Dr. Vladeck seem to credit a slowdown in the rate of increases to the last recession, or to changing consumer behavior due to increased cost-sharing and less confidence in their economic prospects. 

Which leads back to Dr. Vladeck's "myth of the sovereign consumer."  Yeah, I'd have to agree that the record is pretty poor about consumers taking good care of their own health.  I'd also have to agree that the full impact of increased cost-sharing is, as yet, unclear. 

At the end of the day, though, given a choice between having responsibility for my health or abdicating it to someone else, I'd rather have it, and I think most people would agree.  It's not that the "sovereign consumer" is a myth, it's that we haven't ever really tried it. 

Frankly, in many ways, it is pointless to decry provider consolidation, because it is going to happen, just as it is happening in virtually every other sector of the economy.  

The Commonwealth Fund is "searching for the
next breakthrough in health care, by which they mean "an idea, a paradigm, a strategy that positively and profoundly disrupts the status quo."  Finding ways to truly empower consumers -- not just paying lip service to it -- may just be such an idea.

This post is an abridged version of the posting in Kim Bellard’s blogsite. Click here to read the full posting


Portrait of a LinkedIn User

By Claire Thayer, May 12, 2014

A few weeks ago, LinkedIn announced that it reached 300 million registered users, with almost two-thirds of these members located outside the United States. So, just what does the typical LinkedIn user look like? Power+Formula has a nice infographic on user demographics in their new Portrait of a LinkedIn User 2014 Edition.  A complete copy of the infographic is shown below, and highlights include:

  • 81% are using the Free LinkedIn version
  • 43% spend 0-2 hours a week on LinkedIn
  • 42% use LinkedIN to build new relationships with potential customers
  • 41% use LinkedIn to increase marketing presence
  • 60% use the LinkedIn Company page feature to share status updates with company followers
  • 36% Rank LinkedIn as “Extremely” important in efforts to develop or grow business


The full infographic is available here:


Practice Profitability Index: Physicians Bearish on the Year Ahead

By Clive Riddle, May 9, 2014

CareCloud, in partnership with QuantiaMD, has just released their second annual Practice Profitability Index report. The ten-page 2014 report, “intended to serve as an annual barometer for the operational wellbeing of U.S. medical groups in the year ahead,” finds that “U.S. physicians are now more than twice as likely to foresee eroding, not increasing, profits in 2014,” as they illustrate with survey results in this portion of an infographic provided in conjunction with the report.

Of course, as the healthcare landscape evolves and trends for integration continues to gradually gather steam, those remaining in private practice may view themselves in an increasingly embattled or even endangered species. Albert Santalo, CareCloud Chairman and CEO  tells us, “physicians are experiencing increasing strain on their practice operations as a result of healthcare reform and government mandates. This strain, in turn, affects patients – including the millions of new ones entering the system as a result of the Affordable Care Act.  Nearly half of physicians say they cannot take on these patients, foreshadowing an access to care issue. Meanwhile, despite the hype about emerging reimbursement models, physicians are most likely to seek improvements through programs that help them engage with their sickest and most vulnerable patients.”

The Practice Profitability Index involves gathering insights via an interactive online questionnaire and related discussion groups. This year, 5,064 physicians participated during March, 2014. Here’s highlights of findings presented in the report: 

  • Physicians with a negative outlook increased from 36% to 39% during the past year
  • Physician optimists declined from 22% to 19%.
  • The detailed breakdown of responses for profitability trending was 5% very positive; 14% somewhat positive; 30% about the same; 29% somewhat negative; 10% very negative; and 12% not sure.
  • Their top financial concerns are: declining reimbursements (60%); rising costs (50%); requirements from the Affordable Care Act (49%); and the transition to ICD-10 (43%).
  • The percentage of doctors spending more than one day a week on paperwork rose sharply between 2013 and 2014, from 58% to 70%.
  • 23% spend more than 40% of their time on administration, up from 15% last year.
  • 40% of physicians indicated patient engagement programs hold the greatest promise for improving their practice performance in 2014.
  • Other responses for improving performance including new alliances with other providers (21%), ACO participation (11%) and mobile technologies (11%)
  • The survey was taken before the minimum one-year delay to the ICD-10 code transition, originally scheduled for October 2014, but at that time 44% did not know whether they would be ready. Another 25% were certain they would not be prepared and faced high transition and upgrade costs.
  • Of the 48% of respondents that own their practice, 24% of these physicians are considering selling the practice, up from 21% in 2013. 53% are not looking to sell at all, down from 50% in 20

Humana Study Measures Claims Costs and Absence Rate by level of Wellness Program Engagement

By Clive Riddle, May 2, 2014

Humana has released findings from their HumanaVitality Health Claims and Productivity Impact Study of Humana employees. HumanaVitality is a joint venture between Humana Inc. and Discovery Holdings, Ltd. That serves 3.5+ million members and “is a data-driven wellness and rewards program that motivates members to make healthier life choices.”

Humana touts that “the two-year study found improved health, as shown through lower health care costs and fewer unscheduled absences, among employees who actively participated in the HumanaVitality program.”

Here’s their specific findings:

  • Unengaged members in both years averaged $53 more per month spent on health care claims than members who were engaged in HumanaVitality both years.
  • The largest impact on health care costs was on members with lifestyle-related chronic conditions like high blood pressure or diabetes. Engaged members with these conditions had 60 percent lower health claims costs than unengaged members with these conditions.
  • Another way of stating this: Unengaged members with lifestyle-related chronic conditions had 101% higher claims costs than the total population, while engaged members with these chronic conditions had 41% higher claims costs than the total population
  • Unscheduled absences were 56.3 percent higher among unengaged members in both years than engaged members
  • Members who were unengaged the first year but engaged the second year had 29% higher unscheduled absence and an average of $28 per month in claims costs than members who engaged both years

Humana shared this about the study methodology: “This study was performed on a cohort of Humana associates that were on a Humana employee medical health plan for a full 12 months in at least two consecutive plan years over the study period. The study was conducted by Humana actuaries for the following time period: Baseline Year (July 2010 – June 2011), Year 1 of the HumanaVitality program (July 2011 – June 2012) and Year 2 of the HumanaVitality program (July 2012 – June 2013). Only Humana employees were included in the study; individuals with high cost claims (>= $ 150,000 in the Baseline Year, Year 1 or Year 2) were removed from the sample. The final sample size was 13,046 members in the Year 1 analysis and 16,296 members in the Year 2 analysis.”


Net Gain of 9.3 Million American Adults with Health Insurance Coverage

By Claire Thayer, April 18, 2014

While the big news this week focused on the success of President Obama and the ACA enrolling 8 million Americans for health insurance through the federal marketplace, a new study from RAND estimates that there was actually a net gain of 9.3 million in the number of American adults with health insurance coverage from September 2013 to mid-March 2014.

The RAND survey, “drawn from a small but nationally representative sample, indicates that this significant uptick in insurance coverage has come not only from enrollment in the new marketplaces established under the Affordable Care Act (ACA), but also from new enrollment in employer coverage and Medicaid.”

A summary of the new RAND report is available for free here, with highlights below:

  • Of the 40.7 million who were uninsured in 2013, 14.5 million gained coverage, but 5.2 million of the insured lost coverage, for a net gain in coverage of approximately 9.3 million. This represents a drop in the share of the population that is uninsured from 20.5 percent to 15.8 percent.
  • The 9.3 million person increase in insurance is driven not only by enrollment in marketplace plans, but also by gains in employer-sponsored insurance (ESI) and Medicaid.
  • Enrollment in ESI increased by 8.2 million.
  • Medicaid enrollment increased by 5.9 million. New enrollees are primarily drawn from those who were uninsured in 2013, or those who had “other” forms of insurance, including Medicare, retiree health insurance, and other government plans.
  • According to our estimates, 3.9 million were covered through the state and federal marketplaces as of mid-March 2014. This figure does not fully capture the enrollment surge that occurred in late March.
  • Among the 7.8 million people who were enrolled in off-marketplace individual market plans in early 2014, 7.3 million were previously insured; 5.4 million were previously insured through an individual market plan.

The complete RAND study is available for download at no charge here.

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