Purchasing healthcare on “a wing and a prayer”? There’s a better way.

imageIn a post earlier this month I conveyed information about my participation in a CEO Health Care Summit organized by Virginia Mason Medical Center in Seattle.  Our first Summit was held at the Waldorf Astoria Hotel in New York City.  Today, we just wrapped up a similar event in San Francisco held at the Fairmont Hotel.  The objective of these events is to bring together business leaders from around the county to show how they can use their purchasing power to drive market-based reforms in healthcare and achieve the triple aim of care that is better, faster and less costly.  Working with companies like Boeing, Starbucks, and Intel, Virginia Mason, a multi-specialty medical group practice and hospital based in Seattle, has become a national leader in applying Lean tools to the health industry and instituting what they call the Virginia Mason production system to the practice of medicine.

imageIf you run a a large business, chances are you have someone on staff, perhaps many people, in charge of purchasing materials and service for your enterprise.  Often these people are called “procurement officers”.  Whether they are buying paper clips for the supply room, or manufacturing equipment for the machine floor, their mission is to make sure that every vendor they buy from provides the best value considering the cost, quality of materials and service levels they offer.  But what about the healthcare your purchase for your employees?  How do you know you are getting great value there?  I’ll bet your procurement department has never evaluated the cost and quality of the medial services you buy for your employees.  But why not?

To illustrate the problem and the lack of transparency in most health systems today, let me tell you about an e-mail I received from one of my Microsoft colleagues shortly after I posted information about the CEO Summit event in New York City.  He told me what happened when he visited an imaging center near his home in the Midwestern United States .  After a sudden and very intense episode of back pain, a physician had ordered a CT scan of this guy’s kidneys to rule out kidney stones.  Here’s the story in his own words:

imageI show up early for my 7:30am appointment.  Upon sitting down with admissions I fill out a number of forms with redundant information that I had filled out at my physician’s office last Friday.  She even had a faxed copy from my that visit in front of her.  The first question is “Can I get your insurance card and ID?”   Basically – how do you plan on paying us?  I’m OK with this by the way, but she wasn’t prepared for my questions that were coming.

One of the forms I filled out said that I was provided “price information” and asked me to sign. 

At this point I asked:  “How much is this CT going to cost my company?” 

She replied “Well, it usually depends on your insurance.” 

Me: “Can you give me a ballpark?”

Her: “I really have no idea.”

Me: “I’d really like to know prior to having the test since I signed something that says I was provided this information.”

Her: “OK – Let me try and find out.”

**Now all of this was not contentious but more a matter of fact.  She triggered her Vocera device and started asking her manager, director, etc.  This went on for 10 minutes.  No answer.  Meanwhile I asked her how long she had been working admissions for the radiology department.  3 years.  Has anyone ever asked this question?  “NO”!

At this point I’m moved to a patient room and the tech comes in and gives me an estimate of what the CT Scan costs:  “A CT scan can be approximately $1100 plus radiologists fees”.  My response:  “How much are the radiologists fees?”  You guessed it – No idea.

10 minutes later I’m in car headed to the office not knowing if Microsoft just spent $1100 or $2000 for a 30 minute visit. 

So why do major employers and employees who are paying for and receiving these services put up with this?  Maybe its because we’ve had such low expectations, or maybe it’s because we’ve all been so disconnected from the true costs of healthcare.  In either event we, and the healthcare providers we purchase services from, can do much better.

7 Steps to Affordable Health Care

In their quest for a zero-defect health system, Virginia Mason as outlined “7 steps to more affordable health care”.  Without elaborating on each step they are: use your purchasing power, define health care quality, set priorities for providers, choose providers organized around reliable systems, pay for quality, purchase quality, and incent a healthier workforce.  Virginia Mason and other large health systems, employers, and insurers are now forming marketplace collaboratives to share best practices on how to improve healthcare cost, quality and access for some of the most common health conditions.  The evidence on quality improvements and cost savings so far from projects at several major employers is, to say the least, impressive!

At Microsoft we are working hard with our partners to develop better tools to help consumers, patients, providers, and purchasers of healthcare make better decisions about the care they get, give, and buy.  If I’ve grabbed your attention, be watching for news about upcoming CEO Health Care Summit events in Seattle and Boston.  For more information follow this link.

Bill Crounse, MD                          Senior Director, Worldwide Health                       Microsoft




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