Why Interoperability Is Suddenly An Exciting Space

Atul Gawande wrote a very interesting article back in 2011 titled, “Cowboys and Pit Crews” where he draws attention to the similarities between pit crews and the practice of modern medicine. One of his points was that medicine is increasingly specialized. To the extent that providing care to a patient took 2.5 full-time equivalent in the 1970s and in the 1990s, that number grew to more than 15 FTEs — a typical pit crew.

If you step back for a minute, you will observe that the analogy makes sense. You can see the similarities between that model and how healthcare is practiced today especially when chronic diseases are concerned. Firstly, each member of the pit crew is very specialized. The jack-man (lifts the car), front and rear tire changers, front and rear tire carriers and the gas man. They even go over the wall in a specific sequence. They are, of course, supported by a larger team behind the wall. A diabetic with co-morbidities is likely to see their general practitioner, cardiologist, endocrinologist, dietician, nurses, surgeon(s) and more during the course of their care. Each is a specialist and focused on their role. This is the care team, the pit crew equivalent in healthcare.

Secondly, the team as a whole is quality- and outcome-focused. Indeed, if the sight of an incident-free race disappoints the crowds, it’s because the pit crews did their job. The key phrase being the team as a whole, and that is where healthcare struggles right now.

Good reasons exist for why it is so. For example, while it would be ideal for care teams to be all co-located and close to their patients, realities of…

  • Geography: Remote vs urban areas
  • Different organizations: Hospitals, general practice clinics, specialist clinics
  • Growth via acquisitions
  • Choice of Electronic health record systems (EHRs): Epic vs. Cerner, AllScripts vs. eClinicalWorks etc.

…make for very distributed teams and increase the communication challenges and interoperability. The current approaches of just sending some data over to HIEs (as an example) hasn’t worked. In the words of George Bernard Shaw, “The single biggest problem in communication is the illusion that it has taken place.”

So why now?

1. The sheer $$$ involved
Spending on healthcare has been steadily increasing. A recent report by CMS noted that healthcare expenditures hit $3 trillion in 2014 and is expected to continue to grow at 5.8% per year over the next several years. Chronic disease continues to be the number one contributor to healthcare expenditure with the CDC noting that eighty-six percent (86%) of all health care spending in 2010 was for people with one or more chronic medical conditions. Additional studies have also discovered that one in four adults in the US suffer from two or more chronic conditions.

Something has to be done to address these runaway cost numbers.

2. Reduced Medicare and insurance payments
As one of the largest health plans in the country, the government does have a vested interest in controlling costs. Medicare has been given a goal, set by the Administration, of having 30 percent of all Medicare fee-for-service payments made via alternative payment models by 2016 and 50 percent by 2018. CMS has been taking steady steps in that direction through the use of bundled payments as one example. These bundled payment models are usually all outcome based / reduced re-admission rate based. And the general rule is that whatever Medicare does, the private health insurance market will follow.

If a general practitioner refers a patient to a hospital for joint replacement, then the hospital and the GP must collaborate and share information to insure that the patient is not readmitted within 90 days. Similar models exist for surgeries (30 day readmit penalties) etc. All of these are steps in the right direction and incent organizations to share data amongst themselves. Obviously, if this can be automated i.e. systems made interoperable, then ongoing expenses to gather and submit the data are reduced.

Added to all this is the fact that Medicare reimbursements have also been trending downwards steadily. (See the legislated line item of this doc.)

The efficiency imperative

If a customer is paying you less for a service, then you, as a business, have three options:

Shut down
Which is happening. Partially being driven by statistics such as this and I quote “Still, a large percentage of the state’s 32,658 beds routinely were empty. The median occupancy rate for beds staffed by doctors, nurses and others was 57 percent statewide and 67 percent in the six-county Chicago area. That’s up from 56 percent across Illinois and 66 percent closer to home, respectively, in 2013.” [Source]

Hence trends like ambulatory surgery centers (ASCs) which only perform a subset of procedures but do a massive amount. These trends are clearly seen through these numbers — An average of 2,105.6 outpatient visits per 1,000 people occurred in 2011, up from an average of 1,273.4 days in 1991. (Source). Additionally, a recent MEDPAC analysis showed inpatient volume was down by six percent from 2010 to 2013, while outpatient services have been steadily on the rise (30%) for the past 13 years.

Do it more efficiently
Current interest is centered here. Health systems have spent millions, if not hundreds of millions, implementing EHRs. But they’ve also come to realize EHRs cannot do everything. These white spaces within the EHRs’ functionality are being addressed by innovators and startups. However, innovation is only valuable if it is used. Care providers already have to login to multiple systems and re-enter information. Adding one more system to the mix isn’t going to improve the uptake. Hence, they demand interoperability, leading to interest in broad market trends like telemedicine, post discharge care solutions, bundled payment management solutions, and so on — all of which need integration and interoperability to function effectively. While there aren’t that many for-profit health systems (1,025 of the total of 5,724), they still must compete in the same markets. If a for-profit health system cannot be as efficient as its nearby and more efficient competitor, they the system will be unable to operate effectively after a period of time. One interesting metric indicates that the average for-profit cost per inpatient day is only $1,798, while the same is $2,346 for nonprofit hospitals, per this study.

Forward thinking organizations see this trend and are making changes. Mt. Sinai has this fascinating ad campaign in which they state, “If our beds are filled, it means we’ve failed,” i.e. filling beds is not the only source of revenue and perhaps people (and employers and health plans) will be willing to pay to keep people healthier.

We are left with three big factors.

  1. The large $$ involved
  2. The reduced payment trends
  3. The efficiency imperative

These factors are driving the business need for increased interoperability. Additionally, with the advent of newer approaches like FHIR, interest has suddenly sparked around this very challenging and large market opportunity.