science to profits

Healthcare reform, and “cheap colonoscopy”

My work last month took me to several conferences and locations, and I have come back with a collection of fascinating snapshots illustrating different ways in which the US healthcare ecosystem is responding to the pressures for change that are being exerted on it. Some are depressing, but some offer exciting glimpses of very positive ways in which the system may transform itself. It’s too soon to draw conclusions, but I am going to capture these different glimpses of the future in my blog as a series of “snapshots of healthcare change“. Here is the first.

I spent a few days at “Digestive Diseases Week”, one of the main annual gatherings of US gastroenterologists. I was there on behalf of a company which has a new (optical) technology with the potential for detecting/diagnosing GI (gastrointestinal) cancers earlier than can be done today and/or reducing the costs of detecting them. I spent most of the time in the scientific sessions trying to understand better just how such a new technology would best fit into current “best practices”, and what it would need to do in order to become a tool that could help clinicians deliver better care at lower cost. To put this in context, this is a field I have been working in/following for a number of years, and I have spent a lot of time studying the scientific literature. So this was really an exercise in taking the pulse of current luminary opinion, rather than of basic education.

As is normal with these annual scientific gatherings, a lot of the talks dealt with ways to improve the practice of medicine. But the talk that stood out for me was one entitled “Healthcare reform and CRC screening: Impact of Pay-for-performance, Value-Based Insurance Design, and ACO’s on Reimbursement”. This talk was given by Dr. John I. Allen, who is VP of the American Gastroenterology Association (and will be President of the AGA in 2014), and National Quality Advisor for Minnesota Gastroenterology, P.A., a large (61 physician) independent specialty GI practice.

Key takeaways: healthcare economics

Here are my takeaways from Dr. Allen’s talk:

  • No matter what the fate of “Obamacare” in its current form, there is no escaping the trend away from pay-per-procedure, and toward some type of overall population-management approach to the management of colo-rectal cancer (CRC). Dr. Allen described what he saw as an inevitable future progression from today’s focus on “encounter-based” medicine (i.e. a colonoscopy), to “episode of care” medicine (the pre-colonoscopy advice, plus the colonoscopy, plus any necessary followup care, with potential penalties for adverse events etc), to “population based medicine” (focusing on minimizing the progression to CRC in an entire population as a result of effective CRC screening techniques and early interventions).
  • Screening colonoscopies (the frontline technology for screening for CRC in the USA) today represent a large fraction of GI clinician income (I saw the figure of 70% in one talk), but reimbursement for this procedure is very likely to go down in the near future (perhaps by 20%), thus likely causing some significant economic impact on the clinician community.
  • There really does seem to be a march toward some type of comparison shopping for procedures like colonoscopy. Dr Allen even showed a picture of the website, which advertises $950 colonoscopies in 32 states across the USA.

Price transparency now available (colonoscopy)

I did some homework afterwards on this If you focus only on costs, it is certainly very interesting. The $950 includes consultation before colonoscopy; physician/surgeon fees; facility fees including nurse costs; anesthesia costs (conscious sedation); and removal of small polyps. The website explains there may be additional fees for pathology and for different methods of sedation.

Of particular interest, I noticed that you can also select the “colonoscopy abroad” option at With this option, a similar total price of $995 gets you all the above colonoscopy services, performed at a hospital in Costa Rica; plus any costs due to complications; plus airfare to Costa Rica; plus 2 nights at a 3 star hotel. So you can combine this all with a nice vacation!

As a convenient contrast, Dr. Allen’s GI group is also admirably transparent about costs, with a downloadable price sheet for colonoscopies available on the Minnesota Gastroenterology website. For a colonoscopy (no biopsy or polypectomy), physician fees plus facility fees = $1,804. Costs increase if there are biopsies or polyps, and in the most expensive listed scenario (colonoscopy with biopsy and polyp) physician fees plus facility fees = $4,088. As for, pathology fees and more complex anesthesia add additional costs.

No matter how you look at it, there are some significant savings to be had here. But what about quality? Who knows if all these providers are equally good, as at present the websites are far less forthcoming about the quality than they are about the costs.

Quality transparency lags

If I put on my healthcare insurer/payer hat, this all sounds pretty interesting. I can offer my covered patients price transparency, and it looks like there is some significant pricing competition, and maybe this will drive down overall costs. It’s not at all clear as yet whether there is a quality drop that comes along with these reduced costs, or not. But even if there is, perhaps from a population health perspective the reduced overall costs may well be worth it.

If I put on my patient hat, however, I really need to understand not just the cost, but also the quality. And here is where I think high quality physician groups are missing a big opportunity. Especially for consumers (like me) who end up paying meaningful portions of their own healthcare bills. What I want is not just cost transparency, but also some accompanying metrics of quality. And the metrics I want have to do with the level of perfection in preventing cancer if I go to physician x. I think this is particularly important for a procedure like colonoscopy, for which results are really quite dependent on the skill of the clinician. If we were talking about heart surgery, I would care even more!

Now in some medical situations, quality is a hard thing to measure. But as it happens, for colonoscopy, the professional bodies have spent a great deal of effort over the last few years trying to improve the overall quality of colonoscopies and come up with sensible metrics to help them improve the overall skills of their GI members. In the case of colonoscopy, for example, there is a metric, called Adenoma Detection Rate (ADR), which is widely agreed to be a measure of just how good a given doctor is at performing screening colonoscopies. There have been a number of clinical studies published that show that ADRs vary widely among clinicians, and that show that in general the more skilled colonoscopists achieve higher ADRs.

As a consumer, what I would really like to see, in addition to price, is a nice set of quality metrics for individual clinicians. And for colonoscopies, I would like to see published ADRs for each physician, as well as overall rates of adverse events, and some breakdown of the nature of these adverse events.

Traditionally, physicians have been very resistant to releasing such metrics. And of course, for the equivalent of the “weekend warrior” colonoscopist, publishing such metrics might have a quite negative impact on patient volumes. But for the high quality endoscopists, it seems to me these quality measures are the vital element in resisting a sort of race to the bottom in price.

Surely the right decision the educated consumer should be making is whether to go for x% higher “quality” at y% higher “price”, or stick with the “blue plate special” of $950, and accept a lower (but known and acceptable to the consumer) quality.

The Opportunity

It seems to me there is an opportunity here, and I can’t resist speculating about what it would look like if an entrepreneur tried to tackle this opportunity.

What if you could go to some type of central clearing house website (ideally run by some independent and well regarded body e.g. the AGA?), and get a list of all providers of colonoscopies (in your state, or perhaps around the country, or even the world?)? Beside each provider’s name would be a set of metrics, that would be somehow updated every few months. These metrics would include some pricing information, such as already provided by and by Minnesota Gastroenterology, but it would also include on a per physician basis, the ADR rates, the number of colonoscopies performed in the last 12  months, the adverse event rate, the top 5 adverse event types, and some other similar information.

Ideally there would be some process of independent validation of the data, so it was considered trustworthy. Perhaps by a group of peers? And the site would include an educational component so the averagely savvy consumer could figure out what it all means.

A detail that I consider particularly important: It should be run by an entity with the interests of the consumer at heart rather than the interests of a payer. It should not be run by insurers and certainly not by the government. Because I think the emphasis should be on allowing the consumer to make an informed choice about balancing price and quality, and not for “big brother” to decide what quality we are allowed, and then encourage competition solely on price.

The first part of this transformation is clearly well underway, with sites such as  New Choice Health, which focuses solely on costs.

I wonder if adding quality transparency represents the next phase in “transparency”?


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