Saving Healthcare: A Three Pronged Approach

Hospital waste, health and wellness and of course automating health insurance.

Introduction

Normally, we talk about healthcare and health insurance, but we’ve only posted once about healthcare in the past six weeks and it is time to correct that oversight.  This week we are going to combine several of our ideas, designs and executions to automate everything in healthcare and health insurance except actual delivery of care and sweeping the floor.

We are going to list our three pronged approach in order of least efficacious to most efficacious, that is the things that make the biggest difference will be last.

Controlling Costs at the Hospital Level

While controlling costs at the hospital level is going to save millions and not billions, or trillions as our last point will describe, it will expose the waste and the graft, allowing more resources to be spent on doctors.  

Enterprise Resource Planning (ERP) Style Practice Management

Investopedia defines ERP as “Enterprise Resource Planning (ERP) integrates and manages a company's core business processes to streamline operations and improve communication across departments.”  

Every administrator I have ever had the pleasure of speaking with tells me a practice management system is for billing. Billing is just a small part of what a practice management system should do. If you are going to manage the practice, manage the practice, or hospital and include these things:

• Financial Management
  ERP systems are used to manage financial transactions, produce financial statements such as balance sheets, manage companies' tangible and intangible assets, and track money owed by and to the organization.
• Supply Chain Management
  ERP systems help to monitor the stock levels, track inventory movement, manage the movement of goods, and automate the purchasing process.
• Human Resources
  In an organization, ERP systems help to manage employee records, automate payroll processing, and manage recruitment and onboarding.
• Customer Relationship Management (CRM)
  ERP systems help in sales automation, automate marketing campaigns, track customer interactions, and improve customer satisfaction.
• Project Management
  ERP systems support project planning and scheduling, and monitor project time and expenses for accurate cost estimation.
• Manufacturing
  ERP systems help in production planning, list all the raw materials required for product manufacture, and monitor the production process.  While it may appear that a practice or hospital doesn’t need manufacturing, they do provide a service that requires labor, capital, consumable and equipment assets and of course real estate, just like making a widget.

An in depth discussion of exactly how this all works is beyond the scope of this article, but we will say that financial management becomes a set of reports that quite literally shows “where the money goes.”  That allows administrators to trace and fix cash leaks without paying an accountant to sit in a room with virtual mountains of spreadsheets for weeks or months trying to figure out where the money goes.

The ERP style PM doesn’t necessarily fix hospital waste, but it does allow the administration to easily track expenditures and even find a cost for each individual procedure and compare that with all monies earned for that procedure.  

Confidentially, we at Sentia will probably be looking at these financial reports as well, and ensuring that there is no fraud or exorbitant waste keeping hospitals from paying doctors a wage that will allow them to enjoy the fruits of their labors.  

We have produced a more in depth article about this here.

Health and Wellness

According to the OECD the average mortality for chronic, behavior-based, avoidable disease is 336 deaths per 100,000 Americans annually.  The average mortality for the same chronic disease is 225 per 100,000, according to the Commonwealth Fund.  

The cost of avoidable, behavior-based chronic disease in the US is about 84% of the $4.9 trillion we spend on healthcare.  If we combine the two facts above and figure out a way to get the US mortality to the OECD average, we will save $1.34 trillion.

How do we tie that bell on the cat though?  Since Sentia is the insurance company, and more on that later, we can offer discounts for healthy living.  But how do we know the patient is eating well and exercising?  We know their clinical measurements and lab results.  We provide the Electronic Medical Record (EMR) to the practice, along with the ERP style PM from earlier, we will know that the patient is doing the healthy thing.  To facilitate this, we prescribe the patient medical education based on their current lab results.  When they read the education, they get a small discount.  When their lab results actually improve, they get a larger discount.  This shifts the burden of bad behavior to the people behaving badly and incentivizes everyone else to get healthier, as we are literally paying them to live better.

This gives the system “teeth” and shows patients how to not get bitten.  Shifting the burden to the people who choose to live less-than-healthy and incentivizing everyone else helps us get to the average OECD mortality, and saving us that $1.34 trillion, or about 25%.

There is a more in depth discussion on how this all works here.

Automating Health Insurance

As we alluded to earlier, Sentia IS the insurance company and we provide the EMR to the practice or hospital.  This allows us to total procedures performed at the end of the day and electronically transfer payment to the practice or hospital.  24 hour maximum turn around.

We use reference based pricing, 150% of Medicare, so there is no negotiating rate with the insurance company,take it or leave it.  Our EMR is based on the Unified Medical Language System (UMLS).  This nomenclature is adequate to document the entire patient encounter.  That means that there is no medical coding.    

That eliminates medical coding, insurance networks, adjudication, delays, denials, rate negotiation, sales/brokers/agents, the cost of a third party EMR, skyscrapers in every major city in the US, and the hundreds of thousands of employees that work at the insurance company that you, as the insured, pay for.

Since we have eliminated everything the entire health insurance industry does, we eliminate the cost and we calculate that will reduce the cost by over 50%

Here is a more in depth discussion of how we automate the health insurance industry.

Alternative Solutions

There are no alternatives in the US for making this kind of impact.  However, to appease some of you we will give a few examples of what other countries are doing and cover why they won’t work.

Bismarck, Germany

How it Works

In this insurance system the insurers are called ‘sickness funds’ and are financed jointly by employers and employees. These plans have to cover everyone, and they make no profit. Doctors and hospitals are privately owned. This is a multi-payer model, but tight regulation gives the government much of the single payer cost control that the Beveridge model enjoys. Countries that use this model are Germany, France, Belgium, the Netherlands, Japan, Switzerland and parts of Latin America.

Why it Can’t Work Here  

Germany's effective tax rate is a little more than time and a half (47.9% tax burden in Germany, 29.9% tax burden in the US) what we pay in the US.  Imagine paying your taxes at the end of the year and then still owing more than 50%.  Germany is also coming up on about half the population not being able to afford a car.  Combine that with the special interests in the US  pushing their own agenda and this is utterly untenable.

 Beveridge, The UK

How it Works:

Named after William Beveridge, The Beveridge Healthcare Solution is Britain's National Healthcare service. Healthcare is provided and financed by the national government through tax payments, just like the police force or the public library. Most hospitals and clinics are owned by the government. Costs are low per capita because the government as the sole payer controls what doctors can do and what they can charge. Countries that use this system are Great Britain, Spain, most of Scandinavia and New Zealand, et al.

Why it Can’t Work Here

This plan is already bankrupting Britain, and causes wait times that are dangerous to patients there, though citizens there pay more taxes than we do

Nationalized Health Insurance, Canada

This is the government single payer system we hear about frequently. This system uses private sector providers and has elements of both Bismarck and Beveridge, but payment comes through a government run insurance program that every citizen pays into. Since there’s no need for marketing, no financial motive to deny claims and no profit, these universal insurance programs tend to be cheaper and much simpler administratively than American-style for-profit insurance.

This single payer tends to have a lot of negotiating prowess being the only game in town, so has much success in capping drug prices from pharmaceutical companies. This classic system is found in Canada, Taiwan and South Korea.

Why it Can’t Work Here

Like the UK, Health insurance is bankrupting Canada.  

And that is it. Those are the choices.  That is the best the world has to offer.  Either we bankrupt ourselves or increase taxes by 56%.  No thank you.  Find a more in-depth analysis of why we can’t have government run healthcare here.    

Conclusions

If we transfer all hospital savings to doctors either as cash payments or less work, that is, time off to avoid burnout, and the health and wellness process is successful, and we save 50% by automating health insurance, we are looking at a 75% savings; 50% immediately from automating of health insurance and another 25% over time as the incentives kick in.  The least expensive country in terms of per capita expenditures on healthcare is South Korea, the insurance automation alone should put is on an even footing with them.  Cutting out another 25% of the whole or 50% of the remainder makes healthcare in the US about half the cost of the cheapest in the OECD, while not affecting how medicine is practiced, nor reducing care and decreasing doctor burnout.  

This is also the only plan that actually works and doesn’t cost twice as much as everyone else, in fact, half of the cheapest over time.

We have the health and wellness and the EMR built and deployed for use right now.  The ERP style PM system has been designed and is in the process of development.

Contact us here or on our site and we will be happy to provide a demonstration of the fully functional prototype.

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We have built a comprehensive health information system to keep the patient healthy and on the right track with the ability to incentivize healthy living. This system includes the automation of the health insurance industry completely.  We have designed and are currently building the ERP style PM system.  Implementing this system should be fairly simple and will completely revolutionize the way healthcare is paid for, saving countless lives. We have shown a way to use this system to make the best healthcare system in the world also the most efficacious and the most affordable.

If you liked what you read contact us here, on our site, SentiaHealth.com, our parent company SentiaSystems.com, or send us an email to info@sentiasystems.com or info@sentiahealth.com.