01 Dec 2013
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Curing Health Care

Set on improving the health care industry's prognosis, several HBS alumni and faculty are pushing the medical and business boundaries with fixes that range from the technical to the biological.
Re: Sachin Jain (MBA 2007); David Bradley (MBA 1977); Thomas Eisenmann

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Prescription: Free the Data!

On a bright September morning, on the expansive lawn outside the Watertown, Massachusetts, headquarters of the e-health firm athenahealth, city and state officials, company executives, and hundreds of employees are gathered under a huge white tent. The occasion? The company, a leading supplier of cloud-based services for electronic health records (EHR), practice management, and care coordination, was expanding. In a big way.

Founded in 1997, athenahealth now serves about 44,000 medical providers, posted $422 million in revenue in 2012, and has been growing 30 percent annually since 2006. In the years ahead, athenahealth announced, it would nearly double the size of its workforce, to some 5,000 employees. It would also further redevelop the 29-acre site by adding 150,000 square feet of space, including some for other e-health companies, plus parks, a museum, even a beer garden. "We are tackling one of our nation's biggest challenges, fixing health care," said President and CEO Jonathan Bush (MBA 1997), and creating a dedicatedspace where workers can be "creative, industrious, and revolutionary."

Revolutionary is the right word for what all those employees, who call themselves "athenistas," will be doing: improving health care efficiency and quality by connecting doctors, hospitals, and patients. For decades now, EHRs—computerized versions of those banks of manila files once behind the receptionist's desk in doctors' offices—have promised to make patient data easier to analyze and move around to different care settings. But the biggest EHR players sell systems that are relatively closed, that are best at communicating within the walls of the hospital networks and other organizations that buy them. This is not, Bush will tell you, the future of health care.

Today it can still be extraordinarily difficult for a patient to, say, get an MRI at a nearby community hospital—where it could also be hundreds or thousands of dollars cheaper—and then have it sent to a specialist at a faraway academic center with a different EHR system. The scan might as well be stuck in a manila folder.

“The biggest problem with health care today is not how expensive it is. It's that we're held down by force, our money is taken, and then we're shoved into a medical system that is not responsive to us.”
—Jonathan Bush, President & CEO, athenahealth

"Patients' health information is either on paper and isolated or electronic and isolated," Bush tells the assembled crowd, his voice rising. That this little thing remains so difficult in the Internet age, often because many providers are loath to share price and quality data lest consumers shop around, gets him visibly agitated. "Practically speaking, we can't even move an MRI from one guy to the next, and both have electronic medical records—are you kidding me?" (His reputation precedes him: "I've been very, very concerned about the low level of enthusiasm from Jonathan," Massachusetts Governor Deval Patrick joked in his speech.)

Even worse is what less-than-frictionless systems do to quality. Although most doctors now have access to some kind of electronic records system, only about half really use them. And backsliding into their old clipboard-and-paper ways of doing things leads to mistakes. For example, an estimated 30 percent of abnormal Pap smear results are simply lost, Bush says. "The biggest problem with health care today is not how expensive it is. It's that we're held down by force, our money is taken, and then we're shoved into a medical system that is not responsive to us."

Athenahealth's cloud-based services are designed to make communication and sharing of information easier, as well as move the back-office burdens from the doctors and support staff to the company. One of the company's software services, for example, translates electronic records from its system to others (no more stuck MRIs), and lets doctors track and manage test results and other clinical functions (no more lost Pap smears). Another provides a secure portal for patients to make appointments, request prescriptions, and see their test results. Yet another helps doctors get their claims paid on time more easily—according to company research, providers see a 12 percent increase in their collections, on average.

A lot of athenahealth's work is geared toward the less glamorous tasks of administration. But less time spent on those details, of course, means more time spent doctoring. "Those first steps of connecting medical providers," Bush says, "represent the immediate battlefront of making health care human."

—Francis Storrs

Prescription: Build a Killer App

Silicon Valley is known for being open to innovation, risk, and failure. At the opposite end of the table sits health care, with its strong emphasis on hierarchy, training, and experience—no surprise, given that human lives are often at stake.

Halle Tecco (MBA 2011) brings those two very different cultures together at Rock Health, a San Francisco–based full-service seed fund launched during her second year at HBS with classmate and medical doctor Nate Gross (MBA 2011). (Gross continues to serve on Rock Health's board and is cofounder of Doximity, a professional network for physicians.)

Each year, Rock Health selects about 20 companies from thousands of applications to receive backing in the form of funding (grants up to $20,000 or convertible notes of $100,000) and services (office space, operational support, and access to corporate partners). "We have a strong network of industry partners that can serve as a sounding board and even as potential customers," Tecco says during an interview at Rock Health's Chinatown offices. (With full-time staff projected to grow from 7 to 12 employees, December marks a move to new, expanded quarters in the city's Mission Bay neighborhood.) In addition to a current portfolio of 60 companies, Rock Health organizes industry events such as its annual Health Innovation Summit and offers aspiring entrepreneurs free access to its online Startup Elements curriculum, including topics such as marketing, fundraising, IP, patent law, and the ins and outs of FDA and HIPAA regulations.

Tecco and Gross refined their vision for Rock Health in a field study with HBS senior lecturer Bob Higgins. But first, Tecco had the experience of founding Yoga Bear, a nonprofit that provides cancer fighters and survivors with access to yoga in their communities and online. Despite the adrenaline rush that comes from launching a new venture, however, Tecco is enjoying her bird's-eye view. "We're working with companies at such an early stage that we're seeing the most out-of-the-box technologies," she says.

“Is the lean start-up approach applicable to the health care sector? For heavily regulated drugs, diagnostics, and devices, a 'launch early and often' strategy simply isn't possible, although entrepreneurs can still run lean tests to gauge the level of demand for their product.”
—Tom Eisenmann, Howard H. Stevenson Professor of Business Administration and cochair, Arthur Rock Center for Entrepreneurship

One such example is CellScope, which manufactures a device that fits easily over a smartphone's camera so a parent or school nurse can take a photo of a child's inner ear and text or email it to a pediatrician. Doctors are also using the device, finding that it works better than a traditional otoscope while offering a way to easily share images with colleagues for diagnostic purposes. "Some children have chronic ear infections, and it can get quite expensive and time-consuming to go to the doctor's office every time," Tecco notes. "It's a great example of using technology to reduce costs and save time."

Musing on the risk-reward equation of launching a start-up in the digital health space, Tecco acknowledges that the tough regulatory environment can scare off even the most enthusiastic of entrepreneurs. But it's also the dawn of new thinking around what is possible when it comes to delivering the highest level of health care at the lowest possible cost. "It's an arbitrage opportunity," Tecco summarizes. "We're at an early stage, and the legacy systems embedded in health care don't represent the best technology out there. The possibilities are endless. And our health care system deserves the absolute best technology."

—Julia Hanna

Prescription: Measure Health Care's Real Costs

While most industries have embraced accounting advances that make it easier to measure costs relative to results, the field of health care has evolved differently despite a decades-long scramble to control spending. HBS professor emeritus Bob Kaplan described the state of affairs in a 2011 interview with the Harvard Business Review: "When I encounter the costing systems in health care institutions," he observed, "I feel the way Darwin must have felt when he came across the Galï¡pagos Islands."

An innovative collaboration between Kaplan and University Professor Michael Porter is starting to change this state of affairs. In the early 2000s, Porter embarked on an ambitious effort to realign health care around value for patients, where value is the health outcomes achieved relative to the money spent. While his initial work focused on reorganizing care and measuring outcomes, he began to understand that appropriate cost information was missing. In 2010, he reached out to Kaplan to help. What resulted was their coauthored article, "How to Solve the Cost Crisis in Health Care" (Harvard Business Review, September 2011).

Their work on a pilot study at the University of Texas MD Anderson Cancer Center shows that more accurate measurement of costs and outcomes can have a significant impact on the bottom line and on improving the quality of patient care. In 2005, Porter developed a multiyear learning partnership with MD Anderson, regularly ranked as the top cancer treatment center in the United States. The organization radically reconfigured its structure in the mid-1990s, creating multidisciplinary treatment centers for each type of cancer. For example, a breast cancer patient at MD Anderson's Breast Center will have diagnostic imaging and pathology; see specialized surgical, medical, and radiological oncologists; and consult with a plastic surgeon, all in one location. "We believe it's our responsibility to put the patient at the center of care," explains Dr. Thomas Feeley, head of MD Anderson's Institute for Cancer Care Innovation.

That approach fit well with Porter's research on value-based health care, in which care is best delivered and measured in integrated practice units (IPUs). "MD Anderson was an exciting discovery, because it was a real-world example of the IPU concept at work in a top-rated, cancer-focused hospital," recalls Porter, who cowrote an HBS case on MD Anderson with Sachin Jain (MBA 2007/MD 2008). As the relationship deepened, however, it became clear that MD Anderson was facing challenges in defining and measuring costs and outcomes. Porter introduced Kaplan to MD Anderson leaders, bringing a new dimension to the partnership.

"I had done some previous work in the health care sector, and it was clear that costing approaches were based on incorrect assumptions," notes Kaplan. "But I had never been able to persuade a provider to try a more innovative approach. The collaboration with Michael and MD Anderson was an ideal opportunity to change that."

The pilot study at MD Anderson's Head and Neck Center employed Kaplan's approach of time-driven activity-based costing (TDABC), a model that identifies the time of people and equipment used to perform a service and their cost. TDABC relies on accurate mapping of all the processes patients go through in the course of a visit to the cancer center—from check-in and registration to authorization for insurance payment, diagnostic testing, and physician visit, followed by an accurate assignment of the cost of employees and equipment at each process step.

"The transformative result has been our ability to better measure costs that matter to patients and providers, not just to payers," Feeley reports. By using TDABC, the Head and Neck Center realized reductions in process time, in costs for technical and professional staff, and in overall direct and indirect per-patient costs. In addition to these savings, Feeley says that TDABC pointed to process improvements—such as reductions in the time it takes to schedule appointments, receive test results, and schedule procedures—that not only lowered cost but improved results for patients.

"This is a great example of what Michael often calls the 'unique capability' of HBS," Kaplan observes. "When we're at our best, we don't just study existing practice. We put our ideas into practice, see how they work, and learn from that how to make them even better."

—Deborah Blagg

Prescription: Make Medicine Personal

A writer and scientist with a PhD in biophysics from Johns Hopkins, Gregory Stock (MBA 1987) is an outspoken and sometimes controversial proponent of uncomfortable topics such as human cloning, genetic screening, and antiaging medicines. Yet he is more passionate about the discussion these issues generate than any final outcome. "We are in the awkward early stages of beginning to rework and adjust biological processes," he says. "Life is taking control of its own evolutionary future. We aren't just watching it—we're the architects who are making it happen. I'm awed by what's going on; for me it's mostly about trying to understand the implications of the technologies that are driving change in our lives and society in general."

In Stock's mind, it's inevitable that eventually, parents will select favorable genes for their children or even clone a deceased child, so regulation is beside the point. "This is a force that is above and beyond us as individuals," he says. "People get a little exuberant about time frame, but the scope of change when things do finally happen is often much greater than we imagined." (Consider our relative comfort with IVF, he points out, or the ubiquity and power of the Internet, both relatively recent, revolutionary developments.)

“Scientists are driven by the rush of working on the edge of knowledge, but working at this edge is inherently risky: Information is fragile until further testing can sift the wheat from the chaff. Building commercial enterprises around such new knowledge has the potential to truly change the world, but the process of commercializing this science must start with a vital question: Is it real?”
—Vicki Sato, Professor of Management Practice

Preventive, proactive, personalized medicine is also on the immediate horizon, as Stock sees it, perhaps because he is chief scientific officer at Ecoeos, a company that will launch its first consumer product, MercuryWise, in January. The product, a simple DNA saliva test to determine an individual's personal sensitivity to routine levels of mercury, is grounded in an eight-year clinical trial that found about one in five children had a three-year developmental delay when exposed to "normal" levels of mercury from sources such as amalgam dental fillings (which contain 50 percent mercury) or the consumption of certain fish, such as swordfish, shark, and tuna. The company is currently investigating genetic markers that indicate sensitivity to other environmental toxins, with the intention of introducing additional products.

Stock predicts that the development pace for personalized therapeutics and preventive diagnostics will pick up speed, thanks to the beneficial add-on effects derived from identifying more and more biomarkers for particular conditions and sensitivities. Our genetic makeup and the influence of environmental toxins are powerful, still somewhat mysterious influences on our health. Simple tests that make those tendencies more transparent will result in basic behavioral changes and healthier lives overall.

"Things are about to catch fire," says Stock. "It's a virtuous circle where more access brings more knowledge and more value."

—Julia Hanna

Prescription: Leverage Human Nature

A couple of years ago, HBS associate professor Nava Ashraf embarked on an ambitious economics experiment in Zambia, a place where close to one in eight adults is infected with HIV. Getting people to use condoms is a challenge in the central African country, and she wanted to see if there was a way to incentivize hairdressers—who often maintain safe spaces for women to discuss sensitive topics—to sell female condoms alongside the phone cards and other items they typically offer. Ashraf and her colleagues partnered with 1,222 hairdressers in 200 neighborhoods in the Zambian capital of Lusaka, breaking them into four groups: two groups that received different cuts of condom sales, one that received wall charts and stickers to show customers how many had been sold, and a control group that got no reward. After a year, the researchers sat down to analyze the results.

Ashraf is a behavioral economist, so she knows people make financial decisions in complex ways, but even she was surprised by what they found: Hairdressers with the display charts sold twice as many condoms as anyone else, including those who were getting cash. "It isn't that money doesn't work," but that money's incentivizing power can be overvalued, Ashraf explains. "The takeaway is in fact that we have a hierarchy of needs that includes social recognition."

By studying how people behave, how they really think, Ashraf is reconsidering the traditional model of global health delivery. Each year, the United States alone spends over $9 billion on health improvement worldwide, yet nearly 13 million people die from illnesses that are relatively easy to prevent—and the problem isn't always money. Water purification tablets go unused in villages ravaged by disease, and boxes of mosquito nets that could slow the spread of malaria go unopened. The problem is that, sometimes, not enough attention is paid to what motivates the target population to use medicines or make changes. "In my MBA course, the most important goal is to put the end user first," Ashraf says. "If that person is not first and foremost in all of our thinking, we won't be able to have the impact we want."

Put another way, Ashraf and her colleagues want to get people what they need, but in a way that they will use. She once conducted an experiment in the Philippines that showed poor women would save 81 percent more money if they could deposit it in an account with withdrawal restrictions. An early design focused on saving money for medical expenses, requiring a doctor's note before the money could be withdrawn. Although some of Ashraf's fellow academics had expressed concern that locking up the money would leave sick women in a lurch, when she asked the savers if they wanted to ease the restrictions, they actually requested the opposite: The program should require medical bills, they said, because doctors' notes were too easy to get.

In her current research, Ashraf wants to broaden her view of health delivery from individuals to their families. In Zambia, husbands tend to prefer larger families than their wives. But when the women alone could make the choice of whether to use an injectable contraceptive, they had 57 percent fewer unwanted pregnancies. That was the good news. The bad was that not having their husbands' acknowledged support exacted a significant emotional toll on the women—and that can lead to its own health problems. "There is a human part of us," Ashraf says. "If you ignore that and focus exclusively on health outcomes, you are not feeding the entire human being."

—Francis Storrs

Prescription: Integrate Preventive Care and Payment

In the shifting scrimmage of US health care, the goals of health care insurers and health care providers are often at odds. But what if doctors, hospitals, and insurers teamed up to align what's best for the patient with what's best for the pocketbook?

It's not a new model: In 1945, Kaiser Permanente was the first to integrate care and direct payment; today, nearly 20 percent of hospitals offer their own insurance plan, and many more are working with insurers to craft pay-for-performance arrangements. But the administrative muscle and know-how required to successfully execute against such integrated models is daunting for even the most sophisticated of hospitals, requiring a radically different clinical model.

Enter Evolent Health, a 2011 start-up cofounded by Seth Blackley (MBA 2007), Frank Williams (MBA 1995), and Harvard alumnus Tom Peterson with the backing of the UPMC Health Plan and The Advisory Board, a global research, technology, and consulting firm founded by David Bradley (MBA 1977). "It was that old adage of listen to your customers," says Williams, Evolent's CEO. "When we were working together at The Advisory Board, Seth and I kept hearing from a number of health system CEOs that there was major pressure that would make it necessary for the average hospital or physician-based organization to change the way they cared for patients, and that they were going to need support to make that transition."

Evolent provides that support, he notes, by bringing together the people, processes, and technology to create a provider-led, clinician-driven model focused on preventive care. "Our system up until now has been very good at treating the sick and acute, to the point where your physician only gets paid by an insurance company if you go see them in an office, and the hospital is only paid if you're admitted," Williams explains. "Hospitals have told us that they want to take care of the community in a more holistic way and change the economic model."

“The markets for everything from cars to books to food benefit from customers who are informed about the price and quality of products before making their purchases. While such consumerism has been slow to make its way into the health care field, the concept of shopping—long absent in much of the industry—is becoming a reality.”
—Robert Huckman, Albert J. Weatherhead III Professor of Business Administration and cochair, HBS Health Care Initiative

Thanks to Evolent, for example, an asthmatic patient admitted to the ER five times over the past six months would be introduced to a coach—not necessarily a clinician—who would work with the patient one-on-one, while remaining in close collaboration with the physician charged with the patient's care.

"In your normal primary care experience, you get 5 or 10 minutes with your doctor," Williams says. "Often what they're telling you is complex, and you leave not always knowing exactly what to do. In the new model, a full care team is supporting the doctor and the patient, with a focus on preventing issues before they happen. A key member of this team is the coach.

"Coaches can make a quick phone call: 'Did you pick up your medication? Are you eating the healthy meals we talked about?' There is a motivational element to the behavioral changes that ultimately reduce visits to the ER and health care costs overall."

Evolent is currently in varying stages of engagement with health systems across 15 markets nationwide, a number projected to increase to 30 or 40 within the next several years according to Blackley, the company's president. Part of that pace is due to the expertise and credibility provided through its association with The Advisory Board and the UPMC Health Plan, but with an employee base that's grown from 6 to nearly 350 in just two years, and a recent investment of $110 million by TPG Growth, Evolent is keeping that momentum going.

"Working in health care right now is like joining Google in 1999," says Blackley. "We're on the cusp of a reinvention of a huge sector of the economy."

—Julia Hanna

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Class of MBA 2007, Section E
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