It’s Time to Create an Industrial

Revolution in Health Care

George C. Halvorson
Chairman and CEO, Kaiser Foundation Health Plan, Inc.
and Kaiser Foundation Hospitals

World Bank Presentation

September 15, 2005
 About Kaiser Permanente

• More than 8 million members

• 142,000 employees

• 32 hospitals

• 12,000 physicians

• $30,000,000,000 in annual revenue

2
 About Kaiser Permanente
• We may be the largest non-
governmental, vertically integrated
care financing and delivery system in
the world.

• We are the largest system of that

type in the U.S.

3
 It’s time for an industrial
revolution in health care.

4
 It’s time for health care to
stop functioning as a
highly localized,
unacceptably idiosyncratic
cottage industry – with the
exam room functioning as a
medical cottage.
5
It’s time to bring a significant
degree of systems support
and systematic thinking
to health care.

6
It’s time to give the heath care
industry a whole new set of
tools.

7
 Health care is state-of-the-art
science, significantly handicapped
by antiquated, cumbersome and
often dysfunctional information
dissemination and data application
approaches.

(The results are expensive – and

sometimes dangerous).
8
 Health care today is
inconsistent, unmeasured,
sometimes dangerous and
often wasteful.

9
American Health Care

• Most expensive in the world

• Superb high technology
• Superb techniques
• Mediocre outcomes
• Inconsistent quality

10
 In a country with the highest
per capita spending on health
care in the world, best care is
not a guarantee for everyone.

11
 More than one
half of America’s
diabetics receive
inadequate care.

Adequate care
Inadequate care

Source: RAND Study, New England Journal of Medicine, June 26 2003 12

 Half of America’s heart attack
patients do not receive proper
follow-up care.

Source: Institute of Medicine, Committee on Health Care in America. Crossing the 13

quality chasm: a new health system for the 21st Century, 2001
 Nearly 55% of
older women with
a fracture did not
receive
osteoporosis
medications after
their diagnoses.
Adequate testing
Inadequate testing

Source: KP Center for Health Research, Journal of Bone and Joint Surgery, 12/03 14
 UCLA 2003 Heart Patient Study
• 31 % of patients considered ideal candidates
for ACE inhibitors were sent home without
them.
• 72% of heart failure patients were released
without recommended discharge instructions.
• 69% of smokers with heart failure were never
told to quit.
• 18% of heart failure patients didn’t have the
pumping power of the left ventricles measured.

15
 U.S. Inconsistency

One hundred and thirty-five doctors

diagnosed the same patient and
recommended 82 different treatments.

Source: “Strong Medicine,” 1999 16

 Ugandan Inconsistency

Three doctors

diagnosed the same patient and

recommended 3 different treatments

Source: “Strong Medicine,” 1999 17

It’s true everywhere.

18
 Doctors can’t keep up
and
doctors can’t remember everything.
• There are more than 20,000 medical journals.
• Nearly 10,000 articles on clinical trials are
published annually.
• About 1,000 new drugs were developed over
the last decade.

Source: Foundation for eHealth Initiative, 11/15/03, and the National Library of 19
Medicine, 2001
 Care delivery is not set up to
manage care outcomes -- the
care delivery non-systems are all
built around incidents of care --
maybe episodes of care -- but not
optimal, patient-focused delivery
of all appropriate care.

20
 Cost Distribution of Care
1% of people

100%
% of
Healthcare 80%
Costs
30% total
60%
cost
40%

20% Premium level

10% total cost

0% total cost 0%
0% 20% 40% 60% 80% 100%
% of
People 
20% of people 70% of people

Source: Milliman USA Health Cost Guidelines – 2001 Claim Probability Distribution 21
 Any rational macro system
would define and consistently
deliver best care to the truly
sick and would intervene to
prevent or delay illness in and
care needs for the other 95%
of the population.
22
That level of intervention
would require:

1. Systematic thinking
2. A system

23
 The doctor in the exam room
needs all of the information
about each patient, about each
patient’s disease, about best
care for each disease, and
about the support needed and
available for the patient.
24
Wobbly Parts of U.S. Health Care
Five are glaringly obvious:

1. The medical record

2. Inconsistent access to
current science
3. Patient compliance
4. Patient follow-ups
5. Outcome tracking

25
 Wobbly Part #1:
The Medical Record
• Incompatible
• Inconsistent
• Often illegible
• Generally isolated
• Too often inaccurate
• Not interactive
• Woefully inadequate

26
 Wobbly Part #2:
Inconsistent Access to
Current Science
• Physicians have a very hard time staying
current with medical best practices.
• The translation of medical research into
practice is slow. It takes an average of
17 years for new knowledge generated by
randomized control trials to be
incorporated into practice.
Source: Foundation for eHealth Initiative, November 3, 2003 27
Every other industry has used
systematic quality
improvement techniques to
improve its products.

28
 DVD Players:

$700 five years ago

$70 today
(better functionality at one-tenth
of the cost)
29
How does that happen?

30
By constantly re-engineering
the product.

31
How does re-engineering
actually work?

32
How did General Electric
achieve Six Sigma
production standards?

33
 By using basic
re-engineering tools.

34
 Four MAIC Steps:

1. Measure

2. Analyze

3. Improve

4. Control

35
Source: "Jack Welch and the GE Way", Robert Slater, 1999
 Measure
• Identify the key internal process that
influences critical-to-quality characteristics
(CTQs) and measure the defects generated
relative to CTQs.
• Defects are defined as out-of-tolerance
CTQs.
• Success occurs when you can measure the
defects generated for a key process affecting
the CTQ.
36
Source: "Jack Welch and the GE Way", Robert Slater, 1999
 Analyze

Why are defects generated?

• Brainstorm, use statistical and other relevant
tools to identify key variables that cause the
defects.
• The output of this phase is the explanation of
the variables that are likely to drive process
variation the most.

37
Source: "Jack Welch and the GE Way", Robert Slater, 1999
 Improve
• Confirm the key variables and then quantify the
effect of these variables on the CTQs.
• Identify the maximum acceptable ranges of the
key variables.
• Make certain the measurement systems are
capable of measuring the variation in the key
variables.
• Modify the process to stay within the
acceptable ranges.
38
Source: "Jack Welch and the GE Way", Robert Slater, 1999
 Control

Ensure that the modified process now

enables the key variables to stay within
the maximum acceptable ranges using
tools such as statistical process control
(SPC) or simple checklists.

39
Source: "Jack Welch and the GE Way", Robert Slater, 1999
The process starts
with data.

40
Health care lacks
data.

41
Where does health care get
the data it uses now?

42
From paper medical records.

(And not even one complete

paper record per patient).

43
 One patient, four doctors:
Four unrelated, unconnected,
non-communicative,
non-intuitive, non-interactive,
often inaccessible and too
often illegible paper medical
records.
44
Four doctors cannot always
coordinate care.
They often repeat tests and
prescribe conflicting drugs.

45
So health care lacks both data
and real care coordination.

46
 No outcomes data.
No process data.
No data sharing.

Minimal data and minimum data

availability.

So what happens when no one

has data?
47
Bad and expensive
care.

48
Hormone Replacement
Therapy for women

49
Knee Surgery

50
 The Knee Surgery Story
• More than 650,000 relatively expensive
arthroscopic lavage or debridement
procedures were performed each year to
relieve the pain of osteoarthritis of the knee.

Outcomes Seemed Satisfactory:

• About half of the patients reported some
relief as a result of surgery.

Source: New England Journal of Medicine, July 11, 2002 51

 Scars vs. Cuts

A study was done. Some patients

were just given scars instead of
surgery – “fake” surgery in effect.

Source: New England Journal of Medicine, July 11, 2002 52

 The Result?
In a clinical trial with a matched control
group, surgery was no more effective
than a placebo in eliminating pain and
improving function.

Source: New England Journal of Medicine, July 11, 2002 53

 Or the Vioxx Situation?

(More than 2 million people

worldwide were taking Vioxx in
2004).

Source: The Washington Post, October 1, 2004 54

 Based on Kaiser Permanente
Data…

Vioxx Estimate: Up to
140,000 Got Heart Disease

40,000 Unnecessary Deaths

Source: The Lancet, January 25, 2005 55
 Or autologous bone marrow
transplant treatment for breast
cancer?

56
So what should be done?

Think about how costs are

actually distributed in
health care.

57
 Cost Distribution of Care
1% of people

100%
% of
Healthcare 80%
Costs
30% total
60%
cost
40%

20% Premium level

10% total cost

0% total cost 0%
0% 20% 40% 60% 80% 100%
% of
People 
20% of people 70% of people

Source: Milliman USA Health Cost Guidelines – 2001 Claim Probability Distribution 58
 We need systematic
approaches to determine
what best care looks like.

59
 We need systematic
approaches to support
physicians in delivering
that care… in the exam
room at the point of care.

60
We need real and useful
data about what really
works.

61
 Patients need to know
which doctors detect breast
cancer well; or fix knees
well; or cure skin cancer
most often.

62
 Major differences in
performance exist within
the care system.

63
 Life Expectancy for
Cystic Fibrosis Patients
50
45
Years 40
35 Average
Treatment
30
Center
25
Top Treatment
20
Center
15
10
5
0

SOURCE: Data from 1997 Cystic Fibrosis Foundation Patient Registry, as reported 64
in The New Yorker, December 12, 2004
So what happens when care
is systematically supported?

65
Kaiser Permanente is investing over
3 billion dollars over the next 5-plus
years to implement a total
computerized physician tool kit –
including an automated medical
record.

Why are we spending that money?

66
 Kaiser Permanente
pilot studies show that
systematic support of
consistent approaches to care

really do work.

67
 Improved Outcomes:
Ohio Death Rates From Heart Disease
2.18
(per 1,000)

1.36 Ohio KP

0.87

0.32 0.29
0.13

Ischemic Heart Disease Myocardial Infarction Congestive Heart Failure

68
Ohio vs. KP in Ohio
 Improved Outcomes:
Renal Disease in Southern
California

Computer tracking of follow-up care

resulted in a 31% reduction in the death
rate from end-stage renal disease.

Source: Department of Health and Human Services 69

Medicare Demonstration Project
 Improved Outcomes:
Anti-Coagulation in Colorado
• What happens when an AMR is attached to a
pharmacy review program to monitor and
track patients on anti-coagulation therapy?

• A 79% reduction in bleeding complications.

70
 Improved Outcomes:
Reduced Drug Interactions
A recent study of intensive care patients by
Kaiser Permanente found that when physicians
used a computerized physician order entry
system (CPOE), incidents of allergic reactions
and excessive drug dosages dropped by 75%.

Source: Foundation for eHealth Initiative, November 15, 2003 71

Standard breast cancer
detection scorekeeping:

72
90 percent of
cancers detected
before reaching
Stage II
 E-support:

-- e-visits

-- e-scheduling

-- e-reminders

-- e-care

74
And e-efficiencies.

75
Nurse Shift Change
(paper records)

 Cumbersome
 Error-prone
 Time-consuming
 Dangerous to patients
 43-minute average

76
Electronically-Supported
Shift Change

 Better information
 High level of accuracy
 Less time away from patients

(43 minutes to 12 minutes)

77
Ordering lab tests for hospitalized
patients --

switch from “first in/first out”

(FIFO)
to prioritized scheduling based on
urgency and discharge date…
78
Eliminated one day in the
hospital for every
four patients.

79
 Potential Savings:

80,000 hospital days for

diabetes alone.
(based on systematic follow-up care)

80
 How Can Technology and
Data Help?
CPOE in the outpatient setting would prevent
more than 2 million adverse drug events and
190,000 hospitalizations per year, saving
$44 billion in costs for medication, radiology,
laboratory work and hospitalization.
(It’s like refrigerating food in restaurants.
It helps).
81
Source: Center for Health Transformation, 2004
Final reason to create that
AMR toolkit:

Research

Real and timely research

requires digitalized data.
82
It’s necessary to get the
health care industry on
board.

83
 How Can We Get Health Care
Leaders on Board?
• All physicians want to do the best job for
their patients.
• Use data examples and anecdotes to
prove that the “best job” involves physician
support tools.
• Make the system ergonomically useful –
not only for physicians but for the entire
health care industry.
84
 How Can We Get Health Care
Leaders on Board?
• Use physician leadership and governance
at all key points – to avoid any sense that
the patient’s best interest is not the primary
focus.
• Make it interactive. Involve both the patient
and the caregiver at the point of care to
show that individualized care, competent
care and culturally sensitive care are not
mutually exclusive.
85
The opportunities are
immense.

86
Those opportunities cannot
and will not be realized
without…

87
1. An electronic
medical record

2. Computerized
physician
support tools
88
 Without these computerized
tools…
• Care is inconsistent
• Prevention is ineffective
• Huge amounts of resources are
wasted
• No one knows what actually happened
(in truly useful ways)
89
Both are needed.

Both are possible.

Both are overdue.

90
The result will be a true
industrial revolution in
health care – better care
for less money.

91
 That’s the number one
opportunity for health care
today:

92
Let’s truly modernize
medicine.

It’s overdue.

93