Posted in Health care, Pricing, Supply Chain, tagged flu, flu shots, Health care, influenza, Pricing, Supply Chain, vaccines on January 22, 2013 |
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It’s been a bad flu season with hospitals in many cities overwhelmed with patients. This is largely a preventable problem. The annual flu vaccine is not perfect but a wider use of the vaccine would provide some amelioration. So why don’t more people get a flu shot? Some reporter at the LA Times seemed to think that cost might be a factor (Why does a flu shot cost so much?, Jan 21). After all, getting the shot at your local pharmacy will set you back $30 or so. However, as the reporter found out, given the supply chain challenges of producing and distributing influenza vaccines, the real question is why flu shots cost so little.
That’s because the process of manufacturing the flu shot and distributing it is a huge headache for pharmaceutical companies. The influenza vaccine must be made anew each year, beginning in February. Researchers determine what strains to put in the vaccine after looking closely at what types of flu are most prevalent in the Southern Hemisphere throughout its winter, which is our summer. …
Vaccines for other illnesses, such as measles, mumps and rubella, can be used until their expiration date, which is often years after they’re made. Influenza vaccines are really only used September through January and then go in the trash. And there are no regulations saying people have to get flu vaccines, meaning it’s very difficult for companies to estimate how many they should make. …
This year, companies have produced about 145 million doses, he said. Only about 129 million have been distributed. Last year, companies lost even more on the flu vaccine because it was such a light flu season and fewer people decided to get the shot. Only about 42% of the U.S. population got an influenza vaccine last year, which meant that about 30 million doses were never used and had to be destroyed.
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Over the years, we have had several posts applying lean operations to health care (see, for example, this or that). However, we have yet (I think) to post anything on Virginia Mason. Despite what its name might suggest, Virginia Mason is located in Seattle and has long been known as a leader in taking lessons from Toyota and applying them to health care. Now, in the form of a report from PBS’s NewsHour, we have an excuse to remedy that oversight (Rooting Out Waste in Health Care by Taking Cue From Toyota Assembly Lines, Oct 24). Check it out!
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The NY Times (“In Discarding of Kidneys, System Reveals Its Flaws“) had an interesting article on one of the main issues of Kidney allocation:
Last year, 4,720 people died while waiting for kidney transplants in the United States. And yet, as in each of the last five years, more than 2,600 kidneys were recovered from deceased donors and then discarded without being transplanted, government data show.
The question is why. One may conclude that the system is just inefficient, yet a closer look reveals that this inefficiency is rooted in many important principles, regulations, and incentives, all while attempting to create a fair system. In order to better understand the issues, we need to understand how kidneys are being allocated in the US: The country is divided into 58 districts. When a kidney of a deceased person becomes available, the system allocates it to the person with the highest priority within that region. This priority is a function of the waiting time, whether a recipient is a child or not, as well as other factors. The system does not consider the projected life expectancy of the recipient or the urgency of the transplant. The allocation is initially local, and only when there is no match, the search expands to other regions. All of that is done while competing against the clock: Kidneys start to degrade after 24-36 hours. The system is allowed to make offers to only a limited set of hospitals at any point in time, and these, in turn, have an hour to respond.
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Posted in Apparel, Health care, tagged Apparel, Health care on September 14, 2012 |
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It’s time to clear out a bunch of articles of that I have had kicking around. First up, we note that it has been Fashion Week in New York and that has led a couple of interesting articles:
- The New Yorker has a profile of Federico Marchetti and his company Yoox (The Geek of Chic, Sep 10). Yoox does a couple of things. It started by selling end of season luxury fashions. It won friends in the industry by just posting their own price with noting how much it was discounted off the list price. Luxury brands liked that this allowed them to unload unsold items without tying their brand to a 50% off sign. The interesting part is that Yoox was able to provide the brands with information they never had before (like what colors were selling where). Yoox has since expanded and now provides the backend and fulfillment for multiple designers’ web stores.
- At a different end of the market, Wired had an interview with Yasunobu Kyogoku, the COO of Uniqlo USA, which is ramping up a big US expansion (Upending Fashion, Steve Jobs-Style: 10 Questions With Uniqlo’s Yasunobu Kyogoku, Aug 31). Uniqlo has a very different approach from, say, Zara.
Wired: Is it true Uniqlo orders from its suppliers a full year in advance? What’s the thinking behind that?
Kyogoku: Let’s say you happen to own your own factory, and someone says, ‘In September, I’d like to order 40% of your capacity; in October, 70%; in the rest of the year, zero.’ You’d say, ‘But there’s a gentleman who just came to me and said, ‘I will book 80% of your capacity for a year and in fact, let’s do a long term partnership. Why don’t we add an extra line?’ The more you produce, the more you help me reduce the cost. We pass that to the customer. The customer buys more. We have a positive cycle where everyone wins.
Wired: With a 12-month cycle, aren’t you worried customers will go to faster-moving competitors with trendier clothes?
Kyogoku: We don’t chase trends. People mistakenly say that Uniqlo is a fast-fashion brand. We’re not. We are about clothing that’s made for everyone.
- Adam Davidson continues to write great stuff. He has a New York Times Magazine article about making bespoke and made-to-measure suits (What’s a $4,000 Suit Worth?, Sep 9). As the article notes, you would think that loads of people in Manhattan willing to pony up for the perfect suit. And there are but does not mean that it’s an easy way to make money. The economics of bespoke suits aren’t like those of Uniqlo:
As Rowland explained to me, even with a century-old reputation and a profoundly loyal customer base, it’s nearly impossible to get ahead. “There’s no scalability,” she explained. “Whether we’re making 50 suits or 1 — each unit costs the same.”
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A recent New Yorker article by Atul Gawande has gotten a lot of attention (Big Med, Aug 13). The article is built around an intriguing observation: The Cheesecake Factory can churn out a high variety of dishes at consistently decent quality at reasonable prices across more than a hundred locations. The question then is whether healthcare providers can learn anything from the Cheesecake Factory?
It is an thought-provoking question. The Cheesecake Factory is one of many “service factories” in a variety of industries that provide decent service at very reasonable prices. Many (e.g., Jiffy Lube) do this by winnowing down the range of services they offer but the Cheesecake Factory has a huge menu and can handle some special requests. So Gawande takes a hard look at the Cheesecake Factory to see just how they do it and finds that the kitchen manager plays a special role:
I watched the kitchen manager for a while. At every Cheesecake Factory restaurant, a kitchen manager is stationed at the counter where the food comes off the line, and he rates the food on a scale of one to ten. A nine is near-perfect. An eight requires one or two corrections before going out to a guest. A seven needs three. A six is unacceptable and has to be redone. This inspection process seemed a tricky task. No one likes to be second-guessed. The kitchen manager prodded gently, being careful to praise as often as he corrected. (“Beautiful. Beautiful!” “The pattern of this pesto glaze is just right.”) But he didn’t hesitate to correct. …
The managers had all risen through the ranks. This earned them a certain amount of respect. They in turn seemed respectful of the cooks’ skills and experience. Still, the oversight is tight, and this seemed crucial to the success of the enterprise.
The managers monitored the pace, too—scanning the screens for a station stacking up red flags, indicating orders past the target time, and deciding whether to give the cooks at the station a nudge or an extra pair of hands. They watched for waste—wasted food, wasted time, wasted effort. The formula was Business 101: Use the right amount of goods and labor to deliver what customers want and no more. Anything more is waste, and waste is lost profit.
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So have you ever had a hard time getting a kid into the car? You ready to go, you’re running late and someone is just being fussy, arching their back, and refusing to be a good cooperator. That’s nothing compared to what Chicago’s Children’s Memorial Hospital is up against. They are getting ready to move into a new facility and have to manage the logistics of getting all of their patients from Point A to Point B (Patients, prep work crucial in move of Children’s Hospital, Chicago Tribune, May 30).
During the course of a single Saturday, Children’s Memorial Hospital will move out of its 131-year-old home, most of it spent at Lincoln and Fullerton avenues, and into the new, $855 million Ann & Robert H. Lurie Children’s Hospital of Chicago in the Streeterville neighborhood.
The 31/2 -mile journey has taken more than three years to choreograph and $30 million to plan and execute.
As many as 200 children, from premature infants to teenagers, including dozens in intensive care, need to be moved, one by one, most with their own ambulance and medical team.
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This week’s The Numbers Guy column in the Wall Street Journal looks at how long patients wait for care (Long Medical Waits Prove Hard to Cure, May 25). The setting to have in mind is not how many minutes past your appointment time you spend in the waiting room. Rather, focus on actually getting an appointment to be seen for an ailment or to get a procedure scheduled.
That seems like a fairly straightforward question. One just needs to track how many patients have been referred for a procedure, when they are referred, and when the procedure is performed. The problem is that no one wants to just know what the wait is; they want to manage that wait. That means that targets will be set and comparisons made. That’s where things get tricky.
If you measure how long patients coming off a waiting list have spent on that list, a hospital has little incentive, while under evaluation, to clear those who already have been waiting longer than average. As soon as they are cleared, the hospital’s numbers get worse.
Measure the percentage of patients seen within, say, 48 hours, and those who can’t be seen in that time might instead find themselves waiting much longer, as earlier slots are saved for patients who call up later and can be slotted in the time frame, thus boosting a health provider’s numbers.
Count how many people are on a waiting list for a specialist appointment or nonelective surgery, and the provider being evaluated might change the definition of how long patients have to wait to be included on the waiting list.
Such responses have stymied efforts to cut waiting times and to determine if changes meant to alleviate delays have been effective.
“Any waiting-time measure can be thwarted or misrepresented,” says Michael Davies, an internist and acting director of high reliability systems and consultation at the U.S. Department of Veterans Affairs.
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One of the things I like about my undergrad alumni magazine is the classified ads. There is always something eye-catching. Like this one that was listed under “Employment Opportunities.”
Family Medical Coordinator: Highly intelligent, unusually competent individual with a background in science and exceptional communication skills sought by Manhattan family to research and coordinate family medical and healthcare issues. This person will manage a small team of professionals and interface with physicians, medical researchers, and consultants (in academia and otherwise) to ensure delivery of highest-quality medical care to family members. Considerable weight will be given to unusual academic distinction and other intellectual achievements. Clinical experience is a plus. This is a full-time position with a highly attractive compensation package and significant upside potential.
It got me wondering about what is the combination of family crisis and disposable income that makes trolling an Ivy League alumni magazine for someone to actively manage family medical issues is a reasonable plan of action. What it makes clear is that at least some consumers will insist on being co-producers in health care. Co-production here goes beyond taking ones medication as prescribed or showing up for physical therapy. Rather this suggest that the patient wants an active role in determining the appropriate course of treatment.
Part of what intrigued me about this ad is that they day I saw it, the Wall Street Journal had a piece arguing against process standardization in health care (Rise of the Medical Expertocracy, Mar 31).
As the health-care debate heats up again in Washington, both Democrats and Republicans will try to convince us that they have the experts to answer all our health questions. President Barack Obama and the Democrats propose panels of government experts to evaluate treatments and, in the president’s words, “Figure out what works and what doesn’t.” Republicans claim that the free market (that is, insurance companies with their own experts) will pay for value and empower consumers. Both sides insist that no one will come between us and our doctors.
Democrats and Republicans share a fundamental misconception about medical care. Both assume that, as in mathematics, there is a single right answer for every health problem. These “best practices,” they believe, can be found by gathering large amounts of data for experts to analyze. The experts will then identify remedies based strictly on science—impartial and objective.
I find this an interesting proposition. On the one hand, if patients were willing to accept what was being suggested as an immutable best practice, there would be little need for a family medical coordinator. Given the diagnosis, the course to follow would be straightforward and clear. If patients — or at least those that can afford to — feel the need to take a more active part in determining care, then it suggests that at a minimum they question whether “best” practice is indeed best. (more…)
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The Daily had an interesting story on a handful of doctors who are paying their patients — either explicitly in cash or in the form of a gift — when they make their patients wait past their appointment times (Their Wait in Gold, Mar 19).
There’s a promising new trend afoot in doctors’ offices around the country: With average wait times growing in recent years, some physicians have begun offering goods, services and even cash to waylaid patients.
“Why is my time more important than my patients?” asked Dr. Cyrus Peikari of Dallas. “True service can only come when we put our egos aside.”
To make up for canceling some appointments last year, Peikari mailed each patient a check for $50.
Dr. Timothy Malia of Fairport, N.Y., keeps a supply of $5 bills on hand. He dispenses them to patients if they’ve been made to wait past their appointment time. …
Nationwide, most patients spend a lot more than 10 minutes waiting to see their doctor. The national average is 24 minutes past the appointment time, up from 18 minutes in 2002 and 16 minutes in 1989, according to studies.
“The trouble with a lot of health care offices is that they are designed by doctors with little training in queuing,” said David Belson, a professor of Industrial and Systems Engineering at the University of Southern California, who studies wait times. “In most business schools, there would be a class on queuing. There’s no need to have a couple of hours worth of patients queued up.”
So let me start by saying that as a patient, I kind of like this. It is nice to hear that MDs take service seriously and are at least somewhat cognizant that patients can have ungodly waits. As a business school professor, however, I think of lots of reasons why you might have “a couple of hours worth of patients queued up.” (more…)
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Much has been written about applying operations management techniques — many developed in manufacturing environments — to health care settings. Indeed, this has been a regular topic in this blog. One thing that has been missing from this discussion has been a view of preventing errors through better design. When making things, the argument goes that it is easier (or at least more cost-effective) to prevent quality issues at the design phase than once production has begun. That gets us to CareMore, a company profiled in a recent article in The Atlantic (The Quiet Health-Care Revolution, Nov 2011, with a hat tip to Suraj Mathew of EMP 87 for pointing me to this one).
CareMore specializes in taking of Medicare Advantage patients. Medicare Advantage is a capitation program. The health care provider is paid a fixed amount per patient and gets nothing extra when something catastrophic happens. That is, it shifts risk from the insurer to the provider. How has CareMore done in this market?
CareMore, through its unique approach to caring for the elderly, is routinely achieving patient outcomes that other providers can only dream about: a hospitalization rate 24 percent below average; hospital stays 38 percent shorter; an amputation rate among diabetics 60 percent lower than average. Perhaps most remarkable of all, these improved outcomes have come without increased total cost. Though they may seem expensive, CareMore’s “upstream” interventions—the wireless scales, the free rides to medical appointments, etc.—save money in the long run by preventing vastly more costly “downstream” outcomes such as hospitalizations and surgeries. As a result, CareMore’s overall member costs are actually 18 percent below the industry average.
What has driven these savings is upstream intervention to identify problems while they are still minor and easy to deal with and proactively making sure that patients adhere to their treatment plans.
One of CareMore’s critical insights was the application of an old systems-management principle first developed at Bell Labs in the 1930s and refined by the management guru W. Edwards Deming in the 1950s: you can fix a problem at step one for $1, or fix it at step 10 for $30. The American health-care system is repair-centric, not prevention-centric. We wait for train wrecks and then clean up the damage. What would happen if we prevented the train wrecks in the first place? The doctors at CareMore decided to find out.
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