Posts Tagged ‘Health care’


August 7, 2017

The American public is frustrated. Congress has its lowest approval rating ever. And they just can’t seem to pass a healthcare bill. The only surprise is that anyone’s surprised, and even that should come as no surprise. Let us gaze upon the elephant(s) in the room:

First, almost everyone hates the do-nothing Congress but continues to elect the same career politicians over and over again, pointing the finger at “the other guy.”

Second, everyone wants healthcare reform unless it involves rescinding expanded benefits that the prior legislation meted out.

Third, everyone wants laws that require emergency rooms to provide urgent care irrespective insurance or ability to pay (that’s what a compassionate society does, right?) but no one wants a mandate to purchase health insurance.

Beginning to see a pattern?

Congress can’t fix a system that needs a major overhaul in both the way we think and the way we conduct business until we accept the fact that we need to overhaul the way we think and conduct business. A politician’s lifeblood is votes. Everyone accepts the need for increasing efficiencies and trimming waste and fraud in healthcare, and many embrace increasing competition in the insurance marketplace. Some are convinced a single-payer system is the answer (see below). But it will not be enough. The burgeoning ranks of the elderly infirm with fewer workers to pay for their care doom any of the current plans to failure. For any clear-thinking healthcare worker the trajectory of premiums for Obamacare was inevitable from the day of its conception. Gravity says you go down, and the laws of economics say, “You don’t get sumthin’ for nuthin’, as much as wishful thinking tries to obscure this truth. With bunsiness as usual, the many hidden taxes in Obamacare were insufficient to sustain the mandate of covering all pre-existing conditions and extending insurance for “minors” until age 26, on top of providing mandated non-essential care. And it’s only going to get worse.

What’s the answer? Health care rationing, otherwise called “death panels” by those that want to quash any reasonable discussion of the topic.

We’ve always had covert rationing (shhh!). Anyone who thinks a homeless street person gets the same level of care as a movie star or professional ballplayer (or Congressperson, for that matter) is living in a fantasy world. That being said, the excesses in the U.S. system are more enormous at all levels of care than most people realize. I will illustrate with a single example: At a recent meeting I attended there was a discussion about the suitability of placing an artificial valve in a patient that had a critical narrowing of the exit valve of the heart, otherwise known as aortic (valve) stenosis, which kills someone within 1-3 years of onset of symptoms. Until a few years ago, the only treatment was an open heart operation, but innovative minds developed a procedure to place a valve inside the old, calcified valve via an artery without surgery, known as transcatherer aortic valve replacement, or TAVR. This particular patient was in her late 60s to early 70s, had advanced alcohol-related liver disease (but was no longer drinking), and had begun to show signs of reduced blood clotting and fluid accumulation in the belly known as ascites related to her diseased liver. Although her life expectancy from the liver disease cannot be precisely predicted from the information I have, it is not unreasonable to postulate 3-5 years. Her aortic valve disease would probably kill her within 1-2. She was deemed a high risk surgical candidate so is being triaged to TAVR. It is more difficult to find the average cost of the procedure doing an Internet search than a cost-effectiveness figure ($50,000 is considered the benchmark for qualitylife-years gained, or QALY, originally based on hemodialysis figures), but $52,200 ± $28,200 is the estimate I found, representing a purported net loss for the institution (as opposed to surgical valve replacment which supports a net gain). Assuming that this patient has no complications (likely, but certainly not guaranteed), you will reduce her short term risk and improve short term quality of life significantly. However, you now have a patient with another terminal illness (end-stage liver disease) at even higher bleeding risk due to the aggressive antiplatelet drugs needed to prevent valve clots, who will likely live longer to be in and out of the hospital in her final years to palliate her progressive liver disease. (Of course, it is possible that the medications could shorten her life, as liver patients are prone to bleeding for many reasons.) Now extrapolate this example across the country and across different illnesses and medical specialties, and you’ll begin to get a sense of the magnitude of the problem.

So, are these doctors greedy, incompetent, or stupid? Absolutely not. A terminally ill patient with advanced cancer and low life expectancy would never come up for discussion. However, that large (and growing) senior population with serious chronic illnesses we’ve become so proficient at eking every last ounce of life from is a much more difficult decision for doctors. Often, they feel that societal issues should not come between the physician and the patient, and everyone is loathe to place the responsibility for these tough decisions in the hands of the government. The upshot of all this is that we’ve abdicated the responsibility to address this overtly. And no wonder: Opening oneself to the criticism of being an uncaring bean-counter is no more appealing to a physician or layperson than to a politician seeking reelection.

So what can we do?

We can set up committees made up of doctors, clergy, citizens, social workers, economists, and yes, politicians to examine clinical scenarios and/or actual patient cases and determine suitability and feasibility of a particular high-cost interventions, adding into the equation societal and fiscal constraints. (There are those that believe a single-payer system will solve the system’s ills, perhaps by overtly or covertly addressing this; I’m skeptical, but the debate is beyond the scope of this rant). This independent committee approach unburdens the caregiver of the responsibility for factoring in issues extraneous to the patient. However, this concept will not be well received. Consider the outrage engendered by recent British government intervention in its decision to prevent a high risk procedure on an infant afflicted with a congenital ailment. Although in this case I agree with the critics, as it was reported that the funding was obtained by the family from private sources, there are other high-profile examples of widespread censure of attempts to limit life-giving care in patients with poor prognosis (i.e. Karen Ann Quinlan and Terri Schiavo, to name a couple).

So what will we do?

All indications are that we will continue to posture, discuss repealing and replacing or modifying Obamacare, and either do it or not. For me, it doesn’t matter. Without fundamental changes that I believe the American people, at this time, are unwilling to accept, the downward economic medical spiral will persist. The forecast is for increasing debt paralleling that of the greater economy (of which healthcare comprises 18%). Like a junkie needing greater and greater cash infusions, it will need to hit bottom before it changes.

I know this is a pretty grim, some might say pessimistic, prediction. And there is always the chance that the exponential advance of technology may save us by completely changing the face of medicine. Unfortunately, we don’t have a lot of time.

The truth is, elephants in a small room make quite a mess.



December 9, 2013

A small study, unlikely to garner much media attention, may be one of the first salvos in the war against medical waste.

Recently published in Circulation: Cardiovascular Imaging, the trial studied the impact a web-based computer program might have on decision-making in the emergency room. About 500 patients presenting with chest pain or a sensation of shortness of breath, something doctors call dyspnea, were randomized to an active group that had a computer gauge their medical risk and prescribe the necessary testing. The doctors in the control group decided in the usual fashion, without computer help. The investigators found that the program lowered the patients’ radiation exposure (i.e., fewer tests) without a significant difference in the rate of return to the emergency department for care or occurrence of adverse events.

Watching the geometric progression of technological evolution, it seems inevitable that someday the line will be crossed where computers become more accurate diagnosticians than people. Whether you believe that day is 25 years away, 50, or 100, is irrelevant. The importance of this study lies in the fact that, properly applied, even present-day computer programs have the potential to cut waste (and increase patient safety).

Whatever your view of Obamacare, it is evident that universal coverage and no exclusions for pre-existing conditions are good things. It is also evident that good things come at a cost. The only immediate way to get a good thing at no cost is by removing fraud and waste. Having practiced in the medical field for decades, my impression is that there’s probably a lot more waste than fraud. Figures of 20-30% of our medical care dollars have been bandied about, which jives with my admittedly subjective impression.

Eventually, the march of technology and knowledge will lower costs in other ways, by allowing more effective treatments and perhaps even curing chronic illnesses that, at present, we can only effectively manage to the point of bankrupting the health care system. In the meantime, it behooves us to put a lot more effort into studies like the one above, the primordial germ of artificial intelligence, that will ultimately make my job obsolete.

Someday, perhaps sooner than we think, the only “doc-in-the-box” you’ll ever need will be attached to a touchscreen with circuits linked to what is now known as the “cloud.”


May 19, 2013

A couple of weeks ago I received a report from an out-of-area cardiologist regarding a mutual patient who spends part of the year in another state. The note referenced a 3-year-old cardiovascular test ordered by me with intent to repeat. There was no record of the more recent study done a few months ago, perhaps forgotten by the patient. I contacted the patient only to learn the repeat study has been completed a day earlier.

If you think this unnecessary duplication of effort is an isolated event, think again. It’s just another example of the 20-30% of the waste in the system. An industry characterized by third-party payers and often little to no patient out-of-pocket expense lends itself to this scenario. The insurers don’t have the ability to track all of this, and perhaps lack the incentive as well, as long as they can raise premiums and maintain robust profit margins. Usually the quick fix is employed—the blunt instrument of progressive reductions in reimbursement for the most commonly employed tests and procedures, regardless of their appropriateness or complexity.

If you think this is isolated to the heath care industry, think again. Waste is the new god of Western society. Its worship takes the form of long-term government guarantees of retirement benefits regardless of market conditions, funded by loans and wave after wave of “quantitative easing,” the green ink flowing like a verdant waterfall. The largesse even spills into the private sector, from time to time. When General Motors decided, at the behest of the union leadership, to emulate the government’s modus operandi with unsustainable retirement guarantees in the form of defined benefits, the ruling class stepped in with freshly printed and borrowed money to prevent the inevitable implosion. The move was applauded by many; the alternative would have been near-term hardship on a major scale. The future fall-out from this is … well, in the future.

A majority of the electorate is perfectly happy to allow this state of affairs to continue. Retirement, unemployment and welfare benefits provide comfort, and a reasonable standard of living. It’s also comforting to attribute the current economic malaise to the failure of the wealthy to pay their fair share, rather than indiscriminate borrowing and unbridled printing. Some believe it will all heal when the economy magically recovers. Others don’t think about it at all. The more informed and cynical will try to get whatever they can before the end of the road is reached.

I don’t know how long the road is. Perhaps it ends when our debt-to-GDP ratio reaches 170%, as in Greece. I do know that history, ancient and present, proves that it is not infinite.

So clink your glasses in salute to the new god. Green beer is a one day event—green money is forever. Or is it?


March 18, 2013

As per my last rant, Forbes magazine’s critique by Chris Conover of Steve Brill’s investigative report on health care pricing appeared early this month in parts one and two. It centers on the premise that Brill obfuscates issues enough that his piece might be interpreted as making a case for a single-payer health system. Salient points of Conover’s “counter-attack” follow:

  • The claim that U.S. outcomes are no better and often worse than in other countries is exaggerated. When adjusted for violent deaths that have nothing to do with health care, the U.S. ranks #1 in life expectancy at birth, and the figures for infant mortality distort the issue as well. Adjusted for length of gestation, the U.S. ranks second, third or fourth against European nations. Cancer patients live longer in this country than any other, we screen more people, have lower smoking rates and, despite our smaller size, produce more top medical and pharmaceutical innovations.
  • The claim that the U.S. spends 27% more than other countries is refuted with the assessment that, when broken down into regions such as states more comparable to the size of European nations, “U.S. health spending is almost exactly where it is expected to be, given U.S. GDP per capita.” Conover does add that he is not implying that there is no waste in our system.
  • The assertion that drug prices here are 50% higher on average than other developed nations is true for those still on patent, but we pay less for generics and over-the-counter products. These account for 70% of the volume but only 20% by sales. The argument that government monopoly or removal of patent protection should be used to lower prices will destroy the incentive for research and innovation; the return on investment for drug research is 18%. The CBO concluded that negotiating drug prices for Medicare would result in negligible savings over what is obtained under current law for covered Part D drugs.
  • Excess prices don’t equate to excess profits. Inpatient hospital care generates an average operating profit margin of 2%; the 11.7% Mr. Brill cites is too high. The profits in the health services sector are in the middle of the pack (or lower) compared to other industries.
  • Medicare administration is not more efficient than private health insurers. Private insurers spend 9.2% rather than 22.5% of each health care dollar on claims processing. Medicare also doesn’t have to pay for as many functions, such as marketing and provider rate negotiations, inflating the private insurers’ costs by one-half. Also, the patient population using Medicare uses costly services more so its administrative expenditures will necessarily be a smaller percentage of the total. Conover maintains that the “handcuffs” Congress has itself placed on Medicare points to the fallacy of a public health care system being inherently better, and he reminds us that every dollar Uncle Sam gets carries the burden of shrinking the economy by 44 cents (he doesn’t mention that we borrow 40% of this).
  • Less consequential issues are Brill’s exaggeration of the personal bankruptcy figure related to medical bills (Conover says it is less than half the figure claimed), that the charity care Brill claims is based on chargemaster prices is not accurate, and that the argument that there is less fraud in the Medicare that the private sector is false.

Mr. Conover states, “What makes good for politics far too often is not good policy,” and concludes, “Mr. Brill has nicely codified much of what is wrong with American health care. He arguably has shown just how inadequately Obamacare addresses the myriad of problems he identified.  But unfortunately, he also has contributed to some of the very same misconceptions that resulted in Obamacare, a very misguided prescription for what really ails the American health care system.”

I leave it to the reader to decide who is right. There are many known problems with a single-payer system, and we ignore them at our peril. The truth is that our current, unsustainable system through indirect subsidies has helped many of the single-payer systems overseas to function at diminished cost. Like our economy, the medical marketplace is, to an extent, a global one. However, the uniqueness of medical care is that much of it is essential rather than discretionary, and creating the ideal, a marketplace with free competiton, is not always feasible from the standpoints of logistics and optimal health care delivery. We need a hybrid approach. I’ve given my opinion of the needed fixes in past rants.

Mr. Conover feels that Obamacare is a “misguided prescription for what really ails the American helath care system,” and that “[u]ntil we get the diagnosis right, we have no reasonable prospect of getting off the wrong track we’re now on thanks to the Affordable Care Act.” I agree. And I’d like to add that until the American public becomes more informed and begins making the right demands of its ruling class, the patient we call our health care system will remain as what we physicians term a “failure to thrive.”


March 11, 2013

Last rant I discussed Steven Brill’s important piece on another critical aspect of our health care system’s malaise. Here’s what he recommends to change it:

  1. Tighten antitrust laws related to hospitals to keep them from becoming so dominant in a region that insurance companies are helpless in negotiating prices with them. They have increasing leverage as they consolidate lab work and doctors’ practices and will drive insurance premiums up.
  2. Tax hospital profits at 75% and have a tax surcharge on all non-doctor hospital salaries that exceed a certain amount (he offers $750,000 as a reasonable figure). He estimates this would save over $80 billion a year.
  3. Outlaw the chargemaster, the “retail” price list with the obscenely inflated charges.
  4. Amend patent laws to prevent pharmaceutical firms from exploiting the monopoly these laws give them, or set price limits or profit-margin caps. Reducing prices to conform to other developed countries, he argues, would save more than $25 billion a year.
  5. Tighten further what Medicare pays for CT and MRI scans and cap what insurance companies can pay for them, as well as profits on in-house lab tests.
  6. Embarrass Democrats into stopping the fight against medical-malpractice reform and provide safe-harbor defenses for doctors.

Tongue-in-cheek, he adds that we could limit administrator compensation at hospitals to 5 or 6 times the salaries of the lowest-paid physician, require the drug companies to post a notice of the gross profit margin on the drugs’ packaging and the salary of the parent company’s CEO (as well as their website).

He summarizes Obamacare as “doing some good work around the edges of the core problem,” but reminds us that ultimately it will raise, not lower, costs. In essence, you can’t get something for nothing, even if that something is a laudable goal.

Mr. Brill concludes that “…we’ve enriched the labs, drug companies, medical device makers, hospital administrators and purveyors of CT scans, MRIs, canes and wheelchairs. Meanwhile, we’ve squeezed the doctors who don’t own their own clinics, don’t work as drug or device consultants or don’t otherwise game a system that is so gameable. And of course, we’ve squeezed everyone outside the system who gets stuck with the bills.

“We’ve created a secure, prosperous island in an economy that is suffering under the weight of the riches those on the island extract.

“And we’ve allowed those on the island and their lobbyists and allies to control the debate….”

Where do I, the free market capitalist guy, come down on these suggestions? Because I don’t see free market forces operating in many areas of our health care playing field I’ll give a thumbs up on #1. I don’t trust the government with #2; giving them more money to waste is like handing a loaded pistol to a 2-year-old. Let’s have Medicare actually negotiate with drug and device companies like they do elsewhere, along the lines of #5, and get the lobbyists out of the equation. As an erstwhile affluent nation, I think that subsidizing the world made sense, but not to the extent that we’ve done it, and we certainly can’t continue this behavior while we’re borrowing 40 cents on the dollar. Two thumbs up on #3. Require the uber-wealthy from overseas to make a donation if they want to utilize our specialty health care institutions, or get their care at home. I’d prefer that #4 be handled, as previously stated, with hard-ball negotiations, à la #5. And I’d prefer to limit upper management salaries through market forces, though a mechanism to tie compensation more closely to performance is sorely needed. Even in the private sector, I’ve seen the sky-rocketing CEO salaries that appear to be more a form of racketeering than a function of the marketplace. Success should be well-compensated but coupled with real-world performance. Having the heads of corporate governing boards determine compensation willy-nilly is tantamount to letting the wolves guard the henhouse (sound familiar?—it’s what the ruling class has been doling out for themselves for years).

Finally, if we’ve decided we want everybody covered for all pre-existing conditions in perpetuity, let’s decide to go broke or make the hard rationing decisions that go along with it. Because, short of really, really, excising fraud and waste, the money has to come from somewhere. And a printing press or a Chinese bank will get you only so far.

Next: Forbes contests Brill as a shill


March 4, 2013

I began this rant a few years ago by lambasting corruption and waste in all segments of the health care system, from government to lawyers to doctors to insurers, even the patients themselves. I proposed 15 changes that would need to be implemented if we were serious about fixing what ailed it which I subsequently distilled down to the most critical five. So when an associate sent me a link to Steven Brill’s Time Magazine exposé, “Bitter Pill: Why Medical Bills Are Killing Us,” I couldn’t help but disagree with my colleague’s observation that it should be required reading for anyone in medicine. It should be required reading for anyone not suffering from rigor mortis. I was chagrined to have given such little attention to this superbly researched elephant in the room. This investigative report will take a bit of time to get through, but it’s time well spent.

For years I’ve known about the outrageous charges on hospital bills, the so-called “retail” charges that hardly anyone paid, or so I thought, because the insurance companies knocked them down, and the indigent “self pay” patients were served by programs with deep pockets or walked away from the bills without consequence. I ignored the high percentage of bankruptcies related to health care costs. As Brills points out, “Unlike those of almost any other area we can think of, the dynamics of the medical marketplace seem to be such that the advance of technology has made medical care more expensive, not less.” He dispels the arguments made that the exorbitant rates help pay for the poor. “A closer look at hospital finance suggests two holes in that argument. … [A]t most hospitals it’s not a Saudi sheik but the almost poor — those who don’t qualify for Medicaid and don’t have insurance — who are most often asked to pay those exorbitant chargemaster prices. Second, there is the jaw-dropping difference between those list prices and the hospitals’ costs, which enables these ostensibly nonprofit institutions to produce high profits even after all the discounts.” He goes on to elaborate, “So, what do these wealthy nonprofits do with all the profit? In a trend similar to what we’ve seen in nonprofit colleges and universities … the hospitals improve and expand facilities (despite the fact that the U.S. has more hospital beds than it can fill), buy more equipment, hire more people, offer more services, buy rival hospitals and then raise executive salaries because their operations have gotten so much larger. They keep the upward spiral going by marketing for more patients, raising prices and pushing harder to collect bill payments. Only with health care, the upward spiral is easier to sustain. Health care is seen as even more of a necessity than higher education. And unlike in higher education, in health care there is little price transparency — and far less competition in any given locale even if there were transparency. Besides, a hospital is typically one of the community’s larger employers if not the largest, so there is unlikely to be much local complaining about its burgeoning economic fortunes.”

The “chargemaster” referred to above is a list of charges often ten times the actual cost or Medicare reimbursement for a medication, device, or service. Ironically, while Medicare is able to more effectively limit chargemaster overpayments than many private insurers, special interests have lobbied to limit its ability to limit the excessive profiteering in areas of medications and devices. We, a debtor nation, continue to subsidize the world, which has no qualms limiting the pharmaceutical and device manufacturers’ charges.

To many this will sound like I’m backtracking on my free market ideology. Nothing could be further from the truth. Only in a free, competitive marketplace can the true value of goods and services be found. The government’s meddling, even when the intentions are good, tends to distort the marketplace and create unintended consequences down the line that create larger problems. Where the market is large enough, such as the competition between insurers (when allowing for commerce across state lines) it should be permitted to do its job. When there is a relative monopoly in terms of services, as is often the case when it comes to medical care, especially when it’s emergent, then regulation along the lines of fraud an abuse is necessary and appropriate. The behavior of many of these health care industry CEOs is tantamount to charging a dying man in the desert $500 for a cup of water. It perpetuates an economic milieu where they can “justify” seven-figure salaries by dint of irresponsibly inflated profit margins. The arguments for chargemaster prices and the dubious estimates of the magnitude of charitable services provided alluded  to in the Brill piece should be a wake-up call to us all.

Instead of reaching out to the government for handouts to help perpetuate a corrupt system, the American people must demand change in the system itself. I’ve often stated that the liberal view of government charity for those in need is misdirected. The old saws, “Give a man a fish and you feed him for a day; teach him to fish and you feed him for a lifetime,” and “A rising tide lifts all boats,” has never been truer than today.

It’s time that the American public viewed itself as a special interest.

Next: Some concrete suggestions for change.


December 30, 2012

Now that the season of love and giving is coming to a close, I can once again revert to type and foray into the world of what will be as opposed to what we all wish it would be.

The Affordable Care Act, more colloquially known as Obamacare, has promised us more coverage for more people, both highly laudable offerings that may have contributed to his return to the Oval Office. In an era of shrinking revenues and ballooning debt, how is this possible? I’m going to prognosticate.

The healthcare world of the not-to-distant future will, by necessity, implement the following changes:

  1. Comorbidity, i.e., the number of severe, chronic medical conditions, will determine whether or not a procedure or treatment will be a covered benefit. Age will be one of these comorbidities, but not the sole one, unless things become pre-cataclysmic. No percutaneous valve replacements for a 91-year-old grandfather with diabetes and kidney disease.
  2. Medical care for prisoners will be titrated to the offence. Rapists, child molesters and serial killers with no longer be escorted by two highly paid guards for diagnostic testing and expensive surgery so that they can be housed for a few more decades at great taxpayer expense. When things get bad enough, single murderers will find themselves in the same boat. When things get even worse, attempted murderers may succumb to the same fate.
  3. Drug addicts will be denied care for ongoing abuse. When things get worse, tobacco abusers better watch their backs.

Of course, before any of this occurs we will have to bring the economy to its knees. Our dysmorphic view of how a compassionate society is defined (and the powerful trial lawyers lobby) will fight these kinds of changes to the very end. All of the above, to some extent, should have been implemented years ago, but we tend to be a much more reactive than proactive culture. Perhaps it’s human nature, wanting to put off the suffering for as long as possible, even if it means an even worse fate down the line. Maybe it will take an intervention, like falling off the fiscal cliff or banging our skulls against the debt ceiling.

Tough love hurts.


September 17, 2012

The ideological divide in this nation seems to sharpen as the presidential election draws nearer. My views on individual responsibility and small government are known to my readers, but often lost in the anti-government rhetoric is the reminder that the absence of government is not the answer—that’s anarchy.

The truth is, there is an essential role for government in society but in the tangle of its myriad unnecessary interventions its primary functions become diluted out and it loses its way. It seems others have noticed. Here’s a reference cited in the ACC News Digest:

Economists Suggest Minimal But Important Role For Government In Healthcare.

Modern Healthcare (9/6, Evans, Subscription Publication) reports on a recent article published in Health Affairs, which suggests a minimized, but productive and important role for the Federal government in supporting the private healthcare market. The authors, economists Aparna Higgins and Neeraj Sood, argue that “to best promote healthcare delivery and payment reform, the public sector should fund research, provide access to capital, work closely with the private sector and limit its regulation to address ‘market failures’ such as monopolies.”

Unfortunately, our present government paradigm consists of trying to regulate anything and everything it can get its clumsy hands on. In the process it fails to restrict monopolies not only in the health care sector but in the economy at large. When the inevitable collapses loom they’re “too big to fail” and require taxpayer resuscitation. And with Obamacare, the government is getting a step closer to co-opting the health care economy.

Government isn’t the best instrument to rectify all ills; it’s a club, not a scalpel. Some of you may recall one of the center posts of my proposed solution to the health care crisis was a program administered by medical professional societies (not government regulators) to apprise physicians of their individual utilization statistics relative to their peers in an effort to curb unnecessary ordering of tests. I maintained most physicians would be motivated to self-correct. Here is an excerpt from referencing a study that showed a decline in cardiac imaging studies over the past decade: Patrick White, the president of MedAxiom, a company that specializes in collecting cardiology practice data stated, “Physicians are competitive. So if we put data in front of them showing them that they’re performing below the median, sometimes below the 75th percentile, they are very motivated to make improvements.”

Attempting to micro-manage details from afar with reams of progressively more complex laws leads only to more effective and ingenious ways to circumvent those laws, at greater taxpayer expense. Given personal responsibility and the appropriate constraints to minimize fraud and abuse, the system will self-correct, assuming a generally moral citizenry that wants to do the right thing.

I hope that’s no longer a pie-in-the-sky assumption.


September 10, 2012

Well, maybe not. There is a perverse pleasure in seeing one’s assessment, even when it comes to bad news, validated. It’s human nature. To that end I present a recent excerpt from the ACC News Digest that references several sources analyzing our health care spending:

IOM Says US Health System Wastes $750 Billion Annually.

The AP (9/7, Alonso-Zaldivar) reports that yesterday the Institute of Medicine issued a report finding that “the U.S. health care system squanders $750 billion a year – roughly 30 cents of every medical dollar – through unneeded care, Byzantine paperwork, fraud and other waste.” The conclusion drawn is that while both “President Obama and Republican Mitt Romney are accusing each other of trying to slash Medicare and put seniors at risk … deep cuts are possible without rationing, and a leaner system may even produce better quality.” That’s because the IOM’s “one-year estimate of health care waste is equal to more than 10 years of Medicare cuts” under the ACA and “more than enough to care for the uninsured.” The report also “identifies six major areas of waste: unnecessary services ($210 billion annually), inefficient delivery of care ($130 billion), excess administrative costs ($190 billion), inflated prices ($105 billion), prevention failures ($55 billion) and fraud ($75 billion).”

The Washington Times (9/7, Cunningham) reports in its “Inside Politics” blog, “The report highlighted flaws that have long plagued the U.S. health care system, which is relatively slow to adopt new technologies, lacks incentives for doctors and hospitals to keep costs down and doesn’t encourage all of a patient’s providers to coordinate care.”

ABC (9/7, Wong) in its “Medical Unit” blog says that “the money squandered on services that failed to improve Americans’ health could have provided health insurance for more than 150 million workers or covered the salaries of all of the nation’s first responders for more than 12 years.” Author Dr. Mark Smith, president of the California HealthCare Foundation, said, “We’re spending money in ways that don’t seem to improve people’s health.”

I began this blog a few years ago with the health care system as its initial focus. My estimates were based on my personal experiences but I suspected, correctly it seems, that my observations were generalizable. There is a silver lining to this bad news: With this much waste, theoretically we can dramatically improve our health care delivery and its cost by waste cutting alone. The devil’s in the details of ferreting out the problems and realigning the incentives.

In early 2010 I whittled down my 15 recommendations for a healthier health care industry to what I felt were the most crucial 5:

  1. Tort reform. Without it we’re banging out heads against an endless testing and retesting wall.
  2. Increase competition by allowing patients to obtain coverage from out-of-state insurers, possibly in conjunction with nonprofit health cooperatives owned by the patients. Mandatory minimum coverage for those that can afford it has to be part of this.
  3. Establish a centralized medical records database.
  4. Immediately halt the arbitrary reimbursement cuts (actually, they seem to be based solely on volume and cost, rather than utility and appropriateness).
  5. Notify physicians and providers that are utilization outliers (and by that I mean beyond two standard deviations from the mean) of their status, without penalties.

Since then I’ve become less sanguine about the value of tort reform as a means of reducing cost, considering its impact (or lack thereof) in California, where we’ve had it for decades. Its benefit lies in its ability to bolster physician access by limiting the bloated malpractice insurance premiums that drive doctors away from essential specialties. In any case, little has progressed in this arena. Likewise, numbers 2 and 3 have seen little change, although isolated EMRs are springing up like poorly programmed weeds due to government incentives, which is a first step toward more universal connectivity. Reimbursement cuts are proceeding, although haltingly, so as to keep physicians from bolting from Medicare. I haven’t seen even a mention of number 5.

Will Obamacare be the answer? I know people who think so. I’m skeptical that a complex law no one fully understands, and which the legislators haven’t even read, can increase the extent and scope of medical coverage by increasing taxes without further driving us to the brink of bankruptcy, but we’ll see. Unless it’s repealed.

The only thing for certain is that the only road to “something for nothing” is waste management.


September 3, 2012

There’s been a lot of political rhetoric recently about “not leading from behind.” But in the area of pharmacologic medical treatment, that’s precisely what we’ve been doing—for years.

It’s been an odd but understandable quirk of our health care system that most of the newer, often safer and more effective, drugs are put into clinical practice overseas years before they make their way onto our teeming shores. Odd, because we like to think of ourselves as leaders and innovators, and because many of these wondrous new therapies originate here. Understandable, because we are risk averse and courtroom avid.

We’ve set up an elaborate series of hoops and boondoggles designed to maximize safety, which is good—what we call due diligence. But there is risk versus benefit in how thoroughly we scrutinize the risk versus benefit of the treatment we’re vetting. And if you’re a pharmaceutical firm facing a citizenry willing to play the Great American Legal Lottery each time it falls from a cliff in the wilderness because there wasn’t a sign posted and a fence planted, you don’t innovate; you wait. You wait for some one else to accept the small risks first and reap the early benefits as reward.

Some would argue we’re cautious and they’re foolish; yeah … that’s the ticket.

Only a cynic would think we’re timid and view them as expendable.