Healthcare Efficiency

In a blog for Health Affairs, Rob Cunningham actually mentioned “cost.”  Of course, he was talking about the cost of health insurance, not healthcare, but we’re getting closer.  He was reporting on the poor earnings report from UnitedHealth Group and quoted them as saying, “business is bad because the company’s products are getting too expensive.”   And he went on to question the wisdom of “trying to buy everyone into a system that we can’t afford.”  In other words, if health insurance is too expensive, why are we planning to buy health insurance for the uninsured?  That constitutes heresy in the Health Affairs world.

A long time ago, someone said, “If ordinary people can’t afford to send their kids to college, what good is education?”  Colleges have, in fact, priced themselves out of the “ordinary” market by offering ever more expensive inducements to attract students.  In healthcare, we are seeing a similar phenomenon where we promise infinite healthcare and provide “insurance” to pay for it.  First, healthcare became too expensive for “ordinary “ people.  Now health insurance is reaching the same point.  Sooner or later, we have to bring down the cost of healthcare, and health insurance premiums will follow.  
But somehow, no one wants to use the “C” word.  Instead, we talk about “value.”  Or talk about reducing the “overuse” of healthcare.  (Translation:  Overuse means healthcare that I don’t think you ought to have.)  A few places that have discovered ways to reduce the cost of caring for some chronic condition complain about lost revenue and hold out their hands for more money.  Let me spell this out:  you discover a new way of caring for, say, diabetic patients, so they don’t need to come see you so often--thus reducing the cost of their care.  Now you have holes in your schedule to accommodate new patients or reduce the time-to-next appointment for existing patients . . . and you’re complaining?  I suppose if there is no one waiting to see you, you might reduce the size of your company, but I can’t see begging for higher fees because you’re doing a better job.        But that’s the complaint from Geisinger, among others. As Cunningham states, “cost-saving innovation is a losing proposition.”  Note, however, that the concept of “cost-saving innovation” means reducing the demand for healthcare services, not the cost of individual healthcare services.  

United’s problems may  be a manifestation of a slowing economy (that’s PC for recession), and employers may back out of health insurance expenses by various means, as suppliers wring their hands over lost revenue.  However, a few low-cost providers will emerge and may eventually dominate the market.  When I bought my first car, GM was ignoring the Japanese.  Today, Toyota is having them for lunch.  In healthcare today, retail clinics provide a limited menu of healthcare services at low cost without appointments.  The GM of healthcare is wary, but keep your eye on the lunch menu. 

Posted by Dr. Robert Burney at 09:20 PM | Comments (0) | Send to a Friend

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A book mentioned before, “The Pittsburgh Way to Efficient Healthcare,” makes several good points about roadblocks to improvement efforts.  One phrase that we hear about every initiative is “the importance of leadership.”  You would think that demonstration of a better way of doing something would be enough to convince the world to jump on board.  However, life just doesn’t work that way.  Machiavelli wrote, there is nothing “more uncertain of success, or more dangerous to manage than the establishment of a new order.”  Those who bring change “make enemies of those who derived advantages from the old” and find lukewarm support from new converts who fear adversaries and doubt new things not proven by experience.  Strong leadership is required to overcome these barriers, and the effort must be repeated frequently.  

This principle is demonstrated repeatedly in Grunden’s book.  Improvements can be made in one location, but a systematic improvement throughout a hospital or healthcare system requires leadership.  

PRHI, the subject of the book, grew from a group of Pittsburgh business leaders who approached the local healthcare sector as a business.  The basic premise was that patient safety and quality of care would restore the fiscal health of the local healthcare industry.  For most healthcare workers, this is not intuitive.  Improvements cost money and take time.  No one has a surplus of either.  Juran once addressed this by having a line item added to his company’s budget for the cost of poor quality.  All the rework, rejects, and warranty work came here, and the total was greater than the company’s profit.  The corresponding items in healthcare might be time spent looking for something that’s supposed to be on that shelf, or trips out of the OR for something the surgeon needs that isn’t there.  Waste.  Re-taking an xray because you can’t find the one that was taken yesterday.  

The PRHI effort is based on the Toyota Production System (TPS), and one key tenet is use of pull rather than push in processes.  That means you don’t send work to the next step until that step asks for it.  The example in the book is a pharmacy that pushed IV medication bags to nursing units, only to find that many were not needed by the time they arrived and came back to the pharmacy.  Waste.  In my surgery center days, we pushed patients into the pre-op waiting area as soon as they arrived.  Patients then sat in their favorite hospital attire and waited for the OR to be ready.  Granted, most times were short, but not all.  The variation was huge, and some patients stayed there for hours.  We could prepare patients comfortable in 30 to 40 minutes, and could have waited for the “pull” signal from the OR.  Patients would have been more comfortable in the general waiting area, and we could have reduced staffing in our expensive pre-op area.  Where was Toyota when I needed them?

Most of the book is examples and case studies of improvement projects.  Some are trivial--turning down water pressure to keep splashes from setting off the GFI switch.  Others are monumental--zero central line infections in the ICU.  But all are based on application of TPS principles to healthcare.  Sometimes the $$ savings are documented, but for others, you have to read between the lines.  Time savings are quoted in reductions in stay or time to complete a task.  These are not always translated into $$.  However, when you save 10% of the time to complete a nursing task, you just created a new nurse FTE for every 10 nurses performing that task.

You come away from this book thinking, “So, why doesn’t everyone do this?”  The answer is part Machiavelli but mostly leadership.  Someone once remarked that “the problem with healthcare is that there is no one in charge.”  By that he meant that there is no one who’s job or bonus depends on running that process as efficiently as possible. 

Posted by Dr. Robert Burney at 09:27 PM | Comments (0) | Send to a Friend

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Rep. Henry Waxman began hearings yesterday on “Healthcare-associated infections: A preventable epidemic.”  Chief witness he first day was Peter Pronovost the Hopkins researcher who sparked some controversy when the HHS Office for Human Research Protection terminated his project after he had saved the state of MI $200 K per year.  (see interview:  Their reasoning was that this was “research” and he needed IRB approval.  Makes interesting reading for those fascinated with bureaucracy.  Widespread protests led OHRP to rescind their directive, but only partially.  Stay tuned.  A group from the ASQ will meet Monday with the acting director of OHRP  (ivor.pritchard@hhs.gov )

There are several types of infections to be discussed, and most are included in a new book, “The Pittsburgh way to Efficient Healthcare” by Naida Grunden.  (I bought my copy at Amazon.com.)  Naida wrote the newsletters for PRHI ( www.prh.org ) and has compiled their experience into this book.  The basic theme of PRHI was to use Toyota Production Systems to improve healthcare.  When a production line worker has a problem, they push the red button and everything stops.  A team assembles to analyze and fix the problem, not only for that worker but for the system, so no one else ever has the same problem.  Same idea was used to stamp out central line infections.  When anyone noticed an infection, phones rang, and a team assembled to analyze and strategize.  One ICU reduced their infection rate to zero.  For the year.  That not only saved lives but also saved LOTS of money.   Waxman quoted an IOM estimate that infections cost society $5 billion a year.  That’s Billion, with a ‘B.’  Seems worth doing, regardless of what OHRP says.

And that, of course,  is the justification for the subtitle of the book--efficient healthcare.  Any infection adds time and money to the hospital stay, assuming survival.  One study  concluded that the hospital would lose money on every infection, even if insurance fully reimbursed for the care.  Same care, less time, less money, that’s efficiency.

She  talks about resistance to using Toyota methods in a hospital.  “This is healthcare, and a patient is not a car.”  I’ve often wondered what it is that closes peoples’ minds.  Is there something in medical education?  Graduates of the PRHI “Perfecting Patient Care” institute sometimes return to institutions “ill-equipped to accept change.”  Large minds with small portholes.  I once remarked to an anesthesia resident that the tests she had ordered were not of any benefit to the ambulatory surgery patient.  “Oh, they must be useful.  We order them every day.”  

Posted by Dr. Robert Burney at 09:53 PM | Comments (0) | Send to a Friend

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Just when you thought there were a few certainties in the healthcare debate!  Prevention is a good thing, right?  It saves money by keeping patients from needing expensive healthcare.  An article in today’s Washington Post challenges this belief under the heading, “Prevention is often more expensive than treatment.”  Both  Democratic candidates have issued positive statements on the benefit of prevention, but McCain doesn’t see life this way.  (Check out an interesting graphic on candidate positions in healthcare.)

How can this be?  Like so many things in life, it depends on how you look at it.  If you’re a politician trying to minimize healthcare costs for the country, then prevention is not a bargain.  The article cites a Dutch study showing that “over a lifetime, healthy people incur the most cost, followed by the obese and then smokers.”  The reason, of course, is that healthy people live longer and thus have more time to spend money on healthcare.  Smokers die early.  Perhaps Medicare should issue free cigarettes to beneficiaries as a cost-cutting move.  I once advised our hospital administrator to open a motorcycle store, because it would be good for business.  Same thinking.  I remember reading (a very long time ago) that it was cheaper to let a few women develop cervical cancer than to do PAP smears on the population.   An HMO in Milwaukee tried this approach--just stamped all the PAP smears “normal” without even looking at the slides.  A few women died, but the HMO made lots of money.
However, if you’re an individual, you want that PAP smear or mammogram or colonoscopy, even if it does cost the healthcare system money.  Another way of looking at the question is to calculate how much it costs for every year of life saved.  Then, of course, you have to decide what a year of life is worth to society.  Would you spend $1,300 per year on each smoker?  How about $160,000 per year for statin therapy?  For more on these ideas, look at books by Louise Russell.

Bottom line:  before endorsing prevention as a strategy, you have to make some hard decisions.  It’s not a magic bullet.  Targeting the prevention efforts to those who most need them may improve the financial return. 

Posted by Dr. Robert Burney at 08:42 PM | Comments (0) | Send to a Friend

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Why all the fuss about the uninsured?  We already have a government program that provides healthcare, let’s just expand it to cover everyone.  I’m thinking of Medicare, but you might also cite Medicaid, SCHIP, Community Health Centers, etc.  But if we expand Medicare to include everyone, we won’t need those other programs.  Jacob Hacker , writing in the Washington Post last Sunday, advocates this approach.  And he’s not the only one.  Sounds simple, and that should be a warning.  Congress has yet to face the fact that there is a date certain when Medicare as we know it will run out of money.  There are two approaches to this problem:  reduce benefits or raise taxes.  Guess which approach the government will select.  

So, we have Medicare, a program that’s scheduled to go bankrupt in the foreseeable future just taking care of the over 65 group.  And he wants to expand the coverage to everyone (or almost everyone--see details).  That will require a huge increase in funding (taxes).  He doesn’t address the unhappiness that most providers have with Medicare.  Haven’t seen any ads for “practice limited to Medicare patients.”  But I do see practices that don’t take Medicare, plus some that don’t accept any insurance.  And if Medicare is so good as a health insurance plan, why do we have “Medigap” insurance?  Ever try to call Medicare to contest a rejected claim?  It’s entertaining.

Remember when we used to have city hospitals?  A few persist, but most have disappeared because the city fathers couldn’t keep their hands out of the till and off the tiller.  The same could be said of Medicare where Congress can’t resist mucking with the money.   

For another example, look at the VA.  I’m a big fan of the VA.  They wrote the book on patient safety in hospitals and pioneered electronic healthcare records (in spite of themselves).  As a government funded, closed panel HMO, they generally do a fine job.  But they are chronically underfunded and struggle to provide excellent healthcare in a difficult environment.  A perfect example of what a government will do when it would rather start a war than pay for healthcare.  

As with all “reform” proposals, the missing detail is the money.  He cites “government’s ability to lower service prices, streamline administration and get a better deal on drugs.” Yeah, sure.  It is often said that Medicare has lower administration costs than private health insurance.  True, there are economies of scale in some things, but there are limits.  Government employees work hard and do a good job (I’m one of them), but let me assure you that they cannot run a health insurance program cheaper than private industry.  Just not in the cards.  Trust me on that one.

It will be interesting to see how this plays out.   Universal coverage of some sort is coming.  Not clear where the money will come from, but probably from multiple sources.   And government will play a larger role, but let’s hope not the only role.

Posted by Dr. Robert Burney at 10:11 PM | Comments (0) | Send to a Friend

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From today’s Washington Post:  The EPA ignored its scientific advisers and lowered the allowable concentration of ozone in the atmosphere to 75 ppb from the current standard of 84 ppb.  Their Clean Air Scientific Advisory Committee unanimously recommended a limit of 70 ppb, while the Children’s Health Protection Advisory Committee lobbied for 60 ppb.  Power companies, of course, wanted no change, and their interests triumphed.  The effect of any limits is to reduce the amount of nitrogen oxides etc. that can be released by power companies, and that costs money.  S. William Becker, executive director of the National Association of Clean Air Agencies (local governments) summed it up:  “It is disheartening that once again EPA has missed a critical opportunity to protect public health and welfare by ignoring the unanimous recommendations of its independent science advisers.”

The reason that this is of interest here is the point about health vs healthcare.  If you want to improve the health of the population, reduce the ozone concentration.  Nothing to do with healthcare.  The EPA estimated that reducing the level to 65 ppb could save up to 9,000 premature deaths per year.  But death is cheap.  Those who survive become ill and use the healthcare system.  And those costs go on for a lifetime.  

The point has been made before that the true cost of burning coal is not reflected in the price per ton.  We must include the cost of adverse health effects from air pollution.  We might also include the trashing of landscape by strip mining and the resultant sterilization of local streams by toxic runoff.  How do you account for the lowering of a child’s IQ from breathing heavy metals?  Coal is only cheap when you don’t account for all of the costs.

George was concerned about the near term costs of reducing pollution.  But the effects of air pollution on the population go on forever.  Anyone going to Beijing?

Posted by Dr. Robert Burney at 08:45 PM | Comments (0) | Send to a Friend

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Always interesting to see what people are reading or what they think is important.  Notice how the economy has risen to the top of the interest scale for voters and the Iraq war has subsided a bit.  Healthcare remains near the top, and it seems inevitable that any next administration will press for coverage for the uninsured.  Not clear, however, how they will pay for it.  Also today, a new bill to compel payment for mental health on the same basis as physical health problems.  This also will increase costs with no payment mechanism in sight.  

Health Affairs listed their top ten blog hits for 2007 and another list for ytd 2008.    
For 2008, lots of interest in spending--historical levels and predictions.  As a bonus, they also list the most read articles from the journal.  One interesting article in this latter list by Wm. Savedoff talks about what a country should spend on healthcare.  The complexity of the question makes interesting reading.  He makes the classic error, however of linking healthcare spending to population health, as if spending more on healthcare would somehow improve health.  (see previous postings here for more on that!)  He does point out the widely varying expenditures in countries with similar infant mortality and even states at one point, “it is extremely difficult to attribute changes in health status to healthcare spending.”  
An article on “disruptive innovation” (Clayton Christensen, see previous posting here) made the top ten.   His thesis is that innovations in healthcare service will further the faster-better-cheaper cause.  This is, of course, true, but unlikely to happen without some compelling reason.  There are, in fact, examples of “innovations” in healthcare today that perform faster-better-cheaper.  Surgery centers are familiar to me, but there are others.  Hospitals, however will not emulate these processes, primarily because they get paid not to.

For 2007, most articles on the list focused on healthcare reform, the au current topic of that era.  These fell into two broad categories:
    1. Central planning.  Advocates of a single payer system.  I seem to remember that the Russians tried central planning some years ago, and the results were not good.
    2. “The world would be better if I were in charge.”  This only works for the world of the person in charge--typically someone who’s never been in charge before.

Interesting that both lists have an article about the nursing shortage.  

As competitive politicians promise more and more in the coming months, questions will turn more and more to how to pay for more and more.

Posted by Dr. Robert Burney at 09:00 PM | Comments (0) | Send to a Friend

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Rep. Paul Ryan (R-WI) writes an interesting comment on some estimates from CMS on future health spending.  Much of what Ryan says is true, but the conclusions he reaches are not related to the facts presented.  Perhaps this is another page in the Goehring-Bush playbook (“If you want people to vote for your war, make them feel threatened.”):  Sprinkle your essay with enough facts, and people will believe all of it.  First, he reiterates Sean Keehan’s projection that healthcare spending will reach 20 % of GDP in 10 years.  OK.  Maybe.  Then, he blames “the tax code and entitlement spending” for this problem.   Hmmm.  That’s a stretch.  
He states that most Americans rely on their employers for their health insurance, as if that’s obviously a bad thing.  Ask yourself, who would be more interested in your health, your employer or the federal government?  True, my employer pays part of my health insurance premium.  True, I pay my Medicare premium (and yours too) thru payroll taxes.  Now, if the feds are so good at providing health insurance, and I have Medicare, why do I need another insurance plan?  (A rhetorical question.)
He alleges that the tax code causes employers to hide “the true cost of insurance” and  this, in turn, “increases demand for covered medical services.”  Here, he loses me.  My pay stub clearly states how much of the premium I pay and how much my employer pays.   And let me state here that I do not want any “covered medical services” this year.  I may have need of something in the future, but I don’t want it.  Have never seen a hospital offer frequent flyer miles.  Actually, it’s against the law to offer sales or other inducements to Medicare patients.  
Providers may be “induced” to suggest additional services if they know the patient has insurance that will pay, and this factor has been discussed here and elsewhere.  Covering more individuals with health insurance will increase overall expenditures.  True.  Whether you look at this as “increasing demand” or permitting needed services depends on your politics.  Probably some elements of both.  As with SCHIP, when you raise the income threshold and bring more families into the program, you will include some who don’t need it. But the alternative is to exclude some who do.  An arbitrary line.

Ryan offers three approaches to “controlling healthcare costs and expanding coverage:”
1. Personal Ownership.  Not clear what this means, except an argument for eliminating the tax deductible status of employee health insurance premiums.  I already feel like I “own” my health insurance.  Not clear what additional “ownership” would be created by making me pay for it with after tax dollars.
2. Transparency.  True, healthcare prices are opaque.  But this only matters when those making the purchase decision know the price.  So, why does Medicare pay widely different amounts to adjacent providers for the same procedure?  Why doesn’t CMS shop for the low cost provider in an area and send all their business there?  How would publishing prices affect my decision on where I go for healthcare that BC/BS pays for?  
3. Entitlement Reform.  He doesn’t say what this means, but one can assume (from the SCHIP debate) that he means reducing eligibility of individuals and services.   HMOs tried limiting access to healthcare and were drummed out of town.  Some have talked about means testing for Medicare and for SSA.  Neither plays well on the 5:00 news.  Another concept rears its head now and then--individual responsibility.  (We don’t pay for healthcare needs brought on by personal habits.)

In ending, he states that “there is broad agreement on the problem.”  Perhaps true.  And “there is no agreement on solutions.”  Definitely true.   Any solution will require leadership and courage.   That is, after we define what the problem is.  

Posted by Dr. Robert Burney at 09:24 PM | Comments (0) | Send to a Friend

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