Healthcare Efficiency

Today's Washington Post carries a front page story on healthcare legislation. There has been a lot of discussion on various issues, but now the focus is on the politics of the possible--what sort of legislation can we pass. Here are some quotes and comments on that article. "...cadre of liberal activists...against Democratic senators who (sic) they accuse of being insufficiently committed to the cause." OK. But what exactly is "the cause?" In the next paragraph, we see "comprehensive health-system overhaul." Where is the Devil when you need him. Reading on .... How about "true healthcare reform?" Not yet. There is next a list of those doing the criticizing and (at last) a specific criticism of Mary Landrieu (D-LA) for reluctance to back the government-sponsored insurance option. Is this the Holy Grail? Is the focus on "Medicare for everyone?" Many fear this would morph into "Only Medicare for anyone" as the government gradually becomes the sole insurance provider. But on (to page A-4) with the quest. There is a suggestion that time is running out to do anything, as the debate gets side-tracked into irrelevant issues. Next comes Andrew Stern (president of the Service Employees International Union) who urges Dianne Feinstein (D-CA) to "put her foot on the gas, not the brake." Feinstein wisely responded, "The gas pedal to go where?" and questions how an expansion of health insurance coverage will be paid for. If insuring the uninsured is the "true cause," the twin "cause", as Sen. Feinstein points out, is how to pay for it. So far that answer has been elusive. OMB chief Peter Orzag has consistently pointed with alarm to the rising amount Americans are spending on healthcare--an ever increasing percentage of the GNP that will eventually crowd out all other spending (if you believe in endless extrapolation). Other scholars have examined the causes of healthcare spending and created plans to modify one or another cause. The Dartmouth crew suggests making all of the U.S. look like the lowest spending geographic sector. Others point to "overuse," and the way to end overuse is rationing. At the end of the day, however, when comparing U.S. healthcare with that in any other country, the bottom line is that it just costs too much here. Even allowing for cost of living, standard of living, etc., it just costs too much. We pay our doctors and hospitals too much for each unit of care provided. So far, no politician has wanted to attack that cause, although Obama did mention "bringing costs down" as one of his key goals for healthcare. (The other two were free choice of a health plan, and insurance for all.) There have been calls to reduce Medicare payments, but this seems counter-productive in an environment where many think Medicare currently pays too little. If you reduce payments further, the result would likely be fewer providers who would accept Medicare payments, with no overall effect on the amount spent. In this town (Washington, DC), it's all but impossible to find a physician who will accept Medicare or any other insurance. If you want healthcare in DC, you have to put money on the table. Even local medical schools (we have three) don't accept insurance. Well, yes, Congress could pass a law that everyone has to accept insurance payments. That would go over big. The AMA has previously staked out a firm position against compulsory insurance payment. Want to take them on? We could, however, induce efficiencies that would lower prices by instituting competition. If Medicare sent out RFPs for the 10 most common procedures in a geographic area, institutions and individual providers would find ways to do it cheaper in order to make competitive bids. Is this possible? Doing it cheaper, I mean. Other industries have done so. Think what your computer would cost if there were no price competition. Or your car. Or a TV set. There are even examples within healthcare of the same procedure being done in different settings at different prices. Yeah, it's complicated. But it's also deceptively simple. Besides, have you seen a better idea? So the battle intensifies. The war of words will also likely become more sophisticated. Drew Westen writes an interesting essay on how specific terms conjure emotions, sometimes beyond the literal meaning of the words. If you're into selling a program, it matters what you call it. For example, "a doctor for every family" trumps "universal healthcare." In the end, he advises the administration to "stand up and say what they believe, clearly and with conviction." They're good at that.

Posted by Dr. Robert Burney at 4:24 PM | Comments (0) | Send to a Friend

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It's not often these days that I can read something I pretty much agree with 100%, but a recent column by Robert Samuelson comes very close. He display remarkable perception regarding the basic problems with U.S. healthcare. (It costs too much.) And he is correct that all of the current discussions about "reform" will only make this worse. There's a wonderful Tom Toles cartoon in the Washington Post that's relevant here--representatives from insurance companies, drug companies, and doctors are shown sucking cash out of a patient while one of them is saying to uncle sam, "Which "unnecessary procedures" would you be referring to?" The thought behind this is not that these groups have nefarious motives, but that they are just NOT interested in reducing healthcare spending. Quite the opposite. All of them would benefit from more spending on just about any aspect of healthcare. On the other hand, a newspaper reporter/columnist has no such axe to grind, so common sense prevails. Well, usually. It's like pointing out that the Emperor has no clothes. All those things that everyone accepted as true are suddenly called into question, and most of them are not really true. Like, IT will reduce costs. Wrong. Like prevention will reduce costs. Wrong, well, at least in the short run. Like doctors and hospitals and insurance companies want to reduce the amount of money spent on healthcare. Wrong. There is a lens or litmus test for any comments about healthcare reform. First, accept that the single biggest problem is that U.S. healthcare costs too much. It's not the uninsured. It's not the lack of IT. It's not excessive care. It's cost. Second, when someone talks about reform, ask how their suggestion will reduce cost. If that is still difficult, ask how they will personally benefit from their suggestions. If they start talking about improving quality, just turn the page and look for ways to reduce cost. And it's the cost of individual services that's key. If we can cut 20% off the cost of every service, we could do 10% more of them and still pay less for the package. And yes, it can be done. All sorts of other industries have done this, mostly to address competition. There are books about Lean Six Sigma in healthcare. It can be done. There are even a few examples of healthcare organizations that have put their toes in this water. A joint report by the National Academy of Engineering and the Institute of Medicine noted that few resources "have been devoted to improving or optimizing the operations" of the U.S. healthcare system. Healthcare as an industry has failed "to take advantage of the tools, knowledge, and infrastructure that have yielded quality and productivity revolutions in many other sectors of the American economy." That was 2005, and it's still true today. American industry did this as a response to competition. American healthcare has no competition.

Posted by Dr. Robert Burney at 12:10 PM | Comments (0) | Send to a Friend

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One of the key issues under healthcare reform is the roughly 45 million uninsured. The implication is that these people are totally without healthcare, and purchasing health insurance for them would solve the problem. On closer analysis, neither premise is quite true. Some are without insurance by choice--the young and invincible. In our system of employer-sponsored health insurance, when you lose your job, you also lose your health insurance. Many people are in that position today. Actually, that's not quite true either. There's always COBRA. Now there's another problem that needs to be solved. If you elect the COBRA option, your health insurance costs skyrocket, first because you are now paying the employer's part of the premium also, and second because you are no longer part of your employer's group. You are an individual buying an individual policy, and that's very expensive. Other reasons for being uninsured are many and varied. A few defy any solution. The biggest problem with just buying health insurance for the uninsured is the cost. In fact, the biggest problem with U.S. healthcare is that it costs too much, and buying insurance for another 45 million people would compound that problem. In a speech in Green Bay, WI, today, Obama said, "The single biggest problem we have with the debt is Medicare." As is traditional in our culture, we look for someone to blame, and a frequent target is insurance companies. The administrative costs of private insurance have been attacked by comparing them unfavorably to Medicare. (I hope no one still believes that Medicare has lower administrative costs.) A letter to the editor in June 13th's Washington Post cites ". . . insurance companies that make tremendous profits while interfering with patient care." And another letter mentioned ". . . an unregulated insurance industry. . . " These two letters day sought to deflect blame from doctors in response to an earlier article by Steven Pearlstein. Pearlstein was commenting on a New Yorker article by A. Gawande about the small Texas town that has the highest per capita healthcare costs in the U.S. This well written article demonstrates once again that when entrepreneurship is pressed beyond limits, it morphs into greed. This change is gradual and usually imperceptible to those involved. 
I'm sure those in the insurance industry will be surprised to learn that their industry is "unregulated." What these writers and others fail to appreciate is that health insurance mirrors the cost of healthcare. If you want to reduce the cost of healthcare insurance, just reduce the cost of healthcare. Unlike the healthcare industry, there is competition in the health insurance industry. Yes, they all make money, and I hope that continues. The first year that health insurance companies fail to make a profit is the last year there will be any health insurance companies. Even federal programs, like Medicare must operate at a profit. That is, they must take in (taxes) more than they spend (benefits). In the case of Medicare, there is a Trust Fund (retained earnings) to cushion any disparity for a while. But ultimately, the piper must be paid. Pearlstein makes this point repeatedly in comments on his article. It is unrealistic to expect insurance companies to reduce their premiums while still paying the same benefits. That said, however, there are things that could be done. The problem with COBRA could be solved thru legislation. (Risky!) Those who cannot obtain insurance because of pre-existing conditions or other high risk factors could be added to a pool to be insured jointly. We do this with auto insurance. And what about personal responsibility? When someone with a BMI of 40 develops diabetes, why should his insurance be expected to pay for his care? Some employers are developing risk stratification for their employees and adjusting health insurance premiums accordingly. We are not passive victims of our own bad habits. We can change, if we want to, and our health insurance costs will go down as a result. One of my gym buddies told me last month, "If you want more muscle, you have to put more iron on the bar." OK. I can do that.

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Things were different then. I'm thinking 1920 to 1950. For one thing, people smoked in movies. (Maybe that's why they're all dead now.) They also drove cars without seat belts. Neither would be PC today. Bathrooms had no toilets, and married people slept in separate beds. "The Moon is Blue" was banned, because a man and a woman who were not married walked into a hotel together. But the other striking difference that's relevant to healthcare is that people were thin. The movie stars were thin, and the crowds on the sidewalk were thin. Yes, there were a few overweight actors (Andy Devine, Charles Laughton), but in general, the average BMI seems well under 25. Not true today. Even players in the National Collegiate womens softball championship are mostly overweight. A recent posting by RAND Health highlights the prevalence of obesity in the U.S. population and its likely effect on future healthcare costs. It is commonly accepted that the primary driver of healthcare costs today is technology--the fantastic capabilities of our healthcare system. That may soon be overtaken by the secondary effects of obesity. A study cited here previously noted that Americans are not sicker than people in other OECD countries, except for the higher prevalence of diabetes in the U.S. The assumption was that obesity leads to diabetes, and diabetes means more need for care. That's true not only for the care of diabetes per se, but also for other associated disabilities--think about joint replacement, for example. Bottom line, as the RAND posting notes, "greater disability translates into higher healthcare spending. Medicare spending on an obese person is 35% higher than spending on a person of normal weight." How big is this problem? One estimate on the RAND page has expenses related to obesity reaching 20% of total healthcare expenses. For better or for worse, it's not clear that obesity leads to a significantly higher mortality. Unlike smokers who die faster from every cause, the obese just sit there and soak up healthcare. So, what's a poor employer to do? Can he just hire thin people? Some employers have done this with smoking and are still defending discrimination suits. Can we charge them more for health insurance to reflect their higher costs? Again, smoking is the poster child for this, but the basic concept of tailoring premiums to risk is an anathema to the concept of "insurance." Genetic testing could turn this into an art form. The best solution seems to be to attack the basic problem of obesity itself. Tough problem, but not hopeless. Everyone knows someone who . . . . Remember the small town in France that successfully reversed a childhood obesity epidemic? They implemented everything anyone suggested, and it worked. Remove food from the environment and promote physical activity. In concert with our primary theme, it would be more efficient to combat the root cause than to provide better healthcare to the obese.

Posted by Dr. Robert Burney at 3:22 PM | Comments (0) | Send to a Friend

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The IHI quotes an estimate that 30% of healthcare costs could be eliminated “without reducing quality.”  The problem, of course, is figuring out exactly what care to eliminate.   

One approach is to eliminate the care you want and only allow the care that I want.  Various privileged groups use rationing to restrict the amount of healthcare provided to some segment of the population.  This was part of the rationale behind the HMO movement.  We could erect enough barriers that most people just wouldn’t be able to get healthcare, so the total amount supplied would be less.  It worked.  The annual expenditures on healthcare dipped after the introduction of HMOs. But the population rebelled and we have gradually returned to business as usual.  

Another barrier was “precertification.”  You had to call the insurance company to get permission to go to the hospital.  They pretty much always said ‘yes,’ but if you didn’t call, they didn’t pay.  This saved the HMO some money, but eventually, everyone learned to manipulate the system, and this tool has fallen into disuse.

Now, we’re moving toward “intellectual rationing.”  The IHI is borrowing a theme from the National Quality Forum’s National Priorities Partnership and sponsoring a forum on “unwarranted procedures.”  And what exactly does “unwarranted” mean?  Well, it refers to procedures that an expert committee has deemed “unwarranted.”  And, of course, no expert committee could be wrong.  And there’s no room for a difference of opinion once the experts have spoken.  For one example of this sort of thinking, look at the panel of public health experts that decided the PSA test (for prostate cancer) was “unwarranted.”  They were right, of course.  From a public health or government point of view, it’s hard to justify spending money on a test of uncertain value to relatively few people.  Not everyone agreed, and there were editorials in newspapers and medical journals denouncing the opinion.  

So where do you draw the line?  How much money should we spend to save a life or add a year to the life of a dying patient?  The Brits put a price on a year of life of $46,000, and they have a truth commission to rule on what drugs and procedures the National Health Service will allow within that envelope.  (It’s called the National Institute for Clinical Excellence.   Work out the acronym.)  This is actually economic rationing, because those with money can pony up and have whatever they want.  

Writing in the March The Atlantic, Virginia Postrel talks about rationing cancer drugs in
the U.S., Britain, New Zealand, and Canada.  All except the U.S. have NICE squads to decide which drugs their patients can receive and which are too expensive.  Peter Orzag, new chief of the Office of Management and Budget, favors establishing a similar organization in the U.S. to do "Comparative Effectiveness" research.  The concept is attractively simple:  a panel of experts will evaluate treatments for various conditions and rule on which ones are cost effective and which are not.  Insurance companies (including Medicare) would, of course, only pay for those that are blessed by the NICE squad.  This approach has been called “Welfare for Academia,” because academics would be paid for their opinions.  It is also a fool’s errand.  For any given condition, there is usually an array of treatment options, and the choice for any given patient depends on patient factors as well as local factors where he is being treated.  Take, for example, the choice between stents and surgery for coronary artery disease.   If the Truth Commission has said, “stent,” then there is no choice.  Also, there is the time factor.  Look back two years and talk about treatment of breast cancer.  Anyone want to rely on treatment options available two years ago?  No “comparative effectiveness” committee can possibly keep up with current developments in every field.  The inevitable result would be a lag time for implementation of new treatments and a less attractive market for them.  

There is also one basic principle of the universe that must be considered regarding “Comparative Effectiveness” committees:  They may be wrong.  Yep.  Very smart people sometimes make mistakes.  They have all the facts before them but just make the wrong choice.  

Posted by Dr. Robert Burney at 6:49 PM | Comments (0) | Send to a Friend

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President Eisenhower warned against the military-industrial complex. meaning those in the Pentagon who were too close to their suppliers in industry.  The result, he warned was ever increasing military budgets to purchase ever more expensive toys.  Fast forward to now.  We have a healthcare industry that produces ever more expensive treatments and an ever more expensive electronic record system to keep track of them.  The most significant driver of healthcare costs today is technology, meaning every more expensive tools and treatments.  Those in government or advocacy groups who should be sounding the alarm or injecting rational thought are instead part of the problem, advocating electronic record systems without economic benefit.

The Washington Post last week detailed some of this pattern in an article about relationships in the health records debate.  Electronic records are certainly of some benefit.  Perhaps some economic benefit in some cases.  Perhaps there is an economic benefit that will trickle down to the average taxpayer who is being asked to pay for it.  Perhaps.  But is does make one nervous when everyone at the table has some ties to the providers of the service.  

Not that advocacy is necessarily bad, but if EHRs are so good, why isn’t everyone doing it?  If the answer is that it’s too expensive, well maybe that means it isn’t really so good.   Billion dollar fighter jets and attack submarines are marvels of American technology.  We just don’t need them anymore.  Bottom line:  technology is a potent tool that needs to be applied where it’s needed.

The eHealth Initiative, an IT advocacy group, states that “IT is not an end unto itself but a means to an end.”  Their position paper on  “A Higher Quality System” discusses the uses of IT at various points in the healthcare system.  The ensuing discussion, however, focuses heavily on clinical information exchange, with no mention of the use of IT for operations management of healthcare processes.

Cost of healthcare continues to receive a lot of press.  The Health Affairs blog
reports on an interview with Harvard economist David Cutler in which he speculates that there may be “a serious chance of being able to finance reform” (through savings).  It’s still not clear what the industry groups will do or exactly what they promised.  Note that everyone at the table that day stands to benefit from more money spent on healthcare.  Hard to imagine they will opt for any reductions in healthcare expenses without firm prodding.  
 

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The ink is scarcely dry on the “agreement” among healthcare provider groups, and now they’re all issuing “I didn’t say that” statements.
The NY Times chronicled statements by the six healthcare provider organizations, although these statements are not available on the organizations’ web sites.  At issue is whether the groups actually agreed to “cut the rate of growth of national health care spending by 1.5% each year” or just promised to think about that issue over the next ten years.  The AHA statement reportedly said, "The groups did not support reducing the rate of health spending by 1.5 percentage points annually."  But weren't they all standing there when the President said exactly that?

All this backpedaling was apparently precipitated partly by anger and angst among the organizations’ members.  No one who takes money from the pot wants to see the pot get smaller.    These organizations all have a vested interested in seeing the healthcare finance pot grow.  Remember, of course, that the agreement, as expressed by President Obama did not call for a reduction in healthcare expenditures—only for a reduction in the rate of growth of those expenses.  Even that, however, seemed untenable for the provider groups.  One remarked that the 1.5% figure was a target for ten years, not a promise for each year.  Some of us would say that a 1.5% reduction in a 6+% growth rate is an ineffective gesture, but if that’s the source whence all your blessing flow, you don’t want to see any reduction at all.  The American Hospital Association does not want to see less money spent on hospital care.  And so on.  Even with this reduction, the annual pot would continue to grow—just not quite as fast.  

Yes, 1.5% of a very large number is still a very large number, but in terms of solving the key problem with healthcare, it’s nothing.

The Washington Times quotes Donald Danner of the National Federation of Independent business as saying,”(these healthcare organizations) clearly have been a major part of the problem, and they have been slow to come to the table to fix it."  He also said, “The starting point must be cost, cost, cost.  If legislators don't address cost, whatever else they do is not sustainable."   Seems obvious that these organizations that have historically been part of the problem are not now going to be part of the solution.  The phrase, “kicking and screaming” comes to mind.  One thing physicians in particular fear is that Congress will pass a law that prohibits them from charging any patient more than Medicare allows.

An added impetus for cost control came with the announcement that the Medicare Trust fund will be exhausted by 2017, even sooner than expected.

 

If you tell me that my slice of the pie or indeed, the entire pie must get smaller, I will resist every way I can.  Once it happens, however, I will work hard to become more efficient, so my bottom line will not be affected.  It's up to Congress to make it happen and force the eefficiencies that will reduce cost.  If you want to reduce the cost of healthcare, you need to attack the cost of healthcare.  Forget diversions like quality or IT or prevention.  Keep your eye on the prize.  Focus on cost. 

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Depending on how you pronounce the title of this piece, the meaning changes.  And indeed, there are several meanings that follow here.
Today, President Obama announced an agreement by several key players in the healthcare field to reduce costs.   All the usual suspects were there:  the AMA, American Hospital Assn, America’s Health Insurance Plans, etc.  And when you’re in the desert, any water is good.  So this is a good thing.  Right?  In their letter, these organizations pledged to “do their part” to decrease the annual healthcare spending growth rate by 1.5%.  Did you catch the nuance there?  They are not going to reduce the cost of healthcare, just the rate of increase in the cost of care.  This trivial change will not make any noticeable difference in healthcare costs in our lifetimes, and will not materially affect the amount of money going to any of these organizations.  But, I guess that’s what allowed them to agree.


They said they are “developing consensus proposals” but offered none in their letter.  (The Devil’s busy just now.)  They did offer four broad categories of effort:

1. “...administrative simplification, standardization, and transparency that supports effective markets.”  There is actually some hope here.  How about doing away with a-la-carte pricing for hospital care.  Many of us have been calling for price transparency and standard fees for given procedures.  Let’s see what happens here.
2. “Reducing over-use and under-use of healthcare” the traditional whipping boys.  Who could be in favor of over-use?  Of course not.  We’re all against that.  But by the way, exactly what do you mean by “over-use?”  The classic definition of over-use is the healthcare that someone else gets.  As long as that “someone else” is you, I’m perfectly happy to say you shouldn’t have had whatever healthcare you had last year, and we’re not going to pay for it.  As with “under-use” the problem is with the definition and who decides.  When academia or the government decides, the patient has no voice.  Which system do you want?  The government, of course, is much better at controlling costs.  When the country spends too much on healthcare, Canada just cuts the healthcare budget.  
3. “...adherence to evidence-based best practices and therapies that reduce hospitalization, ...” and apple pie and motherhood.  Not clear, however, how any of this is going to reduce costs.  But that was never the real aim anyway. 

So this was mostly a photo-op.  A bit of fluff to toss out and give the appearance that something is happening.  A feint.  A gesture in one direction (cost reduction) while you’re planning to move the other way (status quo).  All of the players here stand to benefit from more insured lives--expansion of health insurance benefits.  All have an interest in preventing the administration from taking any action that would limit the fees doctors or hospitals could charge patients.  Insurance companies don't want the government competing with their health insurance offerings.  So all these players benefit from convincing the government that they can handle the problem themselves.  

The bottom line is that something will happen.  This year.  And it will probably increase the overall cost of healthcare in America.  Let’s see what the Devil comes up with. 

Posted by Dr. Robert Burney at 8:47 PM | Comments (0) | Send to a Friend

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