Healthcare Efficiency

   
Excuse the pun, but these days, everyone seems to have the answer to the healthcare problem.  Since I’m writing from Washington, let’s start with politics.  HHS secretary Leavitt beamed with pride as “over 100 companies committed” to his four goals to “improve quality and reduce costs.”  Who could oppose such a move!  His boss agreed that Medicare, the VA, and the FEHB (health insurance program for federal employees) would join the fray.  And do what?  Well, the four goals are:
1. Standards for connecting health information technology, a.k.a. interconnectivity.  The goal is to have one electronic medical record system able to read information from another such system.  Easy to conjure scenarios where this might be useful, maybe, but the average consumer gives this a big yawn.  The hidden agenda here is to enable the feds to mine data from non-federal healthcare systems.  “Let’s see who’s doing abortions in Kansas today.”

2. Quality of Care reporting.  The idea here is twofold--inform consumers about who is doing a good job in their area (informed choice), and induce providers to conform to national standards RE what constitutes “good care.”  One problem is that the goals are set by academics and have little to do with consumer interests.  For example, getting to see a doctor within 30 minutes at an ER visit is not on anybody’s list of National Goals, but it’s on every consumer’s list.  The second problem is that it’s not clear that these “goals” actually save money.  Some are on good footing--giving antibiotics within one our of surgery cut time reduces infections.  A lot of drugs are wasted (infections are unusual anyway), but the effort probably nets out on the positive side.  Patients, I suspect, would be appalled to learn that not absolutely everyone does this.  Most of the other standards have some demonstrated benefit to patient care, but the economic value was not on the table when these measures were considered.

3. Providing costs of services in advance, again seeking to empower consumers.  Ambulatory surgery centers do this every day, but hospitals generally have no idea what a given service actually costs.  Their accounting systems aren’t set up that way.  Probably a non-starter in our lifetime.

4. Incentives for quality care.  This is the “Pay-for-Performance” system that has such an apple pie ring to it.  Problem is that “performance” is defined by the same measures as in #2, above.  Also, the pay differential has been trivial so far.  It’s still possible to thumb your nose at the system and still make a living. 

Now, about Iran . . . .

Posted by Dr. Robert Burney at 08:50 PM | Permalink | Comments (0)

If you buy a car this month, an article by Sholnn Freeman in the Washington Post today suggests that it will NOT be an American car.  A local Chrysler salesman blamed Comsumer Reports for not recommending American cars.  David Champion of Consumer Reports countered that he wasn’t impressed with the new cars from Chrysler.  J.D. Power and Associates is quoted as saying U.S. automakers have improved the quality of their vehicles, but they haven’t done so consistently.  In other words, every once in awhile they get it right, but it’s an accident.  
Now, suppose we were talking about healthcare instead of automobiles.  And we might be comparing Community Hospital A with Community Hospital B instead of Chrysler and Honda.  But that conversation would only take place if Americans had the same power to choose healthcare providers that they now have to choose automobiles.  
A letter also in today’s Washington Post makes a similar point by comparing healthcare to restaurants.  John Graham argues that “the system needs more choice, not more coercion.”  Of course, choice presumes information.  It’s easy to compare automobiles--features, cost, reliability, etc.--try doing that with hospitals.  Some information is becoming available (www.hospitalcompare.hhs.gov, www.cms.hhs.gov/hospitalqualityInits/25_hospitalcompare.asp, www.jcaho.org, www.consumeraffairs.com/news04/2005/hospital_compare.html, ) but it’s minimal and doesn’t include cost data.  Also, hospitals typically charge uninsured patients twice what insurance companies pay for the same service.  
All of this would disappear with price competition for individual healthcare services.  And if you’ll look back at the definition of efficiency, efficiency would improve as prices come down--without any change in the basic service provided.  As a next step, providers would look at their internal processes to improve efficiency in order to be able to compete more effectively.  Universal health insurance would offer no motivation to improve efficiency or to reduce prices.

Posted by Dr. Robert Burney at 12:18 PM | Permalink | Comments (0)

A recent study by the Commonwealth Fund shows that those who have “individual market” insurance pay more and are less happy than those with “employer based plans.”  Well, gee whiz.  If you’re the insurance company and you have two calls:  one from a company with 300,000 employees and another from a single, self-employed individual.  Guess who’s going to get the best deal on health insurance!  Hardly surprising, and no one can blame the insurance company for managing risk.

Not surprising either that most who enquire about individual plans do not purchase.  No value there.  These are the folks who really need to consider a high deductible plan.  Of course, those with high deductible plans are at a disadvantage in a market where insurance companies (including CMS) pay for most healthcare.  With no price pressure, costs remain high, and individuals who pay suffer.  Those who pay taxes (for Medicare) or premiums (for health insurance) also suffer, but not as directly.

Also not surprising is their finding that 43% of those who did purchase such a plan spent more than 10% of their income on premiums and care.  With premiums alone over $3,000 a year, that’s not hard to do.  
The CMWF stated that those in individual plans had access problems, but their data suggest that this was a matter of choice, not availability.  Patients chose not to spend the money to see a specialist  or obtain other recommended care.  Some of this is a failure of the physician to convince the patient that such care was truly necessary.  Perhaps it wasn’t necessary.  Providers become accustomed to freely suggesting care when insurance is paying the bill.  

The only suggestion proposed was state sponsored insurance pools to help individuals buy into the health insurance market.  This of course does nothing to promote efficient care and perpetuates the high cost of services.

Posted by Dr. Robert Burney at 08:29 PM | Permalink | Comments (0)

December.  The month when thoughts for most DC residents turn to . . . that’s right.  Healthcare benefit options for next year.  This year, OPM is offering dental and vision care.  Notice that I didn’t say “insurance.”  Traditionally, the cost for dental benefits is about equal to the cost of dental care for most folks, so adding this option is questionable.   Those who anticipate expenses for glasses or a root canal might want to do the math.  However, after the deductibles, copays, and not-alloweds, you might be as well off with a Healthcare Savings Account.  
What does all this have to do with efficiency?  Well, if we want to induce dentists & optometrists to provide better service at a lower price (more efficient servcie), we have to give them some incentive.  Under this new benefit, the patient receives a service, and either he or the third party pays the bill.  (Usually both).  So, where’s the incentive to be efficient?  (See previous postings here suggesting that insurance is partly to blame for healthcare costs.)
It would be some different if OPM had said, “Here’s a list of providers who have agreed to give government employees a 50% discount on products and services.”  Forget insurance premiums.  Prove you’re a government employee, and you get the discount, but all payments are out of pocket.  You’ll end up paying about the same.
What about the providers?  Do they lose?  Well, only if they can’t find a way to become more efficient and provide the same service at a lower cost for them.  
And what would be the net effect?  The unit cost of those healthcare services would decrease--not just for government employees, but for everyone.  OK.  It’s a small part of the bill for healthcare, but the lesson could be leveraged.  The key ingredient is price pressure on individual healthcare services.

Posted by Dr. Robert Burney at 07:47 PM | Permalink | Comments (0)