Healthcare Efficiency

The Washington Post called attention to a report by WHO showing life expectancy (and other things) for member nations.  And guess what?  The US doesn’t look so bad, and more importantly, there is no correlation between ranking by the CMWF and money spent on healthcare or life expectancy--as was predicted here recently.  In general, for first world countries, the life expectancy is in a band from 77.6 to 80.3, and individual differences are probably not significant.  Beyond that, long life depends on good genes, good personal habits, and a clean environment.  

I went to a meeting many years ago where researchers talked about elderly populations--who lived the longest and why.  One basic conclusion was that those who lived longest were those who consumed the most calories per kg of body weight.  Think carefully about that.  

Champions of long life are Japanese women at 86 years--unless they come to live in the US.  For both sexes, the Japanese still lead with 82.3 years, followed by San Marino and Monaco (81.6).  Anyone think there is some common thread in the healthcare systems in these countries that puts them ahead?  

At the other end of the scale sits Sierra Leone with a life expectancy of 38.6 years.  Do you think improving their healthcare system would fix that?  How about taking away all the guns.

African countries generally do poorly, but the big medical problems there (malaria and dysentery) are public health problems, not healthcare problems.  You don’t combat malaria by treating a case of malaria.  You fix that problem with mosquito nets.  The most potent weapon against dysentery is a supply of clean water.

So we are left with the conclusion that life expectancy has almost nothing to do with healthcare.  Some, but not much.  In this country, we do such a good job of taking care of cardiac patients, that this is beginning to affect longevity.  It’s also hard to die in the US of renal failure--there’s a dialysis center on every street corner.  But in general, the quality of our healthcare cannot be linked to our longevity.

Posted by Dr. Robert Burney at 09:00 PM | Permalink | Comments (0)

Writing for the Commonwealth Fund, Karen Davis sounds familiar themes from a previous tome in “Mirrror, Mirror . . . “, emphasizing international comparisons. This popularizes misconceptions about what is and is not “healthcare.”   For example, infant mortality is mostly related to the absence of prenatal care, so a comparison across groups that actually did receive prenatal care would provide a fair comparison of the quality of that care.  Similarly, life expectancy has only recently been even remotely related to healthcare.  Genetic and environmental factors are still far more important in longevity.  
Our system has never been geared for preventive care, but we do rather well, according to Dr. Davis’ comparisons:  
PAP test - first
Mammograms - first
Flu shot over age 65 - third
BP and cholesterol check for hypertensives - tied for second
Wait time for elective surgery - We’re the best.
Statistics from other sources also show good performance in cancer survival and various cardiac conditions.
Davis faults the US for not using non-physicians to manage chronic disease patients.  This is a fault?  Show me that cheaper providers do a better job.
We lag in penetration of IT, but countries (like the UK) that have state sponsored healthcare can institute electronic records by fiat, without regard to the cost.  Physicians in the US want to see the advantage before investing.  This is an argument for another day, but it’s not clear that there is a convincing economic case for electronic record systems.  And the privacy sacrifices with current government proposals are enormous.  If you thought listening to your phone records was bad, stay tuned.
Any comparison of “safety” begs for clarification of reporting differences.  A study of errors in Canadian hospitals found virtually identical numbers to those in US hospitals.  Medical errors are a common problem and the US is doing better at improving than anyone else.

The report contains a paragraph on “Efficiency” but it begins by defining efficiency to exclude any measure of efficiency.  For example, they talk about percent of GDP spent on healthcare without measuring what that buys.  Administrative costs would be a viable subject if we had credible measures to compare.  Anyone who thinks a government can manage a health insurance plan at lower cost than an investor owned company raise your hand.   

I have worked in an overseas healthcare system and deal now with US citizens who live overseas and use local healthcare.  I believe we do it better than anyone.  Not that we’re perfect--or even good at some things.  And not to deny we could learn from others.  But no one who has been both places would choose to get their healthcare in the UK or Germany or Canada or . . . .  Now, our politicians might wish we had a less expensive healthcare system so they had more money for another war, but from a patient’s perspective, I’d rather be right here.

Posted by Dr. Robert Burney at 09:24 PM | Permalink | Comments (0)

Clayton Christensen invented the term to describe a change that upsets the status quo.  He mentions the personal computer as an example, but there are others.  The Walkman.  And the iPod is not just a better Walkman.  When incremental change just isn’t going to solve the problem, you need to wipe the slate and introduce a new concept.  In an interview in Health Affairs, Christensen says the problem of the uninsured won’t be solved by getting hospitals to “somehow become low cost.”  Rather, he says, we should enable “lower-cost providers and lower-cost venues.”  The key to making this happen safely is to embed the ability to perform the procedure “in the equipment and the procedure.”  LASIK is cited as an example of moving the skill from the surgeon to a machine.  It is also an example of price competition driving costs down dramatically.  

In one sense, ambulatory surgery centers are a disruptive innovation in healthcare.  By focusing on a limited number of operations, process efficiency is possible.  I recently saw a report from an ASC that did eight laparoscopic tubal ligations within four hours and at half the cost of the local hospital.  

In the examples of angioplasties and transistor radios, he makes the point that “It’s a system disrupting a system.”  Just as cardiac surgeons opposed angioplasties and appliance stores didn’t embrace Sony, hospitals opposed ASCs.  The academic-hospital complex is heavily invested in the status quo.  They favor injecting more money into their system by purchasing health insurance for the uninsured, whereas the problem cries out for disruptive innovation.  

He talks about potential savings in operating costs of 65% with the Toyota production system.  “...there are better ways of running those hospitals, and we know how to do it.”  The real problem is incentives.  As long as hospitals are paid to do it poorly, there is no motivation to improve.

What about the MinuteClinic movement?  Will a $39 Wal-mart visit replace the $150 doctor’s office visit?  Time and convenience will favor Wal-mart, but if insurance pays the bill, then it will be a hard sell.  However, if patients are spending their own money via HSAs and high deductible health insurance, then the new system becomes threatening.  It doesn’t take a board certified family practitioner to tell if a sore throat patient needs antibiotics.  However, some complaints and more subtle, and the real trick is recognizing the difference.

Posted by Dr. Robert Burney at 09:07 PM | Permalink | Comments (2)

That’s a question being asked of CMS.  If you can get a hernia repaired for $2,000, why pay $4,000?  The current issue is the ASC payment system.  Currently, hospitals are paid more for any given operation than ambulatory surgery centers, but there is considerable pressure to have one payment system for both.  Hospitals justify these excessive charges by pointing to the “poor and needy ones ‘at cluster all about.”  But that excuse is wearing thin.  Healthcare insurance already contains a “hidden tax” to pay for the uninsured.  And, last time I looked, hospitals don’t pay taxes.  That advantage is to pay for indigent care.  
If you’re getting paid $4,000 to do a hernia, it’s very easy to spend $4,000.  
A single payment system for ambulatory surgery, regardless of the venue, would save money on ambulatory surgery.  Hard to estimate how much CMS would save, but estimates run 20 to 40%.  And that’s a lot of money, considering that over half of all surgery is ambulatory.  

Hospitals, of course, oppose such a move, since ambulatory surgery has been a cash cow that feeds their less profitable endeavors.  They also oppose transparency and any move to compare costs for a given procedure.  Perhaps, however, it’s time to see where the chips fall.  Setting CMS reimbursements to the lowest common denominator is a good starting point.  Somebody will do it for that.  If you can’t, step aside and make way for an efficient enterprise that can perform the surgery and still make money and pay taxes.  If the ER loses money, then let’s look at the ER.  Nothing like a little competition to drive efficiency.  There may still be inner city ERs that struggle to survive.  But wait.  In a year or so, there won’t be any uninsured.  Sure.

The other “dirty little secret” about CMS is that they subsidize medical education by paying more to teaching hospitals for the same procedure.  That anachronism would also be wiped out (or become VERY transparent) under a single pricing system.  

Price competition at the individual procedure level will make everyone more efficient and bring down the cost of healthcare, dramatically and instantly.  Price competition requires transparency and freedom--transparency to know the cost of the procedure, and freedom to go where you want to have it done.

Posted by Dr. Robert Burney at 09:36 PM | Permalink | Comments (0)

If you want to emphasize this, express the figures as percent of income.  For example, if you make $100,000 per year and buy a six-pack for $10, that’s 0.01% of your income.  For your neighbor who makes $50,000, the same beer costs 0.02% of his income.  Twice as much!  Let’s have a government subsidy!  Or fine the beer companies.

Some things do cost poor people more in actual dollar cost.  Try buying your groceries at the local convenience store rather than Safeway.  Or go to the hospital.  A study just posted on the Health Affairs blog reports uninsured patients are charged 2.5 to 3 times more than Medicare patients.  (Study not available to the public) Is anyone surprised?  This points out the increasing differential between hospital charges and what insurance companies pay.  The other factor in this equation is collections.  Hospitals collect about 40% of charges on uninsured patients, but that still puts them above Medicare reimbursement.
Responses from hospital groups so far consist of whining about all the free care they provide and how tough life is.  “We still have more people who can’t pay for the care they need.”  Let’s see.  Last time I looked, hospitals were non-profit entities.  That means they don’t pay taxes, and the idea was that they would spend that money taking care of the poor.  Guess they changed their minds.

Did anyone in the hospital industry think about becoming more efficient as a strategy to reducing costs?  My recent hospital experiences suggest ample opportunities for a Toyota engineer.  But where’s the incentive to become more efficient when they get paid for doing it poorly?  Transparency may do this, and hospitals are afraid of any move to measure and publish their costs for a given service.  This is one of the reasons they hate ambulatory surgery centers and specialty hospitals.  

Maybe the day of the hospital is over.  Maybe they are too cumbersome and inefficient to exist in a competitive climate.  Maybe we need to wipe the slate and design a new system for providing efficient healthcare.  This could probably be done for half the current cost of hospital care. 

Posted by Dr. Robert Burney at 09:20 PM | Permalink | Comments (0)

The Commonwealth Fund reviewed an article from the Dana Farber Cancer Institute regarding patient reports of “incidents.”  Unfortunately, the paper is not available to the public, so the following comments are based on the abstract.  The authors questioned patients’ ability “to recognize such events.”  In fact, they classified most complaints as related to service quality rather than medical errors or adverse events--the implication being that it’s OK to provide poor service as long as you don’t screw up the technical aspects of care.  Is that possible?  “If the pharmacy experiences chronic delays, how do we trust that the chemotherapy is prepared reliably?”  Well, yes.  If you can’t do the little things well, why should we trust you with something important?  As the abstract notes, “patients view service problems as potential red flags about the quality and safety of treatment.

Interestingly, 48% of those interviewed had at least one complaint.  Anyone know of another industry where almost half of the customers complain of poor service?  Even the IRS gets better reviews.  Actually, the graph (“Incidents per 100 patients”) seems at odds with the text and suggests that 63% of patients had a complaint.  From the graph, 18% of patients experienced a medical error that either did or could have caused them harm.  Must be hard to dodge those bullets while wending your way through the care process.  This is a long way from Six Sigma.  

Missing from the abstract is any analysis of causes or plans for improvement.  They do state that 21% of service complaints resulted from poor communication.  Well, yes.  Perhaps ALL service complaints are due to a failure to communicate realistic expectations, like how long they will have to wait.  How can you have “inadequate coffee?”  Talk to McDonald’s.  They do coffee really well.   Surely someone could calculate how many cups of coffee will be needed each hour.  Is that important?  Well, yes.  It shows that you care about your customers.  

And, lest we forget, patients are our customers.  They define what “quality care” means.  No, they don’t understand some very technical aspects of care, but they do understand service, and the two are probably related.  I remember a McDonald’s TV ad that said, “Sure, we make mistakes sometimes, but we fix them real fast!”  From the abstract, it doesn’t seem that Dana Farber has yet acknowledged any mistakes and has no plan for corrective action.  

Posted by Dr. Robert Burney at 09:48 AM | Permalink | Comments (0)

Ewe Reinhardt (R) comments on a paper by D. K. Remler and S. A. Glied (R&G) on the Health Affairs blog site.  The original paper looked at the effects of high deductible health plans (HDP) and health savings accounts (HSA) on cost sharing of healthcare expenses.  One original premise of the combination of HDP and HSA was that this would shift first dollar costs to patients and make them more cost conscious.  The hoped for result was a decrease in healthcare expenditures overall.  (For info on HSAs and other alternatives, click here.)

R & G suggest in their paper that high tax rate individuals would actually face decreased cost sharing and would be likely to increase their healthcare expenditures, thus defeating one of the goals of the program.  This, of course depends on how you do the accounting and, in any case, is neither new nor surprising.  In this paper, the authors regard the tax savings as a subsidy to the patient.  

R brilliantly points out that pre-tax accounts are more advantageous to those who pay a lot in taxes.  This makes them less attractive to those in lower tax brackets.  And just why is this a bad thing?  Where is it written that one plan for healthcare must fit everyone?  Tax law has always been used to induce behavior and frequently affects one level of income more than others.  Want to start a Roth IRA?  Not if you earn more than $150,000.  R did have one interesting suggestion--index the deductible amount to income.  If this were set to, say, 10% of income, then the average person would be entirely out-of-pocket for all healthcare.  Insurance would kick in when expenses got serious, and overpaid executives would never receive any benefits.

Missing from all this debate is a clear statement of goals.  Are we trying to decrease the amount of healthcare provided? Reduce the annual healthcare expenditure? Or reduce the public funds spent on healthcare.  The first goal would require central planning (and control) which didn’t work for Russia, or anyone else who ever tried it.  The second two goals could both be furthered by improving the efficiency in the system through cost competition at the individual service level.  But no one is yet talking about this.

Posted by Dr. Robert Burney at 02:21 PM | Permalink | Comments (0)

A current management mantra is “it’s the system, not the individual.”  However, sometimes people do screw up.  Where’s the line?  When do individuals accept responsibility for their own actions?  A note in the Washington Post says that NJ governor Jon Corzine took responsibility for not wearing his seat belt and would forgo his health insurance and “spend hundreds of thousands of his own money for his medical care.”  There’s an easy link between no seat belt and serious injuries.  But how about those who carry around a few extra pounds and then want a total knee replacement?   And you could go on down the list of personal habits that contribute significantly to healthcare costs today.  Before you get self-righteous, remember there’s no end to the list.   One of my risk factors is driving a small car.  Are you going to deny coverage if I have an accident?  Only if I wasn’t wearing a seat belt?  If I had been drinking?

Society has an interest in providing some healthcare.  That guy with the BMI of 40 can continue to work after his TKR and pay SS taxes.  Otherwise, he’s sitting home collecting disability.   But, he did make personal choices that contributed to his need for healthcare, so maybe he should shoulder part of the cost.  

But what about conditions that are beyond personal control?  Did the world promise to hold you harmless from the problems God visits upon you?  Say you have diabetes or hypertension.  Even if you do everything right, your healthcare costs are going to higher than mine in those categories.  Sorry.  Which brings up another question:  should normal pregnancy be covered by health insurance?  Give me a break here.  Pregnancy is a preventable disease, and you have nine months to plan for most of the costs.  On the other hand, if we want to improve infant mortality, we need to ensure that women get prenatal care.  Nothing’s easy, but that doesn’t mean we shouldn’t try.  There must be a way to introduce some personal responsibility into healthcare costs. 

Posted by Dr. Robert Burney at 09:57 PM | Permalink | Comments (0)