Healthcare Efficiency

Fed Chairman Ben Bernanke spoke recently to the Senate Finance Committee on economic aspects of healthcare reform.  He saluted the scientific and social aspects of healthcare but cautioned that it is an economic issue as well, “. . . will affect many aspects of our economy.”  Currently, healthcare represents about 15% of our economy and has been growing at 2.5% faster than the GDP.  (After last week, healthcare may be the only sector of the economy that’s growing at all!)  Interestingly, as the economy sinks, this percentage will rise, as healthcare spending is sticky downward and not really related to the overall GDP.  He cites three challenges for healthcare reform:
1. Access, meaning covering the uninsured.
2. Quality, meaning conformance to academic norms.
3. Cost. And here, he acknowledges the dilemma:  covering the uninsured and/or improving conformance will dramatically increase cost.  
For an economist, his presentation was meager on facts and figures or concrete proposals.  He gives a brief overview of the salient issues in healthcare reform without contributing any new ideas.  He first decries the rising costs, then asserts that the benefits have exceeded the economic cost.  Sounds like a politician.

This, in contrast to presentations by Peter Orzag of the Congressional Budget Office who identifies rising healthcare costs as “the nation’s central fiscal challenge” and seems more ready to challenge the benefits of spending more money on healthcare. (See his presentation of 16 June to the same committee.)
(www.cbo.gov)  As have many others, Orzag cites the geographic variation in costs and benefits of healthcare as evidence of an opportunity “to reduce healthcare costs without adversely affecting outcomes.”  Putting numbers to his words, Orzag cites estimates that in a perfect world, 30% of healthcare costs could be saved from this source alone.  He does not, however, mention the 20 to 50% savings that might be achieved by improving the efficiency of individual healthcare services.  He also notes that “restraining the growth of healthcare costs” would increase the number of people who can afford it.
  In other words, reducing the costs of healthcare services would reduce the cost of health insurance and thus make it available to a larger audience without added subsidies.

Orzag shows again (his figure 1) that our aging population will not drive healthcare costs--more expensive services will do that.  Indeed, the cost of individual healthcare services seems to be the sweet spot for controlling costs.  

Unfortunately, neither of these economists offers any plan or incentive for reducing costs. 

Posted by Dr. Robert Burney at 02:57 PM | Permalink | Comments (0)

Continuing our bullet analogy, it’s time for another magic bullet to throw at healthcare.  This one’s called technology.  We’ve solved many problems in life with technology.  Our productivity has soared, largely due to technology, and healthcare is way behind other industries in exploiting this tool.  Indeed, some of our problems--particularly with patient safety--seem amenable to IT solutions.  Prescriptions are one obvious application.  When done by computer, it takes less time to write the Rx, and the order arrives at the pharmacy in milliseconds.  Handwriting errors are virtually eliminated, and you can’t write for a dosage that doesn’t exist.  The pharmacy doesn’t have to re-transcibe the order into their system, and there are no paper records.  This is a classic example of faster, better, and cheaper.  In my organization’s system (180 providers), almost all prescriptions are now electronic (vs none last year).  It was, frankly, an easy sell.  Our providers are younger and more computer literate than average, and most patients use a single mail order pharmacy.  Everyone wins.  With a service like RxNT or iScribe, you can send an electronic Rx for any patient to almost any pharmacy.  There are efficiency gains at almost every point in the process, but this is not likely to lower the cost of drugs any time soon.  The primary gains are in safety and time.  Time savings pay for the cost of the system, but there’s not a lot left over.

What about records?  The feds have been pushing electronic healthcare records for several years with the caveat of “interoperability.”  Penetration, however, has not been nearly as successful as e-prescribing.  One of the difficulties is “interoperability.”  This term means that entries in your doctor’s computer would be readable (and understandable) from another computer at another site.  This might be useful if you visit another doctor and need records, but not many people want the feds snooping thru their healthcare records.  Next thing you know they’ll want to listen to your phone calls or monitor your library card.  1984 revisited.  Gains from interoperability seem mostly theoretical or a little far-fetched, and the sacrifices in privacy are huge.  The other problem is money.  A recent study from the NEJM noted few physicians using EHRs in their offices.  (Costs $$ to see this, so no link.)  The docs have their hands out for subsidies, and HHS has responded with $150 million for starters.  Those who have them seem to like them, but the business case is missing--or at least not perceived.  Given the lack of an intrinsic financial reward, it’s not clear why we taxpayers should subsidize something that doesn’t make clear business sense.  There are, of course inexpensive alternatives for small offices.  And those who know and love the VA system can get VistA from www.medsphere.com

From the patient’s perspective, there are Personal Healthcare Records.  Everything about you in a document that you control.  I keep mine on my .mac account.  One weakness of the PHA is that it only contains what the patient enters, but maybe that’s OK.  

But what exactly do we mean by “technology?”  The above comments concern information technology.  Another aspect is the weird and wonderful.  Sophisticated, hi tech approaches that don’t involve IT.  Robotic surgery, invasive cardiology, ECHMO, lasers, laparoscopic surgery.  Technology, in general, is the chief driver of increasing healthcare costs, so these tools don’t always follow the better-faster-cheaper mantra.  Some do.  Laparoscopic cholecystectomy is a shining example.  Inguinal hernia repair by laparoscope is not.  Why do we pay for technology that is more expensive than the way we’ve been doing it for years?  If the result it “better,” show me the money.  Who would say no?

Posted by Dr. Robert Burney at 07:30 PM | Permalink | Comments (3)

P4P is one of them.  It’s supposed to transform healthcare into the system everyone wants it to be.  A 2006 Leapfrog group survey of P4P programs disclosed that the primary motivation was “improving quality and reducing variation.”  The first rule of quality is consistency, so reducing variation is definitely a virtue.  The term is not well defined, however, so we’re left guessing what varies less.  If a process sometimes takes 5 minutes and sometimes 5 hours, it’s hard to make it better.  Results are all over the map.  On the other hand, if it takes 2 hours, plus or minus 3 minutes, you can work to make that 1 hour because he basic process is under control.  
Quality, on the other hand, is a vague concept.  As noted previously, quality  is defined by the customer.  In the case of P4P, the payor defines quality, and the parameters are not what the average patient would specify.  For example, most P4P criteria look to national standards such as HEDIS or the NQF.  These generally reflect what academics think  is “good” for the patient.  And usually, they’re right.  It’s just that patients don’t think that way.  Patients assume the technical aspects of healthcare are ensured by the hospital, accrediting or licensing organizations, etc.  If aspirin is “good” for patients with chest pain, then, of course every ER would give every patient with chest pain an aspirin. The ER patient defines quality as a wait time of less than 30 minutes.  (Yes, it is possible.)  Or available free parking.  Or no out-of-pocket expenses.  Patients also value the cleanliness of the facility and the friendliness of the staff.  Haven’t seen these criteria in anyone’s P4P program (tho some do incorporate the CAHPS survey).  Interestingly, P4P programs don’t generally include cost, so it’s not clear that the payers benefit either.   They’re paying providers to conform to a third party’s idea of what constitutes “good” care, without regard to its economic benefit.  Doesn’t sound like this is a transforming concept.

Some P4P programs include the presence of electronic record systems--a concept that has been greatly oversold, particularly when you add “interoperable” to it.  Think about it.  Do you really want someone at CMS in Washington perusing your medical record?  Next thing you know, they’ll be listening to your cell phone calls or monitoring your library books.  Heavens!  

One problem noted with the second P is the validity of the measures, particularly with a single physician practice.  If they metric is Hgb A1c, and you only have 3 diabetic patients, it’s hard to tell if you’re doing a good job or not.  Or you might get dinged for not doing a PAP smear in a woman who’s had a hysterectomy.  In other words, data collection is problematic and expensive.  

Some try to include patient safety, but that’s also very hard to measure.  The rare “never events” are, well, rare, so they’re not reliable indicators of the safety culture.  Attempts to collect data on near misses will likely suppress their reporting and thus defeat the safety climate you’re trying to promote.  

So, at the end of the day, we have a program (P4P) that sounds as if it should improve healthcare . . . until you try to implement it and discover it’s not as easy as you thought.  Even programs that have been deemed successful haven’t reduced cost (not an aim) and haven’t reduced wait times or out-of-pocket expenses for patients.

Time to chamber another round.

Posted by Dr. Robert Burney at 09:44 PM | Permalink | Comments (0)

Competition is good, right?  It  is said that three shoe stores will do better than one alone.  Think what we would be driving if the Japanese never made automobiles.  But what about healthcare?  Currently, there is competition to insure patients but no competition for the patients’ business.  Third parties pay the same whether you do a good job or a poor one.  CMS is making threats about not paying for mistakes, but it’s not clear what that means, and a lurking suspicion that it will mean nothing for hospital revenue.  
True, there is P4P, but the first P is tiny, and the second P stands for conformance to rules that have never been shown to make much real difference to anyone.   So no real competition there.  
And how would you know if one hospital or provider was “better” than another?  Well, there is “hospitalCompare” and the JCAHO publishes some results of their surveys.  But it’s not clear that anyone makes purchase decisions based on such data.  It’s also not clear that the data they publish is important to anyone but themselves.  Has anyone ever asked patients what they want in a hospital or primary care provider?  Would it matter?  Patients don’t really have much choice, so why ask.  I listened to a presentation last week by some folks from Marriott Hotels.   They know EXACTLY what their customers want.  In the hotel business, it does matter.  

So, maybe we should foster more competition in healthcare.  We’d sell more shoes, and the bathrooms would be clean.   But some argue that a hospital monopoly is better for consumers.  Inova Health System is planning to acquire Prince William Hospital in Northern Virginia, giving them essentially 100% control of all the hospitals in the area.  Even Inova admits that the deal would raise prices in the area and thus increase healthcare costs to consumers and businesses.  The FTC and the VA attorney general have weighed in against the deal, but Inova claims the quality of care will improve if they control everything.  

Where is the motivation or incentive to improve if there is no competition?  There is a certain amount of corporate culture that might improve a failing institution.   Beyond that, it kind of depends on what you mean by “quality.”  I was always taught that quality was defined by the customer.   I guess the officers of Inova are the customers.  

This is not the only example.  Sentara Health Care is doing the same thing in the Norfolk/Virginia Beach area.  

At the end of the day, however, it really doesn’t matter.  Creating a monopoly can’t reduce competition that didn’t exist in the first place.  

Posted by Dr. Robert Burney at 09:27 PM | Permalink | Comments (2)

In one of a series of posts about P4P, Arnold Milstein talks about waste and cites a Congressional Budget Office consensus report that estimates waste at 35% of current healthcare expenditures.  Think about that.  If you’re involved in healthcare, roughly a third of what you did today provided no added value to your patients.  This includes both what you did and how you did it.  The “what” aspect is commonly referred to as  unnecessary  care--not supported by current science, the stuff that makes headlines in the Dartmouth Atlas, the reason care in one area is more expensive than care in another area even though the results are the same.   Remember the anesthesia resident who said pre-op tests must be useful, because “we get them every day!”  Then someone looked carefully and found they were pretty much without value.
There are also errors of omission.  We have rules about hypertension, asthma, diabetes, and immunizations.  Not hard to know what to do, and it’s not hard to do it.  The hard part is making sure that it is done every time and that you act on the results.  That’s why you get the big bucks.  
The other part of the waste equation is process efficiency.  How many clerks does it take to check a patient in?  This is Toyota Production System (TPS) stuff.  Lean processes.  Just-in-time delivery.  Pull instead of push.  Potential savings run to 20% easily from this source alone.  When you add this to the “what” savings, it’s not hard to come to a total of 35%.  

So what!  Nobody’s salary depends on these kinds of savings.   Those who suffer are the low and middle income Americans who represent the uninsured and have no voice in this discussion.  Savings of 35% would easily pay for health insurance for everyone without adding any more money to the healthcare system as a whole.   So why don’t we do it?  The  reasons are complex but boil down to incentives.  Currently, no one’s paycheck is affected by the efficiency of the healthcare system they work in.  The single most effective way to change this would be price competition at the individual service level.  If you have to compete on price, you will find ways to become more efficient or you will find another occupation.  

Milstein posits three classic approaches to shrinking America’s “35% waste-line.”
1. Deny care to those who can’t afford it.
2. Tax health insurance to pay for healthcare for the rest.
3. Improve the efficiency of healthcare delivery.
One and two represent aspects of our current system and thus define the problem.  They are not solutions.  That only leaves number three.
Milstein somewhat naively suggests that motivation to improve efficiency can come from education, appeals to a “sense of responsibility,” consumer incentives, and P4P.  Some of these may help at the margins, but none is likely to drive the kind of improvement that is needed.  
We know how to do this.  The technical ability is there.  The missing pieces are the will to do it and the courage to demand that it be done.

Posted by Dr. Robert Burney at 09:31 PM | Permalink | Comments (0)