Healthcare: What Fixes Beyond Financing?
 

I had dinner with some doctor friends. One argued that the current proposals to reform the US healthcare system focus on financing - how to pay for healthcare - rather than on the healthcare delivery system itself. He claims that without making the healthcare delivery system more efficient, reform will not be successful. We will continue spending a high, growing, and ultimately unaffordable share of GDP on healthcare.

He stated that more care should be provided by primary care physicians and less by specialists, more by clinics and less by hospitals, that certain parts of the healthcare system need to make less money, and that medical "high technology" is frequently a waste of money.

Any views on this, from our medical members?

Prevention being cheaper than cure, tackling the 30% obesity rate in this country would be a start.

I think you'll find that different specialists will tout different solutions to the question you pose. As a surgeon, I think tort reform is pretty important. Defensive medicine can be pretty costly. But so are those lawsuits (even frivolous ones, which most are) and frequently ridiculous jury awards.

I had a similar conversation with my brother-in-law last month. He's a child psychologist and his wife is a family practitioner. For him, prevention and utilizing primary care providers more were big deals.

One thing we agreed on is that the medical payer system is so poor, that it forces many healthcare providers to work on a volume over quality mentality. The medical payer system does not reward spending time with people and discussing issues. That probably leads to some degree of worse diagnostic skills, less patient compliance, and higher lawsuit rates.

Finally, I'd have to argue that we, as a society, have to change our expectations of medicine, if we wish to have a viable system of universal coverage. As on other threads in the past, we have to consider medicine like a commodity. Everything in life is a balance of risks and benefits. We have to understand that if we wish to pay for healthcare for everyone, with finite medical dollars, no matter how efficient we otherwise become, we will still have to be willing to ration medical care/technology/knowledge/etc. Just because we have it within our power to do certain things to improve patient outcomes doesn't mean we should be doing so if the gains are marginal compared to the costs. And as painful as that may be, we have to be OK with that.

True healthcare reform needs to include tort reform as well.

While we are at it, strip doctors of their licenses when they have a record of botched surgeries. You sometimes hear of doctors losing their license in one state, only needing to move to another state to continue practicing.

In Sweden, the most problematic issue is that the people that decide over the money (politicians and such) have not the first clue as what practicing medicine is all about and hence they spend it in all the wrong places.

That will be true of ANY solution that involves government. Resources are allocated based on who is most effective in bending politicians' ears, not in what would work the best or be the best use of resources.

What we need is a system with relatively little government intervention. A system where doctors are naturally attracted to areas of highest need because those areas of practice command the highest fees. Of course, a supply of more doctors in a popular area of practice will bring down the price in that area over time. It would be a self-regulating system that ensures resources are allocated to the areas with the highest demand for service. Supply and demand. Huh. What a novel idea...

From what I understand, hospitals spend a LOT of time and money (HR wise) submitting claims to insurance companies, resubmitting them, etc. And, insurance companies spend a LOT of time and money (again HR wise) denying and/or eventually processing claims. I think that improving the efficiency of submitting, making sure submissions are complete and accurate, paying, etc. could save enough to be considered a "good start".

Better access directly to providers and physicians without 15 intervening layers of bureaucracy.

Simpler, itemized, understandable billing. And estimates ahead of time.

Hate to say it, but some of those problems go all the way back to the doctor. A lot of time they write down (or they are incorrectly transcribed from the doctor's notes) the wrong ICDs and CPTs on the bills. A diagnosis not consistent with the procedures (or vice-versa) will get a bill kicked out of a lot of automated bill review systems.

Another problem, is that a lot of hospitals will send bills to the wrong insurance company. This I have dealt with first-hand. Let's say you are in a car accident and break your arm. You go to the hospital. Your auto insurance company is billed and everything is paid and everything is fine. A year later, you go back to the same hospital for surgery unrelated to your broken arm (which is now healed) or the auto accident. You give the hospital your new insurance information. The hospital staff, deciding to take a short-cut, doesn't really look over your paperwork and just bills the company that paid last time: your auto insurer. Your auto insurer rejects the bill (as they should). It takes months of phone calls on your (the patient's) part before you ever find out that the hospital is billing the wrong company. All this time, your health insurer has no idea you had surgery. This battle gets even more fun when it crosses a calendar year. Health insurance companies don't like to be told about claims after the year they occur in, and when you have MER, they like to think they get to keep the money if you didn't use it. The fact that the claim was submitted in a timely manner to the wrong insurance company (which was not your fault) doesn't seem to sway them much.

I guess my point is that the communication between providers and insurers is usually pretty efficient, but every human who touches a bill between (and including) the doctor and the person who pays the claim can make a mistake, and that is where most of the problems occur.

Something like 50% of your lifetime medical costs will be spent in the last 6 months of your life. We spend obscene amounts of money treating terminal disease. We perform hopeless surgeries, endless expensive treatments with no real chance for improvement. Until palliative care and hospice are MANDATORY for terminal disease, we will never get a handle on runaway medical costs.

I don't know if the topic of healthcare administration costs goes under "financing" or "delivery system", so I might be off-topic to my own thread.

I found a 2003 study published in the New England Journal of Medicine that states US healthcare administration costs in 1999 were $395BN or 31% of total healthcare spending in the US at that time. Bring forward to 2007 at 3%/yr inflation and that that would be $500BN. http://content.nejm.org/cgi/content/short/349/8/768

An opinion article in the NYT also refers to a McKinsey study which concluded the "excess" administration cost in US healthcare was $100BN in 2003. No, I don't know how they defined "excess". Bring forward to 2007 at 3%/yr inflation and that would be $113BN. http://economix.blogs.nytimes.com/2008/11/21/why-does-us-health-care-cost-so-much-part-ii-indefensible-administrative-costs/

I know the total operating expense of the US publicly traded healthcare insurers and managed care companies was $350BN in 2007. Presumably not all of this is administration costs, though you could argue that would be true for the insurers. This wouldn't include what providers (hospitals, clinics, doctors offices) spent on claims processing, and wouldn't include private (not publicly traded) companies.

To put in context, the US reportedly spent $2400BN on healthcare in 2007.

When HMO's really got going in the 90's, they sold themselves to employers saying that they would reduce healthcare costs by closely monitoring billing. They sold themselves to investors by saying they would "squeeze the inneficiency out of the healthcare system" (and take a small cut in the process).

What they did was to introduce another layer into the system. This additional layer has made the overall healthcare system less efficient. Some doctors now spend large amounts of time "unbundling" procedures and doing other things like that now that their fees are more or less mandated by law in many places. In other words, HMO's spend a lot of effort trying to "catch" doctors billing improperly, and doctors spend a lot of effort trying to figure out how to get around a draconian reimbursement system. If doctors could just bill whatever they felt like for their time, there'd be no point in these games and people could chose to go to and "expensive" or "cheap" doctor.

I look at various pharma/biotech companies, and see lots of very expensive drugs with what seem to me like limited benefits to terminally ill patients, or even large benefits to a very limited number of patients.

Typical would be a cancer drug that costs $60K for typical patient and will extends the typical patient's survival by a couple months. Also drugs for orphan diseases that do make a big improvement in the lives of a few thousand patients (often children born w/ rare and debilitating genetic diseases), but will cost $100K-200K/yr for the patient's lifetime.

I wonder what mechanism we have to judge the cost-effectiveness of these treatments. It would be a hard-hearted thing to do, but everything has trade-offs.

John, you are correct. So is Moses.

We have learned how to extend human life by a few hours, weeks, or months at a tremendous cost and with little benefit for the patient or their family. When my grandmother had cancer, doctors kept he alive two more weeks with technology. She was still unconscious for those two weeks. Had she not been unconscious, she would have been in tremendous pain.

+1. I'm not a doctor, and I don't play one on TV, but even can see this.

How will the average consumer judge what a doctor's services are worth, whether a charge is "expensive" or "cheap"?

If I choose the most expensive doctor who gives me every possible high-tech test, does the payor (insurance company) have anything to say about it?

If not, why wouldn't everyone choose the most expensive doctor?

Go after the consumption of alcoholic beverages the way we're attacking smoking. Make it difficult, expensive and socially unacceptable. The medical cost of alcohol use (and abuse) is enormous.

So is eating Big Macs. Let's queue going after fast-food first. There's way more obese Americans than there are alcoholics.

Then we can move on to ice-skating. I'm tellin' you, that really needs to go. Those folks have *BLADES* strapped to their feet,. And not a single government employee is in sight to direct the flow of traffic around the ring.

We gotta stop hang-gliding, bungee jumping and snow skiing should be a felony. YOU DON'T WANNA KNOW THE INJURY RATES FOR SKATEBOARDS!!!! :D:D:D

I've said it before: Eliminate insurance.

1. Drives people to docs with good outcomes, and good outcomes/dollar spent.

2. Significantly alters patient's and family's thinking about end of life issues and beginning of life issues. (Although Moses mentions costs close to death, a huge amount of money is also spent on premies which often are significantly ill/continue to rack up bills or delayed, and may not have been premies with proper prenatal care. Note average cost for all premies 47K vs 2.8K full term, and "Of the tiniest babies, one-third die, one-third live with serious problems such as blindness and cerebral palsy, and the rest are relatively unaffected, he said. Hospitalization costs alone for one of these infants can easily top $1 million - March of Dimes)

3. Eliminates a huge amount of unnecessary layers and profit taking from insurance companies, various bureaucracies etc. An exquisite example are all the little oversight committees that are popping up. There is a committee for every mode of testing that requires yearly fees and continuing education to maintain certification, all in attempt to have only "accredited labs" be paid by insurers.

4. Consumer-patients might finally get that dietary and lifestyle changes mean less out of their pockets.

5. Get people to save money for a "rainy day" rather than spend it all (this might be considered a disadvantage from the business/economy outlook)

6. Less government involvement in healthcare (or any part of our lives).

7. Eliminate overutilizers who go to the MD only to decline all the approp therapies. They wouldn't get the doc visit for free (or $10).

8. Make MD life a lot more bareable, by allowing to charge for afterhours phone calls (and hence reduce the volume of such calls), or email, or anything else that takes time, like 5 page disability forms.

YMMV

PS Chris, MD's don't write CPT/ICD codes most places, although sometimes I have been asked to clarify the diagnosis (not the coding). The billing is done by the hospital. A great deal of time is spent having the insurance companies deny coverage because X wasn't documented or something else silly. The money eventually comes in. Just takes nagging. Aetna just lost a large lawsuit by MD's for categorically delaying payments. Also, making the most of modifiers to "get" the full payment occupies a great deal of time.

So what are you suggesting?
This is a pretty slippery slope you are entering

Steve

I agree with much of artplumber. #3 hits especially close to home as the nuclear medicine lab that I run had to undergo accreditation in order for health insurance companies to continue to reimburse for studies performed at the lab. Who came up the idea of needing to be accredited? Insurance companies of course, and they are on the recieving end of some of the accreditation money. Silly.
Did my lab improve because of the process? Not really, but it did need about 60 man hours to complete and an application fee that was just under 5K. Another layer of BS that somebody is making money from and the benefit to the facility is nil.
Soylent green scenario is on the way if healthcare is rationed by the govt.

I'm noticing that most of the doctors and other medical professionals who are posting are arguing for limiting or controlling how much medical care is provided in various cases. I.e. Noah, Moses, and art (livi didn't, but he works in a different healthcare system).

Yet I suspect the term "rationing healthcare" is quite controversial for the electorate at large.

Peter I also have questions about #3. I thought those areas were where a lot of progress was being made, especially preemies.

Yes rationing healthcare is not what the general electorate thinks of when "free healthcare" (i know its not free, but some will label it that) I believe the massed expect all the treatments, all the time, and with no limit.
Not gonna do it.

Caring for premature infants is very expensive. Fortunately, the vast majority of newborns are healthy and full-term. The global cost of caring for premature infants is not a huge factor.

Unlike the relatively rare premature birth, we will all die someday. Unless you die suddenly and unexpectedly, the last 6 months of your life will cost more than $500,000.00.

I understand that to some the costs outweigh the life, but I do not think the costs are that high.

My son was in ICN for 70 days and the bill was 175K. Most of the children were in and out in just a couple of weeks.

How many countries even attempt to save the tiniest of the preemies (<1500g)?

If healthcare is to be "rationed", what is the best way to do it?

I can think of a few possibilities:

1. Explicit dollar cap on payment of healthcare costs, either by time period (e.g. $X per year) or by person ($Y per lifetime). A lifetime cap might be difficult to administer as people switch plans.

2. Identify the situations which typically lead to excessive healthcare costs, and restrict treatments or limit payments in those specific situations. Who does that analysis and makes those rules?

3. Create financial incentives for patient and/or his healthcare provider to restrain healthcare costs. For example, high deductibles, sliding scale deductibles (e.g. rises with more treatment), flat fee to provider per patient, etc. I think Art's suggestion of eliminating healthcare insurance altogether falls in this category. Some of these schemes sound complicated, how handle coordination between multiple providers treating same patient?

4. Segregate population, provide very limited healthcare to one group and more-or-less unlimited healthcare to the other group. I think this is essentially how we do it today.

Any thoughts? Other, better approaches I didn't list?

OK, I'm not sure what slippery slope you are suggesting. If you are concerned about those with no money, physicians and hospitals have been doing free work for years before there was medicare or medicaid. The folks with Medicaid are still "free" work now since the payment received is less than the overhead and other headache associated with treating most of those folk. Even Medicare is approaching no profitability for some specialties.

The benefit to patients is that you won't have somebody get shafted for having some assets and no insurance, since insurance plans can dictate what they will pay for something. Example, patient gets procedure x, hospital bills $22K, insurance agrees to $16K and medicare pays $13K. If you're someone with some money and no insurance, you will end up paying $22K. Sucks don't it?

My point about no insurance is that receiving med care would become self rationing and rational. People won't be willing to pay huge sums of money to get little benefit, and researchers/developers won't develop things with tiny incremental gains and high costs.

And I disagree w/Moses on the premie thing. There are substantial dollars spent in this country on premies (premies are more than just pre 28wkers). That is one of the reasons why the country always gets bad marks for infant health/mortality.

EDIT: $175K is a whole bunch of prenatal care for several hundred people I'd guess. 175K being considered cheap is the mentality that needs to be changed. I'm not saying it wasn't worth it to you, but at a societal level it is not something that is easily afforded (my most PC).

I could go on again about colonoscopy screening for colon cancer too. Or mammograms. Or HIV research/therapy. All "hot button" issues. All debatable at some level. (and no I'm not advocating no Rx for HIV, just that there is a disproportionate share of $ spent on a disease that is pretty minor in terms of death rates in the US).

My concerns where I though you might be suggesting which some premies might be worth spending money on and some might not. It appears you where not suggesting that.

Steve

I had a "choich" 2 months ago. Continue with a full health care plan that was $800/mth or go with a basic plan for $200/mth. The $200 plan has a prescription drug discount and access to the discounts from Blue Cross get for the doctors. But, we have a family deductible of $5K. After $5K, they pay 80% of everything.

$800-$200 = $600

$600 * 12 = $7200! But the full plan has a $1000 deductible and $30 co-pay for each Dr. visit. I would be out $2200 more, for sure. And more likely than not, I will not use $5K in health care. And the $5K can be in a health savings account...

This was a no-brainer. I will gladly pay cash for what I need.

That's another piece of the puzzle. I frequently (at least once per week) have a patient come in that is convinced he/she needs an MRI. For what, I ask? Getting a test just because it's expensive and fancy-sounding doesn't make sense if you don't know what you're looking for. I wonder if people would be so insistent on obtaining not-entirely-indicated tests and such if they actually had to pay for this stuff, themselves. But, hey, the expectation is that we have the technology, so let's do it!

true my doctor won't even touch my shoulder, but yet will send me to a specialist, then x-rays, then the specialist, then MRI, then specialist again. it's tough to do especially when it's missed up and you want it fixxed a sap.

I like artplumber's idea and would like to go further:

Everyone, and I mean everyone, pays into a non-government run health insurance plan.
This would cover basic and preventive heatlth care, dentistry, mental health, wellness clinic and follow ups. This would include family panning, AAA and drug treatment, but not self inflicted emergency treatment, for that patient (or for kids, parents) pay.

Everyone gets a plastic card: no card, no treatment under the insurance: patient pays.

Do drugs or alcohol: patient pays.

Elective or plastic surgery: patient pays.

Managed by medical practicioners who are FULLY accountable for their decisions.
Financial decisons managed by medical and financial managers.
All management sign a 10 year contract to give continuity. Absoloutely no "golden parachutes".

No restrictions on anyone paying for private insurance to have more coverage.

Payments come out of pre-tax earnings.
Those on welfare, benefits or similar make a token payment to receive card.

Free gifts to doctors won't do anything as drug companies products will be looked at by commitee with actual power.

Everyone will be expected to have yearly check-up.
Etc, etc...

This is not an issue and not related to the the subject at hand.
yup, we need to let drug addict diabetics go ahead and kill themsevlves too


Chris, the expense of submitting and resubmitting claims is largely driven by 3rd party payors trying to delay or deny payment, not by errors in the bill originally submitted. Their job is not to pay, it is to find a way not to pay. This is not where the big money is spent, so it would give limited return if addressed.

John, we are rationing care now, if we socialize medicine, we just change the means we use to do so and add another layer of beaurocracy and expense.

As it is now, many people pay nothing when they go to the doctor or hospital. If something costs you nothing, you will not value it, and use it in a profligate manner. This is illustrated by people asking for an $1000 MRI because I tell them the $25 x ray was negative, and the tendonitis they have is a soft tissue problem not well visualized by radiographs. The huge amounts of dough spent on end of life care is a good example of this too. People that are 90 with failing hearts, kidneys or whatever, are going to die soon. Just because their family is wailing about doing whatever it takes to "save" their mom/dad/granny/gramps, does not make it a good idea. People need to be financially invested in their own care; ie, their bad decisions must cost them something more than the price of a pack of smokes, a big mac or a crack rock.

The high perceived cost of specialist care is because they are generally procedure driven, procedures are expensive, not just because of surgeon's fees. OR time is very expensive. Some procedures are very cost effective though, and this can be tracked. The reason a lot of primary care docs don't treat before referring is because they are paid by number of patient contacts in many cases, not by what they actually do. I practice stupidly myself, I spend an hour with my new patients, spend a lot of time to educate my diabetics, tell them the consequences. Works out to me getting less an hour than you pay to get your Porsche worked on, so it makes sense for me to work on my own car. How is that for rationalization:p

It should be very expensive to be obese, there should be a tax on high BMI's and smoking(or higher on smoking) We should drug test everybody getting any public assistance. Needs to be a financial penalty for bad health decisions, but how are you going to get anything out of a 500 lb disabled guy?

We wanted the HMO model because it was marketed as "cheaper" and forgot that you get what you pay for.

Funny how the people who pay least often seem to be the most demanding (and litigious).


As an aside: This sentiment is entirely correct. However, it is rare that doctors can do this type of thing (anymore, at least). If there is some sort of action taken on your license in one state, then you are required to report it to all other states in which you hold other medical licenses. Realistically, if you lose your license in one state, you're going to lose your license in all other states, too. States' medical boards do communicate with each other. Better than the DMVs do, too. Most state medical boards print quarterly newsletters. They are mailed to all the licensed physicians in that state. There is a section which lists all the disciplinary action taken by the Board. There are always a few physicians listed that are from out of state. Presumably, they had some sort of disciplinary action taken on them in another state where they are currently practicing, and whatever sentence was handed down was then extended to their California license by the California Board of Medicine, despite the fact that they're not practicing in California. Heck, get a DUI while off duty on personal time, and the medical board will still take action against you (not that I have any personal problem with that as I'm adamantly anti-DUI. But in how many other professions do you risk the permanent loss of current livelihood for stuff that's done on personal time?).