June 26th, 2009 — Symptoms
President Obama has succumbed. The lure of the Dark Side – with its Blame Game – was too powerful. Though he acknowledges that “our healthcare system is broken,” he points the flying fickle finger of shame at people: this time the doctors.
Doctors as Villains
We have known for decades that over-, under- and mis-use of medical technology produces bad outcomes and wastes money. We have known for millennia that incentives affect human behavior, and providers are human.
Under fee-for-service, the more the doctor does, the more she/he gets paid. Some doctors do too much (over-use). Under capitation, the less the doctor does, the more she/he gets paid. Some doctors do too little (under-use). The system is inconsistent and contradictory.
None of this surprises me. What astonishes me is how the majority of doctors actually ignore what is in their personal financial best interest when deciding what is best for the patient.
As a pediatric cardiologist, I could order an echocardiogram on every single child I see with a heart murmur. The test carries no risk. I could rationalize the need. It would generate lots and lots of money. The problem is that word “generate:” it should really be replaced with “waste.” While all those unnecessary echoes would be revenue to the hospital, they would be unneeded costs for the nation.
President Obama has fixated on this under- and over-use problem decrying it as a major cause of healthcare over-spending and by inference, blames the doctors.
Differences in practice patterns: money and quality
Representing the Administration on Charlie Rose (June 15, 2009), Peter Orszag of the Budget Office pointed the finger at the doctors saying that: a) different quantities of health care delivered in various parts of the country produced similar quality, and b) homogenizing these differences, i.e., curbing doctors’ overuse, could save billions without impairing quality of outcomes. I am sure he means well, but he doesn’t have a clue.
The measures of quality used for comparison were negatives: days in hospital; discharge diagnoses; complications; deaths; and hospital bills. Not one measure of outcomes-we-want, like restored function or longevity. “Quality” is not the absence of death.
Secondly, his offhand estimate that changing doctors’ practice patterns could be a major factor in reducing national unsupportable healthcare spending is ludicrous. The amount saved by standardizing practice patterns is less than a drop in the bucket compared to: worthless (but costly) bureaucracy and regulations; perverse incentives; actions without evidence; and defensive medicine – to name but four out of ten reasons for healthcare spending.
Finally, many (most? all?) doctors use “too much” or “too little” health care when the “right amount” is unknown: not unknown to them but unknown to everyone. A national database of medical processes and positive outcomes would show what works; what does not; and what it costs. Such a database does not exist. Why not?
How the regs prevent learning “the right amount”
There are a host of regulations, HIPAA merely the latest and greatest, aimed at keeping medical information isolated and unshared. Examples have been given in previous blogposts. Efficient transfer and free exchange of medical information – which COULD teach us those magical “right amounts” – is trumped every time by what bureaucrats believe are vital security measures, more important than learning to do good for patients.
When the Administration talks about how medical records will improve efficiency and outcomes, they need to note that the major source of inefficiency and inability to share information is their own regulatory bureaucracy.
Prior recipients of the Villainy Award
The doctors are merely another in a string of culprits identified as responsible for our healthcare mess. Prior villains include the hospitals; big pharma; and the ever-popular insurance companies. Interestingly, two who have never been singled out have been trial lawyers and the administrative bureaucracy itself.
Does blaming ever solve anything?
Blaming the doctors is wrong for three reasons. 1) As above, the assignment of blame is unfair. 2) Blaming per se always does one thing and always fails at a second. It invariably produces defensive behaviors and invariably fails-to-fix. 3) Even the President (rightly) said that the problem is a broken SYSTEM. If he wants to make things better – fix the problem, not the blame.
Fix what is broken: the system. Don’t blame the parts.
System MD
June 23rd, 2009 — What to do?
Ever heard that expression? It is a crude update of “You can’t make a silk purse out of a sow’s ear.” Whichever is your favorite aphorism, they mean the same: some things are impossible by their nature.
“Reform” means changing structure while leaving substance or essence intact. For healthcare, it is its essence that makes it fail. It is the system itself that is broken. Reform would keep it as is with minor modification. In other words, reform does not address the real problem. The healthcare system must be REPLACED, not reformed.
Lack of “connection” in healthcare system
You do not need a PhD in Economics to understand supply and demand. The seesaw that keeps them in balance is called money exchange. If demand goes up and supply does not, then the price goes up. This dampens demand and balance is restored.
If supply is high, the price goes down. When things are cheap, people buy more. That raises demand (to the level of supply) and again you have balance.
The fancy phrase for this balancing act is micro-economic connection: supplier (producer or the person who provides service) and demander (consumer or buyer) are connected by money.
Once you understand this, you can see why both the President’s and the Republicans’ reform of healthcare will produce fixes-that-fail. All they are doing, to use another well-worn aphorism, is rearranging deckchairs on the Titanic. (That ship has already sunk; the USS Healthcare is on its way to join her.)
In healthcare, who consumes? The patient.
In healthcare, who pays? Insurance or government.
In healthcare, who drives the cost? The doctor.
Question: what connects these people – consumer, payer, and cost-driver?
Answer: nothing! Consumer does not pay supplier (disconnected). Payer has very strong incentives not to pay the cost-driver (disconnected again).
Question: who has any incentive to economize and how might he do it?
Answers: Consumer has no reason to economize (money is not coming out of his pocket) and has very little ability to do so. Cost-driver (doctor) has contradictory incentives: under fee-for-service, incentives encourage unnecessary tests and procedures. Under HMO control, incentives encourage withholding of necessary tests and procedures. Payers want to enroll consumers (to get premiums) and NOT pay for care because by not paying they make profit. This is as true for government as for private insurance, as long as healthcare payments are considered short-term line cost items instead of the infrastructure investment that it is (or should be).
What we have now is unlimited demand with no counterbalance. What has changed is that patient and provider have become competitors (for dollars). What we suffer through are incentives that encourage (by paying for) the very things we do NOT want.
How will proposed “healthcare reforms” solve any of these problems? Will a new insurance Program (Democrats) fix this? What about tax breaks and “insurance pools” (Republicans)? Who believes that big insurance can, much less will, cut $2 trillion from national healthcare payments (to them)? Where is organized medicine in all this? Why are they not advocating for us and for what we need: affordable, accessible, quality health care?
What the government and the pundits are offering us – so-called healthcare reform – is snake oil, not real solutions. Face it: we need a new system. We need replacement, not reform. We need a transplant, not cosmetic surgery.
Healthcare needs replacement, not reform.
System MD
June 19th, 2009 — Causes
In this kingdom of the blind, the one-eyed person is not a happy king: he is frustrated. President Obama and his new Secretary of HHS are leading us toward quicksand. The one-eyed king sees where we are heading. He is unsure whether our leaders are truly blind or simply have their eyes closed. Sadly, the one-eyed king can do nothing (except write this).
The latest stumble-blindly-in-the-wrong-direction is the government’s touted ‘fix’ for healthcare. Their Plan is nothing more (and nothing less) than a new competitor in the health insurance industry called The Federal Government. There are a multitude of things wrong with this approach that the one-eyed king can readily see by activating his non-special power – a power that everyone has – called root cause analysis.
The government’s Plan is intended to fix two problems: millions of Americans without health insurance and unsupportable individual as well as national healthcare expenditures (not costs). 1) Will the Plan get health CARE (not just insurance) for all Americans? 2) Will the Plan reduce expenditures on healthcare, which has become the leading cause of personal bankruptcies and is approaching 20% consumption of GDP?
Fixing healthcare requires – to use the President’s own words – dealing with “root causes.” Does his Plan address the reasons for uninsured Americans and escalating healthcare outlays? My answer to this question is a resounding no!
BEWARE. Do not let anyone use the crisis excuse: that it is always better to do something now than to wait. A ‘something (anything!) now’ is quicksand: it always produces a fix-that-fails-or-worse-backfires.
What are the root causes of high healthcare costs? There are ten. The first two we want to keep. The others should be prohibited, minimized, reversed, eliminated, excised, prevented, removed (?), and prosecuted.
ROOT CAUSES OF NATIONAL HEALTHCARE SPENDING in order of cost to the nation.
1. New Value. Health care can do things that it could not before. They cost money.
2. More People. There are more Americans and they are living longer.
3. Act w/o evidence. People in authority make decisions without proof that their decisions will produce the intended outcomes.
4. Bureaucracy (especially regulatory), Inefficiency, and Reconciliation. This non-value adding element consumes at least one third of all healthcare dollars. Regrettably, a single payer system will have little impact on this cost factor.
5. Disconnection. In healthcare, consumer, cost-driver, and payer are three different people. Because of disconnection, ‘markets’ cannot balance supply and demand.
6. Perverse incentives. The system rewards outcomes we do not want.
7. Defensive medicine. In our adversarial litigious environment, providers spend money preemptively to defend themselves.
8. Adverse outcomes and errors (not necessarily the same). These consume resources in extra medical expenses, loss of productivity, and legal costs.
9. Profit-taking. Money is taken out of healthcare as profits.
10. Fraud and embezzlement. Healthcare has its share of Jay Skellings and Bernie Madoffs.
Repeatedly, I ask my fellow Americans to judge for themselves and not simply put their blind trust in our leaders, self-styled experts, or me. Many moons ago, I offered a simple test guide called a “Quorum & A Chant” to help you decide. So decide: Will the President’s Plan address (fix) any of the root causes noted above or not?
Is the Government fixing root causes or are we getting more snake oil?
System MD
June 12th, 2009 — Symptoms, What to do?
Marketing 101: Get their attention! Show them the product! Sell them the goods (and if it is snake oil, get the hell out of town!) Worked in 1895 and still works today. People buy snake oil – promises of quick easy fixes, such as for healthcare – believing (? hoping) it will cure anything. The ‘medicine’ turns out to be Kool-aid, the lethal kind.
You cannot read the newspapers; access the headlines on your computer; or get on Twitter without seeing volumes of discussion about healthcare – most of it off base. Big Insurance promises to cut $2 trillion in ten years. Nancy Pelosi claims that spending ARRA 2009 funds on electronic medical records will save billions. Obama says we will provide health coverage for everyone: snake oil and the medical accounting fraud. None of it gets at the root causes (systems thinking). Therefore, none of it will cure the patient [healthcare].
We need fish oil, not snake oil. We need systems thinking and reality checks, not wishful thinking and expectations of quick, easy solutions.
Dose of reality #1: Countries that have “universal health care” do not cover everyone. Great Britain, France, and Canada do NOT offer full health coverage to illegal aliens nor to most visitors with visas. Over a certain age, you cannot get kidney dialysis, hip replacement, or heart surgery.
Dose of reality #2: Assuming the government could provide health insurance for all, without a totally new healthcare system, this will speed up the bankruptcy our nation is currently facing.
Dose of reality #3: Even if we all magically had health insurance, this would not assure us all of health care. For care, you need doctors, nurses, institutions and especially systems. Those are in short supply and the supply is shrinking.
Dose of reality #4: Cutting costs means (to them) reducing payments. Such “cost cutting” not only fails to reduce real costs, it dramatically increases long-term expenditures.
Final dose of reality (for today): President Obama recently used the term “root causes” when referring to healthcare reform. That is good speech writing. Unfortunately, he was disingenuous as he is not discussing much less trying to cure the root causes of unsupportable healthcare expenditures and of system-wide dysfunction.
Forty-six million Americans without health insurance; national healthcare expenditures approaching 20% of GDP; a tsunami of personal bankruptcies due to medical bills; 100,000 who die needlessly each year in U.S. hospitals; growing shortages of doctors and nurses: these are all symptoms of critical illness. They are not root causes. As long as they try to treat symptoms, we will continue to have “fixes that fail or worse, backfire.”
Fix root causes of healthcare problems or you “fix” nothing.
System MD
June 5th, 2009 — Causes, Money
A recent Milliman Medical Index report shows that the average American family-of-four with employer-supported health insurance last year paid out-of-pocket medical expenses of $16,771, which represented 28% of their total annual income. No wonder the leading cause of bankruptcies is medical expenses, not toxic assets.
Milliman further reported that 34% “went” to doctors; 30% to hospitals; 17% to outpt services and 15% to pharmacy. While this may be true on some accountant’s ledger, these numbers are completely misleading. They enable the medical accounting fraud (no, Milliman did not commit fraud), which is a new and subtle “big lie.”
People infer from the information above that similar proportions apply to the nearly $2 trillion our nation spends on healthcare. By that reasoning, in one year: $680billion “goes to” the doctors (that is more than the US has spent on the entire Iraq war); $600b to hospitals (don’t they wish!); $340b to outpatient services; and $300b to for medications. Not true, not even close.
The medical accounting fraud ignores the roughly 40% of $2 trillion that goes into the healthcare system but never comes out: not to doctors; not to hospitals or big pharma; and certainly not to patients.
As shown in the list below, healthcare expenses can be classified into ten groups, ten reasons why it costs so much. Two of the ten add value: #1 and #2 improve the quality and length of our lives. Numbers 3 through 10 add no value. THAT is where you can save money without losing something we want. Some overlap like inefficiency and regulatory compliance. Others demonstrate a system not designed at all or worse designed to fail, and to fail us.
Actual Reasons For Healthcare Expenses
[Note that the title does NOT read “Appropriate Reasons For Healthcare Expenses”]
1. Treatments available now that did not exist before
2. More people living longer
3. Action without evidence
4. Cost of regulations and compliance
5. Inefficiency
6. Perverse incentives
7. Defensive medicine
8. Adverse outcomes and errors
9. Profits taken out of healthcare system
10. Embezzlement and fraud (outright theft).
Who perpetuates the medical accounting fraud?? All those who refuse to question their preconceptions and are afraid of the new, the different and what comes with it: change. The medical accounting fraud is a dirty little secret that is good at staying below the radar. However, we must expose this “fraud” that is ripping us off. The system is stealing us blind, a system we allow to persist even support.
We applaud when the government “cuts costs” in healthcare. They do not actually cut costs, they reduce MediCare payments so doctors will not accept MediCare patients because they cannot afford to.
Now California, drowning in red ink, needs to cut costs and how are they doing it? Sacramento plans to reduce payments that provide health coverage for kids, 940,000 of them. Such so-called cost cutting has two perverse results: it increases costs and prevents the system from caring for us.
There is some good news. Paraphrasing Dr. Bill Wiese of New Mexico, there is more than enough money going into healthcare. That amount could easily provide health services to 300 million people if it ever got to them! We need to redistribute our dollars taking them away from #3 through #10 so they can be used for #1 and #2.
The medical accounting fraud prevents real cost reduction and simultaneously prevents care delivery.
Next blog, we need to look at how the medical accounting fraud is behind all the ill-conceived “health care reforms” currently being discussed in Washington.
System MD
