Good Questions. No, Really…

LGF has decided to bring some sanity to the health care debate… By composing (and hopefully eventually asking) good questions on the issue. Better questions than the one you’ll see from me in a few hours (stay tuned)… I almost hate to see this, because I fear our politicians are not prepared to actually answer good questions on the health care debate. On the other hand, if you ask and they dodge, then it’s time to give them a dose of outrage all their own. It’s refreshing to see some sophisticated and intellectual opposition out there.

I mean… not all of them. Some of them are a little knee jerk…

The defenders of the health-care bill claim that it’s going to lead to all sorts of savings, not by actually cutting any services or denying care, but just by finding “inefficiencies” that will save money. Do you think this is remotely plausible? When has anybody ever said, “This project has to be lean and efficient—let’s get the government do it”?

… the answer to that could go on for hours but suffice it to say that the “free market” way creates all kind of institutional pressure to waste money unfairly compensate some types of providers… institutional pressure that can only be relieved by constraining the “free market” to force better practices. Mainly in ending “per visit” compensation in favor of “per treatment”, ending unnecessary referrals and multiple visits for simple needs.

A few others are similarly derived from conservative/libertarian talking points and don’t reflect any deep thinking about the issues. But by and large these folks should be congratulated for taking the discussion seriously and for leaving out the crazy.

16 comments to Good Questions. No, Really…

  • Who decides what’s unfair compensation, and how do they decide?

  • RW

    … but suffice it to say that the “free market” way creates all kind of institutional pressure to -waste money- unfairly compensate some types of providers…

    The free market solution to that – competition – dictates that a competing company that does NOT unfairly compensate some types of providers (what’s the current definition of “fair”, by the way?) will have lower costs and thus allow clients of higher-prices firms to switch. People shop at Wal-Mart for a reason other than its Elizabethan atmosphere, after all. :) The caveat is, of course, that in some instances there can be a bit of collusion or rules against encapsulating the full scope of the market & thus there isn’t much by way of competition (the oil cartel comes to mind – it’s not like you & I can start up Smijer & RW oil and truly compete against Exxon-Mobil).

    institutional pressure that can only be relieved by constraining the “free market” to force better practices.

    Congress dictating what should be standards & practices, especially when it comes to economic matters, is, forgive me, laughable. I can think of no other institution that should be trusted LESS to put forth practices than the federal government. They’ve managed to put us TEN TRILLION DOLLARS IN DEBT, primarily during our lifetimes. One can only imagine what the deficit would be if the US government was as frugal as those wasteful insurance companies. Then again, there isn’t much competition when you have voters in far too many districts, across party lines, who care little about the cost of things that they want their congresscritter to “do for them”. That is, after all, how we got to this point.

    We have three basic entities that pay for health care, assuming that the people who pay w/cash at the point of purchase are too few to count:
    1. private insurance
    2. Medicare
    3. Medicaid

    Two of those are slated for bankruptcy in the near future.
    So, of course, thinking logically the solution to hour health care problems is to tear down the one entity that is solvent and remake it in the mold of the two that are going into the red. And tear and rebuild it we should most certainly do! Plus, it should be done by the same hands that created the two that are near bankruptcy: the government. Rahm, Nancy, Barney, Harry and Barack have a great history of cost constraints, streamlining inefficiencies and instituting best practices….right? [Answer: sure, just make sure you pay no attention to anything that they've ever done that involves math, numbers, dollars, addition, subtraction, budgeting or spending]

    Let’s all practice the overarching theme when it comes to governmental frugality: “eliminate waste, fraud and abuse”

    Someone should put that to a melody…

  • smijer

    Bill, I think that question misses the point. You would recognize it yourself in a number of areas. The question isn’t how to “decide” it and go take money back from those people… it’s how to remove the institutional pressure to drive up compensation unnecessarily in the first place. One way to do that is to change the compensation structure from “per visit” (which increases the number of visits a patient has to make unnecessarily) to “per treatment”. See here for more info.

    The whole health care “for profit” structure is itself sick. Health care isn’t optimized by commoditization. Instead, Madison Avenue advertizing budgets are optimizied. More here.

  • 1. private insurance
    2. Medicare
    3. Medicaid

    Two of those are slated for bankruptcy in the near future.

    One of these doesn’t have the burden of providing insurance for people who are disabled, unemployed, or without income. It avoids those people like the (ummmm… ) plague, and dumps them into the other systems. What do you expect? And even so – while the boards of private ins. co.’s are doing well, their customers are filing bankruptcy at alarming rates!

    Sorry – you have to look around. The health care systems that are succeeding are not “self-regulated”.

    You’re right about the failure of “competition”.. really the free market doesn’t even come into it. Most of us are lucky to have one option for private insurance. Almost none of us can choose between two or more providers. It’s a monopoly system. Not just that, but health care has a lot more in common with “public utilities” that should serve everyone – like water service, for instance, than they do Wal-Mart. We can get by with out plastic garbage from China. We kind of need to see a doctor now & again.

  • I’ve had better experiences with pay-for-service medicine than capitated HMO medicine. “Who” should deicide what’s fair compensation is a pretty important question. It’s more important than how they decide really.

  • I’m guessing that “good experience with HMO” is in Oxford’s Big Book of oxymorons.

    Right now the providers themselves decide, and “how” is kind of a mystery to outsiders. It would be nice if consumers had some input into the equation, but I don’t know a way to do it. I would have less problems with providers deciding if there were some decent regulations in place limiting “how” they can decide.

  • Providers take what the carrier gives. That’s it. There are a done of regulations in place for Medicare, and that basically drives the prices a provider can charge. Sometimes more, often less… depending on the deals. One obvious solution is drive down prices by creating more Providers. Allowing more Foreign Medical School Grads in… giving granst to Med Schools to graduate more Doctors. Liberalism was once about creating this kind of abundance. No more though, HR3200 is pure Nixonian wage and price controls.

  • Out of curiosity, how would you rate the French health care system, based on what you know of it? Their’s is a hybrid private / public supplemented system with price controls. They pay somewhat less per capita than we do, leave no one out, and have quality ratings consistently better than ours.

    Granted HR3200 is not the French system… but as an alternative?

  • I don’t know anything about France’s system. I’ve only worked with NHS and I’ve watched Canada.

  • Bill, RW… on the provider’s side, this article says what I am trying to say better than I can. That’s not to say that there aren’t also problems with the carrier side (THERE ARE!)… there are unnecessary & unfair cost inflations all through the system. That’s the only way it’s possible for Americans to pay more for lower quality care than most other industrialized nations. If there were no waste, we would at least be paying less for the lower quality care we get.

    No one teaches you how to think about money in medical school or residency. Yet, from the moment you start practicing, you must think about it. You must consider what is covered for a patient and what is not. You must pay attention to insurance rejections and government-reimbursement rules. You must think about having enough money for the secretary and the nurse and the rent and the malpractice insurance.
    Beyond the basics, however, many physicians are remarkably oblivious to the financial implications of their decisions. They see their patients. They make their recommendations. They send out the bills. And, as long as the numbers come out all right at the end of each month, they put the money out of their minds.
    Others think of the money as a means of improving what they do. They think about how to use the insurance money to maybe install electronic health records with colleagues, or provide easier phone and e-mail access, or offer expanded hours. They hire an extra nurse to monitor diabetic patients more closely, and to make sure that patients don’t miss their mammograms and pap smears and colonoscopies.
    Then there are the physicians who see their practice primarily as a revenue stream. They instruct their secretary to have patients who call with follow-up questions schedule an appointment, because insurers don’t pay for phone calls, only office visits. They consider providing Botox injections for cash. They take a Doppler ultrasound course, buy a machine, and start doing their patients’ scans themselves, so that the insurance payments go to them rather than to the hospital. They figure out ways to increase their high-margin work and decrease their low-margin work. This is a business, after all.
    In every community, you’ll find a mixture of these views among physicians, but one or another tends to predominate. McAllen seems simply to be the community at one extreme.
    In a few cases, the hospital executive told me, he’d seen the behavior cross over into what seemed like outright fraud. “I’ve had doctors here come up to me and say, ‘You want me to admit patients to your hospital, you’re going to have to pay me.’ ”
    “How much?” I asked.
    “The amounts—all of them were over a hundred thousand dollars per year,” he said. The doctors were specific. The most he was asked for was five hundred thousand dollars per year.
    He didn’t pay any of them, he said: “I mean, I gotta sleep at night.” And he emphasized that these were just a handful of doctors. But he had never been asked for a kickback before coming to McAllen.
    Woody Powell is a Stanford sociologist who studies the economic culture of cities. Recently, he and his research team studied why certain regions—Boston, San Francisco, San Diego—became leaders in biotechnology while others with a similar concentration of scientific and corporate talent—Los Angeles, Philadelphia, New York—did not. The answer they found was what Powell describes as the anchor-tenant theory of economic development. Just as an anchor store will define the character of a mall, anchor tenants in biotechnology, whether it’s a company like Genentech, in South San Francisco, or a university like M.I.T., in Cambridge, define the character of an economic community. They set the norms. The anchor tenants that set norms encouraging the free flow of ideas and collaboration, even with competitors, produced enduringly successful communities, while those that mainly sought to dominate did not.
    Powell suspects that anchor tenants play a similarly powerful community role in other areas of economics, too, and health care may be no exception. I spoke to a marketing rep for a McAllen home-health agency who told me of a process uncannily similar to what Powell found in biotech. Her job is to persuade doctors to use her agency rather than others. The competition is fierce. I opened the phone book and found seventeen pages of listings for home-health agencies—two hundred and sixty in all. A patient typically brings in between twelve hundred and fifteen hundred dollars, and double that amount for specialized care. She described how, a decade or so ago, a few early agencies began rewarding doctors who ordered home visits with more than trinkets: they provided tickets to professional sporting events, jewelry, and other gifts. That set the tone. Other agencies jumped in. Some began paying doctors a supplemental salary, as “medical directors,” for steering business in their direction. Doctors came to expect a share of the revenue stream.
    Agencies that want to compete on quality struggle to remain in business, the rep said. Doctors have asked her for a medical-director salary of four or five thousand dollars a month in return for sending her business. One asked a colleague of hers for private-school tuition for his child; another wanted sex.
    “I explained the rules and regulations and the anti-kickback law, and told them no,” she said of her dealings with such doctors. “Does it hurt my business?” She paused. “I’m O.K. working only with ethical physicians,” she finally said.
    About fifteen years ago, it seems, something began to change in McAllen. A few leaders of local institutions took profit growth to be a legitimate ethic in the practice of medicine. Not all the doctors accepted this. But they failed to discourage those who did. So here, along the banks of the Rio Grande, in the Square Dance Capital of the World, a medical community came to treat patients the way subprime-mortgage lenders treated home buyers: as profit centers.

  • Not sure I totally follow, but for me, the distinction between for-profit and not-for-profit entities is just a tax issue. Everyone needs to be solvent to exist and we all need to keep watch on the bottom line. My first experiences in Health Care was auditing Not-for-Profit, 100% Medicare, Home Health Agencies, and they were some of the greediest people I had seen. So the profit vs non-profit distinction is not significant to me.

    Obama wants us to believe the health care system is broken. I don’t think it is. I think if you have insurance and use it appropriately (you can get zigged by overuse too as Michael Jackson shows. Knowing when to go to the Doc is an algorithm worthy of a research paper.)

    Health care value is a function of Cost and Quality Care. Cost easy to quantify but quality far less easy. Getting a central Gov Agency to make these kinds of calls in addition to making the payments I think a pretty dangerous route to go. The temptation to weight the formulae towards cost and disregard quality (or worse fudge quality by redefining things and so on) pretty powerful.

    I like reform that gets out of the metrics busines (although funding accountablitity efforts like making outcome data public are very good) and instead focuses and breaking down the barriers to people pooling their risks, and buying insurance out of state; giving vounchers and credits to people without means, making insurance available to people outside of a job benefit, and making it independent of family status as the notion of family as Mom and Pop + two kids awfully out of date (if it ever was in date).

    If the costs seem too high, graduate more docs, build more med schools, increase the suppy of care.

  • Well, Bill, quality & cost don’t have to rise together. From the same article…

    The core tenet of the Mayo Clinic is “The needs of the patient come first”—not the convenience of the doctors, not their revenues. The doctors and nurses, and even the janitors, sat in meetings almost weekly, working on ideas to make the service and the care better, not to get more money out of patients. I asked Cortese how the Mayo Clinic made this possible.
    “It’s not easy,” he said. But decades ago Mayo recognized that the first thing it needed to do was eliminate the financial barriers. It pooled all the money the doctors and the hospital system received and began paying everyone a salary, so that the doctors’ goal in patient care couldn’t be increasing their income. Mayo promoted leaders who focussed first on what was best for patients, and then on how to make this financially possible.
    No one there actually intends to do fewer expensive scans and procedures than is done elsewhere in the country. The aim is to raise quality and to help doctors and other staff members work as a team. But, almost by happenstance, the result has been lower costs.
    “When doctors put their heads together in a room, when they share expertise, you get more thinking and less testing,” Cortese told me.
    Skeptics saw the Mayo model as a local phenomenon that wouldn’t carry beyond the hay fields of northern Minnesota. But in 1986 the Mayo Clinic opened a campus in Florida, one of our most expensive states for health care, and, in 1987, another one in Arizona. It was difficult to recruit staff members who would accept a salary and the Mayo’s collaborative way of practicing. Leaders were working against the dominant medical culture and incentives. The expansion sites took at least a decade to get properly established. But eventually they achieved the same high-quality, low-cost results as Rochester. Indeed, Cortese says that the Florida site has become, in some respects, the most efficient one in the system.
    The Mayo Clinic is not an aberration. One of the lowest-cost markets in the country is Grand Junction, Colorado, a community of a hundred and twenty thousand that nonetheless has achieved some of Medicare’s highest quality-of-care scores. Michael Pramenko is a family physician and a local medical leader there. Unlike doctors at the Mayo Clinic, he told me, those in Grand Junction get piecework fees from insurers. But years ago the doctors agreed among themselves to a system that paid them a similar fee whether they saw Medicare, Medicaid, or private-insurance patients, so that there would be little incentive to cherry-pick patients. They also agreed, at the behest of the main health plan in town, an H.M.O., to meet regularly on small peer-review committees to go over their patient charts together.

    Increasing supply doesn’t guarantee that doctors will adopt best practices like these exemplars have done voluntarily. The incentive is still more to take the McAllen model.

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