Three juicy lemons came through my inbox this week. The NY Times published an expose of why hip replacement surgery costs 5-10 times as much in the US as in Belgium even though it’s the same implant. JAMA published research and a superb editorial on the Views of US Physicians About Controlling Health Care Costs and CMS put out a request for public comment on whether physicians’ Medicare pay should be made public. Bear with me while I try to make lemonade, locally, from these three sour economic perspectives.

Here’s a super-concentrated summary of the three articles: The hip surgery is more expensive because, in the US, as many as 10 intermediaries mark-up the price of that same hip prosthesis. Then, Tilburt et al said in JAMA that “physicians report that almost everyone but physicians bears responsibility for controlling health care costs.” The physicians reported that lawyers (60%), insurance companies (59%), drug and device manufacturers (56%), even hospitals (56%) and patients (52%) bear a major responsibility to control health care costs. Finally, CMS is trying to balance the privacy interests of physicians with the market failure that my other two lemons illustrate.

Can we apply local movement principles to health reform? How much of our money can we keep with our neighbors? What policies and technologies would enable the health care locavore? The locavore health system couldn’t possibly be more expensive than what we have now and, as with food and crafts, more of the money we spend would benefit our neighbors and improve our community.


Let’s start with the least local aspect of our health care system – insurance. If a reasonable risk pool is 50,000 people, then that’s about the size of my town. The major non-regulatory impediment to small insurance cooperatives seems to be the cost of negotiating provider contracts. That negotiation cost will drop to zero when our local doctors, labs, imaging facilities and hospitals post their services and charges like all my other merchant neighbors. (So, yes CMS, please help get this going by posting the physician and hospital payments.) If the technology was available, the ACA’s Consumer Operated and Oriented Plan Program with distribution through my state health insurance exchange could be just the ticket to remove the far-away insurance company from the picture.

Before we turn to the hospital, let’s do more in the home. More aging-in-place, more community-based supports, more telemonitoring and mobile lab and imaging services. Digital X-rays, hand-held ultrasounds, networked infusion pumps and reliable monitoring communications are getting easier and more accessible and they eliminate a lot of overhead. Extended doctor’s office hours and the 24-hour pharmacy a few blocks away can also reduce overhead. That leaves the local hospital for pretty much everything else other than the hip replacements and such. The local hospital would be easy to deal with because it would have mostly the local co-op insurance plan to work with and would benefit from proximity to the local in-home services. As with local farms, the service areas of local hospitals would overlap and provide some diversity and backup capacity.

Then we have the local doctor and the patient. Care in the home and pharmacy-based services would be coordinated through personal health open source software technology. Instead of big cloud personal health records, each patient’s home server will be an “HIE of One” based on open source software customized and supported by our local geeks. My doctors, my hospitals and the local pharmacies and home health providers would all log into my personal server and could contribute apps to the open source system without proprietary barriers or overbearing technology regulation. As with the insurance co-op, software infrastructure investments would stay within the community instead of leaving in the form of license fees. Localized technology diversity would parallel cultural diversity and make all of us stronger.

This leaves drugs, devices and tertiary care. These costs will not be easily shifted to local, but technology helps here too because drugs and devices are truly global and benefit from Internet distribution, price transparency, and support communities. Some changes might be required to allow us to purchase our drugs and devices through Amazon, but once the local health and price transparency bandwagon gets rolling, the regulatory barriers will yield.

So let’s review the money flows. Locally operated non-profit co-op insurance plans, locally owned hospitals, locally owned clinics, pharmacies, labs and imaging facilities, all using locally supported open source software would conspire to keep us at home through reliable local social and technical networks. The only money flowing out of the community as either investment or commerce would be for drugs and devices which can be sourced and supported on the global market along with tertiary care that would go to centers of excellence in a global market as well.

We can do this.

Adrian Gropper, MD is Chief Technical Officer of Patient Privacy Rights and participates in Blue Button+, Direct secure messaging governance efforts and the evolution of patient-directed health information exchange.

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32 Responses for “Enabling the Health Care Locavore”

  1. Bobby Gladd says:

    “Locavore”

    Nice analogy.

    “negotiation cost will drop to zero when our local doctors, labs, imaging facilities and hospitals post their services and charges like all my other merchant neighbors. ”

    “Negotiation cost” is the source of a ton of income. These parasites are not going to go quietly. Opacity = Margin.

  2. Mighty Casey says:

    Love this “outside the box? what box?” kind of thinking. The challenge, though, would be that we were up against a pretty big monolith – the medical-industrial complex, which has been said to make the Pentagon look like homeless people.

    I’m afraid that BobbyG’s hit the nail on the head. The economic space between patient and clinician is the rice-bowl of a very fat player: the payers. They’d want to suffocate this idea in its crib. How could we stop them from doing that?

  3. The people providing the health care services are our neighbors. There’s no law that prevents them from posting prices. The message is optimistic and a matter of community so it’s to be expected that some communities will pioneer this practice.

    What kind of community is most l,sly to move first?

    • Bobby Gladd says:

      I’d love to see it happen. There may be no statutory “law” but surely there are prevailing contracts that impede it. Those are just as legal as any other “law.”

      • As I understand it, the gag orders prevent publishing the price negotiated with an insurance company or device vendor. That does not prevent the service provider from posting a price for any service as long as it has nothing to do with a specific contract. Am I confused?

        • Bobby Gladd says:

          I don’t know, Adrian. I’m not a medical economist or lawyer. Here’s what Joe Flower recently observed on his blog:

          “Health care pricing has always been opaque. Pricing has been so fragmented and so bound up in contractual secrecy, complexity and ongoing negotiations that nobody could tell you how much something was going to cost. The idea of “shopping” on a cost/quality basis has always been a logical impossibility. Talk of “consumerism in health care” is vapor until the actual chooser knows how much the thing costs, and how good it is — and has reason to care.”

          I love your locavore idea.

          • Rob says:

            Well he is an idiot! Medical pricing hasnt ALWAYS been opaque. Years ago when patients paid their charges and submitted receipts to their insurance companies(or not)physicians and hospitals prominently listed their prices for all to see. Years ago my pediatrician listed all office based charges on the wall in the waiting room. It wasn’t until HMO, PPO, Medicare, Medicaid etc, etc came into existence that costs and charges became proprietary information.

          • Bobby Gladd says:

            Who is “an idiot,” “Rob” (whoever you are)? Adrian? Joe Flower? People with established cred and accomplishments in the field, people whose IDs are traceable?

            Or, “Rob”?

          • Peter1 says:

            “Years ago”

            How years ago”

          • Peter1 says:

            Above should have been How MANY years ago.

          • Rob says:

            Established credibility? With no academic or real world experience in the health care field other than having an opinion? That gives you cred? Really? BTW, The quote speaks for itself. Maybe you are the idiot for posting it before you read it or thought about how ridiculous it is and then being offended by having it pointed out to you.

          • Joe Flower says:

            “Always” is perhaps too absolute a word if we imagine it is only about about the lack of publishing of prices. But it is not too absolute in that prices were not bundled. You could not know what the total price for a procedure would be; you would keep getting hit with further bills from other people whom you may not have even realized were involved.

          • Rob says:

            I think my point was that a lot of people would have the public believe that the “opaqueness” as you put it, of medical pricing is a nefarious plot adopted by providers and hospitals to keep patients in the dark about medical billing practices. I’m sorry thats just too simplistic, but makes for a good sound bite. I was merely pointing out that that practice became prevalent only after insurance companies began contracting directly with providers and hospitals, cutting patients out of the picture. It was only then that charges became proprietary information. Prior to that, everyone paid the same and charges were advertised. If you were CFO of Mans Best Hospital and you just negotiated a contract with Aetna, and Blue Cross knocked on your door would you start the negotiation by disclosing the terms of your agreement with Aetna? Of course not! What if they had different case mixes and reflected different costs and risk? What if your hospital had to provide more indigent care than the one across town and therefore had higher costs through no fault of your own? Would publishing that higher cost be misinterpreted by the public? Of course it would. If your goal is to allow patients to “shop” for the best price, go back to a delivery system where insurance companies don’t negotiate on their behalf and patients contracted directly with providers, but be careful what you wish for. And stop framing this as an evil plot by greedy providers. I think it’s a little more complicated than that.

        • Mighty Casey says:

          I think there’s a real, and largely justified, fear on the part of clinicians that the payers’ dogs of law will be loosed on them should they post any prices at all. Then there are groups like Surgery Center of OK City, who post their prices with a “request a specialist” button right next to it. Since they’re an ambulatory surgery center, there’s no way to check their outcomes rating on HospitalCompare or Leapfrog, though …

          • Peter says:

            “I think my point was that a lot of people would have the public believe that the “opaqueness” as you put it, of medical pricing is a nefarious plot adopted by providers and hospitals to keep patients in the dark about medical billing practices.”

            Yes it is (a nefarious plot), but just not for patients but for everyone outside the industry.

            “go back to a delivery system where insurance companies don’t negotiate on their behalf and patients”

            They don’t advocate for patients now. They only negotiate for their own margins and executive bonuses.

            “What if your hospital had to provide more indigent care than the one across town”

            Here Duke Hospital offloads its charity care to the state UNC system, yet it’s the high price leader in the area.

            Explain this Rob; A local imaging center is purchased by UNC Hospitals. It used to charge $40 per x-ray shot, now it charges $250 per shot. Nothing in overhead changed.

  4. Aurthur says:

    Actually very “inside the box” thinking. If only we could raise the cost of mobility through increased petroleum prices and then limit services to exurbia via Agenda 21, and convert to single payer (one option aka government monopoly), centralized government planning could really take off since there would be none of that pesky travelling outside our locavore, where someone may need non local medical care. The peasants are so much easier to control when they are confined to small spaces. I know, what a far fetched set of ideas.

    • Joe Flower says:

      I imagine it takes a concerted effort to so completely misread an idea, Aurthur. You somehow read Gropper’s formulation as another over-reach of the evil centralized government. Yet the idea is about returning as much real choice as possible to local people. The situation that pertains now is in fact one the constraints against people using their real market power to obtain better, cheaper healthcare are mostly baked into law and contract that prevent, or at least do not support, the real transparency that would be needed for real choice.

      Any such insurance coop would of course have to support people finding services elsewhere if that’s where they found better services — or got a better deal. But since healthcare is work done on physical bodies, it would usually be better and cheaper to get the work done locally.

      • Bobby Gladd says:

        ” the constraints against people using their real market power to obtain better, cheaper healthcare are mostly baked into law and contract that prevent, or at least do not support, the real transparency that would be needed for real choice.”
        __

        That was my point initially.

      • Aurthur says:

        “I imagine it takes a concerted effort to so completely misread an idea, Aurthur.”
        Mr. Flower, not really…
        http://www.grammarphobia.com/blog/2011/04/concerted.html
        I erroneously did not link my reply directly to Mr. Casey’s comment regarding “outside the box thinking”.
        Dr. Gropper’s “locavore” concept suggests packaging the health care needs of his town of 50,000 into one box is not exactly thinking outside the box.
        However, the “locavore” concept includes at least a couple of basic premises that are outside reality:
        1) “The major non-regulatory impediment to small insurance cooperatives seems to be the cost of negotiating provider contracts.”
        The costs of negotiating provider contracts on a group of 50,000 are negligible… http://theincidentaleconomist.com/wordpress/breakdown-of-insurer-administrative-cost/
        2) “Localized technology diversity would parallel cultural diversity and make all of us stronger.”
        Please site one study that documents “cultural diversity” or “technology diversity” did anything to lower costs or “make us stronger”. I thought it was the American culture (distilled from the melting pot of many diverse cultures) that made us stronger. I also thought standardizing technology was the cost reducer.

      • Peter1 says:

        “Any such insurance coop would of course have to support people finding services elsewhere if that’s where they found better services — or got a better deal.”

        Joe, we have nothing but mostly “local” medical care now. The market is already captive. If we want better “local” we’d need better access to far away services. I didn’t want to be a locavore for my new hip, I went to India for a top rate surgeon at 25% of the cost – including air fare and hotel.

        Medical care has never been about lower prices, it’s about greater margins.

        • Yes, the local insurance co-op would need to pay for your hip in India and your local doctor would need to support you by providing pre and post procedure care. Why wouldn’t the co-op support a treatment that would save 75% of the cost?

          The core principle of the locavore is transparency. The insurance co-op I envision would be defined by its willingness to pay anyone that a) publishes pricing and b) is Joint Commission accredited or holds a state license. This would apply equally to local and distant providers.

          • Peter1 says:

            “Why wouldn’t the co-op support a treatment that would save 75% of the cost?”

            Better question, why would the patient opt for a treatment 75% less when the co-op would pay either way?

  5. Joe Flower says:

    An excellent vision, Dr. Gropper.Most excellent. “Locavore” works as a nice metaphor. Though what it brings out as a metaphor is that the ruling idea is not really so much about doing things locally, it is about creating actual markets with real people and organizations making real decisions based on value and cost. The non-local parts — tertiary care, specialties that are not well served locally, and so on — fit in quite well. In fact, it’s those parts that are more commonly opening up to real market influences, like the Surgery Center that Mighty Casey mentions.

    And the keys to it are indeed the transparency, and the ability to form insurance coops on about the same scale as local credit unions.

  6. Jeanne says:

    Well thought, and well written. Where do I sign up?

    Oops, I already did sign up. We’re working hard on transparency. Perhaps Boston’s next!

    Thanks for this: It’s a classic.

  7. Carla Berg says:

    I agree with Joe that “locavore” is an excrllent meme to import here, Adrian. it immediately sets a reader to thinking twice about how the whole ecosystem tends to work. It also has some useful echos in which we can all recall being entranced by obtaining something at a distance (blueberries in January?) only to realize later that the iimporting had many contingent costs of its own.

  8. Dr. Rick Lippin says:

    Adrian Gropper has adoped a huge social and economic megatrend (emphasis on local community ) and applied it to Health Care. His proposal is highly creative and makes abundant sense.

    What could possibly be a more personal service than the provision of health care? That is just one reason this “locavore” concept makes sense

    As others have said in this thread those who reap huge profits from layers of unnecessary adminstrative costs in non-local (BIG INDUSTRY) medicine will not yield easily to this excellent paradigm put forth by Dr Gropper

    So let’s help Adrian get some real traction on his excellent idea

    Dr. Rick Lippin
    Southampton,Pa

  9. Peter1 above makes my locavore point, I think, when he asks: “why would the patient opt for the 75% less expensive service when the co-op would pay either way?”

    The closer the patient feels to the paying community, to her neighbors, the more likely they are to see that their own health costs are tied to their choices. This is the basis of all locavore strategies and it works both ways. To the extent that the patient spends more than they could just to buy that local health care product they feel good because they’re spending the money it their community. If the community and the co-op are one, then they both win either way.

    • Peter1 says:

      ” they feel good because they’re spending the money it their community.”

      They’re spending the money in “their” community now. I did not spend my hip money locally.

      What you are describing Doc Gropper is a niche market with niche motivations, like the buy local food co-op. A niche market is not enough to tip the balance and change overall health costs.

  10. The discussion above about insurance contract secrecy reminds me of how the free market builds cars. GM and Ford negotiate in secret with competing parts suppliers and use their market muscle.

    The big auto company is the health insurer negotiating with the “providers” as suppliers, then we add a healthy dose of federal and state regulation and a very big automaker called Medicare and Medicaid with real negotiation power.

    What consumer would willingly buy a regulated car from Ford, if Medicare-brand cars were similarly regulated and cost half as much? So to make this work, we forbid most people from buying the Medicare-brand car and create a bureaucratic and unfair system we have now.

  11. Established credibility? With no academic or real world experience in the health care field other than having an opinion? That gives you cred? Really? BTW, The quote speaks for itself. Maybe you are the idiot for posting it before you read it or thought about how ridiculous it is and then being offended by having it pointed out to you.

  12. Alice says:

    A really interesting post. The subject of the cost of hip surgery is always an interesting one. When looking at the differing costs and who is paying for them, from insurance companies to the government to the individual them selves through private hospitals.

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