cost containment

Craig GarthwaiteThe Affordable Care Act is premised, at least in part, on the notion that competition can be harnessed to reduce healthcare costs and improve quality. This explains why insurance in the individual market has not been nationalized. Instead, consumers go to an online exchange where they customers can easily (at least in theory) compare plans offered by different firms. Unleashing competitive forces should result in lower premiums for these plans. And why not? Over the past two decades, competition has been one of the few success stories in the U.S. health economy. For example, when competition intensified in the 1990s, healthcare costs moderated. When competition weakened in the wake of provider mergers and the backlash to the narrow networks that were essential to cost containment, healthcare costs rose.

When most people think about the benefits of competition, they tend to think about prices. Monopolies charge high prices; competitors charge low prices. There is nothing wrong with this perspective, but it misses a more fundamental point. In the long run, the greatest benefit of competition is that it has the potential to fuel innovation. This is as true, in theory, for health insurers as it is for telecommunications and consumer electronics. It hasn’t always been true in practice; for several decades after the IRS made employer-sponsored health insurance tax deductible, insurers tended to offer the same costly indemnity products. But consumers eventually demanded lower premiums, and insurers responded with managed care. After the backlash, insurers developed high deductible health plans and value based insurance design. Insurers are now moving towards reference pricing. These plans offer consumers reimbursement up to a pre-specified level for treatments that can be easily broken into a treatment episode such as hip replacements or MRIs. Patients have the choice of any provider, but they bear the cost of choosing a more expensive facility.

High deductibles and reference pricing are fine, but do not always work in practice. Chronically ill patients quickly exhaust their deductibles, and reference pricing does not work well for chronic diseases. In order to complement these tactics, some insurers are once again offering narrow network plans. We commented in earlier blog posts that the ACA would catalyze the return of these narrow networks and also warned that this might fuel another backlash. Unfortunately, a recent New York Times article shows, the backlash is well underway.

Continue reading “Narrow Networking”

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Why are nurses not usually integrated into the cost containment discussion? Why have we not been invited to the table? Likely, it is because we don’t have the power to order (or discontinue) tests, labs, or medications, all of which are major factors in the rising costs of care. Even so, a nursing perspective can be important and should be considered when doctors make treatment decisions.

For example, I recently treated a patient who had undergone abdominal surgery. Despite uncomplicated post-operative days 1 and 2, on day 3, he developed nausea, vomiting, and an increasingly distended abdomen. I administered intravenous anti-nausea medications, along with back rubs and cool cloths on his forehead. None of the treatments worked. While waiting for the doctor, I sat with the patient and spoke to him about the possibility of receiving a nasogastric tube to alleviate his symptoms. Given an understanding of the process, the patient agreed to this possibility and I paged the doctor once again. The doctor eventually placed the nasogastric tube, the tube was connected to suction, and out came a liter of gastric contents.

I then noticed that the doctor had put in an order for an abdominal x-ray to “check nasogastric tube placement.” Seeing this, I initiated a conversation with the doctor to discuss the patient’s symptomatic improvement as well as his current state of exhaustion. I assured the doctor that nurses would be at the patient’s bedside to monitor for signs and symptoms of tube malfunction. As a result, the doctor cancelled the x-ray, which not only eliminated an unnecessary test for the patient, but also reduced the cost associated with his care.
Continue reading “Bringing Nurses Into the Cost Containment Discussion”

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The Affordable Care Act (“Obamacare”) is now settled law.

It will be implemented. It will also have to be changed but not until after it is implemented and the required changes becomes obvious and unavoidable. We can all debate what those things will be (cost containment is on top of my list) but it doesn’t matter what we think will happen––time will tell.

There are and will be more lawsuits.

I wouldn’t waste a lot of time worrying about those. Anyone in the market will do better spending their time getting ready.

But, when will the Affordable Care Act (ACA) be implemented?

So far, only about 15 states say they want to implement health insurance exchanges. Some of those may not make the October 1, 2013 kick-off date.

Maybe now that it is clear the law will go forward, some of the conservative states who have said they would not build one will get into high gear rather than have the Obama administration do it for them. But they may not have enough time to be ready in less than eleven months.

The Obama administration says they will be ready on time with federal exchanges. But they have not been at all transparent about just what they have so far done and can get done in the eleven short months that remain.

Starting today, the big question is can the Obama administration really be ready or will the October 1 insurance exchange launch date have to be pushed back, at least in some states?

It’s time for some post-election transparency and honesty from the administration.

Continue reading “The 2012 Elections and 2013 — A Daunting To-Do List”

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Governor Patrick signed a new healthcare law today aimed at cost containment, and the rhetoric soared assuring all that Massachusetts has “cracked the code on healthcare costs.” Unfortunately, with no debate on the underlying bill in the House of Representatives and only little debate in the State Senate, the 349-page statute, which was released just 14 hours before the legislative final vote, is little understood and brimming with unintended consequences.

Real cost-containment is only possible when we encourage patients to reward low-cost, high-quality providers with their business.  We’ve said it over and over again throughout this process.

Instead, the law being signed today re-imagines and repackages so many failed top-down approaches from the past. The acronyms may have changed, but this bill looks a lot like past approaches that trusted government, not patients, to drive big, systematic changes in how we purchase healthcare. For some reason our state policymakers expect completely different results this time around.

Rather than provide financial incentives for individual patients to take charge of their own medical care, this legislation rearranges the system based on accountable care organizations (ACOs) and governmentally-imposed changes in payment methods.  Real-life evidence that these approaches contain costs is mixed at best; as a result, the law misses the mark by a long shot and will not lead to long-term, sustainable containment of health care costs.

Continue reading “Will Government-Directed Healthcare in Mass. Really Contain Costs?”

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FROM THE VAULT

The Power of Small Why Doctors Shouldn't Be Healers Big Data in Healthcare. Good or Evil? Depends on the Dollars. California's Proposition 46 Narrow Networking
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