JAMA

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.

Continue reading “Enabling the Health Care Locavore”

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A controversial study published earlier this year in the Journal of the American Medical Association shows that overweight people have significantly lower mortality risk than normal weight individuals, and slightly obese people have the same mortality risk as normal weight individuals.


This meta-analysis, headed by statistician Katherine Flegal, Ph.D., at the National Center for Health Statistics, looked at almost 100 studies that included 3 million people and over 270,000 deaths. They concluded that while overweight and slightly obese appears protective against early mortality, those with a body mass index (BMI) over 35 have a clear increase in risk of early death. The conclusions of this meta-analysis are consistent with other observations of lower mortality among overweight and moderately obese patients.

Many public health practitioners are concerned with the ways these findings are being presented to the public. Virginia Hughes in Nature explains “some public-health experts fear…that people could take that message as a general endorsement of weight gain.” Health practitioners are understandably in disagreement how best to translate these findings into policy, bringing up the utility of BMI in assessing risk in the first place.

Walter Willett, chair of the nutrition department at the Harvard School of Public Health, told National Public Radio that “this study is really a pile of rubbish, and no one should waste their time reading it.” He argues that weight and BMI remain only one measure of health risk, and that practitioners need to look at the individual’s habits and lifestyle taken as a whole.

Continue reading “A Second Look at the Link Between Obesity and Mortality”

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A trio of groundbreaking publications on healthcare came out this April. They are my required reading list for CEOs. First is a study published in last week’s Journal of the American Medical Association (JAMA) by Eappen and colleagues (including among them Atul Gawande). The study found infections occurred in 5 percent of all surgeries in an unnamed southern hospital system. For U.S. hospitals, this is not an unusual rate of error — even though it is about 100 times higher than what most manufacturing plants would tolerate. No automaker would stay in business if 5 percent of their cars had a potentially fatal mechanical flaw.

If that’s not bad enough, the second finding is where we enter the realm of the absurd: according to the study, purchasers paid the hospital to make these errors. Medicare paid a bonus of more than $3000 for each one of the infections; Medicaid got a relative “bargain,” paying only $900 per infection. But the real chumps were the commercial purchasers (CEOs, that’s you). Employers and other purchasers paid $39,000 for each infection, twelve times as much as your government paid through Medicare. Most companies could create a good job with $39,000, but instead they paid a hospital for the privilege of infecting an employee. How many good jobs haven’t been created so businesses can pay for this waste?

Most employers are far more hard-nosed about managing their purchase of, say, office supplies than they are in purchasing health care — even though, unlike healthcare, paperclips never killed anyone and no stapler can singlehandedly sap a company’s quarterly profit margin. Yet, according to the Catalyst for Payment Reform, only about 11 percent of dollars purchasers paid to healthcare providers are tied in any way to quality. The results reflect this neglect of fundamental business principles for purchasing: Quality and safety problems remain rampant and unabated in health care, while employer health costs have doubled in a decade. Continue reading “How to Avoid Being a Chump For CEOs”

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There’s a high-profile and important paper in JAMA this week by Sunil Eappen and colleagues. The study looked at surgical discharges during 2010 from a single 12-hospital system and came to the conclusion that admissions that include a surgical complication were associated with a higher profit (defined as the contribution margin) than admissions without complications. The authors conclude that this creates a disincentive for hospitals preventing surgical complications since they might see reduced profits as a result.  This is a very provocative finding and it’s getting a lot of well-placed media attention, as you might expect. There is an important caveat with the study that I would like to highlight.

In the study, the authors report that admissions with surgical complications result in $39,000 higher “profits” if the care is reimbursed via a private payer and $1800 if Medicare is the payer. However, as Dr. Reinhardt correctly noted in the editorial,

Allocating profit and loss is exquisitely sensitive to the many assumptions made in economic modeling and must be performed carefully to provide useful evidence about the financial ramifications of surgical complications and other services.

His concern dealt mostly with how the authors allocated fixed costs in their calculations. My concern has to do with what the authors assumed happens to an empty bed once a patient is discharged in a US hospital.

Continue reading “Why Surgical Complications May Actually Hurt Profits Despite What You’ve Just Read”

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An important study in the Journal of the American Medical Association finds that misdiagnosis is more common than you might think.  According to the study, almost 40% of patients who unexpectedly returned after an initial primary care visit had been misdiagnosed.  Almost 80% of the misdiagnoses were tied to problems in doctor-patient communication, and more than half of those problems had to do with things that were missed in the patient’s medical history.

The results of this study shouldn’t be surprising if you’re a regular reader here – they are another example of a system that isn’t working as well as it could for patients, and doctors.  Doctors – and the medical professionals who help them in their work – are the best educated and best trained than they have ever been.  They have more access to medical information and technology than at any time in our history.  And yet, U.S. government data show that the typical doctor visit involves 15 minutes or less with your doctor.  Medical records are kept in fragmented, uncoordinated ways.

Continue reading “JAMA EHR Study: Misdiagnosis Poses Significant Potential for Harm”

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Ensuring that Americans who live in rural areas have access to health care has always been a policy priority.  In healthcare, where nearly every policy decision seems contentious and partisan, there has been widespread, bipartisan support for helping providers who work in rural areas.  The hallmark of the policy effort has been the Critical Access Hospital (CAH) program– and new evidence from our latest paper in the Journal of the American Medical Association suggests that our approach needs rethinking.  In our desire to help providers that care for Americans living in rural areas, we may have forgotten a key lesson: it’s not about access to care.  It’s about access to high-quality care.  And on that policy goal, we’re not doing a very good job.

A little background will be helpful.  In the 1980s and 1990s, a large number of rural hospitals closed as the number of people living in rural areas declined and Medicare’s Prospective Payment System made it more difficult for some hospitals to manage their costs.  A series of policy efforts culminated in Congress creating the Critical Access Hospital program as part of the Balanced Budget Act of 1997.  The goals of the program were simple: provide cost-based reimbursement so that hospitals that were in isolated areas could become financially stable and provide “critical access” to the millions of Americans living in these areas.  Congress created specific criteria to receive a CAH designation: hospitals had to have 25 or fewer acute-care beds and had to be at least 35 miles from the nearest facility (or 15 miles if one needed to cross mountains or rivers).  By many accounts, the program was a “success” – rural hospital closures fell as many institutions joined the program.  There was widespread consensus that the program had worked.

Despite this success, there were two important problems in the legislation, and the way it was executed, that laid the groundwork for the difficulties of today. Continue reading “How the Best of Intentions Is Hurting Care for Americans Who Live In Rural Areas”

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Writing in the March 20 issue of JAMA, Drs. Douglas Noble and Lawrence Casalino say that supporters of Accountable Care Organizations (ACOs) are all muddled over “population health.”

This correspondent says the article is what is muddled and that the readers of JAMA deserve better.

According to the authors, after the Affordable Care Act launched the Medicare Accountable Care Organizations (ACOs), their stated purpose has morphed from Health-System Ver. 2.0 controlling the chronic care costs of their assigned patients to Health System Ver. 3.0 collaboratively addressing “population health” for an entire geography.

Between the here of “improving chronic care” and the there of “population health,” Drs Noble and Casalino believe ACOs are going to have to confront the additional burdens of preventive care, social services, public health, housing, education, poverty and nutrition. That makes the authors wonder if the term “population health” in the context of ACOs is unclear. If so, that lack of clarity could ultimately lead naive politicians, policymakers, academics and patients to be disappointed when ACOs start reporting outcomes that are limited to chronic conditions.

Continue reading “Accountable Care Organizations Can Change Everything, But Only If We Get the Definition Right”

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There’s been a lot of discussion of transparency in health care recently, e.g., a USA Today op-ed and a counterpoint by Paul Ginsburg. The appeal of transparency is obvious. As movingly documented by Steven Brill in Time, prices are high and often differ quite substantially, even across close by providers. However, we don’t know the prices for the health care that we consume, and it’s extremely difficult to find out what these things cost (e.g., this recent study in JAMA).

While the appeal of transparency is obvious, it’s important to realize that buying health care is not like buying milk at the grocery store. A key factor is health insurance. Health insurance is very important — people need to be insured against the catastrophic expenses that can occur with serious illness. Thus people with high health care expenses won’t be exposed to most of those expenses (and shouldn’t) and therefore will have no reason to respond to information about health care prices.

Continue reading “Can Health Care Transparency Make A Difference?”

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Should we hold hospitals accountable for what happens after a patient leaves the hospitals’ doors? A year ago, I thought the answer was no. A hospital’s job was to take care of sick patients, make them better and send them on their way. With more thought and consideration, I have come to conclude that I was probably wrong. It may be perfectly reasonable to hold hospitals accountable for care beyond their walls, but we should be clear why we’re doing it. Readmissions are not a good quality measure – but they may be a very good way to change the notion of accountability within the healthcare delivery system.

The debate around the readmissions measure has come to the forefront because of the CMS Hospital Readmission Reduction Program, which penalizes hospitals for “greater than expected” readmission rates. It has raised the question — does a hospital’s 30-day readmission rate measure the “quality of care” it provides? Over the last three years, the evidence has come in, and to my read, it is unequivocal. By most standards, the readmissions metric fails as a quality measure.

Why do I say that readmissions are a poor measure of hospital quality? First, we have to begin by thinking about what makes a good quality measure. Quality is about the essence of the thing being produced – a good or a service. The job of a car is to get you from place A to place B and a high-quality car may be one that does the job reliably, safely, or maybe even comfortably. The job of a restaurant is to provide a meal that you don’t have to cook — and a high quality restaurant may provide food that is fresh, tasty, or with an attention to service that you enjoy. What is the job of a hospital? When you get sick and require hospital services, a high-quality hospital should give you the right treatments, attend to your needs while you’re there, and make sure nothing bad (i.e. a new nosocomial infection) happens along the way. That’s how we measure hospital quality.

Quality measures for healthcare come in three flavors – structural measures (do you have enough intensivists manning your ICU?), processes measures (did you give the heart attack patient his or her aspirin?) and outcomes measures (did the pneumonia patient die?). The elemental part of both structural measures and process measures is that they have to be tied to an outcome we care about. If having more intensivists in the ICU does not lead to lower ICU mortality (or lower complication rates), we wouldn’t think it’s a particularly good quality measure. We know that giving aspirin to heart attack patients lowers their chances of dying by 25%. We have multiple randomized trials. We don’t need much more evidence. Hospitals that have the right structures in place and reliably deliver the right treatments can reasonably be called high-quality hospitals.

Continue reading “The 30-day Readmission Rate: Not a Quality Measure but an Accountability Measure”

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Over the past decade, there has been yet another debate about whether pay-for-performance, the notion that the amount you get paid is tied to some measure of how you perform, “works” or not. It’s a silly debate, with proponents pointing to the logic that “you get what you pay for” and critics arguing that the evidence is not very encouraging. Both sides are right.

In really simple terms, pay-for-performance, or P4P, can be thought about in two buckets: the “pay” part (how much money is at stake) and the “performance” part (what are we paying for?). So, in this light, the proponents of P4P are right: you get what you pay for. The U.S. healthcare system has had a grand experiment with P4P: we currently pay based on volume of care and guess what? We get a lot of volume. Or, thinking about those two buckets, the current fee-for-service structure puts essentially 100% of the payments at risk (pay) and the performance part is simple: how much stuff can you do? When you put 100% of payments at risk and the performance measure is “stuff”, we end up with a healthcare system that does a tremendous amount of stuff to patients, whether they need it or not.

Against these incentives, new P4P programs have come in to alter the landscape. They suggest putting as much as 1% (though functionally much less than that) on a series of process measures. So, in this new world, 99%+ of the incentives are to do “stuff” to patients and a little less than 1% of the incentives are focused on adherence to “evidence-based care” (though the measures are often not very evidence-based, but let’s not get caught up in trivial details). There are other efforts that are even weaker. None of them seem to be working and the critics of P4P have seized on their failure, calling the entire approach of tying incentives to performance misguided.

The debate has been heightened by the new national “value-based purchasing” program that Congress authorized as part of the Affordable Care Act. Based on the best of intentions, Congress asked Medicare to run a program where 1% of a hospital’s payments (rising to 2% over several years) is tied to a series of process measures, patient experience measures, and eventually, mortality rates and efficiency measures. We tried a version of this for six years (the Premier Hospital Quality Incentives Demonstration) and it didn’t work. We will try again, with modest tweaks and changes. I really hope it improves patient outcomes, though one can understand why the skeptics aren’t convinced. Continue reading “Getting Pay-For-Performance Right”

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Contributing Editor

Michael Millenson
Contributing Editor

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