POLICY/PHARMA/TECH/PHYSICIANS: The Industry Veteran thinks Uwe and McLellan are missing the point

It’s been a while since we heard from The Industry Veteran, but the dialogue between Mark McClellan and Uwe Reinhardt I reported on at WHCC last week did raise his hackles. I love Uwe’s analysis and think McLellan is very sensible (though suffering from obvious political restraints). But the Veteran didn’t exactly see it that way. Here’s his sense of what ‘s wrong with health care and how to fix it.

The dialogue you reported between Mark McClellan and Uwe Reinhardt was hugely disappointing as both appeared more intent on glad-handing each other than identifying culprits in the health care system. I offer the following as a useful rule of thumb for THCB readers: whenever someone says more IT represents a principal solution to a better health care system, the red light should flash on one’s shit detector.As uncle Marcus Aurelius advised, let’s return to first principles. Assuming THCB wishes to address the big issues and not turn into a blog for techie nerds, the problems of health care cost, quality and access in the U.S. result from some basic factors. The first of these is that there are too many middle men extracting too much profit (or, in Marshallian terms, too much economic rent) from the system. Among these, third-party payers are both pernicious and dispensable. Most analysts euphemistically classify payers and the efforts of other sectors to deal with them as “administrative costs.” It seems I’ve been seeing these administrative costs pegged at 25-30% of the health care bill for the past twenty years. Since Bush’s millenarian-oil junta has been running the country, I would guess that figure to be substantially higher because payments to providers have been tapering while premiums keep escalating. Given that the administrative costs for Medicare are approximately 2%, it appears self-evident that the current system, based on employers and insurance companies, should appeal only to Reagan-Bush types who consider the proper role of government to be one of handmaiden to business.Within the provider segment, specialist physicians are another extortionist bunch. There is simply no defensible reason for every mother’s doctor-son to expect an annual income between a quarter-million dollars and $650,000. Do I hear in the background, diminuendo, the arachnid voices of techie wonks crying for tactical proposals in lieu of venting and ideology? Sink your incisors into these. (1) Use relative value reimbursement scales to promote a systematic de-skilling. (2) Increase the labor supply in the medical specialties with U.S. citizens who graduate from foreign medical schools. (3) Feminize the medical profession by elevating nurse practitioners and using staff-model and other arrangements that permit 9-to-5 shift work.Manufacturers, particularly in pharmaceuticals, are due their reproach as parasitic middle men. The European countries routinely use reference pricing to help keep them in line and health care’s Iron Triangle of cost-access-quality does not appear worse there than here. In fact the WHO rates U.S. health care as thirty-something in world while France receives the number one spot.Now you’re probably correct, Matthew, in pointing out that the public opinion polls on health care have to show a larger percentage of people expressing a vehement discontent with the system over a sustained period before substantive change can occur. To foster that attitude, I humbly advise interested parties to hammer away at the big issues instead of creating diversions and wasting time with minor tributaries such as IT. I believe there is sufficient greed to expose, enough contradictions to raise and tragedies to highlight, all of which can help prepare the public mood. The drama that can affect public attention, however, seldom resides in the IT department