Physicians

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

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RNSMatthew HoltPeterpgbMDjack daniels Recent comment authors
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RNS
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One other point of note – not to get embattled in what was clearly a nasty and personalized debate – but those ‘blood sucking’ health plans’ benefit decisions are made by employers – not by the plans themselves. Employers determine what they will buy for their employees, right down to the service – health plans just administer it and negotiate rates with providers. It is the employers’ benefit decisions that determine whether a claim is paid or not. It is unfortunate they cannot manage this perception better by focusing more on their customers’ benefit.

Tom Leith
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Tom Leith

I started reading it last week, after a quick skim. I don’t know how people can be constitutionally “required” by the Federal government to buy health insurance. Maybe, just possibly at the state level they could be. But even there I think its a stretch. The only thing the feds clearly can mandate is a tax. Ditto the states. But that requires the consent of the governed. I think Haase’s basically correct in his analysis of the situation. The government sponsored plans he’s talking about sound sorta Enthoven-ish and sorta German. (I do not claim to be an expert here).… Read more »

Barry Carol
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Barry Carol

Tom, I think the point you raised in your most recent post regarding reforming healthcare in a way that fits our national culture is extremely important and receives surprisingly little attention from most people debating this issue. Since you seem to be the foremost expert on this blog from the perspective of management / policy / administration, I, for one, would be most interested in how you think the overall healthcare segment should be changed with respect to both how it is organized and managed and how it is financed. Have you had a chance yet to review the Century… Read more »

Tom Leith
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Tom Leith

> Tom, from reading your post we have a great system, > no reason to change course We do have a great system, partly because it is not a system. This fits our national culture. It should be improved in a way that fits our national culture. California is bigger and more diverse than Canada. That a tiny country of 33M souls having a different national culture, free-riding on the technology and excess economic capacity of the USA, does things judged (mostly by themselves) “better” than what is done here tells us nothing about what ought to be done here.… Read more »

Peter
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Peter

Tom, from reading your post we have a great system, no reason to change course; wonder why there so many complaints from the patients and voters? Maybe it’s just the press. Posts by: pgbMD “What a socialist viewpoint. Who are you going to go after next? Accountants?” From your username it looks like you are in favor of restricting lawyers incomes through restrictive malpractise compensation legislation. “Those that are so infatuated with socialized medicine in this country should just get out and move to Europe.” Canadian living in U.S., love the Canadaian system, even with its problems. I cut out… Read more »

Tom Leith
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Tom Leith

> Can you please explain this comment Yes, thank you for asking. It isn’t about roles or licensure, it is about cooperation and ownership. I’d like the docs to realize that the “technical” services of the hospitals they practice in are their services also. I think the radiologists should see themselves as responsible for the performance of the rad techs and registration people. Surgeons should see themselves are responsible for the PACU, the labs, now that I think about it, the whole d*mn hospital, including the patient accounting department. Think of it as a subcontracting arrangement where the doc is… Read more »

Matthew Holt
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Matthew Holt

I like the way The Veteran gets you all going….just remember that he’s not me!

pgbMD
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pgbMD

Tom:
“use your newfound power to whip into shape the hospitals where you choose to practice and eliminate at least in your mind the wholly artificial distinction between “professional” and “technical” services.”
Can you please explain this comment. Are you getting at the professional privileging required of hospitals (ie why an LPN/RN can’t perform surgery, etc).
PGB

Tom Leith
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Tom Leith

Dr. Borboroglu:
> many surgical specialties/groups are starting to fight
> back by consolidating into larger groups to gain more
> bargaining power with the insurers and to cut overhead.
Super! I am sure that minimum efficient scale for physician practices is bigger than “one”, and it might be bigger than “ten”. While you are at it, use your newfound power to whip into shape the hospitals where you choose to practice and eliminate at least in your mind the wholly artificial distinction between “professional” and “technical” services.
t

Tom Leith
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Tom Leith

Peter’s Rx: > What needs to be fixed first is the blood sucking > insurance industry. Can the whole thing for a single > pay cost effective system (not for profit) made for > both docs and patients. The blood-sucking insurance industry has mostly sucked blood out of docs and hospitals — let us be clear about that. It has not been allowed so much to suck blood out of the pharmas, and the progress that has been made in getting people to use generics (around 50% of Rx) has been accomplished in part by sucking blood from patients in… Read more »

pgbMD
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pgbMD

“Frankly I think the last thing I worry about now is docs incomes.” Good. Let me worry about my own income and you can worry about your own. “If their watching their incomes against other professions that closely they should get out of medicine.” What a socialist viewpoint. Who are you going to go after next? Accountants? Those that are so infatuated with socialized medicine in this country should just get out and move to Europe. By the way, a single pay system as you imagine it is illegal in the US. Move to France or Britain where there is… Read more »

Peter
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Peter

Frankly I think the last thing I worry about now is docs incomes. I do agree that those docs enticed into the practise for money are not the docs I want to look after me. If their watching their incomes against other professions that closely they should get out of medicine. What needs to be fixed first is the blood sucking insurance industry. Can the whole thing for a single pay cost effective system (not for profit) made for both docs and patients. Then go after the slim drug industry and get their gouging down to managable levels as is… Read more »

pgbMD
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pgbMD

JD: I’ll drink to that! Surgical specialist pay is about half what it should be considering the training required. 4years of college, 4years of med school, 5years of surgical residency and then 2years of fellowship= 15years! The average surgical specialist doesn’t go into practice until about 33years of age. Most lawyers are nearing partnership in a firm by then looking at $800k/year for the big ones. Reimbursements for surgical procedures are artificially low secondary to the insurers and Medicare. The average reimbursement for a coronary artery bypass is $1800!! Probably really should be closer to $6000 considering the skill and… Read more »

jack daniels
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jack daniels

“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.” Very few specialists make 650k. The median is somewhere around 300k. Still a lot of money, but policies should be based on MEDIANS, not outliers. Consider that to get that 300k, you are talking about 9 years of training AFTER college. NO other profession comes even close to that, except perhaps some PhD level scientists. At any rate, I think that its misguided to gripe about the money that… Read more »

Tom Leith
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Tom Leith

I understand what you are saying Amy. What I am saying is that if somebody is choosing between (say) medicine and business, and chooses business because it pays better than medicine, then ceteris paribus this is certainly not a great loss to medicine, and might well be a gain. Charles Murray made this case in the 1980s. A few weeks back, Dr. Sidney Schwab popped-in to THCB to tell us about his book Cutting Remarks. I have read it, and one of the points he makes about (especially past) practices in medical training was that they were designed to weed-out… Read more »