Physicians

POLICY/PHYSICIANS: Reducing waste in US health care systems, by Walter Bradley

Walter Bradley is the Chairman of the Department of Neurology at the school of Medicine at the University of Miami. Previously on TCHB he wrote a piece on how we should solve the uninsurance problem. Today he takes aim at waste reduction.

R.W.Bush published a paper entitled “Reducing Waste in US Health Care Systems” in the current issue of JAMA (subscription boringly required). In this, he describes the application of the Lean Production methods of Toyota to eliminate waste. In this context, “lean” is “any activity that does not serve the valid requirements of the customer.”  This approach is innovative and he was able to demonstrate that improving efficiency saved money, improved patient care and made the system more “user-friendly.” Waste is undoubtedly one of the elements involved in over-utilization that leads to the high cost of US health care. Others elements that have been suggested to be responsible for the US expending the highest proportion of GDP on health care of all nations in the world  include bureaucracy and administration, malpractice insurance and defensive medicine, and the high cost of goods and salaries of health care workers.

Over-utilization is in part the result of the way that medicine is
practiced in the USA. US physicians are not taught the practice of
cost-effective medicine. Rather the system promotes entrepreneurship.
While this is responsible for the USA leading the world in health care
innovations, it is also responsible for costly over-utilization in the
clinic and hospital.

We need more research to compare medical
practice in the US and other developed countries in order to determine
the most cost-effective ways to care for patients with individual
diseases.

We need to train our doctors to practice cost-effective care.

We
need to develop a center for evaluating comparative effectiveness of
medical care, similar to that recommended by Gail Wilensky, former
administrator of the Health Care Financing Administration.

We need a new approach to the provision of health care in the US
that mandates cost-effectiveness and cost-containment. This could, for
instance, be based on the Massachusetts model of universal coverage, in
which physicians could become stakeholders in reducing the
overutilization and waste that inflate expenditure on health care.

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3 replies »

  1. jd,
    You haven’t a clue about what gets taught in medical school. Medical school teaches you nothing about entrepreneurship. The students I take on for clinical rotations know nothing about the business of running a practice. They are horribly ill-prepared on this count. If you go into private practice, you have to figure it out on your own after you are finished with your training.
    What you learn in school and during training is how to diagnose and to treat disease. As Dr. Bradley observes, little attention is payed to doing so in a cost effective manner. There are physicians who are positioned so as to have a financial incentive to order diagnostic testing.
    Most physicians, however, have no such incentive. We see a patient and we try to get through the encounter without overlooking something that will cause us to have to face the patient months or years later having to own up to the fact that we missed a diagnosis. Every office encounter presents an opportunity to make a mistake that is going to get us sued. We don’t know what the MRI costs, what the CT scan costs, or what cost is of the exhaustive laboratory workup that our patient is demanding to explain why they are always tired.
    The incentives are perverse, but they are not malevolent. There is no disincentive to spend in the system. Health insurers necessarily try to contain costs – but it is simple to justify unnecessary testing on the basis of the patient’s complaint. The way to improve efficiency is to create a situation which causes the patient to ask the physician, “Hey doc, this $1000 MRI is gonna cast me a $150 copay. Are you sure I really need it?” This cuts down on the “Just to be sure.” testing that pervades health care today.
    There’s lots more to my arguments, but I just don’t have the time. Next time you point an accusatory finger at an entire profession, try to get your fact straight regarding our motives.
    Bob Mooney

  2. jd,
    You haven’t a clue about what gets taught in medical school. Medical school teaches you nothing about entrepreneurship. The students I take on for clinical rotations know nothing about the business of running a practice. They are horribly ill-prepared on this count. If you go into private practice, you have to figure it out on your own after you are finished with your training.
    What you learn in school and during training is how to diagnose and to treat disease. As Dr. Bradley observes, little attention is payed to doing so in a cost effective manner. There are physicians who are positioned so as to have a financial incentive to order diagnostic testing.
    Most physicians, however, have no such incentive. We see a patient and we try to get through the encounter without overlooking something that will cause us to have to face the patient months or years later having to own up to the fact that we missed a diagnosis. Every office encounter presents an opportunity to make a mistake that is going to get us sued. We don’t know what the MRI costs, what the CT scan costs, or what cost is of the exhaustive laboratory workup that our patient is demanding to explain why they are always tired.
    The incentives are perverse, but they are not malevolent. There is no disincentive to spend in the system. Health insurers necessarily try to contain costs – but it is simple to justify unnecessary testing on the basis of the patient’s complaint. The way to improve efficiency is to create a situation which causes the patient to ask the physician, “Hey doc, this $1000 MRI is gonna cast me a $150 copay. Are you sure I really need it?” This cuts down on the “Just to be sure.” testing that pervades health care today.
    There’s lots more to my arguments, but I just don’t have the time. Next time you point an accusatory finger at an entire profession, try to get your fact straight regarding our motives.
    Bob Mooney

  3. The point is nicely summed up in this statement: US physicians are not taught the practice of cost-effective medicine. Rather the system promotes entrepreneurship.
    I couldn’t read the article, so I don’t know if it goes on to talk about perverse incentives. But isn’t this really the root of it all? Without changing the incentives to reward efficiency rather than waste, reform is not possible.
    Fee-for-service payment, rather than quality-based payment or capitated payment or salary/budget-based payment, leads to skyrocketing costs except when you have strong buyer-side controls to counteract the supply-side inflation. If the article doesn’t address that, is it anything to get excited about? Once providers are rewarded for efficiency rather than punished for it, six sigma will spread like wildfire in healthcare.
    As an aside, I find it odd that the focus on efficiency in providing care separates it from efficiency in administration. The same lack of adequate buyer pressure to control costs results in inefficiencies in both areas. The persistence of paper record-keeping is a good example.

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