As you might have noticed, Matthew has been a little preoccupied lately. He and Indu are putting the finishing touches on the Health 2.0 conference. This meeting will be 4 times the size they originally conceived, with content that describes a good portion of how health care will undoubtedly be shaped in the future. I’ll be there, typing furiously, trying to capture the blow by blow for THCB.
In any case, while Matt’s energies are elsewhere, I thought I’d float a topic that’s been on my mind recently.
Senator Clinton plans to roll out her health plan tomorrow, but in the roll-up last week she pointedly singled out the health plans as a big part of the problem.
"I intend to dramatically rein in the influence of the
insurance companies. They have worked to the
detriment of our economy and of our health-care system."
There has been a lot of discussion and progress lately on the transparency of doctor and hospital pricing and performance. But health plans are also very important, costly system players. What about the transparency of their pricing and performance? At this point, nearly all health plan costs and performance are opaque to the purchasers who buy coverage and to the vendors whose services they broker.
Many organizations are now publicly reporting hospital quality. And if the court ruling isn’t overturned this coming week, CMS will turn over physician claims data sets
from 4 states and DC to the advocacy organization Consumers’ Checkbook,
which has pledged to make the refined information a publicly-accessible
resource. (The sets will be purged of patient-specific data.)
As provider performance levels become clearer, there is every
indication that health plans will focus on pegging payment levels to
them. This is a prospect that has many doctors uneasy about the motives
and methods of those analyzing cost and performance.
Just because you’re paranoid, though, it doesn’t mean they’re not
out to get you. While its ridiculous to dismiss health care analytics
out of hand – the tools I’ve seen are, for the most part, superb – it
is not foolish to suspect that health plans, who are just as much into
the business of making money as everyone else in health care, don’t
occasionally spin their information to advantage. Bring up the topic of
health plan negotiations with any doctor or hospital executive, and be
prepared to get an earful on this topic.
The enmity is palpable. Whle they’re not exactly the most objective or balanced group themselves, the AMA published a 2007 update to its study of health insurance in America, concluding that
"physicians across the country have virtually no
bargaining power with dominant health insurers and health
insurers are in a position to exert monopsony power,
that is, the power to lower the price paid for services below the price
that would prevail in a competitive market…Because the managed care contracts between physicians and health
insurers impact so many aspects of the patient-physician relationship,
the severe imbalance in bargaining power demonstrated by this study is
an urgent matter that must be addressed by policymakers."
The family physicians took a more pro-active approach. In October
2005, the American Academy of Family Physicians’ (AAFP) Congress of
Delegates passed a resolution calling on the organization to develop a
"national clearinghouse for the purpose of collecting data
regarding undesirable business practices of health care insurance
companies and use the information to identify trends and to develop
effective policy to promote fair payment for physician services."
In a just published Medscape survey article, the journal Family Practice Management
teamed with AAFP to ask family doctors to rate health plan business
practices. As you might expect, the news wasn’t good. There were 32
most commonly rated plans. The average rating was a C-, with doctors
assigning the best grades, a C average, for "timeliness of payments,"
"member eligibility and benefits information," and "the payer’s Web
site." When it came to "the contracting process," the plans got Ds, on
average. It’s worth mentioning, I suppose, that the plans that got the
best ratings, each earning a C+, were at Blue Cross and Blue Shield of
Florida (here in my hometown of Jacksonville), Regence Blue Cross/Blue
Shield in Washington and Oregon, and MVP Health Plan in the Northeast.
The deeper problems, of course, are that physicians haven’t
collaborated as a group to leverage their clinical and financial data,
and so don’t have an independent data source on cost and performance.
The data they use to contract with is most often provided to them by
their adversaries, the health plans. They remain dis-united and
uninformed, the worst possible position when it comes time to negotiate
health plan contracts. And, of course, the health plans, as a rule,
haven’t shown much interest in helping the physicians find a more level
playing field.
On the other side of the health plan business, purchasers have an
equally difficult time dealing with the plans. Michael Moore’s Sicko presented evidence that many insurance companies spend their time not paying for claims (and that they should all be abolished). But a provocative piece in last month’s Forbes, Slicko,
argues that the plans do exactly the opposite, paying for many
unnecessary and inappropriate procedures. Since the health plans make a
percentage of the total cost, this piece argues that they drive cost up
as much as possible.
There are now well-developed tools to accurately assess health plan
performance and begin to hold them accountable. An evidenced-based
instrument, eValue8,
developed by the National Business Coalition on Health, "makes it
possible to both define vendor performance expectations and to evaluate
their performance."
About a year ago, the Florida Health Care Coalition
conducted an interesting study of the performance of different Florida
health plans. Some of the plans didn’t fare so well and, after the Miami Herald published a writeup,
I received irate calls asking why I would have said this study was
important. The answer was that the coalition had used the eValue8
methodology, which I knew to be credible. I told the reporter that this
was a good approach without knowing what the results were.
We won’t make meaningful headway to stabilize the cost explosion or
the other problems of the health care crisis until we start have real
purchasing decision-support tools for all the industry’s vendors. If
we’re going to have a private sector health system that responds to the
market forces we claim to believe in, then the companies that provide
those services must be accountable through transparent pricing and
performance. The companies would prefer we just rely on them to do the
right thing, of course, but only an innocent should buy that argument
at this stage of the game.
There are many related issues, but here’s an important, timely one.
If health plan operations aren’t transparent, then Pay-for-Performance
can’t possibly work. If health plans change the reimbursement
incentives from FFS (being rewarded for providing more services) to P4P
(being rewarded for providing only the right services), they will
almost certainly drive down unnecessarily untilization and cost. But if
we, the providers or the purchasers, can’t see what the results of
those incentive changes are, how do we know how much was saved, and
whether any of it was shared with the doctors and hospitals who
produced the savings, or returned in the form of lower premiums to
employers?
While Senator Clinton may be a little unfair in picking only on the
health plans, she is probably correct from a political perspective.
Getting change that matters will absolutely require the same level of
health plan transparency as the plans are now demanding of the
providers.
It will also require transparency in the drug, device and supply
chain sectors which now consume close to 40% of all health care dollars.
There’s just one thing to remember. It’s relatively easy to pick on
the doctors and the hospitals. They’re fragmented and their influence
is modest. But when we start demanding that health plans, drug
companies and device companies be accountable, we’ll see what kind of
influence can really be marshaled by the health care industry.
Categories: Uncategorized
Nuclear engineer, $44.25 per hour,
Computer and Information Research Scientist $46.36
Lawyer, $54.65
Microbiologist $31.35
Chemist $31.75
Family and GP $72.04
Internist $77.34
Surgeon $88.83
That’s from the Bureau of Labor Statistics site for May 2006. Stephen Weinberg’s interpretation, that physicians’ hourly incomes are “about the same as other professionals,” does not seem to be supported by this. Perhaps he refers only to some other professionals who, like physicians, belong to “monopoly power” professions? But I haven’t checked.
As to the looming shortage of physicians, we can always import more, or make better use of those less well paid microbiologists. Medical tourism begins to look better and better. And there are various other monopoly powers we could limit. Transparency, of course, will be a great help.
The comments made regarding US physician compensation need to be corrected. Physicians earn about 1.5-1.7 times their counterparts in other industrialized countries when using constant US dollars. Other countries, however, pay for or intensively support the medical education of their physicians. 85% of US medical school graduates have a median of $135,000 of debt and then increase this during their subsequent training. There is an anticipated shortage in excess of 100,000 physicians by 2030. Medical school applications have decreased by about 28% since 1996. Furthermore, there has been a 50% decrease in the number of physicians entering family practice from 1997-2005 as a result of poor compensation and increasing hassles from the private insurers. Physician hourly income is about the same as other professionals in this country according to the US Bureau of Labor Statistics. The main reason why our income is 1.5x Canada, for instance, is that the US has a wider low to high income disparity as a society than another country in the world as quantified by the Gini coefficient. Other US healthcare workers (nurses, technicians, etc.)have a similar 1.5x disparity over Canada for the same reason. There is currently a 120,000 perosn nursing shortage and it is estimated to be 800,000 by 2020. If policies are designed to reduce salaries for physicians and other healthcare workers, further shortages are likely and/or the quality of workers will suffer. Simply supply and demand.
Salaries comprise about 50% of the healthcare expenditures and are not particularly flexible for the reasons stated above.
The real culprits of our excess national healthcare costs are the huge costs of administering our entire system from insurance co. overhead, hospital and nursing home overhead as a result of our multipayer system, excessive costs of drugs and other issues. Less than 80% of the private insurance premium dollar is spent on actual care and the remainder is for company overhead and profit. Medicare spends about 1.6% on overhead. Savings from changing the administration costs and bringing down drug costs could be in excess of $500 billion dollars per year or $1600 per person.
It is time we focused on what is really important!!!
Stephen Weinberg, MD FACC
Cardiologist and Author, “U.S. Healthcare on Life Support: Resuscitating the Dying System”
Clinical Assistant Professor of Medicine UMDNJ SOM
Center for Healthcare Finance Information
http://www.health-financing.com
Bringing in some transparency definitely could add some level of accountability to many areas, but the unspoken issue of why the United States health care system is broken will still remain. The health care system, like the military industrial complex of the cold war, is predicated on corporate profits and not the well being of the patient. The CEO’s of the large HMO’s and pharmaceutical companies have the same agenda as any other corporate leader. Raise their company’s stock price or lose their job which pays their obscene salary and bonus. Health care corporation’s focus is financial and they are not concerned with access to care or the quality of care their patients receive.
These same companies will push for tort reform because it limits their liability in medical malpractice lawsuits. They want to limit patient access, reduce their costs and not have any responsibility. The trial lawyers will not tolerate these unconstitutional limits and are fed by the victim’s misfortune. We have all heard the advertisements asking, “Has anything bad ever happened to you. Someone else should pay. Call us now. Time is running out.” How would they survive if they could only make a few hundred dollars an hour? (Assuming, of course, that they are not double billing). However, without these legal wolves patrolling the health care system even doctors would be at risk to corporate domination.
Where does this leave the doctor? Right next to the patient in the over-crowded emergency room wondering how things have gotten so out of control.
Posted by Dr. Michael Esposito M.D.
Radiologist and Author of “Locked In,” a new medical thriller.
http://www.mikeespositomd.com
In regard to doctor incomes, I recently heard Uwe Reinhardt give an interview discussing the same. He compared ROI in regard to time and money spent on education with MBA’s, JDs, amongst all classmates of physicians in undergraduate school. NOt surprisingly, and I have heard other economists come to the same conclusions, it was not the docs who came out on top. He stated that if we are to talk about physician salary reduction in this country, we should be looking at other professions as well.
Granted, some of the dough that top physician earners make is obscene. However, for the average doc (operative word is average), they work damn hard for the money. Attacking all docs is misguided.
“physicians across the country have virtually no bargaining power with dominant health insurers and health insurers are in a position to exert monopsony power, that is, the power to lower the price paid for services below the price that would prevail in a competitive market…”
“Speaking of doctors, will the media take notice of the recent report on physician income? Apparently US doc are compensated at 3x to 4x comparable physicians in ROW (rest of world).”
If the first quote is true and the second quote is true then what does the AMA have to bitch about – what they always bitch about, incomes.
I can see in the AMA’s perfect world the patient would be cut out of any compensation input.
In a single pay system the fee for each service would be neogtiated and set the same across the country. It would be adjusted for COLA depending on location and possibly also for performance. Now that’s transparency.
Canda is wrestling all the time with the CMA about proper compensation. Both FFS and flat rate have pitfalls. Maybe a combimation of both?? Scott makes a good point about the one armed nation and joking aside it is largely true today. If you visit a professional trained in one type of procedure he will steer you to his income producer. That’s why you not only need second and third opinions within a specialty but you also need them outside that specialty.
I just experienced this amazing lack of transparency when trying to decide what to do in open enrollment. Should I pay thousands more in premiums for a unlimited lifetime allowance or take my chances with a cheaper, $2 million benefit plan? There is no guidance on these matters, except by my employer, whose guidance omits that one glaring $2 million difference completely from its planner. The guidance by carriers amounts to spin. As you say, they are trying to make a buck.
I guess after they pay out the $2M they put you on an ice floe and nudge you out to sea?
Speaking of doctors, will the media take notice of the recent report on physician income? Apparently US doc are compensated at 3x to 4x comparable physicians in ROW (rest of world). This is largely due to reimbursement by procedure which is somewhat unique to the US. Didn’t Bertrand Russell suggest that if we pay doctors by the amputation we’d soon be a one-armed nation?
I’m amazed that Regence in Washington got a positive rating. They fought my Rheumatologist at every turn when she wanted to deviate from standard doses of expensive drugs.