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On Corporate Medicine: A Response To Brian Klepper and His Reply

Maggie Mahar, the former Barron’s journalist, author of Money Driven Medicine, and Health Policy Fellow at The Century Foundation and frequent THCB contributor chewed on my [Brian Klepper] piece about Walgreen’s recent acquisition of worksite clinic firms, and wrote a strong response outlining why she believes that for-profit medicine should be abandoned in the US. I urged her to publish that comment here as its own post. It is below, followed by my reply.

Brian,

I agree with 90 percent of what you say—particularly when you write so eloquently about what has happened to primary care. I believe that we need to make primary care far more attractive to doctors. One way to do it would be to forgive all med school loans for students who choose to go into primary care (or become family doctors, pediatricians or gerontologists), especially if they agree to work, for a few years, in areas where they are most needed.

But when you suggest that corporate medicine is the answer, I have to disagree. In the early 1980s, Paul Starr published his Pulitzer-prize-winning book The Social Transformation of American Medicine. At the end of that book, he predicted the “The Coming of the Corporation” :

“Those who talked about health care ‘planning’ in the 1970s now talk about health care ‘marketing’ . . . . “ Starr wrote. “Everywhere, one sees the growth of a kind of marketing mentality in health care. And indeed, business school graduates are displacing graduates of public health schools, hospital administrators and even doctors at the top echelons of medical care organizations. The organizational culture of medicine used to be dominated by the ideals of professionalism and voluntarism, which softened the underlying acquisitive activity. The restraint exercised by those ideals now grows weaker. The ‘health center’ of one era is the ‘profit center’ of the next.”

Starr went on to explain that because the U.S. had failed at national health care reform , “The failure to rationalize medical services under public control meant that, sooner or later, they would be rationalized by private control. Instead of public regulation, there will be private regulation and instead of public planning, there will be corporate planning.”

The goal driving that planning, Starr suggested, would no longer be better health, but rather “the rate of return on investment.”

So when you tell us that: “Wecare clinic was found to produce a 3.1:1 hard return on investment,” I have a question. Where did that return go? Was it plowed back into our health care system, in order to provide access to high quality care for Americans who cannot afford care? Or did it go to shareholders?

I have no objection to investors making money. I, myself, am an investor. But there are some sectors of our society where I wouldn’t try to turn a profit. (I don’t invest in war, cigarettes, or the healthcare industry—in the latter case, because I know far too much about the industry.) Given the fact that our health care system is in shambles—and that we cannot afford to provide decent care for millions of Americans– I do not think that this is the time to try to figure out how make a profit on the sick and dying. Any savings that can be achieved by providing more efficient, more effective care should go back into the system so that we can provide better care for more people.

Like many others, I believe this is the time to find a public solution to a pubic problem.  We have had enough of private-sector health care planning, with drug-makers deciding what drugs should be developed—and how much we should know about them. We have had enough of for-profit insurers deciding who should be covered, and who should be left by the side of the road. We have had enough of unscrupulous surgeons taking kick-backs from device-makers who tell them which devices to implant in our bodies. Meanwhile, the same device-makers conceal information about defects in those devices, leading to many deaths. They are sued, but they view the cost of the lawsuit as simply “part of the cost of doing business.” The profits they have made on their over-priced products more than cover the expense.

Since the 1980s, we have experimented with “corporate medicine, ”and discovered that Starr was right. The goal driving for-profit medicine is always “the rate of return on investment”—not better health. The history of our for-profit hospitals is a long, sordid tale of corporate crime. Time and again, the most successful investor-owned hospitals have bilked taxpayers, bribed doctors and gulled investors. In the most harrowing cases, for-profit hospital resorted to performing hundreds of unnecessary heart operations while another kidnapped patients. (I devoted an entire chapter of Money-Driven Medicine to the history of for-profit hospitals)

This is why so many of us want to see evidence-based guidelines drawn up by panels of physicians and researchers who have absolutely no financial interest in the outcomes.   Health care is a public good, and as such, should be overseen by non-profit organizations overseen by a government organization that reviews quality and is accountable only to the public.

We have tried experimenting with for-profit medicine, for-profit public schools and for-profit prisons. In each case we have failed.

Why? Because when a for-profit corporation tries to deliver a public service, inevitably, there is a conflict of interest. By law, a corporation’s first obligation is to make a profit for its shareholders. Its customers come second. It is not supposed to lie to its customers—but caveat emptor (buyer beware) always applies.

As economist Rashie Fein once said, “We live in a society, not just in an economy”.
Corporations, on the other hand, live only in the economy. And properly so: that is their mandate.

Sometimes corporations tells us that they want to play a role in shaping society. (So Enron built a football stadium, Philip Morris gave scholarships to Hispanic women; Pfizer would have us believe that it is a philanthropist) When they do that, it’s time to take a close look at the corporation. Chances are they are hiding something. (I spent nearly 20 years of my life covering Wall Street, mainly for Barron’s, and so I know, all too well, that you can never be too cynical about the motives of a publicly traded corporation.)

Now, of course, some will argue that private-sector corporations are always more efficient than non-profits or government. As you put it: “No flying by the seat of your pants if you’re a corporation.” And you go on to suggest that this is why we should believe that corporate medicine will always use the newest, best medical evidence available when establishing
guidelines for care.

If corporations are that intelligent then how does one explain the entire U.S. auto industry? (Forget about the cost of health benefits. The industry seems incapable of designing a competitive car—incapable even of forecasting the oil crisis, and the need for smaller, more efficient cars.)

If corporations never “fly by the seat of their pants” how, then, does one explain an operation like Enron, that made up the rules for its business as it went along. Or WorldCom? Or Merrill Lynch? Think of the waste and fraud in corporate America that begins with obscene executive compensation and ends with insiders selling their shares just months before a stock tanks.

Then there is Walgreens. Its CEO earns $9.780,000– substantially more than most primary care doctors , though I would venture to suggest that his job is no more difficult than that of a busy family practitioner. Most of his compensation comes in the form of stock and stock options. So when a primary care operation produces a hefty return on investment in Walgreen’s clinics, the doctors who provide the care are helping to boost Rein’s salary. I would suggest that there are be better ways to invest those savings in our health care system—perhaps by funding SCHIP so that all children in the U.S. have access to health care.

Further, Business Week reveals that Rein has a connection to 10 members of the Walgreens board. Long, hard experience has taught us that when the CEO of a company has close ties to board members that CEO (along with the board members) are likely to be over-compensated. The CEO’s power goes unchecked, and too often, absolute power corrupts.

Meanwhile, Walgreen’s stock is not doing well—down 20 percent for the year. No doubt management is concerned about this. I wonder how they will use their clinics in order to try to boost their share price?

Then, there are complaints from shareholders about how the company is being run. This from comments to the Wall Street Journal’s health blog: “At Walgreen’s pace of new store openings, it will blow away its goal of 7000 stores by 2010 (by about 400 stores)…I say GREAT, but at what cost for its investors and the company??? We just had a “heart attack” in the stock price.. EASE UP ON THE NEW STORE CONSTRUCTION… the marketplace can’t handle it yet. When a new store opens and it takes away form existing Walgreen’s stores, but does NOTHING for the district’s income, what does that tell you??? Hmm, maybe due diligence (read as: better market studies) should have been done BEFORE that money was spent. I figure it takes about $6million per new store opening, I wonder what would happen if you add a billion or two to the bottom line…”

The Wall Street Journal reports that as generics replace prescription drugs, Walgreens is having a hard time making money on generics– in large part because Wal-Mart keeps prices low. Is Walgreens a desperate company that has set out on an ill-fated building boom while simultaneously branching out into a business that it knows nothing about—primary care? I don’t know enough about the company or the stock to know. But it certainly seems a possibility. (Reins, btw, is a relatively new CEO—came on board a year or two ago.)

Finally, Brian, I very much like the idea of work-site clinics. And I’m sure the clinics you are personally involved with are doing their best to deliver rational, evidence-based medicine. But even so, to avoid conflict of interest these clinics must be not-for-profit.  As a society, we can’t afford to try to make a profit on a health care system that is going broke.

But I would add that work-site clinics do little to address one of the biggest problems in our health care system—lack of access to care. Most of the people who are uninsured don’t work for corporations that are wealthy enough to set up a work-site clinic.

We need neighborhood clinics—in inner-city neighborhoods, and in desperately poor rural areas. There is, of course, no profit to be made on these clinics. And this is why we don’t have them.

Brian responds:

Maggie,

Thanks, as always, for your thoughtful response to my post. All the issues you raise are important. Let me try to address them.

First, and most importantly, I believe that if you’ll re-read my column carefully, you will find that I do not advocate for further corporatization in health care, but simply argue that it is irresistible and will occur. If you inventory my writings over the past decade, you will discover that, like yours, I have focused a great deal on the corrosive effects of financial conflict. I am acutely aware of the corrupting influence of special interests in health care, and have publicly stated that we won’t fix health care in America until we first fix America by eliminating the ability of special interests to shape policy to their own ends by buying control of Congress and the legislatures.

When I closed down the Center for Practical Health Reform early in 2007, it was because I realized that, under the current system, it is impossible to effect meaningful policy change. In 2006, 16% of the $2.5 billion in lobbying dollars spent on Congress (>$55 million per Congressional representative) were from the health care industry, and almost half of that was from the supply chain sector. Health care is the largest part of the economy – one dollar in seven and one job in eleven – and it has translated that strength into an ability to shape policy. Until the non-health care business sector, the one group with more heft than health care, recognizes that it is in its interests to galvanize and drive policies that are also in the common interest, it will be impossible to change American health care policy in ways that re-establish stability and sustainability.

While I absolutely agree that corporations are built to act in their own interests, the reality is that America is built on markets and the drive for profits. I believe it is important to face that this is how the system works, and then deal with that. With the possible exception of certain areas of public health – like local public health units – virtually all American health care is now either for-profit or intricately wrapped up in for-profit ventures. To my mind, there are two main problems here. The first is not that they’re for-profit, but that American policy makers have abrogated any sense of a common covenant that requires profit-driven organizations to behave in socially-responsible ways – through transparency, accountability and appropriate contributions to the general welfare – in exchange for the maintenance of a stable environment that allows the pursuit of commerce. The second is that, in our zeal for and attention to markets, we have given short shrift to critical societal functions that are not profitable, at least in the short term. You mention the access issue, true, but the problem extends much further, to our management of public health generally as well as to education, housing, and most other areas relating to social welfare.

Please also acknowledge that financial conflict is not limited to for-profit corporations, but to any group with power it seeks to retain and enhance. As I recently described, the AMA, which formally represents fewer than 30% of American physicians, has effectively “enabled” – I mean that word in the clinical as well as operational sense – the dominance of a cottage industry and kept both efficiency and quality at bay through its cozy relationship with the US government. Nor is it clear that, for example, the not-for-profit Blue Cross and Blue Shield plans, have operated any more in the public interest than their for-profit counterparts at United, Aetna and CIGNA.

On the positive side, the market is now driving many important structural changes that should disrupt the power dynamics of the current paradigm and dramatically improve the way care is delivered and managed. The reconfiguration of primary care is one area, of course, but another is the accelerating influence of data sharing, analytics and data-driven decision support, which all come under the heading of Health 2.0. Justice Brandeis’ comment that “Sunshine is the best disinfectant” is keenly relevant today, because the real value of Health 2.0 will come through unprecedented levels of transparency, performance identification and accountability that have never been available before in American health care. These new paradigms will be the real sources of transformation in health care and hopefully, will have more far-reaching influence into the ways that we allow ourselves to be governed.

The 3.1:1 clinic ROI I mentioned was retained by the client, the City of Port St. Lucie. We encourage our clients to be self-funded for their health plans, because the savings resulting from their investments in the clinic accrue directly back to them, rather than to the insurance company. In this sense, we are advocates and fiduciaries for the patient and the purchaser, and we do not benefit if health care costs more. Our value proposition is linked to initial savings and long term performance that has significantly better outcomes and lower costs than other approaches. Ours is a traditional market play. We hope to succeed by delivering terrific value that is based on a better mouse trap.

Its worth mentioning that, as I described it, the worksite clinic model is really just a medical home that uses the full range of contemporary tools – electronic medical records, claims and encounter data analytics to identify patients with risk and high performance providers, face-to-face condition management, information therapy – to more effectively the full range of health and financial risk. It is well-suited to mid-sized and large employers and coalitions, but would work just as effectively in public health settings or when bundled with insurance products. To be clear, where the clinic is located is a lot less important than how the medical care process is structured and managed.

The problems that we face in health care will require two kinds of fixes. The cost control issues can and will be addressed by the marketplace, where there are financial incentives to create value by improving quality and driving down cost, As you know as well as anyone, most reasons for exploding health care cost are directly traceable to structural anomalies that have been perpetrated by special interests. Over time, the problems they have created have become vacuums, waiting to be filled by new solutions. This is the classical dynamic interplay described by Thomas Kuhn in The Structure of Scientific Revolutions.

But the access issues must be addressed through policy. To my knowledge, America has not made a policy decision based on social-justice in more than 40 years. The last was Medicare, in 1964, when my parents’ generation, who had weathered the Great Depression and World War II, and who had a more generous sensibility than my generation, were entering middle age. I do not know whether, with a change in Administrations and the emerging influence of a younger generation, we can rediscover the more responsible, open-hearted spirit that I used to think of as the source of American greatness. I certainly hope so.

I share your concern, Maggie, that health care and, for that matter, America, has been compromised by unbridled capitalism. Still, I side with George Soros that the problem is not capitalism, but a failure of societies to develop an aware, disciplined regulatory environment that keeps it in check and requires its interests to also remain aligned with the common interest.

This is one of two big challenges. I believe that the market is responding to many of health care’s issues with new approaches that will help re-establish a healthier national health system. The other large question is whether we, as a people, will mature enough to make health care more readily available to everyone within our borders.

I hope this is helpful.

Brian

Brian Klepper is a health care market analyst and a Founding Principal of Health 2.0 Advisors, Inc. Maggie Mahar is an award winning journalist and author. A frequent contributor to THCB, her work has appeared in the New York Times, Barron’s and Institutional Investor. She is the author of  “Money-Driven Medicine: The Real Reason Why Healthcare Costs So Much,” an examination of the economic forces driving the health care system. A fellow at the Century Foundation, Maggie is also the author the increasingly influential HealthBeat blog, one of our favorite health care reads, where this piece first appeared.

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18 replies »

  1. How about hospital health care that is truly designed around the needs of the patient instead of convenience and schedules of medical personnel?
    1. Tasty nutrious meals cooked on each floor by qualified cooks versus industrial rubbish.
    2. Enforced rest hours. Which means lights out in rooms, announcement speakers SHUT OFF in rooms, and minimum interruptions versus loud, noisy, constant disruptions.
    3. Doctor visits on a schudule. Patient knows doctor will visit between 9–9:30, specialist between 9:30–10:00, therapist will visit between 10:00-10:30 versus haphazard approach.

  2. Greetings,
    Very long complicated posts on a very long complicated subject. I don’t believe that corporations can make health care “profitable” without a significant social cost.
    An example is “evidenced based medicine”. Who would argue against the concept of EBM?! Well, it can now used now to deny a range of what might be otherwise insured treatments, because we do not have “evidence” for everything that we ever do.
    Here is my solution: A universal Health Savings account. Lets say the per capita expenditure is 6K a year per person (it may be more like 7K). Lets put half of it aside (or some percentage) for prevention, pregnancy related and catastrophic care. The other half is an account that people can draw against to get primary care and emergency care. What they don’t use , eventually goes into mortgage support or a university education fund or something that retains a social contract. It also provides an disincentive against frivolous use.
    Eliminate insurance companies ( a REAL dreamer!) Put the actualrial bots at work determining the “attributable risk” of everything that we we do and make sure that the “users” pay for cost up front when they buy the product. ( A motorcycle cost should include a way to pay for Head Injury and Spinal Cord Injury units for example). Pay for the costs of living and risks up front.
    Simple, elegant, understandable. Do you want to add a profit margin for corporations? Go ahead…but lets add it and make it justify itself.
    Haywood Hall (Emergency and Community Health Physician)

  3. The exchange between Maggie and Brian provides the many insights I would expect from two such astute people, but I think the overall lesson boils down to a fairly simple proposition. That is, health care could more effectively meet the goals of access, affordable cost and quality if it moved to either a more truly capitalist or, alternatively, an efficiently socialist model. In its present, half-assed condition, with too many middlemen, it operates without the efficiencies of a true market (if, indeed, such a thing were even possible in healthcare) and without the controlled direction of a command system. The dream of the efficient market, like those of the golden mountain and the second coming, is the plaintive cry of hopelessness. I know that adherents of the market faith disdain encouragement to a socialist system, so perhaps I should refer to it as a military model instead.

  4. Just an anecdote from the front lines: I have a friend whose husband is a board certified internist who went straight from his training into primary care in an exurban area. I gathered from her conversations and the house they lived in that they did not have a lot of $$. He started out with a group of 8; within his first 3 years the group lost 3 docs. (Keep in mind he was probably a full partner by then, or soon.) After another 2 yrs of working even harder because they couldn’t fill the positions, he has finally given it up and is becoming a hospitalist – an attractive escape now for primary care refugees. We fiddle while Rome burns.

  5. Peter,
    The corporate clinics are certainly not philanthropy. They are intended to provide primary care and a medical home. By doing so, employees (and family members) should get good, timely preventive and routine care which, hopefully, will keep them healthier and reduce expensive hospital visits (including ER visits) as well as encounters with specialists. At the same time, the use of electronic records should reduce duplicate testing and adverse drug interactions while claims analytics should help to identify to most cost-effective and best quality doctors and hospitals and steer patients to those providers when their services are required. As for the cost of providing primary care in the clinic itself, whatever it is, it is plus the company pays the manager’s PMPM fee for running the clinic as well. Philanthropy it isn’t.
    Separately, I completely agree with and have previously written about your point regarding everyone wanting change but nobody is prepared to take the hits necessary to get from here to there. This is why I have suggested in the past that all key interest groups should be challenged to suggest policy changes that will cost them money and/or power in the short term in exchange for a better, more cost-effective and more sustainable healthcare system in the long term. Interest groups include: consumers, doctors, hospitals, insurers, lawyers, drug and device manufacturers and regulators / government. In other words: I’m asking them all to put up or shut up. Anyone can come up with ideas that deflect all the pain to others but leaves themselves unharmed or even better off.

  6. James I KNOW the political reality. I’ve posted that the healthcare system (or anything else) won’t get fixed until DC politics is fixed (policy by bribery). But most that post here propose solutions that don’t have a chance in hell anyway given the mindset and the fact that everyone wants change but no one wants to suffer for that change.
    Both medicaid and medicare, even with reimbursement claw backs still operate in a broken and overly expensive system. My understanding though is that the VA does a better job because it can actually NEGOTIATE prices. You asked me if, “we have EVER imposed a budget upon government health care that has held up to the political pressure entailed by the health care spending status quo?” my enswer is exactly, that’s what I said, and that’s the problem. We are governed by corporate proxy and by an electorate that thinks health costs approaching 20% GDP will not affect them. Even posters that say the private system is the answer keep posting “if just” people did this or “if just” doctors did that, or hospitals “just” need to do this. The problem is “IF JUST” never solved anything and if you want reform someone has to suffer and someone has to impose. So we end up in a situation like the present mortgage mess. No one wants to suffer but we all agree there is something wrong. So in the mean time your tax dollars are being used to ease the pain of bad policy and we bail out private investment houses that extoll the superiority of free markets while shouting government can’t do anything right.
    Barry, your own solutions want “qualy-metrics” and less utilization. Just what Canada is doing. As more and more company employees loose health benefits because profits can’t keep up with rising costs there will more and more people who will realize something has to change. Just when that will be I don’t know, except to say if cost trends and middle class income erosion continues it will be sooner rather than later.
    Also are you saying that the use of free corporate clinics as Brian describes is just philanthropy and not cost control? I did say, “as much as can be controlled given outside costs”. I’ll want Brian to reclarify this as well.

  7. Erick, I want to comment on MM suggestion of evidence based guidelines. I think there is a misperception that EBM considers only double blind randomized placebo controlled trials, while there is in fact also room for expert opinion. In any case, the big problem is not the one or the other inappropriate diagnostic or therapeutic procedure for the many but alltogether still rare conditions, but the flood of tonsillectomies, hysterectomies, MRIs for primary headaches etc. … guidelines will never even come close to all eventualities, but they have the potential to sugnificantly cut down on overuse/overtreatment, provided that the regular use of guidelines is accepted by both patients and practitioners (I don’t think we are there yet).
    BTW, I find it a little contradictory to criticize MM’s posts as both lengthy and lacking detail, at the same time.

  8. “That’s why single-pay has a better chance (honest government aside) because it will impose budgets that everyone will have to hold to.”
    I ask: upon what evidence do you base that statement?
    I would argue, respectfully, that that there is no rational basic to make this claim regarding the U.S. experience since the 1960’s. Our two main government-run programs (Medicaid and Medicare) have exploded in costs, have unfunded liabilities pegged in the trillions, require ongoing borrowing by the billions at the federal level to sustain, crowd-out state budgets to the fear of their legislatures, and are generally assumed by most of the wonk class to be unsustainable in their current forms.
    Where is the evidence that we have EVER imposed a budget upon government health care that has held up to the political pressure entailed by the health care spending status quo?
    It seems to require something of a leap of faith that this fiscal discipline will occur with total control – when it has never been demonstrated with partial control (with perhaps the exception of the modern VA system, which fixed something that was broken).
    Look at the annual charade we go through each year with automatic cuts to Medicaid providers that are always overturned by the Congress after the AMA storms the place.
    The New York Times also did a wonderful piece recently regarding how masterful lobbying, political pressure, and rallying of scared elderly populations keep home oxygen suppliers raking in cash from Medicare above what anyone else pays them.
    It took years of intense work to get bidding in place for durable medical equipment in Medicare and we paid out loads of extra cash in the meantime.
    Americans don’t like to be told “no”. This is generally an admirable trait. But, when it comes to health care budgetary discipline, why does anybody assume that the same political structure that led to the current undisciplined mess will suddenly become immune to the pressures and considerations that shaped what we have now?
    Who gets the job of saying “no” and why will “no” really mean “no” now when it has always meant “scream louder until we change our minds” before?
    If we give them more role, what is to prevent “more of the same at even more cost” from becoming the result?
    I am not interested in reform proposals that simply involve cost shifts to the federal taxpayers without addressing the underlying structural problems.
    If we advocate for medicine to use “evidence-based care” then we might want to apply the same principles to “evidence-based health care policy.”
    I agree with your point on corporate clinics and actually worked on legislation in Texas to expand employee clinics within state offices.
    Again, I see some merit in various pieces of the health care planks offered by the various candidates. But, I don’t think any of them go far enough at looking at the fragmentation of care that is one of the roots of the problem. One of my concerns is that market forces are a tool the the political class generally doesn’t either understand or holds in active disdain. Yet, aligning market forces for quality and affordable care is a tool we have to have as part of the mix.
    I don’t want to leave the impression, however, that I am reflexively opposed to a government role or blindly loyal to private-sector insurers as the solution. My worry is with any proposal, by any of the sides, that seems to include a “leap of faith” component.

  9. Peter,
    While I don’t know this for a fact, I don’t think corporations set budgets for the work site clinics in the sense that you are suggesting. I think they may estimate the cost to operate the clinic for the upcoming year based on past experience and what consultants suggest they should expect with respect to the overall medical cost trend. If actual costs turn out to be higher due to higher than expected utilization, I think they are fully prepared to pay as opposed to telling some of their employees that they cannot access care because the budget has been reached before the end of the year. Perhaps Brian could clarify this point.
    The budgeting used by Canada that you are suggesting requires explicit rationing at the end of the day whether it is in the form of longer than ideal wait times or just refusing to provide certain procedures to certain people based on age or other criteria. While I know we, in effect, ration by ability to pay in the U.S., I just don’t think a single payer system could make it through our political process anytime soon even though it may be well accepted in Canada and elsewhere. It’s not just about political money and lobbying, but the fact that too many millions of people who currently have good employer provided health insurance and had it for a long time perceive that they would be net worse off (significantly) under a system similar to Canada’s.

  10. James, we’re almost on the same page. But we spend more here because of the prices and because we lack health budgeting. Other countries are struggling as well with cronic disease management, coordinating care and prevention, but they deliver at almost half. Much of what you think will work will not be done by the private sector because there’s just too much money in not doing anything. That’s why single-pay has a better chance (honest government aside) because it will impose budgets that everyone will have to hold to. I think that’s why the corporate clinics seem to be working so well because the corp sets a budget (as much as can be controlled given outside costs) and has to stick to it and everyone knows that staying in budget will benefit their own healthcare.

  11. “for-profit hospital resorted to performing hundreds of unnecessary heart operations while another kidnapped patients”
    Wasn’t it Tenet (and its corporate predecessor) who did both?

  12. “James, then is the solution higher funding levels? Why do you think insurance reimburses at higher rates? Should we double medicaid reimbursements? If not then I assume you want cuts to balance funding levels. What cuts would you like to see?”
    Let me take them one at a time. One common refrain in discussing the US health care system is that we spend more than anybody else to get mediocre results. If so, then is it logical to argue that the answer is to spend even more? Will we simply get more of the same mediocre results?
    I think the Council for Economic Competativeness did a stellar job in discussing the root problems in their report “Quality, Foordable Healthcare for All: Moving Beyond the Employer-Based Health Insurance System.”
    It is at: http://www.ced.org/docs/report/report_healthcare200710.pdf
    They highlight the inevitable waste and poor results we see from a fragmented health care system that is structurally incable to coordinating care, managing chronic illnesses, or adequately addressing prevention.
    Nor are they the only ones to point to a system that bleeds money as fast as it goes in. The author Shannon Brownlee argues in her book “Overtreated” that we pay for far too much medical care – and that much of it is of no use (or even harmful). Tossing even more money into a broken system is akin to trying to fix a leaking boat by piling greenbacks on top of the hole.
    The problem with many of the proposed fixes, including single-payer, is that they still don’t address the root problems of a structeral inability to coordinate care. Indeed, they can even make the problem worse. Medicare’s roots in FFS were seen as creating an incredible incentive to do a maximum number of procedures.
    Medicine is like any other market-based entity and markets always rule. Ms. Maher can call for non-profits, but they will still respond to the basic rules of economic behaviors. People are people… If we have bad incentives, we will see the inevitable results of more of the bad outcomes. Non-profits can screw up just as much as for-profits and incompetance, greed, or foolishness don’t vanish when you get a non-profit designation.
    The challenge to me is how to get the collective power of patients into the equation. The Health 2.0 concepts show great promise in bringing informed decison-making into play. There are other things I could also point at, but some brevity is in order.
    Markets can play a role in improving care and cost control. The well-known examples of two medical items that decreased in price (laser eye surgury and cosmetic procedures) are examples of what happens when patients shop around because a third party isn’t paying for it.
    It is not a question to me of whether we spend more or less – it is what we spend it on. There is a strong economic case for increasing spending on primary care, but with the caveat that promary care needs to become tied into a connected health care system where information flows to all players. Primary care will not be empowered until primary care can see what is going on with their patents across all the rest of health care.
    I look at it this way: If you could take the exact same lavish amount we spend on healthcare now and had the power to change how it was spent to maximize health outcomes, what would you do? What would you spend it on?
    I would look for areas where I got the biggest return on my health care investment first. I would then look at where I spent a lot and got very little back (or even created harm). I would also accept that you can’t pay for everything and that health care, like life itself, involves trade-offs. As a general rule I would rather have the patients be the ones deciding which trade-offs are preferable. Shifting things to the insurance company or government doesn’t change the need for trade-offs, it just allows someone else to make them and be the bad guy.

  13. “The inconvenient fact facing Ms. Maher’s argument is that these cool government programs are all structurally insolvent.”
    James, then is the solution higher funding levels? Why do you think insurance reimburses at higher rates? Should we double medicaid reimbursements? If not then I assume you want cuts to balance funding levels. What cuts would you like to see?

  14. This is a great discussion. Let me try to make a few points here.
    “I believe that we need to make primary care far more attractive to doctors.” – I couldn’t agree more. We need to address healthcare as a profession. We are facing a shortage of PCPs, RNs, and RPhs over the next decade.
    “Business school graduates are displacing graduates of public health schools, hospital administrators and even doctors at the top echelons of medical care organizations.” – I am not sure this is a bad thing. Are you proposing that this change will make our current situation any worse “given the fact that our health care system is in shambles”? From my experience, a good leader surrounds themselves with good advisors. If these people understand their limitations around clinical information and let their advisors lead them in the right direction, this could be great. The right business leaders have driven change in many industries in the past. (And, sure there have been plenty of bad leaders.)
    You talk about ROI as a bad thing in healthcare. I have to disagree. If we focus on using a value-based framework to make decisions that show a positive ROI, we can attract capital to address public healthcare. The reality is that without data we often don’t understand the impact of our decisions on outcomes and have an ability to put money where it makes a difference. We often throw money at the wrong things which end up driving our costs through the roof.
    We should all have the objective you describe of providing “better care for more people”, but we need to think outside the box to achieve this. I recently met with one of the largest non-profit hospital systems, and they are struggling with how to instill entrepreneurship into their team to drive new models that will improve healthcare for the next 50 years. I told them that without changing the paradigm to attract a different type of person that it wouldn’t happen. Those people will go elsewhere if there isn’t the profit motive and compensation opportunity.
    You say that “by law, a corporation’s first obligation is to make a profit for its shareholders. Its customers come second.” I am not sure that A makes B true. There is lots of proof out there in the business world that shows that a focus on customers sometimes at the short-term expense of profits will drive a sustainable business model.
    I am not going to go down the path of CEO compensation, but I don’t think that you can compare the job of managing a $50B company with that of a PCP. You also talk about the Walgreens model being flawed because of generic pricing which misses the point. I think if you do the analysis on their model you will see that they make money on the cross-sell by having pharmacy not by being a pharmacy.
    I think we just need a different system with passionate leadership (from whatever background) who understand the long-term management model and are committed to impacting outcomes through financially aligned incentives. This likely may need to be a combination of public and private especially when you realize that 1% of the population drives 35% of the cost meaning that a small focus can make a big difference.

  15. Some good points but the discussion seems to be all over the place. Way too many points to hash out. The issue seems to be this really:
    “What is the value and appropriateness of work-site clinics?”
    That is a finite-enough question that can be discussed. Would imagine that this makes the most sense for large public employers but this concept might be limited in private sector largely due to two reasons – employers really don’t begin to self-fund in really large numbers until they have about 4k-5k employees (at least from the latest figures I have seen) and I don’t know how many employers will have that many employees contracted in a single geographic area.
    Having enough employees contracted in a single geographic area has been the single greatest factor against large motivated employers from really being able to shape and change health care. Biggest issue that Bridges to Excellence and other employer coalitions has had to date with their P4P programs.

  16. “Like many others, I believe this is the time to find a public solution to a pubic problem.”
    Damn. We have a pubic problem now too in the US? Things are worse than I thought.

  17. Maggie- I hope you would answer a couple of questions in clarification:
    1. should ANY business associated with health care be non-profit. Or another way, should ALL companies who deal with health care be non-profit?
    2. the post below yours touts Matthew’s very successful “health 2.0”. Given the importance I know you place in health care technology, would you support legislation requiring that all health technology companies be non-profit?
    3. how would you propose to provide care for the thousands (at least) conditions for which the ‘evidence’ you seek to run all health care with is lacking? To wit, there is a ‘mental health parity’ bill, recently passed by the US House. It requires full coverage for ALL diagnoses in the psychiatric “DSM”. Certainly, random, double-blind trials with adequate ‘power’ do not exist for all of these diagnoses. In the absence of the ‘evidence’, should ANY treatment be rendered?
    I enjoy your articulate– and rather lengthy– posts. (though I am not certain to be in a agreement with any). But regularly you fail to answer specific questions that get past the general terms of morality (whose), experts (in what), rights (at whose expense), and on and on…
    I look forward to your reply.

  18. A couple of quick observations:
    1. Governments (as the ultimate non-profits) have been a prime culprit in the starvation of primary care. How do they fix what they themselves helped to bring about? I say this as someone who has been inside government health care for years. We reimburse childhood vaccines at less than the costs to the provider and only one doctor in three is willing to see a Medicaid patient anymore. If it were not for the generally higher reimbursements provided by those evil for-profit insurance companies, the number able to absorb some money-losing Medicaid patients into the mix might be even lower.
    State legislatures are collectively terrified at the double-digit growth of the Medicaid program, which crowds out public education and all other budget categories. They are not going to lead the charge to boost primary care reimbursements, even though it can made financial sense to do so.
    2. When will somebody acknowledge the elephant in the living room here of long-term costs. The inconvenient fact facing Ms. Maher’s argument is that these cool government programs are all structurally insolvent. They have unfunded liabilities measurable in the many trillions. Adding to them is akin to loading more passengers onto the Titanic AFTER it has hit the iceberg.
    “To every problem there is a solution that is simple, elegant – and wrong” seems to apply to a lot of the health care debate these days.

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