There’s waste in the medical system–Duh!

As we begin the health care reform discussion in earnest, many are pointing out all of
the waste in the system and the need to research what works best, provide the incentives to do it, manage the big spenders’ chronic care better, make better use of heath information technology, and encourage wellness and prevention.

One of the disadvantages of being at this for more than 20 years is that I feel like I’ve seen this movie a few times before. You may recall the picture "Groundhog Day" where the guy kept living through the same thing time after time.

I am particularly taken by those that cite the statistics regarding health care waste and efficiency as if this was a new discovery they made in the last few days.

For example, the excellent groundbreaking research from Dartmouth is often cited pointing to the conclusion that as much as 30% of all medical spending does nothing to improve care.

I can’t disagree with many of these conclusions having argued much the same myself.

In an op-ed authored by John Wennberg, director of the same Dartmouth researchers at the Center for the Evaluative Clinical Sciences, former Surgeon General C. Everett Koop, and myself,we made many of the same points:

  • "The health care reform plans proposed by the president and the Democrats just tinker with our deeply flawed system. We need to challenge our basic concepts about health care and then move to reform the system.
  • "In health care, more is not always better, and more may even be hazardous to your health. The amount of health care consumed by Americans differs remarkably, depending on where they live. Bostonians receive almost twice as much hospital care and at twice the cost per capita as do New Havenites. Yet there is no evidence that the people of Boston need more or that they live longer or are happier because they receive more.
  • "Even more puzzling is the pattern of variation in surgery. The rates for cardiac bypass surgery and hysterectomy are higher in New Haven, but the rate of carotid artery surgery is higher in Boston.
  • "We need to undertake a systematic, well-funded program of "outcomes research" to enable patients and physicians to know the outcomes of all medical treatments. If we allocated about one-fourth of a cent of each insurance dollar to fund outcomes research, we would achieve lower costs and higher quality health care for everyone.
  • "But there is one area in medicine where more is better. All our efforts at health care reform will come to nothing if reform is not undergirded by a widespread ethic of prevention.
  • "We should slash administrative costs by replacing the more than 1,100 insurance forms clogging the system with one simple electronic coding system for claim payment and data collection.
  • "Insurance companies must stop competing with each other about whom to exclude from coverage. Instead they must compete on how well they bring sick and healthy people together in pools to make affordable health insurance available to every American.
  • "Medicare needs not only financial reform but also conceptual reform that includes education about appropriate care at the end of life.
  • "We must demand an end to irrational competition between hospitals, which leads to excess technology and beds. Insurance companies and Medicare should establish contracts with "centers of excellence" that will maintain quality care by ensuring decisions based on patient preference, continuous quality improvement and long-term follow-up.
  • "We must act quickly because we have a long way to go. It may take a decade, even though we improve year by year."

OK, here is why I get to feel like it’s "Groundhog Day" year after year when I hear these same points made as if they are fresh ideas.

Our op-ed appeared in the Washington Post on February 19th, 1992!

While we can point to many improvements in our health care system, overall after 16 years, we’re in a deeper hole.

In 16 years, we’ve talked a lot about the things we know need fixing but we haven’t really confronted any of them.

There is a point when it makes sense to stop suggesting the same stuff over and over again and begin to ask ourselves why we haven’t gotten off square one with these great ideas.

Could it be because the next steps from concept to action would entail real cost containment and taking on the vested interests in the system?

Maybe just suggesting all of these broad concepts year after year is just pussyfooting around the problems and never really tackling the problems where the rubber meets the road.

Research on which treatments work the best? In 1992, the counter to that was that would be “cookbook medicine” and it “would put bureaucrats in charge where doctors should be.” Is it really any different today?

Today, we hear about "pay for performance." But have we agreed on what acceptable performance is and are the stakeholders ready to see their incomes cut? For "pay for performance" to save money we have to pay less money out. Do we have a consensus on how to separate the winners from the losers? Have we even gotten past the 1992 bullet points and into who is going to lose and on what basis?

I was in a meeting recently where I heard a physician representative suggest that improved physician performance would lead to less hospital costs suggesting that would be a source of offsetting revenue for physicians. Can’t wait to see that one on the table.

The reality is that tackling all of these things is not really something those in our health care system—payers and providers—really want to do. That is why they have made only baby steps in 16 years.

I have to question the assertion I am commonly hearing today that there is plenty of consensus over how cost containment and quality improvement can happen.

Define quality for me. Then show me a system where there won’t be as many winners as losers—how else do you save 30%? Then I will show you a real health care policy debate and then we will see how much consensus we have.

Wellness? Wellness programs today look an awful lot like the voluntary education oriented wellness programs we were selling in 1988 and things are far worse. Prevention? Most of the commonsense steps in prevention were available to us years ago.

We have been avoiding the heavy lifting in health care reform for 16 years. For me, all of these new ideas aren’t so much new ideas as one more "Ground Hog Day" in the long-running health care debate.

We have to get past all of these guys with the “new ideas” and on to the real work for how we will actually implement these things and get a consensus of stakeholders to buy-in.

I am reminded of Paul Ginsburg’s conclusion in his recent paper, Demystifying U.S. Health Care Spending, "Overall our understanding of high and rising costs is fairly solid. Our most pressing needs are not as much on the research side as on the development side, that is, all of the technical work needed to pursue many of the reforms…"

That is the discussion we really need to have before we waste our 17th year.

6 replies »

  1. Wonderful post, Bob.
    It leads me to a question: if the real challenge is not in identifying what needs to be reformed, but actually goring the oxen that are necessary to get there, then why do we think we can start now with those reforms?
    The public does not yet understand how the reimbursement system creates the misdirection of care away from efficient, maximally–or in many cases, even nominally–effective practices. When you propose making some dramatic change to how physicians or hospitals are paid that is understood to require wrenching institutional changes that result in a loss of 10-30% of their revenue, how in hell do we get that passed in the current political climate? Hypothesis: It hasn’t been done in 16 years because it can’t be done with a straightforward charge in our climate! Example: even policy wonks are convinced that primary care is underpaid, when really it is paid among the best in the world. Specialists still find it easy to get gullible reporters to talk about how they are victims of insurance companies who deny care for experimental treatments. And hospitals are among the largest employers in almost every congressional district in the country. Can you imagine the headlines if hospitals were faced with laying off 20% of their workforce across the country? Hospitals will help write those headlines.
    I realize it doesn’t have to happen all at once, and it won’t. But one of the few things we can predict is that if you try to do a lot at once in terms of reforms that make a big expected impact on care, you will lose, and lose badly.
    This is all just by way of saying that we need to do something to change the public perception about the cost of care and the responsibility for those high costs. You need to get the populists and political left focused on one thing: system reform to improve value delivered. Right now, they are more focused on access reform (universal healthcare) than system reform, and probably the most common approach to system reform doesn’t get much further than to demand single payer, which is dead as a doornail. So, give the populists and the left their universal healthcare in a multi-payer system that makes minor changes to the delivery system that do not (now) result in massive revenue losses to industry.
    Obama shouldn’t pretend he is solving the problem. He is solving one problem. He should make it very clear that the next step is major system reform to improve the benefit per cost ratio of care. But the industry won’t be able to effectively fight him on that first step, because they don’t lose money. In fact, they mostly have life a little easier (more insureed, fewer cases of uncompensated care, etc.).
    But as soon as that reform happens, massive reform is possible. What are the populists, the left and the right all going to complain about the most at that point? High costs!
    Things can be done to accelerate that reform, such as making it clear how much each person is paying for universal coverage. Employers should stop hiding how much they pay for care and instead show it on each paycheck. Government should similarly find a way to show the cost of its share of universal coverage, either on paychecks (like Medicare), or perhaps in separate annual statements. Costs will no longer be invisible to the middle class and well-off.
    I’m a broken record on this, but I really think we can get only small-scale or token reforms if we try a direct assault on the delivery/reimbursement system now. Better to double-down with universal coverage, force an outcry focused primarily on our bang for the buck, and then extract the needed reforms from industry.

  2. I don’t think any one stakeholder group needs to bear the brunt of reform. Part of the reason that we haven’t gotten anywhere is the fact that the conversation always starts with blame. Greedy insurance companies! Greedy specialists! Greedy CEOs! Would you want to come to the table if you were accused of being the problem?
    The stakeholders need to come together knowing that everyone has contributed to the problem and therefore everyone stands to lose something. The pain can and will be distributed so that no one is disproportionately affected, unless it becomes clear that a particular stakeholder group has disproportionately profited from the current system.
    Not all of our high costs are a result of people getting rich. Much of the costs are the result of an unhealthy population. We will all benefit from a healthier population. Unfortunately, the collective thinking has gotten so distorted that we just can’t seem to see that. I have to laugh when the government takeover proponents say that the industry can’t lead reform efforts, yet in other conversations they talk about how awful our government/political system is. Exposing a flawed healthcare system to a flawed political system. Can’t seem to make sense of that one!

  3. I am not sure whether budgeting costs is the best approach. I know from my time in Germany that as they started paying practitioners for sthg. like RVUs (and there was a fixed amount of money for all RVUs), the total amount of RVUs soared, while subsequently, reimbursement for each RVU tanked – and what you had was a system were medical services that were already poorly reimbursed prior to the reform became close to being free of charge, while procedures became cheaper, but were still overused since they were needed for practice reimbursement.
    IMHO, an (experienced, diverse but evidence motivated) medicare board could determine what is particularly overused and cut the reimbursement for these services (probably overused: back surgery, angioplasty, tonsillectomy, hysterectomy; probably not: bone marrow aspiration, LP, appendectomy), so that hourly physician reimbursement roughly equals seeing patients in the office (or even lower if needed). The procedures will be done when they are clearly indicated due to necessity/patient pressure. But the financial incentive from overly generous reimbursement is taken away.

  4. I had a professor in grad school (health administration at VCU over twenty years ago) whose most profoundly memorable statement was:
    “The thing you should remember about health care is that the answers are always the same, it’s just the questions that change.”
    Health care financing and the system that goes with it has been in crisis in America for about 80 years. Who knows, maybe if the auto industry implodes, the next big rescue plan for the American economy will be “socialized medicine.”
    I know its not popular in earnest policy discussions to be jaded but the one thing I think I would predict for health care in 2028 is that it will be a system in crisis.
    And ground hog day will live on . . . and not just at the movies.

  5. There’s waste in our entire consumer system – DUH!
    Waste and it’s resulting cost shifting is what makes the American capitalist system work – up til now at least. Now we’re finding that the cost shifting is bringing the chickens home to roost in more ways than one. We need to establish universal budgets before we worry about quality. Once the pain of less waste is forced upon the system it (we) will then decide what type, how much, and who’s willing to pay for quality. Of course change will not come from within the industry, but from government, even if a health industry bail out, at the expense of the tax and premium payers, prolongs the inevitable.

  6. I agree with your comments. I teach Lean for Healthcare and it’s really not a new idea. I find invariably I have to push, and pushhard, on people really gettingto the roots of the problem. Many times people are looking for the band-aid thinking it will fix the problem. It drives me crazy when people won’t take on the challenge of fundamentally fixing our problems. It’s hard andscary to do this but it won’t get better if we don’t. People want to make a difference What a better place to start than in healthcare