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Controlling Health Care Costs by Seduction

The past failure of insurers and care providers to control medical costs challenges the Obama health care team to redesign health care to provide broader coverage while managing costs. If the past is any guide, they will fail just as certainly as those who went before. The problem is that those working on the new health care plans do not fully understand why existing plans failed over the past 30 years. The panoply of managed care ideas; HMO’s, rationing, pre-approvals, denial of benefits, denial of service, reduction in fees have all failed to reduce medical costs. If we wish to get past these failures, we need to think about seducing those who control the costs.

The phenomenology of health care shows that medical costs are a function of fees and utilization. Fees are what we pay for a medical service. Utilization denotes the variety of services available. Almost all medical services are performed or ordered by physicians. The ever spiraling cost of medical care amply demonstrates that coercive methods used by insurers and managed care proponents against physicians have failed to bring about the desired results.

If physicians cannot be coerced into cooperating, perhaps they can be seduced.

Seduction works when the seduced feel or believe that the rewards of being seduced outweigh the costs. Keeping it simple, what rewards can a health care plan use to seduce most if not all physicians and care providers?

— Let’s pay them fairly. Stop pushing down on the fees paid to physicians. After all, this is a relatively small part of the total health care cost. Let them actually make enough money to pay for their malpractice insurance premiums.

— Let them play god. Allow the physicians to determine the course of treatment without interference from the demons of payer pre-approval and denial of service.

— Pay them promptly. Don’t challenge or refuse to pay medical bills for services already provided. If physicians were auto mechanics they would put liens insurers.

What physician would not be seduced by these rewards? This is the medicine of their fathers and grandfathers (or mothers) when doctors belonged to the country clubs. There is, however, a price to pay; a cost to keep the rewards of this seduction. It’s a small cost, a bearable cost, a cost that will not diminish the physician’s independence or respect.

In joining this health care system, the care provider must agree to practice lean medicine as expressed in a simple, common sense, set of treatment guidelines. These are proven to work effectively in lowering medical costs yet have been accepted by thousands of physicians. For example, one of the guidelines states, “Be sparing in the use of tests and studies unless indicated by clinical findings”. This is not medical care rationing. The choice of obtaining expensive tests or studies is completely up to the physician. All that’s asked is that they ensure that clinical findings call for the tests.

Agreement is voluntary and willing compliance follows from the rewards of seduction. Critics may ask what happens if the physician does not practice lean medicine or follow the guidelines. In those cases, after consultation and discussion of the benefits, the physician will either correct the behavior or be dropped from the system. That is penalty enough. Another questioner might ask, “How do we know whether physicians are complying with the guidelines”. I believe that software already exists that could be easily modified to manage this health care system. It is true that all medical bills, reports, and payments would have to flow through this system to facilitate the management of care but that could have additional benefit by creating a cash flow that could help fund the system.

Finally, who are the payers in this system? Is it single payer, private insurers, or self insured employers? Actually, it could be all of these. The simplicity of the system is that it can be put in place with any type of medical insurance system. The insurer or payer would benefit from lower medical costs and needn’t bother with managing care.

Ultimately we would all benefit from this health care system. Lowering costs of health care by practicing lean medicine could save 30% to 50% over current medical costs. Patients would benefit by assurance that they would get appropriate care. Physicians can practice medicine, and insurers can add to their bottom line. There are no losers. But it all begins with seduction of physicians.

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coupon codesPeterNateMerle BushkinGZ MD Recent comment authors
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coupon codes
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Peter Nesbitt
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Peter Nesbitt

Let’s throw the ball a little further down the field. Lean medical care implies having a level of control. While we can specify to doctors that they should practice lean care, how do we know they will comply? Trust but verify. A control mechanism must follow patient care to ensure that physicians stay reasonably within the lean medical care parameters. In my experience, the best control model is a group of care management physicians and other medical professionals who monitor the system using software and the telephone. This group, not insurer nor provider based, work to see that patients get… Read more »

Peter
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Peter

“Here’s a novel idea- Incrementally shut down 1/3rd of US laws schools by 2015 before they further ruin medicine and the nation.” Certainly less lawyers would allow them to accept less vulture-istic cases. “Why can’t malpractice insurance be part of the plan? A single-pay plan for physicians and one for physicians?” I think you meant a plan for physicians and patients. Not a bad idea for seduction. Patients of single-pay would have to accept (and sign for) a different tort system, which would also attract physicians. But phyisicans would have to allow better guild oversight for negligence. Thing is would… Read more »

Nate
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Nate

“Isn’t it clear that our healthcare system is structurally unsound and uneconomic?” No it is not. We don’t have a healthcare system, we have 50 state systems, 3+ federal systems, and tens of thousands of employer systems. Majority of the employer systems are structurally and economically sound. Medicare, Medicaid, and a couple states are compelte failures dragging down the aggregation of the whole. You can’t blame the succesful systems for the failures of the public systems. “and the federal government should adopt policies that will cause change to happen” Government has adopted policies and that is how we got the… Read more »

Merle Bushkin
Guest

When will each participant in our healthcare system stop shifting the blame to the “other” guy, and stop looking for seemingly “easy” fixes such as a single payer plan (when was the last time government control fostered better quality, better service, lower costs and/or innovation of anything?). Isn’t it clear that our healthcare system is structurally unsound and uneconomic? We don’t always deliver the best care, and the care we deliver certainly is not low cost! Everyone agrees our healthcare costs too much but they argue that it’s the other guy’s fault! The fact is that no one is making… Read more »

GZ MD
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GZ MD

Sounds like a great idea. The only problem I see is when a patient ends up with something that probably would have been found on a specific test even though that test was not indicated by the physical exam, i.e. the patient had non specific, diffuse abdominal pain but no fever, no vomiting, only mild tenderness diffusely, but 2 days later got very ill and was found to have a ruptured appendix. If you’re in the medical field you would know without a doubt that the physician’s behavior was perfectly valid and does not constitute a mistake or poor judgment.… Read more »

care4all
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care4all

WHY ISN’T SINGLE-PAYER REFORM ON THE TABLE?
WHY IS BAUCUS BLOCKING CONSIDERATION OF SINGLE-PAYER?
A NEW STUDY SHOWS THAT SINGLE-PAYER REFORM WOULD BE MAJOR STIMULUS FOR THE US ECONOMY and would provide:
** 2.6 Million New Jobs,
** $317 Billion in Business Revenue,
** $100 Billion in Wages, and
** $44 Billion New Tax Revenues
You can find out more about this study here: http://www.CalNurses.org/
The press release is here: http://www.calnurses.org/media-center/press-releases/2009/january/nurses-to-congress-expanding-medicare-could-reverse-job-losses-and-repair-our-broken-healthcare-system-and-safety-net.html

care4all
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care4all

The health insurance companies have played a major role in our current healthcare crisis. They make huge profits and their CEOs make millions, while the rest of us are denied care. ANNUAL COMPENSATION OF HEALTH INSURANCE COMPANY EXECUTIVES (2006 and 2007 figures): • Ronald A. Williams, Chair/ CEO, Aetna Inc., $23,045,834 • H. Edward Hanway, Chair/ CEO, Cigna Corp, $30.16 million • David B. Snow, Jr, Chair/ CEO, Medco Health, $21.76 million • Michael B. MCallister, CEO, Humana Inc, $20.06 million • Stephen J. Hemsley, CEO, UnitedHealth Group, $13,164,529 • Angela F. Braly, President/ CEO, Wellpoint, $9,094,771 • Dale B.… Read more »

Roger Williams
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Roger Williams

Hello Peter:
I have been thinking about an “incentivized” system like this also. Of course if there is no trust, i.e.
– will this doctor skip a procedure?
– will this patient sue me for something I cannot control?
then the problem is not fixed. Also in my nascent idea, I cannot find any “fix” for large stakeholders who seemingly must take a “haircut”. Specifically,
– pharma
– boated hospital administration
– lawyers
– device makers
I think doctors & patients want “lean medicine”. I guess that the others are not so gung-ho. Maybe I am wrong!

Christopher George
Guest
Christopher George

I forgot about DRG’s. Thank you. All of these failed “management” ideas, or disquised rationing or disquised fee reduction systems (and soon an inchoate, half baked elctronic record mandate) are always layered one on top of the next. A new one comes, but the old ones do not disappear. Fairures at controlling costs, they are successful in degrading system inefficiency, and in adding to the administrative and compliance costs, to say nothing of the additional inconvenience for the patient and the doctor. Policy wonks must thank goodness that no evidence based efficiency standard is applied to their clerical initiatives. Ill:… Read more »

Ill and Uninsured in Illinois
Guest

Why can’t malpractice insurance be part of the plan? A single-pay plan for physicians and one for physicians?

MD as HELL
Guest
MD as HELL

Let’s set the WayBack machine, Sherman. OK, Mr. Peabody. Let’s go to pre-1983. Back to the time of the original RVS and UCR. Back to the time of genuine insurance instead of “healthcare plans”, which are not insurance products but look like them. (Sort of like a PA looking like a doctor). I am sure everyone realizes that this seduction is where we came from. but without strings, prior to DRGs and HMOs and all the other loser plans. Unfortunatly, the strings of Godfathers Kennedy and Obama on the doctor would still be pulled. Seduce all you want, but no… Read more »

Christopher George
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Christopher George

I agree with the concept of seduction. My sense is that the reform crowd, while undetered by a long series of failures, (HMO, pre-qualifications, PPO, capitation, P4P … and the list goes on..)has the medical profession in its sights. Having decided that the insurance companies, hospitals, drug makers have influential friends, the doctor is the only target left. As I have noted before, I think demonizing doctors is a bad idea. Remember the fable about the north wind and the south wind, consistant with the seduction option. The doctors that come to the profession as a calling, the majority in… Read more »

rbar
Guest
rbar

Joe Mersol is exactly right. It needs to be emphasized (I know I sound like a broken record if you read my other posts): Currently, there is NO incentive (other than respect for the greater good) for a doctor to order fewer (noninvasive) tests, but many to order more: -financial (depending on the setting, often not present) -PATIENT PREFERENCE -litigation. The current tort system can function like this (and trial lawyers do make it work that way): If there is a bad outcome, try with RETROSPECTIVE ANALYSIS (hindsight) how the outcome possibly could have been influenced. Then find a highly… Read more »

Hal Andrews
Guest

With all due respect to the folks at Mayo, value requires an analysis of both price (what is charged) and cost. With respect to the “Lean” champions, there is unbelievable opportunity for cost savings if hospitals outcomes were as good every day as they are on the best day. The most renowned hospitals in the U.S. have 3-4X variation in the outcomes of specific DRGs on a day-to-day basis that is difficult to explain.