Beware the Bursting of the Health Care Bubble

George Lundberg The good news is that if and when the American healthcare bubble bursts, some value will remain. The bad news is that the annual appropriate value could actually be only about 60% of the current expenditure.

The turn of the 21st Century has been marked by the creation, expansion, and im/explosion of at least 3 significant economic “bubbles”: the huge company Enron, plus the fields of dotcom and real estate/finance. A “bubble” comes to pass when a commodity of great promise and wide applicability entices many to participate and grows at a pace that reflects hope, excitement, sometimes greed, but does not have sufficient underlying  substance to support its continuing growth.

The demise of the fraudulently inflated Enron forecast much of this decade’s  financial  collapse.  A once successful oil and gas distribution company, Enron enjoyed accelerated growth in an essential field. But it came acropper by fakery, derivatives, and manipulation, out of synch with sound principles for sustaining value. When the trickery was exposed, little remained . Enron had become a “bubble” company with a top stock price of $90 in 2000 that shrunk to pennies.  This emperor had no clothes. It was a house built of Texas sand.

Many of us lived the dotcom boom and bust close up. Computer technologies do have lasting value. The internet added huge new potential with its promise to change the world in a fundamental way and did deliver. But on the way, its promise produced an inflated boom of economic value expectation far in excess of what was possible to sustain. In March 2000, the collapse began, producing a loss of “wealth” of 80 % as reflected in the NASDAQ and 40% in the Dow Jones over just a few months. NASDAQ has not recovered and the Dow Jones took several years to regain and (temporarily) exceed its level , after many companies collapsed.  Companies with the most real substance survived; the emperor had some clothes; the field endured and even prospered for the “winners”, once the bubble burst.

Then came the bubble of personal real estate; everyone wants his/her own home.  Politicians pushed home ownership.  Many buyers could not afford the homes  they were sold.  Subprime mortgages to unqualified buyers accelerated lenders’ profits. America’s Masters of the Universe created a pure shell game, “derivative financial products”, packages of unsound mortgages, thereby claiming vast short term gains. In the computer business, we call that “garbage in; garbage out”; now these products are labeled “toxic ”. This derivative and credit swap scheme was “take the money and run” on a grand international scale. When the derivatives bubble burst, the world economy came close to collapse and no one knows for sure when or even whether it will recover fully.

Which brings us to 2009 and the healthcare bubble. Health Care in the USA uses (consumes) some 17% of the Domestic National Product, something like $ 2 600 000 000 000 per year. Its growth has been at 2-5 X the rate of inflation almost every year for as long as I have watched it (some 30 years).  Many in health care, especially those with high expectations for continued large incomes from this growth, say, “So what”? “We earned it”. I agree that it is better to spend the national treasury for health care than for unneeded, new pork-barrel fighter jets and naval destroyers, or cocaine, booze, tobacco, fancy cars, gambling, second homes, sports, other entertainment, and porno.  The problem is that much of the $2.6 Trillion does not provide the medical value needed by our people. At least $400 000 000 000 annually is spent on unnecessary administration, competitive marketing and advertising, lobbying, large incomes (yes , including bonuses) for CEOs and executive staff who run for-profit organizations (and many not-for-profits ) plus profits for shareholders.  And, (conservatively) something like 20% of the total US health care expenditures (perhaps $ 500 000 000 000 annually) is expended for medical  practice activities that are not based on scientifically sound  evidence and do not improve patient outcomes. The habits of those over-spending and under-achieving American medical geographic regions and many medical/surgical specialists could/should be changed drastically to better conform to those right-spending or mini-spending and maxi-achieving  geographic regions and medical practice organization patterns. From this change, we can expect NO loss of quality, indeed likely improved outcomes.  And, some $150 000 000 000 is expended annually for clinically superfluous actions to defend against potential future medical liability allegations.

These expenditures, of no value to patient care or the public health, add up to roughly $1 050 000 000 000 per year. Comprehensive health care reform that puts the interests of patients first, followed closely by the public health and the long term economic health of the United States, will wipe out those expenditures. Pop goes the health care bubble.

Extrapolation bias teaches us that the scenario I advocate here will not happen. We will not control costs. Neither The Final Report of The Committee on the Costs of Medical Care in 1932, nor Harry Truman’s proposed National Health Insurance in 1948, nor Wennberg’s compelling work on geographic variations of medical practices beginning in 1967 nor Schwartz and Aaron’s “The Painful Prescription: Rationing Hospital Care” in 1984, led to basic health care for all Americans or control of health care cost inflation. Why should 2009 be any different?   Our system has repeatedly not responded well to data or rationality. But, then again, no prior large group (an organized public, the industry, the market, the profession, or the government) has ever been truly serious about the needed reforms.

Some loud and whispered voices in medicine will say…. “we are not like those finance guys. We deserve our money; after all, we do good”.  American medical advances unquestionably do save lives. But I argue that medicine is still a learned profession, indeed still a service profession, and should perform as such.  Asking the government to throw a lot more money medicine’s way in order to cover the uninsured is thinking like those in the failed financial sector. Comparative international experience shows that there is enough money already in our system to care for the basic medical needs of all of our people, if we spent it right. Government has a responsibility NOT to make the health care bubble even bigger. I believe that our long overdue Health System Reform must care for the basic healthcare needs of all of our people as a moral imperative derived from our national culture of common compassion.  And, now is the time for those of us in the American medical profession to do our patriotic duty to rein in our many egregious and habit-addicted members and lead the rest of the bloated medical-industrial complex to cut back on its vast waste. We can help to get the US back on track economically to benefit us and our children’s children.  But let’s beware of the inevitable collateral damage that will result from the bursting of this bubble, and re-valuation of the healthcare industry at 60% current expenditures, and let’s prepare for it.  Or, will we learn that the American Disease-Medical-Industrial Complex has really been largely a sophisticated “jobs program” all along, and cannot change now since the already high US unemployment rate would rapidly reach double digits?

George D. Lundberg MD, is former Editor in Chief of Medscape, eMedicine, and the Journal of the American Medical Association. Currently Distinguished Consultant, Physicians Advocates, Berkeley, CA and Consulting Professor, Stanford University School of Medicine.

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  3. Joint Replacement is the #1 expenditure of Medicare. Patients receiving failed implanted devices are in medical and legal purgatory. Orthopedic surgeons are 96% male making an average annual salary of $400k. Dr. George Lundberg’s reasoning is accurate: medical providers in the US must respond to the new reality by elevating science and service.

  4. Midcareer yeoman orthopedic surgeon here. Just a brief reality check from the front lines. I run an efficient practice, normal 50 percent overhead. Medicare is a financial nightmare. By RVUs i mtake home about 300 dollars for performing a total hip replacement. That’s right, 300 dollars. Preoperative care, hospital care, calls at night, and 90 days of postoperative care. I support myself on privately insured patients who, thereby, are subsidizing Medicare patients and the federal government. If you cut my reimbusement by 40 percent i am losing money. WHY DO ANY OF YOU THINK I WOULD DO THAT? Politicians want to continue to say they provide insurance and have us be the bad people who don’t see them. That is clearly the future my friends.

  5. WAKE UP!!
    Perhaps better is more focus on incentivizing ‘healthy wellness ‘ type care. Americans have always placed value collectively on those things that they aren’t able to do as ‘rugged individualists’. Tax based school and interstate highway systems come to mind. Funding in the form of mil levies (everyone has to have a place to live, right?) were the strategies employed.
    As the foodstuffs we place in our bodies everyday are the seed agents of so many of our chronic and costly disease states, it would make sense to begin a ’sin tax’ provision in the Earl Butz created depressed food cost market.
    These point of sale taxes would be tied to the known deleterious effects of high fat, high sucrose, additive and carcinogenic potential foods and food-like products consumed in abundance by Americans.

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  7. This is for Ellesia Blaque, Ph.D.
    Roy Scales was a friend of mine and he did pass away. Thank you for remembering him. He was a great man and deserved far better than he was given.

  8. Great article by Dr. Lundberg on Reducing Health Care Costs Now.
    Your help needed. Support. AB1478. Jim Henderson, Esq. and John McDougall, MD wrote AB1478, presently in the CA legislature. The informed consent bill seeks to reduce health care costs and improve the standard of care for heart disease and diabetic patients by requiring physicians to give these patients the option, in non-emergency cases, of being referred out to intensive nutritional therapy and lifestyle changes, instead of receiving the standard milieu of drugs/or surgery.
    Visit http://www.camedicalchoice.com for more details on the bill. The bill was created when a consultant of one of the committees read Indicted! The People versus The Medical and Drug Cartel, by Jim Henderson, Esq. See http://www.indicted.us. Indicted argues that while we have the best trauma care in US, we fall flat in chronic disease care because we only seek to manage the symtpoms of diseases such as heart disease, diabetes and cancer without even attempting to cure the underlying cause of the disease. This is a great national scandal. We are trading health for dollars. Hippocrates defined medicine as the discovery of the best foods to restore and maintain health and he discouraged the us of drugs. Today we define medicine as he search for the right drugs to manage,without curing the symptoms of disease.
    It is estimated that 70 to 80% of our health care dollars go just to managing symptoms. California spends approximately $48 billion annually on heart disease and $36 billion annually on diabetes. California would realize great savings if we shifted from a drug and surgery intervention health care model to a prevention and cure model. All major studies show that bypass surgery and angioplasty do not prolong life or reduce heart attack rates. Ornish et al showed that patients who opted for a healthy diet and lifestyle in place of medical management or surgery has a 91% mean reduction in their chest pain and a 82% reversal in their underlying atherosclerosis.
    Similarly medications for type-2 diabetes are prescribed aggressively with the unfounded belief that better control of blood sugar will result in better long-term outcomes for the patient. But all six major studies in the past 13 years have shown otherwise. Nutritional therapy and a plant based diet reverses diabetes.
    It is time we took back our health by adopting a healthier lifestyle and by demanding choice in our medical remedies.

  9. Many good thoughts here. Not too much mention so far on preventive aspects of disease. Chronic disease states are predictable cost constraints for payers. Incidence and prevalence are all known quantities. We need to play on the same field as the ‘insurance pros’ by having our own cadre of actuaries. Can the third party payers really be expected to pick up the known tab of long term care? ..without some kind of fuss? An insurance ‘requirement’ in the form of a Massachusetts type program plays right into the hands of the insurance industry. Sure, the infrastructure is easy and in existence but is that really the answer?
    Perhaps better is more focus on incentivizing ‘healthy wellness ‘ type care. Americans have always placed value collectively on those things that they aren’t able to do as ‘rugged individualists’. Tax based school and interstate highway systems come to mind. Funding in the form of mil levies (everyone has to have a place to live, right?) were the strategies employed.
    As the foodstuffs we place in our bodies everyday are the seed agents of so many of our chronic and costly disease states, it would make sense to begin a ‘sin tax’ provision in the Earl Butz created depressed food cost market.
    These point of sale taxes would be tied to the known deleterious effects of high fat, high sucrose, additive and carcinogenic potential foods and food-like products consumed in abundance by Americans.
    These funds would help offset the proposed 1 trillion Obama-care concept being considered in Congress.

  10. ‘there is enough money already in our system to care for the basic medical needs of all of our people, if we spent it right.’ To paraphrase Ghandi, the system provides enough to satisfy every man’s need, but not every man’s greed.

  11. In a recent 60 Minutes report presented April 5, 2009, a set of facts regarding the healthcare industry were revealed that shocked even me. According to the 60 Minutes report, Las Vegas, Nevada has been hit especially hard by the economic crisis, which makes perfect sense: why would smart people, even those who are usually irresponsible and/or rich, pilfer away their money at a desert casino? This massive loss of tax revenue has crushed the city and state budgets, and like Dickens’s scripted old Scrooge to state, “decreas[ing] the surplus population” is at hand.
    The healthcare facility to which I refer is the University Medical Center of Southern Nevada, Las Vegas, and the woman making the budgeting decisions is Kathy Silver, UMC’s CEO. According to a Channel 8, Las Vegas news report dated May 22, 2007:
    “[s]elf-pay clients — that is, those who don’t have insurance but who don’t qualify for a government medical program — owe $160 million for care they’ve received over the last four years. Some of them declared bankruptcy while some simply can’t or won’t pay. Silver says $160 million is the total billed charges, but UMC never expected to collect the full amount because of fee agreements.”
    This is not only a symptom of the problem of healthcare, it IS the problem. American healthcare is overwhelmed with negotiations and backroom deals for services and prescription drugs. There is no unified system for how these services and drugs are billed or by whom. Nor is there a unified system on how those bills are paid. Within the interstice of these healthcare ills are the patients, of which I am one; but here are a few examples of others effected by UMC’s financial woes, which I find more compelling than my own, and certainly in need of more pro-action from me and all of you who are reading this op-ed piece.
    UMC, the Las Vegas, NV hospital to which I have been referring, lost $51 million when they lost the bulk of their tax revenues. Kathy Silver “chose to sacrifice services duplicated at private institutions” (Silver), despite her knowledge that the patients dropped from UMC because of its new policies on acceptable insurance products, might not be able to afford that care: “the patients who don’t qualify for a social services type of program” (Silver), i.e., the middle class. Therefore, many of the patients Silver and UMC dropped from care are going untreated for killer diseases, such as cancer.
    For example, Yolanda Coleman has breast cancer, which she learned about while employed. However, she was dropped from her employer’s insurance and after three rounds of chemotherapy at UMC, they dropped her from care as well. As a result of interrupted cancer treatment, the disease has advanced to her bones. For several weeks, she lie in a medical bed using a wheel chair for legs, as she was restricted by a broken hip; no doubt her bone cancer was diagnosed during treatment for her hip. Yet, there was still no treatment for her ever progressing cancer.
    Coleman, an African American single mother, worked as a maid in hotels and later as a truck driver to support and educate her two children. At the time of her 60 Minutes interview Yolanda Coleman did not know when, or if, she would receive the remaining rounds of chemotherapy treatment, stating, “I’m just living day by day” (Coleman, 60). After her interview, according to 60 Minutes, the medical supply company supplying Coleman’s medical bed and wheel chair came and took both away like so much repossessed furniture. Insurance reinstated after 60 Minutes contacted her insurance company “to ask why she had been dropped.”
    I spoke to Yolanda Coleman this afternoon. She explained to me that her company, the Imperial Palace Hotel and Casino did not offer her Cobra, the insurance plan that most employers offer their employees upon job separation. Because Cobra can be attained through Imperial Palace, it’s a given that they should have offered Coleman the coverage at the time of termination, but they did not, which supports my theory that as individual companies and CEO’s, there is an attempt to “decrease the surplus population” (Dickens), those of use expected to die–soon.
    UMC Las Vegas terminated the prenatal, outpatient oncology, outpatient dialysis, obstetrics, and outpatient mammographies clinics. They also closed the women’s cancer clinic altogether. Closing the outpatient oncology clinic severely effected Mr. Roy Scales, an African American lung cancer patient. Scales learned in person on the day of his set appointment that the clinic was closed by UMC when they “turned me away at the door,” saying, “every day I don’t get medical input, this [cancer] advances on my body” (Scales, 60). In his attempt to access the clinics listed on the ‘good luck’ document issued to him by UMC, he contacted “at least 25″ doctors’ offices” (Scales, 60) all of which have turned him down because they don’t accept Medicaid. In April of this year, Scales “signed himself” into a local hospice, which by definition means he plans to keep his word in the 60 Minutes interview, to “die peacefully” (Scales, 60. I checked as many hospices in Las Vegas as I could find. Only one asked if I knew Mr. Scales middle name. He would not have asked me that if there had never been a Roy Scales there. Or is he still there?
    In the richest, most industrialized nation, where people live one person to a $500K house, attend universities at $42K a year, drive Hummers and BMWs, spend money on their local Daily Number, in casinos in Vegas and Jersey, poor people are allowed to dies on the street.
    When I was first diagnosed with my disease I was a ward-of-the-state of Pennsylvania. I had been adjudicated a delinquent and chose to sue my parents for abuse and abandonment and was waiting out the decision a children’s home for girls in a suburb of Philadelphia. I was working as a dishwasher at the local Denny’s, second shift. I came home one night and was told I had won my case and was forced to leave the facility right then. My diagnosis was only weeks old. I had no idea was sarcoidosis was, nor was I aware of what the treatment–mass amounts of steroids–would do to my body and my mind. All I knew was that the pills keep the headaches and vision loss at bay and the eye drops burned like hell. Those eye drops, Pred Forte 1%, cost about $60 for 10ccs, and I needed about 20ccs per week. I did everything from forge prescriptions to outright steal the drugs because I had no access to healthcare. I did not know about Loma 1-10 and the insurance companies ‘morbidity’ rates. I did not know that there were people who were considered ‘uninsurable’ and that I was one of them. For many years I received treatment during flare-ups at local emergency rooms, still not knowing that each flare-up left scar tissue on my eyes and optic nerve. Eventually, the disease moved to my brain. The only reason I survived was because, for the first time, I had a healthcare plan, which is credited to my graduate fellowship at Wayne State University. Even with healthcare, that I no longer have as I transition into my new job, I cannot afford the medications most of the time. Thank God for Wal-Mart’s $4 plan, but where do those drugs come from and are they safe, are they as efficient as brand name prescriptions, and how long will Wal-Mart offer that plan? These are the types of problems facing Americans. Regardless of their race, heath insurer, time on the job, income level, or medical issue, Americans are dying on the street everyday because they do not have healthcare.
    The political right argues that State sanctioned healthcare gets the government between the patient and the doctor. What they do not consider is that before I worry about the government getting between me and a doctor I have to actually have a doctor first! What about the tens of millions of people, including the elderly, children, and people like me who have chronic, incurable diseases, without healthcare at all? Are Americans going to hoard a few pennies so that they can buy new houses, new rims for those new cars, and new stereo equipment for those new houses? Or are we going to demand that our tax dollars and insurance premiums and co-pays are collected fairly and spent wisely to allow ALL Americans to have access to wellness.
    Thanks to Nick Spiritos and his partners for investing $100K of their own money to build an oncology clinic in a spare room in his private office where they now treat women with ovarian and uterine cancer. Let’s follow his lead. Please review the 60 Minutes video that inspires this comment, titled, “This Clinic is Closed” at http://www.cbsnews.com/stories/2009/04/03/60minutes/main4917055.shtml. Then decide what YOU are going to do to help alleviate this suffering.
    Thanks for listening, reading, watching, and responding.
    Ellesia Blaque, Ph.D.

  12. Our health care system is driven by those who can afford expensive health care system, those people who pay their taxes right, and most of people who have the money to go to the hospital and ask for a treatment.

  13. Good essay. Would that the following, quoted from the essay, would happen. Given that the current system of financing and payment for medical services generates a predictable, recession-proof and highly lucrative “life-style” to physicians, I see no chance of this happening. I have never met a specialist physician who does not think that his/her $300,000 median net income or $1 million median gross income is at all abnormal.
    “And, now is the time for those of us in the American medical profession to do our patriotic duty to rein in our many egregious and habit-addicted members and lead the rest of the bloated medical-industrial complex to cut back on its vast waste.”
    The only elements of the delivery of medical services that apply competitive pressure on price in medical services are the walk-in clinic chains and services for expensive interventions, surgery primarily, performed in lower-cost sites outside the USA (medical tourism). But their presence and impact are next to nil.
    The walk-in clinic phenomenon seems to me to offer some potential for competitive forces to gain a foothold in the market for medical services in a way that does not have the side effect of potentially lower quality of service (if not higher convenience) along with the lower price.
    The services offered seem to me to qualify as “precision medicine” as defined in the recently published book The Innovator’s Prescription. To my mind at least the book provides a useful and unique framework for understanding which medical services can be delivered based on a “factory” model and which cannot be.

  14. Peter where is your study proving any less then 98% can’t? Check the census study or kaiser only 3-5 million uninsured either don’t have insurance they qualify for and choose to not enroll on or make over 50K and thus able to afford it. Your right I am way to busy to poll 300 million people, luckly the US Government, Kaiser Family and a dozen other organizations already proved it for me

  15. Dear Dr. Lundberg,
    Excellent piece, so true. I think much of this applies to academic health center and their urban settings. The responses to the blog seem to indicate that the greed is less for practitioners in rural settings.
    Since healthcare became a business, it seems that it went nuts. As more and more of the system became profit or income oriented, i.e. pharma, devices, and now the people who work at ‘non-profit’ hospitals and insurers, it got worse and worse.
    The powerful people in many of these companies/institutions have been corrupted. Most mean well, but their conflict of interest blinds them.
    Also, comparative income setting is a tragedy. Just because one doc somewhere is great and makes a better buck, all of the others say, “I deserve that too.” Same with administrators, CEOs etc. etc. Bankers also.
    At least the professional sports teams cut unproductive players, although that hasn’t seemed to slow down the outrageous salary escalations.
    Anyhow, thank you Dr. Lundberg for speaking the truth. Get the money out of medicine and the problem begins to correct itself.

  16. “You should always buy US made or grown goods when possible.”
    I guess that’s why Walmart’s doing so well. I wonder if the money Walmart shoppers save can be put to the purchase of HC?
    Nate, you can’t prove only 2% of the population can’t afford HC – where’s YOUR study? And I don’t mean the right wing claims that the census question on HC is flawed and therefore would mean all but a small faction of the uninsured can actually afford HC. I highly doubt 10% of seniors only need Medicare – links please.
    And yes you’re right, the entire country doen’t have or get cancer, but she is indicitive of all women, with insurance, who get cancer and know that HC is NOT a luxury.
    “You should always buy US made or grown goods when possible.”
    What! and you’er a free marketeer?

  17. Peter you are aware your wife’s one friend with breast cancer is not indicitive of the entire country right? The left’s ability to project knowns no ends. You passed Medicare based on the needs of 10% of seniors, and it didn’t help that 10% at all. Now you want to destroy our systems for the 2% of americans that can’t afford insurance. Wish you would be honest about your beliefs, if one must suffer we must all equally suffer. That is why liberals are destroying public education along with HC.
    Depends on what you mean by US made cars. I would strongly suggest buying almost any car made in the Southern US with a honda or toyota name plate. Stay as far away as possible from GM. This doesn’t match what SEIU is proposing but accomoplishes the same goal more efficiently. You should always buy US made or grown goods when possible.

  18. “HC spending competes with non necessary expenses like nicer cars, eating out”
    Tell that to my wife’s friend who has breast cancer.
    Does your argument that HC spending gets more GDP bump than spending on products made outside the U.S. extend to the union argument that we should buy U.S. made cars (or any other products), despite low quality and high prices (partly due to HC costs), because it keeps Americans working? I guess you would support the SIEU positon because in the end, higher wages is a 7-20 times bump to GDP.

  19. rbar, your comments were pretty surprising
    “It’s crazy, like saying: lowering tax rate will increase federal revenues … non one is crazy enough to say … never mind.”
    What caused the 2005 US jump in tax receipts?
    India in 2008?
    “The economy is growing at a robust pace, income of individuals have gone up and compliance has increased. There has been evidence that lower tax rates have led to higher receipts,” Chairman of Central Board of Direct Taxes, P K Misra, said. ”
    What about the explosion in Ireland after they slashed business taxes?
    If European Healthcare is so great why don’t we copy their business tax;
    When compared to other OECD countries:
    24 U.S. states have a combined corporate tax rate higher than top-ranked Japan.
    32 states have a combined corporate tax rate higher than third-ranked Germany.
    46 states have a combined corporate tax rate higher than fourth-ranked Canada.
    All 50 states have a combined corporate tax rate higher than fifth-ranked France.
    Seems every non liberal/US economist and tax writer in the OECD is saying this crazy non sense.
    “I have rarely noticed any politicizing of EBM”
    Vaccines, speciically the new HPV.
    Gastric Bypass
    Erictile Dysfunction, the whole it’s sexist to cover viagra and not birth control
    Just about every new experimental drug the FDA hasn’t approved yet.
    EBM has been abused and twisted since the beginning of effecitveness studies.
    Peter “And your point about spending leads to spending in other parts of the economy is just self serving, not spending on healthcare will also lead to spending, just not health spending – like education, rent, your mortgage or retirement.”
    All spending is not equal. Elasticity of money, a dollar spent on healthcare can add 7-20 times to GDP. A dollar spent on Oil or Chinesse junk a fraction of that. If you extraoplate the math a dollar spent on healthcare most likely adds more to GDP then most consumer purchases even if that dollar is taken from another expense. Healthcare spending is not on the same priority level as rent, food, and basics, HC spending competes with non necessary expenses like nicer cars, eating out, and general consumption. Contrary to progressive dogma over 80% of the population has no problem paying their medical bills.
    Your projecting a problem for a small minority on the entire population.

  20. MD, maybe Wall Street finance will be more to their liking – docs haven’t seen competitive pressure to survive like that of finance. Maybe a dose of the other side will bring them back to medicine.

  21. Future docs will rethink their career plans if they are to be bridled and ridden until dead. The provider pool will definitely dumb down, but it will be cheaper.

  22. “I expect they will opt out of the public plan.”
    Only if there is a two tier plan, which will cause the failure (resource starvation) of the lower tier. That’s why single-pay will only work as a one tier for all with opting-out or extra billing banned, but with adaquate compensation for care givers.

  23. rbar,
    As the inevitable dumbing down of the provider occurs, the good docs will be in demand. I expect they will opt out of the public plan. Quality medicine is going to be an ever more valuable commodity.
    As for evidence, once the feds are the master, they will want to see evidence of their success and justify their practices, just like JCAHO. They will not reward independent thinking. Just as nurses are now, docs will be put in a box with limited choices, just as the military doc is now, just as the North Carolina school teacher is now.
    I am mad as hell about the hijacking of the profession by the politicians and the insurance execs, all of whom have a different set of ethics in the care of patients. I am mad as hell over the AMA selling out docs to the government. Docs should make medical decisions and be paid for their services. I am mad as hell over EMTALA, the theft by legislation act that forces docs to provide service with no one funding the effort. All of the altruism in medicine has been stolen by politicians so they can look like the giver, when in fact they are the thief, with a gun to the head of the doc. I am mad as hell every time I have to touch the computer to take care of a patient. It is slow, inflexible and designed by someone who never has to use it for the task. I am mad as hell over people thinking the uninsured are being deprived of something. They can afford basic healthcare if they want to make it a priority. (I said basic). No one has a right to the labors of another. And finally, I am mad as hell that Obama thinks he is entitled to steal all of healthcare just for political cover over the Medicare meltdown soon to be under way.

  24. MD,
    I think that I remember from other comments that you are an ER physician in a smaller town, and I never thought you were making a fortune with that (although, like most US physicians incl. myself, you probably are earning at the 97th percentile or higher and have excellent job security).
    My comment referred mainly to your comment “Make it hard to get and watch the price for the good stuff go up. Watch the black market flourish” – unless there is some irony/sarcasm in there that I didn’t get, that sounds like you want to make physician services more sought after and prices/reimbursement higher.
    Other than with reproductive medicine, I have rarely noticed any politicizing of EBM, since we are dealing with scientific evidence that is established by scientists, not politicians. There is, however, great commercial pressure on the availability and interpretation of evidence (e.g. suppressed publication of clinical trials, industry sponsored CME etc.), as you certainly know.
    I get the feeling (based on your other posts and signature) that you, like so many other docs, are mad about the decline of working conditions and reimbursement for docs. I that so? With regards to money, I think we are still extremely well off, except for many peds and PCPs (don’t know too much about ER docs), and I think financial complaints are inappropriate.
    With regards to working conditions for US physicians, I think that many have good reason to complain: increasing paperwork and senseless regulation, persisting high levels of litigation, incr. numbers of doctor shopping patients lacking reason and, at times, respect/courtesy, infiltration of health care with commercial interests. These are the things that make me mad, although not mad as hell. What is it in your case?

  25. rbar,
    I have read your comments for some months now. You are smarter that this. You overlooked the word “politicizing” when you commented on my remarks. It is the same thing as evidence from research funded by an interested party. When “evidence” laced with politics is promoted, there is no real evidence of anything at all.
    I am not a procedural doc. Your last paragraph is just typical liberal boilerplate, I guess.

  26. MD as hell,
    “Politicizing medical care and the so-called evidence of comparitive effectiveness leads to bad medicine and wrong answers.”
    This is just consevative boilerplate. Where is the evidence that applying EBM leads to bad medicine? It’s crazy, like saying: lowering tax rate will increase federal revenues … non one is crazy enough to say … never mind.
    The question one has to ask with policy suggestions is: what is the goal of a particular policy? Applying effectiveness research wants to curb superfluous care (and thereby achieving more benefit for less cost). Your suggestion, I am afraid, seems to be just aimed at improving physicians’ economic situation (that isn’t that bad, even for PCPs). It does not help anyone else.

  27. MD, same argument could be made for military spending or war in that it generates GDP and provides incomes. The real question is should we be taking that many dollars from other parts of the economy to fuel a glutenous medical/political complex. And your point about spending leads to spending in other parts of the economy is just self serving, not spending on healthcare will also lead to spending, just not health spending – like education, rent, your mortgage or retirement. The experience of countries with government run/controlled healthcare is nothing like what you want us to believe.

  28. This is a nice informative article which gives a new outlook on health care. Indeed can we really look at health care as a commodity? 🙁

  29. This is great fiction. Healthcare does not consume 17% of GDP…it is 17% of GDP.
    No one has defined the term “basic healthcare”. What is it that you wish everyone had?
    Healthcare spending is driven by patient demand. Providers respond as we have been trained and conditioned. We order the MRI because it has become standard of care as determined by a jury of our peers. To do less would be malpractice. Until it is not malpractice to not order the MRI, doctors will not change their practice patterns.
    Patients demand healthcare services because they do not have to pay for it directly. When they do have to pay for it, they get a different outlook on what it is worth to them. If families had to pay for nursing home care for their loved one. there would be no PEG tubes.
    Every dollar spent on healthcare, or on anything else, is then taxed at some level. The remaining amount is then spent and taxed again. The faster that dollar moves, the faster it is taxed to zero. That dollar pays the nurse who buys a meal sold by a vendor who buys food from a distributor who buys from the company who buys from a farmer who buys from a seed company, a chemical company, an impliment company, a truck company, a realtor, a builder, an insurance agent, and who employs workers. Stop the flow of that dollar and you have a recession or depression.
    Make the provider do more work for the same dollar and you have a shift in the work force towards people who have less skill, training and experience than the present provider, who will not be around anymore because he/she will not go to medical school just to be the indentured servant of the idiot who thought everyone would just suck it up and do more for less. There goes your productivity.
    Rationing leads to corruption. Politicizing medical care and the so-called evidence of comparitive effectiveness leads to bad medicine and wrong answers.
    The political pain of dealing with a bankrupt Medicare is more than Speaker Pelosi wants to imagine. President Obama will do anything and everything to redirect all the healthcare dollars so he can spread the suffering without dealing with having to say “no” to the Medicare bunch alone.
    Healthcare is a commodity. Make it hard to get and watch the price for the good stuff go up. Watch the black market flourish.
    It is not rocket science.

  30. tcoyote;
    I see at least part of Dr. Lundberg’s post differently than you. That is, I see investors looking for a place to put their cash (and there are plenty still out there with $$), putting it into companies that they believe will be able to feed at the healthcare trough provided by coming government largesse. Witness the salivation already being exhibited by all the various IT vendors and middlemen at the 20 billion suddenly dangling in front of them. These proposals are also a welfare program for legions of lobbyists for vested interests as the players fight for pieces of the pie. Remember – everyone thinks they will get more business when the 40 million uninsured get insurance.
    It is this bubble that has a real chance of developing and then bursting, whether or not true healthcare reform ensues. I don’t think that’s all that Dr. Lundberg was addressing, but perhaps a realistic assessment of part of the picture.

  31. Sorry, colleagues, but I don’t think this happens. As our friend Uwe Reinhardt told us years ago, 80% or better of health costs are someone’s incomes. He compared the health system to a gigantic feeding trough. 16 million people feed at this trough, many of them among the smartest people in our society- physicians, scientists, software architects, engineers, tort lawyers, you name it. It isn’t like Obama is going to unleash market forces to bring down those incomes, and we have a corrupt Congress and political system to keep most of the important actors’ incomes from falling by anything more than a marginal amount. The labor unions, who are foaming at the mouth to organize the workers in the health system, certainly aren’t going to bring down peoples’ incomes.
    No disputing the amount of waste, inappropriate care, and all the rest. But the melodramatic imagery of a bubble bursting just doesn’t work here.

  32. Excellent article … although the problem with the use of the term “bubble” is that the benefit of health care is so hard to estimate for the individual patient. In other words, the “substance” (i.e. benefit) is hard to grasp for an individual who thinks that his/her well being is at stake. This affects the worried well as much as any patient.
    My frequent experience by worried patients is: even if diagnostic or therapeutic benefit of X is marginal, I want it, and my 3rd party payor has to foot the bill. How can a doctor be so uncaring that he/she does not want to order the MRI for my aching back (my pounding headaches etc.)? And that extends to patients with actual medical problems: expect the fanciest scans and the most thorough lab work up, and the newest treatment (even if the benefit is marginal, or in some cases, nonexistent of negative compared to generics).
    The bubble will remain a well inflated bubble over many more years …. as long as there are enough people with money/coverage who are complicit with their treating physicians in the ongoing diagnostic and therapeutic overkill.
    I sometimes wonder how a provider network/insurance product would do limiting themsleves only to the reasonable stuff … but one would need tort reform for that, because otherwise, the participating doctors have every right to be afraid of “failure to diagnose” litigation.

  33. All over the country, innovative ideas are being implemented in the workplace to improve the health of workers and reduce the rising rate of health care spending. Skyrocketing health care costs are crushing families and companies, impeding businesses’ ability to expand and compete, and stunting the country’s economic growth. Some employers and unions – spanning industries, firm size, and workforce demographics – are using creative approaches to reverse that trend in their workplaces. Here is what the Obama administration just released. http://pfx.me/Bt

  34. Excellent post from a major,highly respected, mainstream US medical figure who should become our next US Surgeon General.
    Lundberg is correct in stating that much of what we do in medicine at best has little to no value -at worst harms!
    As far as “disease care workers” losing jobs?- Let them become “preventionists” or true health care workers.
    Here are my two mantras for both health care planners and the public. But I do not know if these folks are willing to hear either Dr. Lundberg’s words or mine?
    – “More is not always better in medicine-Sometimes(often?)it is worse”-ral
    – ” Every American citizen deserves a dignified pain free death with as little sufferring as possible”-ral
    Are Americans ready to grow up?
    Dr. Rick Lippin
    Southampton, Pa

  35. Physicians and nurses will lead the necessary reforms. The insurance companies and hospital aggregators can’t separate their self interest from the public good.

  36. Well said. It is important to remember that physicians in many other countries do not have the prestige and status of those here; they are just another type of worker. For too long we have sought and accepted the mantle of demigod.
    I also think your observations about healthcare being the next bubble are very insightful, given our profit-driven American system of doing things.

  37. Dr. Lundberg,
    So glad you said it. I have been shouting for months that we do not need additional money, we already have too much in the system. And also that the healthcare sector need to realze that if they do not fix, it will become bigger problem than the finanical sector crisis. Remember financial sector is big not only because it is but also because they have direct link to Washington. It is problem of rich people too. Healthcare will have little impact on those who are rich and can afford.
    I wrote several articles around these and also proposed few possible solutions for debate on my site – granted I do not edit my writings..but ideas is worth talking.

  38. Something else that would greatly improve patient outcomes would be if they took some of those huge salaries and bonuses paid to CEO’s and used it to hire more nursing staff to decrease the nurse:patient ratios. When one looks at some of the staffing ratios of hospital, but especially those in nursing homes (extended care facilities), it’s amazing that there are not more deaths or injuries related to medical errors. It’s sad for the patients that they can’t get the one-on-one care they deserve. I’ll be watching this healthcare bubble, I work in it everyday.