Uncategorized

Explaining Runaway Costs: The Lobster or the Salad?

LOBSTER_GRAM_300Have you found yourself ‘splaining to friends and family why the healthcare system is so damn expensive? I’ve been teaching health policy for a couple of decades, and I’m surprised that my two favorite stories haven’t yet surfaced in all the discourse. Here they are, in the hopes that they help you, or someone you love, understand why medical care is bankrupting our country.

Let’s start with the Expensive Lunch Club, a story I first heard from Alain Enthoven, the legendary Stanford health economist. It goes like this:

You’ve just moved to a new town and stroll into a restaurant on the main drag for lunch. None of the large tables are empty, so you sit down at a table nearly filled with other customers. The menu is nice and varied. The waiter approaches you and asks for your order. You’re not that hungry, so you ask for a Caesar salad. You catch the waiter looking at you sideways, but you don’t think too much of it. He moves on to take the order of the person sitting to your right.

“And what can I get for you today, sir?”

“Oh, the lobster sounds great. I’ll have that.”

You’re taken aback, since the restaurant doesn’t seem very fancy, and your tablemate is dressed rather shabbily. The waiter proceeds to the next customer.

“And you, ma’am?”

“The lobster sounds good,” she says. “And I’ll take a small filet mignon on the side.”

Now you’re completely befuddled. You tap your neighbor on the shoulder and ask him what’s going on.

“Oh, I guess nobody told you,” he whispers. “This is a lunch club. We add up the bill at the end of the meal, and divide it by the number of people at the table. That’s how your portion is determined.”

You frantically call back the waiter and change your order to the lobster.

“If the waiter makes a 15% tip on the total bill and you ask him to recommend a dish,” Enthoven asked our health econ class, a glint in his eye, “do you think he’ll recommend the salad or the lobster?”

“And if most of the lunch business in town is in the form of these lunch clubs, do you think you’ll find more restaurants specializing in lobster or in salad?”

I have always found this story to be the best way of explaining how the fee-for-service incentive system drives health inflation – and how it isn’t just the hospitals, or the providers, or the patients who are the problem. It’s everyone.

The second story involves one of the great innovations in the annals of surgery: laparoscopic cholecystectomy, or “lap choley” for short. As you may recall, the old procedure for removing a gall bladder involved an “open cholecystectomy,” a traditional “up to the elbows” surgical procedure. It was a nasty operation: patients stayed in the hospital for a week, recuperated for a month, and ended up with a scar that began in their mid-abdomen and didn’t end till it reached Fresno. The surgery was exquisitely painful, and had a high complication rate and a non-trivial mortality rate. And it was hecka expensive.

In the late ‘80s, along came lap choley, in which the surgeon makes a few inch-long slits in the abdomen, then inserts narrow mechanical arms that can cut and sew while allowing him to monitor the patient’s innards through a tiny camera. With this revolutionary “keyhole” procedure, patients had shorter hospital stays (1-2 days instead of a week), a much shorter convalescence, and a far lower complication rate (and negligible mortality). And costs were reduced by about 25 percent.

This was innovation – the new procedure was safer, less painful, and far less expensive. So what do you think happened to national expenditures for surgical management of gallstone disease after the advent of lap choley?

You know the answer. During my training in the 1980s, we were taught that you only removed a gall bladder containing gallstones when it was infected (“cholecystitis”), unless the patient was diabetic (the much higher complication rate of cholecystitis in diabetics justified prophylactic cholecystectomy). We told all the other patients with known gallstones to avoid fatty foods and to come to the ER promptly if they had severe belly pain, developed a fever, or were mistaken for a pumpkin. Most of these patients ultimately died with their gallbladders still in their abdomens, not the pathology lab.

But lap choley led to “indication creep” – the surgery now seemed benign enough that we began to recommend cholecystectomy for anybody with “symptomatic gallstone disease.” Since everybody ends up with an ultrasound or CT at some point in their life, we find lots of gallstones. Symptomatic? How many people do you know who never have belly pain? Do you? (Perhaps you need your gall bladder out.)

So, whereas technological innovation usually lowers costs in other industries (Exhibit A: Moore’s Law), in healthcare it often raises them as the indications for expensive procedures change faster than the unit price.

Is there a way out of the lap choley conundrum? Perhaps comparative effectiveness research will help – it might tell us precisely which patients will, and won’t, benefit from lap choley. All the usual issues must be navigated.

The expensive lunch club and the story of lap choley are two reasons why our healthcare system consumes 16% of our GDP. Sure, there is waste, greed, and fraud in healthcare, but I find the stories helpful because they illustrate how the actions of perfectly reasonable doctors, patients, and administrators will lead to inexorable inflation if the system isn’t changed in fundamental ways.

That increasingly seems like an awfully big “if”.

Robert Wachter is widely regarded as a leading figure in the modern patient safety movement. Together with Dr. Lee Goldman, he coined the term “hospitalist” in an influential 1996 essay in The New England Journal of Medicine. His most recent book, Understanding Patient Safety, (McGraw-Hill, 2008) examines the factors that have contributed to what is often described as “an epidemic” facing American hospitals. His posts appear semi-regularly on THCB and on his own blog “Wachter’s World,” where this post first appeared.

Livongo’s Post Ad Banner 728*90

52
Leave a Reply

52 Comment threads
0 Thread replies
0 Followers
 
Most reacted comment
Hottest comment thread
24 Comment authors
MarioSJ BeanGertrude Speldkberry Recent comment authors
newest oldest most voted
MarioS
Guest
MarioS

I’m a Brazilian citizen, born in Brazil and have been living here since then, so the health reform won’t affect me in any way. Even so there is something I’d like to share with you. We here have a large experience on government “taking care” of us and that’s exactly why I can tell: YOU DON’T WANT IT! Bureaucrats aren’t competent enough to deal with health issues and to be fair they shouldn’t be. If you are under attack you’ll want a soldier or a lawyer to take care of the problem? Some people are trained to act, others to… Read more »

Irene
Guest

Let me clarify for a general audience what I mean regarding the influences of femininity and masculinity being in balance as a means of achieving health, personally and socially. I am not referring to gender. Femininity is associated with receptivity. Masculinity is associated with creativity. If people are overly receptive, they do not protect themselves, their children and almost anyone or everyone else. They let almost anything in, not keeping danger out. If people are overly, actively receptive (in a creative way), do they want to take? If people are overly creative, they push things onto other people, without being… Read more »

The EHR Guy
Guest

Irene,
Are you OK?
You are mixing chinese medicine, federal blogging, beer summits, two angel protectors that Doreen sees in each person, and music by The Police in the longest and most bizarre narration (if you could name it this) in my entire life!
I promise never, ever to read again comments that are longer than the post!
What the heck?!!!
No thanks,
The EHR Guy

Irene
Guest

Here’s another note about the doctor I mentioned above, as an example of effective coordination between doctor and patient. A patient came in. He said he wanted to be strong. He asked what kind of ginseng* is more powerful, American or Chinese? She said, “Chinese.” Our medical industry uses opposition against the body to counter its focus: disease. Other methods nurture health naturally to support their focus: life. When the forces (or influences) of masculinity and femininity are well balanced in a culture, they are balanced in the people of the culture. The people, together, are the culture. Collective Soul… Read more »

Barry Carol
Guest
Barry Carol

“You are perfectly happy to advocate for a rationing board because you are neither sick nor providing care. That is not the way life works in Medicine.” MD as HELL – First, I’ve had more than my share of medical episodes over the past 15 years including a CABG, a DES, a TURP, seven colonoscopies, and a lap chloey plus a number of other invasive procedures. The plain fact is that resources are finite but demand for medical services is potentially near infinite. While I recognize that doctors see their primary mission as healing without much if any consideration given… Read more »

MD as HELL
Guest
MD as HELL

All of you who argue for a national healthboard are why we will never do better.
You do not want to be responsible for your own choices. You want someone else to be responsible. You want someone disinterested to choose appropriate care. Well, folks. If the Board is disinterested politically, then it is also disinterested in you.
You are perfectly happy to advocate for a rationing board because you are neither sick nor providing care. That is not the way life works in Medicine.

Margalit Gur-Arie
Guest

Peter, Senator Daschle has provisions in his proposal for regional entities that report to the Federal Health Board.
Also, the FHB would have the power to affect payer regulations.
I am having issues with the tiered approach that Barry is proposing, though. I’m not sure how you rate providers for cost effectiveness. First, even if it was possible, it would have to be based on long term studies of outcomes. Second, there will be significant temptation for payers to rate on cost only.

Barry Carol
Guest
Barry Carol

Peter – I’m thinking in terms of a Federal Health Board modeled after the Federal Reserve that Senator Daschle talked about. Obviously, it would have to have power and it would have to be as insulated from the political process as possible. I have no problem with insurance coverage decisions based on both comparative effectiveness and cost-effectiveness evidence and research. For example, if PSA tests are shown not to be cost-effective, then insurance shouldn’t cover them. People who want one anyway can self-pay. If the latest cancer drug that may get you an extra month of life at a cost… Read more »

Peter
Guest
Peter

Barry, do you really want a Federal Health Board making local decisions in Washington? Do you really think that will work? And just how is this board going to get doctors to follow any comparitive/cost effectiveness when it will not have any power?

Irene
Guest

With people and systems, change comes slowly from within, like a groundswell. The best health care creates self-caring people who are healthy on their own. Below, I show how a doctor gently gives patients self-sustaining health. The change we are waiting for is the consciousness between us that enables patients to bloom into health around doctors. First, a few ideas: Lobster and salad. Red pill and blue pill. The depth of Wonderland’s rabbit-hole and ignorance. I’ve never really gotten sick since I realized the medical industry kills people. Telling people that truth is the best incentive to reduce health care… Read more »

Gertrude S
Guest

Mr. pel, you know, I was afraid that using personal illustration instead of some kind of parable would bring this digression. Here goes: My policy with a $5,000 deductible, the most affordable that I could find a few years ago, through AARP, was about $5,500 per year. (60 years old, surgery in ’06 and another issue). That’s about a quarter of my gross income as a self-employed caregiver. I was handling that, but the deductible on the tests that I perhaps foolishly had without first knowing the cost were too much too handle. I know I should have not let… Read more »

Barry Carol
Guest
Barry Carol

I also like the Federal Health Board concept for developing insurance coverage decisions based on comparative effectiveness and cost-effectiveness. We need to recognize that resources are finite and we can’t afford to give everything to everyone. At the same time, if people choose to spend their own money on treatments deemed not cost-effective, that should be their prerogative. The challenge will be to insulate the FHB as much as possible from political influence. That all said, I don’t feel at all comfortable with rationing by age. At the same time, I would like to see the default protocol in end… Read more »

J Bean
Guest
J Bean

There was a study a few years ago about patient satisfaction and the number of tests ordered. I’m too lazy to look it up, but the bottom line was more tests equaled more satisfaction. I used to be kind of self-righteous about not ordering unnecessary tests, but now I measure cost against reassurance. In some ways I think its fraud; many people interpret a normal “metabolic panel” as assurance that “I don’t have any cancers”, but if I don’t order an x-ray or a blood test or provide a prescription they will often leave my office feeling that they didn’t… Read more »

pel
Guest
pel

> First, I challenge any uninsured person like me to try to get an appointment with a primary care physician, or a specialist for that matter, with cash in their hand to pay, but no insurance policy. Come on, that’s a little far fetched. I’m in Texas and there are plenty of reputable doctors and clinics in the area who take cash. Specialists might be more of a battle, but with enough cash and fees negotiated up front, I can’t imagine their “business” office giving an outright refusal. The health care blue book might be a good starting point for… Read more »

Gertrude S
Guest

Here is a third category of cost multiplier. The example is my own situation. I am a state licensed CNA now working as a home health care worker. I enjoy this work, and I work on a self-employed, 1099 basis. I make two-thirds of minimum wage for 24-hour days. The rationalization for that is that I must be sleeping eight hours, although I do need to sleep where I can hear my client if there’s a problem. Under my category of work, I am not entitled to overtime. I report my income, pay self employment social security, and carry a… Read more »