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What if They Had Had to Pay?

A true story, with changes made to protect privacy.  An 89-year-old man with dementia, a heart condition, and other serious medical conditions fell in his Arizona apartment and broke his hip.  His children, wanting the best possible care, arranged for him to be air-lifted to New York.  There, the orthopaedic surgeon advised them that the chance of their father surviving hip surgery was very low, but he would do as the family wished.  The man’s three children could not agree.  Two would have avoided the surgery, but a third felt very strongly that everything that could be done for the father should be done.  The other siblings, out of guilt and respect for the third, acceded.  The surgery took place, and the father spent three days in the ICU before his heart gave out.

Here’s the terrible and hard-hearted question I pose:  If the costs of this procedure and hospitalization had not been covered by Medicare, would the man’s children have proceeded along the chosen path?  I am guessing not.  I don’t know the total bill incurred, but it was certainly in the range of tens of thousands of dollars.

In the US, we don’t have a good societal process for making these decisions.  In the United Kingdom, though, they do, as reported by Bob Wachter in a recent blog post.  Here are some excerpts:

[D]uring my six months on sabbatical in London, when I asked British physicians or hospital administrators who have spent time in the US about their main impression of our healthcare system, I nearly always heard some version of, “You people don’t know how to say no to anything.”

In the UK, they have built an organization that makes these tough decisions: the National Institute for Health and Clinical Excellence (NICE). I was lucky enough to spend several hours with its leaders last week in the organization’s London headquarters. NICE is awesome, not just for what it does, but for what its existence says about the maturity of the British political system when it comes to healthcare.

I asked Sir Michael [Sir Michael Rawlins, NICE’s founding chairman] what it was about the culture of the British people and the NHS that allowed NICE to function, when America has such problems saying, and accepting, a forthright “no.”

“The man on the street gets it,” he replied. “They know that there is a finite amount of money. And politicians get it as well — they know that someone is going to have to make these tough decisions, and they’d rather it be us than them.”

Imagine that.

Bob concludes:

Decisions over setting limits are invariably wrenching, but our failure to create a transparent way to make these decisions just means that rationing occurs implicitly  and haphazardly.

Ultimately, silly season will end, our society will come to grips with the need to choose, and we will begin looking for a method of making these thorny decisions. When that day comes, it’s nice to know that we have a model to learn from.

Paul Levy is the former President and CEO of Beth Israel Deconess Medical Center in Boston. For the past five years he blogged about his experiences in an online journal, Running a Hospital. He now writes as an advocate for patient-centered care, eliminating preventable harm, transparency of clinical outcomes, and front-line driven process improvement at Not Running a Hospital.

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burberry bagsretired RNGreg ParksteveMargalit Gur-Arie Recent comment authors
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burberry bags
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B2B contains two settings qu burberry outlet ite simply, people are any business interaction involving small businesses precisely (for instance the auto maker’s internet purchasing an internet-based flexible, etcIt includes eight bands and also Three multiple grips Applying the following molluscum contagiosum cure c

retired RN
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retired RN

I’m retired after 46 years experience in acute care hospitals. I started before any medicare/medicaid and very few hospitals outside of teaching hospitals had ICUs. There are several elephants in the room: 1. EMTALA is the first big elephant–EVERY hospital has unpaid, unrecoverable costs–even small single community hospitals with no ER. EMTALA requires every hospital that gets ANY federal funds to treat ALL emergency patients. We even take care of dialysis patients who are brought over by family when dialysis is direly needed–there is only paid dialysis in Mexico. We also get trauma patients who are delivered by Mexican ambulance/cab.… Read more »

Greg Park
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Greg Park

Gentlemen, The discussion to date regarding healthcare pricing has been excellent, but it represents one half of the conversation. The other half is the 10,000lb elephant that everyone wants to ignore. Deep seated emotions, especially fear, are the most hard to change. Death for many is their greatest fear. In our society death is the ultimate ending. It is the worst, and coincidentally last, event we endure. Even for those with “faith”, death is an event that is tremendously feared and avoided. Right, who wants to die? No one of course, but is death truely the worst event in life?… Read more »

SJ Motew, MD
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SJ Motew, MD

150% of Medicare, guaranteed for all my patients…..count me in!

Bob Hertz
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To Nate Ogden — I know that some bloggers consider you a pain in posterior, and sometimes I do too…..but your post this morning about the repulsive prices posted by hospitals for not-so-major surgeries , and the almost-as-repulsive prices paid by some PPO insurers, was terrific! All prior disagreements are profoundly forgiven! at least by me. What if we had a President who actually understood health care price gouging? He or she would go on camera, hold up a bloated hospital bill, and put a cigarette lighter to it. He would add a comment on the salaries paid to administrators,… Read more »

Nate Ogden
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Nate Ogden

As much as I would love to see this solved tomorrow on a national level I have set my goals much lower.

If the attorney general of any State(s) would apply the usery or current consumer protection laws we could accomplish the end result pretty quick and possibly without the need for new legislation.

That and a positive judgement in State CA v Multiplan(PHCS) & Sutter Health could also put an end to the PPO BS real quick

steve
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steve

Using big government to control prices? Consumer protection laws? 🙂

Steve

Barry Carol
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Barry Carol

“Unfortunately, true costing of medical care lacks standardization and consistency. As allocation of admin, plant, personnel etc. gets better, maybe someday we can see true costs.” If payers, especially CMS, are going to treat hospitals as heavily regulated utilities, it could require allocation of indirect costs to individual clinical departments to be done in a consistent manner whereas right now, everyone does it somewhat differently. Regulators, at least within a state, require consistent cost allocation approaches for electric and gas utilities. There is no reason why hospitals couldn’t be required to do it in a consistent manner as well. An… Read more »

sr
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sr

As much as the discussion over economics and rationing is important for us to have in this country, I hope I’m not the only one who is concerned about the poor patient who probably spent his last days either unconscious (if he’s lucky) or uncomfortable in an unpleasant setting with a tube down his nose or mouth and his extremities restrained. And his family also didn’t have a good experience, with children squabbling over how best to care for their father. Family relationships are often complicated – it’s not good for patients or their families for long-standing conflict and guilt… Read more »

SJ Motew, MD
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SJ Motew, MD

Although not directly related to the original posting here, which to my interpretation is where the responsibility sits for determining appropriate utilization of limited resources, Nate is right on the money with the last post. Unfortunately, true costing of medical care lacks standardization and consistency. As allocation of admin, plant, personnel etc. gets better, maybe someday we can see true costs. From the perspective of the provider, you betcha that a cost + 50% would be acceptable. What we are really looking at is good old cost-shifting. Charge-masters are nothing but numbers, no one pays this except the rare (and… Read more »

Nate Ogden
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Nate Ogden

cost of inpatient care doesn’t really matter either, that’s not the problem, its billed charges of inpatient or any hospital care. Problem with Hospital charges is Administrator/CEO hubris, thinking they can get away with charging what they do, and our system that has allowed it. Two recent examples; Outpatient Endoscopic polypectomy Billed Charges $20,512.09 PPO Allowed $11,987.00 42% “discount” most people would look at that number and think they got a great deal. Medicare Allowable $879.11 Luckily this client has a plan that limits UCR to hospitals cost plus a 12% markup. We paid them $1,205.82 According to the hospital… Read more »

rbaer
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rbaer

As I said above: overcompensation does TRIGGER procedures that involve costly hospitalizations and device use.

Margalit Gur-Arie
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Wow, Nate! Remind me again, why are we opposed to price controls, like Maryland has in place? Or are we not opposed?

Nate Ogden
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Nate Ogden

Price controls don’t work, see Greece and the article I posted on the collapse of their pharmacies. We have price contols on Milk and other staples and they don’t lead to efficient markets. Great way for politicians to extract money but not so good for the public.

steve
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steve

Work well in Japan and most other OECD countries. Those are usually prices negotiated by the providers with the state.

Steve

SJ Motew, MD
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SJ Motew, MD

rbaer, southern

Without reopening the baseless physician reimbursement differential argument, physician fees are NOT the main driver of costs for inpatient care….by a long shot. While decreasing surgeon reimbursement might drop utilization in the short-term, the cost drivers remain devices, drugs and days (length of stay).

For example, complex ruptured aortic aneurysm repair with endograft , my reimbursement about $1000…compared to device: $25000, 10-20 days hospital stay with ICU care $80-100k…now of course this is all bundled into DRG, but with complexities still drives actual cost to payer to $20-30k range minimum.

southern doc
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southern doc

Agree that physician surgical fees do not contribute significantly to costs during the last year of life. But diagnostic and treatment procedures do (along with drugs and equipment). The same downward pressure needs to be applied to these that has already been applied to physicians’ fees.

rbaer
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rbaer

That’s arguable (I believe I read estimates of about 3%, which still is substantial money) but overcompensation does TRIGGER procedures that involve costly hospitalizations and device use.

southern doc
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southern doc

That’s why there’s a “heart center” on every corner. A small amount of the money from unnecessary stenting is going to the docs, but the hospitals that collect the bulk of the payments are raking it in hand over fist.

Nate Ogden
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Nate Ogden

global budgets and public insurers and health all look great on paper, this is how they turn out once implemented though;

http://www.bloomberg.com/news/2012-01-10/greek-crisis-has-pharmacists-pleading-for-aspirin-as-drug-supply-dries-up.html

For all the faults with our system at least we can delivery asprin effectivly

Bob Hertz
Guest

Your comments take us right back to the difficulty of having a complex and graded fee schedule. The hospitals who do high-priced procedures probably make a lot of money. ICU beds probably make a lot of money. My own little goal has been to challenge the graded fee schedule. According to Joseph White in Competing Solutions, the Germans controlled hospital costs by paying flat per diems. If the nation’s hospitals exceeded the budget toward the end of a fiscal year, all reimbursements were reduced to 10% or 20% of normal. At some point America will get real about cost control… Read more »

rbaer
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rbaer

It’s simply that the current fee schedule favors procedures/surgery – doctors as well as hospitals earn quite well. Make e.g. back surgery paid roughly as well as an office visit with a surgeon (some adjustment for intensity/risk of care and expertise is needed), and all that unnecessary back surgery will go away. That does not mean that you won’t be able to find a surgeon to treat your clearly needed cauda equina syndrome, or appedicitis, for that matter. A great share of systemic medical problems would disappear by making reasonable and gradual adjustments to the medicare fee schedule. This problem… Read more »

southern doc
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southern doc

Exactly! The problem isn’t fee for service, it’s the distortions in our FFS schedule that we refuse to correct.

Barry Carol
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Barry Carol

Bob – I don’t have any clinical experience either. I’m a recently retired finance guy who covered the managed care insurers, drug retailers and PBM’s as part of my responsibilities. In a recent Brookings Institution primer on the premium support model for Medicare, it stated that approximately 25% of Medicare’s costs are for care in the last year of life. I note that we often can’t tell ahead of time that a particular patient will die within a year of getting care, but end of life care, much of which is in fact wasteful, futile or otherwise inappropriate, is a… Read more »

MD as HELL
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MD as HELL

Where does the $30 million come from? Will that go up or down next year? Will it be like the military and get cut if you don’t spend it? Who gets to hold the money, the CEO or the Chief of Staff? How much will be allowed for Profit? Who pays for care out of your home area? What about the cocaine addict on dialysis? What about all the discretionary care like schoolo health and disability money? Who gets to say no?

Bob Hertz
Guest

I appreciate the comments by Barry and Paul. I have run an insurance agency but I certainly have never run a hospital or a clinic, so I may in fact have idealized global budgets. Barry’s post does lead me to ask the following question: Other than the use of overpriced drugs, why is any particular patient more expensive than another? My father was tremendously weak in his last month in the hospital, and needed a lot of nurses— but they were already on the payroll at the VA. The 89 year old in Paul’s example needed hip surgery, which is… Read more »

steve
Guest
steve

Many physicians are not on the payroll. Medical devices are very expensive. At present, a hospital bills for everything, even if their docs are employed. On a global budget, people then aim to work less for the same amount of money. What we do at my hospital then, is to incentivize docs to do enough cases, but that leads back to the same problem.

Steve