Uncategorized

There Are Buoys: The Real Path to Lower cost in the Coming Catastrophic Deformation of Healthcare

There are buoys, far out in the ocean, that bob in the waves and signal, through satellites, when the surf will rise at Mavericks on the California coast, or when the tsunami will hit.

Here comes.

Healthcare in the U.S. is a hollow economy, inflated, impossible, all over patches and gimcracks and work-arounds puffed up on clouds of hot air generated by sweaty, dedicated crews of policy panjandrums and podium pundits burning forests of acronyms. True, that’s just looking at the bad side. But this bad side goes all the way around.

Will it pop? Will it undergo catastrophic exothermal deformation? Is it the Hindenburg nearing Lakehurst? This could be.

Look, this is the 21st Century. Whatever its name, catastrophic deformation, restructuring, “disruption,” or “creative destruction,” this is normal for businesses, industries, entire sectors. We have talked and whined and freaked out about massive change in healthcare since we had a peanut farmer in the Oval Office, and it hasn’t happened. Not really. Trust me, I was there, I watched it not happen. Nothing like the video stores, big-box malls, and Fotomats whose husks litter the landscape like the yonquerías of Baja. Nothing like Eastern Airlines, Western Airlines (“The only way to fly”), Northwest Airlines, Pacific Southwest with its dayglo go-go-booted stews, PanAm, and all the others whose logos adorn the Electras, L-1011s, 727s and Constellations parked wingtip to wingtip in the Mojave.

Healthcare has planetary inertia, gas giant inertia. It snacks on cost-cutting schemes like DRGs and Certificate of Need commissions and just gets bigger. It downs slices of GDP — 12 percent, 15, 18, 19 — and just gets bigger. Right through recessions, reforms, budget cuts. It’s Hungry Mungry. Its extraordinary resistance to deep transformation, compared to other industries and sectors, makes us ask why. What is holding it together? And makes us ask: What would do it? What would puncture this hollow, makeshift gas envelope? 

Today U.S. healthcare at $3.7 trillion is the largest business sector in the history of business sectors. If it were a country on its own it would be the fifth largest economy on the planet. The inflation rate of National Medical Expenditures is trending up, not down. Prices make no sense. Actual prices paid for the same procedure or test can be two, three, five, even 10 times greater across town or even across the street. U.S. healthcare wastes more than $1 trillion every year on overtreatment, doing complex, expensive procedures that don’t help, are not medically indicated, are not necessary, but are well paid.

But things have changed.

In 2012 I published Healthcare Beyond Reform: Doing It Right For Half The Cost, about how we could do healthcare for everyone in the country (not just the lucky) for half or less in constant dollars, in per capita expenditures, in percent of GDP, any way you want to measure it. In 2015 I published Getting What We Pay For: A Handbook for Healthcare Revolutionaries, with more detail and specificity about how to do healthcare for everyone in the country (not just the lucky) for half or less.

I haven’t changed my mind. Maybe I’m an extraordinarily far-seeing thinker with a long time span. Maybe I’m a loony optimism junky, a contrary contrarian. I don’t know. Ask my shrink when I get one.

But here’s what I believe: Today healthcare is where the film camera industry was in 1999, six years before Kodak blew up its factories in Rochester. It’s where cars with internal combustion engines and human drivers are today, on the edge of becoming relics and special-application vehicles. In 10 years healthcare will be unrecognizable, from its therapies to its workflows, from its physical plants to its technologies and especially to its economics. Any payer strategy which brings real market forces to bear, in which buyers, payers and consumers force providers to actually compete on appropriateness, on price, and on quality as in any other industry will bring the hammer down, will collapse those lunatic price spreads and wipe out the unnecessary, wasteful practices. The result will be a healthcare economy something like half its present size serving everyone (not just the lucky).

What are the buoys? What signals?

Let’s start with a lawsuit, not because it is a harbinger of the solution but because it well describes the problem.

Last month California Attorney General Xavier Becerra sued Sutter Health, a large hospital chain in Northern California, alleging (in the words of the L.A. Times) that Sutter Health “engaged in ‘anticompetitive contractual practices’ and that it charged prices for hospital healthcare services that far exceed what the company would have been able to charge in a competitive market.”

The suit cites a 2016 study published in the Journal of Health Care Organization, Provision and Financing that showed that actual prices paid at Sutter and Dignity Health, the other largest system in Northern California, were 25 percent higher than elsewhere in the state, raking in $4000 more per admission. A report by UC Berkeley researchers issued just two months ago pegs the difference at 30 percent. According to the Times, “Becerra cited the Berkeley study, which said the average patient hospital procedure in Northern California, $223,278, exceeded that in Southern California, $131,586, by more than $90,000.”

Thirty percent higher. Ninety thousand more.

Those are big numbers. As Kaiser Health News put it in their report on the 2016 study, “Hospital chains that buy up other facilities, clinics and physician offices often tout savings and improved services from coordinating patient care and eliminating inefficiencies. The researchers found no evidence that any potential savings were being passed along to the employers, insurers and patients who pay for the care.”

No evidence.

Both Sutter and Dignity disputed every aspect of the 2016 study, according to KHN. Dignity, for instance, said “a number of factors affect its prices for commercially insured patients. It cited high labor costs, the need to pay for state-mandated seismic upgrades and the expense of treating a rapidly growing Medicaid population in California.”

Southern California, it should be noted, does not have 25 to 30 percent lower labor costs, fewer earthquakes, lower seismic standards, or fewer poor people than Northern California, nor is there any difference in state regulations. There is only one difference according to multiple studies: Market concentration.

It’s right there on the frozen juice can: Concentrate

How’s that work? Consider what you go through to buy a car, a house, a breakfast burrito, or some toenail clippers. You know what you want: A four-bedroom McMansion, maybe, within a 45 minute commute. You know roughly how much you are willing to pay: No, I won’t pay $400 for toenail clippers. Don’t be silly. Or even $15. A couple of bucks, tops. You know or can easily find out what different places will charge for that car, locally or online, however you want it. There are plenty of places willing to supply what you want. Nothing constrains your choice. It’s perfectly legal to pick up that breakfast burrito at any of a dozen different places along your commute route.

That’s how capitalism is supposed to work. The end user makes (or at least influences) the choice, has options to choose between, and has plenty of information to power that choice. Buyers with choice, options, and information: Constrain any one of those and costs can go kablooey. Market concentration allows the seller to constrain all three.

How’s that work in healthcare markets? It’s complicated, but here’s the 101-level 411. Health systems do have a lot of Medicaid patients, Medicare patients, and “dual eligible” (Medicare + Medicaid). These two often account for a majority of charges (though not necessarily a majority of patients, because the Medicare patients are older and the Medicaid patients often sicker than average). Then they also have the private pay patients, with Blue Cross or other insurance. And some that fall outside all of those systems. Most big employers are “self-funded,” that is, rather than pay an insurance premium they pay the actual costs of their employees’ medical care—but they still pay through the insurance company at the rates the insurers are able to negotiate.

Typically, reimbursement for Medicaid patients are thought to come in at something like the system’s costs (though not the cost to produce any particular baby, tumor excision, or valve replacement, since most systems do not know their “total cost of ownership” of any particular product). Private insurance pays considerably more, and Medicare somewhere in between. Medicare and Medicaid reimbursements are more or less dictated by the federal and state governments, respectively.

Choose your strategy

So a healthcare system has a strategic choice to make. Some take the hard way. The combination of Community Medical Centers and Santé Health Foundation is centered in Fresno, California. It has a territory that somewhat overlaps that of Sutter, and it has a higher than usual concentration of Medicaid patients and uninsured, especially the agricultural workers of the Central Valley. CEO Tim Joslin will tell you (as he told me) that a decade or more ago they set a goal. If they were to survive they needed to get all of their actual costs low enough that they could survive at the Medicaid reimbursement level.

This is long and difficult work. He says they have more or less accomplished this, which has allowed them to grow, to add more services, open new departments, new clinical lines, to serve the people of the Central Valley better.

Others take the opposite path: “If we are to survive, we have to grow so that we have really significant market power throughout our area and can charge higher prices to the private payers: the insurers, employers, unions and pension plans.”

Look at this from the point of view of the insurer, in effect the buyer’s agent. You are selling people access to doctors, clinics, hospitals, and other medical services. In order to compete, you have to put together networks of such providers in every area that you cover. In some counties, you just can’t do that without one or both of the biggest chains of providers. So you say to one of these big chains, “Let’s negotiate so that we can include these particular hospitals and these medical practices in the network that we can offer our customers.” But the big system says, “No, if you want those, you have to contract for our entire system, every service, even in areas where we have more competition. And you have to not include anyone who might undercut us. That’s the deal, take it or leave it.” And the other big chains say the same thing. It’s “all or nothing.”

So you’re stuck. You can offer your customers access to medicine, but not the power of choice and options to exercise that power. Nor can you offer them information. Such contracts often include “gag clauses” specifically designed to prevent the buyers or end users from knowing how much a procedure or test is going to cost, let alone attempting to negotiate a price.

So the seller (the big medical chains) can constrain your ability to choose, the options you have to choose among, and the information you might use to do the choosing. And the market fails. There is no way for the buyers and sellers of healthcare to discover what is the true “market price.”

Wasn’t Obamacare supposed to keep costs down? The core strategy of Obamacare was (and is) to promote competition between insurers: Get more insurers fighting for market share. They win by putting together networks of medical providers and services who are willing to work for less. You can’t do that when the medical providers bulk up and say, “All or nothing.” The core cost-cutting strategy of Obamacare was wrongly conceived.

The battle cry for the healthcare industry all this time has been “value purchasing,” that is, “We need to allow the customer to buy on value.” What a concept, like the title of my book, we could “get what we pay for” in healthcare. But the action has mostly been confined to lip service. The actions of the industry have mostly been to fiddle around with little doodads and folderols like quality payments forced on them by the federal government (which can amount to a few percentage points of total payments) while consolidating massively to keep their prices up, rather than offering real competition between providers on price and quality, offering customers an array of options with an array of prices, the legal and practical ability to choose between them, and the information they need to make the choice. 

The Shape of the Wave

What is the shape of this tsunami? What are the signals we are getting from the buoys?

  

Angry consumers: With deductibles climbing ever higher, even insured consumers are taking more of the burden. Getting billed $937 when you take your tot’s bleeding “this little piggie” toe cut to Emergency, you get angry, aware, and open to new solutions. And this repeats over and over, every day, all across the land, to pretty much every consumer and every voter.

Damaged ACA: The Republicans eight-year drive to “repeal and replace” Obamacare evaporated with a whimper. But they are still managing to bite big chunks out of it by removing the penalty for not having insurance and other administrative changes, all of which tend to drive healthy people out of market and leave it increasingly to the older and sicker. This drives up the insurance costs for those who stay insured. With fewer healthy people signing up, we will see premiums and deductibles continue to go up by double digits every year. Again, voters get angrier and open to anyone who is promising new solutions.

Smart politicians: Beating up on Big Med is becoming politically smart again, as in Becerra’s suit. We will see more legal actions like California’s, and other political attempts to outlaw “all or nothing,” gag rules, and other specific anti-competitive practices that make consolidation so profitable for medical providers.

Angry employers: In 2014, the year Obamacare came into play, some 21% of employers said that rising healthcare costs were a big problem for their business. By last year that had risen to 44%. That’s a big rise in three years. These big buyers are increasingly fed up. They are not idiots, they know that they are being played, and they are increasingly aware that they, too, have market power. Did you wonder what Amazon, Berkshire Hathaway and JP Morgan Chase meant when they announced a few months back that they are forming a new business to build their own healthcare system? This. They will have the market power to go directly to medical services in the markets in which they have a lot of employees and say, “You want these tens of thousands of cases? What will you bid?”

They can use strategies such as reference pricing, bundled payments and medical tourism to force medical providers to compete on price and quality. If you’re a big employer in Alameda County, California and your employee needs a new knee, the average cost to you works out to about $52,000. Promise the employee a $2,000 bonus, no co-pay, all travel costs paid, and a free week’s vacation while recovering on the beach in Los Cabos, Mexico, and the total cost to you the employer will be something like $15,000. Because the cost for the total knee replacement at H+, the best hospital in Los Cabos, is about $9,500 all in.

In creating real competition, big buyers are good, bundles of big buyers even better. But won’t this only serve those big employers? Won’t the medical systems just carve out special deals for them and go on their merry way raising prices on everyone else? No. Here’s why: There is a problem for hospital systems treating these deals as one-offs and loss leaders, because these are typically their most profitable cases. And if the strategy works for the biggest employers and bundles of buyers, others will flock to the strategy, consultants will set up shop showing them how to do it, new combines will be born, and soon the hospital systems will find that they have to compete on the same basis for a significant chunk of the most profitable cases.

When that happens to you, you can’t treat these as one-off deals, you have to change your whole pricing structure. To change your whole pricing structure you have to seriously engage in the long, detailed, life-changing struggle to drive down your own internal costs. The changes you have to make to really get your costs down are systemic. It is not possible to change your workflows and technologies just to accommodate just some specific customers. You have to make your whole system more efficient.

New market entrants: Pissed-off customers and big buyers are already attracting new providers that do business in different ways. This includes new primary chains such as Xoom, Iora, One Medical, and Chen Medical; super-primary chains such as ReadyMed which offer some services such as emergency services, infusion and overnight stays, that go beyond primary care; free-standing Emergency Services that do the same, and other types of specialty services with standing advertised bundled prices and warranties (“We’ll do it until it’s done right.”).

This is why we are seeing OWAs (other weird arrangements) unlike any we have seen before, such as the merger of CVS and Aetna, of Wal-Mart and Humana, of CIGNA and Express Scripts. These are all attempts to break up the market differently, to penetrate the economic wall.

Your own medical record, real, digital and free: We have been building digital systems in healthcare since the late 1980s, and the entire industry has been mandated to digitize since 2009. In all that rush to digitize the legacy healthcare IT companies have done everything they can to help the healthcare providers make all that information—including your medical records—unreadable by anyone else, all as part of their strategy to build and keep market share. Since 1996 by federal law you must be given access to your medical records on demand. Since 1996 the major industry practice has been to impede that access every way they can by delivering them only on paper (You ever wonder why healthcare is the last bastion of the fax machine? This.), in coded language that is unintelligible not only to you but even to other doctors, and in ways that cannot be searched by other medical practitioners.

That’s toast. The Trump Administration, which so far has not brought a single action to help consumers and has done everything it can to reverse previous administrations’ rules, is to the amazement and wonder of all bringing out the whoop-ass on this one. Seema Verma, the administrator of the Centers for Medicare and Medicaid Services, showed up at HIMMS, the massive 40,000-person healthcare IT conference in Las Vegas last month, to announce that by January 1, 2019, every medical entity has to build the necessary interface so that you can download your medical records, written to industry standards and in language you can understand, any time you want to. She was introduced by Jared Kushner, then backed up by the Health and Human Services Secretary Alex Azar in a speech elsewhere.

Every entity. By next January. All other information-sharing rules under HIPAA are “may share” rules. This is the only “must share.” Unless the “Fox and Friends” morning hour policy gurus find a way to rail against this policy change and blame it on James Comey, this is going to happen.

Here’s the kicker: The federal medical privacy law (HIPAA, the Health Insurance Portability and Accountability Act of 1996) applies to all “covered entities” such as hospitals, doctors, and insurance companies. You are not a “covered entity.” It’s your medical record, your privacy, and you can do what you want with it, including giving your records to some competitor of theirs, a different insurance company or healthcare system across town or across the country. Such full information is so valuable to insurers to help guide your care less expensively (such as guiding you into a diabetes program or a prenatal program) that they may well pay you to give them full access to your records. System X has never shared information with System Y, but they both have to talk to you, and you can say, “Here you go. Take my information, please.” And the information walls in healthcare come tumbling down.

New tech: When you talk about the future of healthcare, people tend to think about new technologies, such as robotics, blockchain, artificial intelligence and machine learning, and the array of gadgets and implants that can connect the patient to the system in real time. Won’t these make the system more efficient and lower costs? Yes, absolutely, when the industry gets really focused on being more efficient because an enlivened market forces them to.

Not news

This is the path to lower-cost, higher-quality healthcare.

Why not just force the cost down by law? Single payer, or nationalized, or whatever, just say, “Stop that!” Because it doesn’t work. Lots of reasons and mechanisms, but see the above, look at the history of Hungry Mungry. Coercive laws, cost-cutting schemes, codifying reimbursements under Medicare, over and over again turn out to not be really coercive. Market forces are coercive. If the market finds ways to say, “Give us a better price or we will take our business elsewhere,” there is no argument, no lobbying, no rule-making that can stop it from forcing you to get better, faster, and cheaper at what you are doing.

Here’s something funny. None of this is news to the people who run these big systems. They are no dummies. They can see it coming. The CEOs and strategy teams of medical systems will acknowledge this in private. Their current strategies are delaying actions. They’re trying to build their market power, their capacity, and their financial reserves, against the inevitable. I asked one CEO when he was going to reduce the prices in his imaging center, which were four times the prices of the imaging center right across the highway. He said, “When I don’t get the volume.” When the market brings the hammer down. When the tsunami hits. When the metaphor of your choice collapses the hollow healthcare economy.

Livongo’s Post Ad Banner 728*90

Categories: Uncategorized

Tagged as:

34
Leave a Reply

12 Comment threads
22 Thread replies
1 Followers
 
Most reacted comment
Hottest comment thread
12 Comment authors
Bill SyrjalaDr. JimPesto SauceAllanPeter Recent comment authors
newest oldest most voted
Bill Syrjala
Guest
Bill Syrjala

Disruption is going to happen, but it will come from startups that are completely outside of the healthcare industry. In the same way that Uber “re-started” the transport-for-hire industry from complete scratch, because the taxi industry was too entrenched and corrupt. . Healthcare is the same way, and supposed disruptors like the new Bezos/Buffett startup aren’t getting it right – they are just automating a bad system, and making some improvements, but they aren’t fundamentally disrupting the current consumer health care use case. They will learn the same lesson that EHR vendors learned, and that IBM learned with their cancer… Read more »

Pesto Sauce
Member
Pesto Sauce

As a physician for 25 years, I’ve also been expecting a blow up but the walls keep getting reinforcements. The major thing I haven’t seen an honest accounting of WHY health costs are in the stratosphere. I will say that the hospital in Cabo doesn’t have the following expenses that we face in the USA– Ongoing compliance and audits/certificates with HIPPA, OSHA, JCAHO, STATE AND LOCAL REGS….BIOHAZARD DISPOSAL FEES, LICENSING AND CONTRACTS. CDC alerts, bioterrorism preparedness, mass casualty training. Maintenance of certification paid for all the specialists on staff. EMR training, licensing fees, subscription fees, and security. Lawyers, malpractice insurance,… Read more »

Allan
Member
Allan

Barry writes:”In most other areas of commerce, technological advances can increase the speed of products or processes, shrink their size, improve quality and reduce cost.” It should be similar to health care but top-down control generally produces the opposite effect. Leo writes: “ If we are going to have a collective direction in healthcare, it needs to come from the collective” I assume the collective being the individual. I think those two statements summarize the solution which is an economic solution based on the individual, not a political one which is what Obamacare was. No matter which way one chooses… Read more »

Barry Carol
Member
Barry Carol

In most other areas of commerce, technological advances can increase the speed of products or processes, shrink their size, improve quality and reduce cost. In healthcare, by contrast, new drugs and devices, along with improved surgical techniques, can lengthen lifespans and, hopefully, improve the quality of life as well. By lengthening life spans, though, it gives us more time to develop other diseases and conditions like Alzheimer’s and dementia which creates the need for possibly years of expensive custodial care when we can no longer care for ourselves. Sending cancer into remission gives it time to come back somewhere else.… Read more »

LeoHolmMD
Member
LeoHolmMD

Correct. If we are going to have a collective direction in healthcare, it needs to come from the collective, not industry. People in general do not want to suffer, do not want to be a burden on their families, and want to go quickly. Our healthcare system, as designed, is not aiming at, nor achieving these goals. So medical innovation does not necessarily need to be stopped, it just needs to become aligned with the publics general interest. So much is based on what “stakeholders” want. The problems and solution are industry centered, little to do with individual preferences or… Read more »

Barry Carol
Member
Barry Carol

There is some good news to report on the healthcare and health insurance cost front. From 2007-2018, Medicare’s Part B monthly premium increased only 43% to $134 which translates to a 3.3% annual compound growth rate. During the prior 12 years starting in 1995, Part B premiums approximately doubled which works out to about a 6% annual compound growth rate. There is a long term trend driving more and more care out of hospitals thanks to a combination of better drugs, less invasive surgical techniques, fewer infections, etc. resulting in a shorter average length of stay. Also, a lot of… Read more »

Peter
Member
Peter

Barry, if you’re saying this means revenue loss and svaings then I’ll argue the system has great resiliency finding ways to keep the dollars flowing.

Barry Carol
Member
Barry Carol

Peter, Medicaid spending growth per beneficiary has also slowed at least in part due to more states embracing managed care. Federal Medicaid spending is up less than 1% so far this fiscal year. Hospital inpatient beds per 1,000 people continue to shrink and the long term secular trend is down. Doctors seem to be getting more cost conscious as compared to 10 or 20 years ago. Most medical spending can’t happen unless a doctor admits a patient to a hospital, orders tests, prescribes drugs, refers a patient to a specialist or, of course, performs a service, test or procedure himself… Read more »

Peter
Member
Peter

“Most medical spending can’t happen unless a doctor admits a patient to a hospital, orders tests, prescribes drugs, refers a patient to a specialist or, of course, performs a service, test or procedure himself or herself. With more doctors now working as employees of large health systems and more hospital networks also getting into the health insurance business, there will be more pressure to control costs.” The only thing I’ve noticed with these huge monopoly hospital based health systems is increased prices geared to funneling patients to the mother ship. All tests, x-rays, MRIs etc go to the hospital system.… Read more »

Barry Carol
Member
Barry Carol

The big hope with Alzheimer’s and dementia is the development of new drugs though there have been a lot of failures and false starts so far. Even a drug that can delay the onset of the disease for 3-5 years would be a huge deal and a cure would be the holy grail of drug research.

pjnelson
Member
pjnelson

It is time to seriously recognize that the portion of our nation’s economy increasingly devoted to ‘health spending’ is eventually harmful to our nation’s stable autonomy within the world-wide market-place for its global Resources. In 1960, health spending represented 5% of our nation’s economy, its GDP. As of 2016, it was 18% of the national economy. As corrected for economic growth and inflation, the increase represents an increase in health spending as a portion of the GDP at an annually compounded rate of 5%. The portion of our economy applicable for health spending, no matter how its defined, represents a… Read more »

Joe Flower
Member

In this as in other posts in this thread, my principal reaction is to the use of “we,” as in Tonto’s famous if apocryphal riposte to the Lone Ranger, “What you mean ‘we,’ white man?” That is, who is the “we” that really controls this complex adaptive system? We have considerable experience with the inability of government at the federal or state level getting a whip hand over the cost increases, by all sorts of means tried across the system over the past four decades. Who is the “we”? Any suggestion that “we should” do this or that leaves me… Read more »

Peter
Member
Peter

Joe, you’re too optimistic about providers saying “we”, unless it’s the plural of “me”.

Imposed government price controls will be the only way to curb costs – not sure when that reality will take hold.

Joe Flower
Member

You have read my above comment completely backwards. My question stands: When someone says, “We must …” or “We should…” I have to ask, “Who is the ‘we’?” Certainly not the providers. And certainly not the government. We have profound and decades-long experience with the interaction between the government and providers over cost. It is tempting and easy to think that the government “should” impose price controls. But in the face of experience that goes back to 1983 and imposition of DRGs, the impotence of both federal and state governments to truly bring down real costs makes it clear that… Read more »

Peter
Member
Peter

Joe, this entire economy is “me” not “we”, but most other products can be done without or easily reduced – not so health care . To think that setting prices at Medicare rates will give us the same health care system is foolish by consumers – there will be pain, but it’s clear we won’t be able to get all we want when we want it. But either way consumers will loose, except “we” won’t go bankrupt.

Barry Carol
Member
Barry Carol

Joe – I don’t think the healthcare system needs massive new energy or new players. What it needs instead is cultural change specifically in the following four areas: Tort reform – We need to get medical disputes out of the hands of juries who can be easily swayed with emotional appeals by glib trial lawyers. We need health courts overseen by specialized judges with the power to hire neutral experts to sort through conflicting scientific claims. Doctors need safe harbor protection from failure to diagnose lawsuits if they follow evidence based guidelines and protocols where they exist. Then maybe the… Read more »

Joe Flower
Member

Those four are important. The first three would not get us to healthcare that costs half as much. The fourth is indeed a part of the solution, as the article pointed out.

Matthew Holt
Editor

Great article by Joe. But as fellow futurist Ian Morrrison says the benefit of being a futurist is that you never have to change your slides,,, I fear we will be able to run this in 10 years time without changing a word

Joe Flower
Member

That’s one vote in the “loony optimism junky” column!

Barry Carol
Member
Barry Carol

With respect to consolidation among providers, I like the idea that the big systems can afford electronic records so patients can more easily print out test results for their own records and to bring copies to other doctors and hospitals outside of the system that created them. On the other hand, I definitely don’t like the pressure that doctors who work within those systems feel to keep as much care as possible within the system whether it’s in the patient’s best interest or not. The rules around pricing leave a lot to be desired. A couple of months ago, I… Read more »

pjnelson
Member
pjnelson

The price controlled systems (as in Maryland) around the world increasingly suffer from the loss of system-wide investment in infra-structure and the elaborate use of queuing tactics to control demand, aka contemporary pre-authorization processes.

Barry Carol
Member
Barry Carol

Maryland’s all payer system was implemented in 1977. To make it happen at the time, Medicare and Medicaid each agreed to pay more than they were previously paying so private commercial insurers could pay less. That would most likely be a non-starter today if other states wanted to try it. Maryland’s system also only applies to hospital based care and not even all of that depending on whether or not care is delivered in regulated or unregulated space. It also hasn’t significantly reduced healthcare cost growth vs. other states as far as I can tell. The main virtue of Maryland’s… Read more »

Steve2
Member
Steve2

Screening colonoscopy at our hospital, not the surgicenter, is $1050, everything included.

Steve

Barry Carol
Member
Barry Carol

Steve2, that’s a very fair price. Could your hospital system make money based on Medicare rates from all comers and for all care with no uncompensated care? Could other hospital systems that you’re familiar with do so?

pjnelson
Member
pjnelson

For 2005 through 2014, the maternal mortality ratio of Maryland ranked 43 worst of the 50 States. For 2001-2006, they were 45th, and for 1987-96 they were 41st. Mean while, Alabama ranked, respectively 47th, 33rd, and 8th. Similarly, California experienced an improvement ranked respectively 38th, 35th and 5th. A nephew of mine is an anesthesiologist who retired from the Navy several years ago while stationed in Bethesda. He looked for a position in Maryland and Virginia. It was his observation that the hospitals were obviously constrained by their economic status in Maryland to a much higher degree as opposed to… Read more »

Dr. Jim
Member
Dr. Jim

“Most hospitals claim that they cannot cover their costs if they had to accept Medicare rates from all comers even with no uncompensated care”

If you think the stipulation that any revised system has to meet is that it has to cover the “costs” of the hospitals, then you don’t really want reform.

The cost structure, or claimed cost structure, of hospitals is an enormous barrier to reform.

Allan
Member
Allan

” revised system has to meet is that it has to cover the “costs” of the hospitals”

We neither know what actual costs are nor can we know what they should be.

Barry Carol
Member
Barry Carol

We need to be careful when we talk about costs. There are direct costs, indirect costs, fully allocated costs, and marginal costs among other costs. When hospitals consider closing a particular service line like labor and delivery to save money, there is going to be a big difference between fully allocated costs and escapable costs. Hospitals and doctors would probably claim that every service, test or procedure done for or to a patient is in compliance with the standard of care which, in the U.S., is probably more testing intensive than in other countries to reflect the litigiousness of our… Read more »

pjnelson
Member
pjnelson

For many years, I have anticipated that the healthcare tsunami will occur during the next recession. The last one began 10 years ago, they have occurred every 8 years since WWII. Its plausible that during the next recession, a hospital enterprise will need temporary financing for its cash flow. Unfortunately, its banker subsequently encountered liquidity problems and recalled the temporary loan causing the hospital to close its doors. Soon several other large hospitals will encounter the same scenario. With a degree of hysteria, the Federal government would enter on the basis of “Two big to fail.” THEN, change will happen… Read more »

William Palmer MD
Member
William Palmer MD

Joe, we appreciate your effort here and what you are trying to accomplish. You have to remember, though, that a true market actually has by definition many buyers and many sellers and that the prices are “taken” (meaning they are discovered by millions of votes from buyers and sellers as prices), not made (meaning dictated by price schedules from above.) Big buyers, i.e. monopsonies–can bring prices down but they have severe problems also. See any Econ macro text. It may be that there are so many mergers and groups already formed, and collusive provider and patient and insurer arrangements–already established–that… Read more »

LeoHolmMD
Member
LeoHolmMD

What marketplace are you talking about? The one all parties abhor and try to destroy at every opportunity? If there was a “market” ready to “bring a hammer down”, why has it not done so already? What is it waiting for, 25% of GDP? There is no way to suggest that hyperconsolidation produces anything resembling a marketplace. And the “other weird arrangements” you cite are even worse. They are just one massive industry colluding with another under an unregulated umbrella. You are mistaking the illusion of a marketplace for what is actually occurring: state capitalism. It is one of the… Read more »

Steve2
Member
Steve2

” by January 1, 2019, every medical entity has to build the necessary interface so that you can download your medical records”

Wow! That is very little time.Trying to do that while addressing security concerns probably means major problems. This is the kind of big government that just sucks.

Steve

Joe Flower
Member

As I understand it, this is not a sudden new demand but a finalization of an Obama-era rule arising out of the ACA and the HiTech Act. The industry has been hanging back anticipating that this anti-regulation administration might delay it again or even let everyone off the hook. But Verma and Azar have come out and said flatly that time is up, you’ve got to do it.

Dr. Jim
Member
Dr. Jim

“by January 1, 2019, every medical entity has to build the necessary interface so that you can download your medical records”

Once they get the automatic upcoding out of the way, that should be a snap.