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Category: The Vault

Physicians Aren’t Driving Up Health Care Costs

Recent interest in variability of cost for medical procedures is justified and long overdue. In an article in the New York Times on June 2, 2013, “The $2.7 Trillion Medical Bill,” Elizabeth Rosenthal writes from the point of view of a patient who has received a bill for colonoscopy. She then researches costs of the procedure in a number of markets in the U.S., finding a range of pricing from an average of $1,185 to a high of $8,577. There is an implication within this article that “doctors” are charging these prices. The truth is that physicians are often pawns in much larger negotiations among other entities.

While charges for procedures performed in an office setting or practice-owned ambulatory surgical center (ASC) are largely under the control of physicians, many of the highest prices come from hospital owned facilities — an area that is not at all controlled by physicians.

I called the lead negotiator for payor contracts at my institution and asked him about price variability for colonoscopy. It was clear from my conversation that the current arguments about colonoscopy price variation miss some key components. We need to better explore the true drivers of price variation.Continue reading…

Letting the Data Speak: On Refusing Medicaid Expansion

Robert Pear wrote in the Times that the refusal by “states to expand Medicaid will leave millions of poor people ineligible for government-subsidized health insurance…[1]” Indeed, the refusals will do that, as well as worsen what instead should be remedied. In the following I present a graph of two chronic diseases over the 50 states. Those states which have opted out of the Medicaid expansion are identified. Additionally each state’s poverty rate is indicated. The take-away is that populations in greater need are being further disadvantaged. A conjecture is presented as to why.

Please understand that refusal to expand Medicaid is not about state expenditures. Over the ten years, 2013-2022, every state would gain far more than it would spend for expansion [2]. Were all states to opt-in, the total ROI for the states combined would be almost 10,000% ($8 billion state expenditures in return for $800 billion federal).

Empirically health is associated with income, so if you’re poor you’ll likely have worse health. Also it’s well known that chronic conditions are often comorbid, that if you have a chronic disease, you probably have more than one. Additionally, chronic disease is a major contributor to total health care costs. Continue reading…

Testing Wisely

I remember going to see the movie “Oliver” in the theater when I was a kid.  Since this was my first movie in a theater, my mom made me a treat: a bag full of raisins and chocolate chips (Raisinets for Dutch people) and sent me there with my sister.  It was a fine film, with Oliver getting kicked out of the orphanage when he wanted more gruel, the dastardly Bill Sykes threatening Oliver and sweet Nancy, the funny and clever artful dodger and Fagan teaching Oliver about life on the street, and with (spoiler alert!) good overcoming evil in the end Oliver getting adopted by a rich dude so he can get all the gruel (or real Raisinets) that he wanted.  And though my memories of the movie are still vivid, my strongest memory was the look on my sister’s face when I walked out of the theater covered with melted chocolate chip goo.  It went into family lore (and wouldn’t have happened if they had sprung for Rasinets, I might add).  I think they still don’t trust me with chocolate chips.

The key line in the film comes when Oliver loses a bet and goes up to the gruel-master and says: “Please Sir, I want some more.”  Which, as I am sure Oliver expected, causes the gruel-master to break into the song, “Oliver! Oliver! Never before has a boy wanted more!” and the whole dining hall to pull out musical instruments and singing harmony to the gruel-master’s admonition.

I can see why Oliver was scared.  A whipping is welcome compared to his whole world breaking into song and dance.

Asking for “more” has caused trouble over the ages.  Adam and Eve wanted more food choices, the people of Pompeii wanted more mountain-side housing, Napoleon and Adolph Hitler wanted to spend more time in Russia, and America wanted more of the Kardashians. We can all see what destruction those desires reaped.

Americans have been viewing health care the same way, always wanting more: more antibiotics, more technology, more robots doing more surgery, more expensive treatments for more diseases.  The result: health care costs more in America than anywhere else.  Some folks think that our “more” approach makes our health care “the best in the world,” after all, where else can you get so many tests just by asking.  MRI’s for back pain, x-rays for coughs, blood tests for anyone who dons the door of the ER.  ”Tests for everyone!” shouts the bartender. “Tests are on the house! ”

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Misunderstanding Oregon

Much has already been written about the Oregon Medicaid study that just came out in the New England Journal of Medicine. Unfortunately, the vast majority is reflex, rather than reflection.  The study seems to serve as a Rorschach test of sorts, confirming people’s biases about whether Medicaid is “good” or “bad”.

The proponents of Medicaid point to all the ways in which Medicaid seems to help those who were enrolled – and the critics point to all the ways in which it didn’t.  But, if we take a step back to read the study carefully and think about what it teaches us, there is a lot to learn.

Here is a brief, and inadequate, summary (you should really read the study):  In 2008, Oregon used a lottery system to give a set of uninsured people access to Medicaid.  This essentially gave Kate Baicker and her colleagues a natural experiment to study the effects of being on Medicaid.

Those who won the lottery and gained access were compared to a control group who participated in the lottery but weren’t selected.  Opportunities to conduct such an experiment are rare and represent the gold standard for studying the effect of anything (e.g. Medicaid) on anything (like health outcomes).

Two years after enrollment, Baicker and colleagues examined what happened to people who got Medicaid versus those who remained uninsured.  There are six main findings from the study.  Compared to people who did not receive Medicaid coverage:

  1. People with Medicaid used more healthcare services – more doctor visits, more medications and even a few more ER visits and hospitalizations, though these last two were not statistically significant.
  2. People with Medicaid were more likely to get lots of tests – some of them probably good (cholesterol screening, Pap smears, mammograms) and some of them, probably bad (PSA tests).
  3. People with Medicaid, therefore, not surprisingly, spent more money on healthcare overall.
  4. Continue reading…

The ACO Failure Hypothesis: Likely But Not Inevitable

We recently participated in a program at Columbia Business School’s Healthcare Program on whether ACOs (Accountable Care Organizations) will fail. For those of you that don’t know, ACOs are one of the structures promulgated by PPACA (aka Obamacare) designed to encourage better cost control and quality improvement in the healthcare system.

The current zeitgeist among the commentariat is that ACOs will fail (examples: here and here). We think the reason for the one-sided nature of the question is that those of us who lived through the healthcare upheaval in the early and mid “90s” saw first hand the failure of PHOs, PPMs and IDNs (and all of the other acronyms now relegated to the dustbin of history). When ACOs are touted as a saving grace for the system, you can almost hear the collective groan of the industry veterans.

Ever the contrarian, however, we took the side of the debate that said ACOs will NOT fail. The premise of our argument was that since we already have a good idea of why the structure will fail, we can, a priori, fix the shortcomings, and though likely, ACO failure is not inevitable.

There is an extensive list of why list of why ACOs will fail. We put them into four general buckets.

Infrastructure: The system has mis-allocated resources so we have too many of some things and not enough of others leading to inefficiencies.

Technological/telecommunication: For a number reasons the healthcare system has not adopted technology as fast as other industries.

Cultural: Providers are habituated to fee-for-service payment mechanisms and patients aren’t likely to change their own healthcare behaviors.

Inertia: The well known system problems (e.g. asymmetry of information, the Pareto nature of patient demand, unexplained variation of care, counterproductive incentives) have been around forever and are difficult to overcome.

Because we spend most of our time identifying private healthcare companies with investment potential, we often get a view into what is happening in the entrepreneurial space under the punditry radar.

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The Email I Want to Send To Our Tech Guys But Keep Deleting…

Dear Tech Guys:

So today I’m doing anesthesia for colonoscopies and upper GI scopes. Nowadays we have three board-certified anesthesiologists doing anesthesia for GI procedures every single day at my institution. I’ll probably do 8 cases today. I will sign into a computer or electronically sign something 32 times. I have to type my user name and password into 3 different systems 24 times. I’m doing essentially the same thing with each case, but each case has to have the same information entered separately. I have to do these things, but my department also pays four full-time masters-level trained nurses to enter patient information and medical histories into the computer system, sometimes transcribed from a different computer system. Ironically, I will also generate about 50 pages of paper, since the computer record has to be printed out. Twice.

No wonder almost everyone I know hates electronic medical records! I don’t know anything about computers, and I don’t know what systems other hospitals have. I may be dreaming of a world that doesn’t exist or that world is here and I haven’t heard about it. Nevertheless, here’s my wish list for a system that doctors would actually want to use:

1. Eliminate the User Names and Passords: You can’t tell me that in this day of retinal scans and hand-held computers that there isn’t a better way to secure data. What if each person had their own iPad that you only have to sign into ONCE a day that automatically signs your charts. If you’re worried about people leaving them sitting around use a retinal scan or fingerprint instant recognition system.

2. Eliminate the Paper: If you’re going to have full-time people entering data for you, why print it out? It’s on the computer for anyone to access.

3. All Data Systems Must Be Compatible: You can’t have patient data entered in one place that doesn’t automatically import into another place. If my anesthesia record can’t talk to the hospital OMR, I have to RE-TYPE everything in, which is completely ridiculous.

4. Everybody Has to Use the Same System: Everybody, state-wide. Right now, electronic records from a nearby hospital are not available at my hospital, even though the two hospitals are right across the street from each other.

5. Don’t Make Me Turn the Page All the important information about a patient should be on the first page you open when you look up a patient. I shouldn’t have to click six different tabs. Specific to anesthesia, all the relevant data about the patient including what medications they have received during the case should be automatically displayed on the screen when you start a case. Specific to primary care, all the latest labs and data, recent appointments with specialists, current med list and anything else the doctor wants to see commonly should be right on the first screen.

Continue reading…

Chronic Care at Walgreens? Why (Not)?

Walgreens, the country’s largest drugstore chain, announced on April 4th that its 330+ Take Care Clinics will be the first retail store clinics to both diagnose and manage chronic conditions like asthma, diabetes, high blood pressure, and high cholesterol. The Nurse Practitioners (NPs) and Physician Assistants (PAs) who staff these clinics will provide an entry point into treatment for some of these conditions, setting Walgreens apart from competitors like Target and CVS whose staff help manage already-established chronic illnesses or are limited to testing for and treating minor, short-lived ailments like strep throat.

A one-stop shop for toothpaste, prescription drugs, and a diabetes diagnosis? The retail clinic phenomenon has its appeal: it allows patients convenience and better access to care through longer hours and more locations than our health care system now provides. Walgreens leaders bill their latest offering as a complementary service to traditional medical care. They envision close collaboration with physicians and even inclusion in Accountable Care Organizations, according to reporting by Forbes’ Bruce Japsen (though it’s not clear how the retailer would share the financial risk or savings in such a model).

Teaching Value: Medical Educators Need to Take Charge and Help Deflate Medical Bills

At a time when one in three Americans report difficulty paying medical bills, up to $750 billion is being spent on care that does not help patients become healthier. Although physicians are routinely required to manage expensive resources, traditional medical training offers few opportunities to learn how to deliver the highest quality care at the lowest possible cost. While the gap is glaring the problem is not new.

In 1975, the department of medicine at Charlotte Memorial Hospital initiated a system to monitor medical costs generated by house officers. In the Journal of Medical Education leaders of the Charlotte initiative described how simply being aware of how clinical decisions impact the costs of care could decrease inpatient length of stay by 21%. Over the last four decades there have been dozens of similar efforts to educate medical students and residents about opportunities to improve the value of care. Some interventions were simple like the one in Charlotte, and simply revealed the cost of routine tests to their trainees. Others provided more sophisticated didactics, interrogated medical records to give trainee-specific feedback on utilization, or creatively leveraged the hospital computer order-entry systems.

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Doctors: We Can’t Leave It to Business to Educate Us

Recently I came across yet another media article with suggestions as to how digital health products can gain more widespread adoption. The writer notes that “we can learn a lot from the pharma and healthcare industries,” and goes on to discuss the importance of engaging the doctor.

This article, like many I read, doesn’t acknowledge the downsides of using pharma’s tactics.

I have to assume that this is because from a business perspective, there aren’t a lot of downsides to pharma’s tactics. Pharma, along with many other healthcare industry players (hospitals, insurance companies, device manufacturers) has overall been extremely successful from a business standpoint.

So if the intent is to help digital health companies succeed as businesses, then by all means one should encourage them to copy pharma’s tactics.

But as we know, what works for business has often not worked well for serving the needs of individual patients, or to society from a health services and public health perspective.

Continue reading…

A National Caregiver Corps: What the Administration Could Do

Nearly 40 years ago, when I was in elementary school, a controlling teacher would issue edicts about what we could and could not do: We could not talk at lunch time, nor could girls wear shorts. In both cases, my lawyer-father encouraged me to launch petitions. I wrote a paragraph about the unfair practices, stapled together a pile of loose-leaf paper, which I circulated at recess, in class, and on the bus. After a week or so, I presented the document—perhaps 100 children had signed, and some parents—to the principal. He was unaware of the rules! And, upon hearing them, reversed them. It was my first attempt at community organizing and pushing back against a policy that was making my life nearly unbearable.

It’s been years, and I’ve occasionally signed petitions exhorting various government agencies to act—or not act—on one issue or another. But until recently, my own petition-bearing days had ended.

Continue reading…

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