Tag: Costs

Side Effects May Include Financial Ruin

May 9, 2012• 1

By Christopher Moriates, MD

He winced in a way that made me feel his discomfort. It wasn’t overly dramatic; it was a response of a man trying to put on a brave face and hide his pain, but – as I gently laid my hands on his belly – failing against his best efforts. This man had real abdominal pain, the kind that is impossible not to immediately empathize with. I got concerned.

“How long has this been going on?” I asked, while my mind began to immediately tick through a differential diagnosis.

“Well it probably started a year ago, but got really bad about four months ago,” this otherwise healthy-appearing, thirty-something-year-old man said.

We were in a small curtained-off area in the hectic Emergency Department at San Francisco General Hospital (SFGH). I started to wonder what in the world would possibly cause somebody to wait many months with severe abdominal pain and rectal bleeding before coming to see a doctor.

I asked a few more questions, verifying that he was indeed having bright red blood with his bowel movements, had lost at least 10-pounds over the last few months and has dealt with nausea and debilitating abdominal pain ever since the end of last year.

A Health Care Setup Both Sides Could Live With

Apr 28, 2012• 5

By Donald H. Taylor Jr.

Before long the Supreme Court is expected to rule on the health care reform law, a decision that will have tremendous policy ramifications and could reshape the presidential election.

But even if the court overturns the Affordable Care Act, as some observers predict, that won’t change the reality that our country’s health care system is seriously broken. In short, regardless of what the court says, people will still be getting sick, costs will keep rising and too many people will be uninsured. And our federal budget will never be sustainable if we can’t bring health care costs under control.

The Democratic Party and progressives invested a huge amount of political capital in getting Congress to pass the ACA in 2010. The act was not perfect, but it did provide a start to the many years of work needed to create a sustainable health care system. In speeches, Republicans and conservatives acknowledge that our health care system is unsustainable and have spoken of a need to “replace”; however, in the two years since the ACA passed, they have failed to be clear about what they actually favor.

As we look to what we’re actually going to do about the problem, what’s clear is that progressives and conservatives both need to move beyond their familiar positions to find a new kind of deal. This seems politically impossible before November, but politicians on both sides would do themselves – and the country – a big favor if they quietly started devising a solution that everyone can live with, even if neither side gets everything it wants.

For progressives, universal coverage has always been the Holy Grail and dream deferred, not just of health policy, but of all social policy. I don’t think conservatives have a health policy interest that is so clear and heartfelt as universal coverage is for progressives, but if I had to take a stab, I think it is their belief that people don’t have enough “skin in the game” and are therefore wasteful of other people’s money.

Anatomy of a Walletectomy

Apr 25, 2012• 17

By Merrill Goozner

It all began when Dr. Renee Hsia of the University of California at San Francisco received a simple request from a good friend who had checked into a local hospital for an emergency appendectomy. The fairly routine procedure took place 19,368 times during 2009 in California.

After he returned home, he received a bill from the hospital for $19,000, his co-payment for the parts of the $54,000 operation that his insurance company didn’t cover. “He wanted to know if this was the usual and customary charge for a one-day stay in the hospital,” she recalled.

And thus began her research into pricing variability in the state, which was published this week in the Archives of Internal Medicine. The prices ranged from $1,529 to $182,955 with the median hospital charge of $33,611, the study showed.

The prices not only varied between hospitals, they varied within hospitals. The largest spread occurred at one hospital, which Hsia wouldn’t reveal, where the cheapest appendectomy went for $7,504 while the most expensive charged was $171,696. There were numerous hospitals where the spread was $100,000 or more.

“They had the same diagnosis, but different things could have been done,” she said. For instance, one patient could have had multiple imaging tests and robotic laparoscopy, while the other received no imaging and a regular laparoscopy. There’s no evidence to suggest one set of alternatives had better outcomes than the other.

Washington Stuck Fighting Wrong Health-Care Battle

Apr 18, 2012• 23

By Peter R. Orszag

While Washington wonks continue to bicker over health policy, positive change is occurring outside the Beltway.

Last week, the Altarum Institute, a research organization based in Ann Arbor, Michigan, reported that the moderation in the growth of health-care costs we have seen over the past few years is continuing: Total health spending rose by less than 4 percent from February 2011 to February 2012. And it’s encouraging to see the progress that doctors, hospitals and other providers are making to improve the value of care — by cutting back on unnecessary procedures, for example, expanding their use of information technology, and switching from fee-for- service to compensation schemes aimed at maximizing the quality of treatment.

Instead of examining these changes and finding ways to encourage them, the Washington policy discussion continues to demonstrate its ability to, well, it’s not clear exactly what it does. The most senseless bloviating recently came from Charles Blahous, a senior research fellow at George Mason University, in Arlington, Virginia, and a former official in the George W. Bush White House. He claims to have shown that the 2010 health-care reform act will substantially increase the budget deficit, despite official estimates to the contrary. The Washington Post decided this warranted prominent coverage.

What Blahous actually did was play a trick. His analysis begins with the observation that Medicare Part A, which covers hospital inpatient care, is prohibited from making benefit payments in excess of incoming revenue once its trust fund is exhausted. He therefore argues that the health reform act is best compared to a world in which any benefit costs above incoming revenue are simply cut off after the trust-fund exhaustion date. Then, he argues that since the health-care reform act extends the life of the trust fund, it allows more Medicare benefits to be paid in the future. Presto, the law increases the deficit by raising Medicare benefits.

Medicaid-driven Budget Crisis Needs a Marcus Welby/Steve Jobs Solution

Apr 18, 2012• 20

By Dave Chase

Not a week goes by without seeing some headline about deficits pushing municipalities to desperation or Bill Gates describing state budgets using accounting techniques that would make Enron blush. The common culprit: healthcare costs with Medicaid being the biggest driver.

Recently Carly Fiorina opined on The Health Care Blog about Health Care, Not Coverage. She pointed out the unnecessary administrative burden that could be better spent on delivering healthcare. Fortunately, there is already a proven model, developed and run by physicians, that has shown it can reduce costs 20-40% by removing administrative overhead while improving outcomes (e.g., 40-80% reductions in hospital admissions) and greatly increasing patient satisfaction with Google/Apple level of patient satisfaction.

It can be described as two parts Marcus Welby and one part Steve Jobs. The federal health reform bill included a little-noticed clause allowing for Direct Primary Care (DPC) models to be a part of the state health insurance exchanges. That little-noticed clause (Section 1301 (a)(3) of the Affordable Care Act and proposed HR3315 to expand DPC to Medicare recipients) should have the effect of massively spreading the DPC model throughout the country. In California, the DPC model was introduced in a bill to bring explicit support for the DPC model as has been done in the state of Washington and elsewhere.

Consumer-Driven Medicine’s Fatal Flaw

Apr 17, 2012• 46

By Merrill Goozner

The possibility that the Supreme Court will strike down all or part of the Affordable Care Act has given new life to Republican calls to put market mechanisms to work in holding down health care costs. The public is certain to hear lots more about it on the campaign trail later this year.

There’s one big problem, though. Markets cannot work when consumers and patients have almost no information about the prices they pay for health care.

Rep. Paul Ryan, R-Wis., chairman of the House Budget Committee, has resuscitated his proposal to turn Medicare over to insurance carriers. Future retirees would be offered financial help to pay for policies sold through public exchanges similar to the ones set up under the health care reform law, a.k.a. Obamacare. The subsidy would be limited to the value of the second-lowest cost plan offered on the market. The idea is that over-65 consumers, who would still have the option of remaining in traditional fee-for-service Medicare, would drive down costs by forcing the plans to compete for their business by offering lower-cost alternatives.

Other Republicans and conservative think tanks are touting laws that would allow insurance carriers to sell individuals policies across state lines, which would be coupled with incentives to shift people away from employer-based coverage. Under such plans, individuals could buy catastrophic coverage for expensive hospital stays while using the savings to pay the entire cost of routine health services, just like they pay out-of-pocket now for lawyers, flat-screen TVs or the week’s groceries.

Malpractice Defense Costs Are Real

Apr 16, 2012• 11

By Aaron Carroll, MD

Whenever I post about the malpractice system, I try to make it clear that while I don’t consider it to be the cause, nor the cure, for the problems in our health care system, that doesn’t mean that the system isn’t broken in many ways. Nuisance cases do exist; cases that have real merit never see the light of day. One additional side effect of portraying the malpractice system as the boogeyman of the entire system is that we lose sight of the fact that it really does impact physicians. Take defense costs.

There’s a new paper in the Journal of Law, Medicine, and Ethics by yours truly and co-authors that looks at this in detail:

The objective of this study was to take a closer look at defense-related expenses for medical malpractice cases over time. We conducted a retrospective review of medical malpractice claims reported to the Physician Insurers Association of America’s Data Sharing Project with a closing date between January 1, 1985 and December 31, 2008. On average a medical malpractice claim costs more than $27,000 to defend. Claims that go to trial are much more costly to defend than are those that are dropped, withdrawn, or dismissed.

Health Care for 1% of the Cost

Apr 9, 2012

By Vijay Govindarajan

This blog post is written with Pepijn Veling, Utrecht University, Netherlands.

There is a general consensus that U.S. healthcare needs major reform. Can reverse innovation — innovations originating from poor countries — provide one important answer? Most definitely.

In the U.S., the approach is to spend more money on major technological advances and come up with innovative products and solutions. In poor countries, the innovation paradigm is just the opposite: spend less and innovate new business models. Poor countries face severe resource constraints. They just cannot afford to spend a lot. Constraints need not be limiting, they can actually be liberating.

The ultra low-cost, high-quality prostheses innovation of Dr. Therdchai Jivacate and the Prostheses Foundation of Thailand is an inspiring example of this. Over the years, they have developed and delivered over 25,000 affordable and appropriate artificial legs to amputees in remote areas of Thailand and surrounding countries. In the U.S., an artificial leg costs about $10,000 and the delivery time is 7-10 days. The Prostheses Foundation of Thailand is able to do it for less than $100, about 1% of the U.S. cost, and their delivery time is 1-3 days.

Though Dr. Jivacate spent four years as a resident of physical medicine and rehabilitation in Northwestern University, he understood that conventional artificial legs were unaffordable and inappropriate for the majority of Thai amputees. There are several reasons. First, customers in rural Thailand simply cannot afford to pay a high price. For the poor making $2 a day, a $10,000 product would require 5,000 days of income. (With 200 working days a year, that amounts to an incredible 50 years). Second, the context and functional requirements for amputees in Thailand are vastly different from those in the U.S. Thai people do many of their daily activities with bare feet, sitting squat on the floor or cross-legged, and many work in wet paddy fields. Furthermore, while many roads in the U.S. are paved, Thai people walk on uneven roads. Finally, the expensive artificial legs are only available in Bangkok, thus making it virtually inaccessible to the rest of the population.

The Letterman Approach to Cost Awareness

Apr 6, 2012• 3

By Christopher Moriates, MD

Who doesn’t love a Top 10 list? Creating them is an art form. So when it was formally proposed by Dr. Brody in 2010 in the NEJM that each specialty create their own “Top 5 list” of unnecessary care, it seemed like a straightforward – if not downright provocative – suggestion.

“The Top Five list would consist of five diagnostic tests or treatments that are very commonly ordered by members of that specialty, that are among the most expensive services provided, and that have been shown by the currently available evidence not to provide any meaningful benefit to at least some major categories of patients for whom they are commonly ordered. In short, the Top Five list would be a prescription for how, within that specialty, the most money could be saved most quickly without depriving any patient of meaningful medical benefit,” he wrote.

And yet, thus far the only groups that have seemed to have taken him up on the suggestion have been the primary care specialties of Internal Medicine, Family Medicine and Pediatrics – notably amongst the least compensated fields in health care.

This is a great start, but c’mon guys, where are the rest of you? Dr. Brody wrote you a “prescription.” We have a term for your behavior: “noncompliance.”

Not to say that there hasn’t been some progress. The ABIM Foundation has indeed put together an impressive list of organizations participating in their “Choosing Wisely” campaign. They also have begun to be instrumental in funding projects towards this goal. Costs of Care has highlighted far-reaching areas of non-value-based care, including a recent thoughtful essay about robotic surgery. We must now consolidate on these small gains and move this forward across all specialties in medicine.

Will Doctors or Patients Bend the Cost Curve?

Apr 6, 2012• 44

By Davis Liu, MD

The American Board of Internal Medicine (ABIM) and nine other professional medical societies announced that doctors should perform 45 tests and procedures less often than currently done because there is no good medical evidence that they add any value. Specifically, a xray or other imaging for low back pain in an otherwise healthy individual or an EKG as part of a routine physical, just add a lot of unnecessary cost to the health care system as a whole and don’t provide doctors or patients any meaningful information that would be helpful in improving health or arriving at the right diagnosis and treatment.

The ABIM partnered with Consumer Reports to create a new campaign called Choosing Wisely and are joined also by collaborators like employers (the National Business Group on Health, the Pacific Business Group on Health), hospital safety (the Leapfrog Group), and labor unions (SEIU). The mission is simply to have doctors and patients deliver and receive care that is medically necessary, based on evidence, avoids harm, and minimizes duplication.

The real question is – will it work? Will doctors follow what their professional societies recommend?

Though Choosing Wisely is a laudable attempt to make medical care better quality, the truth is doctors won’t likely follow these guidelines from their medical societies. If it was that easy, we would not have this problem! Even today, it is still a challenge for the medical profession to have all doctors wash their hands correctly every patient every time, get immunized routinely against influenza, or even not to prescribe antibiotics for coughs, colds, and bronchitis due to viruses! What is more disturbing is that doing these basic interventions did not impact a doctor’s income. Some on the list of Choosing Wisely, however, will.