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Tag: Economics

A NY Times guest (inadvertently) spanks its professionals

A couple of weeks back two New York Times reporters (Abelson & Harris) decided to take on the orthodoxy of the Dartmouth school. Frankly their efforts reminded me of England’s performance in the world cup so far—abject and inept and leaving the fans hoping for much better. Within a few hours the mainstays of Dartmouth (Fisher & Skinner) responded correctly accusing Gardiner and Harris of shaky reporting. Although that original article was particularly muddled, there are indeed legitimate questions about some of the Dartmouth research, raised by serious academics (including on the august pages of THCB), but few of those made their way into the hodgepodge that was that original article. And now in their response to the response, Abelson & Harris have descended further into the mire.

The new argument is basically this. Yes, the Dartmouth academics have done all the corrections to regional data that the NYTimes duo accuse them of not having done. But they’re not available on the website within a click, not always portrayed in the maps in the Atlas, and (horror of horrors) you’d have to read Health Affairs to find out what they’d done. And that some of the academics who read Health Affairs hadn’t carefully looked at the maps which showed unadjusted data.

So now it’s not an academic issue or a misstatement. It’s an issue of poor user interface design! Well I guess we’re used to that in health care!

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Are New Yorkers Sicker Than Patients in Atlanta–or Are They Just More Likely To Be Diagnosed?

At a dinner party in Manhattan, someone mentions the problems he has been having with his sinuses, and his doctor’s diagnosis. Since everyone at the table is over 40, his comment quickly leads to a lively discussion of back pain, rotator cuffs, high blood pressure, skin cancer, and diverticulitis. It seems that everyone in the room has been diagnosed with something. Finally, someone asks “Are we really that old? Can’t we talk about something else?” Everyone laughs and the conversation turns to politics.

I couldn’t help but recall that evening while reading an article in the May 12 New England Journal of Medicine (NEJM) titled “Regional Variations in Diagnostic Practices” written by a team of investigators at Dartmouth.

Earlier work done by researchers at Dartmouth has shown that patients in some regions receive moretreatment than others. This newest study, written by Yunje Song, senior author Elliott Fisher, and colleagues, goes further, to suggest that patients in places such as Miami, New York or McAllen, Texas are more likely to be diagnosed in the first place. “Their doctors order more tests and refer more patients to sub-specialists than doctors in Atlanta, Phoenix or Jackson, Mississippi,” explains Jonathan Skinner, one of the co-authors, “and so they discover more disease.”Continue reading…

Americans and Their Medical Machines

Professor Brainstawm

“- The real problem is not whether machines think, but whether men do.”  — B. F. Skinner

“If you are designing a machine, you had better think of everything, because a machine cannot think for itself.”

—  Edgeware: Insights from Complexity Science for Health Care Leaders, 1998

Obsession with medical technologies and machines characterizes American’s cultural expectations. We tend to think of our bodies as perpetual motion machines, to be preserved in perpetuity. If the face of our machines sag, we lift its faces up. If our pipes clog, we roto rooter them out or stent them. If impurities gum up our machinery, we filter them out. If our joints give out or lock up, we replace them. If we want to remove something in the machine’s interior, we take it out through a laparoscope. If the fuel or metabolic mix is wrong, we alter the mix or correct the metabolic defect with drugs If anything else goes wrong, we diagnose it and rearrange it electronically.

We are reluctant to let nature take its course. We rely on half-way technologies and machines to do the job of keeping us looking young, active, functioning , and alive. This fixation on machines and technologies is the big reason American health care is 50% more costly than that of other nations. With rapid access to machines and our reliance on them, we deliver a different product than other countries – more technologies and more machines, faster and more often. Our belief system is : Give a specialist a machine, and he or she will do the job, and we or the government will pay for it.

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McAllen, TX As Outlier? Why Not Houston?

Or Lubbock? Or Oklahoma City? Or New Orleans? Or any of a dozen major and minor metro areas throughout the South? According to the Medicare Payments Advisory Commission, all of them have significantly higher usage rates and costs per Medicare enrollee than McAllen, which was high-cost locale ground zero for Atul Gawande’s famous New Yorker article, “The Cost Conundrum,” which has become, to use the New York Times‘ formulation, “must reading in the White House.”

Gawande grounded his analysis on per-patient Medicare claims data compiled annually by researchers at Dartmouth Medical School. “The explosive trend in medical costs seems to have occurred here in an especially intense form,” Gawande wrote after the Dartmouth Atlas of Health showed McAllen as the highest spending region in the country outside Miami, where Medicare fraud is an especially virulent problem. Not so, MedPAC said. Adjust for prices and McAllen’s outlier status compared to the rest of Texas and large parts of the South all but disappears.Continue reading…

A Look Inside: The Massachusetts Health Reform Law

The Massachusetts health reform law Part II, enacted in 2008 – laid the groundwork for cost control and  quality improvement, as a follow-on to the initial legislation’s emphasis on achieving near-universal coverage.  The legislation authorized several studies — including a report published a few months back on global payment strategies — and set the stage for hearings on health care cost containment to be held before the state Division of Health Care Finance and Policy (DHCFP), which are scheduled to begin March 16, 2010.

In anticipation of these hearings, and as required by the law, the Attorney General’s office released a report on health care cost trends and cost drivers on January 29.

While the names of providers and payors are not included in this report, it provides a fascinating level of detail regarding what we already knew, or at least suspected: some providers are paid as much as twice as much as others for the same services, with no correlation to improved quality or outcomes.

The AG’s summary conclusions in full:

[O]ur preliminary review has revealed serious system-wide failings in the commercial health care marketplace which, if unaddressed, imperil access to affordable, quality health care. In brief, our investigation has shown:

A. Prices paid by health insurance companies to hospitals and physician groups vary significantly within the same geographic area and amongst providers offering similar levels of service.

B. Price variations are not correlated to (1) quality of care, (2) the sickness or complexity of the population being served, (3) the extent to which a provider is responsible for caring for a large portion of patients on Medicare or Medicaid, or (4) whether a provider is an academic teaching or research facility. Moreover, (5) price variations are not adequately explained by differences in hospital costs of delivering similar services at similar facilities.

C. Price variations are correlated to market leverage as measured by the relative market position of the hospital or provider group compared with other hospitals or provider groups within a geographic region or within a group of academic medical centers.

D. Variation in total medical expenses on a per member per month basis is not correlated to the methodology used to pay for health care, with total medical expenses sometimes higher for globally paid providers than for providers paid on a fee-for-service basis.

E. Price increases, not increases in utilization, caused most of the increases in health care costs during the past few years in Massachusetts.

F. The commercial health care marketplace has been distorted by contracting practices that reinforce and perpetuate disparities in pricing.

This report is well worth reading, and it is well-illustrated with clear charts.  While the detail is welcome, many have criticized the AG’s office for leaving out identifying information, and for coming to the party a year after the Boston Globe reported on some of the same issues.

At the end of last week, DHCFP released a series of three reports on health care cost trends as well.  The DHCFP reports are summarized here; they really serve to describe the baseline facts on the ground and explore trends form 2006 through 2008.  Here’s the summary of key findings:

  • The Commonwealth’s health care system is a key employer and driver of economic growth for the region. However, personal health spending per capita is higher in Massachusetts relative to the nation and continues to rise.
  • Some characteristics of the Massachusetts health care marketplace that may be contributing to the high levels of cost growth, include:
    • Most of a health insurance premium goes toward spending on health care services as opposed to administrative and other non-medical services. On average, in Massachusetts more than 88% of premiums are spent on health care expenses (compared to less than 84% nationally).
    • Average monthly health insurance premiums increased 12% from 2006 to 2008.  If employers and individuals had purchased comparable benefits each year, the growth in premiums would have been larger.
    • Premium trends, benefit levels, and trends in health care spending vary across different-sized employer groups.  Small group premiums were higher and grew faster on average than mid-size and large group premiums, when adjusted for differences in benefits, demographics and location.
  • Health care spending in the Commonwealth increased 7.5% per year from 2006 through 2008, a growth rate that is higher than the nation.  The increased spending can be attributed to several factors:
    • Price was an important factor contributing to rising health care spending across all service types.
    • One area of particular concern (and opportunity) is the variation in prices, which was typically greater for facility charges than professional charges.
    • In addition to price increases, care is being provided in more expensive settings over time—more inpatient care is being provided in academic medical centers and there is a decline in the provision of care at stand-alone outpatient facilities.   Much of the growth in outpatient hospital care occurred at academic medical centers located in the metro Boston area.
    • High concentration of physicians (especially specialists);
    • Greater availability and use of academic medical centers for both inpatient and outpatient hospital based-services, and use of outpatient hospital-based facilities for some services that could be provided in less costly settings;
    • Richer health insurance benefits compared to the nation; and
    • Use of payment methods that are not designed to incentivize efficiency and coordination of medical care.

Again: no surprise here — Massachusetts health care costs are higher than national averages, and are growing at an unsustainable rate.The challenge before Massachusetts policymakers is clear:  They need to put together these puzzle pieces of data, learn from the past, model potential solutions, and plan for the future.  Even the national mainstream media acknowledges that, in the face of health reform meltdown, doing nothing is not an option.  (Where were they six months ago?)

In the midst of this challenge, Governor Deval Patrick seems to be distracted by health reform’s implications for his political future. Instead of waiting for a reasoned outcome of the deliberative process set in motion two years ago (well, as reasoned as possible, given the heavy-duty political and economic interests at stake here), he has leapt into the fray with what looks like an ill-conceived bit of political grandstanding: a bill that would give the state insurance commissioner the authority to cap health care price increases.

The Boston Globe reports:

Rates hospitals and other health providers charge insurers would be “presumptively disapproved as excessive’’ if they increased faster than the level of medical inflation, and they could be rejected after a public hearing.

Similarly, for health insurance plans sold to employers with 50 or fewer workers, premium increases that exceed one and a half times the level of medical inflation would be considered excessive and could be turned down.

The legislation would also impose a two-year moratorium on lawmakers’ mandating any new health benefits that must be covered by insurance plans, a practice that employers have said drives up their health insurance premiums. Small businesses have been hit with double-digit rate increases in recent years.

This proposal brings us back to the future here in Massachusetts:

Twenty years ago, Patrick’s presumptive GOP challenger in the fall, Charlie Baker (who, thanks to some of his views being out of step with GOP orthodoxy, will likely draw many of the significant number of independent voters in Massachusetts, as well as some Democrats), was largely responsible for the dismantling of the Massachusetts health care rate setting system during his tenure in budget and health policy roles in the Weld administration.  (In fact, some of us who have been around long enough still refer to DHCFP as “the agency formerly known as Rate Setting.”)  (As a second aside: For those of you tuning in from afar, Baker’s most recent position was CEO of Harvard Pilgrim Health Care, one of the three dominant payors in the Commonwealth.)   Is Patrick trying to stake out a position in opposition to Baker’s legacy?  What constituency is going to buy into this vision of the future?  Other local observers have also questioned the wisdom of this approach, including fellow health policy bloggers Evan Falchuck and Paul Levy.  (Taking a cue from Paul’s musings on blogger disclosure in connection with this issue, I’ll just say that as a life-long registered Democrat, I have voted for a Republican maybe just once.)

Deregulation was successful twenty years ago because we were collectively convinced that payors could do a better job of holding providers’ feet to the fire.  We later framed this in terms of holding providers accountable, and have employed a variety of tools over time to try and make this private-sector arrangement work: capitation, discounted fee-for-service payments, quality incentives, global payments, etc., etc.  Patrick’s proposal is one version of the general acknowledgment that the market approach has essentially failed.

Instead of going back to the future, Governor Patrick ought to let the health reform process play out.  The legislature should hold the Governor’s bill pending the DHCFP hearings and the subsequent deliberations that will — we hope — yield a more data-driven and sustainable approach to the problem of health care costs and quality.

And who knows?  The national debate may continue to be informed by what comes out of Massachusetts.

David Harlow blogs at the HealthBlawg.

Government to Account For More Than Half of Healthcare Spending

Goozner

Amid all the gloomy numbers in the latest government projections for health care spending, one statistic stands out: Public sector involvement in health care this year will surpass private sector spending for the first time in U.S. history.

The actual projections show it will only reach 49.3% of $2.57 trillion, but that assumes Congress won’t throw more money at physicians at the end of this month when previously legislated cutbacks in Medicare pay are slated to go into effect. Congress can’t pass health care reform, but spending more on physicians (mean salary for cardiologists and radiologists in 2009 was over $400,000) has unusual bipartisan support.

What’s driving the growing public role is no mystery. With unemployment at 10 percent and underemployment widespread, millions of Americans have lost employer-based coverage and now must rely on public sector programs. Even where people remain employed, their firms can no longer afford skyrocketing premiums and thus are abandoning or cutting back on coverage.

And there’s no end in sight to those trends, even with an improving economy. Health care spending, which surged to 17.3% of gross domestic product in 2009 from 16.2 percent in 2008,  the largest single jump in the history of government recordkeeping, is slated to rise to 19.3% in 2019, a year when the public sector will account for 51.9% of the $4.49 trillion health care economy. And that’s without paying physicians more.

Here’s another way to look at it: In 2019, U.S. government agencies at the state and federal level ALONE will spend 10% of GDP on health. That’s a greater share of economic activity than many other highly industrialized nations that insure everyone, yet the U.S. will still have one in six or seven people without any coverage at all at some point during the year.

The State of the Union – And the Economy: Why We Need Health Care Reform Now

According to the headlines, 10 percent of Americans are unemployed. The truth is that closer to 17 percent of the population cannot find full-time work; this number includes workers who have become discouraged and have given up looking for work as well as those who have settled for part-time jobs because they cannot find the full-time employment that they need.

The situation is not going to change anytime soon. As Princeton economist Paul Krugman recently warned: “We are facing mass unemployment — unemployment that will blight the lives of millions of Americans for years to come.”

“Even if industrial production picks up, unemployment will continue to lag,” observed Goldman Sachs’ Abby Cohen, speaking at Barron’s Roundtable about a week ago. “The problem is far more than cyclical.” (You may remember Cohen as a bull during much of the ‘Nineties boom. By temperament, she is hardly a doomster, but when she looks at today’s economy, she is very concerned.)

Cohen is saying jobs are not going to suddenly appear with the next business cycle. Current levels of unemployment reflect deep structural problems that go back at least two decades.

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Making A List and Checking It Twice

Goozner Allow me to call readers attention to an article in the latest issue of the New England Journal of Medicine that calls on medical specialty societies to make lists of the five most wasteful practices in their sub-specialties and develop programs to educate their colleagues about how to cut back on these wasteful practices.

Howard Brody, who heads the Institute for Medical Humanities at the University of Texas Galveston Branch Medical School, points out that most stakeholders in health care reform — the drug companies, the insurance companies, the medical device companies, taxpayers, Medicare beneficiaries — have been asked to give up something to insure the uninsured. But physicians?

Although major professional organizations have endorsed various reform measures, no promises have been made in terms of cutting any future medical costs. Indeed, in some cases, physician support has been made contingent on promises that physicians’ income would not be negatively affected by reform.Continue reading…

Prevention is Not Only Good Health Policy, It’s Good Economic Policy

W3956 The current debate around how to best control burgeoning health costs has  pushed the issue of prevention to the forefront. That’s right where it should be. By shifting our health care to be more pro-active and prevention-oriented, we can make a major impact on common and costly chronic diseases such as diabetes. In turn, this will help to secure the financial stability of our health care system and continued economic growth and prosperity.

Over the past century, the burden of disease among Americans has shifted from acute and infectious illness to chronic disease. With more than 75 cents of every dollar in this nation spent on patients with chronic disease, prevention offers the opportunity not to spend more money — but spend smarter. By embracing prevention, we can help more Americans lead healthier, active lives free from disease, so that they can avoid costly complications and hospitalizations, and remain productive in their communities and workplaces.

Prevention today involves a lot more than flu shots, cancer screening, and annual checkups. It is a pro-active strategy of disease avoidance and mitigation that should be embraced throughout and beyond the health system. In the context of chronic illnesses such as asthma, cancer, depression, heart disease and diabetes, prevention runs the gamut from lifestyle changes to screening for risk factors and symptoms, to early intervention to slow or reverse disease, to active management of already present cases.

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