After the Napoleonic wars, the price of corn in England became unaffordable. The landowners were blamed for the high price, which some believed was a result of the unreasonably high rents for farm land. Economist David Ricardo disagreed.
According to Ricardo, detractors had the directionality wrong. It was the scarcity of corn (the high demand relative to its supply) that induced demand for the most fertile land. That is, the rent did not increase the price of corn. The demand for corn raised the rent. Rent was a derived demand.
Directionality is important. Getting directionality wrong means crediting the rooster for sunrise and blaming umbrellas for thunderstorms. It also means that focusing on medical imaging will not touch healthcare costs if factors more upstream are at play.
Medical imaging is a derived demand. The demand for healthcare induces demand for imaging. Demand is assured by the unmoored extent to which we go for marginal increases in survival.
“Can you hear it?” she asked with a smile. The thin, pleasant lady seemed as struck by her murmur as I was. She was calm, perhaps amused by the clumsy second-year medical student listening to her heart.
“Yes, yes I can,” I replied, barely concealing my excitement. We had just learned about the heart sounds in class. This was my first time hearing anything abnormal on a patient, though it was impossible to miss—her heart was practically shouting at me.
Her mitral valve prolapse—a fairly common, benign condition—had progressed into acute mitral regurgitation. She came to the hospital short of breath because her faulty valve was letting blood back up into her lungs.
Though it was certainly frightening, surgery to fix the valve could wait a few weeks. But before doing anything, the surgical team wanted a picture of the blood vessels in her heart.
If the picture showed a blockage, the surgeons would have to perform two procedures: one to fix the blockage, and another to fix her valve. If her vessels were healthy, though, the surgeons could use a simpler approach focused just on her valve.
So she came to the interventional cardiologist who was teaching me for the day. Coronary angiograms are the interventionalists’ bread-and-butter procedure, done routinely to look for blockages and to guide stent placement. They involve snaking a catheter from the groin or arm through major blood vessels and up to the heart.
Under fluoroscopy (like a video X-ray), the cardiologists shoot contrast medium into the arteries, revealing the anatomy in exquisite detail.
The images are recorded electronically and accompanied by the cardiologist’s interpretation for anyone else who opens her medical record.
Though routine, these catheterizations aren’t trivial. Whenever you enter a blood vessel, you introduce the risk of bleeding and infection. Fluoroscopy is radiation, and contrast medium can damage the kidneys. And let’s not forget cost—reimbursing the interventional cardiologist, a radiology technician, and nursing staff costs Medicare almost $3,000 per case.
So I asked the cardiologist if such an invasive approach was really necessary.
Today, as Kathy finished her last radiation therapy appointment, I had my first screening colonoscopy – a rite of passage for new 50 year olds.
Although a bit of a personal issue, I’m known for my transparency and I’m happy to share the experience so that others approaching 50 know what to expect.
The preparation is the hardest part. Three days before the procedure, it’s recommended that you reduce the quantity of high fiber foods you eat – fruits, vegetables, nuts etc. For me that was particularly challenging since my entire diet as a vegan (who tends to avoid white flour, white rice, and white sugar) is high fiber. I moved to soups and brown rice. A day before the procedure (really 36 hours), you move to a clear liquid diet – apple juice, broth, and tea. In my case I drank a cup of vegetable broth and apple juice every 3 hours.
At 7pm the night before the procedure, the real challenge begins. The bottle of magnesium citrate reads “a pasteurized, sparkling, laxative”. Sounds so appealing. The first dose is 15 ounces. The bottle warns that the maximum therapeutic dose is 10 ounces in 24 hours for adults, but colonoscopy is a special case. The 15 ounces of laxative is followed by 24 ounces of clear liquids over the next 2 hours. Keep in mind that you have not eaten any solid food for 24 hours at this point. Sparkling laxative followed by broth and apple juice is not Chez Panisse.
A recent spate of commentaries on the continuing health spending moderation raise an important policy question: If the cost curve is well and truly bent, why are we investing so much of our policy energy on bending it further, when the more pressing problem is the declining percentage of Americans that can afford our health system’s astronomical costs?
Health spending the past two reported years (2009 and 2010) have grown in the high 3 percent range, the lowest growth rates since Dwight Eisenhower’s last year in office (1960), five years before Medicare. Medicare’s actuaries have pointed to the recession as a root cause. Yet even Medicare spending growth has subsided to about 5 percent in 2010, a development hard to attribute to recession since so few Medicare patients have first-dollar cost exposure. This analyst’s extensive industry contacts suggest no spending rebound in 2011 and 2012, despite an aging population and fee-for-service’s pernicious volume-increasing incentives in full force.
Pharmaceutical spending. The two most explosive cost problems of the 1980’s and 1990’s, pharmaceutical spending and imaging — which together now represent about 20 percent of total health spending — are now seeing low single digit growth, and seem likely to remain quiescent. In the pharma case, the main contributor is the ruinous outflow of branded drugs from patent protection, and the failure to replace them with new protected drugs. This outflow continues unabated until 2018. Branded drug prescriptions are shrinking by 5 percent per year, and the only things preventing pharmaceutical sales from actually declining are brand price increases and growth in generics, which now represent almost 80 percent of prescriptions, according to IMS Health. While specialty drugs (biologicals) remain a concern, those too begin losing patent protection in earnest in the next few years.
I am getting caught up on the news after a couple of weeks away and two stories caught my attention. The first is the ongoing debate about the tax exempt status of Illinois nonprofit hospitals, which has received extensive coverage in the Chicago Tribune. Nonprofits avoid paying most state taxes, notably property taxes. For some nonprofit, the tax exemption could be worth tens of millions of dollars annually.
The question before the state is what they should expect of nonprofits in exchange for tax exemption. The current law requires nonprofits to provide “community benefits” commensurate with their tax savings. The state and the Illinois Hospital Association have been unable to find mutually acceptable language to replace this vague standard. The most draconian approach limits community benefits to charity care. At the other extreme, the IHA (and the Chicago Tribune) largely back a proposal by the Civic Federation that defines community benefits broadly to include losses incurred on Medicare, Medicare, bad debt, and community outreach programs.
A few years ago, I advised the state Attorney General’s office on this issue. I argued for the following conceptual approach: In exchange for tax exemption, nonprofit hospitals should be required to perform a commensurate level of “charitable acts,” which I defined as services and programs for which the hospital expects to lose money. Alternatively, charitable acts are those that investor-owned hospitals would not undertake.
By Danny McCormick, David Bor, Stephanie Woolhandler
and David Himmelstein
Our recent Health Affairs article linking increased test ordering to electronic access to results has elicited heated responses, including a blog post by Farzad Mostashari, National Coordinator for Health IT. Some of the assertions in his blog post are mistaken. Some take us to task for claims we never made, or for studying only some of the myriad issues relevant to medical computing. And many reflect wishful thinking regarding health IT; an acceptance of deeply flawed evidence of its benefit, and skepticism about solid data that leads to unwelcome conclusions.
Dr. Mostashari’s critique of our paper, will, we hope, open a fruitful dialogue. We trust that in the interest of fairness he will direct readers to our response on his agency’s site.
Our study analyzed government survey data on a nationally representative sample of 28,741 patient visits to 1187 office-based physicians. We found that electronic access to computerized imaging results (either the report or the actual image) was associated with a 40% -70% increase in imaging tests, including sharp increases in expensive tests like MRIs and CT scans; the findings for blood tests were similar. Although the survey did not collect data on payments for the tests, it’s hard to imagine how a 40% to 70% increase in testing could fail to increase imaging costs.
Dr. Mostashari’s statement that “reducing test orders is not the way that health IT is meant to reduce costs” is surprising, and contradicts statements by his predecessor as National Coordinator that electronic access to a previous CT scan helped him to avoid ordering a duplicate and “saved a whole bunch of money.” A Rand study, widely cited by health IT advocates including President Obama, estimated that health IT would save $6.6 billion annually on outpatient imaging and lab testing. Another frequently quoted estimate of HIT-based savings projected annual cost reductions of $8.3 billion on imaging and $8.1 billion on lab testing.
We focused on electronic access to results because the common understanding of how health IT might decrease test ordering is that it would facilitate retrieval of previous results, avoiding duplicate tests. Indeed, it’s clear from the extensive press coverage that our study was seen as contravening this “conventional wisdom”.
A couple of studies out today from Health Affairs belabor the obvious.
First, the one less covered: Hospital Compare, the government website that for the last seven years has provided the public with detailed information about hospital performance, had no discernible impact on improving outcomes. It had no impact on how well the studied hospitals treated heart attacks and pneumonia, and only a modest improvement in outcomes for patients with heart failure. “The jury’s still out on Medicare’s effort to improve hospital quality of care by posting death rates and other metrics on a public website,” says lead author Andrew M. Ryan, an assistant professor of public health at the Weill Cornell Medical College in New York City.
Comment: Since when has disclosure ever affected behavior? Has it stopped physicians from taking money from the drug industry? Has detailed nutrition labels ended the obesity epidemic? Look at how well it is working in campaign finance reform. We have more information than ever about how our elections are being bought and sold. Disclosure is the reform that avoids reform. The real issue for hospitals is how well they do in improving their performance on checklists of quality indicators, and whether that improves outcomes (the QUEST demonstration project at CMS suggests it does). Disclosure of poor performance may be a goad to action (or not, as this current study suggests). But it is not a substitute for action.
The second, more widely reported study showed that doctors with electronic access to patients’ prior imaging studies wound up ordering more imaging tests than doctors without access to such electronic records. Absent other incentives, why would anyone expect otherwise? Imaging is one of the great generators of “false positives” in the medical system. See something on a scan, better get a biopsy or do an angioplasty. Or at least another scan. Double the number of eyes seeing that scan and you double the number of false positives. The depressing fact is that under the current fee-for-service payment system, everyone gets paid that second time around.
The OIG released an advisory opinion at the end of last month OK’ing a hospital’s proposal to provide insurance pre-authorization srevices free of charge to patients and physicians. This is an issue that has long vexed folks in the imaging world. Clearly, this is a free service provided to referral sources (to the extent they are obligated by contract with third party payors to obtain the pre-authorization before referring a patient for an MRI, for example), so why is the OIG OK with it? In the opinion, the OIG blesses the arrangement for four reasons:
The arrangement doesn’t target specific referring docs, so the pre-authorization service will be provided for patients of docs who are contractually bound to handle it themselves, as well as for patients of those who aren’t, and thus the risk of using the arrangement to reward referrals is low
The hospital will not pay the docs under the arrangement and will not guarantee to docs that the pre-authorizations will be forthcoming (the OIG also notes — not sure why — that the hospital will collect and pass on only such personal health information as may be necessary to secure a finding of medical necessity for the pre-authorization)
The hospital staff will be transparent with payors and referring docs, and will have little influence on steering volume, because they get involved only after the hospital has been selected (other situations are distinguished, e.g., where referral seekers provide referral sources with staff like discharge planners)
The hospital has an interest in being paid for its services, and thus in ensuring that the pre-authorization process is conducted properly, thus “lower[ing] the risk that the … [a]rrangement is a stalking horse for illicit payments to [the hospital’s] referral sources”
Well, the reasoning here doesn’t really cut it, as far as I’m concerned. Referring docs and their staffs hate having to deal with the pre-authorization process, and if a hospital takes on that headache, that’s a real benefit (remuneration, in the language of the anti-kickback statute). If there are two hospitals in town, and — all other things being equal — one provides pre-authorization services and the other doesn’t, guess where all the docs will refer their patients? It doesn’t really matter that the service is provided to all docs, for all payors. It is still clearly an inducement. If, on the other hand, all hospitals take on this added cost of doing business, then nobody gains a competitive advantage. Finally, to the extent physician networks are more and more tightly tied to particular hospital systems (whether through employment or other relationships, post health reform), the potential for steering volume is negligible at best.
Bottom line: I agree with the outcome, but not the reasoning.
David Harlow writes at HealthBlawg:David Harlow’s Health Care Law Blog, a nationally-recognized health care law and policy blog. He is an attorney and lectures extensively on health law topics to attorneys and to health care providers. Prior to entering private practice, he served as Deputy General Counsel of the Massachusetts Department of Public Health.