The Industry Veteran joins us this afternoon in the latest in THCB’s series by guest posters, following up on excellent posts by veteran financial journalist  Maggie Mahar and orthopedic surgeon turned talk show host Eric Novack. The Veteran found Eric’s comments on the health care system inspiring — to put it mildly. They set him to thinking about the true role of physicians in the healthcare system and in society at large. Needless to say, as always on THCB, his words are his alone.     
    
   

On this sunny morning I thought I might take time away from more productive pursuits to answer some of the typically narrow minded and self-serving posts of the physicians who attend THCB in the same way that dogs raise their hind legs at convenient lampposts.  The object of my opening disdain is someone by the name of Dr. Eric Novack.  Alas, Maggie Mahar demolished his drivel in a more cordial manner.  Novack’s transparently phony views suggest an analogy to Samuel Johnson’s comment about a dog walking on its hind legs.  Physicians writing about politics, health care economics or social policy are similar to this canine trick in that it is almost never done well; the wonder is that it is done at all.

Other physicians seeking to foist their miscreant views on THCB usually content themselves with illogical or poorly informed letters that disagree with some of my posts.  I don’t wish to be too caustic in responding to their blatant ignorance.  After all, they spent years performing brute rote memorization and other, low cognitive tasks, so their distorted thinking is a product of their trained incapacity.  While it isn’t terribly useful to disparage plumbers for being poor cooks, the pipe cutters who consider themselves master chefs despite an inability to boil a potato do merit some contempt.

A few themes of disagreement and bewilderment emerge from the physicians’ posts.  One chap, for example, asks about the “de-skilling” reform that I urge upon medical practice.  I realize that memorizing bones and ways to add carbonyls to benzene rings doesn’t leave much time for understanding history, so I’ll try to provide a remedial lesson.

In the late 19th and early 20th centuries, the pace and substantive nature of industrial production was largely directed by skilled craftsmen on the production floor.  This situation stymied the interests of managers who considered matters of volume, configuration, quality and cost as matters for their control. Their solution, as implemented by Henry Ford and others, consisted of the assembly line for which workers with far less skill could be inserted or removed as interchangeable parts.  Labor historians have actually documented many periods of de-skilling throughout the industrial revolution.

As applied to medical practice, the process consists of pushing the scope of practice, discretion and competence down the food chain.  Primary care practitioners should do a fair amount of the things that only specialists do at present.  Nurse practitioners should assume responsibility for many primary care functions, PAs should get other responsibilities, and so on.  Other health care professionals such as pharmacists and nurses should also assume more physician responsibilities.  Of course, physicians for years have berated such “assembly line medicine,” “therapeutic triads” and other labels for the process, despite the fact that studies have shown it produces better outcomes and lower costs.

Other affirmers of the Hippocratic oath who seek to recoup the costs of their medical education from their first four patients find fault with my call to feminize medicine and increase the number of foreign medical graduates.  They claim that even now, 50% of practitioners are women and most hospital physicians are FMGs.  Their figures are possibly correct, but their claim is equivalent to saying that Hispanics, blacks, Asians, poor whites and the aged infirm run the US because there are so many of them.  I merely ask these disingenuous posters to examine the ranks of service chiefs at major teaching hospitals, the senior faculty at top medical schools and the key opinion leaders who speak on behalf of the Big Pharma companies at medical conventions.  Only small percentages of these big, swinging schwanzes are women or FMGs.

A few years ago I systematically examined the reasons for this paucity of women in the medical profession’s key positions.  Basically, the motivations and the personality profiles of influential physicians approximate those of senior executives at the largest 1000 companies.  The desire for wealth, status, power, ego and other forms of self-aggrandizement predominate.  For some of the same reasons that the numbers and influence of women in the corporate boardrooms remain small, their sway in the medical profession is also puny.  In most cases, women are just the working stiffs and peons of the profession.  That stratification of medicine won’t do.  I’m talking about making medicine a feminine profession in the same way as elementary school teaching, nursing and public librarianship.  That will incentivize you egocentric males and the small number of female-impersonating women in the profession to ply your greedy ways in business without the special dispensations that society grants to physicians.

Finally, I don’t know whether I’m amused or nauseated by the posts from physicians who seek to justify their claims to unconscionable incomes by citing the many years they spent in school and the related costs.  Along the same line, a cardiologist at the American College of Cardiology meeting told me that the country should guarantee cardiologists a starting salary of $250,000, at a minimum, because they had to forego the enjoyments of their years between the ages of 20 and 30.

Well, according to the logic of THCB’s greedhead physicians, veterinarians sure get a raw deal because they spend quite a few years in training and receive only a fraction of MDs’ salaries.  Of course PhDs really take it up the sphincter, with all the years they spend in graduate school, a series of post-doc positions in indentured servitude, and then some really chancy prospects of even getting a job.

The lesson here is not like memorizing the steps of the Krebs cycle or the twelve cranial nerves, so I’ll take it slowly for sawbones readers.  No mnemonic devices or acronyms are required. 

One’s income in a market economy is not based upon years of schooling, contribution to society (whatever that means), or any other assessment of intrinsic worth.  Instead, labor is a product that seeks its economic rent in a competitive market and, like any other product, it captures whatever willing buyers will pay for it.

Of course, if one’s profession obtains a legal monopoly through state licensure and then chokes off the labor supply, buyers in the market will have to pay more for that particular labor.

Alas, the day proceeds and I can waste no more of it instructing arrogant, ignoramus physicians.  I charge by the hour and since I don’t make the return on equity of a Big Pharma company, I see no need to coddle your swinish asses.

As a parting shot, I see that Dr. Novack identifies himself as an orthopedic surgeon.  This information reminds me of an old axiom that made the rounds in the pharmaceutical industry several years ago.  Before the prevalence of Ken and Barbie reps, the ranks were smaller and populated by pharmacists and others with graduate degrees in the health sciences.  Many of these sales people used to complain about the fact that they needed to dumb down the detail presentations so drastically for some specialties.  That’s when one wag passed around the story about the procedure used by residency programs for selecting new people.  According to his apocryphal tale, teaching hospitals would take the bottom 10% of med school graduating classes and if people in this tier could bench press 200 pounds or more, they were taken into orthopedic programs.  Those unable to push the bar to arm’s length went into OB/GYN.  I suspect Dr. Novack had two nurturing nurses spotting for him and they raised the bar from both ends.  —  Industry Veteran

Here is a quick hit for the day. We have read about Medicare (actually CMS, but it sounds better to give Medicare its own personality) publishing payments for 30 procedures. I encourage you check out cms.gov and try to actually understand the Excel file that you get for your efforts.

Only government could call that ‘disclosure.’

Private insurers are also getting into the mix. We have all heard about Aetna publishing the range of reimbursement
  for contracted physicians. Many other companies are announcing that they will
  follow suit. These news reports always include the comment that physicians and
  hospitals do not want this published. I disagree.

Two scenarios can emerge from this, once all insurers publish reimbursement 
rates (and they are not mutually exclusive).

As an orthopedic surgeon, I will use an orthopedic example. If insurer X reports
  publicly that the range of reimbursement for treating a broken wrist ranges from $500 – $750, I will obviously immediately go and check to see where I am
  on that scale. If I am at the low end, I will definitely not sign a new contract
  with that insurer for less than what my colleagues are getting for the same
  work. I will not be alone.

Scenario two is more intriguing. Once all insurers publish their fee schedules, doctors no longer need to participate in insurance plans. All I need to do is set my rates comparably- and reasonably- and drop all the insurance plans. And I can eliminate much of my billings/collection staff. I can also now account
  for the actual work it takes to do different things—and perhaps accept lower
  payment for some things, while charging more for much more complex work. (The example I use is joint replacement: a re-do [revision] joint replacement also pays about 20% more than a first time [primary] joint replacement, even though it can take 4x the work, with increased liability.)

The disclosure would have the absolute opposite effect on insurers than they intended. Although I suspect the smart folks at Aetna, UnitedHealthcare, Healthnet, and others have considered this already, and it is why they are so reluctant to actually make public this information.

The Wall Street Journal reported in a June 13th article,
  Page D1 that several major insurers (Aetna, Cigna, Humana, UnitedHealth)
  as well as Medicare are disclosing the prices they have negotiated with doctors
  and hospitals for a number of common procedures. Some are beginning to include
  quality indicators with the pricing information. This is an apparently-growing
  trend that may spell doom for companies like HealthGrades,
  but this wasn’t noted in the article. One interesting thing: apparently at least
  a few insured people have used the system, even though they’ll be well past
  the deductible. Maybe some few will note a link between the premiums they pay  and the Medical Loss Ratio their insurer experiences. On the other hand, the
  article notes that in the absence of any other quality indicator, people may
  think that more expensive implies higher quality and choose the
  high-cost provider.

The insurer’s tools are restricted to their own plan members: this means if
  you’re covered through Cigna you can’t tell what out-of-pocket costs might be
  for somebody covered by (say) United. The article goes on to detail several
  of the limitations inherent in these disclosures, well-known to readers of The
  Healthcare Blog. Tools like these might actually be useful to those with HDHP
  coverage, or the uninsured.

But there’s more. The article says states are beginning to mandate that hospitals
  disclose their charges. Charges amount to the "list price" that almost
  nobody pays, so this isn’t very helpful to prospective patients. The list includes
  South Dakota, Minnesota, and Florida. I wonder who got the states to mandate
  that instead of something useful. Some state hospital associations are evidently
  taking proactive measures, and have created their own websites to disclose hospital
  charges before being told they must. But why would they do this?

Look at this from the New Hampshire Hospital
  Association PricePoint system:

How much do government programs pay compared to other payment
sources?
In many cases, Medicare & Medicaid reimburse hospitals at rates that do not
cover the costs they incur to provide care. Payments from privately insured
patients generally subsidize the shortfalls created by Medicare and Medicaid
and therefore represent a “hidden tax” on individuals and families not
covered by government programs.

Where have we heard this before?

When you ask for prices, you get median and mean charges with no promise that
  your bill will bear any resemblance to either figure, and this editorial.
  Apparently, they expect they’ll be forced to disclose someday, and this way
  they can control the content of the disclosure. If the legislature gets involved
  the hospitals might not be allowed to put their own "spin" on things. This actually
  is brilliant strategy. They’re not disclosing very much, but they can claim
  they’re being as transparent as they can be, given the vagaries of medical treatment.
  They can lobby commercially-insured patients to lobby congress to increase Medicare
  reimbursements with an implication that the amount they pay in "hidden taxes"
  will go down. But of course it won’t. They do not mention that there are many
  cases for which Medicare & Medicaid reimburse hospitals at rates that exceed
  the costs they incur to provide care. Imagine! Finally, they offer no assurances
  that the costs they incur to provide care are reasonable.

As the premier health policy blog on the net, I am honored that Matthew has asked me to occasionally guest post here. I also am regularly impressed with
  the level of thought and knowledge of so many posters of comments.
  Every once in a while, I think it is important to review, what I would believe
  so basic myths about our healthcare system. One of the greatest myths is the
  3% overhead myth for medicare. (This is often also cited as the 2% overhead
  myth.)
  Argument one in favor of the ‘medicare for all’ expansion of government
  regulated healthcare is the disparity in overhead between Medicare and private
  insurance plans. The Medicare overhead number is stated as 2% or 3%, depending
  upon where you read it. The overhead for private insurers is stated as 15%-25%.
  The disparity is used to explain the statement that, “if we just take the
  amount spent on wasted overhead and apply it to medicare-for-all, we could easily
  pay for everyone to be covered”. Where does that math come from? Here’s
  the brief skinny:
  $2 trillion in healthcare. 50% from private sector= $1trillion. Reduce overhead
  by 15-20%= $150- $200 billion available.
  Oh, if it was so simple.
  Let’s attack the 3% myth.

Proponents say overhead should be calculated as: admin costs/ payout for services.
  However, medicare recipients use much more care, on average, than younger groups.
  So, for example (made up numbers), medicare recipients might use $5000 per year,
  while commercially insured people might use $3000 per year. If both groups consisted
  of 10,000 people, it would take the same amount of oversight, management, etc.,
  yet the perceived overhead to take care of the younger group would be much higher;
  or put the other way, medicare overhead would be much lower.Solution: calculate overhead on a ‘per enrollee’ scale. This alone
  accounts for 50% of the discrepancy in overhead between medicare and private
  payers. If you do not believe me, just check with the Kaiser Foundation research
  saying the same thing.
  Proponents focus on the low administrative costs, on the one hand, while denouncing
  the amount of fraud by hospitals, providers. This perhaps is because medicare  does not spend enough on administrative oversight of the program. This happens to be exactly what the GAO and the National Academy of Social Insurance has  said within the past 6 years. So, if medicare spent more on administration,
  the discrepancy would be decreased even further.
  Proponents fail to account that for every regulation, costs are incurred by
  providers to comply. The 100,000 plus pages of medicare regulations function
  as an unfunded mandate on providers. Currently, the coding is based on ICD-9,
  which has over 24,000 codes. ICD-10, slated to go into effect within the next
  2 years has over 207,000!!!! And does upgrading for the change count toward medicare overhead? Of course not.
  Proponents say that private insurance company rules would create as much hassle
  for providers. Perhaps, but we will never know since private insurance rules
  are based off of the medicare guidelines.
  Thus, the ‘medicare 3% myth’, is, in reality, just that: a myth.

But like most myths, true believers will never pay attention to facts.