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You Have to Break Some Eggs If You Want to Make an Omelet

Aug 5, 2012

By David Dranove

In my last blog I explained how at one time our nation’s healthcare budget was relatively small and our economy was robust, so that economic growth could accommodate rising health spending and still allow us to spend more on other goods and services. Today our healthcare budget is huge and growing, while our economy stagnates. Economic growth is barely enough to pay for rising healthcare spending, with little left over to buy more of anything else. In the next few blogs I will explore our options for cutting health spending. To the extent that economic theory and empirical evidence allows, I will also discuss the likely consequences. It should come as no surprise to say that all of these options entail some risks. But if we are to avoid putting all our eggs in the healthcare basket, then we must decide which risks are worth taking.

A simple fact of accounting guides my analysis: If we want to spend less money on medical services, then we either (a) pay lower prices for the services we buy, (b) substitute away from high price services in favor of lower priced alternatives, or (c) purchase fewer services. There are no other options. Moreover, we can do these things either by government fiat or through markets and incentives. In this blog I explore options (a) and (b), mainly focusing on Medicare.

The Affordable Care Act calls for substantial reductions in Medicare fees, providing the largest anticipated cost savings in the ACA. (Private insurers relied on market forces to reduce provider fees in the 1990s, only to see providers gain the upper hand and sharply increase fees in the 2000s.) It is clear that the federal government has the power to reduce Medicare fees, but should it? What are the consequences?

Us and Them-Ism

Aug 5, 2012• 35

By Rob Lamberts, MD

Us and Them
And after all we’re only ordinary men

The wanna-be congressman appeared with his neat hair and pressed suit, a competent yet compassionate expression on his face. ”The first thing I am going to do when I get to congress is to work to repeal Obamacare,” he said, expression growing subtly angry. ”I will do everything I can to give you back the care you need from those who think big government is the solution to every problem.”

My wife grabbed my arm, restraining me from throwing the nearest object at the television. I cursed under my breath.

No, it’s not my liberal ideology that made me react this way; I’ve had a similar reaction to ads by democrats who demonize republicans as uncaring religious zealots who want corporations to run society. I am a “flaming moderate,” which means that I get to sneer at the lunacy on both sides of the political aisle. I grew up surrounded by conservative ideas, and probably still lean a bit more that direction than to the left, but my direction has been away from there to a comfortable place in the middle.

It’s not the ideology that bugs me, it’s the use of the “us and them” approach to problem solving. If only we could get rid of the bad people, we could make everything work. If only those people weren’t oppressing us. If only those people weren’t so lazy. It’s the radical religious people who are the problem. It’s the liberal atheists. It’s the corporations. It’s the government. All of this makes the problem into something that isn’t the fault of the person making the accusation, conveniently taking the heat off of them for coming up with solutions to the problems.

Et tu Dr. Gupta?

Aug 5, 2012• 8

By PAUL LEVY

As well intentioned and thoughtful as he is, Sanjay Gupta nonetheless misses the point in his recent New York Times op-ed “More treatment, more mistakes.” The theme of the chief medical correspondent for the Health, Medical & Wellness unit at CNN is:

Certainly many procedures, tests and prescriptions are based on legitimate need. But many are not…. This kind of treatment is a form of defensive medicine, meant less to protect the patient than to protect the doctor or hospital against potential lawsuits.

Herein lies a stunning irony. Defensive medicine is rooted in the goal of avoiding mistakes. But each additional procedure or test, no matter how cautiously performed, injects a fresh possibility of error.

With a quick aside in admiration of Peter Pronovost’s approach to harm reduction and some other process improvements, he then says:

What may be even more important is remembering the limits of our power. More — more procedures, more testing, more treatment — is not always better.

And then, remarkably, he presents M&M conferences as a remedy:

One place where I have seen these issues addressed is in Morbidity and Mortality, or M and M — a weekly gathering of doctors, off limits to the public, which serves in most hospitals as a forum for the discussion of mistakes, complications, deaths and unusual cases. It is a sort of quality-assurance conference where doctors hold one another accountable and learn from one another’s mistakes. They are some of the most candid and indelible meetings I have ever attended.

Continue reading…

The PED Question

Aug 5, 2012• 1

By Andrew Blecher, MD

I am a fan of the Olympic Games and look forward to them every four years. I was an All-American sprinter myself, having competed against some Olympic medalists, and have a special interest in Track and Field. This is the perfect example of a sport that doesn’t get so much exposure outside of the Summer Olympics, so the events become a stage for athletes in these fields to shine in the rarer-than-usual limelight. The 2012 Olympic Games are underway and as a former athlete and fan, I am looking forward to some amazing performances.

But I am also a sports medicine physician and have treated many elite level athletes, including Olympic Champions. This adds an additional perspective for me as an onlooker- layered within a former athlete, fan, and doctor-and one that I have a hard time coming to grips with. The 2012 Olympic Games are underway and I am looking forward to some amazing performances. The question is, will I believe them?

The 25 Questions

Aug 4, 2012• 5

By PETER PRONOVOST, MD

Recently, I had an enlightening encounter with Horst Schulze, who led Ritz-Carlton Hotels to national awards and has since opened his own hotel chain, Capella. Hortz gave an informal presentation to members of a program that I’m taking part in, the Baldrige Executive Fellowship, and we continued to talk afterwards. Capella has five ultraluxury hotels from New York to Singapore, and all have been recognized as tops in their region. Horst spoke to us of a culture of excellence. He knows—he has built such a culture time and time again. Excellence does not occur by chance. It requires clear goals and a system.

Horst explained that to be great, everyone in the organization needs to know the goals, in order of importance. For Capella, the goals are 1) keep existing customers, 2) add new customers, and 3) optimize the spend of each customer. Every employee not only needs to know the goals, but they need to know the behaviors to achieve them. The Capella employees ensure a warm welcome, compliance with and anticipation of guests’ needs, and a fond farewell.

All employees are required to know service standards. Twenty-five of them. One of them states that you are responsible to identify and immediately correct defects before they affect a guest—for example, getting customers food when the restaurant is closed. Defect prevention is key to service excellence, just as it is to delivering safe health care. Another service standard states that when a guest encounters any difficulty, you are responsible to own it and resolve the problem to the guest’s complete satisfaction.

Capella has standard processes for everything—how to submit defects, how to resolve them. And they trained staff in the goals, the behaviors and the processes. Each hotel, every morning is required to have a huddle at which all staff attend. They review the goals for the company and read one of the behaviors, called service standards. Every day they read a different one. They cycle repeats every 25 days.

If a manager did not do this, Horst said, they would be fired.

The Hidden Costs of Hamburgers

Aug 4, 2012

Many observers believe that the economic realities of the food supply chain contribute to public health problems from heart disease to diabetes. A look at the disturbing economics of the Cheeseburger economy from the Center for Investigative Reporting.

Via The Center For Investigative Reporting.

See Also: The Economist Big Mac Index

It Doesn’t Have to Be This Way …

Aug 3, 2012

By Evan Falchuk

I was struck by the recent story in the New York Times about a young boy who was misdiagnosed, and lost his life.

The boy, Rory Staunton, was a healthy, active 12-year old, until one day he ended up in the middle of our time-strapped, broken healthcare system. He was treated by good, well-intentioned doctors, at a leading medical center, but something went terribly wrong. What started out as a minor cut suffered in a basketball game turned into a major infection that took his life.

Yet nowhere along Rory’s journey, from boy with a bellyache on Thursday to gravely ill boy on Friday night, did anyone act on strong indications that he might be fighting for his life. Critical information gathered by his family doctor and during his first visit to NYU Langone was not used, was not at hand or was not viewed as important when decisions were made about his care, records show.

Story’s like Rory’s happen far too often, and in far too familiar ways. Scientific studies show that patients are misdiagnosed between 15% and 44% of the time. Researchers have found that the combination of fragmented medical information and not enough time between doctor and patient are the leading causes of this problem. And yet, much of America is still unaware how often misdiagnosis happens. Lost in all the politics of healthcare is a recognition that, at its core, healthcare must be about making sure each and every patient gets the right care.

Obesity: Global Public Health Challenge or Investment Opportunity?

Aug 3, 2012• 5

By Marion Nestle

Worried about the potential personal and economic costs of obesity? Never mind. It’s time to view obesity as a business opportunity.

As the press release for a new research report from Bank of America Merrill Lynch, Globesity—The Global Fight Against Obesity, points out:

“Increasing efforts to tackle obesity over the coming decades will form an important new investment theme for fund managers…Global obesity is a mega-investment theme for the next 25 years and beyond…The report…identifies that efforts to reduce obesity is a “megatrend” with a shelf-life of 25 to 50 years…BofA Merrill Lynch analysts across several sectors have collaborated to identify the sectors and companies developing long-term solutions.”

Given the worldwide increase in obesity, its high prospective costs, and the ever-present threat of government regulation, the report identifies more than 50 global stocks that provide investment opportunities for fighting “globesity.” These fall into four categories:

Pharmaceuticals and Health Care: companies taking advantage of the FDA’s increased support for obesity drug development; tackling related medical conditions and needs including diabetes, kidney failure, hip and knee implants; making equipment such as patient lifts, bigger beds and wider ambulance doors.
Food: companies accessing the $663 billion “health and wellness” market and reformulating portfolios to respond to increasing pressure such as “fat taxes” to reduce sugar and fat levels.

In God We Trust. All Others Must Bring Data.

Aug 3, 2012• 5

By Bob Wachter, MD

I knew it would happen sooner or later, and earlier this week it finally did.

In 2003 US News & World Report pronounced my hospital, UCSF Medical Center, the 7th best in the nation. That same year, Medicare launched its Hospital Compare website. For the first time, quality measures for patients with pneumonia, heart failure, and heart attack were now instantly available on the Internet. While we performed well on many of the Medicare measures, we were mediocre on some. And on one of them – the percent of hospitalized pneumonia patients who received pneumococcal vaccination prior to discharge – we were abysmal, getting it right only 10% of the time.

Here we were, a billion dollar university hospital, one of healthcare’s true Meccas, and we couldn’t figure out how to give patients a simple vaccine. Trying to inspire my colleagues to tackle this and other QI projects with the passion they require, I appealed to both physicians’ duty to patients and our innate competitiveness. US News & World Report might now consider us one of the top ten hospitals in the country, I said, but that was largely a reputational contest. How long do you think it’ll be before these publicly reported quality measures factor heavily into the US News rankings? Or that our reputation will actually be determined by real performance data?

Why Should You Care Whether or Not Your State Decides to Expand Medicaid Coverage?

Aug 2, 2012• 8

By Maggie Mahar

By expanding Medicaid, the state-federal partnership that offers health insurance to low-income Americans, the Affordable Care Act set out to cover some 17 million uninsured – or roughly half of the 34 million who are expected to gain coverage under reform. But when the Supreme Court ruled on the Affordable Care Act in June, it struck down a key provision which threatened that if a state refused to co-operate in extending Medicaid to more of its citizens, it could lose the federal funding it now receives for its current Medicaid enrollees.

In a 7-to-2 decision, the justices ruled that this punishment was too coercive: “withholding of ‘existing Medicaid funds’ is ‘a gun to the head’” – that would force states to acquiesce.

As a result, states can, if they choose, opt out of the Medicaid expansion, and some governors are threatening to do just that – even though the federal government has committed to pay 100 percent of the cost from 2014 to 2017. After that, the federal share would gradually decline to 90 percent in 2020, and remain there. This is a generous offer; today the federal government now picks up just 57 percent of the Medicaid tab.

Nevertheless, some states claim that the 10 percent that they would have to ante up after 2020 is more than they can afford. A few go further and admit that this isn’t just about money: by rejecting the federal funds, they are voicing their objection to “Obamacare.”