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The Problem with Free Market Healthcare

The right payment structure keeps patients healthy while saving money.

We want healthcare to be abundant, effective, easy, and cheap; for too many of us too much of the time it is scarce, ineffective, and maddeningly difficult. For all of us it is far too expensive. Why? How did we get in this mess? How do we end up paying so much for healthcare and not getting what we want?

It’s a big question, and it’s at the core of the mess we are in. The convoluted way we pay for healthcare in the United States gives too many patients treatments that they don’t need, or treats them for conditions that could have been prevented with much cheaper care, or denies patients services that they actually need. How does this happen? To answer this question, we have to dig into the actual structures of healthcare, and some of the basics of economics. And in that answer we can begin to see how we need to rebuild those very structures in order to survive and thrive beyond reform.

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The Wrongologist

Header-jacket

Author Kathryn Schulz recently provided a newspaper exposition of some of the themes of her new book, Being Wrong, Adventures in the Margin of Error. As noted on her website, Kathryn has “a credible (if not necessarily enviable) claim to being the world’s leading wrongologist.”

She finds fault in the way we find fault in ourselves. “Misunderstanding our mistakes . . . — seeing them as evidence of flaws and an indictment of our overall worth — exacts a steep toll on us. . . . [I]t impedes our efforts to prevent errors in domains, such as medicine and aviation, where we truly cannot afford to get things wrong.”

The book is engaging and thought-provoking.

Kathryn uses our wrong-side surgery experience at BIDMC as an uncommon example of using error to improve things, particularly when an aggressive target for error reduction has been established and when a commitment to transparency has been adopted.

She notes, “If you really want to be right (or at least improve the odds of being right) you have to start by acknowledging your fallibility, deliberately seeking out your mistakes, and figuring out what caused you to make them.”

(Bostonians can hear Kathryn in a reading this Friday evening at the Harvard Book Store.)

Paul Levy is the President and CEO of Beth Israel Deconess Medical Center in Boston. Paul recently became the focus of much media attention when he decided to publish infection rates at his hospital, despite the fact that under Massachusetts law he is not yet required to do so. For the past three years he has blogged about his experiences in an online journal, Running a Hospital, one of the few blogs we know of maintained by a senior hospital executive.

Slow Medicine

I have been thinking about the difference between slow medicine and UCLA medicine.  It has made me realize how complex and difficult it is to transform American health care so that we lower per-capita cost and increase the quality of our lives. And yet we must achieve these two goals.

Slow medicine is practiced by a small, but growing subculture whose pioneer and spokesperson is Dr. Dennis McCullough, author of the book My Mother, Your Mother: Embracing “Slow Medicine,” The Compassionate Approach to Caring for Your Aging Loved Ones. Slow medicine is a philosophy and set of practices that believes in a conservative medical approach to both acute and chronic care.

McCullough describes slow medicine as “care that is more measured and reflective, and that actually stands back from rushed, in-hospital interventions and slows down to balance thoughtfully the separate, multiple and complex issues of late life.” Shared decision-making, community and family involvement, and sophisticated knowledge of the American health care system are some of the slow medicine practices that sharply contrast with UCLA medicine.

UCLA medicine is the status quo where the hospital is the center of the medical universe; where care is often uncoordinated and hurried, and where cure is the only acceptable outcome for both patient and physician. I call it UCLA medicine because the CEO of that well-regarded medical center was quoted in a New York Times Sunday Magazine article as saying, “If you come into this hospital, we’re not going to let you die.” This is a statement that puzzles me as an old time anatomic pathologist.

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The Cost of Care

On Labor Day Costs of Care asked doctors and patients to send us anecdotes that illustrate the importance of cost-awareness in medicine, as part of a $1000 essay contest aiming to shine a national spotlight on a big problem: doctors and patients have to make decisions in a vacuum, without any information on how those decisions impact what patients pay for care.

Two months later we received 115 submissions from all over the country – New York to California, Texas to North Dakota, Alaska to Oklahoma. We feel these stories are poignant because they put a face on some of the known shortcomings of our system, but also because they unveil how commonplace and pervasive these types of stories are. According to essay contest judge Dr. Atul Gawande, a surgeon and staff writer at the New Yorker, “These [stories] are powerful just for the sheer volume of unrecognized misery alone.” The following story from Brad Wright is one of the finalist submissions in our contest …

Three Ultrasounds

Sitting in an exam room I am watching my patient struggling to ask a difficult question that she clearly does not want to ask. After several attempts at starting and a few half finished sentences she finally manages to mumble a request for help with obtaining food for herself and her two daughters. She is a 41-year-old woman, 32 weeks pregnant with her third child, and working a full time job as a CNA in a local nursing home. Her husband is also working full time as a janitor. At her initial visit she denied any issues obtaining food for herself and her family, and declined any referral to social services.

“Has the work situation changed for you or your husband?” No. “Have you always had difficulty getting food and did not want to ask?” No. “Is there some reason you need more food than you needed before?” No.

Tears begin to flow and she starts to talk. She tells me that she had been in this country for 5 years and never had public assistance of any kind. She talks about her long hours working 2 and sometimes 3 jobs in order to have enough money to keep her family afloat. She talks about putting herself through school to become a CNA while still working to pay her bills. Until last year she was doing this alone, making not only money to provide for her family, but also the money needed to bring her husband here. She had never asked for help or let her children go without. But now she is unable to pay her bills and buy food. What is the tipping point for her ability to provide for her family?

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Managed Care 2.0

“The law of unintended consequences is what happens when a simple system tries to regulate a complex system. The political system is simple, it operates with limited information (rational ignorance), short time horizons, low feedback, and poor and misaligned incentives. Society in contrast is a complex, evolving, high-feedback, incentive-driven system. When a simple system tries to regulate a complex system you often get unintended consequences.” — Stephen Dubner and Steven Levitt, Freakonomics

When The Patient Protection and Affordable Care Act (PPAC) and its companion legislation was ratified by Congress and signed by the President into law, there was a great expectation for sweeping change. Yet, change is a scary proposition for 180M Americans who believe the devil they know (employer based private coverage) is preferred to a government run system.

Seniors are suddenly doing the math and wondering if their beloved Medicare will default on their watch. More than 50% of these same seniors, when polled, shared they do not want a government run healthcare system ——even though Medicare is a government run system.  People are confused, angry and wary. Yet PPAC is now law and despite its obvious flaws and potential for unintended consequences, it is unlikely to be repealed or deconstructed.  For better or worse, it is the foundation for Managed Care 2.0.

Managed Care 2.0 – Reform is setting the stage for a new era of American healthcare – Managed Care 2.0.  In launching this new period anchored by expanded access and insurance market reforms, we are expecting to say farewell to the three decade era of Managed Care 1.0 – a barren stretch of fiscal and social desert marked by spiraling costs, misaligned financial incentives, massive underfunding of Medicare and Medicaid obligations, fraud, over-treatment, public to private cost shifting, historic rates of chronic illness and the slow erosion of employer sponsored healthcare leading to an astounding 40M Americans without insurance.

Where Managed Care 1.0 was a time characterized by consolidation of stakeholders, cost shifting, risk shifting and scorched earth, Darwinian battles on the supply and delivery side, Managed Care 2.0 will begin, as one pundit called it, “ the battle for the soul of medicine”.Continue reading…

Do EHRs Kill People?

Back in the times when EHRs were just EMRs, they had a very simple and humble mission. The software was supposed to help providers of health care services better manage their business. EMRs were supposed to help physicians adhere to CMS documentation rules, automate patient flow management and get rid of all the mountains of paper floating around a typical medical office or hospital. It was assumed that EMR software will increase reimbursement rates, streamline workflow and even make the doctor more efficient. After all, every other industry that switched to computerized business management realized bottom line improvements.

Along the way, bolder statements started appearing, mainly from EMR vendors trying to sell their wares. EMRs could also reduce medical errors. The most common argument was for the benefits of replacing the notoriously illegible physician hand writing. Prescription errors would be reduced if only pharmacists and nurses could get a nice legible script. Then came the frequently misplaced paper charts. If the chart resides in the computer, it cannot be misplaced, it is always available to all and it is complete. All the information you need right at your fingertips, regardless of your physical location. It could save lives or at the very least, it could save time. The EMR was nothing more than an electronic chart. One vendor went so far as to create a computerized image of a yellow manila folder with tabbed pockets for various items in the electronic chart.Continue reading…

If I Ruled the World

If you study previous attempts to reform healthcare delivery through the private sector, there is one common thread. These attempts all failed because of an absence of proper management information systems. We need integrated electronic health records. And not just to improve medical decision making. We need EHR that can be used for management decision making – for contracting, measuring costs, measuring and rewarding quality; I could go on and on. We are trying to solve management problems in a $2 trillion industry using management information systems that would be an embarrassment in nearly any other sector of the economy.

Of course, the industry has been pushing EHR for decades and there are places where EHR is really first rate. Kaiser is a great example but also a special case because of its thorough vertical integration and long history. And even Kaiser has been unable to replicate itself outside of its core markets. The sad fact is that most providers have little incentive to adopt EHR, and even when they do, they have little incentive to be compatible with other providers. Unfortunately, the network externalities benefit purchasers and consumers a lot more than they benefit providers, so don’t expect the compatibility problem to solve itself.

My proposal is simple. Assemble a panel consisting of medical professionals, managers, and insurers. “Lock them in a room” for 72 hours and tell them to choose from among the many fine existing EHR systems. Tell them they can combine the best features of each if they wish. Once we have settled on an EHR system, give every provider one year to adopt it. If they refuse, deny them Medicare and Medicaid payments. Combine the stick with a carrot – subsidies to providers who have limited financial resources. I believe the total one-time subsidies would be less than $50 billion, a drop in the bucket compared with the size of the system.

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The Libertarian Mind

“It is an eternal obligation toward the human being not to let him suffer from hunger when one has a chance of coming to his assistance.” –Simone Weil

Libertarianism is much in the news these days, as the political divide in the U.S. seems to widen almost before our eyes. Before providing a rough, notional definition of “libertarianism”, I should offer readers some caveats. First, I am not a political scientist, professional philosopher, or economist, though scholars in these fields have offered many pointed critiques of what is loosely called libertarianism (see references). Furthermore, as a psychiatrist, I am trained to diagnose individuals whom I have professionally examined. I am not in the habit of “diagnosing” movements, ideologies, or political groups; indeed, the idea of doing so is clearly outside the purview of medical or psychiatric practice.

Nonetheless, as a lecturer on bioethics and humanities, it is impossible for me to read the platform and proclamations of the Libertarian Party without drawing some tentative conclusions as regards the nature of this movement; its psychological underpinnings; and its ethical implications for the poorest and sickest among us—those sometimes referred to as “the destitute sick.”

I do not propose to “psychoanalyze” particular individuals, or to speculate on the motives of political figures who figure prominently in American politics. And, because the term “libertarian” has such a wide range of meanings, I will focus my attention on the official platform of the Libertarian party, which is very lucidly spelled out in a publicly-available venue (http://www.lp.org/platform). For the most part, I will deal with the Libertarian party’s position on health care and social support systems, while offering some tentative impressions on the “psychology” of libertarian theory.Continue reading…

Blood Test Surprise

In the spring of 2005, the sinus infection returned. I awoke severely congested with a pounding forehead and pain around my eyes that grew worse when I bent to tie my shoes. The feeling was familiar. Two years earlier, I had similar symptoms, but was uninsured and endured a miserable week with nothing but over-the-counter medication. Now they were back.

Fortunately, when I started graduate school, my father insisted that I have health insurance. As a healthy 24 year old, I didn’t see the need, but he agreed to foot the bill for a high-deductible insurance policy to cover me in the event of catastrophic illness. Except for four physician office visits subject only to a $35 co-payment, my policy offered no benefits until I spent $3,000 out of my own pocket. With my sinuses throbbing, I knew I needed to use one of those visits. Overwhelmed by the list of “in-network” providers on the insurer’s website, I picked an internist based on convenience—his practice was located in a medical complex near my home.

Arriving for my appointment, I checked in and presented my insurance card to the receptionist. “Your visit today will be $35,” said the woman behind the desk. I was relieved to hear that my coverage was working as promised. A nurse ushered me to an exam room, where the physician promptly entered, half-heartedly listened to my complaint, and confidently asserted that I did not have a sinus infection because I had no fever. I wanted to say “Really? Mind handing me a tissue so that I can show you what’s been coming out of my head?” but resisted the urge. Instead, I clarified that fever or no, I didn’t feel well, and believed my sinuses were the culprit. At this, the internist lost patience. He ordered some lab work and a sinus CT scan to rule out infection, and said that I could have everything done downstairs.Continue reading…

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