We have a tendency to blame individuals whose performances excel within a flawed system rather than analyze why the system rewards an unwanted behavior and perpetuates poor outcomes. Let’s take a look at some of the players attending the 2019 CMS Quality Conference to illustrate how it affects our healthcare system.
Don’t Hate the Playa (Hate the Game)”-Tracey Lauren Marrow (aka “Ice-T”)
For context, I’ll begin with a brief overview of our health care system. Most of you know it is incomprehensibly expensive. But most don’t know expenditures accelerated logarithmically in the late 1980’s. I contend a major reason was legislators decided that instead of prosecuting a few bad actors, we should not trust any doctors, and Stark Laws were passed in order to prohibit physicians from establishing financial relationships with profit-making health care entities.1 Of course all this did was accelerate the movement of non-physicians into the vacuum of private profit-making health care enterprises who were specifically trained in finance, business and law. They accelerated and expanded the efficiency of billing and services, thus creating a windfall of revenue in the healthcare industry by more effectively serving their shareholders.2 In the end, a relatively small percentage of physicians interested in business administration, merely redefined their roles and moved from seeing patients to help established networks that grew into those same managed care corporations. Rather than eliminate bad actors, they just changed job descriptions. The ‘no player hating’ approach would argue those individuals were not primarily physicians in the first place. Ironically perhaps, many have recently begun to recognize that the highest value for patient care seems to come from well trained and trusted care primary physicians who continue to see patients.
What the Healthcare Cost Game Looks Like Today
We spend about $3.5 trillion or 20 % of the GDP on healthcare in the U.S. according to estimates by Centers for Disease Control. Well over a trillion of that goes to hospitals, where 25% of all spending goes to administrative costs, primarily in the form of salaries. (That includes everyone from the hospital CEO’s to billing and coding clerks but not the physicians caring for patients.3 A bit under 16% of the pie goes to physician services, without distinguishing those that get paid for primary care and spend more time with patients from an episodic encounter with a surgeon you see only once.4 Over 32% goes towards the total cost of hospital care. Over $42 billion goes exclusively towards government administration of our healthcare system. Finally, health insurance costs us 6.6% or $210 billion and over 10% or about $325 billion goes to the pharmaceutical industry.5 Why?
Ask any physician that actually sees patients for hours every day rather than make administration of a practice or the business of healthcare their major concern, and they will likely admit they would not: order the number of tests; or order as many procedures; refer as many patients to sub-specialists; or hospitalize and re-hospitalize as many patients as they do, were it not for the medical legal system we operate under. In addition the administrative oversight tied to benchmarks, or reimbursement incentives that limit their ability to continue to practice their profession has a negative impact on overutilization. If the free market truly believe in the power of the invisible hand, the distancing between clinician provider and patients through the inescapable interposition of third party payers, health management organizations and agents subcontracted by CMS to oversee disbursement of payments for care, we could see those intermediaries are adding needless and potentially bankrupting cost to the system. If this were truly understood and made transparent, might we not recognize why we are chasing our tails?
There is a spectrum of forces set up to work at odds in our healthcare system. Not the least of these is interfering with the singularly most valuable participant in the delivery of care: the primary physician who is touching the patient or emergency physician who is trying to save the patient’s life. Any time there is no life threat, the best option for the care of every patient is a primary care doctor. It may seem obvious, and perhaps the average citizen believes that is the case. Here is the problem: as I’ve described in earlier posts, well-trained triage nurses and emergency physicians are strongly discouraged from telling patients: “you are not having an emergency right now, it is safe for you to go home and schedule an appointment to see your doctor in the morning.” There are myriad reasons for this, including incorrectly placed financial incentives. Part of it is the erosion of trust between patients and the health care system in general; part of it is that once you set up an adversarial system between payer and clinician everyone acts in a self-interested manner. The medical legal risk of being even slightly wrong is intolerable, and even if a condition that does not exist at the exact moment of the interaction with that clinician develops subsequently. In the end, you cannot compel ethical behavior in the unethical system. Assuming the worst will actually be a guaranteed way to lose revenue in the overall process. Suffice it to say for now that honest advice it is simply disallowed.
Professionals Do What They Are Trained to Do Best
The keynote speaker at this conference was Seema Verma, the top administrator for CMS who oversees its $1 trillion budget. She is the former CEO of Health Management Associates. Mrs. Verma has a bachelor’s degree in life sciences and a master’s degree in public health. She a policy consultant who founded SVC Inc. (Seema Verma Clinic, Inc.) although Mrs. Verma does not have a medical degree. In 2014, SVC Inc was awarded more than $3.5 million in Indiana State contracts and she was also employed with Hewlett-Packard at the same time, where she earned over $1 million. Her company apparently changed its name to Health Management Associates around that time.
Not surprisingly her keynote presentation praised the achievements of current White House initiatives under the Trump Administration and she cited successful actions to ameliorate deficiencies she perceives in the Affordable Care Act (ACA) including securing subsidies to insurance agencies to support premiums, preserving the private insurance market and promoting managed care oversight to ensure that ‘only those that absolutely need Medicaid’ are allowed to depend on it. (Who is she suggesting does not need Medicaid? Not the uninsured emergency patients from the inner city I serve?)
Many may recall that this past November 1st, 2018, Mrs. Verma sent out the following tweet accompanying the photo below:
“This year’s scariest Halloween costume goes to…
(pic of white young man wearing a black T with the words “Medicare For All”)
Then followed that one up later in the day with:
“Did I get your attention? Good. Medicare for All isn’t a joke. It’s a multi-trillion dollar drain on the American economy that will bankrupt future generations. It’s government controlled health care that will strip choice away from millions. It’s a bad idea. Ant it IS scary.-Administrator Seema Verma”
I include all of this only to point out that if you expect to hold someone accountable for understanding the effect of the current government controlled health care based on the medical care provided by physicians, perhaps one would prefer to consult practicing physicians.
I also met Dr. Paul Rosen, Medical Officer for Transforming Clinical Practice Initiative for CMS. His goal is to enroll hundreds of thousands of physicians in what is called an alternative payment model (APM) which instead of paying providers for the care they are providing their patients, rewards them for delivering high-quality cost efficient care, prevent hospitalization, prevent unnecessary tests and realize a multi-billion dollar cost savings to the government as a result. I shared my perspective on our current system of government sponsored health care reimbursement and the potential short-comings of business initiatives like six-sigma when it is misapplied to emergency medicine care. He assured me CMS would not interfere in patients being able to get the emergency care they critically need. (See page 38 of American Academy of Emergency Medicine “Common Sense” January 2019 @ https://www.aaem.org/resources/publications/common-sense
I also, met Professor Robert Flemming, PhD in Health Services Research who has a strong background business with an MBA in Healthcare Management. He also does not have a medical degree yet as the Director for Transforming Clinical Practice for CMS is implementing the approach described above. He also promised to read my article in Common Sense on the unintended consequences of management initiatives.
Finally, there was my friend Jean Drummond CEO of Health Care Dynamics International (HCDI) who is both a part of the mission of CMS through contracted work similar to that of Mrs Verma made her reputation on and trying to help minority providers survive the current realities I am describing. She introduced me to Dr. Patrick H. Conway, CEO Blue Cross Blue Shield of North Carolina. He is former Deputy Administrator for Innovation and Quality at the federal CMS. Dr. Conway succeeded Mr. Brad Wilson in his current position who was one of North Carolina’s top health care officials in terms of compensation. According to BC/BS Mr. Wilson’s salary in 2017 was in excess of $1 million on top of which he earned a bonus of over $1.9 million. Why? Dr. Conway shared how he is aggressively addressing the social determinants of health the communities he serves. What else else would justify that kind of administrative compensation? Brace yourself for the barrage of acronyms.
If you are not willing to become conversant with this alphabet soup of acronyms, you have no hope of understanding why the U.S. Healthcare budget is approximately $1 trillion. Worse yet, you stand no little chance of understanding how any one could believe every citizen in our society should have a path to affordable health care and yet not endorse something called the Affordable Health Care Act (ACA). I predict that most folks will agree, it’s not the players, it’s the game. Let’s use the present examples. Now I have had extensive conversations with Jean and I can tell you her heart is in the right place with regard to helping providers that serve the most vulnerable underinsured and barely insured continue to survive in their practice. I will begin by admitting theirs is a small piece of the enormous budgetary pie that is in question. We will move on to the bigger players, insurers and hospitals in a bit, but let’s start with Jean’s operation.
HCDI is a Program Support Center (PSC) IDIQ (Indefinite Delivery/ Indefinite Quantity) contract holder, the largest multi-function shared service provider to the federal government. PSC is hosted by the U.S. Department of Health and Human Services (HHS) and provides support services focused on customer needs. PSC was established 20 years ago to reduce HHS’s annual spending and increase the quality of administrative services including performance measures for clinical care and clinical practice reimbursement from CMS. This function falls under TCPI which stands for Transforming Clinical Practice Initiative. PTN stands for Practice Transformation Network and SAN for Support and Alignment Networks. HCDI is focused on the latter.
As a result of the ACA, CMS funded a spectrum of programs to compel clinicians to realize small to large-scale transformation. At the ground level, individual practices are required to prove quality outcomes while simultaneously reducing costs, that is, while reimbursement from HMO’s and CMS is reduced. As the majority of the cost is salary therefore, payments to providers are an essential part of cost containment. Practice Transformation Networks (PTN’s) are peer based learning networks coach, mentor and assist clinicians to develop core competencies in order to retrain them to perform up to standards set by new benchmarks. Examples of PTN’s would be Baptist Health, Mayo Clinic, Vanderbilt University Medical Center…Support and Alignment Networks (SAN’s) use partnerships with national and regional associations to enforce core competencies, compel service and incentivize care through reimbursement for compliance with measurable standards of utilization and performance. SAN’s include American College of Emergency Physicians, American Medical Association, National Nursing Centers Consortium…
CMS calls the next phase, the Quality Payment Program (QPP) which will replace what was formerly referred to as the Sustainable Growth Rate for reimbursement. In other words, payment will be based on value assessed based on benchmarks so that data drives care not cost. Unfortunately, there is no self-awareness regarding the costs added by the administration of these vast networks for oversight. You see the above entities are but major categories and we have yet to consider HIIN, BFCC, QIN, ESRD…In fact, there were approximately 3,500 attendees to this conference, the overwhelming majority of whom, will make their careers and salaries on saving CMS money by cutting payments to providers, particularly troubling when one considers that primary providers that are touching patients are not the ones responsible for the majority of the $1 trillion in question and the only real avenue to reduction in cost. The solution is not in what you call it:
Medicare for All
The solution is in recognizing where the value already exists and eliminating the costs of third parties interfering is what could be a simple transaction between patients and their physicians.
The Basics of Legislative Process: “I’m just a Bill…” -School House Rock
Want to know a not so well kept secret? Legislators are just people like you and me. Luckily, the idea for a bill can also come from anyone. Anyone, including the President of the United States (or POTUS), a trade organization, a business or any private citizen, (depending on the attention they command from the legislator in question), can help prepare and even help draft a bill. Why do you need to go through a legislator? Because only legislators can introduce bills into Congress and allow for the process of turning into a law to begin.
Here are the basics steps from there: after the initial idea gets put on paper, an elected official (or more likely their underpaid staffer) finalizes the draft of the bill and sponsors (or co-sponsors) it. The bill is then introduced for consideration by the legislative body of which that legislator is a part. For instance, a congressional representative introduces the bill by submitting it to the House of Representatives through the House Clerk who then gives that bill a number and a committee is assigned to study the issue. That committee may then refer the bill to a subcommittee. At this point, the committee or subcommittee requests reports from government agencies, such as Centers for Medicare and Medicaid (CMS), and begins to hold hearings so that experts and other interested parties (including Jane Q. Citizen, with your impassioned personal frustrations with the healthcare system) may offer testimony as part of public hearings, on behalf of, or against the measure. This information is used to revise or, “mark up,” the bill. The committee then recommends passage, aka reporting the bill out of committee, further revision, or laying it aside, aka tabling the bill.
Once the bill is ‘reported out of committee,’ it goes to the floor of the House or Senate for debate and approval. It is at this point that a bill is amended, and thus may have additional content added to it. Once it is approved, it moves to the other Chamber of Congress for similar consideration. This results in two versions which require reconsideration, which is why you may have heard the term “sister bill” in reference to two versions of a bill that are simultaneously introduced in the House or Senate to speed a process which is painfully slow if methodical regardless. After the two versions are completed, the measure is negotiated between legislators of each chamber and the compromise is summarized in a Conference Report which creates a common version of the measure. If that finalized version of the legislation is passed by both houses, is sent to the POTUS for signature into law or a veto. In other words, the bill will not become law depending on who occupies the main seat in the Oval Office, so timing is everything.
There are also variations on this legislative process such as Reconciliation in which a caucus of legislators from both chambers with a common goal may propose a concurrent resolution on a bill in terms of spending or taxation. Parts of the Affordable Care Act fall into this category. However, this process also generally requires consideration in various committees of each chamber prior to making it to the floor for a vote. In other words, you get the idea, it leaves room for many stakeholders to influence the process and that degree of influence varies broadly.
The Basics of Lobbying: “Hey, must be the money!” –Ride Wit Me by Nelly.
Lobbying is a process by which individuals, trade organizations, private businesses and frankly, anyone, can attempt to influence the decisions or perspectives of legislators. Theoretically, influencing decisions does not require money. Practically speaking, almost nothing else does. Consensus has long been that money is not only the leading factor in influence peddling with politicians, but the overriding force that defines all legislation, healthcare included of course. It is a major reason attempts to dismantle the ACA gained traction despite popularity with patients and that proposals for universal healthcare are similarly blocked. Legislators are squarely in the crosshairs of industry lobbying. For example, in recent years, the top fifty industry groups spent almost three quarters of a billion dollars on lobbying congress and the federal government. Among the top five biggest spenders were Blue Cross Blue Shield, the American Hospital Association and the Pharmaceutical Research and Manufacturers of America. Suffice it to say, it is an uphill battle for the concerns of the average citizen to be heard above all of this noise. When it comes to the needs of the most economically disadvantaged citizens requiring medical care and a way to pay for it, you better find allies.
Regardless of the flaws in our current system of healthcare provision, the rhetoric of repeal and replace of the Affordable Care Act (ACA), reflects something different than the needs of patients with preexisting conditions or the concerns of clinicians caring for them. The average citizen should question why insurers are spent over $6 million in the first three of 2017 on influencing regulations to stabilize the health insurance market by preserving cost-sharing subsidies while congress worked to eliminate the ACA.
The Effect of Stakeholder Influence at the State Level
In Maryland, Delegate Joseline Pena-Melnyk of District 21 and State Senator Brian Feldman District 15, have announced their intention to enact a Health Insurance Down Payment plan that requires each citizen to pay a penalty, in place of the federal mandate, which is slated to be eliminated by the end of 2019. The proposal would use these funds to purchase a health insurance plan from private insurers for all Marylanders. Del. Pena-Melnyk, is a criminal lawyer with a strong back ground in Criminal Justice, Criminal Defense and Democratic Activism and serves on the Maryland House Health and Government Operations Committee. Sen. Brian Feldman, a lawyer with a strong background in government and economics formerly with the US Dept of Justice who now serves as Senate Chair of the Joint Committee on Federal Relations. The major insurers in the State of Maryland are CareFirst BlueCross Blue Shield and Kaiser Mid-Atlantic. I leave it to readers to research any connections that may exist.
We already went over the fact that health insurance companies are lobbying aggressively to preserve cost-sharing subsidies. What do patients get in return? Does everyone really benefit from entering into a contract for coverage of health care costs? Is it the same as saying we will have equal access to health care for all? Take a look at prior posts on how health insurance works, then consider the following: comprehensive universal health care coverage for every resident. Maryland Senator Paul G. Pinsky District 22, has recently proposed SB1002, calling for the creation of a public corporation to do just that. The legislation is modeled on the Healthy California single payer system without premiums, copayments or deductibles introduced in 2017. The fiscal effects of that plan or the one SB1002 will have is challenging to gauge as any comprehensive single-payer system requires cost controls in order to experience cost savings and those have not been made obvious to the public thus far.
Cost containment will continue to be a tremendous challenge as a result of the complexity of protecting all stakeholders. One major obstacle to passage of these measures will of course be the elimination of incentive of for profit insurers so we should expect robust resistance from the largest lobbyists cited above. The bill proposes coverage on a fee-for-service basis without cost sharing by patients creating another challenge in terms of price setting. Neither legislation seems to include medical malpractice tort reform which is essential as one would predict increase usage will be concurrent with cost savings predicted as result of expanded access to preventative care. It is early in the process, so that many voices can still be heard. Since you now all know the basics of the legislative process, lobbying and stakeholder influence, the time to have your interests represented and start asking questions, is now.
First things first: let’s get some definitions out of the way. Universal health coverage, universal health care, single-payer and the public option are only interchangeable until we get a clue what the terms actually mean. Typically, what’s meant by “universal health care” is universal health coverage, which means a health care system that pays for the health care of all residents of a society. Countries may provide national health care coverage for a defined set of benefits (not necessarily all benefits) through a variety of mechanisms. One possibility is to have one government funded single-payer plan. That’s not the only potential mechanism for covering the cost of medical care. Another possibility is to establish a public option, short for public health insurance option. That’s a government operated (public) health insurance agency that is made available for enrollment as an alternative to private insurances (hence the modifier “option”). A public option health insurance may be financed through premiums with or without subsidy from the federal government. Each proposed health care payment model has nuanced differences that place control in the hands of distinctly dissimilar stakeholders. Note none of these terms specifies what amount of care is covered, with the exception of a single payer system, in which all health care would be included, since all payments for medical care come from one source.
Our Current Reality
The US Health Care System currently operates under the Patient Protection and Affordable Care Act (aka ACA) which was signed into law in March of 2010 by President Barack Obama. The nickname Obamacare was initially attached to it by opponents as a pejorative descriptor to invite ridicule for the measure. In fact, other than causing initial mild confusion, that eponym is now popular with patients and generally understood to be synonymous with the ACA. The law, which was an attempt at a comprehensive overhaul of all federally funded health care coverage, is complicated and multifaceted to say the least, but here are the highlights that relate to the present discussion. Just over twenty million more citizens and permanent residents were covered by health insurance than were previously insured in the US through a combination of provisions that expanded eligibility for Medicaid (low-income individuals, families and children, pregnant women, elderly and the disabled) and major changes to private insurance providers. The cost to the government for this increased coverage was largely offset by new taxes and cuts to Medicare provider rates and to reimbursement for managed care programs that were already capitated. Many of the reforms stipulate an increase in clinician driven services, including patient satisfaction, the creation of electronic health records, increased contact with caretakers or clinicians. (Remember this as we go forward to examine which entities are most adversely affected by cost cutting measures and which changes can be passed on to patients). Private insurers were made to accept all applicants at the same rates (i.e. the same cost for premiums) regardless of sex or pre-existing conditions, as well as required to cover a set of minimum essential health benefits. In order to offset the increased risk pool, a requirement was included for taxpayers to have to purchase insurance or pay a penalty known as popularly as the “individual mandate.” However, this provision was repealed in 2017 as part of legislation on tax cuts passed by congressional Republicans. Private insurers have predictably reacted by increasing premiums. Less predictably, many clinicians have reacted by selling individual practices, going into early retirement, consolidating into larger management groups, becoming employees of large hospitals or health systems or simply going bankrupt and out of business.
The Debate: Public Option
Having covered the general advantages of a single payer system in my last post, let me begin by looking at the concept of the public option. After all, that is what we were heading for with the ACA (aka Obamacare). Some argue one of the immediate advantages of the public option would be averting abrupt tax increases. The program would continue to phase in over the next decade or so and cost savings would continue to be increased efficiencies and limiting payments for care provided. The argument being that since the public option is a government-run non profit insurance company it services everyone more effectively and provides a model to be followed by the rest of the industry. Among the major problems with this reasoning is the following:
- We all understand no government program runs except through increased taxation.
- We lose clinician providers to micromanagement, higher administrative costs, and onerous oversight restrictions to the unencumbered practice of medicine.
- There has not been concurrent medico-legal reform commensurate with the demand for reduction in cost demanded for increased efficiency as clinicians providing care are increasingly scrutinized for resource utilization. This evolution constricts physician and patient choices for management options and safe care while increasing exposure to liability.
- Premiums continue to rise as private insurances pass on costs to consumers and the middle man (insurers) maintain rising revenue margins, and model reigning in costs demanding more proof of services, requiring more attention and time for documentation from providers while applying lower reimbursement rates.
- Relatively minimal impact is realized on the cost of devices, products, pharmaceuticals and interventions (or the cost of hospitalization for that matter) under the current model.
The Debate: Single Payer
As mentioned previously, Medicare is, in fact, a single payer system for those over the age of 65. Rather than expanding Medicare coverage in a piecemeal fashion, imagine the risk pool advantage of covering everyone for birth to death. These are major aspects of the cost savings realized by single payer health systems of countries such as the UK and Spain where doctors are employed and hospitals are run by the government. However, Canada has a modified version: a comprehensive publicly funded healthcare system that allows private providers to bill the local province directly without involvement of patients and with simplified and minimal administrative process.
A single payer system eliminates the need for insurance companies of any type as well. US expenditure for health care is currently estimated at roughly $20 trillion. Over $6 trillion of that cost is attributed to the insurance industry. Eliminating the middle man means payments go directly to the clinicians. Because facilities and infrastructure are paid from a single source, oversight is federally mandated as are minimum standards of quality. Consider the cost savings to individuals who are currently insured: no longer co-pays, deductibles or premiums, and no out of network charges. Physicians can direct and refer patients to wherever they judge their patient will receive the best care.
A single payer system would eliminate the need for employer incentives to subsidize health insurance premiums in order to purchase insurance. Lower cost would allow them to pass on gains in the form of increased salaries to offset increase in tax base to fund the program. Additionally, a single payer would have greater leverage to negotiate cost of products like pharmaceuticals drugs.
The public option has the potential to negatively impact the relationship between clinicians and patients while perpetuating the cost of insurance bureaucracy, so that cost savings are reduced along with goodwill. Because they are focused on limiting the function of professional practitioners, cost is increased to compel the achievement of improved health. Some would argue that in the current political climate, legislatures are unlikely to endorse a single payer system and only consideration of an expanded public option is palatable. However, it is possible that beyond lobbying power of insurers and other interested parties such as big pharma, insufficient public knowledge of where the largest costs lie and the highest return on health states resides is the real culprit.
Causes of Controversy and Confusion
As mentioned in prior posts, corporations are not equivalent to providers and convoluting the terms creates an opening for self interested parties. Hospitals and private insurers nor corporate entities of any kind should ever practice medicine or frame their roles as providers of care. They often assert that the professional judgment of clinicians is not interfered with at any time. Yet experienced physicians and other clinicians know that when debates arise over which entities are authorities in the quality care delivery, they often convolute their roles with that of practitioners. In fact, part of the confusion and controversy in the healthcare reimbursement debate stems from the fact that physicians-administrators serve entirely different roles with regard to patient care depending on their roles in various organizations. Though some maintain a lesser degree of patient contact in order to justify the claim that they “still see patients,” the bulk of their salaries come not from the care they provide, but the care they oversee. Subterfuge can be created by conflicting interests and patient advocacy versus increased patient turnover are primary examples of how incentives make the focus profit over patients.
This may affect their perspective on the healthcare debate as they become, primarily, advocates for private insurers, multinational pharmaceutical companies and large cap hospital networks and healthcare systems. The average patient may not be aware that the physician they see on a web site, magazine or ad espousing positions on the best system of medical care coverage may essentially represent a conflict of interest to their health and most cost effective care. Historically, top managers have more easily circumvented the usual avenues of compliance and oversight and ethical breaches are usually applied at the lower levels of the enterprise. Increasingly, solid leaders are trying to reverse that trend. Those that do not will no longer fool any of you reading this blog of course.
Enter Physicians for a National Health Program (PNHP)
Not all physicians went in to medicine with the same goals. Many went into the field because they feel a genuine passion to help cure disease, reduce pain and suffering and comfort the sick, regardless of the patient’s income bracket. Now an increasingly visible group of these US doctors, medical students, residents, and activists have organized to advocate to put patients before profits. Their goal is to see patients not paperwork and computer screens. They want to see Medicare expanded to cover all residents and comprehensive coverage for every patient. They envision a single payer system in which patients have free choice of doctors and hospitals without co-payments, deductibles, premiums or middle men. They are the ones that would have been voted least likely to run a shiny car dealership though they understand most folks need a decent vehicle to commute. We can all appreciate living in a country where we have the freedom to purchase a vehicle that costs five to ten times as much as the one we need to get around, but a $250,000 Lamborghini won’t increase your safety or reflect your wisdom to make a prudent investment. Fortunately, the vision of many healthcare professionals is also the only realistic chance we have at an affordable and sustainable US Healthcare System.
If the average US Citizen understood our healthcare system well, they would put far less trust in its ability to improve their health state and they would invest far more energy in trying to avoid getting sick and needing medical care. As discussed in prior entries on this blog site, if you are not significantly ill, you are better served avoiding excessive and unnecessary medical care and its associated costs.
Insurance, the care you need based on age versus what you can afford:
Insurance providers of every type (from Medicaid for the least able to pay to the most luxurious private carriers for the most affluent in our society) are acutely aware there is little incentive for young, healthy individuals to enroll in a health insurance plans, with the possible exception of those for catastrophic care or accidental injury.
As for those that are a bit older but still, in generally decent health, with only episodic need of medical attention, if they have the ability to afford an occasional night out on the town, paying cash is a far wiser approach than paying for health insurance. Hence, high deductible plans with limited coverage outside of routine care. This is especially true in the case of dental insurance which generally charges you monthly well in excess of out of pocket cost, while covered routine care is minimal, and far below the cost of a once or twice yearly uncomplicated exam and dental cleaning.
What if you’re a bit older and not eligible for Medicare yet? If you’re over age fifty and expect to need to engage with increasingly expensive routine medical care that passes for the minimum standard, we would be prudent to consider how much we expect to pay for expensive procedures such as screening colonoscopies and mammograms etc. Always request a discount if you are paying cash as you are saving private providers a great deal of time, energy cost and paperwork by not going through insurance providers to reimburse them for care.
What if paying the equivalent of a date night is beyond your means or you are out of work? Community controlled health centers such as Mid-Atlantic Community Health Centers in my adoptive home state of Maryland, D.C. Primary Care Association (DCPCA), such as Bread for the City Health Care, offer sliding scale payment schedules based on ability to pay. You are also more likely to be given sound advice on whether you need a specialist than if you go to an emergency room where, for medico-legal reasons, referrals to specialists will almost always be the default position. Ultimately, these clinics are federally funded but they are also a better option than hospital emergency departments for non emergent care.
What if you are fairly sure you do not have a serious emergency but cannot wait for an appointment at the public health clinic? Consider urgent care centers for routine convenience care if a more moderate cost is tolerable.
Insurance, the debate over single payor, universal healthcare and “providers”:
We currently operate in a free market system where various insurers provide a variety of products to cover part or all of our healthcare needs, but this does not cover every citizen. A single payor health care system is one that covers all medical bills for every citizen, regardless of whether you are able to pay into the system or not. Such a system would consider health care as a right, which means you are eligible for care simply because you feel you need medical attention. The extent of that care can be comprehensive or basic, such that private care options can still coexist along with the single payor system. The confusion comes in when you consider that the US already has an incomplete form of single payor system known as the Centers for Medicare and Medicaid, which includes the Children’s Health Insurance Program (CHIP). The reason it is not a comprehensive single payor system is that the entire population does not currently qualify for Medicare, Medicaid & CHIP. Attempts to cover more of our citizens include proposals to expand Medicare coverage to those 55 and over rather than the current age 65.
Why are proposals to expand coverage so difficult? The problem begins with lobbyists formulating language for lawmakers in order to undermine the relationship between clinicians and patients through subterfuge, such as that created by convoluting terms such as ‘providers’ so that hospitals and health insurance corporations are defined as equal to physicians. However, corporations are not equivalent to healthcare providers and in many states, doing so is illegal. Corporations are, at best, facilitators of healthcare provision. Healthcare management companies then should not engage in patient care as if they were providers. When they do we all suffer. Here is why:
The theory goes that a single payor system would yield immediate cost savings in the form of price fixing for services, including salaries. Physicians and other healthcare workers increasingly beholden to governmental oversight through benchmarking fear further loss of revenue and control as a result of the increased scrutiny required to justify current salaries. In reality, the impact on physician practices does not need to be a requirement of a single payor system and clinicians could still elect to opt out of the system if they so chose. The true cost savings are not in these relative small margins of private practices or even in slightly higher margins from affiliated outpatient surgi-centers, but in larger health system hospitals and in private insurers. Read on to find out why.
The major generators of cost for medical care are not physicians and clinicians involved with routine patient contact and treatment. The highest costs are generated by the use of facilities, medico-legally driven unjustifiable overuse of unaffordable interventions and unchecked resource utilization. Consider the potential savings from eliminating the incentive for revenue generation from publicly traded large cap (market capitalization of over $10 billion) such as Aetna, Alfac, Anthem, Humana and United Health Group. The administrative costs of operating these private health insurances include multi-million dollar salaries that have never been proven to increase the health state of patients. Given the lobbying power and marketing ability of those powerful corporations, it should not come as a surprise that the messages that filter down to the electorate is often one of fear that assuming the cost of care would be too great for taxpayers to bear. The irony of the argument of course, is that taxpayers are a major source of the revenue for large cap health insurers such that we are already paying for the unaffordable system of healthcare we frightened into not funding. In fact, there is no justification in terms of health outcomes for administrative costs to comprise the bulk of health expenditures whether considering a corporate management group of any portion of the health care system. Costs should be determined by clinicians having contact with patients and their clinically indicated need for utilization of resources. Cutting out the ‘middle man’ is an essential element to achieving reasonable reductions in cost and finding affordable solutions to rising healthcare costs.
Hospitals, insurers, and corporate group practices have used Lean Six Sigma methodology for years to improve patient safety and financial performance, with an increasing emphasis in recent years on simply maximizing revenue. However, applied without the required attention to ways in which healthcare differs from other service industries, the approach can undermine the value it proposes to capitalize on: the health of the patient. Application of Lean Six Sigma concepts to the delivery of medical care requires deeper insight and customization of these concepts or the goal of improved health outcomes will not be realized.
The term Lean Six Sigma combines two, well-known, business improvement principals aimed at performance: lean manufacturing (taken from the Toyota Production System), to remove waste and inefficiency, and Six Sigma (taken from Motorola and GE), to reduce variation and error. Some aspects of Six Sigma, a way to measure and reduce defects in the manufacturing, were directly transferable to reduction of errors and improving consistency in medical operations such as the ordering and administration of medications. The well-known landmark Institute of Medicine report of 1999, “To Err is Human: Building a Safer Health System” described the dire need for approaches to improve accuracy when performing straightforward tasks such as physician orders and delivery of medications. Reducing errors using checks and balances pioneered in Six Sigma, including confirming correct surgical sites, urgently needed addressing and saved lives almost overnight. Not surprisingly, these changes improved satisfaction as outcomes improved immediately.
However, Lean Six Sigma business strategies aimed at increasing revenue by improving production require more consideration to apply safely in healthcare. Any series of activities can be analyzed in the interest of increasing measurable steps to improve production and flow. This concept can be applied in a clear-cut manner when the goal is the sale of physical products or other uncomplicated services. But there are fundamental differences not shared by other industries in healthcare. For instance, higher sales and consumer expenditures do not correlate favorably health outcomes or patient satisfaction when measured in context. Healthcare business leaders, often focus disproportionately on metrics such as speed and quantity to gauge the success of operations which may lead to critical errors when applied to healthcare delivery.
Emergency physicians seeing patients, rather than managing operations, typically prioritize focus on health outcomes and prudent utilization of scarce resources. Although, they may be financially incentivized to increase production to a lesser extent than managers, they recognize markers of performance other than patient turnover. They understand the relationship between patients and health is unlike any other customer product relationship. However, these clinicians also introduce variation into process improvement measures. I suspect the internal conflict this dynamic causes is a significant contributor to what has erroneously been termed “physician burn out,” and a source of waste antithetical to Lean Six principals.
Lean Six Sigma can be applied more usefully to improve health given a more considered approach. Currently, the focus on short-term returns, like immediate customer satisfaction based on attention to environment and entertainment (TV in every patient room), food and liberal use of narcotic pain medication as primary measures of performance, is a risky proposition applied indiscriminately. Care quality, when weighted too heavily towards a patient’s comfort, rather than more focused on clinical effect, is not only wasteful, but irresponsible. Quality medical care requires that clinical interpretation and professional judgment supersede the immediate subjective preferences of patients as consumers. Moreover, the role of clinicians is not equivalent to salesman in other industries: as educators their opinion needs to be valued more highly in the context of the goal. If hearsay suggests clear coat does not protect your vehicle and you should forego the option, this does not equate to recommendations regarding vaccination. The issue of vaccines being flawed due to an unproven association with behavioral illness requires educated physicians, nurses and researchers to keep the world’s population safe by valuing the time required to clarify the issue. This difference must be recognized and factored into applications of Lean Six to healthcare.
Caution must be taken to balance the business goal of improving the quarterly bottom line against long-term health outcomes. There is a risk in paying incentives to physicians and others in leadership interpreting Lean Six Sigma in unsophisticated ways. For example, equating patient satisfaction with speed of care and then prioritize it over clinical judgment, is a deeply flawed approach. Research increasingly supports that, current high satisfaction ratings from patients most often require they receive healthcare in excess of that provided the rest of the population. This leads to overmedication and avoidable hospitalizations which not only result in higher cost but poorer outcomes. It represents a massive conflict of interest and should be reason enough to re-evaluate our current unexamined approach. Alarmingly, more satisfied patients suffer death at a higher rate than their less satisfied counterparts. By tying compensation to the wrong patient satisfaction indicators, our healthcare system is not only failing to realize the stated goal of improving patient safety and health, it is violating a primary tenet of medical care: “first do no harm.”
The need for Lean Six Sigma methodology to be clinically informed by trained ethical leaders could not be more urgent. Process and quality improvement by identification using root cause analysis (RCA) helps reduce medical errors quickly and efficiently. However, losing levels of sophistication in medical assessment in order to simplify a process and increase turnover may both increase revenue and harm patients. We should be sensitive to the fact that continuous quality improvement (CQI) can easily stray from the primary goal of realizing improved health outcomes. For example, what happens when CQI analysis of a case is tainted by the desire to support an initiative that is financially favorable to the operation? 
Unexpected deaths typically trigger departmental chart review as part of CQI with the goal to uncover RCA. But what if the cause of death is unclear and leadership is interested in finding justification for increase in use of trauma consult services? Consider the following fictional example. Hospital trauma services are struggling to justify maintenance of Level 1 services and have pushed emergency services leadership to reduce under-triage to less than 1% and recommend 100% consultation on all trauma cases along with pan-scanning with CT. Higher utilization of services, would, after all, improve revenue and appear to increase safety. We can all imagine a case such as this: A patient presents to the emergency department alert and oriented but with mild lethargy immediately following a head injury and denies other injuries. No other injuries are found or documented on physical exam. Initial CT of the head and C-spine show no evidence of acute trauma, however Neurology is consulted immediately and explain mild alteration in mental status as due to concussive injury. The patient is transferred to the floor but becomes increasingly confused, lapses into coma, aspirates and has a cardiac arrest. After a prolonged resuscitation attempt, including extensive chest compressions, there is no spontaneous return of pulses. A middle manager in charge of CQI reviewing the case a couple of weeks later concludes based on the autopsy report including evidence of chest injury that the critical error occurred at presentation: failure to recognize traumatic chest injury and call for surgical trauma team evaluation of the chest. This, in turn, results in justification for pushing an agenda aimed at higher rates of trauma surgery consultation for chest trauma. The critical error in the RCA: the chest trauma is temporally out of sequence as it was actually caused by the resuscitation attempt rather than injury prior to arrival. Clearly, objectivity was compromised by confounding factor of external agenda.
Several factors, in fact, contributed to the incorrect assessment in this sample case. They include a hierarchical structure of leadership that put management agenda ahead of careful analysis of timeline, insufficient knowledge of medical care and perhaps the relative inexperience of the safety officer. The erroneous conclusion that the trauma team would have caught the chest injury and saved the patient’s life is both wrong and misses the opportunity to educate the neurology team on the need for more aggressive evaluation of traumatic brain injury (TBI).  Correctly identifying the presentation of TBI might have resulted in recognizing required emergent MRI, intubation and ICU admission earlier in the patient’s course. The case also illustrates a real observation made by other medical professionals about migrating practices from other safety critical industries to healthcare: the underlying principle must be customized to the level of sophistication required to explain the outcome. Application of RCA to CQI requires consideration of the danger of allowing external agendas to cloud the judgment of managers.
As for applications of business processes more focused on Lean concepts from manufacturing and production, the devil is in the details. Improving throughput and eliminating wasted time required for processing patient care, such as at patient registration, can decrease time to patient bed placement and reduce time to physician encounter with patients. However, what happens when the staff becomes more beholden to patient tracking boards and focus on identifying and addressing time stamps rather than patient needs? In fact, we all know staff learns to game electronic tracking systems to appear to be performing at the required level. Some clinicians, click on a patient icons significantly before seeing a patient, or charge nurses place patients in a room virtually that are still in triage. The tracker can become a fictional representation of reality and not represent actual ED flow, while hiding inefficiencies and waste they were created to eliminate.
Early patient testing and evaluation can expedite flow when the method is applied selectively and wisely. However, operations cannot be streamlined when upfront testing is applied blindly. Instead of decreased throughput times, flow is decreased due to over-utilization. Selective point of care testing, on the other hand, is useful to this end. Testing all patients liberally without a clear indication backs up scarce resources and slows the overall time required for safe efficient care. Responsible leadership balances such initiatives with what provides advantage for all stakeholders, rather than thoughtlessly push indiscriminate testing of all patients. Middle managers incentivized to follow protocols, unquestioningly focused on meeting bonus metrics, rather motivated by protecting all stakeholders, threaten to destroy the industry if not the profession. No priority should pre-empt the patient’s best interests in a drive for remuneration for performance if for no other reason than it increases risk and adds, rather than removes, inefficiency and waste to the system.
Patient flow is often targeted for Lean method application without full consideration of the goal. Increased throughput efficiency brings patients to the point of requiring hospital admission, but where do patients go when inpatient beds are not available? This is a long recognized problem throughout U.S. hospitals, but is underappreciated cause of health inequity. Frequently, limited ability to hire staff takes precedence over actual hospital bed availability. In the case of safety net hospitals, economic constraints limit the ability to address bottlenecks, leading to increased patient hold times. Often reduction in wait times on the front end in the waiting room triage is all that is addressed in the ED, while the so called blocked back door is allowed to persist. Some hospitals attempt to create a work-around such as creating a holding area in an ED Annex, but run up against the same limitations in bed availability on the in-patient floors: nurse staffing. These constraints negatively impact safety net hospitals disproportionately as they have tighter budgetary constraints. Beyond that, often the same hospitals are overburdened by hospitals closings, as will be the case in the DC Metro area this year with the closing of Providence Hospital. A universal application of Lean concepts would consider the critical need to make patient admission to the hospital a pre-eminent concern rather than push the burden towards holding areas that would meet criteria for emergency services performance but not be the best interests of patients.
Next, Lean Six Sigma methodology is frequently applied by leadership to doing more with less. Management often makes the case that the quickest and best way to reduce cost is by requiring increased productivity while simultaneously decreasing salaries. As administrators are rewarded with bonuses for achieving these benchmarks, employees, in this case physicians and nurses, are essentially incentivized to price themselves out of a job, also increasing the stress burden referred to a as burnout. In fact, when work force supply and demand equation is favorable to management, it does lead to lower cost. However, less experienced, less qualified clinicians deteriorate the quality of the product. This is, of course, not in the best interest of patients as consumers. Moreover, inexperienced clinicians would be less likely to challenge leadership, reducing internal oversight. An extension of this case might be made for increasing non-physician and non-nurse clinicians penetration and entice them to practice beyond their scope or experience. While these providers can expedite routine care of low level complexity, it would be inconsistent with reaching for ideal Lean Six Sigma performance levels to introduce more potential error into the system. Insisting lower-salaried caretakers evaluate increasingly medically complex cases is counter to the ultimate goal when Lean Six is applied wisely and should at minimum require transparency regarding level of quality.
Lean Six Sigma applied to healthcare in an informed manner requires practically experienced clinicians with undivided attention to the goal of achieving health in the best interest of patients. If a trained medical professional sees no indication for testing or consultation, using an untoward outcome to justify the increased utilization of those services, will bankrupt the system and still not help patients. A similar case can be made for any intervention with no proof to support their efficacy over time. The oversimplified objective to increase revenue by defaulting to defensive practice adds cost without benefit and will eventually deteriorate the value of service. We can easily imagine the conflict of interest caused by creating fear of reprisals to require clinicians to use needless services as a condition for continued employment. Physicians and nurses know that one incomplete chart in a patient with a poor outcome can be used against them, particularly if that professional tends to advocate for patients and invest time in unrecognized added value activities. Who better to recognize value than experience clinicians working in the trenches?
Healthcare corporations that continue not to adequately value patient contact time are missing an important opportunity. At one time the physician-patient and nurse-patient relationship was an unquestioned value, and the engendered trust generated satisfied patient customers more often. Prudent healthcare leaders should require that clinicians be valued for the quality of contact with patients. As noted above, that quality of care should be based on more than patient satisfaction. The Lean Six Sigma Tool known as DMAIC (Define, Measure, Analyze, Improve and Control) is commonly used for data-driven improvement and could be applied to value the quality of patient contact time and outcomes, over reproducibility and revenue cycles. This certainly merits discussion if only to highlight the competing interests of various stakeholders in the equation and what should be the ultimate objective of a healthcare system: improving health.
Limitation of physician or nurse activities for health care delivery may reduce variance, but it may simultaneously reduce autonomy and incentive to advocate for what is in the best interest of patients. We may fail to identify new causes of poor outcomes and accurate root causes of poor health states. Such steps would not be expected to have an immediate impact on improving the bottom line, but as actual health states improve, patient consumers can be expected to correlate the result of care with a higher value provider. Protocols used to enhance reproducibility may be out-competed by an allowance for professional judgment to protect the best interests of the individual. They may well begin to appreciate an organization that is willing to deviate from protocol and offer patients a higher value at a lower cost. As physicians have less flexibility to advocate on behalf of their patients, there is less attention given to the efficacy of expensive procedures or alternative interventions. The needs of economically disadvantaged patients, especially those struggling with mental disease or drug addiction, are often not factored into the equation, under the assumption that “no margin, no mission.” There is no excuse for taking a more considered approach to tailoring care to needs of the entire spectrum of the population.
A final consideration to broadly applying Lean Six Sigma across the healthcare industry without a global considered approach: negative impact on health inequities. There is an ever-increasing chasm growing between billing and collections limited by payor mix of a particular catchment area for a hospital largely determines ability to drive revenue as the system is conceived now. As technology, services, interventions, usage and billing increase along with revenues for private services, the ability of underinsured populations and public insurers to cover costs is increasingly impossible. The economic competitive advantage the methodology offers to large, affluent for-profit hospitals and health care systems, deteriorates competition as fewer hospitals whose mission it is to serve the underinsured can stay afloat. Prudent application of these methodologies would allow all the entire healthcare system to remain competitive, as quality would be based on outcomes and value lower cost care.
All of these considerations are why it is a much more complex proposition to apply Six Sigma principles when the “product” is the health state of a human being. An unbending, formulaic approach to becoming Lean and unconsidered implementation of Six Sigma method is not in the best interest of patients. We must recognize the universe of difference between manufacture of even the most complicated of machines versus the delivery of healthcare. A great deal can be remedied by valuing the resource that are trained medical professionals that have direct contact with patients and reward their ability to connect what should be the goal of the operation: patients’ best interests. If the trend towards rigid oversimplification of the methods is not modified, we can expect to continue to reap short term financial reward along with professional burnout and poorer health outcomes until the system ultimately fails. We will see quarterly earnings rise only until then, while in the long term goal, human health and the beauty of what was once a noble enterprise will continue to deteriorate.
We can do much better than that.
(Part 1 of 3 Part Series)
The environment we are exposed to increases our risk of illness even when we cannot see it. Our current system for meeting energy needs results in most of us becoming locked into wasteful consumption. Generation of electricity, food production, transportation and manufacturing, lead to visible and invisible byproducts and waste that pollute our air, water, soil, as well as, the structures we occupy.
In my home state of Maryland, where respiratory diseases are leading causes of death and illness, smog has been identified by the CDC and Department of Health as a major culprit. Chronic obstructive pulmonary disease is now the 4th leading cause of death in the state. That ranks us 5th in prevalence across the nation. Asthma affects approximately 12% of the children in Maryland. The rates are more likely to affect us if we live in urban and low income areas that are more frequently located near areas of noxious land use. Vehicle exhaust and other combustion processes used in industry result in the production of chemicals such as benzene, a known cause of acute respiratory distress syndrome. Coal ash dust from trash incinerators correlates with greater incidences of asthma. Chlorine gas exposure can lead to lung disease that mimics pneumonia. These are just a few of the numerous toxins that can affect our respiratory system.
Even diseases and public health risks we may come to believe are a thing of the past are very much still with us. Lead poisoning is a persistent threat in cities like Baltimore, where lead-based paint was used in homes built through 1978. Lead is still frequently present in paints that were used for door and window frames, stairs and railings. It can even be in toys, batteries, crystal and pottery, if like many of us, you buy goods manufactured outside the U.S. Especially if you are an expecting mom or have a young child living with you in an older home, you should be screened for lead poisoning. There is treatment available called chelation therapy, with agents such as succimer and penicillamine, that can reduce high levels of lead in your blood and protect from serious effects such as brain damage, but only if the problem is detected early.
Industrial sources of environmental pollution include those from metal processing in refineries, coal burning in power plants, petroleum combustion, and nuclear power stations. Heavy metals such as arsenic, cadmium, chromium and mercury are highly toxic and are more likely to cause harm the closer you live to a landfill or the more benign sounding “transfer station”, a building or processing site for the temporary deposition of waste before it is moved to a landfill. Coal ash is also correlated with high rates of lung cancer. I won’t try to catalog an exhaustive list of potential threats here, it would just be too long. Just know that invisible toxins, like Radon gas, can seep up from the foundations of houses to cause cancer, and are imperceptible to us as we go about our lives. We would be naive to assume that government can or does make us aware of all of these threats and can monitor every harmful chemical in our living environments. Many of these toxic byproducts come from multiple sources, so even if amounts detected from one source are below a predetermined safe limit, given multiple sources encountered by any one individual person, we could still be exposed to above-safe levels overall.
If you work in agriculture or gardening for instance, you are at increased risk for exposure to insecticides called organophosphates, which block an enzyme you need for normal nerve conduction. Exposure may manifest as muscle twitching, vomiting and diarrhea, leading to frequent trips to the emergency department for what may be an undetected cause. Understand that mild symptoms can lead to serious disease and even death, so wearing a mask to protect yourself from these chemicals is a must. If you find yourself feeling sick over and over again, make sure you disclose it to your doctor and raise the question of a potential toxic exposure from your work.
If your job involves blasting into the earth, asphalt or concrete, or if you live near an area of heavy construction, you are exposed to harmful dust, which may contain silica that can cause a condition called silicosis in your lungs. This increases the likelihood of developing chronic bronchitis and chronic obstructive pulmonary disease. Beware that a chronic cough which seems to have no other explanation, even if you don’t smoke, can cause emphysema. You may even see workers wearing masks, so steer clear if you live near such ongoing construction sites or projects.
Construction work can additionally put you at risk for exposure to inhaled fumes from solvents and paints called hydrocarbons, such as nitrous oxide and formaldehyde. These can cause respiratory problems and skin eruptions and symptoms often start out as a mild sore throat or watery eyes. They can even land you in a hospital emergency room with acute onset of chest pain and lead to longer term devastation like cancer.
If in addition to these exposures, you chose to smoke, you can almost guarantee you will be creating business for hospitals and healthcare systems as well as potentially irreversible illness in addition to needless cost for yourself and your loved ones. Physicians know this and often advise patients to stop smoking, but those warnings may not carry as much weight as they once did. What if we told you that cigarette smoke still also contains benzene, the known carcinogen mentioned above? Often, patients don’t appreciate the gravity of the situation and consider this advice that health care workers are compelled to give by protocol. After all, ‘doctors used to smoke’ as some of my patients are quick to point out. Ask yourself if you see many of those doctors around anymore.
Some of our foods are sources of risk for toxic environmental exposures. As a result, current FDA guidelines recommend fish consumption only 2-3 times per week, even then with the advice that the fat should be trimmed or drained. This is in part because fish and shellfish can concentrate toxins, such as mercury, from the water into their fatty tissue which can in turn cause nerve and kidney damage in humans who consume them. Similarly, polychlorinated biphenyls (PCBs), can accumulate in seafood and lead to skin, liver and gastrointestinal cancer. Many of these toxins are found in multiple additional sources throughout our environment. Although policy changes have prohibited the use of PCBs in plastic production in the U.S., their chemical stability allows plastics with PCBs to remain in the environment for decades, cycling through our air, water and soil.
Current energy, food and goods production policies will not, by themselves, protect us from a spectrum of toxic and potential lethal exposures that lead to disease and the deterioration of health. We each must become more responsible for understanding the risks of continuing on our present path. As consumers we must face the fact that we, along with industry, share in the unrealized costs to our health and to our society.
The Commonwealth Fund’s 2017 International Comparison of Healthcare Systems affirms US Healthcare is by far, still the most expensive health care system in the world: over twice that of Canada, Germany, UK, and France. Is it because we have more doctors coordinating our care? No. Germany, France and the UK lead us there. Is it more hospitals per capita? No. Germany and France both have more than double ours. It must be because we have better health outcomes and are living longer. No, Germany and the UK lead there. Aha! You may be thinking it must be the cost for caring for all those uninsured people! After all, as most of us know, the U.S. is leads most successful western economies in percentage of uninsured populace. Think again.
First of all, National Academy of Medicine, Kaiser Family Foundation and other that study the issue note that although the Affordable Care Act (ACA) brought coverage to millions previously not insured, approximately 30 million of us remain uninsured. They also point out the uninsured are less likely than people with coverage to use any health services. That uninsured populace, comprised mainly of low income working families, pays a heftier price in other ways, including higher rates of morbidity and mortality. Limited access to routine preventive care leads to astronomical costs of treating catastrophic illness. The financial implications of not having any coverage lead to medical debt, exhaustion of savings and deficits that have to be absorbed into the overall cost of healthcare, often, even when they result in premature death. Why?
The uninsured tend to wait until they have no choice but to go the hospital for medical care in hospital emergency departments where immediate care is guaranteed. This safety net was created as a result of the Consolidated Omnibus Budget Reconciliation Act (COBRA) which includes a provision called the Emergency Medical Treatment and Labor Act (EMTALA) signed into law in 1986 by then President Ronald Reagan. Under EMTALA, all patients presenting to an emergency department for any potentially lethal medical condition must be stabilized and treated regardless of ability to pay. This is no way to save money, as critical illness typically costs many times more than preventive care. It reflects poorly on indices of health outcomes in our extremely expensive system and suggests callous indifference. A more intelligent health system design would include consideration of reducing negative impact from the social determinants of health: income, education, and environmental factors that drive poor health outcomes and increase the need for catastrophic care that we see daily in emergency departments across the country. I will return to this concept in future posts.
Why is U.S. healthcare so expensive?
The invisible hand is extremely expensive: business administrative costs are the highest in the world and the leading reason for the $4 trillion price tag. All of the staff not directly involved in the care of patients, including the vast variety of insurers required as intermediaries in the health provision transaction, add multiple layers of cost right to the top of the organizations. (See prior post on Emergency Department costs)
Drug costs are not negotiable by the federal government; therefore Medicare is compelled to cover the costs pharmaceutical industry sets, and with the exception of the Veteran’s Administration and Medicaid, cannot negotiate to lower those prices.
Our healthcare system is the most litigious in the world with zero tolerance for even the most exceptional rare outcome, which causes hospitals, healthcare organizations, and physicians, to practice defensive, often protocol-driven, medicine. Conveniently, this leads to over-utilization of resources, and pushes prices for care up astronomically. These costs are passed on to patients directly as well as in the form of higher insurance premiums based on insurance status.
A related effect is the overuse of specialists and sub-specialists. Higher reimbursement for specialist care and consultants and over-utilization of procedures they are trained to perform(regardless of scientific that those interventions may have no effect on outcomes) drive costs higher. In some cases, the interventions are demanded by patients based on fear or marketing and eroded trust in the physician-patient relationship hampered by the threat of litigation described above cannot reverse that inertia.
Business strategy based solely on on quarterly profit margins. rather longer term return on investment. Marketing, branding and certification, including non-clinical benchmark-based hospital rating services, all add to needless costs that health systems use to compete in the market. These costs are absorbed into the overall operational budget and lead to increased costs to patients as well. (See post on patient satisfaction)
So how do we pay for the care for the uninsured? Public hospitals are funded by tax district, city, county, and state. In some cases, these regions operate health care centers and clinics, employing healthcare providers directly. In other cases, they purchase the healthcare services from private providers, hospitals and clinics. For example, the District of Columbia (D.C.), created an entity called the DC HealthCare Alliance to pay for low income District residents not eligible for Medicaid. As a result the District has one of the lowest uninsured rates in the country. Incredibly however, mental health and substance abuse services were not included this coverage.
Hospitals and health providers bill patients regardless of insurance status, which also leads to increased cost to uninsured patients. Bills are higher than that for insured patients, as there is no carrier to negotiate collectively for lower prices. You should be aware that you have a right to negotiate for a lower cost as well. To be fair, hospitals budget in the range of about 5% expenses for uncompensated care. The American Hospital Association reported that in 2016, hospitals provided about $40 billion in uncompensated care to uninsured patients the year the ACA passed. The GOP is still threatening to eliminate provisions in the ACA that would likely double that uncompensated care, a fact that the Healthcare Leadership Council (a coalition of CEOs from all disciplines in US healthcare) has pointed out, is not a partisan issue.
To be clear, our ridiculously expensive health care system could save countless lives and an almost unfathomable amount of money by applying more sensible approaches to health care system design, but it goes far beyond accounting for the cost of care for the uninsured.