Search This Blog

Follow by Email

Thursday, September 24, 2009

Where does the money come from and where does it go?

All water is recycled. The drip from my nose was, at one point, the drip from someone else's nose and so on. And the same goes for money. There is a limited amount of money, as it represents resources, but it doesn't just go away when we spend it. So, with health care dollars, the problem with the 2.3 trillion dollars going to pay for health care isn't exactly that 2.3 trillion dollars, it is where it comes from and where it goes.

An example in point: A friend of mine was just diagnosed with a particularly nasty form of brain cancer, glioblastoma multiforme. It is the most common malignant brain tumor, and it just killed Ted Kennedy. I don't have any idea how it chooses its victims, but it seems clear they have no fault in the process. He has already had 2 MRI scans, brain surgery and 5 days of hospitalization around the brain surgery. He also had an ambulance ride and several doctors' visits. He hasn't got the bill yet, but my guess is that he has just racked up close to $100,000 in medical costs. Everything, so far, has been necessary. But the costs of everything are significantly higher than they would need to be if procedure prices were as low as a competitive market could make them.

So the money comes from my friend, a teacher making maybe $45,000 a year, and his insurance company and it goes to a neurosurgeon, emergency room doctor, 2 hospitals, and indirectly to the makers of various medical equipment and supplies. It also goes to the many administrators who push pens regarding insurance payments. If he is responsible for 10% of the costs, he's already looking at 10K out of pocket.

As he enters the next phase in his treatment, he will spend tens of thousands of dollars over the next 6 weeks getting radiation therapy and then chemotherapy, at an expected cost of $5000 a month, for which he will foot some percentage of the bill. The money will come from him, his insurance company, and go to an oncologist, a radiation oncologist, a hospital that does the radiation, and a drug company that produced and markets his chemotherapy agent. And a bunch of administrators pushing pens in a system more complex than anyone could shake a stick at.

His situation illustrates a problem that will not be solved by doctors getting together and streamlining and making more effective the care they deliver. The care that he is going to need over the however long he has to live is just way too expensive, and his portion of the cost is way too high.

If he happened to roll the jackpot and live a long time, he will exceed his insurance's lifetime max of 2 million dollars in less than 10 years.

It is clear to me that there needs to be significant pressure to bring down the costs of big ticket items, procedures and certain medications, and that the system of insurance coverage needs powerful tweaking, either by regulation, replacement, or effective competition, in order to protect people from financial ruin. Just having a public option won't achieve this, but a public option, with standardization of coverage, and regulation of private insurance companies, could do this.

Sunday, September 20, 2009

Excuse me Mr. Obama--here's the money you were looking for...

Now, like the beginning of a mudslide, there are people, doctor people, writing about why it costs so all fired much to deliver medical care in these United States. There are articles in the New England Journal of Medicine, that staid periodical with the plain white cover, and just this week an article in the Journal of the AMA which explains exactly how the costs of medicine can be curbed, resulting in better care.

The sound of this message is a murmur that is steadily increasing in volume. I'm not entirely sure that anyone in lawmaking positions is hearing it yet. Perhaps when it gets really roaring they will.

I was feeling frustrated by the apparent near inaudibility of this message until today at about 1:30 when, while walking on an old logging road, I realized that it doesn't really have to be heard by law makers. Now, if they did hear it, they could be substantially relieved to know that costs are going to go down, but they don't even have to know that. Perhaps it will just be a pleasant surprise.

It is going to happen that medical care will become more streamlined and more effective, because it is really what everybody wants. And when people start talking about it, it will happen. In talking to doctors of all description, including those who make lots of money from procedures, I've found that virtually everybody is feeling uncomfortable with waste in medicine, and those of us who are in the position to be leaders have started to do things to make change happen.

The next step that I'm going to take is to have a conference at my hospital, most likely a repeating event, in which providers (I hope this will include nurses and therapists) will discuss the things that we do that are costly and don't really help anybody, with the overall goal of sharing thoughts and eventually developing new policies. The radiologist who first got me thinking about all this and I talked about it yesterday, and he will talk to the person who sets these things up this week.

Thursday, September 17, 2009

Senator Baucus' proposal--are health care co ops a bad thing?

I just skimmed the 223 pages of the health care proposal by Senator Baucus, with a focus on the health care cooperative suggestion and the mention of medical malpractice reform.

There are lots of sections in this proposal, and most of them contain good ideas. Achieving all that is in it would be a humongous and monumental amount of work. It also nearly completely misses the boat in terms of cost savings.

But..

The proposal suggests that we establish health care cooperatives as an alternative to presently available insurance plans, that work about like Group Health does now. Group Health is a cooperative based in the northwest which provides full health care services to members for what looks like a reasonable price compared to what most health insurance costs. It provides basic services easily, emergency services competently, and focuses on prevention. It provides good care for serious illnesses of all kinds, and skimps a bit on cutting edge technology and medications. Sometimes members have to wait for services if the providers get busy. The basic idea behind cooperatives from a doctor's point of view is that we get paid a salary to take care of a certain number of patients, and provide those patients all the health care we are qualified to do, and refer out to other providers or services as necessary.

I worked for Group Health from 1989 to 1993 or so, and had a baby while insured with them. The total cost for prenatal care and delivery was $5, which I paid for use of the TV in the delivery room (which I didn't actually watch). As a provider, I was occasionally quite annoyed when I wanted to prescribe a new medication for a patient, and they wouldn't pay for it until I had tried 3 or more ineffective medications with tons of side effects, but no one ever died because of that.

It will be difficult to establish functional health care cooperatives on a large federal scale in time for them to absorb all of the people who need insurance now, but it would be well worth the effort. A cooperative such as Group Health has the ability to mandate cost effective strategies for taking care of patients, and if that began to be part of the way medicine was practiced in the US, it might spread to the fee for service arena, as the overall culture of care changed.

The problem is that it would be slow, but then the strength of it would be that it would be slow.

The changes that need to happen in health care are so large that going too quickly might entirely bust something that is only mostly busted right now.

Still, to get a health care cooperative up and running well will take years, and will be a bumpy road for each individual cooperative, which gives little relief to people who need medical care now.

A public option, if it were identical to medicare, would have the difficulties of medicare, with a set of rules that don't make good sense, and reimbursement that is low enough that many providers opt out of caring for patients insured with it. If we could make a public option plan available and also improve medicare at the same time, with a medical home model, this would be better than cooperatives, but if that can't happen, all would not be lost if we were able to get in motion good, solid, viable health care cooperatives.

There was exactly one paragraph in the bill about malpractice, saying the the "sense of the senate" was that states should take this change in health care delivery as an opportunity to change the liability system so that it actually works. I can see that perhaps the inclusion of broad and powerful malpractice reform in a health care bill might kill it, but I am disappointed nevertheless. Tackling malpractice is vital to reducing costs and there is actual energy and motivation to do it now.

Tuesday, September 15, 2009

What American health care system, exactly?

People throw around the expression "American health care system" like it was something that actually exists. Britain and Canada have health care systems, and in the US of A we have things like Kaiser and Group Health and the VA which are health care systems, but we don't have "A health care system". What we more accurately have is a bunch of professionals who provide services that are sometimes random and sometimes coordinated, having to do with caring for peoples' health and diseases.

Because we don't have a health care system, it is hard to fix it.

Most of our health care is delivered by people who see themselves as individuals delivering a service. In addition to delivering the service, these individuals want to make as much money as they can, consistent with keeping the client happy and healthy. This model does not lend itself well to cost efficiency.

Today our office was provided lunch by a well dressed representative of a medical equipment company. This salesman was sent by his company to show us a device, an inflatable vest, that bumped and vibrated to help patients with lung conditions get rid of their congestion. I can see that it would be helpful, but he said the cost was $15,000, most of it paid by Medicare. So his company had made something that was pretty darned good, but cost as much as a car, and shouldn't. If there were an actual health care system, that system would include the medical equipment company which would be encouraged to produce the fancy doohickey for less money.

If we are to make a bunch of independent providers deliver cost effective health care, we either need to regulate costs, which might work, or allow the market system to push down costs.

Monday, September 7, 2009

What if I had 3 minutes to make my case

What if I had 3 minutes with a health care czar to ask for what I think we need

Okay, the timer is running...


1. Reduce costs of health care by a. reforming the malpractice system at a federal level to reduce malpractice insurance costs and reduce "cover-your-ass" medical spending b. introducing cost transparency, whereby providers and patients know what everything costs and can make informed decisions and c. creating teams of healthcare professionals to identify waste in practice and administration.

2. Insure everybody by expanding medicare to cover those who can't afford insurance, and revamping medicare to encourage a "medical home" model that provides care for patients through primary care providers who know them well. This would include better coverage and compensation for patients and providers who participated in the new medicare program, and education in cost effective and appropriate medicine to providers of care.

Thursday, September 3, 2009

Bedtime story

Once upon a time there was a big country with not very many people living in it. They were farmers, and ranchers and teachers and people who sold things that other people needed. There were doctors, too, who gave advice to the sick, did minor surgery and comforted the dying. The doctors could set bones, bandage wounds and tell people approximately what was wrong with them, but they couldn't do much to fix people who were sick. Eventually the doctors made schools to teach each other what they knew, and educate new doctors who would know a bunch of things right off, rather than having to learn them as they went along. The new well educated doctors were respected because they were able to help people who really needed help, so smart young people wanted to be doctors. In the medical schools the teaching doctors were able to discover new ways to treat the dread diseases that they saw, and so the job of doctoring was associated with more respect. With the respect came good pay. When doctors were actually able to do something for patients the patients were more willing to pay good money for what the doctors had to offer.

Pretty soon the only people who could get into the medical schools to become doctors were the smartest students, and they were often from rich or influential families. A job with good pay and immense respect was hard to beat, so qualifying for it became very competitive. The prospective doctors didn't realize, though, how hard it would be to learn the increasingly huge amount of book facts and practical skills that were taught at the medical schools. The time and effort that were spent educating these students was huge as well, and so the cost of going to these medical schools rose. The young doctors, despite their good families, often were not able to pay for school and went into debt and they were sometimes ill or sad because of how hard they studied.

The ever more effective and fancy procedures that the young doctors learned were very expensive, but they were also the only thing that might stand between a sick and suffering person and death. There was no question. The sick and suffering person had to have them. Since the procedures were so expensive, nobody could really afford to pay for them. Cleverly, the communities of people produced a whole industry that would pay for the medical procedures that people couldn't pay for themselves, using money that was contributed by everybody, even when they weren't sick.

The doctors became more powerful, as a profession. In order to make them accountable to their patients, the communities of people hired lawyers to tell them when they had done wrong, and the lawyers told the doctors that if they didn't behave, they would have to pay lots and lots of money. The doctors then started doing more and more for the sick and not so sick people so that the people would like them and not sic the lawyers on them. But the more things the doctors did to make the people happy, the more money the people spent and eventually all the money in this entire country was spent on the stuff that the doctors did, and there was no money to spend on other things the people needed.

A wise matriarch who lived on top of a mountain saw that the whole thing had gotten utterly and ruinously messed up, and so she did something that was so wise and so creative that all of the happy people who lived in that country spoke of it around their kitchen tables of an evening, for long generations. But I'm not entirely sure what she did. We can, though, write the rest of the story any way we like, so long as the ending comes out happy.

Tuesday, September 1, 2009

What's wrong with spending trillions of dollars on health care

A couple of years ago I decided that the reason that Americans spend so much money on health care is because it is our national pastime. In Brazil they like soccer and Carnival, and in France they like fine wine and good food. In the US, we like our MRI scans, our bypass operations, CAT scans and the whole gory and dramatic process of getting them and discussing them. When we have a spare moment, we talk about going to the doctor and what tests the doctor ordered and what the doctor said. We have other hobbies, true, but we are very interested in things medical.

When I developed this theory of health care as a national pastime, I saw it as interesting and neither particularly good nor bad. It seemed that any national pastime costs money, and the money that is spent on it goes to pay the salaries of the many people who provide the goods and services related to the pastime. Since medical care consumes such a large amount of money, it must support many households whose wage earners make medical equipment, administer to insurance companies, provide direct care etc.

Then came the realization that our nation's health care budget is rising faster than any other segment of that budget, that our national debt is rapidly increasing, and that a rising national debt threatens to wreck our economy. At the same time it has become clear that much of the money spent on health care is spent on unnecessary care, inflated procedure costs and administrative waste. This wasted money does eventually make its way back into the revenue stream, but without creating any product of value.

In the federal budget the biggest expenses are medicare/medicaid, defense and social security (about 20% each). Social security gives us a safety net in retirement and in disabling circumstances. Defense spending, at its best, provides for a structure that keeps the bad guys from messing with us. Medicare provides for maintaining health and treating disease in people who are at the age of retirement, or unable to work. Other budget items include money spent to maintain roads, pay for police and public works, support education. In the ideal world, all of this money not only pays the salaries of citizens, it also creates something we value. Money that is spent on things that are truly waste, if not spent that way, will remain in the revenue stream as disposable income. ( I would argue, on another point entirely, that money spent to build beautiful shiny bombs that are then blown up to destroy people and property in unwinnable wars is money more extravagantly wasted that that spent on a needless CAT scan.)

We come back, again, then, to what is wrong with spending trillions of dollars on health care. I would argue that spending money wisely on health care creates something we value. Spending vast amounts of money on things that don't make anybody healthier or happier is wasted money, and the extent of that waste goes considerably beyond what I can consider a national pastime and becomes more of a self destructive addiction.