Health Care Costs - Read Atul Gawande
Steve Novick
As the health care battle rages on, I suggest that everyone who has not already done so take the time to read this New Yorker article by Atul Gawande from June 1. Gawande set out to figure out why the per-capita costs of Medicare are unusually high in McAllen, Texas. He concludes that the medical industry in McAllen - hospitals, doctors, everyone - has just been unusually aggressive in exploiting a basic fact of the entire industry: the more procedures you perform, the more drugs you prescribe, the more tests you run, the more you get paid - and that is true, for the most part, regardless of the effectiveness of the procedures, drugs and tests. It is also true in the context of Medicare - a 'single payer' 'public option' - as well as in the private sector context. Medicare has lower administrative costs than private insurance, but it still suffers from the perverse incentives of a fee-for-service system.
Gawande observes that the real question is not why McAllen is like McAllen; the question is why EVERYWHERE is not like McAllen, because the basic incentives are the same everywhere. There are places like the Mayo Clinic where doctors are on salary and the general structure is set up to maximize health while minimizing costs. But they're swimming against the current.
It is worth noting that the article specifically debunks the right wing's favorite argument, 'tort reform.' Texas passed a strict malpractice damages cap some years back, and lawsuits have plummeted. The problem with the system isn't lawsuit-driven 'defensive medicine'; it's compensation-driven over-procedurizing and over-testing.
[I'm adding this next point in reaction to a comment]: It's important to stress that in most cases the doctors and hospitals are not deliberately trying to 'game the system.' It's probably mostly subconscious. They're not saying 'I know this is pointless, but I am doing it anyway.' They have an assortment of options, and they tend to take the option that results in their being paid more.
I have never felt more connected to my President than when I read that Barack Obama was telling everyone (including Senators) to read this article. It's not immediately clear how to solve the problem. But one way is to sink some money into 'comparative effectiveness research' (as Obama has done) and then have a public option, open to all, which bases its reimbursement system in part on what the research shows about what you should be doing for a given condition ... and what drugs, procedures, and tests tend to do little more than pad somebody's bottom line. If the public option does that, with good health care outcomes, it will out-compete the private insurers and move them in the same direction.
Those 'comparative effectiveness' choices will not be easy choices. And, unfortunately, for every expensive and 'wasteful' procedure there will probably be some doctor, and some patient, who thinks it was a godsend. But Gawande's article - which is not too different from a lot of things John Kitzhaber has said over the years - has convinced me that the only way we can have affordable health care is to make dramatic changes to our fee for service system. We can have universal coverage, we can have a public option - but unless we can control costs, we'll also have a bankrupt country.
 |
More Recent Posts | |
Albert Kaufman |
|
Guest Column |
|
Kari Chisholm |
|
Kari Chisholm |
Final pre-census estimate: Oregon's getting a sixth congressional seat |
Albert Kaufman |
Polluted by Money - How corporate cash corrupted one of the greenest states in America |
Guest Column |
|
Albert Kaufman |
Our Democrat Representatives in Action - What's on your wish list? |
Kari Chisholm |
|
Guest Column |
|
Kari Chisholm |
|
connect with blueoregon
Jul 18, '09
Thanks for the message Steve. Actually, the main reason that there aren't more McAllen, Tx situations in Medicare is because of a growing cottage industry providing post payment audit and recovery for procedures performed for mere capital gain. Those engaging in this practice will get found out eventually. They will then be given the opportunity to pay the money back and/or face the potential of Medicare sanctions and prison.
Over the past several years Medicare has begun paying outside contractors to perform audits and highlight procedures or payments that are out of line. These same contractors then are encouraged to 'recover' the improper payments in much the same manner as the contractors who track down and recover defaulted US Education Department Student Loans.
With Medicare we are talking about a system that makes Billions in payments annually. Even a 10$-15% rate of improper payments runs to hundreds of millions of dollars annually.
Jul 18, '09
Bernie Sanders was reading off a list of penalties against health industry corporations for ripping off Medicare. The numbers were horrendous but apparently not of interest to Senators Dodd and Harkin who C-Span caught on camera laughing at some joke they had going instead.
Clearly, whatever system is developed there needs to be some means of preventing fraud, waste and abuse. Throwing a few people in the slammer might help.
Jul 18, '09
If I have a brake problem on my car and I go in and the mechanic completly overhauls my brake system and I then find out that I needed only brake fluid I have a good case of fraud on my hands.
If I go to a doctor and the doc does surgery and then I find out I only needed to change my diet, well tough. That's medicine.
In Europe midwives deliver a larger percenatge of children then they do in the U.S. And the MDs are not going to allow that to happen here. That would take away to much of their power and money.
6:27 p.m.
Jul 18, '09
I added a point to the piece to respond to Kurt's comment - I don't think it's usually a matter of deliberate "I know this is pointless but I am doing it anyway." It's more subtle.
Jul 18, '09
Whistleblower/private AG/qui tam lawsuits or outside audits can reduce fraud, but they aren't a particularly subtle tool for getting at the kind of excess/defensive/unnecessary medicine that is routinely practiced because the system rewards it. You wouldn't want the government posting your medical records online and asking people to look for fraud, would you?
The fee for service model is really at the heart of it all. It pushes doctors to be businessmen first and healers only secondarily. While salary based systems do have their own adverse incentives (largely to work less), the incentives are easier to balance there. This benefits doctors too - a salary based system would lead to better quality of life for physicians and fewer patients dying from medical errors caused by exhausted physicians.
Whenever someone on the right talks about a physician's right to free enterprise, etc, I always have to laugh. If doctors are such great natural businessmen, why are they the #1 target of investment fraud schemes? More practically, they can engage in free enterprise all they want - outside of the public system.
Jul 18, '09
You wanna talk about health care costs and why they were so high. Here is a great example; my father had to go to a specialist to have a skin tag removed from just inside his ear. Not in the canal mind you, very visible by eye.
Here are the charges:$269 for the consultation, $573 to remove it, $70 b/c he had to use magnification and $349 to look up his nose for reasons we still don't know.
$1261 to remove a skin tag. Funny, it only cost him $5 to buy scissors to remove the one on his neck by himself.
Jul 19, '09
Doctor's visits are intimidating to many because of their expensive fees. I know they have malpractice insurance that is extremely high but I get tired of all the visits that are unnecessary. If you go to the doctor 5 times, at least 2 of them are unnecessary. They come in the room and spend 2 minutes with you then leave. They've could've saved you money and the insurance company money by sending you an email to give you an update.
Order Checks Online
Jul 19, '09
thank you admin.
Jul 19, '09
When congress men & women are willing to give up their current Gold Plated medical plans and join with the rest of us, the majority, in a national health care, that's when I'll listen, not until.
Btw, we already have a "national health care plan". It's called Medicare. Why not IMPROVE & expand it instead of adding more bureaucracies?
Approaching Medicare/Medicaid age, I'd be willing to contributing more to these existing plans as well as private supplements, BCBS, Providence, etc.
Jul 19, '09
I read the articale and a couple of Dr Gawande's books. The article mainly went into the cottage indutry doctors have that they use to generate fees with multiple medical procedures.
My biggest issue is that McAllen basically had no private insurance and was mostly Medicare, yet still had the highest $/procedure. So how does this help the single-payer agrument?
Jul 19, '09
Steve, I'm hoping you will consider a primary run against Ron Wyden if he fails us on health care this year. That said, the Dem. party may be beyond repair if we don't get health care this year.
Jul 19, '09
"When congress men & women are willing to give up their current Gold Plated medical plans and join with the rest of us, the majority, in a national health care, that's when I'll listen, not until."
Ralph: I presume by "Gold Plated medical plans" you mean the Federal Employees Health Benefit Plan (FEHBP) that is available to all federal employees and retirees. Check my comment (July 18: 12-01-8) on Jo Ann Bowman's thread. They are not all that great, and if people could count on not having a serious illness they would probably be better without these plans. At the same time, if someone comes down with the wrong illness then he or she could be out of luck and headed for bankruptcy. There are lots of limits on what these plans will pay.
Ted Kennedy presumably has one of these plans, but you can bet he is either paying a bundle out of his own pocket for the care he is getting or he is getting special discounts and/or freebies from the doctors and hospitals treating him.
As for your comment about expanding Medicare, I agree that is something that should seriously be considered.
Jul 19, '09
"Steve, I'm hoping you will consider a primary run against Ron Wyden if he fails us on health care this year. That said, the Dem. party may be beyond repair if we don't get health care this year."
There are few times in the history of the Democratic Party when it has proved capable of repair, and they have a common thread - the people rose up and demanded the party do the right thing.
There was a time in FDR's presidency when it was important to do the right thing, but he couldn't because of politics and he told people, "Make me do it."
John Kennedy got the ball rolling on civil rights, but he was pushed into it. Like Wyden on health care, he tried to stall the movement.
Jul 19, '09
Bill Bodden: Don't members of Congress have their own plan, exclusive of the FEHBP? I'm not sure who is correct but certainly interested to find out.
As for Ted K. I wouldn't be too sure about him paying for his care outside of very specialized and exclusive care he has chosen. Freebies? In return for what? Nothing is "Free".
Jul 19, '09
Steve, I appreciate the additional comments, but think that you underestimate the intregral part Medicare plays in both the problem and solution for healthcare delivery in the US.
First - Medicare dictates what stays will be, what procedures will be in-patient and what will be out-patient. The medical practiioner must create reams of paperwork and tests to get the desired outcome if they believe the patient is better served than the Medicare guidelines will allow.
Second - Medicare does not measure or 'count' return admissions for the same or similar medical problem. therefor, efficacy of treatment modality does not even get into the decision making process when dealing with Medicare patients.
Third - Medicare does not negotiate with medical providers regarding reimbursement. They dictate reimbursement levels that vary by geographic region and population density. If that were not bad enough, Medicare knowingly sets reimbursement rates below break even for the providers in many instances.
The three points above inevitably lead to Medicare over utilization. When one has a location such as McAllen where there is a disproportionate level of Medicare patients then the scewed results stick out like a sore thumb. Yes, the over utilization of tests, hospital admissions and procedures are done in a subtle manner, but they are inherant in the system that Medicare has created.
I'll break HIPAA here and us myself as an example. Over the 4th of July I had a nasty accident on the Rogue and needed emergency room treatment. I recieved excellent care that included some meds, a CAT Scan and staples/stitches to close a head wound. The bill camt just under $3,000. Now that is what a non-medicare, uninsured person will be expected to pay. The hospital knows damn well that Medicare will only re-imburse at 'X' percent, probaly less than $1,400 and they will accept that. The big medical insurance companies also have 'negotiated' different reimbusement levels that are going to come in at somewhere between $1650 and $2,000 and they will accept that. Oh, and try to get any health care provider to tell you what the various negotiated reimbursement rates are up front. It ain't gonna happen and it is wrong.
Jul 19, '09
Bill R and Bill B,
Sell-out Steve Novick has already ENDORSED the reelection of Wyden. He held a fundraiser for Wyden a month or two ago which was protested by single payer champions.
The Democrats are useless. Novick is only slightly less useless.
12:29 p.m.
Jul 19, '09
I guess I am more cynical than Steve when it comes to doctors chasing the dollar. I work in the medical device industry and I know that products are used, not because they work or are appropriate, but because they are reimbursed. There are techniques that are absurdly priced, but are over used because of the rich reimbursement. At the same time, cost saving devices that could cut physician fees aren't used. If insurance companies really were competitive and wanted to lower costs they would force the use of some devices and minimize the use of others, but that would require actually researching best practices. Instead it is easier to deny patients' coverage.
A starting point ought to be legislation that forbids any physician from utilizing any medical facility that they have an economic interest in. Specialty clinics are created to house expensive equipment like MRI's or hyperbaric oxygen by a group of physicians. Guess what they prescribe for their patients? Keep in mind that, for the most part, I am not referring to primary care physicians but the specialists. One of the reasons that a lot of docs refuse to do primary care is that there is no money in it.
At a minimum every doctor's office ought to be required to post the doc's investment in any medical business.
Jul 19, '09
It is a shame that some Americans are so gullible, to the outlandish propaganda and lies spat in the newspapers, television and radio about Obama’s health care agenda. They have demonized the British, Canadian and other worthy plans. Hidden under a sub-rosa undercover, these radical entities are determined to keep the special interest organizations in absolute power. Comprising of the money-draining profitable insurance companies and their rich stockholders. They don't want any changes to the broken system of medical care, because it will hurt the status quo. I was born in England, in the county of Sussex and until the inception of the European Union and the European Parliament dictating to Britain. That they must accept millions of foreign workers, the nations medical system was exemplary. I never had to wonder if I would have to file bankruptcy, to pay my medical bills, or listen to the incessant ring of debt collectors on the phone.
On several occasions I ended up in the cottage hospital and their was never a cost applied to it, never a ream of paperwork. No doctor, no hospital or specialist ask me for my Social Security number, drivers license or if I was covered by a predatory for-profit insurer. Today the British Isles is being submerged under a barrage of legal and illegal immigrants, who have never paid into the system, have caused some rationing. Prior to the importation of foreign labor my trips to doctor, to hospital, the eye or a dentist was paid from my taxation. Unless we pass a national health care agenda, Americans will never know what it's like to breeze through their lives, without worrying about paying for health care? Tell your Senators and Congressman you want an alternative to the--GET RICH-- insurance companies, before a Universal health care is killed. 202-224-312 REMEMBER THE INVESTORS AND STOCKHOLDERS DON'T WANT THEIR PIECE OF THE $$$TRILLION$$$ DOLLAR PIE DISTURBED. EVEN SOME POLITICIANS HAVE THEIR DIRTY FINGERS IN THE PIE? AS AN ALTERNATIVE TO THE PRIVATE HEALTH CARE, A GOVERNMENT SINGLE PAYER SYSTEM WILL ASSIST IN REVITALIZING THE WILTING US ECONOMY.
5:28 p.m.
Jul 19, '09
The Oregonian has been running pieces from Regence on its op-ed page; last Sunday’s was labeled Part 10. (I don’t know whether these are paid spots or the Oregonian is giving them space for what amount to ads.) The last one I saw was headlined “The power of a question.” In it the insurance company seemed to argue that patients should question their health care providers about the procedures they prescribe: “What do you charge for that?” “Is there a cheaper option?” “Is this really necessary?” “Is there a generic for that?” “Anybody out there had this?”
Has anybody tried to initiate such a discussion? I have, and didn’t get very far.
Now, the piece came off as a bit of fluff really, a bunch of words about “our collective voices” and if we “share stories, trade examples and gain knowledge, “ …”we can launch real change today.”
I got a story for ‘em right here: We're From the Health Insurance Industry and We're Here to Help You
Seriously, leaving aside the peculiar application of corporate personhood that has the Oregonian publishing a series of commentaries, submitted by an insurance company, on its opinion page, it is important to note that it is in the insurance companies’ interest to steer the discussion toward questions of utilization.
Our health care “system” has many layers of problems, and they will not all be solved at once. Insurance company overhead, and the overhead imposed on providers by the insurance companies, should be the first layer peeled away. If we don’t do that, we will not get to the other issues.
Jul 19, '09
Analysis of healthcare costs is a worthwhile endeavor. But the immediate task at hand is to make into law the principle that every American citizen has a right to an essential safety net of health services and a start on how we are going to accomplish that. The debate in the beltway is all about who is going to win and who will lose financially. I thought we won the core debate on the principle of universal healthcare in the election. But we have obstructionists in the Dem. party who are willing to walk away from that if it's not done their way, and for their patrons.
10:09 p.m.
Jul 19, '09
Something else to read: CJR: Who Will Be at the Table?
Jul 20, '09
Between last week and today Ron Wyden must be getting pressure because the well rehearsed and reassuring statement I got this morning from his staff was quite different from last week.
Jul 20, '09
Apparently Rep. Kurt Schrader is still waffling on Health Care too... seems to have forgotten what the election was about. I just called his office... Hasn't taken a position on whether he wants to support the president or the party on Health Care. Time for some phone calls.
Jul 20, '09
Why do we keep electing these irresponsible legistlators ...we have to get the healthcare right once and for all.
Jul 20, '09
"Something else to read: CJR: Who Will Be at the Table?"
Thanks for that great link, Sue. It is more evidence of how intent health-related corporations are intent on keeping health care a corporate cash cow.
12:50 a.m.
Jul 21, '09
Steve,
Medicare is a kind of single payer system, but not the only kind.
HR 676 contemplates three kinds of reimbursement for providers (doctors and others): 1) fee for service, with geographically variable rates, established by negotiation apparently in a kind of collective bargaining whose details are not spelled out; 2) salaries for providers employed by organizations (hospitals, clinics, group practices) that are reimbursed by the national health plan on a "global budget" basis, meaning a budget for all aspects of the operation plus capital expenses based on past experience & future projections, negotiated with the plan annually; and 3) salaries paid to providers who are employees of organizations reimbursed on a capitation basis -- i.e. payments for the longitudinal care and interaction with a set number of patients over a period of time. All of these would be combined with effectiveness and outcomes research creating best practice standards.
Of course such methods can be and are applied outside of a single payer context even now.
Making money is one motive doctors have, but for most of them patient care is also an important value, and both of those can compete with the value of time for life outside of work. The flip side of fee-for-service as a conscious, semi-conscious or unconscious motive for delivering more "services" is that it creates strong pressures for doctors to spend less time with each individual patient and to extend hours, both in the interest of seeing more patients.
Many doctors who have worked on a salaried or partial capitation basis express preference for it because it allows them to practice medicine in a fuller and more humane way and it makes their lives overall less harried.
Capitation systems can be combined both with limited fee for service reimbursements and with good outcomes incentives.
On efficacy research, yes, certainly, but we should also recognize that aggregate statistics can mask sub-populations. Lets take treatment A and treatment B, with treatment B efficacious in 70% and cases and treatmetn A in only 50% of cases at the same cost. Not knowing anything else you'd say, make treatment B the standard. But suppose we found out that of the 50% helped by treatment A, only 20% were also helped by treatment B. There is apparently a large sub-population for which treatment B is an inappropriate standard. The question is, can the populations be distinguished and those who will only be helped by treatment A be identified?
Now let's make it harder, let's say that treatment A not only helps fewer people but is more expensive ... you see where it goes. This can be an issue with drugs, but it also gets mixed up with the effects of pharmaceutical advertising.
Point is though there's more of a problem than just anecdotal individuals deciding they really want or like something that research shows to be ineffective or less effective than something else. And even at that, individual and subjective factors do need to be taken into account -- consider e.g. differential susceptibility to side effects. I've had experience with two different classes of drugs for the same condition, both generally similar in global statistical efficacy; one class made it hard for me to focus and concentrate (a subjective state) and gave me small tremors in my limbs, the other did not. Other individuals could have no problem with the drug that caused my trouble, and others could have problems that I didn't with the second class. Unless and until causality and markers predicting susceptibility can be worked out, choice of treatments is empirical in the old medical sense of the term.
Jul 21, '09
We have a tendency in America to argue for or against a concept based on our own personal philosophy or view of the world, what advances our personal interests, or the interests of our party, family, organization, or region. Perhaps viewing the issue from a management or systemic perspective might result in innovative approaches to the issue. The American national mindset, citizen philosophy, lack of citizen motivation to be proactively healthy, and governance model make the socialization of health care in America very problematic, particularly at this point in time. A country needs to know its limitations.
11:30 a.m.
Jul 21, '09
"The American national mindset, citizen philosophy, lack of citizen motivation to be proactively healthy, and governance model make the socialization of health care in America very problematic, particularly at this point in time.
Ohhhh. Americans don't have access to health care because they don't deserve it! Thanks for clearing that up!
12:10 p.m.
Jul 21, '09
"Our health care “system” has many layers of problems, and they will not all be solved at once. Insurance company overhead, and the overhead imposed on providers by the insurance companies, should be the first layer peeled away. If we don’t do that, we will not get to the other issues."
Exactly.
For years, the collusion of Neo-Con politicians and industrialists have produced a health care system seriously out of whack, beholden to the dollar and not health. But, for the first time in almost a generation, there is a real chance to make change, yet our high expectations (as well as our years of being flogged by the right wing) have made us see demons at every turn.
There is no middle ground for some: if an elected does not advocate for single payer and only single payer, s/he is labeled as a sellout. Even as a proponent of Single payer, I couldn't disagree more.
Ron Wyden has been pummeled here and elsewhere, and compartmentalized as one of the bad guys. Why? He doesn't offer the Single Payer Stump Speech, and he's got the audacity to want to carefully evaluate the feasibility of any proposed solution. If you talk to Ron or any of his staff, the 2 most critical elements they share is that any proposal needs to meet the criteria of sustainability and equal access.
Single payer in the raw may well be the most cost effective and most comprehensive health care delivery system, but we're not starting from scratch here. We have to make a significant transition from the boondoggle we have now to an increasingly more effective system.
If we do not transition mindful of the plethora of variables that created this monster in the the first place, we are doomed to slide right back into the monster's gaping jaws. If we don't do this right, we won't get the chance again in most of our lifetimes.
Jul 21, '09
"Ron Wyden has been pummeled here and elsewhere, and compartmentalized as one of the bad guys. Why? "
Because, until today. his plan was designed (by and) for the benefit of insurance corporations. As a commentator on another thread said, Wyden is now open to a public option. This commentator also said, understandably, that Wyden must be feeling the heat of phone calls. And maybe comments on this web site.
6:02 p.m.
Jul 21, '09
Bill, It never hurts for constituents to express themselves. I can't say where the messaging got all messed up, but I NEVER heard from the source (i.e. Wyden's office) that he would oppose a public option. (and I did feel the need to check in, meet w/ folks there, and did so about 3 weeks ago)
But 2nd hand messaging, press reports, interpretations of messaging, blog posts and regurgitation of all of the above are slamming around like the steel balls on an overloaded pinball machine.
Hours after Wyden interviewed today on Ed Schultz, absolutely stating that he'd support the public option, I had an animated conversation w/ a local constituent insisting that a Wyden office staffer told him - today - that the Senator was opposed to public option. While I believe the caller misinterpreted whatever was said to him, he clearly is vocal about this "knowledge" and readily shares it, further complicating the already confusing landscape.
The sad fact of the matter is that Democrats - even and especially progressive Democrats (w/ whom I personally cast my lot) are so anxious, frustrated, and yes, damaged by the last 8 years that we easily turn on each other.
We need to remember that the bottom line is the result - getting health care for the uninsured and having a equal playing field for all.
The Wyden interview on Schultz happened today at about 10 minutes past the second hour (I was multi-tasking, maybe 10 past the third hour), ans it's worth hearing and probably available on the Ed Schultz website.