Sunday, June 22, 2014
Stanley Feld, MD, FACO, MACE. Creator of Repairing the Healthcare System Blog and Advocate of Ideal Medical Savings Accounts
Preface: Dr. Stanley Feld and I go back a long ways. We have spoken to each
other about health reform for 25 years. We started our blogs the same year
2006– his, Repairing the Healthcare System, and mine, Medinnovation and
Health Reform. Given America’s current system and its consumer-driven culture,
we share skepticism about Obamacare.
Stanley, if I may quote a cliché, has clinically “been there and done that.” He
is a retired endocrinologist, was President of the American Association of
Clinical Endocrinologists, and the American College of Endocrinology.
He founded and grew a large endocrinology practice in Dallas. His particular
interest is diabetes and preventing its complications. In his practice, patients
signed a patient/physician contract describing the physician’s
responsibility to the patient and the patient’s responsibility for
his/her disease. He handed out “In Control” T-shirts to thousands of loyal
patients. His patients had 1/6 the complication and hospitalization rates of the
diabetic population as a whole.
Stanley, a native New Yorker, is now an avid Texan of 45 years. He once
told me, “Texans are the smartest people I ever met. They understand freedom
and choice.” The economic performance of Texas, the nation’s leading employer
and the number one destination of businesses, workers, and physicians across the
land, affirm his judgment.
President of American Association of Clinical Endocrinologists
“In 1994 I became the third president of the American Association of Clinical
Endocrinologists. My mission was to put clinical endocrinologists on
the medical care map and to save patients and physicians from the
Washington induced bureaucratic destruction of medicine and
medical care. Physicians do not invest in lobbyists like other stakeholders in
the healthcare system.”
“We tend to be polite. We are not aggressive. We don’t get our patients or our
best interests represented. Our interests in our patients and our profession
“As President of AACE among other things, I launched a “Patients First”
campaign. Putting patients first is not only logical it is essential to effective
medical outcomes in a healthcare system. With Obamacare, logic has not
prevailed and patients are not first.”
Who The Customer Is?
“Government does not know who the customer is. Neither do
insurance or pharmaceutical companies. No one knows who the customer is. I
do. The customer or consumer is the patient. I advocate a consumer-driven
healthcare system. I met Regina Herzlinger, a professor at Harvard Business
School in 1994. She subsequently wrote two books on consumer-driven care
– Market Driven Care (1997) and Who Killed Health Care (2007).
Central Theme of My Blog – Consumer-Driven Care
“The central theme of my blog is consumer-driven health care.
Somehow Regina Herzlinger read diabetic guidelines I chaired for
AACE called a “System of Intensive Diabetes Self-Management. She
contacted me and said,” This is exactly what I am talking about
when I talk about consumer driven healthcare and focused factories.
A focused factory in medicine is a medical practice that is a one stop
shopping facility using a team approach to a disease (diabetic care)
with the patient at the head of the team where the physician is the
managers and the rest of the healthcare team are the coaches.”
“Consumers driving the health care system in focused-factories are
the key to better medical outcomes by reducing the complication
rates of chronic diseases.”
“Eighty percent of the cost of direct medical care is the result of
complications of chronic diseases.”
“The end result would reduce medical costs. Policy makers are
finally coming around to the notion of consumer driven healthcare
It is because most of the things being done with Obamacare are not
working. As Winston Churchill said, “ You can always trust the
Americans. In the end, they will do the right thing after they have
tried everything else.”
Obamacare is a top-down central controlly system. America is a
bottom-up society where consumers want to have the freedom to do
what they want. “
Dr. Regina Herzlinger invited me to talk to her class at Harvard Business
School. We’ve been friends ever since. We both have ideas of how to make
consumer-driven health care happen.
My son, Brad Feld, a venture capital and author of Venture Deals, suggested I
write a blog to “express my ideas” in 2006.” I have been at it ever since.
“Physicians are so busy they haven’t paid attention to what’s going on. They
simply don’t have enough bandwidth to deal with the complexity
bureaucrats have built into the healthcare system. The same is true
for patients. Obamacare is too complicated and too abstract to grasp
its deficiency at a glance. Few people pay attention to what is happening
politically, economically and socially to them until it affects them
personally. It might be too late by that time.”
Six Letters to Obama
“Six years ago, I wrote six letters to then soon-to-be President Obama about what
he had to do if he wanted transformational change in healthcare.
His ideology and the ideologues he was listening to held a different view. I tried
to point out that his agenda would lead to a system of increased dysfunction
because his agenda was not focused on the patient.
I told him he had to align all the stakeholders' incentives. Consumers
are the only ones that can align their incentives. They are the
But he didn’t and hasn’t listened. “
Hospitals, Health Plans, and Physicians
“ With the advent of managed care, health plans and hospitals figured out
how to maintain and increase their profits. Health plans and hospital systems
were organized. Physicians were too busy or didn’t know how to organize to
protect themselves and their patients. “
“Mistrust developed between hospitals and physicians. Physicians
began to set up outpatient surgical and diagnostic centers, and hospitals began to
hire unhappy doctors they thought they could control.”
“First dollar coverage increased demand. Insurance premiums and healthcare
costs rose. Reimbursement for physicians was lowered by the
insurance companies to blunt the rise of premiums for patients while
increasing the insurance companies’ profits.
What wasn’t decreased was physicians’ practice overhead. The more
regulations and more administrative complications, the more paperwork, the
more people physicians had to hire. Hence an increase in overhead.”
Indictment of Doctors
“Patients began to complain the doctor didn’t spend enough time with
them, didn’t let them complete a sentence, just gave them something to fix
them. Consumers’ complaints were widely publicized in the media. Complaints
This was viewed an indictment of doctors, but it was really an indictment of the
healthcare system that was evolving.”
“The media began to destroy the patient’s trust in the doctor because it was a
good story that would sell newspapers.
The media reported that Physicians do this, they do that, they over-test,
they under-diagnose, and they make mistakes. They are interested only in
money. This barrage of unsubstantiated talk diminished the physician/
patient relationship.” The physician/patient relationship is paramount to
the effectiveness of medical treatment.
The Role of Physicians
“But when physicians have time to teach the patient about the disease, the
patient has less anxiety about the disease and less distrust of the doctor. When
patients follow the physicians’ instructions they control their disease
better. Complication rates go down, and costs go down.
The bottom-line is that patients listen to physicians they trust, and
physicians listen to patients who question them when the patients are
in control of their healthcare dollars. Both physicians and patients
benefit from the listening. So does the health system.
“Organized medicine didn’t effectively explain to physicians what
was going on and failed to help doctors maintain the physician-patient
relationship. Things got worse for patients, things got worse for the doctors, and
now things are getting worse for all the stakeholders as the government
tries to take over the healthcare system.
It’s getting worse for the insurance companies although they worked out a deal
with the government to be bailed out if they don’t make enough money by
their definition. Hospitals systems are complaining even as they build more
and bigger buildings.”
Getting It Right
“Nobody has gotten it right. What will get it right is when consumers are
responsible for their health and their healthcare dollars, and are rewarded
financially for taking care of themselves. If the healthcare system would
permit the consumer to be a true consumer the cost of healthcare
would decrease dramatically. The technological tools to help consumers
figure out the best value at the best price could be made available on
Ideal Medical Savings Account
“What is needed an ideal medical savings accounts. Health savings accounts are
the fastest growing healthcare insurance product despite the Obama
administration’s attempt to eliminate them.
The trouble with Health Savings Accounts is that they keep the money in play
for the insurance company rather than the patient owning the money
not spent in a separate retirement trust.”
“With the ideal medical savings account, the employers would give employees
$6000 in a trust account to be spent at their choosing for legitimate
medical care. The employer would also provide first dollar coverage
after the $6000 was spent to buy reinsurance. The total package
would be less than the yearly package spent the previous year.
If the employee takes care of his health and healthcare dollars the
remainder not spent goes into his personal trust account tax free to
be used and taxed at retirement. The remaining money is not carried
over for future medical expenses.
This would provide the financial incentive for consumers to take care
of themselves and their healthcare dollars.
Employers are willing to pay $12,000 per person for insurance.
“The medical savings account would give the consumer $6000 in a trust
account. The remaining $6000 would be used to pay for first dollar
The payment interface ought to be between the consumer and the
physician rather than the insurance company. Prices would be
transparent. The consumer could be taught to know what he is
buying. Claims could be adjudicated immediately. Physician overhead
and insurance overhead would decrease immediately. The cost of
healthcare would decrease immediately.
“An example of how patients spending their money directly decreases cost is
Oklahoma City, where the Oklahoma Surgery Center charges patients directly
and transparently. The Surgery Center’s fees are posted on their web
site. Consumers know what they are buying. They pay at the point of
The Surgery Center’s administrative expenses are low because they
do not accept insurance payments. The cost of a surgical procedure is
one quarter to one half the cost of the same procedure in an overhead
bloated hospital system.”
“ With an ideal medical savings account, if the patient spends $1000 for
medical and surgical care in one year, that patient would have $5000 put
into his tax trust fund at the end of the year. It does not have to be
spent on medical care in the future.”
“Patients would have more incentives 1) to take care of themselves; and 2) to be
cautious about spending their health care dollar.”
“The medical savings account would put the consumer, not the insurance
company, in charge. Suppose a patient has diabetes mellitus and it cost
about $3000 a year to control the disease and avoid acute and chronic
complications. If that person took of himself, controlled his blood
sugar and did not have to go to the ER, the employer could afford to
give that employee a $1000 bonus because that patient did not have to
use the reinsurance coverage. If the employee used the reinsurance
coverage the price of the reinsurance would increase the following
year. These systems could be set up so the consumer with diabetes mellitus is
rewarded for taking care of himself.”
“The ideal medical saving account could apply to every age group. The
average cost to the government for direct medical care for Medicare
patients is $6700 a year. The average includes Medicare patients with
end of life care in ICUs.
The low-end Medicare Part B per patient is $1500 tax-free dollars per
person plus an additional non-tax free $3200 per couple if Medicare
Part F is purchased to cover hospital and physician deductibles.
Medicare Part D is n additional $1800 per couple per year. Patients
still have to deal with Part D drug deductibles.
Premiums at the high end because of means testing can cost up to
$16000 in pre and post tax dollars per year.”
It’s not generally known, but the insurance company, which is in the middle of all
of this, takes 40% of your health care dollar off the top.”
“This is the reason Medicare is unsustainable. It is not because
physicians keep raising prices. In fact physicians have not had a
reimbursement increase in 10 years. Reimbursement goes down each
The ideal medical savings account would reduce costs because
there would be not insurance claims and little administrative costs.
Physicians would be paid immediately upon patients’ request.
Consumers would force the healthcare system to be transparent.
Free Market Economics
“Healthcare would become a true marketplace.”
“The healthcare insurance industry, government, hospitals
and physicians have already negotiated prices. Retail prices are
“Consumers would be in a position to decide if they wanted to
pay for certain services and tests, not the insurance companies or
“Medicare and Medicaid patients should have the same access to
medical savings accounts and the same decision making power as
“Most Medicare and Medicaid patients are smart enough to handle this kind of
decision making. “
“I don’t think people are stupid when it comes to money. For any
other commodity or service, people figure out how to get what they
want at the price they are willing to pay. They can figure out what to
do and what to buy, especially when it is their own money.”
The Trouble with Entitlements
“ The intentions of food stamps and other entitlements are good.
The problem exists when the design of the entitlement encourages
dependence on the entitlement rather than providing the incentive
to become independent of the entitlement. Entitlements put power
in the hands of the central government, not the individual. The
individual becomes the slave to the entitlement. Entitlements do not
work. Incentives will work.”
“Physicians would be relieved if free-market principles were applied.
The armies of hospital administrators and health plan managers
would be eliminated. Buildings full of claims people would be
eliminated with medical savings accounts. These high salary and low
salary people all add to health care costs. It doesn’t work. It makes
healthcare costs unsustainable.”
“The only way to make it work is by putting the patient in charge with
appropriate education and appropriate protections so no one can game the
system. The key is getting rid of the administrative cost.
At the Oklahoma Surgery Center, Dr. Keith Smith has found his center can
perform surgeries at one fourth (1⁄4) to one half (1⁄2) the cost hospitals
charge by simply eliminating administrative costs. The same is true of insurance
companies. Once you end the long-drawn out process of adjudicating claims, you
save health care dollars.”
A Princely Profession
“My view is that medicine is a princely profession. Unfortunately, physicians
are feeling they are so enslaved and criticized by the others in
the healthcare system that they do not want to participate. This
feeling accounts for the evolution and growth of the concierge/direct pay
Concierge medicine is attractive to patients because feel their
physician care about them. They have someone to talk to. They are not
some number or abstract commodity.“
“The healthcare system’s problems will not be solved by electronic
health records or clinical guidelines or other management or
“The only way to make health care more effective, efficient, and
affordable to consumers is to set up the system so consumers can
drive the healthcare system.”
“ The government’s role should be teach consumers the best way to
drive the healthcare system and not to tell them what care they can
and cannot get.”
Consumers and Doctors as Boiled Frogs
“Patients and doctors are feeling like the frog in that story of how to cook a
frog. If you turn up the heat slowly, one degree at a time, the frog won’t know
he is being cooked until he is dead. By then, it is too late. This is what’s
happening in healthcare today to consumers and doctors. It’s gotten so
hot consumers and patients feel they can’t move.”
“You don’t have a health system unless you have patients and physicians. Policy
makers think you can replace physicians with managers or with non-doctors with
some medical knowledge."
"They are wrong. The system needs patients and physicians who talk and listen to
“In order to deliver cost effective medical care America’s healthcare
system most maintain a patient /physician relationship with
consumers being at the head of the healthcare team controlling their
health and healthcare dollars and the physician being the manager of
the team with physician extenders as his coaching assistants.”
“This can be accomplished with medical savings accounts.”
“Medical care is not a commodity! Attempts to make it a commodity
will fail at a great cost to society”