Waste, abuse, and fraud, In Health Care: One Man’s Hope is Another Man’s Waste

One man’s meat is another man’s poison.

English Proverb

Both presidential candidates have put forward proposals for curtailing waste in the U.S health care system…But, what really, do we mean by waste?

Henry J. Aaron, PhD, Senior Fellow, Brookings Institute, “Waste: We Know Your Are Out There,” New England Journal of Medicine, October 30, 2008

Health care critics often cast private practice in a negative light. Doctors order too many tests,perform too many procedures, prescribe too many drugs – often for dubious or self-serving reasons. If only we would root out those things deemed to be useless, ineffective, unnecessary, ineffective, duplicate, defensive, and downright venal, we would save $700 billion, 1/3 of money spend on U.S. health care.

Here’s how Henry Aaron, senior fellow at the Bookings Institute, puts it

Reports abound of needless or low-benefit procedures, some performed for fear of litigation, some ouf of venality, some demanded by importunate patients, and some representing the mindless repetition of established routine.

That’s what many pundits believe, and they often offer this answer: Establish a National Institute for Health Care Effectiveness and Health Care Decision Making to decide what works and doesn’t work. Don’t pay for what doesn’t work, and lower all private fees to Medicare levels.

But doctors and patients know health care is not so simple. Much of care is based on hope, that something might work, life might be improved, functionality might be restored even if chances for success are small and costs are high. The operative word is “hope,” not “effectiveness.”

Henry Aaron uses technocratic bureaucratese to define waste, “Waste could be as care that costs more than some threshold per unit of health care improvement,” and he offers this table to clarify what he means.

Probability of Benefit or Harm from Three Hypothetical Medical Interventions.

Intervention Probability Probability Expected Years
Of Extending of Death of Extended Life
Life

By 1 Year, By 5 years

1 0.5 0 0 0.5

2 0.25 0.05 0.7 0.5

3 0 0.1 0.9 0.5

I don’t find this data particularly help, and as Aaron admits, “The very definition of waste is unclear, and the term is fraught with ambiguity.” Low probability procedures may help patients, and besides, as long as someone else is paying, little incentive exists to avoid waste, either among patients or doctors.

What is Aaron’s solution? The first step, he says, is to invest “heavily” in research into what works and doesn’t work, and the second step, is to extend coverage to the uninsured, with limits of spending. He goes on to list these ways to cut costs.

• Carefully analyze cost-effectiveness

• Shift costs to patients

• Free Medicare to extend its spending and regulatory clout to private medicine

• Change physicians’ financial incentives.

• Provide patients with medical homes to improve disease management and coordination.

• Increase use of IT

• Reform insurance markets

None of these measures, he adds, will yield dividends early, and their payoffs are often greatly exaggerated. He concludes “That all these changes would take decades to become fully effective only adds to the urgency of initiating them promptly.”

Aaron’s line of argument doesn’t impress me. Maybe doctors ethics and training to do what is best for their patients isn’t a bad thing. Maybe health care going from 16% of GNP to 20% isn’t a bad result. Maybe health care revenues and their ripple effect are good for economic growth and greater employment in most communities. Maybe most of what doctors decide for patients is clinically sound most of the time, and maybe most of the time what “might” help them is what patients want.

As a surgeon once told me, “I’ve never met a patient who didn’t want to live another day.” Hope springs eternal, and “waste” sometimes has a purpose that cannot be defined in statistical terms.

health care and the economy - Speaking Out: Imperiled, Independent Privately Practicing Physicians Are Good for the Economy

Sometimes, in the course of human events, it’s important to tell the other side of the story.

The independent practice of medicine is in trouble. By 2020, there’s likely to be a shortage of 50,000 doctors in the U.S, fewer doctors are entering private practice, more are leaving, and more are seeking employment with limited hours. Privately practicing doctors are demoralized and are seeking to bring to the public at large and policymakers an understanding of their plight and the decreasing appeal of medicine to the best and the brightest..

Forces for reform are advocating changes that lessen doctor autonomy – IT dictated practice protocols, salaried positions with fixed practice patterns in big groups or hospital systems – or that marginalize payments – cuts in physician reimbursement, Medicare payment rates for all payers, limited payment for high-cost care, competitive bidding for hospital episodes-of-care. These “reforms” are all part of a pattern to bring doctors to heel, but not necessarily to heal.

Lastly, there is a behind the Medicare and private practice scene effort, to minimize fee-for-service payments, said to inappropriately incentivize doctors to do either the wrong, the high-priced, or ineffective thing.

In other words, you can trust government officials or health plan executives but not doctors to do the right thing. All that is required is the establishment of a Center for Medical Effectiveness and Health Care Decision Making and rules for what one can and cannot do, or what one will be paid for..

And yet every Chamber of Commerce official knows health care is usually the major employer in most communities. Chamber members know physicians in private practice directly or indirectly generate 13 jobs. These physicians still comprise of 80% of the caregiving doctor workforce. The Chamber also knows hospitals, whose patients usually come from a medical staff engaged in private practice, are more often than not the biggest single employer in town.

I’ve said some of these things in a previous April 13, 2008 blog, which I shall reprint now.

Best Kept Secret: Health Care is Good for the Economy

For many residents of Bangor, the hospital is replacing the mill as the passport to the middle class. This trend extends nationally, and it could help blunt the faltering U.S. economy. Demand for health care tends to stay strong during recession. Cash-strapped consumes are more likely to cut back on new appliances or cars than visits to the emergency room.

Conor Doughtery, “Factories Fading, Hospitals Step In,” Wall Street Journal, April 15, 2008

To hear politicians tell it, health care in the U.S is in a doleful state – unfair, unaffordable, inaccessible, uncoordinated, and uncommonly and unnecessarily complicated.

Yet if you speak to the local chambers of commerce, business groups, employer recruiters, or economists-in-the-know, they’ll tell you health care is the biggest employer in town – bigger than oil in Houston, bigger than the Street in New York City, bigger than education in Boston, bigger than insurance in Hartford, bigger than the furniture industry in North Carolina, bigger in Nashville than state government, bigger in Arkansas than chicken , bigger than Hollywood in L.A., bigger than manufacturing almost everywhere you care to look.

In the U.S. from 1998 to 2007, manufacturing fell from 14% to 10% of those employed, while health care rose from 9.5% to 11.5%. Last year, manufacturing lost 310,000 jobs. Health care gained 363.000. In places like Duluth, health care now employs 20% of all workers, up from 14% five years ago. In Minnesota as a whole – thanks to United Healthcare, Medtronic, the Mayo Clinic, and countless other health related firms in Medical Alley – health care is by far the dominant employer. In Bangor, Maine, from 1990 to 2007, manufacturing jobs fell from 16% to 6%, while health care positions rose from 12% to 20%. And so it goes in almost every city and region in the US.

Health care differs in some ways from manufacturing. Entry level jobs pay less, and wage differentials from workers and top doctors and hospital administrators tend to be greater. Health care requires more education. You can’t just step off the street into a job.

And if politicians have their way, health care may grow even faster, as more federal monies are pumped into the system. It’s going to happen with Republicans, too, as market-based health care grows. There’s no getting around it. As Americans age, they require and demand more health care. So relax, you doctors out there. You’re in a growth industry

data, use and misuse -Sabermetrics: The Solution to the Health Care Crisis?

In the past decade, baseball has experienced a data-driven information revolution. Numbers-crunchers now routinely use statistics to put better teams on the field for less money. Our overpriced, underperforming health care system needs a similar revolution.

Billy Beane, Newt Gingrich, and John Kerry, “How to Take American Health Care From Worst to First,” New York Times, October 24, 2008

When we talk about the health care crisis, my wife often comments “ No one seems to know what’s going on, or what to do about it.”

Well, Loretta, I have news for you.

Billy Beane, a baseball guru believed to be responsible for the success of the Tampa Bay Rays and other low-paid, high performing teams; Newt Gingrich, the all-knowing, all-feeling conservative commentator: and Senator John Kerry, a liberal who knows a thing or two, about health care, says the answer to our health care problem is sabermetrics.

Sabermetrics in Baseball

Sabermetrics? Yes, sabermetrics, the use of obscure statistics to predict and improve performance, even among unknown players. It’s the numbers not the names that count. In the case of baseball, sabermetrics is made up of such things as WHIP (walks and hits per inning), VOPR (value over replacement player), or runs created – a number derived from the formula ( (hits + walks X total bases)/ (at bats + walks).

In baseball, the beauty of sabermetics is you can predict what to do, what risks to take, what players to draft, what line-up to use at much lower costs per player with superior results.

Sabermetrics in Health Care

In health care, our trio of non-medical experts explain, you can use sabermetrics to pick the right doctor, and identify clinical approaches that work statistically, based on mega-analyses of mega- studies rather than on informed opinion, personal observation, or tradition.

I would disagree Beane, Gingrich, and Kerry, on one point. There is nothing “obscure” about the information doctors could collect to improve care. It is well known, for example, about the data needed to avoid vascular complications in the metabolically related diseases of hypertension, hyperlipidemias, diabetes, health disease, and stroke – which cause roughly 50% of deaths in America.. Once you know a patient’s blood pressure, total cholesterol, HDL and LDL cholesterol, and Hemoglobin A-1C, you can treat the patients accordingly and cut deaths from vascular complications dramatically.

Access to Evidence-Based Data

Our health system, the three baseball aficionados argue, would be much better and much cheaper if doctors had “better access to concise, evidence-based medical information.” No question of that. The cost of routinely bringing this data to patients’ side isn’t mentioned, nor is how we’re going to pay for it or what the savings might be.

The three amigos hasten to add,

“Evidence-based health care would not strip doctors of their decision-making authority nor replace their expertise. Instead, data and evidence should complement a lifetime of experience, so that doctors can deliver the best quality care at the lowest possible cost.”

The operative word here is “should.” But what about doctors who take exception to the rules and who decides to treat the patient as an individual rather than a statistic? People, after all, die or get well as unique individuals not as statistics. And what about the thesis of “personalized medicine, “ which says different people with different genomes respond differently no matter what clinical studies show abut the “average” patient?

Abandoning Tradition for Data

But I digress. It may be true that dispassionate neutral data can complement a manager’s or baseball executive’s judgment as is the case with the Tampa Bay Rays and produce superior results at a lower cost.

And it may be,

“America’s health care system behaves like a hidebound, tradition-based ball club that chases after aging sluggers and plays by the old rules: we pay too much and get too little in return. To deliver better health care, we should learn from the successful teams that have adopted baseball’s new evidence-based methods. The best way to start improving quality and lowering costs is to study the stats.”

That’s The Direction We’re Headed.

The sabermetric crowd is at the gates of clinical care, waving Health 2.0 banners, crying out for a National Institute of Comparative Effectiveness, calling for Pay-For-Performance, insisting that widespread EMR installation will cut costs, and heralding the glories of predictive modeling. And health care enterprises like the Cochran Collaboration, Kaiser-Permanente, and Intermountain Healthcare has shown impressive results.

A systems approach to treating disease may improve care based on statistical evidence, but will it save money? After all, doctors will have to order more tests to collect the right data. And preventing early deaths will prolong life which will result on spending more on treating the elderly. But in health care, it’s not about saving money. It’s about the right thing to do.

Still

Still, after the collapse of our financial system, with the failure of a vast array of financial geeks bearing algorithmic rifts, I’m dubious about data-engineering. And after the failure of managed care, with its huge data depositories, to control clinical behavior and improve quality.I remain skeptical.

I suppose care can be reduced to a numbers game. But as a patient, I would rather not be reduced to a number – or a set of numbers. Information technologies are always ahead of their interpretation or implementation. And hope of what might work may be beyond the scope of data.

physician income - Obama Tax Plan Would Hit Many Physicians Hard

I have no idea what percent of American physicians will vote for Senator Obama or Senator McCain, nor do I know which of their health plans physicians prefer.

But I do know this. Obama’s tax plan would hit many physicians hard. You do not need to be a rocket scientist to see this. In their 2007 book, Merritt Hawkins & Associates Guide to Physician Recruiting, the authors listed these average incomes for 15 recruited specialists.

1. Internal Medicine, $162,000
2. Family Medicine, $145,000
3. Radiology, $357,000
4. Orthopedic Surgery, $370,000
5. Cardiology, $342,000
6. General Surgery, $272,000
7. Hospitalists, $175,000
8. Ob/Gyn, $234,000
9. GI, $315,000
10. Emergency Physicians, $230,000
11. Urology, $320,000
12. Anesthesiology, $306,000
13. Psychiatry, $174,000
14. Neurology, $210,000
15. Otolaryngology, $272,000

These figures presumably are mostly starting salaries that would increase as physicians climb their career ladders. Consider the fact that 2/3s of American physicians are specialists, and it isn’t hard to imagine that most physicians would pay higher taxes, perhaps for a good cause.

Senator Obama has famously and repeatedly declared he will raise taxes on those make $250,000 or more, which would include the majority of physicians.

Take a look at the following data, compiled from Senator Obama’s and Senator McCain’s websites to see what effect that their dueling tax proposals would have on your personal taxes (Brain Carney, “The Election Choice: Taxes, “ Wall Street Journal, October 25, 2008).

Current Law McCain Obama

Highest Income, 35% 35% 41%
above $250,000

Capital Gains 15% 15% 20%

Dividends 15% 15% 20%

Income + Payroll 35% 35% 43-45%
Combined

Estate Tax 45% 15% 45%

Corporate Tax 35% 25% 35%

Depending on your income and your situation, you do the math, and you decide which tax plan you prefer and how this ties into your opinion on the candidate’s health plans.

U.S. health care system, physician culture - Paradoxes abd Tensions Facing American Physicians

Despite the ideals and wishful thinking, the government’s job is not to provide full employment and wealth, and it can’t provide them anyway. The aging population will make the system unaffordable. It is already unaffordable.

John Naisbitt, Mindset, 2006

Uncover and work with paradox and tension. Do not shy away from them as if they were unnatural.

Edgeware, Insights from Complexity Science for Health Care Leaders, 1998

As long as advocates of a government-driven versus a market-driven care compete for political supremacy, American physicians will experience natural paradoxes and tensions.

This is inevitable. One cannot have a free, choice-filled, autonomous health system with access to the latest technologies and vast uniform social welfare programs covering all with restrictions at the same time.

The barriers to the former are uneven quality, high costs, and more uninsured; the barriers to the later are high taxes, limited freedoms, less innovation, slow productivity, and restrictive practices. The contest between government and market approaches to health care inevitably produces paradoxes and tensions for American physicians.

Paradox #1 - Other developed nations have better health statistics than the U.S. – longer lives, less infant mortality, and fewer deaths that might have been prevented through medical care.

The U.S. culture differs from that of other countries. We demand greater access to high technologies, have a more heterogeneous population, are a vast continental with sharp regional differences, experience more violence and accidental deaths, and have more obesity and diabetes than other developed countries. Some of this is due to the vibrant vitality of our exceptionalism, some to excesses and freedoms of U.S. culture. Most of these statistics are beyond the control of health professionals What is often overlooked is that Medical care accounts for only about 15% of the health of any nation. The rest rests with its culture.

Paradox #2 - U.S. physicians have higher incomes than physicians of other nations.

This is true, and there are reasons for the differences. U.S. physicians must subsidize their education through college, medical school, residencies, and beyond, which is not the case in most other nations. The typical medical school graduate in the U.S. is $150,000 in debt, which often reaches $300, 000 for married medical couples. Also due to the litigious proclivities, U.S. physicians must endure high malpractice liability costs. Practice expenses are also greater in America. These factors aren’t necessary desirable, but what is, and U.S. physicians’ higher pay is partly illusionary when these factors are taken into account.

Paradox #3 - In the U.S., medical progress and new technologies account for about 70% of health inflation.

The paradox here is that the U.S. people demand quick access to the fruits of technological progress, often for elective life-style procedures such as joint replacements and cosmetic procedures. Furthermore, in many diagnostic workups and procedures, advanced technologies – X-ray imaging and heart bypass and stents – have become the accepted and expected standard of care. Finally, practitioners offering high tech care have higher incomes and better life styles than generalists offering cognitive advice.

Paradox #4 - Many mandatory or universal coverage advocates believe Medicare payments should be the gold standard for reimbursement.

This is already the case in certain sections of the country. Unfortunately, this leveling of rates creates paradoxes and tensions. Medicare payments and sister Medicaid payments are usually far below those of private payers. This fact may cause physicians to cease accepting new public-paid patients or may drive physicians out of practice, precipitating an access crisis.

Paradox #5 - There is a yearning for a return of Marcus Welby- like care, for more compassionate physicians, and for a return to more coordinated and comprehensive and less costly care in ”medical homes.”

This yearning is understandable and desirable, but faces barriers: 1) a specialty dominated health system with 2 of 3 doctors being specialists; 2) payment differentials between specialists and generalists; 3) current special interests – hospitals, high tech specialists, health plans, device manufacturers – who profit from the status quo. In addition, there is a renewal among medical school educators for an emphasis of a liberal arts education with a refocus on narrative medicine, listening more closely to patient stories.

Paradox #6 - Doctors are being told they should tell patients exactly what they are doing, including telling them when they are prescribing placebos.

A fine idea in a perfect world of symmetrical information equally shares by patients and doctors. But not practical, desirable, or even advisable in the real world. Studies show 30% to 40% of patients unwittingly received placebos improve. Telling patients you are prescribing placebos will offend many patients, and signal to them you are not taking them seriously or labeling them as hypochondriacs.

Paradox # 7 - The government should establish a Medical Advisory Commission “with teeth” with a specific payment schedule created by Congress.

A bad idea, certain to drive more doctors, who cherish their autonomy, out of practice and to discourage more bright young people from entering the profession. A Center for Medical and Health Effectiveness is also being proposed. Most drugs are approved for “average” patients, but the whole thesis of “personalized medications are that individual patients, depending on their genomic makeup, may respond differently to the same drug. Congressional mandates telling doctors what to do and prescribe might have the effect of reducing doctors to mere medical technicians, devoid of independent thought.

Paradox #8 - Policy makers are fond of proclaiming that the system should be stripped of “perverse incentives” by “aligning” incentives of hospitals and doctors.

This is another way of saying hospitals and medical staffs should be “integrated.” This in unlikely to happen except in large health enterprises with salaried doctors. The truth is that the gap between the hospital “admonisher,” ie. those in executive suite, and practicing doctors on the ground are widening. The gap grows because of control issues and competition for the health care dollar between hospitals and doctors.

Paradox #9 - Politically it easy and safe to say that health care ought to be a “right” and that mandated universal care ought to be the norm for our society...

But it a quite another thing to implement because of the diverse desires of patients and doctors, distrust of government, the trend towards decentralized rather than centralization, and the smothering effect of government mandates on innovation.

Paradox #10 - The partisan divide between those who say medicine is a “Science” rather than an “Art, ” who advocate “group” or “team” care rather than solo or small practice care, and those who push for government-based care rather than market-based care will continue to pose paradoxes and tensions for doctors.

Those who say medicine is a “Science” rather than an “Alert’ claim practices can be” rationalized” through information technologies, including pay-for-performance program, best practice guidelines, application of Health 2.0 algorithms, elimination of waste and duplication, and widespread collection of data through EMRs, and regulation and discipline of practices using the data. This belief system poses dilemmas for doctors who think of themselves and patients as individuals with freedom to practice and choose as they please.

There are those who fervently believe large group practices with salaried caregivers acting as teams, acting upon best practice data at their fingertips, and following group-agreed upon rules will rule. This may be, but many physicians prefer to practice autonomously following their instincts and experience. These large practices are gaining traction but still comprise less than 15% of practicing physicians.

What ultimately evolves will likely be incremental for the simple reason that the incoming president will face a budget deficit of over $1 trillion. If Barack Obama is elected, which seems probably at the moment, this deficit will be constraining for his policies which are projected to cost $4.3 trillion over the next nine years and to project 171 new federal programs.

clinical innovation - Health Care Innovation: Govrnment-Down or Society-Up

There's nothing mysterious about innovation - it's niches, sons of niches, and government gliches.

Tongue-in-Cheek Entrepreneur


In the U.S., decisions are based on proximity to performance. The American entrepreneurial economy differs from European economies. American organizations make decisions based on proximity to performance, the market, technology, society, environment, and demographics.

In Europe, on the other hand, distance from the market of centralized systems makes innovation and responsiveness difficult. What separates us from other nations is our individual ingenuity and entrepreneurship, as opposed to government-imposed agendas, which tend to smother innovation.

The recent economic crisis, said by some to be due to lack of centralized regulations, dismal U.S. health statistics, and a U.S political shift to the left, raises this question: Is national innovation preferable to private innovation?



Two “Perspective” articles in the New England Journal of Medicine form the basis of this editorial.

· In the first, Victor Fuchs, PhD, retired Stanford economist, says national reform should start with three “inconvenient truths” as a starting point for national health reform.


1. Over the past 30 years, U.S. health costs have grown 2.8% faster than the rest of the economy.

2. Advances in medicine, mostly secondary to private innovation, are the reason for this 2.8% faster growth.

3. Universal coverage will require national reform and financial sacrifice by the wealthy and healthy and those who afford to pay to pay for the sick and the ill who can’t afford to pay.

· In the second, Karen Davis, PhD, president of the Commonwealth Fund in New York, says we ought to learn from other countries to develop innovative national strategies to cut spending. She cites the following data based on predictive modeling by the Lewin Group. Here I list the data in descending order of spending impact.

1. Establishing a National Center for Medical Effectiveness and Health Care Effectiveness, -368%

2. Promoting public health and disease prevention through new taxes in invested in prevention programs, -293%

3. Instituting Medicare episode-of-care payment, -229%

4. Strengthening primary care and care coordination, 194%

5. Promoting public health by reducing tobacco use through next taxes invested in prevention programs, -191%

6. Limited payment updates in high-cost areas, -158%

7. Limiting federal tax exemptions for premium contributions, -131%

8. Apply Medicare provider payment methods for and rates to all payers, -122%

9. Instituting competitive bidding between Medicare and private plans, -104%

10. Promoting health information technology, -88%


In other words, Big Brother will take care of you through federal innovations: new taxes, new programs, and new regulations. “What is required,” Dr. Davis asserts, “is national leadership and commitment to moving towards a high-performance health system.”

It sounds a bit like All for Medicare, and Medicare for All, with national prevention programs to get Americans to change their smoking and eating habits, and cutting and limiting doctor payments. You can call this innovation. I do not.

References

1. V.R. Fuchs, Election 2008: “Three ‘Inconvenient Truths’ about Health Care, “ New England Journal of Medicine, October 23, 2008

2. K. David, Election 2008: Slowing the Growth of Health Costs – Learning from International Experience,” New England Journal of Medicine, October 23, 2008.

3. C. Schoen, R. Osborne, M, Doty, B. Peugh, J. Murukutla, “Toward Higher Performance Health Systems: Adults’ Health Care Experiences in Seven Countries,” 2007, Health Affairs,(Millwood, 2007.26:w717-w734