Friday, July 18, 2008

Limits of Intervention -Getting Real About Reform

Given the health reform buzz, it’s easy to forget intervening into existing health markets has realistic limits.

First, among those pushing universal care with rules to make it work, we forget government simply doesn’t have resources or personnel, or for that matter rules, regulation, and databases, to track and enforce the 2 billion health care transactions that occur at the point of care each year. Nor are officials capable of measuring performance or outcomes. Nor can they second-guess every patient-doctor transaction, many of which have little “scientific basis, “but rest rather on clinical experience, doctors’ search for more revenue, and individual patient desires or demands.

Second, the U.S. has a deeply embedded for-profit capitalistic health system that feeds American doctors and patients appetites for new technologies and other medical advances. To sustain profit growth and innovations, these enterprises hire thousands of lobbyists who pump money into political coffers of both parties.

Health Care Lobbying Contributions

Health Care Contributors

Pharmaceutical/medical products $227 million
Health insurance companies $138 million
Hospitals/nursing homes $91 million
Health Professionals $70 million
HMOs/health services $52 million

Other Big Health-Related Spenders

U.S. Chamber $53 million
GE $23.6 million
PhRMA $22.1 million
AMA $22.1 million
AHA $19.7 million

Consider the last list. U.S. Chambers know in many communities health care is their meal ticket. GE is heavy into health care, particularly scanning technologies. And Big Pharma, the AMA, and the AHA are the bedrock of our health system.

Third, there is simply the tyranny of the status quo. My friend, Brian Klepper, beautifully explained this tyranny in a recent blog.

There is broad expert consensus that one-third to one-half of all health care expenditure is waste. Talk privately with most health care professionals - physicians, hospital execs, health plan administrators, benefits managers, supply chain execs - and there is reasonable agreement on critical principles that are necessary to re-establish the system's stability and sustainability: some form of universal coverage for at least basic health services; a comprehensive and compatible IT infrastructure; a transition from fee-for-service to some form of performance-based reimbursement; pricing and performance transparency; and much more.
Such changes could drive tremendous savings for individual, corporate and governmental purchasers, but at significant cost to health care firms and professionals. Revenues and profitability would plummet. As the struggles over health care resources intensify, the efforts to protect and enhance each interest's position through policy will intensify as well.

It’s easy to glibly say America ought to have universal coverage, universal IT, total transparency, evidence-based performance bonuses, and transitioning from fee-for-service to packaged pricing, but embedded interests have a lot to lose, and they will not yield quickly until they understand the profit-tradeoffs.

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