Monday, May 4, 2009

Managed care - Can Medical Costs be Micromanaged?

The notion of micromanagement can be extended to any social context where one person takes an inappropriate level of control and influence over the members of a group. Continued micromanagement can result in disengagement. A disengaged employee puts in time but little else, and their apathy affects not only their own productivity but that of his/her colleagues. Because a consistent pattern of micromanagement tells an employee you don’t trust their work or judgment, it is a major factor in triggering disengagement.

Wikipedia, The neutrality of this discussion is disputed

Physicians often complain about “micromanagement.” By this they mean inappropriate bureaucratic intrusions into their practices by outside third parties like Medicare or health plans. How can these payers make these clinical decisions when they’ve never been in practice and never had a patient in front of them?

Payers can because they can and because they’re responsible for the bills. Medicare and Medicaid now gobble up 1/3 of the federal budget, and rising medical costs are the major factor cutting into health plan profits. But, and this is a huge But, payers can’t possibly account for all permutations and combinations of variables occurring at the level of the patient-doctor relationship and in the medical marketplace.

Social Reality

Still, the reality is, as Peter F. Drucker explained in The Age of Discontinuity “ Every single social task of importance today is entrusted to a large institution organized for perpetuity and run by managers. Where the assumptions that govern what we expect and see aqre still those of the individualistic society of 18th century liberal theory, the reality that governs our behavior is that of organized, indeed organized, power concentrations.”

Inability of Government to Perform.

Yet government, in the case of Medicare, has shown an inability to perform. It can;t
control runawary costs, which may bankrupt Medicare in 5 years. The federal government sees the solutions as better analysis and smarter payment systems designed by the bureaucracy. All that’s needed, Medicare officials bravely say, is more micromanaging of physician and hospital practices. But what’s really needed is reform that shifts financial control from the government to Medicare beneficiaries.

Medicare Reality

That’s not likely to happen since Medicare is organized for perpetuity and run by buureaucrats.

As the conservative National Review observed on May 1.

Medicare looks and operates as it does for a reason — politics. Medicare can’t play favorites. All licensed health-care providers get paid exactly the same. There’s no government-run PPO because that would mean steering patients to certain physicians and hospitals and not others. Moreover, politicians want to insulate their retired constituents from the financial consequences of their health-care decisions. Put it all together and you have an insurance plan that can’t control volume. The only cost-cutting mechanisms available are price controls, which make matters worse.

What Medicare Could Do

So what is the bureaucracy to do? It could means test recipients and make the rich pay more. It could go for “Medicare for all,” which would drive costs down temporarily, drive doctors and hospitals out of business, and end by costing more, as massive entilements always do. Or it could restructure care by rewarding present and future primary care practitioners more and even recruiting specialists to practice more primary care by making it more financially attractive.

The Health 2.0 Solution

Yet another approach is that advocated by the Health 2.0 community – minimizing practice variations by using sophisticated computer algorithms to pay equally for outcomes across the practice spectrum. This would require an EHR in every doctor’s office and in multiple locations within a hospital.

John Wennberg of the Dartmouth Group and followers has been pushing the concept of micromanaging “unwarranted practice variations” for more than 35 years by using Medicare data. Wennberg believes homogenizing payments across the board would save the nation 30% in costs and allow us to cover the uninsured.

The concept, which the Obama administration and his budget director, Peter Orzag, now fervently embrace. Unfortunately, Wennberg's ideas haven't fundamentally changed regional or local variations one iota, even among the academic elite, but making Medicare payments uniform across the board remains a Holy Grail for the information-infatuated crowd.

Surely, the thinking goes, if only doctors, doctors, and consumers were aware of the striking differences in costs, even with equal health outcomes, confirmed by unequivoal data, costs would shrink, either because providers would be embarrassed or payers would refuse to pay the high rollers.

Profound Variations

That profound differences exist can’t be disputed, In original research, Jerry Reeves, MD, chief medical officer of an international union of hotel and restaurant employees and principal of Health Innovation, LLC, studied more than 450 episodes of care among high volume physicians in 4 states and found these variations.

Variation from Low to High Costs, Same Results

Family Practice

Otitis media, $46 to $412, 9.0X variation
Bronchitis, $89 to $771, 11.6X variation

Internal Medicine

Urinary tract infection, $81 to $778, 9.6X variation
Angina, $86 to $743, 8,7 X variation


Angina, $241 to $1389, 5.8X variation

Orthopedic surgery

Knee surgery, $2727 to $9383, 3.4X variation

Presumably, with a big enough computer network and with data on every physician in the land and outcomes information on each patient, the payer could steer patient to the perfect doctor – the cheapest with the best results. One could, theoretically, micromanage costs and the work of John Wenner could be vindicated.

My read on this is: It ain’t goin’ to happen. The socioeconomic differences and relationships between patients and doctors and local and regional markets and doctors and hospitals is simply too profound in an individualistic society like America. You can’t pour data into a homogenization practice blender and expect to have a pureed payment system at the other end.

Reconnecting Vertical Specialist-Filled Holes across the Medical Landscape

But the Health 2.0 folks are onto something. – reconnecting the disconnections over our sprawling and fragmented medical landscape. Which reminds me of the writings of Edward de Bono, MD, a London-based doctors who runs a think tank in Malta who came up the concept of “Lateral Thinking. ” He visualizes the medical landscape as a series of vertical holes, Each hole stacked with specialists with a world-class expert at the bottom of each hole. The trouble is : no connections exist between the vertical shafts.

Maybe the solution is to reconnect the vertical holes with an army of newly trained primary care doctors, better-paid existing primary care doctors, and specialists with high-enough pay to induce specialists to do more primary care. This is more likely to work than micro-management, which may reduce doctors to mere technicians , to drive them out of practice, and reduce the appeal of medicine as an independent-thinking profession


Medical costs can’t be micromanaged.

1 comment:

David said...

Huntsville Hospital announced this morning that it is purchasing The Heart Center, a private cardiology practice that is already part of the hospital campus. The deal is expected to be finalized in September.