Tuesday, November 23, 2010

Health Reform and SNACU (Situation Normal All Costs Up)

A reader challenged me to come up with magic acronym to explain the evolution of the health system under the new health reform law. SNAFU (Situation Normal All Fouled Up) has been taken, so I came up with SNACU(Situation Normal All Costs Up). SNACU helps to explain why health costs are up 7.4%, 7 times the rate of general inflation, since Obamacare’s passage eight months ago.

SNACU is not the fault of the health reform law.It all comes down to human nature. Health care participants, in my opinion, are not “good” or “bad.” They live by their wits. They do what it takes to survive and thrive. They act in their own self-interests, which they believe, advance the general interests of society.

Unfortunately, with health care, SNACU drives most costs up. With health care, most SNACU phenomenon are carried out in the name of “progress,” meaning most players think their efforts are done at the cutting edge of medical progress.

Here are four SNACU phenomenon.

• One, Medical Technologies.
Technological advances account for 70% of health care inflation. These advances include such things at imaging tests (CT, MRI, and PET scans, life-style restoring procedures (hip and knee replacements), and life-saving life technologies (bypasses, stents, dialysis). Innovators say “Disruptive Innovations” - - innovations performed cheaper, more conveniently, by less sophisticated personnel – will drive costs down, but so far costs are still climbing at 7% a year, versus 1% for general inflation.

• Two, Information Technologies.
Here I’m talking about EMRs, EHRs, and PHRs, those wondrous record keeping devices, those remote electronic monitors, either visual or implantable, and the Internet as an all purpose source of consumer information. For individual doctors, EMTs will take $40,000 to $60,000 per doctor to install and implement, and $27 billion out of the federal treasury. Will these technologies save money? Only GODs (Generally Optimistic Developers) of IT systems know, but so far only 20% of practicing physicians and less than 5% of hospitals have fully-functioning EMRs.

Three, Consolidation and Integration of Health Systems – Today’s buzz phrase for these systems is “accountable care organizations, “ which supposedly will coordinate care and reduce duplications across real and virtual organizations and save money in the process. Whether costs of creating these organizations with their attendant administrative bureaucracies will exceed cost saved remains doubtful.

Four, Managed Care Administered by a small core of administrative technocratic experts centered inside the Washington, D.C. Beltway. This describes the thrust of the health reform bill and of Dr. Donald Berwick, the Administrator of Medicare and Medicaid Services. The effort will require over 150 new federal agencies, a vast new bureaucracy with 100,000 or more new federal employees, 13,500 IRS agents, and 50 new state level health exchanges to create and enforce federal mandates at a cost of roughly $2.5 trillion from 2014 to 2023.

SNACU, regrettably, is closely related to another phenomenon, SNEDWIT (Situation Normal Everybody Does What It Takes). People in the health care industry will do what it takes to remain financially viable, even if what they feel what they have to do costs more money and displeases health reform advocates. Oh, what a tangled web we weave when the health system we seek to reform and cost reductions we strive to achieve.

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