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All items for September, 2006


A Few More Words About Mistrust

Stanley Feld M.D.,FACP,MACE

Unfortunately, all the stakeholders mistrust one another. The facilitators stakeholders, hospitals, insurance companies, pharmaceutical companies, all seem to be trying to grab as much money out of the system as they can. The insurance companies by restricting access to care are also trying to spend as little money as they can. Physicians are trying to do the same, but are less successful. The payment they get from the government decreases yearly even though they raise their fees.

Patients, the primary stakeholders, are the only reason the healthcare system exists. Patients are in a constant state of fear. The fear of losing their insurance. The fear of losing their job. The next job might not have an insurance benefit. The fear of getting sick and being ineligible for insurance. If you are self employed and over 50 years old you might not be able to buy insurance. If they can buy insurance it will be after with after tax dollars. The government should be protecting the people from these fears. They are not.

In recent weeks, I have pointed out salaries of hospital CEOs and benefits of insurance executives. I have used recent examples reported in the press. There is no explanation offered for these high salaries. The high salaries seem to be for the profits they bring to the hospital or insurance company. They have figured out how to make the most from the rules of the system. Also, there is nothing transparent about fees or charges by hospitals, pharmacies, or physicians.

In other words, the system is not focused on how to improve patient care and quality of care while reducing the cost of care. There is no effort to increase efficiency of care and pass some of the savings to the patient.

In our consumer driven digital world, everything should be scalable, resulting in increased quality and a decrease in cost. An excellent example is the development of the PC. The computing power and quality have climbed and the cost has fallen. The same was true for the telecommunications industry.

The Medical Care System and Healthcare System can get there. I define the Medical Care System as the patient and the physician relationship. The Healthcare System is the structure that facilitates the delivery of medical care The mistrust between and among stakeholders must be eliminated from the system. The only one who can do that is the patient and the future patient. They can do it by controlling their own healthcare dollar.

I did not mention the government as a facilitator stakeholder, but it has done a few things to the consumer in the last year that has served to escalate mistrust for the government. One was raising the Medicare premium on patients who earn a certain amount of money. This is a small thing that seems very unfair after paying an escalating premium into Medicare over the last 40 years.

New York Times headline on September 11, 2006. “Medicare Costs to Increase for Wealthier Beneficiaries”. People who paid into Medicare for the last 40 years should have to pay a higher monthly premium if their earning is above a certain amount. Is the message, “Do not earn any money when you retire? If you do earn money, you will not only suffer with a tax on your social security but you will pay a higher premium for Medicare from your salary even though you are still paying into Medicare from your salary check. Is this what we signed up for? A system of disincentives has been created. Is this the American way?

We all expect Medicare to go bankrupt. The government has not done anything to fix the problem except decrease benefits. The timing of the report is strange. It was published on 9/11. We are never secure even in our retirement. The benefits we have prepaid over 40 years of labor are evaporating. Can we trust government’s promises?

Medicare Part D, the drug benefit, was supposed to help seniors pay for their drugs. It can be. If you choose the right plan in an extremely confusing and complicated system you might benefit. The prices of drugs are not transparent. Drugs are sold with multiple prices. Terms such as retail, average wholesale price, tier A, B, and C have been introduced into the system to the disadvantage of the patients and the advantage of the retail drug store and pharmaceutical industry. If we had Price Transparency and control over our money all this opacity would disappear. If you pay retail for your medication you will spend first $225 the insurance pays for very quickly with the Medicare Part D benefit.

After the first $225 you hit the donut, and you are responsible for the next $2,500. Seniors did not understand the implications of the drug plan. The patients can not afford the medication. The patients then do not take their medication. Non compliance simply leads to complications of chronic disease.

I think the government tried to do the right thing. Medicare Part D was contaminated by facilitator vested interest. This action generated more mistrust of the government.

I think Wal-Mart with it $4 fee for 30 days supply of generic medicine is going to have a revolutionary effect on drug prices, accelerate the fulfillment of the Price Transparency issue, and the drug compliance problem of the elderly. The details of the program are sparse presently. If done correctly it can be a win-win for Wal-Mart and patients. It will also serve to get other facilitator stakeholders to start thinking about how they can retain business and cater to our consumer driven society.

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I Might Have I Figured Out HCA’s Strategy!

Stanley Feld MD.FACP,MACE

The HCA drama continues. It also remains a strong opportunity for a “Patient Power” abuse protest and boycott their facilities. The opportunity has presented itself for patients to demand Price Transparency and control of their own healthcare dollar
Neither HCA nor United Healthcare is looking out for the patients’ interest. They are looking out for their bottom line.

850,000 patient lost coverage in HCA hospitals in the Denver area. Patients fled to other Denver area hospitals. Their physicians also fled from HCA. Their physicians applied for rapid admitting and surgical privileges in other hospitals to HCA’s surprise. HCA also increased the fees in Florida and Las Vegas.
The State Board of Insurance upheld United Healthcare’s right to place HCA hospitals out of network after an HCA protest. “The Colorado Division of Insurance said Wednesday that United Healthcare did not violate state insurance regulations by failing to get consent from customers before limiting access to hospitals operated by HCA Inc. Notice the power of the Colorado Division of Insurance. The Colorado gubernatorial candidates were serious about healthcare reform for the people of the Colorado; they should step up and pledge to use the power of the state agencies to clean up healthcare.
Immediately after the Insurance Board’s ruling United Healthcare sued HCA Inc.

“United HealthCare has sued HCA Inc. over what it sees as hardball negotiating tactics in an important Western market, upping the ante in a bitter fight over rates there.”

“United, the nation’s No. 2 health insurer, asked a Colorado judge Monday to bar HCA from engaging in anti-competitive behavior that it says is eroding its business in the Denver area”.
United Healthcare claims “The tactics “cause irreparable damage to United’s reputation and customer goodwill, which United has built over several decades,”

“The Nashville hospital chain has barred United Healthcare nurses from contacting patients in HCA facilities, charged higher rates for mammograms, and encouraged companies to switch insurance providers — all in an effort to increase its leverage at the bargaining table, United says in the suit.”
These lawsuits are going to cost United Healthcare and HCA a lot of money. These costs are certain to be translated into increased insurance rates. The result will be more uninsured people in the State of Colorado. It is an opportunity for true leadership and real healthcare reform.

It dawned on me what HCA might be doing. HCA is facing lawsuits from its stockholders over the leveraged buy out terms. The suits accuse that HCA was sold for too little money. $51 a share was much too little to pay for a company worth at least $58.60 per share. The stock was selling at $49 a share at the time of the buyout. HCA has also limited counter offers by placing a short time limit on bids.

HCA, suitors reject charge of cheating

“Shareholders upset with sale price HCA Inc. and a group of private investors who want to buy it deny claims by some upset shareholders that they’re cheating stockholders out of millions of dollars in potential profits from the multibillion-dollar deal that could close later this year.’

“Six shareholder lawsuits were filed soon after the July 24 announcement that HCA’s board had agreed to sell the company in a leveraged buyout to a group of three private equity firms and Frist family members, including HCA co-founder Thomas Frist Jr.”

“The cases, brought by institutional and individual investors, were consolidated, and Pirelli Armstrong Tire Corporation Retiree Medical Benefits Trust was named last month as lead plaintiff.”
“The lawsuits argue the price is “grossly inadequate.” The offer is well below the company’s record high price of $58.60 a share on June 22, 2005.”

In my opinion, something is wrong with the price paid in the leveraged buyout. In order to protect itself from a stockholder class action lawsuit, I suspect KKR and HCA figured they could trade one lawsuit for another. They devalued the shares to a level much below the sale price as a result of their failure in to successfully negotiate with United Healthcare.

On September 19, the “Buyers: HCA still attractive, stock iffy”
“Three private equity firms painted a dreary picture of HCA Inc.’s short-term prospects even as they tried to convince its board to sell the company and take it private, the latest regulatory filings outlining details of HCA’s pending $33 billion sale show.

Shares of Nashville-based HCA were trading in the mid-$40 range this summer when the trio of equity firms warned that the hospital company’s stock price was likely to fall to the high-$30 range and stay there for several years because of the stock market’s concerns over issues such as sluggish patient volumes and escalating bad debt.”

Could it be the buyers wanted to depress the stock’s value to get the stockholders lawsuit off their back? If so, it might backfire on them. They might also lose their loan commitment. The banks have committed themselves to a $25 billion dollar loan, when the stock price was $49. Medicare is pledging to change the DRG system to lower payments to hospitals. The old DRG system has been so lucrative for the hospital systems bottom line in the past.

The stockholder suit could vanish since the stock price sank and their argument evaporated. Then HCA could negotiate a mutually acceptable price increase with United Healthcare. The United Healthcare suit might vanish with a contract settlement. The result could be an increase in the stock price well beyond $51 per share
Think about what might be going on here. Is this for the good of improved cost efficient patient care? Who has to say something? We do! We have not heard a word from the elected officials or any candidates. It is our job to demand action.

  • Frank Downey

    HCA Managemnet Model.
    “Protect the BOTTOM LINE at any and all cost.” “Protect the PATIENT with as little cost as possible” Thats why I left.

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“War on Obesity”

Stanley Feld M.D.,FACP,MACE

It might be easier to win a “War on Obesity” than it is to win a “War on Terror”. At Least you can see the enemy in the “War on Obesity”. I suspect winning the “War on Terrorism” will cost us money after victory. The “War on Obesity” will save us money.

“Prevention is the Cure” for many chronic diseases. Prevention of disease is totally dependent of patient compliance. In other words, it is the patient’s responsibility. It is the healthcare system as well as the medical care system to provide the appropriate education so that patients can fulfill their responsibility.

I received the following comment from Fred van Beuningen. I found his comment worth the spotlight. It highlights the fact that you, the audience, are out there and thinking, as well as getting angry with the present healthcare system.

The healthcare system collapses because it treats -by and large- symptoms and people’s lifestyles leading to societal diseases fuelled by industry eager to sell us fat, sugar and additives. Another -big- idea, empower people to live a healthy life. Translate old esoteric knowledge of healthy lifestyle into practical advice and reward people for the improvement of their lifestyles: inspires and leads to less costs. Shareholders in pharma need not to worry, they can buy other stock and have children too.
Fred van Beuningen

Thank you Fred

We like ourselves better when we are free to responsible for our own well-being. A healthcare system has to be developed that allows us to have personal responsibility for our care and respect for our decision making about our care. The responsibility of society is to provide appropriate and valid information to help us make responsible decisions. Patient should have a free choice of lifestyle.

Successful personal responsibility for our health should be the goal. There could also be a dividend for maintaining our health. We should think innovatively as the auto insurance industry has with no fault insurance as well as penalty for poor driving. The original Medical Saving Accounts proposed by John Goodman were just that. It created a monetary incentive for not only our learning to maintain our health, but reaching that goal of good health. However, congress never allowed the MSA to be on a level to playing field with traditional insurance. The insurance industry was protecting its power in order to continue to make money with traditional insurance. I will discuss this in detail in the later. Over time, after the insurance industry figured out how to maintain its power and control of the money spent, our political system under the influence of the insurance industry’s vested interest discounted the value of the MSA and called it Health Saving Accounts.

Doing the right thing has taken a back seat to protecting the insurance industry’s vested interest. The result is the false hope created by the present Health Savings Account. HSAs are presently the hot insurance vehicle. HSAs create a minimal incentive for the patients. They might act as a transient deterrent to spending. Additionally, in a price opaque environment the Savings Account portion of the HSA is meaningless.

I believe it is a charade to pretend to have done something that will repair the healthcare system with HSAs. What has been done has been to create a false hope, as we have seen so many times in the past. We saw the promise of HMO’s and the promise of Manage Care evaporate because they were ill structured band aids to real Healthcare Reform. People insured with HSAs are still patients in the insurance companies’ panel and under the insurance industry control. The patients are told what is covered and what is not covered. They are not free to choice nor have monetary incentive to choose. Price is opaque and I suspect will remain opaque as long as the hospital and insurance industry can avoid Price Transparency. There is no prevention of complication of chronic disease incentives in these HSA plans. Remember, 90% of the cost of healthcare is spent on chronic disease complications. The prevention of the complications of disease is dependent on education and self responsibility.

Physicians can not prevent chronic disease or the complications of chronic disease. It is the responsibility of the patient to prevent chronic diseases and its complications. The patient has to change his lifestyle. Poor lifestyle choices lead to chronic disease and it’s complications! It is the obligation of the medical community to teach the patients how to make these changes. We have been deficient in this task, partly because education and lifestyle training and observation are time consuming and non-reimbursed.

The insurance industry and Medicare system has not recognized the value of cognitive services nor preventive services. They might be learning. However progress is very slow. My interpretation is they are not interested in figuring out that patient self determination can save a lot of money. At least they are giving lip service to the concept that “Prevention is the Cure”. They are very slow in paying for educational centers of excellence for diabetes, osteoporosis, heart disease and chronic lung disease. If they were serious about doing something, it would be done and we would be on our way.

There has not been enough media publicity about “Prevention is Cure”. Presently the American Association of Clinical Endocrinologist has a program called the Power of Prevention. Clinical Endocrinologists visit public schools and discuss the importance of diet and exercise and healthy lifestyles to prevent obesity and diabetes.

Unfortunately Fred is correct. The food insurance through the media throws much money at eating more and paying less. The patient reward is paying less for a hamburger, getting fat, and then getting diabetes. The food industry’s reward is more business. Society’s reward is higher health care cost. If the government really got behind the concept of preventing obesity, as they did cigarettes in 1959, our obese country would start to change.

A large portion of society is taking solution to the problem into its own hands. People are trying to live healthy lifestyles. Unfortunately industries with little value have been developed to service their desire under false pretense and no evidence. The megavitamin business is a 21 billion dollar a year business. There is little scientific evidence that taking megavitamins will have any impact on preventing chronic illness. Yet, the megavitamin business has grown yearly and continues to grow. Part of the reason for its growth is the mistrust developed for traditional medicine and physicians.

The latest rage is the organic food business. It is intuitive that ingesting large amounts of pesticides will kill us. It kills the bugs. Is it scientific to assume ingesting residual pesticides if any is present will kill us? It could be, but no one has proven it to date. The same argument and counter argument holds for genetically engineered food. Are we a people who make decisions on hearsay, media stories and beliefs, or on facts? Unfortunately, the media is the message, the facts be dammed.

I do not know the answer to organic foods’ value, but no one has proven any added value yet.

What seems clear is we are spending a lot of money on worthless stuff as people get heavier and heavier. We know obesity causes chronic disease. We should demand that the government declare “War on Obesity”.

  • Nari Kannan

    Good Topic, Dr. Feld!
    However this is like blaming the failure of kids’ education on teachers, schools, society, the moon and mars! Parents cannot abdicate the responsibility for kids’ education.
    Similarly, there is no excuse for not watching what you are eating! We can blame Kellogs, McDonalds and others but unfortunately they are not putting a gun to anybody’s head.
    However like you mentioned about Patient Power, this arena can also benefit from People Power! We do not buy any cereal with more than a few grams of sugar per serving! I am guessing that a lot of other parents are also doing the same. Cereal makers have started cutting down sugar and now have even Kellogs Cocoa Crispies with 1/3 less sugar as a new product!
    I would say vote with your feet and wallets. Bad foods will vanish from stores and menus!

  • karean

    Battling against obesity is not easy, but it’s not as hard as battling against
    terrorism. I’m telling you base on what I am experiencing now. Ever since I was in elementary years I have always been obese, yet I don’t eat much. I just ate like other kids. Now that I finish college my physique bothers me in getting a good job and reducing the risk of getting sick. I am trying to figure out why I became this “fat”, I realize I might not be eating too much but those food that I ate were not the right ones plus my metabolism is very slow.
    Battling against obesity seems easy but I’m telling you, it takes courage and faith in yourself.
    One must be conscious in every food that they put in there mouth. It could either make the person healthy or sick. It’s not the teacher’s obligation, though they should teach children the right food to eat but it is still up to person himself neith to the doctor.
    I am not blaming anybody, all I’m saying is we should be responsible in everything we do with our body. It’s our body and it is irreplaceable so we should learn to take care of it. I’m doing it now so can you.
    Dear Karean
    I congratulate you and applaud your comment.
    You have emphasized that your most important asset is your health and your health is your responsibility.
    If people had control of their healthcare dollar, they would solve lots of the waste, abuse, and overuse of the healthcare system. We would have a healthier population. The result is decreasing cost to the healthcare system.
    Stanley Feld M.D.,FACP,MACE

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A New Contest !

Stanley Feld M.D.,FACP,MACE

Did you know there is a new money contest going on in the Boston area? The contest is called “which hospital CEO can make the most money?”

“Hospital CEOs join the $1m club” is exposed in the Boston Globe while nurses are asked to take a salary cut. Union slams big raises, but nonprofits say they’re trying to keep top talent.
Chief executives at charitable hospitals in Massachusetts received substantial pay and benefit increases in fiscal year 2005, for the first time boosting their overall compensation to more than $1 million at most of the largest institutions.

Partners’ HealthCare chief executive James J. Mongan broke the $2 million barrier.
Massachusetts General Hospital chief executive Peter Slavin’s compensation rose 13.1 percent to $1 million, from $884,422.
The package for the chief executive at Brigham and Women’s Hospital, Gary Gottlieb, climbed 6.9 percent to $1 million, from $935,009.
Among other teaching hospitals in the state, Boston Medical Center chief executive Elaine Ullian’s compensation increased 54 percent to $1.37 million, from $885,901. The jump was the result of bonuses worth $425,000, which made her the second-highest-paid chief executive in the state, behind Mongan.
At UMass Memorial Medical Center in Worcester, chief executive John O’Brien’s compensation swelled 38 percent to $1.27 million, from $920,000. The increase included $372,000 in deferred compensation and other benefits.
The Massachusetts Nurses Association, which broadly criticized increased salaries for Massachusetts hospital chief executives, singled out O’Brien for criticism, because during ongoing contract talks for 760 nurses at the hospital’s university campus he has asked them to accept a reduction in pension and healthcare benefits.
At Lahey Clinic in Burlington, chief executive David M. Barrett’s package was up 32 percent to $1.25 million, from $945,031. The increase included $518,000 in benefit payments.
In Springfield, Baystate Health gave chief executive Mark R. Tolosky $1.24 million, up from $1.03 million in 2004, the year he was promoted to chief executive.
Children’s Hospital Boston boosted chief executive James Mandell’s compensation 9.9 percent to $1.07 million, from $978,955.
At Tufts-New England Medical Center, chief executive Ellen Zane received a total of $1.05 million in 2005. In 2004, she was chief executive for just eight months and received $590,131.
Beth Israel Deaconess Medical Center chief executive Paul Levy received a 4.5 percent increase to $1 million, from $957,477.

The CEO turnover rate among the 4,566 hospitals tracked by the American College of Healthcare Executives was 16 percent in 2004.

CEOs are fired or resign. The turnover rate is very high. Perhaps the high paid CEOs in the country have figured out how to make large profits for the hospital system from the dysfunctional DRG system and non profit care profit, while those fired CEOs did not.

Meanwhile, patients in the Philadelphia area have to wait three months to get an appointment to see a Clinical Endocrinologist for their diabetes. The reason is that few physicians are going into Clinical Endocrinology because the payment is too low. There are only 22 Clinical Endocrinologist practicing in the Philadelphia area.

Cognitive services have been experiencing and receiving decreases in payment for the last 10 years. New rules and reimbursement cuts continue to bombard the Internal Medicine specialties and subspecialties. The American College of Physicians, the Internal Medicine specialty group, published a white paper on the demise of Internal Medicine this past year.

At the same time “Hospital Charity Care Is Probed” for abuses by non profit hospitals. A certain percent of care must be given to charity cases in order to maintain non profit status. “Investigators Find Nonprofits Overcharge or Deny Services.”

Is this one of the ways the Boston and Massachusetts non profit hospitals make so much money to enable them to pay the CEOs one million plus dollars per year? We know the loopholes in the DRG system also help.

Where are the American Healthcare Systems priorities? Where is the value? Is it patient care first or the bottom line? The rules and regulation generated in the 50 years since Medicare has resulted in distortions of priorities in the healthcare system. The hospitals and insurance companies are making lots of money from the developed Healthcare System.

Patients, the primary stakeholders, are suffering with decreasing value of medical care and increasing cost. Physicians are experiencing decreases in reimbursement. Many are retiring early or seeking other sources of income.

Patient Power has to act now and demand of state and federal candidates create real Healthcare System and not the Band-Aid for the facilitator stakeholder vested interest reform of the past.

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The First Big Step: What Is Step Two?

Stanley Feld M.D.,FACP,MACE

The HCA/United pushback is the first big step. It represents an expression of how “Patient Power”. Patients should be madder than hell and not want to take it any more. I hope the boycott spreads to Florida and Las Vegas.

United Healthcare can not get any more money for premiums from employers. They are the people who buy the health insurance for their employees. In fact, employers want to decrease the insurance coverage they provide for employees. Present premiums are too high and severely impact corporate profits.

General Motors spends $1500 per car for healthcare benefits. General Motors says they can not afford the healthcare benefit of $1500 per car and be competitive. The General Motors’ example does not speak to the 46.7 million uninsured. Many of the uninsured are self employed patients can not qualify for insurance because they have a preexisting illness or are at risk for illness. The insurance companies will not sell them insurance. If you are in a group insurance plan the insurance companies by law must insure you. Additionally, the self employed can only buy insurance with after tax dollars. The price of insurance is also very high for small businesses. The owners do not have the negotiating power of the large corporations. These two groups have no choice but to drop the insurance benefit. Hence the people working in these companies are uninsured.

If United pays HCA more money, United will be forced to reduce the salary and stock options given to the executives of United Healthcare. United Healthcare paid its CEO 1.8 billion dollars in stock options over the last 8 years. I have no idea how the other United Healthcare executives are compensated. I am sure their compensation is not shabby because United Healthcare profits are large.
The next step in the exercise of “Patient Power” is patients must take control of their access to care. Patients must be responsible for the payment of that care with funds allocated to them in a trust. United Healthcare should not determine regulate the patients care. Patients’ freedom of choice and self responsibility is the key to Repairing the Healthcare System. Patients will then become informed consumers of healthcare. There are preconditions. Prices must be transparent so the consumer knows what they are buying. This should be government’s role. The insurance industry should negotiate the price with the physicians and the hospitals and become the surrogate broker for the payment of money belonging to the consumer. Consumers’ who overspend will not be spending the insurance premium dollar. They will lose there medical savings trust money. Patients who have an expensive illness, like diabetes, can be rewarded for spending money to care for themselves to prevent complications of disease. Medicare care becomes the patients responsible to purchase. The insurance company can be the administrator and adjudicator of payment.

Remember, Medicare director Mark McClellan M.D. said that 90% of the healthcare dollar is spent on the complications of disease. If we reduce the complications of disease we will save 45% of the current expenditure excluding the elimination of waste.

Consumer overspending was best described by Victor Fuchs an economist from Stanford. I suspect unknown to him, he had made the case for meaningful Consumer Driven Health Care. The Health Saving Account system congress has approved is my opinion is impotent. The trust account of $1,000 per year is too low to motivate the consumer to become a wise shopper. The original Medical Savings Trust Account of $6,000 started to represent motivation. There are interesting political reasons for the compromise. I will discuss those reasons shortly. The HSA represents the same false hope HMO’s and managed care represented. Dr. Fuchs calls it “The Restaurant Check Problem.”

“You go out to a restaurant with a bunch of friends and you sort of understand that you will split the check,” he said. “The waiter comes along and says, ‘the lobster looks very good, and how about a soufflé for dessert?’ The restaurant check balloons, but you are not so careful because you figure everyone is splitting it. “That’s the way medical care gets paid for,” he said. Dr. Fuchs added, “We want to spend our money on the things that will bring the most value for the dollar. When we are spending collective money as we are in health care, then it becomes much more difficult.”

We want the Diabetic to spend money for medical care in order to prevent complications. Prevention of complications will keep him out of the hospital. The consumer driven healthcare plan can be set up to give his trust fund a credit. This would serve as motivation for him to take care of himself. This reward is much cheaper than paying for a hospitalization.

The significant of the HCA/United Denver episode is that patients start realizing that they can impact the healthcare environment. After all without patients there is no need for a hospital. If an insurance product is overloaded with salaries, waste and overhead patients will not buy the product. The insurance product will have to become more cost efficient.

We, the patients and future patients have it in our power to change all of this. Some very clever entrepreneur will develop an insurance product that everyone wants. State governments have the power to encourage development of this product.

The examples in industry in America are numerous. Sam Walton revolutionized retailing in America with Wal-Mart and Sam’s. Michael Dell almost brought IBM to its knees and revolutionized the distribution of information technology.

It is going to happen in the Healthcare System. My goal is to describe the necessary components of the product that does not offer another disappointing false hope. I hope to show the way to develop the insurance product that can turn the insurance industry on its ear. There is no reason we can not provide excellent affordable insurance coverage to all including corporate employed, small business employed, self employed, unemployed, and Medicare covered families, with all the stakeholders making a reasonable profit.

  • Nari Kannan

    My guess – One simple way Insurance will split is into two kinds of plans – Basic and Catastrophic healthcare plans. Basic healthcare plans will place lot more emphasis on healthy living rather than medicine for illness. Costs will also be lower.
    Catastrophic plans will probably cover only more serious illnesses. This way the thought that somebodyelse is paying for your expensive treatments will go away since everyone will have basic coverage inexpensively and the more serious plans will split costs among similarly sick people and also more expensive.

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“Patient Power”: Historical Event in the Making in Denver, Colorado

Stanley Feld M.D., FACP, MACE

A historic event is in the making in the Denver Colorado area. Unfortunately, not enough people in Denver are aware of the event, even though it involves 800,000 patients insured by United Healthcare insurance. The significance of the historic event is that it demonstrates Patient Power. I attended a gubernatorial candidate forum in Denver for the high tech community on Friday moderated by my son Brad Feld and Jack Tankersley. Neither Republican nor Democratic candidate even mentioned healthcare. Nor did they mention the significance of what was going on in the Denver area to the 200 plus entrepreneurs in the local Technology industry in attendance.

State governments and state laws have everything to do with Repairing the Healthcare System’s problems in my view. The states issue licenses for selling insurance, practicing medicine and operating hospitals. Price Transparency is a major issue on the path to reform. The individual states could demand Price Transparency as a precondition to issuing a license in the state. The major thrust of the panel discussion was improving the economic environment in Colorado to attract the technology industry to Colorado. Reducing the cost and waste in the healthcare care system has everything to do with the growth of any industry in an area of the country. Colorado could be just a couple of steps away.

I predicted the new owners of Hospital Corporation of America (HCA) would raise their charges as a result of their increase in debt and debt service from $11 billion dollars to $25 billion dollars.

United Healthcare refused to pay the 33% increase in charges HCA demanded in the Denver area. The present contract expired August 31, 2006. United Healthcare’s 800,000 insured were instantly out of network if they were treated in an HCA facility. The patient is now responsible for the entire retail charge (non negotiated retail charge) according to United Healthcare,

Patients are starting to understand that even if they are lucky enough to have insurance in this day of 46.7 million uninsured patients, they might be underinsured. The insurance company business is to increase their profit while keeping the premium and benefits low enough for the employer to afford. Hospital Systems like HCA are trying to squeeze the biggest profit out of the system. The goal is not quality healthcare at the most affordable price.

HCA has also raised their charges to United Healthcare in Florida. The Florida contract also expired August 31. Last week HCA announced a fee increase in Las Vegas. HCA is now in a contract dispute with Sierra Health Services in Las Vegas. Sierra has 600,000 members. Its contract expires December 31, 2006. However, they have made no progress. I hope the pattern is clear to all.

HCA and United Healthcare are facilitator stakeholders. Their goal is to make as large a profit as possible. They make huge profits from the healthcare industry.

In fact the CEO of United Healthcare has received $1.8 billion dollars in stock options in the last 8 years. I imagine the board of directors feels they are paying fair market value for good help. The 1.8 billion dollars has to add to United Healthcare’s overhead and in turn adds to the premium cost.

My point is neither organization (HCA or United) is trying to reduce the costs of healthcare in order to have an affordable Healthcare System.

HCA figured the patients would continue to come to HCA hospitals until this contract dispute was settled. The patients’ physicians were at the HCA hospitals. The retail price of a hospital bed under the non price transparent DRG system ranges from $5,000 to $24,000 per day. The price does not include physician or laboratory fees. The insurance industry pays a discount fee of 30-50% on average.

The patients in Denver have surprised the executive strategists at HCA. Patients are fleeing to non HCA hospitals to get their surgery and medical care. In turn the HCA hospital physicians are getting fast tracked admitting privileges at the non HCA hospitals in the Denver area.

In an environment where mistrust is created, loyalty does not exist. This is especially when it is realized that the facilitator stakeholders are trying to take advantage of each other as well as take advantage of the primary stakeholders, the patients and the physicians.

“Patient Power” voice is being heard loud and clear by HCA in the Denver area. Hopefully it will be heard throughout the land. This voice should be heard both in Florida and Las Vegas. It will not be long before HCA is in financial trouble. It is also possible that the banks that HCA’s new owners are borrowing the $25 billion dollars from might be hesitant to close on the leveraged buyout.

Who said Repairing the Healthcare System was hopeless? It is not hopeless. It takes organized “Patient Power”. Patients and future patients have to be educated to see how they are being taken advantage of by facilitator stakeholders. Only 20% of the population are patients at any one time. The remaining 80% do not pay attention to the problem (as long as they have insurance) until they slip into the patient category. Every one needs to be informed and demand action. The action is to create of a system that aligns all the stakeholders’ incentives for the democratic good of all patients and futures patients. The goal is to deliver quality medical care at a reasonable price in a healthcare system that is not out to take advantage of the patient by making atrocious profits while not eliminating the waste in the system.

The historic event in Denver is that finally, ordinary people are taking back some of their rightful authority, and not permit themselves to be enslaved by their surrogate systems. Hopefully, this will spread to the rest of the country. The work has only just begun!

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Is There A Campaign To Prove Healthcare Cost is Cheap in America?

Stanley Feld M.D.,FACP,MACE

Two articles have implied that healthcare is inexpensive in America. The NY Times article of August 22 “Health Care the Engine that Drives the Economy 1 and a August 30 AP article “Americans may get medical money’s worth”. 2

For some reason someone feels compelled to find justification for the escalating out of control healthcare costs. For some reason they are ignoring the tremendous inefficiency, waste and overcharging in the system.

In the NY Times article Dr. Fuchs is quoted as saying “It takes so little of household income to satisfy expenditures on food, clothing and shelter,” he explains. “At the end of the 19th century, food, clothing and shelter accounted for 80 percent of the family budget. Today it’s about a third.”

Dr. Fuchs must be kidding. Where does the waste in the system go? It certainly does not go toward improved medical care.

“We have to spend our money on something,” says Robert E. Hall, a Stanford University economist., Dr. Hall and Charles I. Jones of the University of California, Berkeley, write: “As we get older and richer, which is more valuable: a third car, yet another television, more clothing — or an extra year of life?”1
Dr. Hall; what about the people who can not get insurance or can not afford insurance. Who is going to pay for them?

David Cutler, an economist at Harvard, calculated the value of extra spending on medicine. He added, “Are you willing to spend more? Yes, it costs a lot, but we’re rich enough where the alternative use of the money isn’t as valuable.” 1
In a recent paper in the NEJM Dr Cutler et al stated:” Americans of all ages spent an average of $19,900 on medical care for each extra year of life expectancy gained over the last four decades of the 20th century. And that cost is worth it.”2
“On average, the return is very high,” concludes study leader David Cutler, a Harvard University health economist. “But it’s getting worse for … in particular, the elderly.”

This is an incredible analysis from well known economists. They seem to be saying let us keep the waste and lack of value generated by waste. Everything is fine. The medical care is worth the cost.
Dr. Sidney Wolfe who heads research at Public Citizen has a cynical view of all this:
“The fact that someone is writing this paper shows how desperate the health care system is to justify these out-of-control increases in health spending,” .2

These economists seem to have concluded that since we can not eliminate the waste, we should convince the public of the value they are getting from our present healthcare system. It sounds pretty ridiculous to me. These economists are ignoring the fact that access to the medical care system in the present healthcare system is out of the reach of 46 million of the most important stakeholder the patient. They are also ignoring the fact that the benefactors of the waste and inefficiencies are the facilitator stakeholders and not the primary stakeholders the patients and the physicians.
Both the physicians and the patients make their own contribution to the waste and inefficiencies in the system. This waste must be eliminated for the survival of the medical care system. It can not be eliminated by legislation. It can only be eliminated by creating motivation and incentives for all stakeholders.

I am optimistic. I believe when confronted with a broken healthcare system, America create a democratic and efficient system. There is an opportunity to eliminate waste. There is an opportunity to improve the delivery of medical care. There is an opportunity to reduce cost by reducing waste and increasing quality of care. All these opportunities can be realized without destroying the resource and will of our most important asset in the healthcare system, namely the physicians trained to take care of us (the medical care system) when we are ill and before we become ill. Rather than holding on to the obsolete, ossified bureaucratic system of ineffective and abused rules, we can create a system for the good of all.

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It Is Hard To Do The Right Thing!

Stanley Feld MD,FACP,MACE

Many of you have not received notification of my last blog post. Please review it with this notification to subscribers. Thank you.

Mark McClellan MD, Phd. present Medicare chief is going to resign from Medicare. I think he was trying to do the right thing for the Healthcare System. However, in the present bureaucracy of the Healthcare System with the influence of corporate pressures, organizational pressures and Congressional pressures, it is very hard to get anything right.

Good ideas get distorted through compromise with the most powerful until the resultant impact is nil or harmful. The reason for this, to my knowledge, is no one has tried to align all the stakeholders’ vested interest to a mutual advantage of all, with the patients’ interest being first. Hopefully, I will get you all inspired to make a difference and help get it right.

Dr. McClellan will probably come back to Texas and be an official in his mother government. She is running for Governor as “Grandma”, against Governor Perry and Kinky Friedman.

We, Texans, are looking for an alternative. I do not think Governor Perry has inspired anyone in the state yet.

Kinky has not responded to my request or Denise’s request yet. His healthcare policy is a joke as are the healthcare policies of the other candidates. Kinky is clearly is not responsive. He is simply another one of them. He will probably get few votes even though he is very funny.

Good luck Mark.

Again, please read my last blog post. Importantly, some have read it. I received a very thoughtful and important comment from Nari Kannon.

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Did You Hear That Wasting Money In Healthcare Was Good For the Economy?

Stanley Feld M.D.,FACP,MACE

On August 22, the NY Times had an article called “Health Care the Engine that Drives the Economy.” I believe the experts The Times chose to quote were not serious, uninformed or quoted out of context.

“The United States already spends nearly 16 percent of its gross domestic product on health care, and it is almost impossible to know where all that money goes.”

“By 2030, predicts Robert W. Fogel, a Nobel laureate at the University of Chicago Graduate School of Business, about 25 percent of the G.D.P. will be spent on health care, making it “the driving force in the economy,” just as railroads drove the economy at the start of the 20th century”.

But Dr. Fogel says he is not alarmed.” Americans can afford it, he says, because the nation is so rich.”

Most of us are aware that corporations spend 16-18% of their gross revenue on healthcare. General Motors spends $1.500 per automobile built on healthcare premiums. Thirty percent (30%) of the premium is spent for administrative costs at the insurance company. Medicare stated that its overhead is only 3%. However, Medicare outsources all the administration duties to an insurance carrier. Therefore it should have little administrative overhead.

Administrative costs could be greatly reduced by effective use of information technology. Claims adjudicated at point of service should be as simple as it is during commercial transactions. If one ever experienced the inefficiency in adjudicating a hospital bill one could appreciate the administrative waste. The savings to the system would be approximately $40 billion per year. Electronic Medical Records documenting care as well as medical and financial outcomes would save the healthcare system another $40 billion dollars per year.

If we added successful Chronic Disease management systems into our healthcare system, we could save another $60 billion per year simply decreasing the complications of Diabetes Mellitus by 50% and save $10 billion decreasing the complications of Osteoporosis

Instituting proven techniques, adjudication of claims, communication and documentation using EMRs could result in a total savings of $150 billion. Instituting these techniques would eliminate waste and inefficiencies in the system. It could reduce the cost of care and make insurance more affordable to corporations and individuals.

The big question is,” Who should benefit from this savings?” The answer should be: patients and society. A portion of this savings should be used to reduce the cost of care. A portion of the savings should be used as incentive to stimulate adoption of the new systems so the new systems are successful. We could also figure out how to make insurance available at an affordable price to the 47.6 million uninsured people with a portion of the savings.

However, I bet the facilitator stakeholders are lining up to grab the extra money generated by the elimination of the inefficiencies.

Waste is not good for any economy. The waste in the healthcare system should not be the engine driving the economy. Adding value and better medical care should be the engine for a healthier America.

  • Nari Kannan

    Thinking wasting money is good for the economy suffers from the same problems that Communism had in practice! In a global economy, every piece of work needs to be done in the most efficient and effective way that someone else is dcapable of doing. Otherwise sooner or later it will catch up! There is no better example of this than how Toyota and Honda are taking Global and US market share away from American Car Makers for the past four decades. All by doing things in the most efficient and effective way possible, lowering costs and at the same time increasing quality and productivity. The irony and the sad thing is that they listened and adapted the teachings of American Quality Gurus like Feigenbaum, Deming and Juran. These gurus were ignored here in the U.S!
    It is a shame that all these ideas to reducing costs are not being adopted!
    I am guessing nothing except a total breakdown will shake American Healthcare from complacency!
    Dear Nari
    Great comment. I hope more citizens are getting as upset as you are.
    The only way things are going to change is if the public is outraged and presents an option. I hope to present that option

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