Stanley Feld M.D., FACP, MACE Menu

All items for November, 2007


Addressing Health Care Costs — The Right Way

Stanley Feld M.D.,FACP,MACE

The AMA has put forward four broad strategies to reduce health care spending and improve the value of medical care. The facilitator stakeholders have not asked practicing physicians what they think should be done to improve the quality of medical care and decrease the cost of the healthcare. I must confess that I am proud of the AMA for publishing this opinion editorial. Maintaining the status quo and focusing on price transparency using inaccurate methodology is simply the wrong way to control cost. The result will be another complicated mistake.

Is it possible to change the status quo? The editorial’s initial statement is; “A fundamental first step is to properly address the issues of cost, value and efficiency in the U.S. health care system.”

The latest rise in health insurance premiums and the $2 trillion annual health bill is a timely example of why attention turns so quickly to rising health care costs. “The figures, compiled by the Kaiser Family Foundation, represent the smallest rate of premium increase since 1999. But that’s a dubious distinction given that the rise is more than twice the overall inflation rate of 2.6% and far ahead of the 3.7% increase in wages.”

As insurance costs go up at that rate, we can expect a rise in the number of uninsured Americans.
“Another of our page one headlines, only two weeks before the premium news, announced a dramatic increase in the latest U.S. Census Bureau tally of the uninsured — to 47 million.”

“When insurance rates rise, according to researchers, fewer workers can afford to pay premiums and medium- and small-size firms give up offering coverage. One striking figure: In 2001, 68% of firms smaller than 200 workers offered health benefits; at last count it was 59%”.

“It’s essential to note that much of the increase in what’s spent on health care in America is for necessary care.”

The meaning of necessary care is when someone is sick and needs to be treated rather than preventing them from becoming ill.

“ By one count, from a 2004 study in Health Affairs, treated prevalence of disease — basically, the underlying prevalence of illness and often evolving treatment resources used to address it — alone accounts for an estimated two-thirds of the recent growth in health costs. But there are a number of studies indicating inefficiencies due to overuse and under use of services. On top of that is non-clinical waste, including bureaucratic burdens and excessive third-party profits.

The answer is not willy-nilly hacking away at costs, but defining and moving forward with a focus on better value in our health care spending. Focusing on value would likely lead to a slower growth of costs.”

“Value can be thought of as the best balance between benefits and costs (i.e., efficiency, in economic terms), and better value as improved clinical outcomes, quality, and/or patient satisfaction per dollar spent.” AMA Delegates adopted four broad strategies, presented in the report, to contain health care spending and improve value:
• Reduce the burden of preventable diseases. This includes preventing the onset of chronic illnesses such as diabetes and improving patient compliance with medications.
• Make health care delivery more efficient. Better coordination of care and reducing unnecessary services fall into this category.
• Reduce non-clinical health system costs that do not contribute to patient care. For example, reducing excessive spending on administration, profits and marketing.
• Promote “value-based decision-making” at all levels. This involves improving the process used to make decisions so that cost and benefit — particularly clinical outcomes — are taken into account.

Do any of these proposals sound familiar to readers of this blog? A lot of physicians know what to do. The changes necessary are counter to the vested interests of the facilitator stakeholders who control the healthcare system. The facilitator stakeholders do not ask the practicing physicians’ opinion because it might decrease their profitability.

“Patients and stakeholders inside and outside of the health care arena will be needed to bring about the transformation to a more value-driven system. And physicians have an opportunity to be a key component in the change. Physicians have the most contact with members of the public every year, putting them in a unique position to help patients help themselves, such as by adopting healthier lifestyles.”

With some effort, motivation and sincerity on everyone’s part, headlines on future stories could proclaim health care costs under control and improved health care for all Americans.

If we could focus on these four principles and align all stakeholders’ incentives so that there was mutual trust, respect, and effort, using American ingenuity we could repair the healthcare system. Developing processes such as P4P, report cards, evaluation of physician care using artificial and inaccurate data can only lead to a more dysfunctional healthcare system.

No one has asked for practicing physicians’ input or put practicing physicians in a position to offer advice on the Repair of the Healthcare System. There are many physicians out there who know what to do. The tools to do it must be provided to them to make it happen.

  • charlesclarknovels

    I agree with the concept, especially that stressing the importance of a value-driven system. My ideas of improved efficiency and improved outcomes depend on the following;
    Encourage development of critical pathways and practice guidellines
    Remove incentives for performing medically unnecessary procedures and diagnostics
    Encourage and insist on strict protocols for managing Diabetes and other Chronic Diseases
    Further eliminate provider incentives by denying reimbursement for procedures and diagnostics performed in physician-provider owned facilities
    Increase reimbursement to primary care providers for efficient patient care management
    At some point in time we must accept the fact that more is not necessarily better.

  • morechoice

    For another look at value-driven health care, look at what Regence is doing. They are the largest insurance company in the Pacific Northwest They’re also nonprofit.
    They just launched a site on value-driven care, trying to engage their members and others in a discussion. If you’re following what insurers are doing, it’s worth a look —

  • Thanks for leaving a comment, please keep it clean. HTML allowed is strong, code and a href.


Physician Focused Price Transparency: Raw Medical Claims Data: The Wrong Measurement To Control Cost

Stanley Feld M.D.,FACP,MACE

The real problem with raw medical claims data is that it will be misleading to the public. Its use will not measure the quality of medical care accurately.

In the meantime “Health insurance premiums up 6.1%, fast outpacing inflation and wages”.

During a recent lecture a physician asked me why are healthcare insurance rates rising at such a rapid rate and I have not received a reimbursement increase in 8 years? The answer is simple. All the other stakeholders are increasing the cost of healthcare.

I have discussed price transparency in detail. The error in using raw medical claims data is it is creating another false hope. It will not reveal overhead costs of the healthcare insurance industry or the actual costs for the delivery of care by hospital systems. Other sources are available to reveal hospital system charges and reimbursement. We do not have a way to evaluate hospital system costs. We have mentioned the $11 aspirin built into hospital charges, the one million dollar plus annual salaries of hospital administrators, the ten million dollar plus annual salaries of healthcare insurance company administrators. These numbers increase each year without explanation or analysis of its impact on the cost to the healthcare system. We must demand the analysis of these costs.

“These data are not so transparent and certainly not beside the point. Real healthcare data is hard to find and define.
Everybody wants a clear view of the cost and quality of healthcare. But defining this “transparency” is not an easy task. It is a task that physicians, insurers and the federal government continue to struggle with. These days there’s a lot of talk about making the cost and quality of health care more understandable to patients. But this transparency, like beauty, is in the eye of the beholder. While physicians and insurers each express support for transparency, there is a battle over what measures and techniques should be used to achieve it. Even the definition of price transparency is in flux.”

“ There is a concern among physicians that without physician clear direction and input, transparency initiatives aimed at the physician might mislead patients into thinking that healthcare insurance plans are paying doctors more than they actually are and that physicians are overcharging. Physicians also worry that plans are not using the correct and most complete information to rate quality, thus misrepresenting doctors, particularly those who take high-risk cases.”

In the discussion of medical claims data the real issue of the increase cost to the healthcare system is avoided. Remember, eighty percent of the healthcare dollars are spent on treating the complications of chronic disease. Neither insurers nor the government adequately do anything to support the prevention of chronic disease. Let us suppose the insurers did support the prevention of the complications of chronic disease. The additional monetary support would lead to the development of innovative techniques to prevent the onset of chronic disease.

Patients need to work hard to prevent the onset of chronic disease. Patients with a chronic disease have to be taught to be the “professor of their disease’ and work hard to prevent the onset of the costly complications of chronic disease. This can be done with the aid of their physician assuming he has the economic incentive to help the patient manage their chronic disease. These educational processes are not adequately supported economically at the present time.

Patients are ultimately responsible for their lifestyle behaviors. Patients are not doing a good job preventing chronic disease or the onset of the complications of chronic disease. Obesity is at the root of precipitating many chronic diseases, yet obesity in America is growing at an alarming rate.

Are patients to blame for the obesity in America? The answer is they are partly to blame. However, they are bombarded with external stimuli that promote obesity. My solution to obesity in America is for congress to pass a farm bill that does not subsidize mega farm corporations for producing harmful foodstuff. If congress passed a farm bill that banned the use of corn, corn products, soy and soy products as well as sugar and sugar products in food and shifted its foodstuff use to produce oil we would go a long way to solve America’s obesity problem as well as our dependence of foreign oil. I would also subsidize public education through public service campaigns to promote healthy food intake, increased exercise and healthy lifestyle changes. The public is needs this information. It broadly support the megavitamin and supplement industry in an effort to promote its good health.

Neither the insurance industry nor government supports programs that enhance compliance or adherence to medical therapy. Innovative programs rewarding patients are relatively easy to construct if industry and government would support these programs. Nationally, patient adherence to medical therapy is about 50%. Wal-Mart’s generic drug program has gone a long way to increase the affordability of drug therapy and increase adherence.

The issue of transparency and raw medical claims data can now come into focus as being inadequate to judge the quality of the therapeutic interaction. We are only going to reduce the cost of healthcare if we decrease the complications of chronic disease and not by evaluating quality medical care inaccurately.

This is going to take co-operation of all the stakeholders. The way to motivate patients to control cost is to have them own their healthcare dollar and provide incentives for them to use those dollars wisely. If we took the steps outlined much of our healthcare costs would decrease and the health of the nation would increase.

  • Thanks for leaving a comment, please keep it clean. HTML allowed is strong, code and a href.


Private Insurers Jump on Physician Ranking

Stanley Feld M.D.,FACP,MACE

I previously stated that Pay for Performance (P4P) is another way of decreasing physicians’ reimbursement using misleading medical claims data. The raw medical claims data is an easy but inaccurate way to judge physician performance. If someone really wanted to help patients understand quality of medical care in order to choose their physician it could be done correctly. The only concern of private insurers seems to be their bottom line.

I have been accused of having a vested interest in protecting physicians.

My interest is protecting consumers from dumb policies that will result in decreasing access to quality care and promoting a further gaming of the healthcare system by all stakeholders except the patient.
Immediately after the judge’s decision on releasing raw medical claims data, the insurance industry started rating physician on the basis of medical claims data.

New York Attorney General Andrew Cuomo sent letters to Aetna and Cigna warning them that the doctor-rating systems they use to guide consumers are confusing and could be considered deceptive. “ Health insurance companies create physician ranking programs to recommend certain primary care physicians and specialists to consumers. In his letter to Aetna and Cigna Healthcare, the Attorney General describes the problematic design of the physician ranking programs created by Aetna and Cigna Healthcare: the rankings are based on claims data, which is well-known to carry several significant risks of error when used to rank individual physicians; the insurers do not disclose the accuracy rate of their rankings; and insurers have a profit motive to recommend doctors who cost less, not necessarily those who are most qualified.”

Cuomo told UnitedHealth in July not to roll out its rating program in New York without his approval. “We’re not opposed to the ranking systems in and of themselves, but we think these may have problems,” spokesman Jeffrey Lerner told Health Blog.

The letters also describe how inaccurate physician ranking programs may cause financial harm to consumers. Some employers steer employees to the doctors preferred by the insurer by lowering co-payments or deductibles. Consequently, employees who choose not to go to the preferred doctors could pay more.

New York’s Cuomo further warns that rankings based on claims data can be badly flawed, and that the insurers have conflicts of interest. He’s asking the health plans for a “full justification.”

The stern letters follow a recent lawsuit filed by Connecticut doctors in Superior Court in Danbury. The Fairfield County Medical Association and a group of orthopedists accuse Cigna and UnitedHealth of libel, unfair trade practices, breach of contract and more for setting up the ranking programs.
All of this was totally predictable. It leads to more dysfunctional relationships among stakeholders in the healthcare system.

The key to the Repair of the Healthcare System is to align incentives by complete price transparency so that no one stakeholder can game the system. It is clear the health insurance industry has positioned itself to game the system for profit with the publication of inaccurate medical claims data at the expense of the patients and physicians.

We must create an environment that promotes mutual trust among all stakeholders. Mechanism designers commonly try to achieve the following basic outcomes: truthfulness, individual rationality, budget balance, and social welfare. The most efficient economic outcomes are systems designed in which everyone does the best for himself under fair and truthful sets of rules. This can be achieved by sharing information truthfully (real price transparency). It is easy to understand that some people can do better than others by not sharing information, distorting information or lying.

If everyone’s incentives are aligned, you have a much better chance for an efficient economic system. I believe the use of raw medical claim data without defining quality medical care properly and not risk weighting medical outcomes will result in misleading judgments. These judgments will hurt patients and physicians. The result will be a decrease in the quality of medical care. It will also lead to more mistrust between the insurance industry, government, consumer groups and physicians.

The only stakeholder who can align the other stakeholders incentives is the consumer, in a consumer driven healthcare system demanding that the government act fairly on setting appropriate rules.

  • KGilbert

    Basing physician rankings solely on claims data is certainly a recipe for disaster. But this conclusion begs the questions of how one goes about getting a fair rating system. Making aggregated patient data available is both impractical – most offices use paper records – and runs afoul of privacy concerns. Yet this information is essential if the healthcare market concept is to succeed. If there is no way to create an informed consumer (on price, quality, etc), then the concept of a healthcare market will fail.

  • Thanks for leaving a comment, please keep it clean. HTML allowed is strong, code and a href.


Another Complicated Mistake

Stanley Feld M.D.,FACP,MACE

Real price transparency, affordable healthcare costs and improved quality of care for chronic disease are essential goals in order to repair the healthcare system. Real price transparency by all the stakeholders, accurate criteria for evaluating quality of care, along with patients controlling their healthcare dollar and having access to the information have to occur simultaneously. Only then will stakeholders compete for the patients’ healthcare dollar. The result will be a decrease in the cost of healthcare.

At this moment neither quality health care nor real price transparency among stakeholders has been defined. When this occurs the marketplace will determine the price of healthcare. Neither artificial negotiation of prices nor price controls will result in a stable price environment.

Nevertheless a federal judge ordered the federal government to release the results of the raw medical claims data accumulated by Medicare. This data is supposed to be used to judge the quality of medical care and cost of that care delivered by thousands of physicians across the nation. This judgment would be fine if the data were a valid measurement of quality medical care. It is simply one of many tools that define cost of a disease.

Medical claims data can be used to evaluate the length of stay in a hospital for a hernia repair. If the average hospital length of stay is one post op day it would seem logical to say the physician releasing the patient in one day did a better job than the physician who released the patient in five days. If physician A’s patients were all released in one day and he did one thousand hernia repairs a year one could conclude the physician has many good hernia repair experiences.

The inaccuracy of medical claims data is easy to understand. Let us say physician A did hernia repairs on athletic patients under the age of 25. Physician B did hernia repairs on all patients. The majority of physician B’s patients have multiple diseases such as diabetes mellitus, hypertension and coronary artery disease. His patients were at greater risk of post operative complications and needed more post op hospital days. Technically, both surgeons were equal. However, physician A receives a higher score on his report card and a higher reimbursement for his performance (P4P) than physician B. Physician B would quickly figure this out. He would start selecting only healthy patients on whom to hernia repairs. His goal would be to match physician A’s performance and reimbursement. The result would be access to care for sicker patients would be restricted. The only way raw medical claims data could work is if the raw medical claims data would be refined to include accurate risk weighting of the patients.

Therein lies the weakness of medical claims data. Each piece of data has to be risk weighted. This simple example demonstrates only one defect in the use of claims data to determine quality care. On the surface medical claims data is intuitively sound but the details are complicated and the use of raw medical claims data to determine quality is invalid.

How could medical claims data judge a cognitive physician such as an internist, an endocrinologist or a non invasive cardiologist? Clinical endocrinologists take care of sicker diabetic than the generalist. They use the same billing codes. The generalist refers his most difficult cases to the clinical endocrinologist. This is as it should be. However, sick patients with chronic disease have worse clinical outcomes than patients who are less sick. These patients will cost more than less sick patients. Medical claims data will not measure the quality of care received by these sick patients as opposed to non sick patients. Raw medical claims data cannot and does not measure this nuance.

Emboldened employers and insurance companies could easily manipulate the medical claims data and steer employees to a lower quality of medical care using the inaccurate raw medical claims data definition of better-performing doctors.

Consumers Checkbook a consumer non profit company is developing web site to publish this medical claims data. They sued the government demanding the release of the medical claims data. Their business plan is to sell this potentially misleading information to patients for a fee in the name of consumer advocacy. Robert Krughoff the president of Consumers’ Checkbook says “This will make the efforts to rate doctors more reliable, more valid. The group will use the data to measure the quality and efficiency of doctors and plans to launch a Web site that tells consumers how much experience doctors have performing certain procedures”

Consumer experts believe the ruling, made by U.S. District Judge Emmet G. Sullivan in Washington, will not be appealed by the Bush administration. Last year, in an executive order, President Bush called for greater cost and quality transparency in the health care system.

“It honestly is a treasure trove,” says Francois de Brantes, the national coordinator for Bridges to Excellence, a program that rewards doctors for improving the quality of their medical care. “There is an unbelievable amount of analysis that can be done with the data that up until today just hasn’t been possible.”

Bridges of Excellence looks like a start up web site in search of a product. Rather than being a benefit to patients, it is interpretation of the raw medical claims data by laymen who have no concept of the complexity of medical treatment and can be harmful to patients.

“Consumer groups say the data has limitations but it nonetheless can be used to accurately rate physician quality.”

I think they truly believe what they are saying. They see a business opportunity. Physician organizations must define quality care and judge the quality of delivered care. Misleading, inaccurate and complicated raw medical claims data can only result in a decrease in quality and access to medical care. Healthcare system has just made another complicated mistake.

  • Thanks for leaving a comment, please keep it clean. HTML allowed is strong, code and a href.


A Comment On Mechanism Design

Stanley Feld M.D.,FACE,MACE

Dick Swersey is a Columbia College C’59 classmate. He is extremely intelligent. He has commented on my blog Repairing the Healthcare System in the past. He is a strong free market advocate. In response to my blog post Mechanism Design and Repair of the Healthcare System he wrote the following:


History has proven over and over again that only the market mechanism of willing sellers and willing buyers is the optimal way to allocate economic resources. This presumes an informed buyer, and a willingness of sellers to compete for buyers. Adam Smith was clear on this in the Wealth of Nations.

But he expressed an additional concern. I am paraphrasing here but he said it was dangerous for craftsmen of the same trade (i.e. doctors and/or hospitals) to get together, even for merriment, that the event turns into a conspiracy against consumers. This thinking was 115 years before the Sherman Anti-Trust Law was enacted.

So, here’s the dilemma: we have long passed the point of sellers of medical services colluding (in the broadest sense). How do we get market power back into the hands of consumers?

I wouldn’t necessarily dismiss a role of government in this arena. Fully 20% of the Wealth of Nations is a section called “The Role of the Sovereign”. You might want to look at that section to see if there are any relevant principles. I’ll do the same.”

Dick is absolutely correct. The government is there to make the rules of the game. These rules need to be constructed so that they are fair to all. The rules have to align everyone’s incentive for the basic goal of the endeavor.

In medicine the basic goal should be the welfare of the patient. The goal should be the delivery of quality medical care at the most affordable price. The patients and not the insurance company should decide on what their needs are. The rules can not interfere with free choice. If a seller is unwilling to sell according to the rules they should not be forced to sell. However, they can not play the game. They need to play in another game. If there is an unwilling buyer to buy he should have the option to buy elsewhere. Both the buyer and the seller should be entitled to pursue their self interest within the rules of the game. All transactions should be transparent so the buyer knows exactly the quality of care he is buying and the price he is paying for it. The rules for defining quality of care and price have to be clearly stated. If the rules of the game are broken the party who breaks the rules should be penalized.

The distortion in the Healthcare System is the opacity of pricing and payment by the healthcare insurance industry, the hospital systems, and sometimes the physicians. Additionally, the consumer does not have the option to choose the products he feels he needs. (Access to care)

The healthcare system needs revision of the rules of the game. Consumers must own their healthcare dollar and drive the healthcare system. They should be able to buy high deductible insurance and deposit the initial at risk dollars in a tax free trust so they can pay for their initial care. If they do not spend the money in their trust account they should not be required to use it for healthcare expenses in the future. The trust account can be set up by their employer, themselves, or the government for them. Money not spent in the trust account should accumulate tax free and be used for retirement.

The self employed would be able to set up the trust with pre tax dollars just as the employer can. This would encourage young people who are well to buy insurance so that they have another source of forced savings for retirement. It is foolish for the young well person to be uninsured because illness can strike at anytime. It would also nullify the healthcare insurance industry’s complaint that the healthy young choose to be uninsured because they are paying for a higher risk pool.

Another required rule change would be the way premiums are calculated. The calculation should be based on community rating and not the archaic actuary calculations now used.

The “sovereign” should make the appropriate rules and then get out of the way and let the marketplace do the work.

  • Thanks for leaving a comment, please keep it clean. HTML allowed is strong, code and a href.


Mechanism Design and the Healthcare System

Stanley Feld M.D.,FACP,MACE

Last month the Nobel Prize in economics was awarded to Leoid Hurwicz, Roger Meyerson and Eric Maskin . They were awarded the Nobel Prize for developing the economic theory of “Mechanism Design.” My first reaction was “what is that?”

After some research I discovered the power of Mechanism Design. It is a brilliant economic theory that could solve many economic problems. Mechanism Design applied to our healthcare system could solve many of the problems.

What is it? “ In economics, mechanism design is the art and science of designing rules of a game to achieve a specific outcome, even though each participant may be self-interested. This is done by setting up a structure in which each player has an incentive to behave as the designer intends. The game is then said to implement the desired outcome. The strength of such a result depends on the solution concept used in the game. It is related to metagame theory, which is the theory of games the play of which consists of developing the rules of another game.

Mechanism designers commonly try to achieve the following basic outcomes: truthfulness, individual rationality, budget balance, and social welfare. However, it is impossible to guarantee optimal results for all four outcomes simultaneously in many situations, particularly in markets where buyers can also be sellers[1], thus significant research in mechanism design involves making trade-offs between these qualities. Other desirable criteria that may be achieved include fairness (minimizing variance between participants’ utilities), maximizing the auction holder’s revenue, and Pareto efficiency. More advanced mechanisms sometimes attempt to resist harmful coalitions of players.”

Lodi Hurwicz contributed the idea of incentive compatibility. His point is the way to get as close to the most efficient economic outcomes is to design mechanism in which everyone does best for themselves. He says this can be achieved by sharing information truthfully (Price Transparency). It is easy to understand that some people can do better than others by not sharing information or lying.

If everyone’s incentives are aligned you have a much more efficient economic system. An example is defense contracting. If you agree to pay on a cost plus basis you have created incentive for the contractor to be inefficient. I you agree to pay a fixed price you can come close to an efficient price if you have all the truthful information. If you do not you have incentives aligned and truthful information you create the incentive to be overcharged. Most people can do better by not sharing truthful information. If the rules of the game require truthful information you can get close to an efficient market driven solution.

The concept of Pareto efficiency means no one can be made better off without someone becoming worse off. Therefore the incentive is to maintain your dominance by not being truthful at the expense of others. Hurwicz observed as others had that the dispersion of information was at the heart of the failure of a planned economy. He observed that there was a lack of incentive for people to share their information with the government truthfully. The free market mechanism was far less afflicted than central planning bureaucracy by such incentive problems. The free market economy was by no mean immune to this defect. He observed that the free market economy can get us closer than central planning to incentive compatibility because the end consumer can drive the discovery of truthful information.

The customer creating rules of engagement in a market driven economy can get you closer to the ideal of Mechanism Design. Since the customer determines success of an enterprise by creating demand in a transparent environment they can get closer to incentive efficiency. They create the rules of the game for compatible incentive.

Roger Meyerson contributed the revelation principle, a mathematical model that simplifies the calculation to create the most efficient rules of the game. The mathematical model gets people to reveal their truthful private information leading to aligned incentives.

Eric Maskin’s breakthrough was in perfecting Mechanism Design with his “implementation theory.” His theory clarifies how to design mechanisms that heighten incentive alignment and efficiency.

How does Mechanism Design relate to the Repair Of The Healthcare System? We have to set the rules of the games so that we align all the stakeholders’ incentives without one stakeholder takes advantage of another. The insurance industry is taking advantage of the patients, doctors and hospital systems. The hospital systems are taking advantage of the patients, doctors and insurance companies. Doctors are taking advantage of the insurance companies, hospital systems, patients and the government. The government is taking advantage of the hospital systems, the doctors and the patients. Employers who pay the insurance bills for their employees are taken advantage of by the insurance companies. The drug companies are taking advantage of patients and unduly influencing physicians.

In our healthcare system everyone is pursuing his vested interest in a game that has rules that does not lead to “incentive compatibility.”

Some politicians think central planning will straighten out the rules. Historically, central planning has not worked. The winners of this year’s Nobel Prize in economics have proven this fact.

I believe the consumers can fix the rules of the game so that all the incentives are compatible. Consumers have to have incentives to force politicians to fix the rules of the healthcare game. Consumer driven healthcare system will achieve the alignment (incentive compatibility) using the ideal medical saving account.

  • Alena

    I recently came across your blog and have been reading along. I thought I would leave my first comment. I don’t know what to say except that I have enjoyed reading. Nice blog. I will keep visiting this blog very often.

  • Thanks for leaving a comment, please keep it clean. HTML allowed is strong, code and a href.


Fall 2007 What Have I Said So Far? : Part 2

Stanley Feld M.D.,FACP,MAE

The consumer must fix the healthcare system. None of the other stakeholders has been successful. In fact, of the last 30 years the healthcare system has been made worse by the insurance industry, government and policy makers.

All their systemic changes have failed, because they have, for the most part, been to the advantage of the facilitator stakeholders and not the primary stakeholder, the patient. Facilitator stakeholders’ profits have soared, insurance premiums have skyrocketed while access to care has plummeted. Patients, physicians, hospital systems and the government have adjusted to changes to the detriment of the patient. The facilitator stakeholder adjustments have resulted in further dysfunction in the healthcare system.

Presently, employers and all the stakeholders except for the insurance industry are in pain. However, the stakeholder most at risk is the consumer. Only 20% of the population is sick and interacts with the healthcare system at any moment in time. 80% of the population does not interact with the healthcare system. They think everything is fine. However, the entire populations’ health and well being is at risk! If we stay on the present course, I predict the system will break down completely. Access to care will be limited and rationed. Access to life saving medical advances will vanish. Future advances in medical care will disappear.

The goal of the healthcare system should be;
1. To provide patients
a. with access to good quality care
b. with education to judge quality care
c. with incentives to be motivated to be responsible for their care
d. with the freedom to judge and select the physician of their choice
e. with the information of their evaluations so it is truly portable
f. with choice of health insurance vehicles that are affordable to everyone
g. with education vehicles so they can become “Professors of their Disease” and be truly responsible for their care
h. effective and affordable drug insurance to enhance patient compliance with medication

2. To provide physicians
a. with a precise definition of the meaning of quality care for various diseases.
b. with incentives to provide quality care for both acute and chronic disease
c. with the educational opportunity and motivation to improve the quality of care they deliver.
d. with an actual vehicle developed by their peers to prove that they are delivering quality care.
e. with a mechanism for delivering care at a transparent price
f. with the ability to effectively communicate with patients electronically.
g. with the ability to improve the patient physician relationships
h. with the ability to enable patients to practice effective self-management techniques to prevent costly complications of chronic disease
i. with the ability to improve communication and access to patient information so as to reduce the cost of redundant evaluation and treatment

3. To decrease the overall cost of the system
4. To eliminate the 47 million uninsured
5. To align stakeholders’ incentives to provide satisfactory profit margins to hospitals, and pharmaceutical companies and insurance companies.

These are ambitious goals. Processes must change in order for the United States to deliver effective health care to the population now and in the future. Consumers can not leave it up to the facilitator stakeholders and policy wonks to fix the system. Their policies have distorted the healthcare system to serve their vested interest. The patient or future patients must drive the process of change through appropriate demands on our politicians in order to repair our healthcare system.

In my view none of the politicians running for president have a clue. They will only wake up if we make appropriate demands. Patients can make effective demands for a healthcare system that works. They have to demand that they own their healthcare dollar and be responsible for their care!

  • Thanks for leaving a comment, please keep it clean. HTML allowed is strong, code and a href.


Fall 2007; What Have I Said So Far: Part 1

Stanley Feld M.D., FACP, MACE

Our most precious asset is our health. We should be responsible for our own health and welfare. The ability to maintain our health is dependent on access to the healthcare system for diagnosis, treatment and health maintenance. The dysfunctional healthcare system is decreasing our ability to maintain our health by limiting access to the healthcare system.

In the past thirty seven years as a Clinical Endocrinologist, I have seen many advances in the medical care system as distinct from the healthcare system. We are becoming proficient in preventing the complications of chronic disease. The complications of chronic disease consume 90% of the healthcare dollar. I have observed economic and political distortions of a healthcare system. These distortions have impeded the physicians’ ability to prevent the complications of chronic disease.

Many have declared that the healthcare system is broken. We have also heard that while all goods and services industries have embraced the electronic era (not totally true), physicians have resisted the electronic revolution. It has been stated if medical care is to step into the 21 century, medical practices simply have to adopt an Electronic Medical Record (EMR). The EMR will solve many of the healthcare system’s problems.

In my opinion, the notion that the widespread adoption of an EMR is the solution to the problems with the healthcare system is simplistic and incorrect. It is true that physicians have resisted instituting EMRs, for many good and not so good reasons.

Why have physicians resisted the EMR? It is hard to find a coherent answer in the literature. Here are some reasons.

The EMR’s are too expensive to purchase and too expensive to service. They will not help patient care in their present form. There have not been standard EMRs developed. The EMR should help the patient and physician. If past behavior is a predictor of future behavior the data accumulated by the medical care system will be misused to the disadvantage of the patients and the physicians by the insurance industry and government.

These are some of the reasons for physician resistance. The Ideal Electronic Medical Record outlines my propose solutions to the EMR dilemma. Since we do not have universal adoption of EMRs, society is led to believe that the problems with the health care system are the physicians’ fault for not adopting the EMR.

However, a sober look at the problem reveals all of the stakeholders are at fault. The stakeholders are the government, the insurance industry, the pharmaceutical industry, the hospitals, the physicians and the patients. All have played an important role in the distortions and dysfunction of the healthcare system.

In my view, the patient and the physician are the key stakeholders. Without the patient and the physician, we would not need a healthcare system. The patient is the player and the physician’s role should be the coach, making the diagnosis and teaching the player what he has to do to get well and stay well.

However, in 2007, the patient and the physician are generally listed last among “important” stakeholders by government, insurance companies, hospitals and policy makers.

Since the patient is most important stakeholder, patients should be in the forefront of policy making. Physicians should be second. Unfortunately, as physicians have adjusted to the changes in the business aspects of healthcare their ability to practice efficient, effective and friendly medical care has deteriorated.

All other stakeholders are in reality facilitator stakeholders for patients and physicians. Everything done in the healthcare system should be done for the benefit of the patient first, and not for the economic bottom line of the all the stakeholders. After all it is the patients’ healthcare system! Is it not?

The demand for repairing the healthcare system and action to fix it has to be made by the patients.

  • Fred Wilson

    Dear Dr. Feld,
    I’m confused. In the second paragraph you write, “We are becoming proficient in preventing the complications of chronic disease.” Then at the end of that paragraph you write, “These distortions have impeded the physicians’ ability to prevent the complications of chronic disease.” How does one become proficient, if their ability has been impeded?

  • Thanks for leaving a comment, please keep it clean. HTML allowed is strong, code and a href.