Stanley Feld M.D.,FACP,MACE

In the early 1980’s, the government made an effort to control its costs by regulating prices for encounters, procedures and diagnoses. We had terms such as Evaluation and Management codes (EM codes), ICD-9 coding, CPT codes and DRGs. The goal was to quantitate services and unify prices for each diagnosis. This was very confusing and complicated for the practicing physician. We went to hours of dull, descriptive lectures to learn what these terms meant. We tried to figure out how to participate legitimately. Quite simply, a system of price controls was imposed upon us. Price controls, in my opinion, never work no matter what the industry. These price controls set into play many of the serious economic misalignments all the stakeholders suffer in our healthcare system. Price shifting occurred. Hospitals had more money and more administrators than physician practices. The hospitals figured out what was going on and how to get around it before the physicians did.

Price shifting was simply the phenomenon of increasing the price of a service to another payer (Private Insurer) to compensate for the reduction in fees imposed by the initial payer (Medicare). If the institutions’ or physicians’ cost to provide the service was $75, they would charge the patient, Medicare, and the private insurer $100 and have a $25 profit. Medicare now said it would only pay $50. In order to compensate for the Medicare reduction in payment below the cost of the service, the fee for the service was increased to $150 to the private sector. The price charged did not take into account the institution’s or physician’s patient mix. Some hospitals and physician practices lost money because they had a high percentage of Medicare patients. Some experienced a windfall profit because of a high private pay population. The insurance industry did not protest because its revenue increased with the increase in revenue volume.

The plot thickens. I believe the solutions to the riddle are in the developing defects in the system.

Today’s problems were yesterday’s solutions. 1940-1980

Part 1: How did the healthcare system start to fail?

It all started after World War II. The economy in

America

was booming. Corporations and business were growing rapidly and needed workers. These organizations provided health benefits to attract workers. The Health Insurance industry was born. Everyone’s “incentives were aligned.” The patient, the physician, the business, the government, and the insurance industry were all happy with the healthcare system post World War II.

   Patient: The patient had insurance to protect them financially if they got severely ill. The insurance was provided by the employer

   Physician: The physician was receiving payment from patients, whom he did not receive payment in the past from and his income rose.

   Business: Business had a relatively inexpensive and attractive employee benefit. Business needed employees in a fast growing post WWII economy.

   Government: The government could concentrate on developing medical schools and promote research in medical schools to advance medical knowledge and subsequently care.

   Insurance Industry: The insurance industry had a pure insurance product. The medical insurance plans post WWII had the power of large numbers of premium paying clients. This population of workers was relatively young and healthy. They did not spend lot money on healthcare, because they infrequently got sick. The young population did not utilize the premiums dollars paid to the insurance industry, resulting in a nice insurance industry profit at a low cost.

Medical expenses were smaller post WWII, because of the lack of medical knowledge and the lack of technological advances. Today, 80% of the healthcare dollar is spent on the complications of chronic disease that we patch, or fix. Sometimes we do neither. We simply have the ability to keep the patient alive. In the “Olden Days”, we could not do anything for the patient, and so they died and did not spend money.

What happened to this blissful era? All the major stakeholders were friends in those days and not enemies?

The population got older, overweight, stressed, greedy and angry.

Technological innovation made a big business of medicine and medical care.

In the next blog I will cover the first bump in the road leading to a dysfunctional system.

Repairing the Healthcare System 

Stanley

Feld M.D., FACP, MACE

The Overview

Our greatest asset is our health. Access for diagnosis, treatment and health maintenance is through our health care system.

In the past thirty six years as a Clinical Endocrinologist, I have seen many advances in health maintenance and in preventing the complications of chronic disease. I have also experienced economic and political distortions in a healthcare system that has impeded the progress of our quest for a healthier society.

We have heard that the healthcare system is broken. We have also heard that while all goods and services industries have embraced (not totally true) the electronic era, physicians have resisted the electronic revolution for some reason. If medicine is to step into the 21 century, medical practices simply how to adopt an Electronic Medical Record (EMR). The EMR will solve the problems within the healthcare system. In my opinion, this view of the solution is a very simplistic, and not correct. It is true however, that physicians have resisted instituting EMRs, and for many good reasons.

Why have physicians resisted the EMR? It is hard to find a coherent answer in the literature. Again, no one has asked the practicing physician. In the future, this blog will discuss the multiple reasons for the resistance, and probable solutions.

Since we do not have universal EMRs, we are lead to believe that all 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. We will discuss the role of each have played 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 2006, 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. The patient should be in the forefront of policy making. The physician is second.  All the other stakeholders are in reality simply facilitators for the patient and the physician. 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 other 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 patient,

The patient with his consumer power is going to have to be the one that fixes the system. None of the other stakeholders has been able to fix the system to date. In fact, the insurance industry, government and policy makers have made the health care system worse by their solutions. Systemic changes have been made over the years. The result has been further adjustments by the facilitator stakeholders for their profit advantage. These adjustments in turn have lead to further changes and further adjustment by those stakeholders. These adjustments have resulted in further distortions in the healthcare system. Presently, all the stakeholders are in pain. However, the stakeholder with the most at risk is the consumer of healthcare. His health and well being are at risk! If we stay on the present course, I predict the system will break down completely and access to care will be limit and restricted. Advances in medical care will be non existent.

The goal of this blog is to walk thoughtful people through the evolution of the problem, and the process of cure. The ultimate goal is to;

1.     Provide patients

a. with access to good care

b. ability to judge quality care

c. true assets and vehicles to be responsible for their care

d. the freedom to select the physician of their choice to deliver quality care

2.     Provide physicians

a.     A precise definition of the meaning of quality care

b.     with the opportunity to provide quality care for acute and chronic disease

c.      with an opportunity to improve the quality of care they deliver

d.     with a vehicle 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

g.     with the ability to develop effective patient physician relationships

h.     with the ability to help patients prevent costly complications of    chronic disease   

i.       with the ability to improve  communication and access for patient information so as to reduce the cost of redundant evaluation and treatment

3.     Provide patients with the information of their evaluations so it is truly portable

4.     Provide insurance vehicles that are affordable to everyone

5.     Provider patients with education vehicles so they can become “Professors of their Disease” and be truly responsible for their care

6.     Knowledge is power. This knowledge through education will increase patient compliance and adherence to recommended treatment and thereby reduce the cost of care.

7.     Create both quality of life and economic incentives that with stimulate patients to be responsible for their own care

8.     Decrease the overall cost of the system

9.     Eliminate the 45 million uninsured

10.  Decrease cost to the government

11.  Increase profit margins for the insurance industry

12.  provide satisfactory profit margins to Hospitals, and Pharmaceutical companies

These are ambitious goals.  Processes must change in order for the United States to deliver effect health care to our citizens now and in the future. We, the people can not leave the fix up to the minor stakeholders and policy wonks. They have failed in the past.  Their policies have distorted the healthcare system to serve their vested interest. The patient or future patients must drive process in order to repair our healthcare system.

In this blog, I, Stanley Feld M.D., FACP, and MACE, as an individual will try to stimulate you, the patient or potential patient, the major stakeholder, who presently has the smallest voice to be the most powerful stakeholder with the loudest voice. You can make effective demands for a healthcare system that works because you have been put in charge and are responsible for your care!