Medicine: Healthcare System

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Disinformation and Media Spin: Part 2

June 23, 2008

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Stanley Feld M.D., FACP, MACE

Dr. Aaron Carroll and Dr. Ronald Ackerman, the principal authors of the 2003 survey and 2008 letter in the Annals of Internal Medicine, states very clearly that physicians support a national health insurance plan. They does not state whether physician support a government run single party payer plan.

"Many claim to speak for physicians and reflect their views. We asked doctors directly and found that, contrary to conventional wisdom, most doctors support the government creating national health insurance," study author Dr. Aaron E. Carroll, director of Indiana University's Center for Health Policy and Professionalism Research, said in a prepared statement.”

However they seem to be saying that physicians want the government to take over.

"Across the board, more physicians feel that our fragmented and for-profit insurance system is obstructing good patient care, and a majority now support national insurance as the remedy," Ackermann said in a prepared statement.”

The source data is not available in their 2008 letter published in the Annals of Internal Medicine. I have evaluated the source data in their 2003 survey. The survey consists of two questions. The questions have misleading implications. Both questions start by asking one “to assume the principal goal of any national health insurance proposal is to arrange health care financing for all U.S. citizens”. In 2008 I believe most physicians would agree there should be universal healthcare coverage. The real question is do physicians want the government as the single party payer?

Question 1 asks “ do you support or oppose government legislation to establish National Health Insurance?”

Does that mean the government creates a plan that should cover everyone or does that question mean the government establishes a National Health Insurance that it administers as a single party payer?

Question 2 implies the former. “Do you support or oppose a National Health Insurance plan where the entire healthcare is paid for by the government?”

The survey design is flawed. Therefore it cannot yield valid conclusions. However, let us assume we could draw conclusions from the data in the survey.

Figure 2 describes the characteristics of the respondents in the survey.1650 physicians completed the survey sent to 3250 physicians. Only 1263 physicians had their characteristics compared to the AMA Physician Master file of 733,183 U.S. Physicians. What happened to the characteristics of the other 387 included in the survey? Does this 30% drop in number of physicians invalidate any power to arrive at conclusions for the data? Does the number of physicians in the survey represent a large enough number of physicians to represent the 733,180 physicians in the U.S.?

None of the mean insurance types, primary practice settings and primary practice locations was available in the AMA Physician Master file. This is one of several flaws in the study
The most important characteristics of the 1263 physician respondents was missing. How many physicians were in private practice? How many physicians in the survey group were employed and salaried by a university or hospital? What is the percentage of survey group physicians in private practice who received an institutional salary? These characteristics would have a effect on the physician response to the questions.

Additionally, any study whose published results present percentages without actual numbers or statistics has conclusions that are suspect.

Physician attitudes about National Health Insurance Financing are the most important table in the article.(Figure 3). The results are presented in the most misleading way. If a physician assumed that a national health insurance plan was universal coverage without a single party payer they might choose one answer to a quick survey. They might have thought the question meant the government would be the single party payer. 19% generally oppose, 21% strongly oppose and11% were neutral. The 11% neutral respondents might have been uncertain of the meaning of the question. If opposed to a single party payer they might have chosen to remain neutral. Therefore 51% of physicians might have opposed a national health plan as opposed to the 40% in the survey.

The answer to question 2 was important. It nullifies the principle authors’ message. 33% of physician strongly opposed, 27% generally opposed while 14% were neutral to a government paid for National Health Insurance plan. A neutral answer to this question could mean to some that the government would give me less grief than the healthcare industry has in recent years. Only 9% of physicians strongly supported the government as a single party payer. Again, we do not know the actual number of these physicians in private practice with monthly overhead. We do not know if the sample is valid or the results statistically significant. The number of physicians opposed to a single party payer was not discussed in either the 2003 or 2008 press release.

Only three predictors of physician support for governmental legislation to establish national health insurance plan were statistically significant. (Figure 4) The statistically significant predictors of support for national health insurance plan in reality support opposition to a single party payer according to the data presented. The statically positive predictors were inner city physicians vs. non inner city physicians, Medicaid vs. non Medicaid providers, and primary care vs. specialists. The predictor chart did not separate out the demographics of the physicians in each category.

In the last table the percentages of physicians in favor of the federal government as the sole payer was soundly defeated by all specialties. All of the specialties represented voted below 50% for the government to be the single party payer.

Here we see the data telling us one thing and the authors, through the use of the media providing a sensational but false conclusion from the data. The survey was poorly designed with little statistical significance.

Quoting Dr. Carroll, a primary author "Many claim to speak for physicians and reflect their views. We asked doctors directly and found that, contrary to conventional wisdom, most doctors support the government creating national health insurance,"

The moral of my story is to not believe anything until you see the data, the source of the data, and the methods used to evaluate its validity. Unfortunately, this is very hard to do. Refereed journals have been delegated as our surrogate evaluators. To my disappointment it seems the American College of Physicians has not fulfilled its obligation to practicing physicians of internal medicine.

It looks like the few governing physicians of the American College of Physicians and the Annals of Internal Medicine have chosen instead to pursue their own agenda and not the agenda of science at the expense of their member physicians and their patients.

The opinions expressed in the blog “Repairing The Healthcare System” are, mine and mine alone.

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Medicare “Drifting Towards Disaster”: Says U.S. Sec. HHS

June 18, 2008

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Stanley Feld M.D.,FACP,MACE

US Secretary of Health and Human Services Michael Levitt said Medicare is lurching toward disaster. Secretary Levitt has studied the problem for eight years. He has tried to introduce some innovative policies along with some poor policies. It seems as if only the poor policies survive.

“ Medicare is lurching toward disaster and it is too late for the Bush Administration and Congress to do anything about it, U.S. Health and Human Services Secretary Michael Leavitt said on Tuesday.”

He said the next administration will have to act to stop rising costs and get control of the $400 billion federal health insurance plan for the elderly, which now covers 44 million people.

$400 billion dollars is twice the cost of the war in Iraq. This amount only partially covers 44 million senior citizens. There are deductibles and co-pays. The insurance premium for Medicare is almost as expensive as private insurance for persons collecting retirement plan money. Medicare is an entitlement that should not be expanded to 300 million people. Do the math. The cost would be $2,727,272,727,273 dollars a year and rising, in addition to the premiums and co- pay citizens would be paying.

"Higher and higher costs are being borne by fewer and fewer people. Sooner or later, this formula implodes,"
Leavitt said in a speech to the right-leaning Heritage Foundation and American Enterprise Institute think-tanks.

It doesn’t matter if he was talking to a right or left leaning organization. It takes a blind man to see the wheels are coming off and no one is doing anything about it. All it takes is a little common sense to know something creative has to be done.

There are many innovative changes that can be made easily. One would be an emphasis on effective chronic disease management. Another would be effective malpractice reform in each state to decrease the need for physicians to practice costly defensive medicine.

A national health plan run by the government would do is stifle innovation and run up the cost. If we compound the healthcare problem by adding all U.S. citizens to a government paid for and directed single party payer system we will accelerate disaster.

“There is serious danger here," he added. "Medicare is drifting towards disaster."
"It troubles me that this matter is not receiving more attention in the presidential candidates' discussions. The next president will have to deal with this in significant part," he said.

Doesn’t Secretary Levitt know the presidential candidates do not understand the issues, the problems, the potential solutions? He should speak out. The solutions are easy if all the stakeholders’ incentives are aligned. The recognition of patients as the primary stakeholder is critical. The needs of the physicians as medical care providers have to be understood. The needs of secondary stakeholders have to be modified and adjusted.

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Disinformation and Media Spin: Part 1

June 11, 2008

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Stanley Feld M.D., FACP, MACE

A recent headline in the Washington Post declared that “Majority of U.S. Doctors Back National Insurance Plan”. It should be noted that the original article was published in the Annals of Internal Medicine, the official journal of the American College of Physicians, in 2003. A 5 year follow-up letter was published with incomplete data on April 1, 2008 reevaluating physician attitudes. The Washington Post article quoting a press release stated that the 124,000member American College of Physicians, the nation's largest medical specialty group, endorsed a single-payer national health insurance program.

In 1993 the American College of Physicians generated significant backlash from member physicians all over the country. Many physicians quit the American College of Physicians. I recall the CEO, at that time, was forced to resign over the issue of calling for a single party payer.

I can’t believe that the executive committee of the American College of Physicians has once again tried to manipulate public opinion through the media by originally publishing the 2003 article and updating it with a letter from the same authors in 2008.

In my opinion, the original survey was a poor study. The original study and follow-up letter further contaminates the Annals of Internal Medicine and American College of Physicians’ credibility as spokesmen for practicing primary care internists.

Our sound bite society would believe the media headlines “Majority of U.S. doctors back national insurance plan”. The message is clear: The majority of U.S. physicians advocate a single party payer system.

Neither government nor the healthcare insurance industry has appreciated the value of primary care physicians or the importance of the patient physician relationship. Both reimburse inadequately for cognitive therapy. They have not wanted to reward the therapeutic value of the problem solving ability of primary care physicians.

Primary care physicians who have had any practice experience know the difficulties in collecting for services rendered from the government. They have also experienced an endless string of price reductions. Primary care physicians have faced the same problems with the private healthcare insurance industry.

I appreciate that the price of health care is sky rocketing. However physicians” fees are falling and not sky rocketing. I have pointed out that facilitator stakeholders are benefiting more than the primary stakeholders (patients and physicians).

It is hard to believe the majority of physicians in this country want the government (Medicare) as the single party payer for medical care.

The Washington Post article states “A majority of American doctors now support the concept of national health insurance, which represents a shift in thinking over the past five years, a new survey finds."
“Typically, national health insurance plans involve a single, federally administered social insurance fund that guarantees health coverage for everyone. In most cases, these plans eliminate or substantially reduce the role of private insurance companies.”

Unfortunately the media report what the press release tells them has been found in the study.

“Physicians For A National Health Program” published this press release. The Washington Post copied the press release.

This is disinformation with media spin at its height. The public usually accepts the data as valid findings when presented by the media.

The study had 2,193 physicians. The physicians responding to the survey are supposed to represent 733,183 physicians in America.

"A survey conducted last year of 2,193 physicians across the United States found that 59 percent support "government legislation to establish national health insurance," while 32 percent oppose it, and 9 percent are neutral. In 2002, a similar survey found that 49 percent of physicians supported the concept, while 40 percent opposed it."

A larger sample size with a better survey questionnaire might have come to a different conclusion. If one accepts the survey sample and sample size as valid the study shows the percentage of physicians who want universal healthcare coverage but not universal coverage under a government run single party payer system. The press release leads us to the single party payer preference.

“Typically, national health insurance plans involve a single, federally administered social insurance fund that guarantees health coverage for everyone.”

The AMA has recommended universal coverage, as do most physicians. The problem of the uninsured is large. However, neither the AMA nor most physicians in private practice recommend the government as a single party payer. Private practitioners understand the problems inherent in government run organizations as do most consumers
.
In the next blog I will publish the original data and my commentary on the survey results. It will be clear how the data is manipulated to reach conclusions that should not be reached.

The opinions expressed in the blog “Repairing The Healthcare System” are, mine and mine alone.

Gerald • June 12, 2008

Fair enough.
Raises your anxiety level, doesn’t it? Being a physician is something you are “locked in” to. While no-one forces you to practice medicine, if you quit you’ll have wasted about a decade of education and training.
That’s an invested, sunk cost : if you could have put that level of effort into another career, you could probably make almost as much money as a physician. But you can’t go back in time and reclaim your sunk investment.
Economically, I just don’t see how the government can take over everything. While people complain about the state of affairs now, if the U.S. medical industry were basically a giant V.A. hospital it would be un-imaginably worse.
How would they make enough doctors go to work? My economics classes show that people respond to incentives. There is currently a growing shortage of physicians as it is.
If you significantly cut the pay of practicing physicians, many of them would work fewer hours or retire.
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Health Clinics Inside Stores Likely to Slow Their Growth

June 8, 2008

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Stanley Feld M.D.,FACP,MACE

In 2006 I stated "the creations of free standing retail clinics (convenient care clinics) are complicated mistakes.” I thought they would distort the healthcare system even further. I believed it would also be difficult to establish positive cash flow quickly or ever. When investors realize these clinics will have a difficult time making a profit they would be closed.

I said “I think Wal-Mart and CVS are indeed putting their reputation and good will on the line and are going to get a nose bleed.”

“The boom in walk-in health clinics located inside pharmacies, supermarkets and big-box retailers is showing signs of slowing.”

Hailed as an inexpensive option for treating minor health ailments like sore throats and rashes, the retail clinics have grown in number to 963 as of May 1 from just 125 three years ago. The clinics typically feature nurse practitioners who can prescribe basic drugs. The price for a visit ranges from $50 to $75.

“ But in recent months, retail health- clinic operators based in New York, Nevada, Indiana and Alabama have closed their doors, shuttering 69 clinics in 15 states, including ones operating inside outlets of Shopko Stores, Meijer Inc., in New York, Nevada, Bi-Lo LLC, Wal-Mart Stores Inc, and the Medicne Shoppe unit of Cardinal Health Inc."

“Now, the biggest retail-clinic operator, CVS Caremark Corp., says it is scaling back expansion plans for its MinuteClinic brand.”

The math is easy. It is very difficult to generate a profit with uncomplicated cognitive services. The In Store Clinics investors did not realize the resistance from primary care physicians and the communities they service. If these clinics have any chance for success they would have to be a direct extension of the community physicians’ care.

“Tom Charland, the owner of industry consultant Merchant Medicine LLC says the venture capitalists and private-equity firms that backed many of the retail clinic operators failed to appreciate how complicated and expensive the clinics are to operate. Research shows that patients are enthusiastic about the clinics' convenience and quality of care, but acceptance has been slow.”

I do not think the consultants understand the problem. There is a difference between medical care and healthcare. When someone is sick he wants to see a doctor and not a healthcare provider. Another problem is these clinics can not be profitable if they do not provide ancillary services. Ancillary services are not within the scope of practice for nurse practitioners in most states. A third problem is that if these clinics were seeing enough patients to create positive cash flow they would have the same long waiting times and become as inconvenient as community emergency rooms.

“Some operators are finding that the clinics are complex to manage. Earlier this year, CheckUps, a clinic operator based in New York, abruptly closed 23 clinics that it operated inside Wal-Marts in Florida, Mississippi, Alabama and Louisiana. It was stretched thin by operations in multiple states, says company spokesman William Armstrong.”

"You have to have a critical mass of stores seeing a high number of patients to get somewhere," he says. He adds that new clinics need to spend a lot of money on marketing to build public awareness and that the clinics become expensive quickly. "We ran out of operating funds," he says.

The big box stores and pharmacies opening In Store clinics are on the verge of another complicated mistake. Rather than affiliate with the convenient care companies, who have not done well, they are reaching out to hospital systems well known in the community.

"Tina Galasso, an analyst who follows the retail clinic industry for Verispan LLC, says the cost of setting up an in-store clinic runs about $500,000. That is one reason why much of the future growth in walk-in health centers is expected to come from big companies with deep pockets and from hospital systems that are already well-known within a community and don't have to spend so much on marketing."

Hospital systems tried to establish “DOC In the Boxes” in the mid eighties as a strategy to capture patients in the surrounding area. They failed in the mid eighties because they were competing with local physicians who were hospital system staff members. The establishment of these clinics was a strategic move to “increase the hospitals’ product line.” The practice of medicine is more than a product line and a commodity. No one seems to understand this.

In a strategy that combines both elements, Wal-Mart plans to partner with hospital systems to open as many as 400 co-branded store clinics by the end of 2010, up from about 50 sites in operation now. That approach is a departure from an earlier strategy under which Wal-Mart leased space to operators like CheckUps that weren't associated with hospital systems.

It amazes me to see local hospital systems competing for the Wal-Mart contract. Where is their corporate memory? Where is the building of trust between physicians and hospital administrators to create stronger institutions? If physicians do not know how to provide convenient care, the hospital system teach them how to provide it. Hospitals are always saying they want to create partnerships and trusted relationships with physicians in order to provide better care for the patients in the community. Do it and don’t create more dysfunction in the healthcare system.

The opinions expressed in the blog “Repairing The Healthcare System” are, mine and mine alone.

Nurse Practitioner • June 9, 2008

Dr. Feld, What are these “ancillary services” that you speak of that NPs cannot do and are scope of practice issues? With all due respect, I think you aren’t very familar with nurse practitioner practice. There are states that allow NPs to practice autonomously and most states require a collaborative relationship. In these majority of states, there is very little that NPs cannot do.
And as far as folks wanting to see a doctor and not a “healthcare provider” when they are sick: I think you are mistaken. People want care that is conveinent, high-quality and affordable. I’m going to assume that your statement isn’t a slap to the 120,000+ currently practicing NPs that work in all areas of healthcare: from retail clinics to oncology units to emergency departments and critical care and so on.
There are certainly plenty of patients to go around and it is very obvious that physicians can’t do it alone.
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Dr. Feld. Why Only Pick On The Healthcare Insurance Industry?: Part 3

June 1, 2008

inMedicine: Healthcare System, Summary Blogs

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Stanley Feld M.D.,FACP,MACE

In summary, one stakeholder did not create a dysfunctional healthcare system. Since everyone believes the healthcare system is broken the main question is how can it be fixed.The major beneficiary of the largess and the worst offender in generating dysfunctions is the healthcare insurance industry.

As a secondary stakeholder in healthcare, the healthcare insurance industry adds little value to the treatment of a sick patient. It is essential that consumers understand the abuses to the healthcare industry in order to know the cure.

All the abuses of every stakeholder must be eliminated in order to have a viable healthcare system. The abuses and overuses have been outlined in my response to Matt Moledeski’s comment. The present dysfunctional healthcare system is the result of adjustments and reactions to changes imposed on the various stakeholders by each stakeholder to the disadvantage of the consumer.

The key questions are

1. Who is the primary stakeholder?

Answer: the patient

2. Who are the primary utilizers of resources?

Answer: the patients

3. Who should be the primary controller of the utilization of resources?

Answer: the doctor and the patient. Presently, the government and the healthcare insurance companies, in an attempt to control utilization of resources, restrict patient access to care when they deem it appropriate.

4. Who is the primary generator of disease?

Answer: A. The patient and his lifestyle.
             B. Industries promoting disease generating life styles.
             C. Industries generating toxic material into the environment.
             D. Agencies and industries that create unaffordable and inaccessible medical care.

5. Which diseases utilize the most resources?

Answer: Complications of chronic disease. 90% of the healthcare dollar is spent and taking care of the complications of chronic diseases. If we could avoid generating chronic diseases and their complications we could reduce our healthcare costs by correcting the problems in section 4. Healthcare and healthcare insurance would then become affordable.

5. How do you set up a system that encourages the avoidance of the complications of chronic disease?

Answer:A. Put the patients in charge of their healthcare dollar.

B. Let them keep the money they do not spend in a reti rement trust.
C. Insure consumers for large expenses.
D. Reward them financially for good health and the avoidance of complications of chronic diseases and penalize them for bad health habits (i.e. obesity).
E. Require complete transparency by all the stakeholders
F. Provide an Electronic Medical Record financed by users by the click
G. Put in place effective malpractice rules to eliminate defensive medicine
H. Require hospitals to reveal actual costs of services to patients
I. Empower and require state boards of insurance to withhold licenses to sell insurance in the state that abuse patients and physicians. The ineffective financial penalties are providing a profit center for these abuses to the healthcare insurance industry.

Consumers will boycott inefficient companies and business that charge too much.

The healthcare dysfunction started with a government entitlement rather than a government subsidy. It preceded government imposed price controls followed by healthcare insurance company abuse. Physician, patients and hospitals reacted to the abuse.

It will end with consumers controlling their healthcare dollars, employers and the government providing the funds to consumers along with financial incentives for consumers to control healthcare costs.

The concept of imposing a bureaucracy on top of a single party payer system is a solution that can not work.

The opinions expressed in the blog “Repairing The Healthcare System” are, mine and mine alone.

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Dr. Feld. Why Only Pick On The Healthcare Insurance Industry?: Part 2

May 28, 2008

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Stanley Feld M.D.,FACP,MACE

This post continues my reply to Matt Modleski’s comment. If one views the dysfunction in the healthcare system as a gradually evolving process is it clear that all the stakeholders have contributed to its dysfunction. As each stakeholder adjusted to the changes, the healthcare system became more dysfunctional.

“ The number of scans, tests and procedures that are done each year unnecessarily because the facilities that are built (many Physician owned) are put to use is also a big part of the problem. This has been documented in study after study (some of them conducted by physicians).”

In the studies Matt refers to patients going to these testing clinics could be getting better care than the non physician owned clinics? Remember quality of care has not been clearly defined by policy makers or the healthcare insurance industry.

Physicians in academic medicine have not precisely defined quality medical care. However, everyone talks about it. I do not believe you can assume physicians are doing the test simply to make a profit.

I do think there are a lot of unnecessary procedures done in many hospital outpatient facilities and physician owned facilities. Many of the procedures are done because physicians are forced to practice defensive medicine. There are many law suits in the pipeline presently because of missed diagnosis.

Patients with vague symptoms at the time of physician visits need to be tested to detect possible disease. Almost everyone experiencing automobile accidents with the slightest head trauma automatically undergoes a CAT scan to rule out a cerebral bleed. President Reagan did not get an automatic MRI or CAT scan when he had his subdural hematoma.

Diagnoses that would not otherwise be made are made early through testing using new technology. Clinical judgment has lost its place in the defense of malpractice suits. The costs of using new technologies has an enormous impact on the cost of medical care. Yet no one has precisely defined quality medical care . Nonetheless, physicians have been accused of over testing when they control their intellectual property.

A significant number of malpractice suits would disappear if the government changed some liability rules. The rule change would make malpractice claims less attractive to malpractice attorneys. Malpractice attorneys receive one third to one half of any settlement. A change in the contingency rule would decrease lawyers’ incentives and frivolous malpractice claims. The government has to put limits on damages for certain claims and change the adjudication process. Plaintiffs attorneys’ have resisted these changes.

The state of Texas has made these changes. there has been a marked reduction in malpractice claims as well as malpractice premiums.

The reasons for the overuse of the healthcare system have not been publicized in the media or by organized medicine. Overuse of the healthcare system makes a sensational story for the media and it is easy to blame physicians. I am not interested in defending physicians. However, one should give physicians the benefit of the doubt since you trust them to deliver the best medical care possible. If you do not like what they suggest pick another physician. I would not rely on a healthcare insurance company’s employee looking at the computer screen to make a medical treatment judgment about my health.

There are also lots of unnecessary tests done because of increasing patient demand. Patients learn from the media and online what needs to be tested. Cholesterol testing and bone density testing are increasing. When the compliance rate is analyzed only 30%- 50% of people who should be tested are tested. When they were tested only 30-50% treated stayed on the medication after 1 year. Think about it. If everyone was tested and treated appropriately the cost of testing and treatment would increase while the cost of the complications of these chronic diseases would fall precipitously. The greatest cost is the cost of treating the complications of chronic diseases.

Matt complains about physicians owning the facilities to test patients. Why should physicians give their intellectual property away to hospitals when they can do the test more conveniently and cheaper in their office?

Physicians detect, treat and teach patients how to become professor of their chronic disease so patients can be knowledgeable in managing their disease. This is the definition of cognitive therapy. Cognitive therapy is not reward by the government or the healthcare insurance industry. Isn’t this a perverse circumstance since 90% of the healthcare dollar is spent of the complications of chronic disease?

“The system is broken and commoditized reimbursement, regardless of the quality of care, is a key component, but so is the overtreatment of patients by financially driven providers. Every now and then you hint as much, but you would be helping everyone by giving it equal airtime with your perspective on the woes created by the insurance companies.

Physicians’ intellectual property has been discredited and devalued. Physicians are intelligent people who have accepted the fact that their credibility is challenged. They are trying to figure out way to make a living taking caring for patients in the best possible way. They also want to figure out how to protect their intellectual property. They try not to react to a healthcare system that has challenged their skills and integrity.

Patients are at fault by believing medical care is a right. Obesity is an epidemic and generates chronic disease and the complication of chronic disease. The adherence to hypertension therapy is less than 50% leading to strokes and myocardial infarction. The adherence to diabetes treatment is less than 40%. Shouldn’t society be putting energy and money into solving this problem?

The question is where did the dysfunctional behavior start? It started when the healthcare insurance industry started gaming and controlling the healthcare system for profit after the government instituted price controls.

My solution is my ideal medical savings account putting the patient in control under the appropriate set of rules. The consumer is the only stakeholder that can force the government to make the correct rules!

"Keep doing what you do, I read your stuff every day".

"Cheers,

Matt"

Matt, thanks for your comment.

The opinions expressed in the blog “Repairing The Healthcare System” are, mine and mine alone.

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Dr. Feld, Why Only Pick On The Healthcare Insurance Industry?: Part 1

May 25, 2008

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Stanley Feld M.D.,FACP,MACE

Matt Modleski of Stovall Grainger Inc a company that “ maximizes people's potential through the application of strategy in sales, leadership and life" wrote the following comment.

"Dear Dr. Feld,

I believe many of your points are right on the mark, but your credibility is undermined when you speak so infrequently about the “supply side” of healthcare delivery as if the insurance companies were always wrong."

I will divide my comments into two articles. I assume Matt means the patients, physicians and hospitals on the supply side. You may recall that I have blamed all of the stakeholders for the dysfunction of the healthcare system. The physicians, hospitals, the government, the healthcare insurance industry, pharmaceutical companies, malpractice attorneys and patients are all at fault. The questions are who started this dysfunction?, who made it worse?, and who can fix it?

The answers to the questions are the government started it; the healthcare insurance industry made it worse. and continues to make it worse. The only stakeholder that can fix it are consumers.

The government initiated the dysfunction of the healthcare system in the early 1980’s. It imposed price controls to combat rising costs. The rising costs were the result of increased technological advances leading to procedure based diagnoses. Some hospitals, physicians and patients took advantage of this diagnostic procedure based shift in medical care.

Historically, price controls never work. They usually create stakeholder incentives to develop innovative methods to get around the price controls. This leads to increased dysfunction and greater costs to the system.

The dynamics between hospitals and the healthcare insurance industry became perverse. The more spent for medical care the more the healthcare insurance industry could charge employers. The result was increased hospital and healthcare insurance industry profit at the expense of the employers and patients.

Employers started providing healthcare insurance to their employees after WWII as an employment benefit. This led to post war healthcare price inflation. In 1965, Medicare healthcare coverage for all seniors over 65 increased healthcare price inflation.

When the government decreased Medicare reimbursement in the early 1980’s increased prices (price shifting) for employer provided healthcare was rampant. Price shifting led to the healthcare insurance industry increasing healthcare premiums to employers.

In the late 1980’s employers said they could not afford to pay healthcare premiums costing 18% of their gross revenue. The insurance industry asked what they could afford. The answer was 12%. The insurance industry said no problem. Managed care and all of the managed care problems were born.

Managed care is managing costs. It is a form of price controls. Managed care introduced another form of stress into the healthcare system. Patients experienced limitations on access to care. Physicians experienced increased paper work, bureaucratic interaction with a defective care approval system, and decreasing reimbursement. Physicians’ frustration increased as non medical related time and overhead increased and reimbursement decreased. The managed care system interfered with effective care. It also led to increase mistrust for the administrators of the healthcare system.

Hospitals experienced the same pressures. Hospital administrator figured out how to creatively adjust to the new system.

The healthcare insurance industry changed some rules in order to manage costs. It started paying for out-patient procedures rather than paying exclusively for in-patient procedures and hospital bed days. The bed day cost at that time was $100-$200 a day (as opposed to $1,000 to $10,000 today). In-patient procedures were two to three times the cost of outpatient procedures done in a physician’s office. Managed care companies wanted to take advantage of this savings in order to manage costs.

In the early 1980’s with surgical and technological advances, the legal profession saw an economic opportunity to make quick money. There were no limits on liability. Malpractice suits and malpractice insurance premiums escalated for both hospitals and physicians. These costs were passed on to the consumer. Malpractice suits also led to an increase the practice of defensive medicine. CAT scans, MRI’s and other expensive tests were ordered by physicians to protect themselves from malpractice suits. The cost of medical care further increased.

Hospitals captured most of this increase in revenue production at an inflated price. Some physicians were unhappy they were giving away their intellectual property and not sharing in the revenue production. Additionally, they could do most procedures at half the hospital charges thereby saving money for their patients and the healthcare system. They started opening their own clinics, and testing facilities in order to capture the revenue from the new technology. The hospitals and the giant national laboratories were upset because their revenue production was threatened. They accused physicians of over testing in a well executed public relation campaign. Some physicians did abuse the system. However, the percentage of physicians’ abuse was small. I believe the reality of the situation is physicians did the procedures and testing more carefully and more conveniently for patients than hospitals or the national testing laboratories.

Physicians’ use of increased testing became necessary in order to protect themselves from malpractice suits. Physicians’ testing facilities charged substantially less than the hospital facilities. The healthcare insurance industry encouraged physician owned clinics because it was able to save money. The healthcare insurance industry then abruptly cut them off.

The Stark Laws slowed the proliferation of these facilities but only as applied to Medicare. Pete Stark created a restriction that most figured out how to get around. The price of procedures increased. The dysfunction in the healthcare system increase by Pete Starks own admission of the failure of his legislation

Matt, you might have thought the answer to your comment was simple and physicians are at fault. Unfortunately, the sound bite is usually not the answer. The stakeholder that has intensified the dysfunction is the healthcare insurance industry.

I will continue to answer your comment in Dr. Feld. Why Only Pick On The Healthcare Insurance Industry?: Part 2.

The opinions expressed in the blog “Repairing The Healthcare System” are, mine and mine alone.

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John McCain Describes His Health Plan; In Reality A Non Health Plan

May 21, 2008

inMedicine: Healthcare System, Politicians,Healthcare and Vested Interests

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Stanley Feld M.D., FACP,MACE

Politicians give me a headache. John McCain revealed his healthcare plan last week. His healthcare plan is just as poor as Hillary Clinton’s and Barach Obama’s. He goes further than President Bush in shifting the healthcare premium payment from the employer to the employee. This action is just what the large corporations want and the employees don’t want.

“Mr. McCain’s health care plan would shift the emphasis from insurance provided by employers to insurance bought by individuals, to foster competition and drive down prices. To do so he is calling for eliminating the tax breaks that currently encourage employers to provide health insurance for their workers, and replacing them with $5,000 tax credits for families to buy their own insurance.”

Five thousand dollars in tax credits will not help people who can not afford the average $12,000 healthcare insurance premiums for a family of four.

Businesses have been trying for years to relieve itself of the obligation to provide healthcare insurance to employees. The defects in the HSA are clear from my last blog entry. HSA’s will do little to Repair The Healthcare System. The healthcare insurance industry still controls and captures the healthcare dollars. It still sets the premiums for healthcare coverage.

Mr. McCain seems to have no idea of the problems in the healthcare system. The government should create new rules to change the incentives of the stakeholders. The rules must create incentives for the consumers and physicians and not be punitive. One hundred and fifty million people presently have some form of healthcare insurance provided by their employers. Nonetheless, those insured employees can not afford the deductible they are required to pay while receiving less coverage at higher costs.

“Mr. McCain had previously described aspects of his health care plan but on Tuesday offered new details on how to cover people with existing health problems, in a nod to the growing concerns about the difficulties that many sick, older and low-income people have getting insurance. ”

Political expediency is the name of the game. It does not matter what the facts are or if the plan will be effective. However, if the facts of any problem are ignored, problems can not be solved. Neither the Democrats nor the Republicans have a clue regarding the problems in the healthcare system. Neither has presented any viable solutions.

“Elizabeth Edwards, the wife of former Senator John Edwards, recently pointed out that both she and Mr. McCain could be left uncovered by Mr. McCain’s plan because she has cancer and he has had melanoma. Stung by such criticism, Mr. McCain is trying to develop a way to cover people with health problems while still taking a generally market-based approach to solving the health care crisis.”

John McCain has the advantage of ignoring the pre-existing illness problem. As a Senator, he is entitled to participate in both Medicare Part C and Medicare Part B without premium penalty for his pre-existing illnesses. Both plans mandate that people with pre-existing illness must be covered at the universal rate.

“I’ll work tirelessly to address the problem,” Mr. McCain said in a speech here at the H. Lee Moffitt Cancer Center & Research Institute. “But I won’t create another entitlement program that Washington will let get out of control. I won’t do it. Nor will I saddle states with another unfunded mandate.”

McCain is pandering to conservatives who see red at the word entitlement. He is also pandering to the healthcare insurance industry and its executives’ multimillion dollar salaries. His plan will preserve the healthcare insurance industry’s dominance over its $150 billion dollar waste.

“For people who currently get health insurance through their jobs, Mr. McCain’s plan would give them a tax credit that they could put toward buying a different, and potentially less expensive, health insurance plan tailored to their needs — and allow them to keep that health plan, and their doctors, even if they switch or lose their jobs.’

These words have no meaning. Presently people with insurance do not have adequate and affordable insurance coverage. Out of pocket expenses increase yearly. People without insurance can not afford the restrictions on the policies they could buy if they were eligible.

“ Mr. McCain’s speech here implicitly acknowledged some of the shortcomings of his free-market approach. But rather than force insurers to stop cherry-picking the healthiest — and least expensive — patients, Mr. McCain proposed that the federal government work with states to cover those who cannot find insurance on the open market. With federal financial assistance, his plan would encourage states to create high-risk pools that would contract with insurers to cover consumers who have been rejected on the open market."

Mr. McCain does not seem to know that high risk pools have been created and are failing. He might have a between the lines agenda in opposition to consumers needs

“Mr. McCain was vague Tuesday about just how his safety net would be structured, and did not specify how much it might cost, leaving the details to negotiations with Congress and the states.”

This is an interesting admission. The reality is he does not have a healthcare plan that will solve any of the healthcare system’s problems.

"Some health care experts question whether those tax credits would offer enough money to pay for new health insurance plans. The average cost of an employer-funded insurance plan is $12,106 for a family, according to the Kaiser Family Foundation, a health policy group. Paul B. Ginsburg, the president of the Center for Studying Health System Change."

Enough said about the McCain healthcare plan. It is a non healthcare plan to the advantage of the secondary stakeholders and to the detriment of patients.

It is clear to me that we can not depend on our presidential candidates for help. We are going to have to organize and demand the necessary reform essential to eliminate the dysfunction in the healthcare system.

The opinions expressed in the blog “Repairing The Healthcare System” are, mine and mine alone.

Patrick • May 22, 2008

Coming up with a good healthcare system is not brain surgery. For starters, we could just copy Singapore’s system exactly ( http://econlog.econlib.org/archives/2008/01/singapores_heal.html ) They have a longer life expectancy at 1/3 the per person cost.
The real question is not how to fix healthcare. The real question is to figure out why our political systems gives us systematically poor results, and then fix the political system.
Scott Dalferes • May 24, 2008

Right on. Thanks for the well thought out post.
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The Health Insurance Mafia

May 18, 2008

inHealthcare Insurance Industry, Medicine: Healthcare System

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Stanley Feld M.D.,FACP,MACE

Jonathan Kellerman is an M.D.. He is telling it like it is even though no one asked. His story is clear. I believe many physicians understand the problems in the healthcare system more clearly than most of our politicians. I also believe it is our obligation to describe to consumers the real problems and dismiss political babble.

However, when physicians are in positions that represent many physicians they themselves become politicians and abandon the purpose of the medical care system which is to put patient care first. For some reason physicians do not articulate the problems of every day medical practice.

“Most discussions about the rising cost of health care emphasize the need to get more people insured. The assumption seems to be that insurance – rather than the service delivered by doctor to patient – is the important commodity.”

The healthcare insurance industry has kept the discussion focused on insurance and not on the patient physician relationships and services delivered by physicians to their patients, namely cognitive services. It also does not focus on the patients adherence to the recommended treatment and the exploding obesity epidemic.

“You don’t need to be an economist to understand that any middleman interposed between seller and buyer raises the price of a given service or product. Some intermediaries justify this by providing benefits, such as salesmanship, advertising or transport. Others offer physical facilities, such as warehouses. A third group, organized crime, utilizes fear and intimidation to muscle its way into the provider-consumer chain, raking in hefty profits and bloating cost, without providing any benefit at all.”

The healthcare insurance industry is the middleman that controls the healthcare system. The government through Medicare depends on the healthcare insurance industry to be the third party administrator for Medicare. The healthcare insurance industry sets the prices and the benefits using a unscientific social science called actuarial science.

“The health insurance model is closest to the parasitic relationship imposed by the Mafia and the like. Insurance companies provide nothing other than an ambiguous, shifty notion of “protection.“

In order to control the healthcare system the healthcare insurance industry has managed to control the process of authorized treatment and reimbursement.”

“ But even the Mafia doesn’t stick its nose into the process; once the monthly skim is set, Don Whoever stays out of the picture, but for occasional “cost of doing business” increases. When insurance companies insinuate themselves into the system, their first step is figuring out how to increase the skim by harming the people they are allegedly protecting through reduced service.”

Insurance is all about betting against negative consequences; the insurance business model is unique in that profits depend upon goods and services not being provided. Using actuarial tables, insurers place their bets. However actuarial science is not an exact science. Therefore, to be safe a percentage is added to the potential pricing error guaranteeing an increase in profit.

“Health insurers have taken steps to avoid that level of surprise: Once they affix themselves to the host – in this case dual hosts, both doctor and patient – they systematically suck the lifeblood out of the supply chain with obstructive strategies. For that reason, the consequences of any insurance-based health-care model, be it privately run, or a government entitlement, are painfully easy to predict.”

Jonathan Kellerman nailed it. It is not about the patient, society’s health or the value of physicians’ intellectual property, it is about the healthcare insurance industry’s profit.

” There will be progressively draconian rationing using denial of authorization and steadily rising co-payments on the patient end; massive paperwork and other bureaucratic hurdles, and steadily diminishing fee-recovery on the doctor end.”

The result is obviously more profit for the healthcare insurance industry and more out of pocket expenses for patients.

In the olden days: “ The doctor had to look you in the eye – and didn’t need to share a rising chunk of his profits with an insurer – the cost was likely to be reasonable. The same went for hospitals: no $20 aspirins due to insurance-company delay tactics and other shenanigans. Few physicians became millionaires, but they lived comfortably, took responsibility for their own business model, and enjoyed their work more.”

The idea is to get the dollar out of the hands of the healthcare insurance industry and let the patient manage his own money and keep the money he does not spend in a trust.

Healthcare insurance must be converted to true insurance that is needed for expensive procedures.

Both physicians and patients need to be active in liberating themselves from the notion that insurance will pay. The healthcare insurance industry has figured out how to control the premiums and the reimbursement. They have now figured out how to neutralize the innovative concept of patient control of the healthcare dollars with Medical Savings Account and converted them to Health Savings Accounts with healthcare insurance industry control.

“Physicians and other providers need to liberate themselves from the Faustian bargain they’ve cut with the Mephistophelian suits whom now run their professional lives. Because many doctors are loath to talk about money, they allowed themselves to perpetuate the fantasy that “insurance is paying.” It isn’t. There is no free lunch and no free physical exam.”

One solution is for physicians and patients to abandon the traditional healthcare insurance grip.

Government (local,state or national) or employer associations (third party payers) set up their own healthcare insurance companies. They set rules in favor of the patient with the patient having control over their first six thousand dollars. The patient does not contribute the first 6,000 dollars. One of the third party payers contributes the insurance premium. Self employed people would contribute their own money with pre-tax dollars. If they could not afford the premium, they would be subsidized by the government. This is not an entitlement. This is pure insurance with motivation to save money.

I wonder how many politicians would be willing to past legislation to permit this to happen. It could easily be done on a state level. Consumer would then be able to control the system. We would be able to get rid of what Dr. Kellerman calls the Healthcare Insurance Mafia.

The opinions expressed in the blog “Repairing The Healthcare System” are, mine and mine alone.

QuoteFL • August 19, 2008

First of all, I love your mafia take as it is dead on! I am in favor of deductable assistance, or government subsidies for high risk individuals that need it the most. Another thing to point out is that unfortuntely in the US, insurance (especially health & life) is considered a luxury and many young people and working middle class with a choice of where to spend there money are opting for toys and entertainment rather than planning ahead. Hopefully that will change in the future. Great post and resource links…I’m your newest fan. Bookmarked!
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