Stanley Feld M.D.,FACP,MACE

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

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

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

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

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

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

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

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

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

Stanley Feld MD,FACP,MACE

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

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

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

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

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

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

Good luck Mark.

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

Stanley Feld M.D.,FACP,MACE

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

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

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

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

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

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

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

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

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

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

Stanley Feld M.D., FACP, MACE
Physicians have the same problems. Dr David Westbrock’s knee story is chilling. Recently I received an email from a Clinical Oncologist. From the physicians point of view treating patients with chemotherapy in the office is more efficient and cheaper than sending them to the hospital for treatment. It provides one stop shopping for the convenience of the patient and generates Centers of Excellence in physician’s offices. It also promotes the physician-patient relationship.
The government is worried that physicians are going to cheat their patients by over ordering tests. Laws been written to “protect patients from their physicians.” The government laws figure that all physicians are crooks and will take advantage of their patients. Who is going to protect the patients from the hospital? The hospital charges for chemotherapy are three times the charges for the same treatment in the physician office. However, both fees are opaque. The physician fees are a little less opaque than the hospital fees. Many times the add on complications and procedures raise the price further in the hospital. Patients make little personal contact with anyone in the hospital. When the patient gets the very expensive bill who does he get angry at? The person he had contact with. His physician. This does not help the patient-physician relationship at all. I think about 50% of the therapeutic effect of treatment is the patient-physician relationship a relationship that is eroding at a rapid velocity because of the conditions of practice. Patients want to know why we are recommending a certain therapy. Instead today the patient get a call from the physicians nurse being told that the doctor wants you on this medicine and she will call in a prescription. The patient-physician relationship is not a commodity!
The following is John’s (the Clinical Oncologist) letter to me.
“Stanley,

Getting a hospital charge and Medicare reimbursement is a totally different thing. Seen inconsistently and usually when the patient wants to question this or that about a hospital stay. This, of course, is one of the issues. Very opaque. A patient cannot go to a hospital and ask the charge for 75 mg Taxotere. What Medicare or some commercial insurer will pay is also not available to the patient because what they charge and what is paid is totally disconnected. The patient can ask my office and I will tell them all the prices.”

As physicians we have the same problem patients have. The hospitals and insurance industry want to keep us blind to their charges and payments. In studying DRGs, I discovered an additional problem. When the patient receives an Explanation of Benefits (EOB) from Medicare or the Insurance Company one has no idea what was done to you in the hospital, or what medication you received.(see Dr. Augus Deaton letter). A patient told me that he received all generic drugs in place of his prescribed brand named drugs while in the hospital. I would suspect the hospital wanted to save money. However, was that DRG charge built on generics drugs as opposed to the brand name drugs ordered? I would suspect it was on the price of the brand named drugs although I will never know.
Remember Denise’s story. Denise had no power to negotiate anything. She paid retail for everything.
It is up to us to demand that opacity does not evolve to semi opacity to appease us. Semi opacity is worthless and does not help the consumer with prices. The system must go directly to real and accurate Price Transparency. Consumers (patients) have to be in a position to negotiate price. If they can not they can walk with their feet . This is the definition of “Patient Power.” Why are Americans buying Toyotas and not Ford, GM or Chrysler cars? We own the purchasing power. We figure out how purchase the best buy giving the best value for our hard earned dollar. My goal is to help you figure out how to do the same in healthcare.

Stanley Feld M.D.,FACP,MACE

If we are going to be able to Repair the Healthcare System REAL Price Transparency is a must. There is a lot of noise about Price Transparency by hospitals and the insurance industry but it is all pretend. I suspect there is going to be little change in policy until the patients, future patients and physicians as well demand REAL Price Transparency.

Augus Deaton an economist at Princeton tried to be a well informed consumer. In his “Letter from America, Trying To Be A Good Hip Op Consumer” he points out the problems he had seeking good value in his health-care and being an informed consumer. It is a worthwhile read if you want to see what the American consumer of healthcare is up against. Consumer driven healthcare is just talk and will fail unless we want to walk the walk. He points out the lack of available appropriate information and the total opacity encountered when information is limited.

President Bush “Bush Seeks Better Health Care Cost Information” and the people at CMS seem to really want to do the right thing. They will not get better information. Their problem is they are up against a powerful vested interest lobbying machine that has been successful at contaminating every good idea that might hurt them. There is a total resistance to change. The fact is the change might help the vested interest stakeholders. The change would certainly help the consumer of healthcare. President Bush’s only chance will be if we create a public opinion outcry. Once again who is responsible? Unfortunately, we are because our surrogates have let us down.

Medicine is big business and the facilitator stakeholders want to keep control of the big business of Medicine. Checking on quality care was impossible for Augus Deaton. Understanding his potential financial liability was an even bigger chore. Surprise billings were ubiquitous. He could not even know what he was covered for until after the service was rendered. This lack of transparency is ubiquitous in Medicine and not getting any better. Aetna claimed a Price Transparency initiative in 2005. It affected a small group in Ohio and covered only 23 services. This sort of Price Transparency is a relatively meaningless gesture and will not help repair the system. The initiative did generate a lot of sound bite publicity for Aetna at a small cost.

Ohio announced that it is going to publish their hospital DRGs. However, they will not be ready for more than a year. Publishing DRGs does not tell you what the insurance company or Medicare is going to pay for or how much. Wisconsin published their DRGs. It is enlightening but meaningless because you as a consumer can not do anything about the price.

Is this right? My answer is no! We, the people are responsible for making the demand, and demanding it now in an election year. If we are going to be purchasers of healthcare with our own dollars we need to know what we are buying.

Stanley Feld M.D.,FACP,MACE

Last week I had a post entitled “Medicare backed off maybe?” Medicare announced it was delaying changing the ineffective DRG system established in 1983, to a system that reimburses on hospital cost rather than charges. I said maybe they have back down. I have been to this movie before. They never seem to back down even if there are defects in the new system that can easily be corrected. The policy usually gets instituted using another route.

The front page Sunday New York Times had a story entitled “Hospitals Grew with Medicare Paying the Way” exposes the abuses of the DRG system by St. Barnabas Hospital System. There is naturally a lot of disinformation in the story. However, the abuse is the result of defects in the charges based on the old DRG system. I asked previously; ‘how the various hospital systems have so much money to build, redecorate and buy hospitals?” I suggested; “hospital systems might have a special deal with the government”. One could start connecting the points after this Sunday’s NY Times story. The CEO also made a salary of 4.7 million dollars in 2003. I guess good help is hard to find.

“In 1998, Mr. Del Mauro received $613,000 from SBC, according to documents on file with the I.R.S. His compensation was $4.7 million in 2003, the last year St. Barnabas received the huge Medicare overpayments. In 2004, it was $4.2 million.”

However, St Barnabas is not the only hospital system in the country involved in the federal investigations of abuse. Some might remember when HCA was called “Columbia Healthcare Systems”. Columbia was expanding rapidly and investigated by the Federal government for Medicare abuse. The result was a penalty and reorganization.

“The episode at St. Barnabas, whose legal problems are not over, is part of a wave of Medicare fraud investigations that, according to a federal report, have reached more than 450 hospitals nationwide. Experts said the money involved could exceed $6 billion. “

“The way the system has operated, it’s almost irresponsible corporate governance for hospitals not to cheat Medicare,” said Patrick Burns, an analyst at Taxpayers Against Fraud, a leading watchdog organization.

Isn’t it bizarre? A facilitator stakeholder (hospital systems) take advantage of a defect in the system the government created (DRGs). Then the government sues the organizations that take advantage of the defect in the system that they created at a huge cost to both the hospital systems and the government. Who do you think pays for the legal fees? You bet. We do (the people.) Who do you think is wrong? The answer is both the hospital and the government. Shouldn’t the government do it right the first time? Shouldn’t we demand that the government does it right the first time? Shouldn’t someone ask the practicing physician and the patient what they think the right thing to do is? You bet! Are they? No!

Stanley Feld MD,FACP,MACE

I have stated that all of the stakeholders are at fault in creating a dysfunctional healthcare system. Most of the media articles are critical of the defects in the system, as well as the stakeholders abusing these defects in the healthcare system.

The last few weeks have highlighted a few defects. The defects have resulted in corporate abuse by the facilitator stakeholders. The government is trying to take steps to correct the abuses. However, no one in the media is trying to connect the points. It seems to me when something happens, it is reported. The public gets upset. Newspapers are sold. The story then blows over.

I believe the power of the internet, along with blogs and the development of topic specific search engines will be the vehicle that allows us to connect the points. We will understand the significance of the media stories. Understanding problems usually leads to populous pressure in America with a resulting change.

A few weeks ago HCA went private for 31 billion dollars. The result, the best I can tell from the internet financial information about a public company and the buy out terms reported, was the Frists walked away with about 8 billion dollars in cash and reinvested between $800,000 million and $1.6 billion dollars. Their ownership position went 40% to 14%. There is a great advantage to be a private company in the present healthcare system environment. The principle advantage is their financial position can become more opaque compared to the level of opacity presently. The problem is they have $25 billion in debt to service and pay verses 11 billion dollars before the leveraged buyout. The government cleared the way for the buyout

There only seem to be two ways to pay off debt. One either sells of assets or raises prices. Today, HCA announced that is selling a money losing hospital in West Virginia to CAMC Hospital Care System. The sale will stop the $2.4 million bleed since 2005 and add $19 million to its bank account.

This is occurring in an environment where Medicare is supposed to be calling for transparency in pricing. Price Transparency should benefit of the patients and the cost of medical care. The goal of Price Transparency is for patients to be informed healthcare consumers. They can then make responsible healthcare purchases at an affordable cost while being in control of their healthcare dollar.

Before the ink on the deal dried HCA raised their fees to the insurance industry. United Healthcare plan and HCA were very far from a contract in Denver. The 800,000 patients (the primary stakeholder) with United Healthcare insurance will have to find other hospitals and physicians in the Denver area if agreement can not be achieved by August 30. If they do not change hospitals and physician they will be liable for complete retail payment of fees. Yesterday, it was announced that HCA raised the price in the Florida market. United Healthcare has refused to accept the price increase on the grounds they can not afford the increase.

The question in the supposed environment of Price Transparency for the consumer (patient) is; “what is the justification for HCA’s price increase? I bet we will never know.
I suspect as each new contract comes up, we will see isolated small media stories about the price increases state to state and insurance vendor to insurance vendor. However to the nation, this will not be new news and will not be picked up by major media outlets. The problem will fade away. No pressure will be applied to solve the problem.

My guess is the best thing United Healthcare Insurance Company can do is drop HCA. In the Denver area, United has 800,000 people insured presently. Many of who use HCA’s hospital system for care. With HCA’s tremendous debt service and brick and mortar expenses, HCA’s prices will come down to manageable levels or the HCA hospitals will close as HCA loses contracts.

Stanley Feld MD, FACP, MACE

Every time I visit my sons and their families in Boulder I am asked to less write intensely in my blog. It is difficult for me. I feel a sense of urgency to precipitate action immediately before the system fails and medical care is destroyed.

However, during dinner one night, we were talking about the fact that I finally got an ice cream maker. I am a lover of chocolate ice cream. I have searched the world for the best tasting chocolate ice cream. So far the winner is Vivoli in Florence, Italy.

My wife and I are part of a supper club in Dallas called the Gourmet Group. The five couples have met every 6 weeks for the last thirty four years. Last month the meal was at our house. Cecelia assigned one couple to make Maida Heatter’s recipe “Doris Duke’s Bittersweet Chocolate Ice Milk.”

I discovered that I did not have to travel all over the world for the best chocolate ice cream. I had it in my dining room during Gourmet Groups dinner.

I have a fantasy that I can become a Chocolate Ice Cream Making Superstar. I then could have great ice cream any time I want. However, I need your help.

The Call for ACTION is:

If any one out there has an outstanding recipe for chocolate ice cream, please send it to me. I will make it in my new electric ice cream maker. I will make judgments about the quality and taste and then share the recipes and rating with all of you out there. I will also do some innovative things to the recipes to try to create the best chocolate ice cream ever made. Thanks for your help.

Stanley Feld M.D.,FACP,MACE
stanfeld@feld.com

Stanley Feld M.D.,FACP,MACE

I was very moved by Ayn Rand’s Atlas Shrugged in 1957. I reread it in the late 1990’s. I listened to it on tape in 2000. Each time I read the book I saw more similarities to the events going on in our world today. I believe Ayn Rand recognized patterns very astutely. Her teachings are equally as fresh and pertinent today as in 1957. Societies have doers and moochers. Industries have been built on taking advantage of our current system of bureaucratic public administration.

Let us assume that the government is for the good of the people and directed by the people. Let us also assume that the current process oriented public administration of our healthcare system has mutated into an inflexible system on the brink of bankruptcy. One can not make minor modifications to marginally improve the system. Minor modfications can make the system a little better or a lot worse. The pressure to sustain the status quo by the bureaucracy, the advantaged stakeholders and the media is overwhelming. Change only occurs when we are all overwhelmed by the burden of the status quo. In healthcare we are almost at that point. Presently, all the stakeholders are hurting as medical care charges and prices are spinning out of control and out of the reach of all of the stakeholders. Even the moochers are hurting.

My son, Brad Feld, said to me a few months ago; “Dad if you think you have something to say then say it though RSS (Real Simple Syndication) and create a blog.

Songwriter Kris Kristopherson wrote in “Beat the Devil”: “he has a stomach full of empty and a pocket full of dreams” An old man at a bar buys him a beer and borrows his guitar. The old man then sings this verse;

“If you waste your time a talking to the people who don’t listen to the things that you are saying who do you think is going to hear. And if you should die explaining how the things that they complain about, are things they could be changing, who do you think is going to care. There were other lonely singers, in a world turned deft and blind, who were crucified for what they tried to show. And their voices have been scattered by the swirling winds of time because the truth remains that no one wants to know.”

Kristopherson goes on to say: “When no one stood behind me but my shadow on the floor.” “Lonesome is more than a state of mind.” “I didn’t beat the devil but I drank his beer for nothing and then I stole his song.”

He concludes:

“And you still can hear me singing to the people who don’t listen to the things that I am saying , praying someone is going to hear. And I guess I will die explaining about the things that they complain about are thing they could change hoping someone is going to care.
I was born a lonely singer, and I am bound to die the same, but I have got to feed the hunger in my soul. If I never have a nickel, I will never die ashamed because I don’t believe that no one wants to know.”

Kris Kristopherson’s song explains why I am writing this blog. I believe people want to know. I want to get the people “madder than hell and not take it anymore”. The BIG IDEA is people taking personal responsibility for their medical care and medical care dollar. I want the people to direct their leaders to develop effective system, and not a series of patches that do not work.