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.

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.

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.