Stanley Feld M.D.,FACP,MACE

The best way to beat competition is to not permit their entry into the marketplace. Businesses would do this if they could.

Medical specialists learn the nuances of disease processes and have the ability to discover early clues of disease. Surgical specialists understand their facility needs to increase their efficiency and effectiveness. They know what they need for effective post operative care. There is no reason that family practice groups can not have a couple of physicians become expert in a particular chronic disease.

“Focused factories’ are needed for medical and surgical care to avoid the complications of both acute and chronic disease. General Hospitals do not have the ability or desire to create focused factories. Focused factories could convert the care of profitable diseases with complications to unprofitable diseases without complications. The economics do not work for General Hospitals. General Hospitals try to prevent Specialty Clinics and Specialty Hospitals from being developed in their area.

“Hospitals are still the heart of the health care industry, consuming a third of the $2 trillion U.S. health care bill. Some are very good. But many are not, brimming with infectious bugs, systemic error and negative hospitality. And because the hospital industry does all it can to thwart competition, many communities are stuck with the hospitals they have.”

Hospitals hide behind the provisions of the Stark law to prevent the development of doctor owned efficient facilities for treating specific diseases (Focused Factories). There are many examples proving Focused Factories’ expertise used in treating particular diseases are more effective than a General Hospital. The most quoted examples are a hernia hospital in Canada and the Heart Hospital in Houston.

“Congressman Fortney “Pete” Stark (D-Calif.) passed legislation in two parts between 1989 and 1995, banning physicians from “self-referral,” meaning that a doctor can’t refer a patient to an physical therapy practice, lab or other facility that she owns part of because then she’ll benefit from the revenue associated with the services provided. Without Stark, the theory goes, unnecessary and expensive procedures would proliferate”

Congressman Stark thinks all physicians are crooks and will take advantage of patients. However, I think he is realizing the unintended consequences of his thoughts about physicians and his legislation. If patients own their healthcare dollar(ideal medicalsavingsaccount) they would be wary of anyone taking advantage of them.

“Recently Congressman Stark told a Forbes reporter that he regretted the bill because of the perverse effects and the army of lawyers creating an industry to take advantages of loopholes in the bill” .“The Stark laws have had a huge impact on how medical business models are structured.”

The laws have had an impact on discouraging physicians from creating Focused Factories. Focused factories are one stop clinics. They avoid fragmentation of and duplication of care. They take advantage of the concept of continuing quality improvement of care. They provide care in the most cost efficient way to remain competitive in the marketplace. They also permit the physicians to retain the value of his intellectual property rather than giving their intellectual property to a third party businessperson. .

“Yet in an interview today the Congressman lamented that he had ever made his legislative intrusion into medical practices. The unintended consequences of trying to legislate good behavior, as Sen. John McCain would tell you about campaign finance reform, is too many lawyers looking for loopholes.”

The loopholes have given an advantage to already large clinics and hospitals and do not provide incentives to smaller clinics to devise efficient models of medical care.

“Patients have a choice, but it’s not widespread yet. It’s called the specialty hospital, a center that focuses on the care of a particular body part such as the heart, spine or joints, or on a specific disease such as cancer. There are 200 specialty hospitals in the U.S. (out of 6,000 hospitals overall).”

The protection for large healthcare institutions is cracking with the realization that hospitals absorb two thirds of 2 trillion dollars spent on healthcare. Hospitals earn much of this money treating hospital acquired illnesses and complications of surgery. The government and the insurance industry is now making noise to stop paying for hospital acquired complications. In order to protect themselves, hospitals are starting to enter into joint ventures with their physicians.

” The specialty hospital often deliver services better, more safely and at lower cost. A recent University of Iowa study of tens of thousands of Medicare patients found that complication rates (bleeding, infections or death) are 40% lower for hip and knee surgeries at specialty hospitals than at big community hospitals. A 2006 study funded by Medicare found that patients of all types are four times as likely to die in a full-service hospital after orthopedic surgery as they would after the same procedure in a specialty hospital.”

If the correct rules are made by the government Mr. Stark’s fear of physician being crooks can be assuaged. The government must collect appropriate data to determine the need for car the quality of care, and the real cost of that care. So far no one has figured out how to collect correct data.

“Three of the nation’s top ten cardiac programs are at specialty hospitals in South Dakota, Indiana and Texas. Three of the top ten hospitals for total joint replacement surgery are specialty centers in Oklahoma, Ohio and Georgia.”

There is good reason for this. The physicians develop the facility they need and use it efficiently. Their motivation is quality care and a good cash return in a competitive marketplace.

“Specialization is a law of nature,” says Robert Tibbs, a neurosurgeon and part-owner of the Oklahoma Spine Hospital. “Spine surgery is an elective procedure. One of the biggest risks to any surgery is infections. Last year, out of 1,773 patients who slept over at the hospital, only 7 got an infection. That’s one-third to one-ninth the rate seen for similar patients at a big hospital.”

“At Oklahoma Spine anesthesiologists are practiced in putting patients under in the prone position for back surgery. At a big hospital few anesthesiologists would be skilled in that particular task. “You don’t take your Ford to the VW mechanic,” says Tibbs’ partner Stephen Cagle.”

If physicians are permitted to be innovative under appropriate rules without fear of penalty or disgrace they can accomplish amazing things. Our government should be looking at making rules that encourage innovation not abuse.

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

Stanley Feld M.D.,FACP,MACE

President Bush keeps trying. I do not think he really understands the difference between poverty and unaffordability in America today. If he did his goal would be affordable healthcare insurance for all.

“The popularity of health savings accounts for the poor will be put to the test in Indiana under a program approved Friday by the Bush administration. Under the plan, someone making $20,000 a year could get health coverage for about $19 a week.”

Sounds good. However, the devil is in the details.

“Bush has long pushed health savings accounts as a way to slow the rising cost of medical care and extend basic coverage to the uninsured.

Under the Indiana program,eligible residents can pay up to 5 percent of their incomes into state-subsidized “Personal Wellness and Responsibility Accounts” that cover their initial medical expenses up to $1,100. Once that deductible is reached, private insurance purchased by the state kicks in.”

I have no quarrel so far. I see a few problems and questions. One problem is $1,100 does not get you much health coverage at retail prices. Private health insurance is still in charge of reimbursement and not a partner with the patient. What is the type of healthcare insurance coverage after $1,100? What are the co-pays? Only a few patients will have money remaining in their health savings account. There is nothing mentioned about giving patients incentives to stay well and potentially accumulate money for retirement.
Eligibility is limited to adults with incomes below twice the federal poverty level. The poverty level is now $10,210 for an individual and $20,650 for a family of four.

I looked up the actual eligibility criteria on their web site. I was curious to know if eligibility meant people making $41,300 a year would be qualified for the plan. The answer to this frequently asked question was;
The Healthy Indiana Plan (HIP) will provide health insurance for uninsured adult Hoosiers between 19-64 whose household income is between 22 – 200% of the federal poverty level (FPL), who are not eligible for Medicaid. Eligible participants must be uninsured for at least 6 months and cannot be eligible for employer-sponsored health insurance.

I was confused after reading this statement because of the absence of definitions. I asked the web site the following question.

Does this mean that people with a family of four making up to $41,300 a year can be eligible for this plan?
This feedback I got was as follows.

“The Healthy Indiana Plan (HIP) will provide health insurance for uninsured adult Hoosiers between 19-64 whose household income is between 22 – 200% of the federal poverty level (FPL), who are not eligible for Medicaid. Eligible participants must be uninsured for at least 6 months and cannot be eligible for employer-sponsored health insurance.”

The reply did not clarify a thing.

The eligibility limit is better than Medicaid but not as high as necessary to make it affordable. Moises would qualify in Indiana. He does not qualify in Texas. He makes $22,000 per year. An illness would destroy him and his family financially. He can not afford nor does he qualify to buy private insurance as an individual.

The limits for being qualified to receive benefits should be at least $50,000. The benefits packages should be developed by the insurance industry. The deductible must be higher than $1,100. Six thousand dollars is a realistic in order to provide patients with the appropriate incentive. It should be the Ideal Medical Saving Account formulation. It should be bought by citizens through the insurance industry on a competitive basis. It should not be run by the government as a single party payer. It should be subsided by the government for those who qualify for subsides. If the government finds that the insurance industry is taking advantage of patients or providers it should intervene and disqualify that insurance company from participating in the program. Patients of higher income should pay more for insurance than lower income people.

A mechanism for means testing should be developed. People below a certain income should receive government subsidies. Subsides should be regressive with lower income people receiving a higher subsidy than higher income people. The price of the insurance should be affordable and emphasize reward for good health, and prevention of disease. Both patients and providers should receive adequate incentive to achieve this goal. The Ideal Medical Savings Account could include both low income families and high income families. The high income families would pay a means tested surcharge to a certain amount.

“The waiver in Indiana is the first of its kind for the Medicaid program, a state-federal partnership that provides health coverage to the poor and disabled.”

The punishing criteria for eligibility for Medicaid still exist. On close study I have concluded that the Medicaid program is a way the state can obtain a subsidy from the federal government. The criteria for eligibility is simply too restrictive.

“Indiana officials said they’ve already received inquiries from more than 1,000 people interested in applying.
This sound bite implies impending success of the program. I think it is a long way from success.
The program will be monitored closely because of the philosophical divide among lawmakers about the value of health savings accounts for the poor. Many say such accounts work best for healthier and higher-income people with low medical expenses.”

The enemies of Health Savings Accounts have an excuse to react negatively. I believe that most lawmakers do not understand the goal of Health Savings Accounts. They also do not understand that Health Savings Accounts are a bastardize form of Medical Saving Accounts to keep the healthcare insurance industry in control and accumulate unconscionable profits

“Judith Solomon, senior fellow at the Center on Budget and Policy Priorities, said she doubts that many people making $10,000 a year can afford to pay $500 for health insurance. She said that about 50,000 people lost Medicaid coverage in Oregon after that state got permission to raise insurance premiums to $20 a month.”

“You can say it’s better than nothing, but I just don’t see how many of those folks will be able to afford it,” Solomon said.

Judith Solomon is absolutely correct. People making $10,000 dollars can barely afford to put food on the table or a roof over their head. So many well intended programs are built to fail.

“This is a big step forward that will lead to approximately 120,000 uninsured Hoosiers having the peace of mind of health insurance,” said Indiana Gov. Mitch Daniels, a Republican who once served as Bush’s director of the Office of Management and Budget.

I believe Governor Daniels should check to see how many of these 120,000 uninsured are living under the poverty level. I would guess less than 50%. It is fun to listen to Governor Daniels’ advertisement. , He makes a false promise and a false hope with false information.
If the state and federal government really wanted to do something they should expand the eligibility level to $50,000 a year. They should subsidize the Ideal Medical Savings Account with the incentive for patients’ to accumulate money in their retirement fund if they spend their healthcare dollars wisely.

Healthcare programs such as the Indiana program continue to appear and are destined to fail. The consumer must force lawmakers to get serious about Repairing The Healthcare System.

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

Stanley Feld M.D.,FACP,MACE

Healthy Indiana Plan: http://www.hip.in.gov

Stanley Feld M.D.,FACP, MACE

I type ideas into my computer so I do not forget them. I do not know if the following is a quote from someone or something I simply wrote down. I apologize to the person if someone else said it.

A given: Free societies tend naturally toward a “Katrina mentality” of doing nothing until something happens. Have we done anything yet?

September 11 was less ‘a failure of imagination’ than an inability to see that America’s enemies were hiding in plain sight. They still are. Have we done anything yet?

The same mentality applies to developing the Ideal Electronic Health Record (EHR). The answer is in plain sight! The barriers are the vested interests that are benefiting from the present medical infrastructure. It is difficult to be innovative and imaginative when you are experiencing success. Many successful businesses feel anything innovative, imaginative or noble could decrease their present success. It is also difficult to express innovation and imagination in a hierarchical bureaucracy. Therefore “mature” businesses and organization become ossified.

The problem in a free society is you can only become chief of the bureaucracy (most of the time) if you do not use your imagination and do not make waves.

I believe the internet, and blogosphere are going to change all of the ossification of innovation and imagination our society has experienced recently. They are truly democratizing. The internet and blogosphere permit people to think, be imaginative and innovative through the ease of free expression offered by RSS.

The great power of a free society is individual freedom of speech, a free press and freedom of communication. We have lost some of these freedoms in the last 70 years with the development of hierarchical bureaucracy and consolidation of the press.

Robert Scobies’ book Naked Conversations is a must read. The subtitle is “How blogs are changing the way businesses talk with customers.” We are in the midst of a revolution in how we do business. Most of us can not visualize it yet. In general, societies do not understand the paradigm shifts as they are in the process of occurring.

In the development of the ideal EHR the answer is hiding in plain sight. I believe I established the fact that the Electronic Medical Record (EMR) should be broadened to an Electronic Health Record (EHR). I have also established the fact that the Health Savings Account (HSA) should be expanded to a Medical Saving Account (MSA)

In the Repair of the Healthcare System the key question is where does the healthcare system spend most of the money?

1.Eighty to ninety percent of the money is spent on the complications of chronic diseases. We all accumulate chronic disease as we go through life. As I said previously, medical physicians have become very expert at fixing things that are broken. The medical profession has just started to develop systems of care for chronic illnesses in order to prevent complications of chronic diseases. If we have systems of care for the treatment of chronic disease in place, and could execute the practice of evidence based medicine efficiently in a clinical setting, we could reduce the complication rates of diabetes, osteoporosis, asthma, chronic obstructive lung disease, muscular skeletal disorders, hypertension and heart disease by at least 50%. If we were perfect we could probably reduce the complication rate by 80%

The math is simple. Diabetes Mellitus costs the healthcare system in direct cost $150 billion per year. The cost of complications is eighty percent (80%) of $150 billion, or $120 billion per year. A fifty percent reduction in cost means a $60 billion dollar savings to the healthcare system for diabetes. However, the disease management has to be done correctly.

Can a system of disease management be set up to reduce the complication rate of Diabetes Mellitus?

It has been by the American Association of Clinical Endocrinologist for Diabetes Mellitus. Any physician can execute this system of intensive diabetes self management in his office. The most important person in the system of care is the patient. It is a system that teaches the patient intensive diabetes self management. Intensive means the patient is taught how to normalize his or her own blood sugar. A normal blood sugar will avoid the complication of diabetes mellitus. The system of intensive diabetes self management teaches the patients to be the “Professor of Their Disease”.

Patients are responsible for their own care. The physician is the coach that helps fix some errors in patients self management. The care paradigm can be put in an Electronic Health Record (EHR). Both the patient and physician can share all the results including the blood sugar tests the patient does and the lab work the physician does with a web based EHR. If the banking system can do it with online banking, medicine can do it!

The interoperability of the EHR includes a pharmacy history of the patient’s compliance with medications that are ordered. The pharmacy must interact with the patient/physician electronic health record every time a refill is given. The physician can then through the EHR calculate the patient’s compliance with medication.

Compliance is a huge problem. If the patient does not take the medication the medication can not protect against the complications of disease. If the patient is educated (patient education is under compensated or not compensated presently by the insurance industry) and is responsible for their own healthcare dollar with a Medical Savings Account (MSA), the patient will become motivated to demand and will pay for education. It is easy for patients to understand that not only is their health at risk but their own money is also at risk.

An imaginative person in an unimaginative facilitator stakeholder industry can start seeing how this one element (Chronic Disease Management) is the one answer to the run away healthcare costs. The answer is in plain sight. The current information technology expertise is available. The EHR has to be created to add value to the patient/physician interaction for both the economic and quality care benefit of the both primary stakeholders. It is inappropriate and doomed to failure if it is formatted for the secondary stakeholders. It has to be driven by the patient. It has to have interoperability between medical and financial lines. The patient has to be given incentive to drive the system.

I will continue to expand on the ideal EHR.

I will continue to build on the ideal electronic medical record.

Stanley Feld M.D.,FACP,MACE

We have experienced an increased number of uninsured patients for the past 16 years as insurance premiums have escalated and employers have been reducing and eliminating medical insurance benefits as part of the employment package. In 1990, 34.4 million Americans were uninsured. At that time, 85% of the uninsured patients were members of a family with a working adult.

Today, that number is 46.6 million, according to a new Census Bureau report. This represents 15.9% of our population up from 15.6% of our population in 2004 representing an increase of 1.3 million in the last 2 years. The number of workers with no health insurance rose from 26.5 million to 27.3 million. Nearly all the increase in uninsured was among working adults.

Do you think we need a creative innovative solution to ensure that all Americans have affordable and comprehensive health insurance coverage? You bet!

Congress has so far failed to reach a consensus on how to even approach the problem.
Our difficulty is we have an elected Congress that professes to support the publics’ vested interest but in reality is swayed by vested interests’ political contributions. This is the reason they are in a State of Denial about everything including medical care of our population. America does great when the crisis is overwhelming. When the crisis subsides we resort to our highly developed short attention span and ignore our problems. We leave ourselves vulnerable to be taken advantage of by stakeholders who are protecting their vested interests.

What should we be focusing on?

1. As the price of insurance has increased and out of pocket payment for the employed has increased, the price of coverage has exceeded the price the employers can afford.

2. People working and not covered by employer provided health insurance have to pay for health care premiums with after tax dollar, while their employers pay for employee health insurance with pre tax dollars.

3. Evolving tax laws and employee benefit laws are causing employers to act in ways that cause the employer to provide fewer benefits to the employee. The biggest impact is felt by moderate to low income families. They are priced out of the market. If they get sick, they figure they can get medical care paid for by their community. The result is an increase in economic pressure on the individual and the community.

In light of this the facilitator stakeholders try to protect their envisioned vested interests at the expense of the patients and society. Policy makers have proposed to force everyone to buy insurance. The goal is to force the employer to buy insurance for the employee, or force the uninsured to buy insurance or go on Medicaid. The State of Massachusetts just passed a law mandating insurance and guarantying insurance for all.

It seems to me all of these proposals ignore real reason people do not buy insurance on their own in the first place.

They cannot buy reasonably priced insurance on a before tax basis. The patient is disadvantaged by an expensive and defective third party payer insurance system that does not permit them to control their healthcare dollar.

A Medical Saving Account system in a Price Transparent environment cures all these defects. Real insurance would be sold to individuals using after tax dollars in a freely competitive environment. The competitive environment would not be price manipulated by the insurance industry as the Medicare Part D benefit is. People would have an economic motivation to purchase insurance and keep themselves healthy. If someone had a chronic illness and if they avoided the complications of disease they could be rewarded economically.

Families on Medicaid could be motivated in the same way with the government providing the same or similar subsidies. The cost of care to State governments would be less than it is today. However, we would be empowering to the Medicaid family to make independent decisions rather than demoralizing these families in the present system of care rationing.

Americans yearn to be free and make free choices. We are not a dumb people even though our education system is crumbling. We need enlightened leadership not imprisoned by our hierarchical bureaucracy. I believe it is going to be up to the population of 40-50 year olds to step forward and say “we are sick and tired of this and we do not want to take it anymore.”

Stanley Feld M.D.,FACP,MACE

In my view none of the published estimates of administrative costs to the healthcare system are correct. The latest estimate of administrative costs to the healthcare system was $150 billion dollars. I bet this estimate is only half of the administrative costs. The estimate represents only the costs the insurance companies add on to their insurance premium calculation. It does not represent the cost to the physicians to process each claim.

My estimate for the administrative cost to the physician for each office visit is $35- $40. The physicians’ administrative costs include the cost of physicians’ time to complete the paper work for each encounter as well as the cost of back office personnel for processing each claim to completion. Many claims are adjusted by the insurance company and disputed by the providers. The claims are then resubmitted for another round of non medical value added costs. The total cost to the system could represent $300 billion dollars. Three hundred billion dollar savings can go a long way to reducing insurance premiums to manageable and affordable levels. I could also go a long way toward increasing accessibility to care.

A few weeks ago I wrote about economists declaring that we can afford the cost of our excellent healthcare system. I blasted the concept as ridiculous. The economists ignore the inefficiencies and not medical value added cost to the system.

This week an article appeared titled “Running on Empty: Healthcare As the Engine of the Economy by Brian Kleeper and Alian Enthoven.
“Healthcare insiders know that the industry’s rosy prospects can continue only if its funding remains stable. Most also acknowledge that the dollars are not likely to flow as they have in the past.
The reality into the foreseeable future is that healthcare–at least beyond a narrow definition of “basic care”–will remain a voluntary buy. In fact, there’s every indication that group purchasers are quietly abandoning the market. A wealth of recent data shows that healthcare cost growth is pricing corporate and governmental purchasers out of the market for coverage.
Reports from the Kaiser Family Foundation and the Department of Commerce’s Bureau of Economic Analysis show that, between 1999 and 2004, premiums–the point where costs converge from throughout the healthcare continuum–grew 5.5 times general inflation, 4.0 times workers earnings and 2.3 times the growth of business income.”

Please recall that much of the increase also results from a faulty DRG system. The present system reimburses on hospital charges and not hospital costs. The DRG system contributes to the engine of the inflationary medical costs.

“The numbers are spectacular. And purchasers are responding. In September 2006, another Kaiser report on employer health benefits showed that, between 2001 and 2006, the percentage of employers offering coverage plummeted from 68 percent to 61 percent, a 10.3 percent drop over five years or a 2.1 percent annual erosion rate. During the same period, the percentage of employees with coverage dropped from 65 percent to 59 percent. Data from other sources show that certain workers–those in the private sector, service workers, retail employees–were particularly vulnerable to losing coverage.
Meanwhile, Florida’s Office of Insurance Regulation released data showing that, between 1996 and 2004, 132,000 small employers (with 50 or fewer employees) stopped offering health coverage. This represents a 53 percent drop, while enrollees in small group plans fell by 760,000 individuals (42 percent, or 5.25 percent annually). The state’s population grew by three million during this period.”

As fewer and fewer people have health insurance coverage there is less and less premium dollars in the system. At present we have 46.7 million uninsured in America, 80% of whom would buy affordable insurance if they could.

Jon Lowder’s blog entry of November 10, 2006 nailed the problem. There are precipitous enrollment drops and an increasing uninsured population.

“These precipitous enrollment drops make sense, particularly when you compare the scale of healthcare cost to earnings. The actuarial firm Milliman calculated that the total coverage costs for a family of four averaged $12,214 in 2005. But one-quarter of the nation’s workers made less than $18,800, and one-third of its families made less than $35,000. How can mainstream Americans stay in a game that’s stacked like this?”

Worse, healthcare is 1/7th of the economy and 1/11th of its job market. If this sector develops a large demand-resource mismatch and becomes financially unstable, the disruptions could cascade to and destabilize others sectors, threatening the national economic security.

Many people who follow the healthcare crisis know all of this. Unfortunately the public is not aware of much of it. We only realize that health insurance cost more and more. We have discussed much of this previously.
However, no leader has the courage to step forward and do something about it. I have emphasized much of the leadership can be exerted at the state level by state boards that license the insurance industry,hospitals and physicians. No one has organized the people to protest. The excuse is that the healthcare system can not be fixed. It is impossible to control physicians. I believe all these excuses are smoke to cloud the solution. The facilitator stakeholders are simply holding on to what they falsely perceive is their vested interest.

“A theory of limits applies here. In a voluntary market, healthcare purchasers–employers or taxpayers–will tolerate only so much cost growth. Then they’ll recede. It is preposterous to believe the well won’t run dry.”

All of these pricing mismatches and excess non medical value added costs can be eliminated by permitting the patient to be in control of their healthcare dollar and selling pure insurance that is fairly priced. The ideal Medical Saving Accounts system represent pure insurance in the form of high deducible health insurance and motivation for the patient to become an informed consumer.

The cost of processing claim could be eliminated completely. The service claims could be adjudicated instantly with a credit card. Thousands of diverse businesses adjudicate claims on purchases instantly daily at a low cost. The use of credit cards to pay for Medical Savings Accounts could provide an instant savings of 150 billion dollars to costs in the healthcare system. The losers will be the non competitive insurance company. The winner will be the bright flexible company that puts the system in place.