Stanley Feld M.D.,FACP,MACE

“Critical” What We Can Do About The Healthcare Crisis is a book by Tom Daschle, Scott Greenberg and Jeanne M. Lambrew. It provides a more detailed outline of the Democratic Party’s approach to overhauling American health care than either Mr. Obama or Hillary Clinton has offered on the campaign trail.

“The most important proposal in “Critical” is the creation of a “Federal Health Board,” explicitly modeled on the Federal Reserve Board. Its duties would include “recommending coverage of those drugs and procedures backed by solid evidence. It would exert influence by ranking services and therapies by their health and cost impacts.”

I knew this was the way the Democratic Party and Hillary Clinton are thinking. The thinking is dead wrong in my opinion. Increasing regulation and price control would lead to a more dysfunctional healthcare system.

“The Federal Health Board duties would include “recommending coverage of those drugs and procedures backed by solid evidence. It would exert influence by ranking services and therapies by their health and cost impacts.”

Previous rankings have had errors. I suspect these measurements will have errors also. It sounds as if the government is going to dictate the kind of care patients will have access to. It will not be the care the patients’ physicians think is best. Generic medication will replace newer medications. Innovation and inventiveness will be suppressed. Some medical devices will not be available unless the board says it is cost effective.

This is essentially price control and controlling access to care. Past experience has shown these maneuvers do not work. The creation of incentives generates innovation.

The principles of Mechanism Design would create a system of rules fair to all stakeholders with patients being the most advantaged.

“What about the uninsured? Mr. Daschle wants to open to all Americans the Federal Employee Health Benefits Plan — a menu of private-insurance options now accessible only to government workers. He would offer, in addition to the current plans, a government-run program, presumably similar to Medicare, although he provides few details. There would also be some form of means-tested premium support (or tax benefits) for Americans who couldn’t afford one of the available plans.”

The good thing is access to care will be available to all regardless of preexisting illness. The bad thing is it will not create a competitive market place healthcare system so badly needs. It will create another level of bureaucratic complexity.

“Most of Medicare’s costs are borne by doctors and hospitals that must meet the requirements of a host of regulations; if they do not, they may face federal investigations and lawsuits for noncompliance.”

Tom Daschle’s (the Democratic) vision creates a punitive atmosphere for stakeholders that inhibit innovation and usually leads to higher costs.

“Medicare has employeed a mere handful of mostly generalist clinicians reviewing its coverage and payment decisions.”

There is no way a handful of generalist clinicians are able to understand the nuances of complicated disease processes and enforce the new bureaucratic rules. The only way reform will be successful is if the patients force competition for their healthcare needs.

“Mr. Daschle federal health-board proposal is not exactly a new idea. Mr. Daschle himself proposed it as part of the failed American Health Security Act of 1993.”

This was translated into (Hillary Care) a program that assured the government as a single party payer dictated access to care and choice of provider. It failed because public opinion opposed it before it got started.

“Tom Daschle admits that the board is based on the National Institute for Clinical Excellence in Britain and the Federal Joint Committee in Germany. Both are charged with managing the public’s access to higher-cost drugs, medical devices and procedures. But both are growing increasingly unpopular in their home countries — precisely because they’ve become a triumph of cost-containment over patient access and choice.”

Americans had the same experience with HMOs. They failed because of public disenchantment with the system that eliminated choice and access to care. Public opinion turned against HMOs.

“Mr. Daschle proposes a dozen or so “experts” who would be “chosen based on their stature, knowledge, and experience, ensuring that the decisions they make have credibility across the health-care spectrum.”

I have outlined a system that puts the patients in charge. If Americans are given the appropriate incentives and the correct education they can make wise healthcare choices.

The trick is to not let the politicians sneak a defective system into law in the middle of the night.

I hope if Mr. Obama becomes President he does not fall for the Democratic Party’s folly. So far he has camouflaged his intentions.

Stanley Feld M.D.,FACP,MACP

The government could solve the uninsured problem with a few effective consumer driven incentives. Previously, I have made the point that all of the incentives need to be initiated at the same time. They have to be made simple and clear without loopholes.

Mitt Romney plan in Massachusetts and Arnold Schwarzenegger’s in California plans fall short. They promote universal coverage in a market environment. Universal Health coverage is important but should be optional to the consumer. Both plans are complex. Both plans have several problems in common. Both are contaminated by politics and facilitator stakeholders’ vested interests. The more complex a system is, the more opportunity for abuse by savvy facilitator stakeholders. Neither plan creates a true market economy. If the plans were attached to the ideal medical savings account plus tax equalization for a group and an individual, along with true price transparency, they would have a chance to be effective. The plans would create a pure consumer driven healthcare environment. The consumers would own their healthcare dollar and force competition. In the plans proposed the consumer does not have any increased power.

Hillary Clinton’s program is not the answer. It is designed to fail. When it fails the Democrats will call for a government controlled single party payer in a price controlled environment. This will create a larger mess than we have now. Her plan will also create another unaffordable entitlement. Our government cannot afford another entitlement program.

We have seen in an effort to control prices (price controls) the government has made irrational decisions. One such decision severely decreases the reimbursement for DEXA (bone density) to the point of discouraging medical practices from developing disease management programs for this chronic disease (Osteoporosis). The result will be to undermine the ultimate goal of creating a focused factories for the treatment of osteoporosis. These focused factories would increase the quality of care delivered for osteoporosis and avoid the complications of this chronic disease.

It is much better to create an environment which lets the patients determine the efficacy of a treatment if they are given the appropriate information to decide on the purchase of a medical therapy.

It is my opinion that community rated healthcare premiums should be included among the changes I have outlined to repair the healthcare system. Everyone in a city or region should have his premium rated by the health experience in his community. The premium cost is based on the $6,000 deductible. The $6,000 premium will obviously be lower than the first dollar premium coverage.

The argument against community rating among many healthcare policy wonks is that young people are subsidizing the sicker citizens. Therefore the healthy people will be unwilling to pay the premium and will not participate in a community rated system. I believe this is a porous argument if we look at what is happening today with corporations that are self-insured.

We need to look at some of the principles of pricing life insurance and auto insurance. People at risk pay a higher premium than people with little risk for death or auto accident . This principle should be applied to healthcare insurance in the ideal medical savings account model. We need to convert the healthcare insurance model to a true insurance model.

In reality, community rating is the way large corporations are charged by healthcare insurance companies to administer their self insurance plans. The corporations are charged according to the healthcare insurance experience. If the healthcare experience was $1 million dollars last year the corporation deposits $1,100,000 in a healthcare trust fund the following year. If the employees spend more than $1,100,000 during that year, the corporation either adjudicates the trust fund for the insurance carrier’s administration at the end of the year or that difference is added to the next year’s trust fund payment. General Motors was self insured. It was screaming about their healthcare cost. With their new contract they have now dumped the insurance relationship off to the automotive unions. This move is not that bad for either side. It gets ownership of the healthcare dollar closer to consumers, the autoworkers. However it is less than perfect.

Human Resource officers are experiencing how their self insurance trust is priced by the third party administrator, the healthcare insurance company, and are unhappy. They are realizing the healthier their company is the lower the premium cost will be. They are beginning to set up contests among employees to lose weight, control their blood sugar if they are diabetic, and control their blood pressure if they are hypertensive, to avoid the complications of those diseases.
The reality is that large and small businesses’ healthcare insurance premiums are determined by that businesses community healthcare experience. Large and small businesses try to get rid of their sick people. However, there is great liability to this maneuver. I sense most corporations have walked away from trying to fire these people.

The issue of healthcare insurance has not been the concern of young healthy people when the corporations were paying for their healthcare insurance. Healthcare insurance coverage has become expensive. The argument is more young healthy people will elect to be uninsured if they were required to buy their own healthcare coverage. However, more and more employers are limiting benefits. Many young people are finding out that they have inadequate insurance if they get sick. Additionally, many employers are dropping their healthcare insurance coverage for all employees.

If we think it out in the ideal medical savings account, the corporation provides $12,000 to the employee. $6.000 is put in the medical saving account and the next six thousand pays for first dollar coverage above $6,000. If the employee does not spend the $6,000 that employee keeps that money in a trust fund for his retirement. The young employee would actually have incentive to purchase healthcare insurance and try to protect the health of his family.

If the healthcare system converted the present corporate community rating formula to a city wide or regional community rating system the risk would be spread to the entire area covered. It could result in a lower premium cost. If the individual communities or regions encouraged the creation of systems to encourage good health, community pressure would be put on the citizens to lose weight, control blood sugar and blood pressure similar to procedures currently being used by corporations. The communities would be encouraged to decrease local environmental hazards including restaurants, in order, to decrease the community healthcare costs and risks.

Local regions could encourage our restaurants not to serve 3,500 calorie meals. We have to support the efforts of TGI Friday. We need to have community pressure on us because we are responsible for our healthcare dollar and indirectly responsible for our community’s healthcare dollar.

Everyone should have the ability to buy a community rated ideal medical savings account with pre tax dollars. They should also have the right to buy any other healthcare insurance policy with pre tax dollars. This policy would increase competition among healthcare insurance policies even more. Some might have noticed that this quarter UnitedHealthcare’s profit went from very grotesque to extremely grotesque. It increased 15% taking advantage of their control of the healthcare premium and provider payments while increasing premiums for the employer.

If someone chooses to be uninsured he would have to negotiate the payment on his own and not enjoy the tax benefits of the ideal medical savings account. At the same time the government through regulation, would require the healthcare insurance industry, hospitals and physicians to have complete and accurate price transparency based on cost. If the facilitator stakeholders did not participate they would lose the privilege of insuring and serving the public in that state. If the government supplemented the insurance premium of people who could not afford the ideal medical saving account healthcare insurance policy the government would save money and enable the patient to have incentive to control their healthcare costs. It would inspire a new paradigm of competitive healthcare insurance and medical care. The consumer would control his healthcare dollar, have incentive to control his healthcare spending and demand a competitive environment necessary for a true market economy.

Stanley Feld M.D.,FACP,MACE

Another example of the government trying to improve the healthcare system is Medicare Part D. The Medicare Part D benefit was created to help senior citizens pay for their medication90% of the Medicare healthcare dollar is spent on the complications of chronic diseases.

The goal was to enable the senior patients to buy their necessary medication at affordable prices. If a person has an illness that needs medication that person has to be able to afford the medication. Taking the medication is important to prevent the complications of chronic diseases. It is well established that

I believe the government’s intentions were good. However, after vested interests manipulated the rules and regulations, Medicare Part D has turned out to be less effective and more costly than anticipated.

Medicare Part D was created to enable free market competition to regulate the pharmaceutical sector of the healthcare system. The government could have opted for a single party payer system for drugs for Medicare recipients. The structure of Medicare Part D created opportunities for innovations and entrepreneurship on the part of the healthcare insurance companies and large pharmacy chains. They could have been creative and proven that a free market economy works to the advantage of all. However, they have figured out how to manipulate the system to their advantage and the disadvantage of the consumer.

The government program created specific pricing rules. These companies figured out how to get around the pricing rules. The government has recognized the defects. Yet it has been slow to act to repair them. Slow reparative action is not unusual in a hierarchical bureaucracy.

In the most affordable Medicare Part D policy the premium is Humana basic costing $24 per month. It started at $14 per month. The premium provides coverage until patients reach $2510 in drug costs. After $2510 the patient pays 100% of the drug cost until the drug cost reaches $4050. Thereafter patients pay 5% of the drug costs. The co pays varies depending on the drug and the healthcare carrier. At Humana, generic drugs co pay is $4, branded drugs $25, and non healthcare insurance company’s preferred drugs have a co pay of $54.

The $87 Humana Medicare Part D per month plan only improves the generic drug payments.

The $2510 doughnut hole (coverage gap) had been inserted after much lobbying by the healthcare insurance carriers. This is a loophole. It created a great disadvantage for the patient. The doughnut hole (coverage gap) is to the advantage of the healthcare insurance companies.

Humana had a “My Annual Cost Calculator” posted on their web site at one time. From that calculator you could figure out how much they charged your account for each drug. When I used the calculator it looked as if they were charging the patient’s account the retail price for the generic and brand name drugs. You can be certain that Humana was not paying the pharmacy the retail price. This served to get the patient into the doughnut rapidly. At that point patients pay 100% of the price for the medication. The details of the program are complicated and aggravating.

When faced with a complicated issue the consumer would look for help from a consumer advocate. AARP would be the natural consumer advocate for senior citizens. Mr. Richard Jellicoe’s comment about AARP suggested that AARP was not as dedicated a consumer advocate as we thought. “What amazes me is that AARP endorsed this company when it was time for 2007 Medicare sign up and it was not till many months later that AARP acknowledged that it’s endorsement of UnitedHealth care was a paid endorsement. They offer drugs with co-pay almost twice what you can get the same drug via cash. I guess that is how they can pay it’s fired CEO $5 million in retirement. And AARP is supposed to help the seniors.”

Dennis Kucinich said. “According to published reports, the American Association of Retired Persons (AARP) “will net AARP $4.4 billion over seven years from the insurance giants United Healthcare and Aetna” with whom the organization signed agreements earlier this year. Under the AARP brand name, the organization will promote Aetna insurance policies to its members between the ages of 50 and 64 and United Healthcare policies for Medicare-eligible members”.

Kucinich emphasized that he was not taking issue with the 38 million members of AARP. “Millions of trusting AARP members has bought Medicare-supplemental and prescription drug insurance plans from AARP, believing that they were getting a good deal. The ‘AARP name’ was like the ‘Good Housekeeping Seal of Approval.’ It turns out, however, that AARP is taking a $4 billion cut by steering its members to profiteering private insurance companies trying to capitalize on fear and confusion.”

Wal-Mart four dollar pricing of generic drugs promises to put a big hole in the Medicare Part D shame. Physician will be more than willing to co-operate if the generic substitute is equally effective as a brand drug.

If the Medicare Part D healthcare insurance policy was driven by the patients’ vested interest and not the secondary stakeholders’ vested interest, Medicare Part D would be a great thing. It would go a long way to help repair the healthcare system. It would serve to decrease the money spent on the complications of chronic disease. (Medicare part A and Medicare Part B). I would say the healthcare insurance industry was entrepreneurial in its influence over the construction of Medicare Part D. I suspect that both the administration and much of congress had difficulty understanding the complexity and possible defects in the plan. Now the key is to force the administration and congress to fix Medicare Part D.

Stanley Feld M.D.,FACP,MACE

There are oceans of information and data describing our options in the healthcare system. Neither the consumer nor agents for the consumer (typically Human Resource officers) have had an easy time distinguishing between good and bad information. Health insurance companies have large departments that “craft” its message to the media and for the sale of its healthcare insurance products. The goal is to increase the number of healthcare insurance policies it sells. They also have entire departments that negotiate them through the maze of rules and regulations. They also have multiple prices for multiple customers. All of the above increase the healthcare insurances companies’ inefficiency and overhead leading to an increase in premium pricing. All of these actions are entrepreneurial.

There are many rules and regulations imposed by government bureaucracy that distracts physicians from their duty of delivering medical care. The easiest thing for physicians to do is do their job the best they can. Physicians cannot fix our broken healthcare system. Our medical care system is not broken. It is inefficient in delivering care for chronic diseases. Physicians can and do deliver excellent medical care. We lack systems and motivation to deliver excellent preventative care. Preventative care goes beyond the annual physical examination. It is essential that the healthcare system create incentives to develop systems to deliver continuing care for chronic disease. This includes the patient being activity responsible for the self management of his chronic disease. This concept can be understood by reviewing the AACE’s “Management of Diabetes Mellitus A System of Intensive Self Management .”

Organized medicine has been dormant and ineffective in creating innovative ideas in order to teach physicians how to develop systems of care for chronic diseases. The government and insurance industry have been uninterested in supporting the development of these systems of care because I believe they do not have an understanding of its importance to the long term cost of healthcare. The attitude prevails despite the fact that we know that ninety percent of the healthcare system’s cost are spent on the complications of chronic diseases. If you are a company interested only in short term results, I can understand the attitude toward long term reduction of chronic disease complications. It would be an entrepreneurial activity to develop systems of care for chronic diseases that would teach physicians how to care for chronic disease. Additionally the incentives to execute that care would have to be provided.
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The healthcare system as opposed to the medical care systemis extremely complex. The multiple small “political steps” taken over time to help repair the healthcare system have not generated effective change. As Nietzsche said, “sometimes small steps make the situation worse’.

It seems that everything that is done to improve the healthcare system ends up harming it even more. A recent example is the windfall profits provided by a defective DRG payment system for hospital systems. It took a couple of years for the hospital systems to figure at the loopholes in the DRG system. Once they did, hospitals’ profits soared. This was entrepreneurial on the part of the hospital systems.

CMS recognizes the defect and wants to implement a new DRG system based on hospital system costs rather than hospital system charges. This change implies true price transparency. Price transparency should be available to the consumer to choose the hospital. Price transparency should not be developed into a form of fovernment price controls. If a hospital experiences more overhead or delivery costs they should charge more. However, if they were forced by competition to become more efficient they would be able to reduce their prices. The result would be a decrease in cost. Hospital systems should make the cost of a band aid clear. It is simply wrong to charge $11 for a five cent item. However, hospital systems’ lobbyists successfully fought for a one year delay in the implementation of a new DRG payment formula based on cost and not charges.

I suspect Dr. Mark McCellan resigned as director of CMS out of political frustration. He was not interested in price controls. He was interested in accurate pricing. It is one thing for the government to know what to do. It is another thing to get it through the tangled way our government bureaucracy does business. To me, the only way to reduce the obscene hospital fees is by knowing the hospital costs for the service or item and not accepting the grossly inflated price and then negotiating a discounted price.

Hospitals should be paid on a cost plus basis in relationship to the average hospital cost per disease in the state or county. Allowances should be made for variation in overhead in different parts of the country. This methodology would force the hospital systems to become more efficient and be competitive. They would be forced to learn how to increase their profit margin as prices would decrease.

The present payment system encourages hospitals to be less efficient and incur higher fees and more costs. It would force hospitals to be entrepreneurial for the benefit of all the stakeholders and not simply themselves. I would guess implementing a new system will be delayed even longer than one year, especially with the change in administration in the next year. Hospital systems are not interested in real price transparency. They will fight it. I believe they are blindly encouraging government price controls. Price controls historically make things worse in every area of our economy.

If we as consumers do not force the secondary stakeholders to get smart we will end up with a single party payer system. Hillary Clinton’s new healthcare plan is heading us in that direction. Her 2007 words are crafted differently than her 1993 plan. Her 2007 healthcare plan will evolve to a single party payer plan. She has changed her direct approach. She has gotten her strategy from organizations like the Commonwealth Fund who are advocates of a single party payer being the only solution to our healthcare systems problems.
A full discussion of Mrs. Clinton’s plan will follow shortly.

I believe the government wants to help the people. What is the reason government initiatives misfire? They misfire because of the inefficiencies in hierarchical bureaucracies. The hierarchical bureaucracy is imbedded in all of our government agencies and in our body politic. Governmental decisions are influenced by vested interest’s lobbying and not by common sense.

There are a lot of very smart people in America. We have figured out the solutions to many problems in the past. Winston Churchill said “the American government always does the right thing after they have tried everything else. He might be right. “

The public can overcome the archaic bureaucratic structure of our government. We need an entrepreneur to step forward, recognize the patterns, be innovative, make the repair, and profit from his innovation. The repair will be driven by our knowledge based economy. The healthcare system can to be a healthcare system for the public good without price controls that do not work, single party payer systems that do not work and government restrictions on access to care that does not work.

We as consumers must become concerned enough and disturbed enough at the present healthcare system to generate the will to act in a constructive way to improve the system to the advantage of everyone. We have an excellent medical care system. We have a dysfunctional healthcare system. I believe the American consumer is getting there. We have at least forced a change in Hillary Clinton’s rhetoric but not in her policy. The solution in a free market system is to construct a system that will function for the consumers’ benefit and not the vested interests’ benefit.

Stanley Feld M.D.,FACP,MACE

The hospital systems and the insurance industry have archaic and unscientific methods of determining price. The combination of the methods of pricing and the excess cushion built into the price leads to the excessive profits, salaries to executives and excessive building and remodeling. I look at this as creating a perfect opportunity for creating a competitive environment on pricing between hospital systems and between hospital systems and physicians practices. It also is a perfect environment for insurance companies to compete with each other. The result would be lower premium prices. If one insurance company made a move to lower prices, increase efficiency and decrease consumer grief, the others would follow. The insurance industry has some leeway on pricing because of their excess profits. Naturally, hospital systems and insurance companies do not want to give up this profit advantage. This is the reason hospital systems and insurance companies have lobbyists in State Governments and in the Federal Government. When consumers are in charge of their healthcare dollar and can profit from its wise use, they will force the insurance industry to lower prices.

All that is need is to pass a few rules and regulations by the politicians in government to create this price competition. The rules would include present price transparency, reporting on the methods used to determine the prices for hospital services and the price of premium creation, as well as the patients’ access to this pricing mechanism. If the politicians in government had the courage to act on these suggestions the mess in the healthcare system could clear up very quickly.

The people and not the insurance industry should have control of their healthcare dollar. If the people use the control over their healthcare dollar wisely, the money saved would grow in a tax free trust account each year to be used at retirement. This concept is embodied in my ideal medical savings account. The insurance companies would adjudicate the claim. However now it would be done instantly decreasing administrative costs for the insurance companies, the hospital system and the physicians. They would continue to negotiate the best fees for the patient. If they did it poorly the people would move to another insurance company. They would receive the privilege of holding the insurance premium and the trust account money. They would provide pure insurance if an illness cost more than $6,000.

Community rated group insurance would be available to all with pre-tax dollars. People would can not afford insurance would be supplemented by the government. This form of insurance would also apply to Medicaid and Medicare. It would be universal healthcare in a consumer driven and controlled system rather than universal health care in a single party payer system.
Doing all this at once would force the hospital systems, the insurance industry and physician to be more efficient. It would accelerate the development of the ideal EMR and decrease money wasting inefficiency in the healthcare system.

The most important stakeholder in the healthcare system is the patient. Somehow, the patient has been converted from a person with an illness and needs medical care, to a person who is a potential financial asset to the facilitator stakeholders. It is not uncommon, in the halls of facilitator stakeholders to hear patients referred to as clients, lives and eyeballs. “The more lives you have in your healthcare system, the greater the revenue and the greater the profit.

Without patients there would not be a healthcare system. The conversion of patients to economic entities is partly a result of the advances in technology and partly the dysfunctional evolution of the healthcare system. CAT scans, MRI scans, and stress echocardiograms and others have served to make the patient a commodity. All these test procedures generate revenue. The organization performing the testing generates the revenue. If patients owned their healthcare dollar, prices for services were transparent, and physicians’ offices were able to compete with hospital systems for procedures that are presently not permitted in the physician offices, all the stakeholders would be driven to more accurate pricing and more efficient care. The price of care would drop. The Lasik procedure is a perfect example of prices dropping in a consumer driven competitive marketplace.

At the same time, the government and the insurance industry are complaining that the physician does not practice evidence based medicine. Patients ought to have a mammogram once a year, a colonoscopy every five years, and a bone mineral density every two years, to name a few preventative screening tests.

The reality is that the increased technology has lead to increased accuracy in early diagnosis and early treatment. The result is a decrease in complications of chronic disease. The complications of the disease absorb 90% of the healthcare dollar. The technology has increased the diagnostic skills of the physicians. However, with the restrictions imposed by the facilitator stakeholders to not allow the physicians to do the testing in the office, and the inefficiencies of getting a hospital system scheduled procedure prevents the physicians from consistently practicing evidence based medicine. The implication is if the physician was permitted to do the test in his office, the physician would over test. This implies physicians are crooks and will take advantage of the patient. Ninety eight percent of physicians aren’t crooks despite what Pete Stark (D-Cal) says. It is easy to stop that 2%. However, the inefficiency in the healthcare system does not permit the physician to give appropriate preventive care to the patient.

Cognitive services are essential to accurate diagnosis and treatment. Yet, the skills these cognitive services have been devalued in recent years. In fact, if payment for cognitive services was the only revenue a physician could generate he would not be able to pay his overhead. This is presently a crisis Family Practitioners are now facing. It seems obvious, that in order to increase ones revenue, one must do indicated ancillary procedures. The counter argument is the physician will be given the incentive to over test. If a test is done in the hospital systems the cost of the procedure is usually higher than when it is done as an office procedure. (remember Dr.David Westbrock’s example). Physician office testing would drive the hospital system prices down if the hospital system wanted to be competitive. It is in the vested interest of the hospital system not to permit a competitive environment. If purchasing of healthcare services was in the hands of the patient they could choice the provider and force a competitive environment.

Physicians have the privilege of helping patients who are ill get well. They also have the obligation to prevent disease. It is not only a privilege, it is an awesome responsibility. Physicians are medical doctors that provide medical care. Medicine is a princely profession. Physicians must be given to tools to provide efficient and effective care at an affordable price. The marketplace through patient control should decide the price. Hospital systems and insurance companies arbitrarily made up the price in the past. This has to stop.

Stanley Feld M.D., FACP, MACE

The solution should be pretty clear to all following my blog. I advocate the American way! I believe a consumer market driven system with government making rules for the benefit of all members of the society. When one stakeholder takes advantage of another stakeholder to the harm of the other stakeholder the government has to intercede.

Richard Swersey Columbia College Class of 1959 has a college degree in the ability to think! He also has a post graduate mining degree and masters of business administration. He wrote “You referenced Adam Smith in your blog on dirty coal plants. People need to be reminded that: (1) there is a large section of “Wealth of Nations” entitled “The Role of the Sovereign”. Even Adam Smith recognized that the market can’t do everything; and (2) there has never been a time in recorded history where commerce (or markets, or industry) was totally free of government intervention.”

I made the same point in the blog on the TXU proposed dirty coal plants. Adam Smith’s treatise also applies to the healthcare system. The function of government is to promote civility (civil right) for the benefit of all and not to build bureaucracies that can not possibly work effectively.

Dick is absolutely correct. The function of government in a democracy should be to function for the people by the people. The operative words are for the people and not to the disadvantage of the people.

Entrepreneurship and obtaining a competitive advantage is the engine that drives innovation in America. Our problem in medicine right now is some the facilitator stakeholders have large vested interests they need to protect. They are very busy protecting their vested interest by various political means. Unfortunately government is not acting for the benefit of the people. The advantaged stakeholders are so short sighted that they can not see that the system they are protecting is falling apart right in front of their eyes. In fact, it is about to blow up. We, the primary stakeholders (patients and physicians) can not see what does not hurt us. We are waiting for the Katrina effect. The mentality of what we can not see can not hurt us has to stop. We have to act know and demand change.

In my view price transparency and the consumer (patient) being in control of their own healthcare dollar can go a long way to transform medical services into a competitive market place.
Some of the insurance companies are talking a good game. Aetna has feigned price transparency in Cincinnati. They published only the price of the top thirty procedures for customers that bought HSAs. This is good start but never expanded to my knowledge. I called this blog Another Smoke Screen.

Wal-Mart made an innovative advance with its generic drug initiative. They are charging $4 for a thirty day supply of generic drugs. They have 340 drugs in the formulary. Physicians feel comfortable using some generic drugs. They also want to help their patients. Patients can also demand generic drugs. Most physicians will use generic drugs if there is not a clear cut difference between the generic and brand name medication.

Wal-Mart can not keep the drugs in stock. They also can not keep people out of the store. Wal-Mart is not losing money on the drugs either. The result will be an increase in net profit to Wal-Mart and a consumer driven market benefit for the patient. It will also force brand name drugs to come down in price. Wal-Mat’s initiative will created a clear market driven economy for buying drugs.

Who needs Medicare Part D and its $10 co pay along with its ominous $2200 doughnut? Wal-Mart is also setting up competitive price wars among CVS, Walgreens Rite Aid. Wal-Mart has good chance of winning because it has the mentality to engage in these kinds of innovative programs. The CVSs will get there as it works its way through their hierarchical bureaucracy. The end result will probably be too little too late for CVS.

The most of the uninsured who could buy insurance have had no choice but to not buy insurance.
They have chosen take their chances. When they get sick someone has to pay or not get paid. This is the point. It gets painful and costly for all the stakeholders. The Canadian model of Universal Health Care with a single party payer does not work. The costs rise, access to care is restricted and patients die.

The main question is how do we fix the problems. We have to exercise some common sense. We need to be equitable. The vested interest empires (facilitator stakeholders) have to start to understand that our most precious possession is our health and not their profit. A healthy nation is a strong the nation. They have to stop fight the Repair of the Healthcare System.

Price transparency, reform DRG on cost and not charges are very important. We must stop the bonus to hospitals or insurance companies for supposed cost overruns at the end of the year. We must provide incentive for disease management training to all patients with chronic disease. We must make the patient responsible for their healthcare and healthcare dollar in a price transparent environment. We must motivate the patient to care for their chronic disease by rewarding prevention of complications of disease.

We must eliminate hospital and insurance company administrative waste. We must neutralize defensive medical practice by malpractice reform. We must revolutionize the adjudication of claims system to a system of instant payment.

We must provide and institute an EHR universally that can measure outcomes. The outcomes we must measure are the medical outcomes. The medical outcomes must be relational to the financial outcomes and patient and physician input as to the value of the outcome.

We need to start getting serious about all of these issues in unison. We have to concentrate on the cost of complications of chronic disease. We must create financial incentives for preventative services. We have to teach the patient the “Professor of their Chronic Disease”.
http://stanleyfeldmdmace.typepad.com/repairing_the_healthcare_/2006/06/do_complication.html

We must motivate the patients to be responsible for their chronic care. If they are not they will have a financial loss as well as a medical loss. We must put the patients in control of their healthcare dollar. I believe if we did all of this our healthcare system would not be in trouble. All of this can be accomplished with the Ideal Medical Savings Account. The structure of the current HSA system will not accomplish all of these key initiatives

If the government wanted to subsidize something it would be the purchase of the ideal medical savings accounts for all the uninsured who could not afford to buy insurance. This would eliminate all the waste in Medicaid. The concept of universal healthcare with the government as a single party payer is a sham because it does not address any of these important initiatives.

Stanley Feld M.D.,FACP,MACE

To me, a true entrepreneur is a person, who can see patterns that others can not see and act on those patterns to create an opportunity that no one thought existed.

KKR has a long history of success is discovering these patterns and investing in them in a leveraged way. A current purchase was Hospital Corporation of America. My guess it is the purchase was not through a process of intensive study of endless data and pilot studies. It is through a process of considering information and then visualizing the trends and patterns of the times. Once visualized, then you act and follow through. It is a no brainer unless there are bumps in the road.

Oceans of good and bad information are available about the healthcare system and its ills. In fact there are many nonsensical rules and regulations that distract physicians from their duty of delivering medical care. The easiest thing to do is for physicians to ignore the obligation we have to try and fix the system. At first glance, with all of the healthcare system’s complexity and all of the suggestions to fix the complexity it seems impossible to generate effective change.

It seems that everything that is done to improve the system ends up harming it even further. The most recent example is the windfall the 1983 DRG method created for hospitals. Now, implementation of a new DRG system based on cost rather than charges is delayed for one year. Dr. Mark McClellan resigned as director of CMS. My guess implementing the new system will be delayed even longer with his departure.

Recent examples are plentiful. One is the Medicare Part D benefit. The benefit was developed to help people of Medicare age. A $2,500 doughnut hole has been inserted to the disadvantage of the patient and the advantage of the pharmacy. The details are of the advantage are madding.

Another governmental error is the conversion of the concepts of Medical Savings Accounts into Health Savings Account by the congress who wants to fix the system. The Health Saving Account is a small deductible of $1000 as opposed to the original Medical Saving Accounts deductible of $6000 which gave the patient incentive to spend his dollar wisely. The Health Saving Account is to the advantage of the insurance company and not the patient. Additionally self employed older people can hardly afford or qualify for insurance if they could qualify. If qualified they would have to buy the insurance with after tax dollars rather the pre-tax dollars the employer pays.

In order to be an educated and wise consumer, one needs to know the price of the item. So far, hospitals, insurance companies, pharmacies, and pharmaceutical companies have refused to reveal the price of their services or payments in a transparent way. The government has published their reimburse schedule but you have to be a coding expert to figure it out. Then you have to know what codes the physicians and hospitals will use. Total opacity remains. It is in the hands of State licensing boards to insist of transparency. So far, not one governor has stepped up to the plate. President Bush has call for transparency but it has generated no action because a deadline has not been set.

The Commonwealth Fund just published a preliminary document advocating the government as the single party payer. We have just listed errors the government has made in the past. Imagine if everyone was insured under Medicare, how difficult and inefficient the system might be. I noticed the Chairman of the Commonwealth Fund study is the CEO of Partners Health in Massachusetts. John Monagan has been awarded a salary of over $2 million dollar for the profitable job he has done for Partners Health. I suspect his success is from his figuring out the reimbursement system from the old DRG system.

I truly believe the government wants to help the people. What is the pattern that creates these misfired initiatives? They misfire because of the inefficiency in hierarchical bureaucracy. The hierarchical bureaucracy is imbedded in all of our government agencies and in the body politic. Decisions are influenced by vested interests lobbying and not by common sense.

In the book High Noon, J Rischard points the way of coming to reasonable decisions for all the vested interests. Everyone needs to participate in the decision making process. It is by network problem solving for the common good and not hierarchical bureaucracy influenced by vested interests.

We, the people, can overcome this archaic structure. A system can be repaired that will cost less money. It would be is a system by the people for the people. There are lots of very smart people in America, who can figure out lots innovative solutions.

We, the people, have to be angry enough in order to have the will to act.