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

A few days before President Bush’s state of the Union address David Philips wrote in the Minneapolis-St Paul Star Tribune

Minnesota hospitals: Rising red ink

“The sudden, steep rise in the number of patients who can’t pay their bills is causing budgeting nightmares for hospitals.

It’s led to staff layoffs in some cases, slower hiring in others and scrimping on low-tech supplies, hospital administrators say. What’s more, insurers get charged more to make up for the losses, leading to higher premiums for everyone else.”

It is bad for the hospitals’ bottom line to care for the uninsured and not get paid. The salaries of 1 million plus annually must be paid to hospital administrators.

Thirty million of the 46.7 million uninsured could buy insurance if the price was reasonable. However, they are buying for health insurance with after tax dollars. Their premiums are also high because the uninsured as an individual does not have the negotiating power of big corporate buyers of health insurance. They also do not have other advantages of group insurance. Insurance companies must accept all members of a group even if they have a preexisting illness. Presently, a 50 year old individual male with hypertension and hypercholesterolemia would not be qualified to buy health insurance.

President Bush proposed to level the tax playing field for the uninsured and self employed.. The pre-tax health insurance premiums are essential for any significant reform. However, his proposal is misguided. He has ignored other essential aspects of the disadvantaged uninsured. He has created a monetary advantage to hospitals and the insurance industry. More people will be insured and more money will be made. He has not dealt with fixing the runaway price structure of DRGs for hospitals, price transparency, community rated insurance premiums, or indiviual negotiating power. The consumer is only minimally empowered by his proposal. I am disappointed in the President. I know he knows better.

“The President’s plan would give a $7,500 tax break to individuals and a $15,000 tax break to families who either buy their own health insurance or receive it through their employer.”

Grace-Marie Turner a leading authority on Consumer Driven Health Care has fought hard for this tax reform proposal. It is vital to provide the uninsured and self employed uninsured with the same advantages as the corporate group insurance plans recieve. She was very pleased with President Bush’s proposal. However, I feel the attempt is only one required regulation in a healthcare system that requires all encompassing structural reforms for the advantage of the primary stakeholders.

Grace-Marie Turner: “And isn’t moderating the escalation of health costs the goal? This would help even more.

As I explained in a talk to the American Benefits Council in 2005:
• There would be some relief in sight for employers, giving them and their employees an incentive to bargain for better value.
• Employers would be more likely to stay in the game if the open-ended tax preferences were limited and they could gain a new tool to control costs.
• And the uninsured would benefit from new revenue for tax credits to help them purchase coverage.

We think this is important enough that we actually produced a book about it called Empowering Health Care Consumers through Tax Reform.
A tax cap would be the right thing to do.

Most of the politicians running for office have jumped in with an opinion. It is clear to me we need some thoughtful leadership right now. None of the politicians sound as if they understand the healthcare problem. They seem to be searching for sound bites. It sounds like they simply want to get elected or reelected. The situation is a smart entrepreneurs’ opportunity of a lifetime.

Stanley Feld M.D.,FACP,MACE

The Presidential election is just 18 month away. During every political season interesting things happen in America. On January 19th the WSJ had an article entitled “Health-Insurance Gap Surges as Political Issue.”

“Suddenly, the long-festering issue of providing health coverage to the one in six Americans who lack it seems to have leapt to the top of the national to-do list.” The Journal reviewed all various politicians’ proposals to repair the system.”

.” However, “[t]here’s nothing approaching a consensus on what to do.” Some see “the current turmoil and dissatisfaction with job-linked insurance as hastening a single-payer national system,” while others “would let individuals shop for health care much as they do for other things.” Meanwhile, a “third camp, borrowing from what’s going on at the state level, essentially would widen existing sources of health insurance — government, employers and individual policies — so that they cover everyone.”

President Bush had distinct proposals in his State of the Union. The lead article in the NY Times did not report all his proposals. President Bush’s entire proposal was defective in that it gave lip service to price transparency. A system without price transparency is a system that does not generate competition. I feel his outline was too brief and the implications incomprehensible to the average citizen. It may have been incomprehensible to the average congressman and senator.

“In effect, the president is proposing a new standard deduction for health insurance — $15,000 for families and $7,500 for individuals. That would mean lower taxes for more than 100 million Americans with employer-provided coverage worth less than the standard deduction, Mr. Bush said. But it would raise taxes for about 30 million people with more expensive plans, unless they switched to less costly alternatives, White House officials said.”


Does everyone understand the above??

“Mr. Bush said the tax proposal was an effort to “level the playing field” between Americans buying insurance on their own and those who get it through their employers.”
“For the millions of other Americans who have no health insurance at all, this deduction would help put a basic private health insurance plan within their reach,” he said. “Changing the tax code is a vital and necessary step to making health care affordable for more Americans.”

The ability to deduct health insurance premiums by the uninsured is vital to solving the uninsured problem. However, it is only one initiative in a dysfunctional healthcare system. The system needs many sound structural changes introduced simultaneously to be repaired to a truly market driven competitive system.

A little step here and a little step there will only make the system more dysfunctional. These small steps will only be to the advantage of the insurance industry and hospitals. The cost of care will go up with more money in the system. CEOs of insurance companies will get richer while access to care and quality of care will go down.

“Democrats, labor unions and some consumer advocates said the proposal would shake the foundations of the nation’s health insurance system, still largely built around the workplace.”

This quoted statement shows me the profound lack of understanding of the problem the healthcare system faces.

This is precisely the reason that the consumer and not our government needs to lead the change.

The patient needs to control his own healthcare dollar in a totally price transparent environment. Some entrepreneur or some financial services organization is going to provide this option to the consumer. The result will be the all that financial gains through inefficiency and rising premiums will be toppled. I have in mind some entrepreneurs who I think could do it.

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.