Playing the Blame Game
The American Health Care System financing crisis and care quality crisis became significantly worse after the powerful in our Medical-Industrial Complex hobbled Managed Care. As our health care costs skyrocket and reports of increasing rates and seriousness of medical errors surfaced, many books were written by “Experts” about the problem. Depending on the author’s bias, various causes for the crisis were promulgated.
Authors with a business or economics background focused on the financing side, generally giving our medical providers a pass. Most of these authors have a good understanding of finance but little knowledge regarding medical decision making. They are the folks describing the parade as the Emperor walks by in his new clothes.
Authors with a medical background usually fail to look in the mirror, focusing on causes external to their control. Similarly, the medical academic community, deeply invested in producing and certifying memory based experts, look more at causes external to the medical decision making process. As that great Scots poet Robert Burns said, “O a God the gifte ge us to see oursels as others see us.”
Obfuscation abounds and the blame game is played to a high level of sophistication in most of these books. I believe these authors do not intentionally lead the reader down the wrong path. They are just unable to see or accept the real problems. Believing the fantasy is much less stressful than facing the reality. They are part of the big flashing screen of distraction being operated by the man behind the curtain. A better metaphor might be the Emperor’s New Clothes. Our Emperors need new clothes and perhaps a GPS so they know where they are going.
The books written about reform of the American Medical-Industrial Complex fall into several categories depending on the point of view and expertise of their Author. Few address the our crisis in health care quality. All discuss our crisis in health care financing. I have presented the background on some of the broad categories below. The book reviews may be found at the bottom of this page.
Competition Between Health Insurance Companies
There is a fantasy that Competition between Insurance Plans will lower health care cost, because the consumer will select a plan based on value. Value = Benefit / Cost. The vast majority of consumers/patients are not knowledgeable about either standard, regulated insurance company operations (financial benefit) or the risks verses the benefit of available medical goods and services. In reality, the consumer knows little about the minor differences between insurance company offerings. There is very little difference in this highly regulated industry. The premium price is a combination of administrative cost (including executive bonuses), stockholder dividends and medical loss (health care bills/claims).
Health care costs (“medical loss” using insurance-speak) are minimally influenced by plan design. I have yet to meet an insured, HMO member or patient who understands their insurance plan design or understands how the co-pays, deductibles, terms and limitations steer their access to health care or effect their premium. Most patients do not look at their insurance plan description until the doctor’s bill arrives in their mailbox.
The greatest driver of insurance premium costs is provider controlled over-utilization. Up to half the goods and services delivered to patients in the American Medical-Industrial Complex are not medically necessary. Most authors minimize or ignore this major cost driver preferring to blame the evil insurance industry for the crisis. Indemnity insurance companies have virtually no control over the price or frequency of medical services because they have no direct, contractual relationship with providers.
Preferred Provider Organizations (PPOs or Managed Care “Light”) do have fee schedule contracts with a network of providers. The PPO may have actually vetted the doctor through primary source verification of licenses and credentials prior to listing her as a network provider. The contracts reduce the cost of individual services but do not control frequency/volume. These organizations offer some competition to standard indemnity companies but have no direct mechanism for reducing the delivery of unnecessary medical goods and services. Providers, consciously or unconsciously, will do what is necessary to maintain cash flow.
Through the application of evidence based medical standards by a Utilization Reviewer (HMO nurses and medical directors), managed care has some leverage regarding medical quality and cost. This influence is only applied through approval or denial of payment for a small number of costly and highly variable medical goods and services. However in today’s political climate, UR effectiveness is limited. The competition from HMOs that bent the cost curve down during the eighties and nineties has been neutralized by legislation and regulation purchased by the powerful in our Medical-Industrial Complex.
Fortunately, for most people the decision between health insurance companies is filtered by an employer’s human resource department, with or without the help of a benefits consultant. A reasonable value balance is usually achieved through the efforts of these professionals. If price alone determined our decisions in life, we would all be driving Yugos. If everyone believed we were spending other people’s money (OPM) we would all try to drive Cadillacs.
To assert that fostering competition will address the health care crisis also requires the assumption that there is virtually no competition now. Nothing could be further from the truth. Health insurance functions in a free, highly competitive, albeit highly regulated, market. I worked inside the system for 15 years for various corporations, living through Reductions In Force (RIF), downsizings and several severance packages following multimillion dollar losses. Health care insurance is a very tough, competitive business.
The only effective means to increase competition and possibly lower cost was taken off the table when the public option of purchasing Medicare was negotiated away to appease the far political right. As President Obama signed the bill into law, I couldn’t help but think of the newsreels of Neville Chamberlain’s news conference when he returned from Germany on September 30 1938. He waved the Munich Agreement for a cheering crowd at the Heston Aerodome. Later that day he gave the, “I believe it is peace for our time” speech on the steps of Number 10 Downing Street.
Consumer Driven Health Care
Consumer driven health care is promoted by a subset of the people pushing competition as the solution. The power of the purse is placed in the hands of the worker/consumer. The model for understanding these plans is the “whole life” insurance industry (assuming anyone understands whole life policies). Just as in a whole life policy, a portion of the premium is placed in a “cash value” account. This portion is called a “Health Savings Account” (HSA) or “Health Reimbursement Arrangement” (HRA) in a consumer driven health care plan. A Third Party Administrator (TPA) may manage the accounting, distributing payment for qualified lower cost routine care and minor medical problems. This TPA may provide a reinsurance health care policy to cover any catastrophic medical crisis. Lower cost routine and minor medical problems deplete the savings account. A catastrophic illness would be covered by the reinsurance. The idea is to make the patient acutely aware of where the money comes from and where it is going.
Using the HMO business structure and work flow as a models, the worker/consumer assumes the rolls of network development, provider relations, credentialing, fee negotiation, closing the contract, quality assurance, outcomes analysis and patient satisfaction evaluation. Are you up to it?
A good idea in theory but as Albert Einstein said, “In theory, practice and theory are the same. In practice, they are not.”
Some people might have a good understanding regarding where the money in the savings account is coming from and where to spend it wisely. I fear most would discount the value, considering the dollars in the account the same as premiums or OPM. On the spending side, very few people enjoy haggling, particularly where their health care is concerned. Forget about negotiating the price in an emergency.
These accounts might work well for a provider relations representative or a utilization review nurse in an HMO. She would know what to look for and where to look to find out. She would know the qualifications and certifications of the providers. She would know the level and severity of complaints against various providers. She would have in hand several fee schedules. And, most importantly, she would be a trained negotiator regarding the written or verbal contract with the doctor or facility. How many workers/patients fit this profile?
The consumer knows nothing about the evidence based medicine, the technical quality of the providers, or the value (benefit/cost) of the medical goods and services delivered by our Medical-Industrial Complex. The present conspiracy of silence about health care cost and quality precludes effective implementation of this methodology. If you doubt this is true contact your favorite local hospital and ask for the names of the people on their infection control and quality improvement committees. If you get any response, ask these folks for the statistics regarding hospital acquired infections (nosocomial infections) and the top 10 surgeons complication rates for the top 5 surgeries performed in their institution. Do you think you will get an answer? Do you think these numbers are a mystery to these folks?
It is possible for Consumer Driven Health Care to work. For competition to drive down medical cost significantly for employers, consumers, and patients, provider fee schedules, efficiency, quality assessments, error rates and patient satisfaction surveys must be made public. Dorothy must stop being distracted by the big, colorful, flashing screen and look at that man behind the curtain. What are the odds that will happen?
Let us face reality. The physician is in complete control of all the medical goods and services ordered and provided. The hospitals are in complete control of the fees charged for the goods and services ordered by the physician. The hospital’s primary customer is the physician. Patients do not admit themselves. The hospitals are in the business of satisfying PHYSICIAN demand.
No amount of competition between insurance companies or managed care plans will change this fact. The practice style of the doctor, not the configuration of, or competition between insurance companies, determines the cost of our health care delivery system. Nothing of significance happens to a patient without a physician’s order. Our health care crisis is, “Just what the doctor ordered.”
What would it take to change this reality? Baby steps are being taken to improve the medical delivery side of our crisis. Authors that address the crisis in quality and abuse of the medical delivery system(medically unnecessary care) usually offer technology solutions. Electronic Health Records (EHRs) and Clinical Decision Support (CDS) tools lead the way.
The financing or administrative side of our Medical-Industrial Complex is stagnant and will remain so as long as the lobbyists for the key players control legislation. The American Health Care System will continue to consume about thirty percent of our health care dollars (about $700 billion dollars a year) until real reform establishes a single purchaser/buyer (the taxpayer), multiple private not-for-profit administrators, private health care delivery system.
Administrative costs will never go away. Shylock will have his pound of flesh for transferring the money, but Shylock should be managing a claims processing commodity, not a for-profit cash cow.
Physician and Hospital Report Cards
If people understood how badly FUBARed American health care is presently, things might begin to change. Some authors have a handle on our problem and have offered solutions. One of these is to go public with information about the quality of care being delivered. Physician and Hospital “Report Cards” are the hot topic of this discussion. I could work if it could be done. People would demand care from the “better” doctors and at the “better” facilities.
People who understand the system have called for publication of information about medical outcomes and errors for over one hundred years. This information is knowable but never published. During the late 1990s, we generated confidential cost and quality reports for sharing with individual physicians to help them improve their practice patterns. We failed with implementation because of push back from the powerful. These same data are available in today’s computer systems. The information is not converted to useful information for the consumer for the same reasons.
There are people who know the level of quality being delivered, and even the level of quality attainable, but they ain’t making it public. The physicians and hospital administrators have resist publication of report cards out of self-interest and self-protection.
Insurance companies and MCOs have two very good reasons to resist making the information they have public. The first is network maintenance. A physician would cancel her contract if the MCO published her error rate or patient satisfaction survey results. The second is marketing. A public record confirming the mediocrity of an MCO’s network physicians makes the health plan hard to sell. A statistical significant report of quality delivered by network physicians and facilities would clearly demonstrate that half the contracted providers are below average. Do you think the lay public understands anything about statistics?
Even if such information were made public, it would only allow identification of the “cream of the crap.” It would do nothing to address the core driver of our medical care system crisis. Nothing will change until objective evidence based computer assisted judgment replaces medical determinations made using flawed global subjective memory.
The present proposed solutions are like the Walter Mitty Story. There’s the fantasy that the Emperor is wearing a finely spun golden cloak of infallibility. In reality, our Emperors are naked. Our physicians are, for the most part, demigods that make errors in judgment half the time. It’s not their fault. They just don’t know there is a better way. How could they know? They are the product of our medical education system and the categorical thinking it promotes.
An organization modeled on Consumer Reports might provide useful information for selecting an insurance company or HMO plan, if they could develop the metrics and get the data. The comparison could only show the differences in the cost of purchasing various health plan benefits, not the quality of medical services delivered. Although decision making regarding real patient value (benefits / cost), corporate profits, shareholder dividends and each upper executive’s compensation package might provide for a more informed decision, it would not impact the overall outcome. Attempting to shave a point or two off the cost of administering our present private, for-profit Fee-for-Service (FFS) reimbursement financing system, is not going to solve our crisis.
Legislate and Regulate the Insurance Industry
This section could be labeled, “ObamaCare.” The so called health care reform legislated by congress is really increased insurance regulation. This was a good thing to do. It is the nostril of the reform camel in the tent. However, if we are to fix the American Health Care Crisis, we must understand the difference between “Health Care Reform” and changes in “Insurance Regulation.”
The American Medical-Industrial Complex is out of control, harms patients and our economy and is not fixable if our present dysfunctional delivery and financing system continue. The present reform effort focuses on private insurance company administration regulations, policies and procedures. It may increase the number of people covered by insurance but fails to effectively deal with the quality of care delivered. The direct beneficiaries of expanding mediocre health care access to the uninsured are the insurance companies and Big Pharma. The Rube Goldberg system patches implemented will increase the cost of health care while failing to address the medical quality crisis.
Perhaps the silliest proposal made by authors, bloggers and elected officials is the regulation of medical loss ration (the percent of dollars spent on health care divided by all insurance dollars). The cost of administration is between 20% and 30% for most companies. The dollars spent on health care therefore range between 70% and 80%. The variance is largely due to the administrative requirements of various fiscal models. TPAs and ASOs spend very little on administration. They are essentially bare bones claims crunching operations. Without dedicated resources to investigate submitted claims for validity or medical necessity, they have little impact on fraud and abuse. HMOs have much more administrative overhead because of their dedicated resources. As a result HMOs reduce fraud, abuse and payment for unnecessary medical care.
The administrative costs of our entire dysfunctional Health Care System are built in, and predetermined by the American capitalistic economic system. The cost of administering health care benefits includes business operations, executive bonuses and stockholder profit. As long as Americans and our elected officials promote the control of health care financing by for-profit, risk managing indemnity insurance companies, in a quasi free market milieu, tweaking regulations will have no success in lowering health care cost.
Patient Centered Medical Home (PCMH)
I have seen this movie before. During the mid-1980s, my practice conformed with the tenets of PCMH. The medical practice model puts broad patient management and some of the elements of HMO operations under the direction of the Primary Care Physician (PCP). The model is 1980s style capitated gatekeeper HMO Redux. It could work, but most authors fail to provide specific details regarding how to manage and fund this model. All recognize some form of “management fee” must be developed but the details about development and implementation of such fees are difficult to find.
Patient Centered Medical Home (PCMH) may result in cost savings and care quality improvement but only if primary care physicians are properly supported. This practice model transfers some of the responsibilities of managed care to the primary care doctor. To function properly the physician requires advanced computer technology and a partnership with a MCO. The partnership must include sharing of information technology, medical management and financial resources.
If PCMH is to reach fruition, the Primary Care Physician (PCP) must manage and coordinate all patient care. The MCO partner establishes and maintains networks of contracted ancillary providers of the services directed by the primary care doctor. The MCO is the fiscal intermediary between the purchasers (hopefully the taxpayer in a universal health care model) and the providers of medical goods and services.
The financial incentives must be properly aligned for this primary care practice methodology to work properly. The fiscal intermediary (modified managed care organization) transfers capitation (risk) for all primary care services and care management. My book, “Creative Design for Health Care Reform” contains practical examples.
Until our primary care providers use problem oriented electronic medical records interfaced with medical artificial intelligence decision support tools, the death spiral of our health care system and the American economy will continue.
This web site and my book promotes a healthy questioning of expert opinion. The assumption is made that an author is an expert simply because he or she has written a book. I have written a book about health care reform so I am an expert on the subject. You should understand I have a T-shirt that states, “I make thing up.” To gain profound knowledge of anything we must question authority and avoid being “confounded by experts.” Consider reading the following book before you are lead down the wrong path by any Pied Piper.
Berns, Gregory 2008. iconoclast: a neuroscientist reveals how to think differently. Boston: Harvard Business Press
The basic knowledge needed to understand the the cause of and cure for the American Health Care System failure to deliver quality, cost effective care may be gleaned by reading the following two books:
Weed, L. L. 1991. Knowledge Coupling: New Premises and New Tools for Medical Care and Education. New York: Springer-Verlag
Available at Amazon: http://www.amazon.com/Knowledge-Coupling-Premises-Education-Informatics/dp/0387975373/ref=sr_1_3?s=books&ie=UTF8&qid=1281988869&sr=1-3
History will consider Knowledge Coupling by Lawrence L. Weed one of the most important medical books of the 20th century. He reengineered medical records, originating S.O.A.P. medical charting and organizing medical information by problem rather than source. Dr. Weed migrated his paper charting concepts to the electronic platforms available when personal computers were developed. He is the father of the Problem Oriented Electronic Medical Record (POEMR).
This is a relatively high level read for medical professionals. In it Dr. LL Weed identifies the causes of our present medical delivery system fiscal and quality crisis. The central cause identified is the flawed medical decision making process resulting from the human mind's inability to manage the complexity and quantity of medical science and to integrate the available knowledge with the patient's problems. Dr. Weed offers both philosophy and science to the reader so the system's problems may be understood. He offers a solution that may be the only way out of our present medical care crisis and could provide a major strategy for reducing America's present fiscal crisis. This is a must read for all medical students, educators and politicians. President Obama and his entire cabinet need to read this book before they take the country too far down the path of an attempted fiscal solution.
Walton, Mary and Deming, W. Edwards 1988: The Deming Management Method. New York: The Berkley Publishing Group
Available at Amazon: http://www.amazon.com/s/ref=nb_sb_noss?url=search-alias%3Dstripbooks&field-keywords=deming&ih=3_1_1_0_1_0_0_0_0_1.0_504&fsc=-1&x=13&y=19
Mary Walton is a long term associate of W. Edwards Deming, the father of Quality Improvement and “Total Quality Management” (TQM).. This book provides a short Deming biography and what could be termed, “Deming for Dummies.” She explains the profound Deming philosophy for business improvement in terms more understandable by middle managers. The book presents the information from Out of the Crisis by W. Edwards Deming to folks that do not have a Master’s degree in business. Although the problems identified, simplified statistical methodology and quality improvement techniques presented in this text are directed at American business, the applications to our health care crisis is obvious.
Malcolm Baldrige--The other quality improvement guy. Both Deming and Baldrige focused on fixing the process not fixing the blame. Both needed disciples to explain what they were talking about.
Hutton, David W., 2000: From Baldrige to the bottom line: a road map for organizational change and improvement. Milwaukee: American Society for Quality Press
The concept of “Quality” has many Gurus and Prophets. For example, Philip B. Crosby developed the concept of “Zero Defects.” Bill Smith at Motorola Corporation first formulated the program “Six Sigma.” The International Organization for Standardization administers the ISO 9000 award. The Prophets may not have seen eye to eye and their disciples continue to argue about how many angels can dance on the head of a pin, but they all wanted to answer the question, “How can the product be made better, made faster, produced at lower cost and result in higher consumer satisfaction.” This is similar to Olympic athletes’ quest for, “stronger, faster, higher...”
None of these quality improvement philosophies work without absolute support of upper management and buy-in from the folks in the trenches. They work reasonably well for companies producing consumer goods and services, but for medicine, not so much. The fact that business executives understand and promote quality improvement and hire “expert” consultants to help quality as a corporate goal does not garauntee success. Consider reading the following book to understand what can and frequently does go wrong:
Weiss, Alan, 1995: Our Emperors Have No Clothes: Incredibly stupid things corporate executives have done while reengineering, restructuring, downsizing, TQM’ing, team-building, and empowering...in order to cover their ifs, ands or “buts.” Franklin Lakes: Career Press
Quality is a corporate goal for all medium to large scale business entities in our Medical-Industrial Complex. Virtually all companies in our health care system have well developed quality improvement departments managed by qualified, dedicated people that work diligently on improving the process of delivering medical goods and services.So why does the American health care system continue to produce crap? The answer to this question and the way out of our health care crisis is the subject of my book, Creative Design for Health Care Reform.
Many other authors have published books that document our cost and quality problems. They have attempted to explain why our system lacks quality and costs so much. Most have missed the mark, by not understanding or choosing to ignore the real source of our crisis. They have offered solutions without a basic understanding of the cause or appreciating the unintended consequences of their recommendations. Many are like Pied Pipers leading the misinformed down the wrong path.
The following are books about our Medical-Industrial Complex and the American health care financing and care quality crises. They are written by politicians, economists, health care professionals and others with a genuine interest in identifying problems and offering solutions. Some are written by people who simply have an axe to grind and attempt to fix the blame rather than the problem.
Daschle, Tom, 2008: CRITICAL: WHAT WE CAN DO ABOUT THE HEALTH-CARE CRISIS. New York: St. Martin Press