A Doctor's Reflections on Health-Care Reform

It is articles like this - without data, and full of self-interested posturing, that gets me upset about physician perspectives on health care reform.

A Doctor's Reflections on Health-Care Reform - WSJ.com

The McAllen Problem

Rajiv pointed me to this article the other day - brutally on target, if you ask me. As one of my mentors once told me - doctors are finely tuned economic machines:

The McAllen Problem: The Baseline Scenario

What is the lesson of McAllen, Texas, the focus of Atul Gawande’s celebrated article (discussed here and here)? This is my attempt at an answer:

Currently, our health care system has high-cost and low-cost areas; the high-cost areas have no better outcomes than the low-cost areas. So theoretically we can solve our health care cost problem by making the high-cost areas behave like the low-cost areas.

However, the market incentives go in the other direction; the economically rational thing for providers (doctors, hospitals, etc.) to do is to run up procedures and thereby costs. It would be better if providers focused more on patient outcomes or organized themselves into accountable care organizations, as Gawande prefers; but there is no economic reason for them to do so. People are not magically going to become more altruistic overnight. Even shame has only a temporary effect on behavior. Here’s Gail Wilensky from a Health Affairs roundtable:

It’s only by being able to offer compelling evidence that it’s the physician that is the outlier relative to his or her peers, that the patients really aren’t different, and in fact they are not having better outcomes, that you are able to pull back physician behavior — although there seems to be a high recidivism rate.

(Emphasis added.)

In some ways McAllen isn’t the aberration; according to the old Chicago economics department, everywhere should be like McAllen.

Remember all the people who said that you can’t blame mortgage brokers and investment bankers for being greedy, because that’s how a capitalist economy works? Well, you could make the same defense for the McAllen doctors. We long ago stopped expecting lawyers and accountants to behave contrary to their economic interests; now we simply expect them to conform to the law and to certain professional codes of conduct, and otherwise make as much money as possible. Why should we expect anything different from doctors?

In a capitalist economy, the thing that is supposed to keep prices in check is the buyers. If someone offers me a product that costs more than it is worth to me, then I won’t buy it. But we can’t count on patients to play this role in health care, because there is no way to make patients internalize all of the costs of their care; they simply don’t have the money. Furthermore, most people don’t understand the health production function (the relationship between treatments and outcomes), so they don’t have the ability to select treatments that provide benefits that are worth their costs. (And, in many cases, it’s not obvious even to professionals that a treatment isn’t worth the cost; it’s only obvious when you look at the data in aggregate.)

What about payers (health insurers?) A “market” solution would be to change the reimbursement rates for different procedures – increase payment for things that doctors should do more of and reduce payment for things that doctors should do less of. Theoretically, payers should be doing this already. However, in the current situation, a private payer who tried to reduce the rates for popular, expensive procedures would find itself unable to attract providers. The only payer with any real negotiating power is Medicare. The private payers have little ability to control costs. Or, if they have the ability, they aren’t exercising it.

In short, prices will only go up. As a result, the cost of health insurance goes up, and the market finally kicks in in the crudest possible form: people who can’t afford it become uninsured. At some point, if we have enough uninsured people, the health care industry will hit a point where it cannot increase revenues anymore, because it has fewer and fewer paying customers.

The proposed public health insurance plan would have the power to negotiate lower rates with providers. That’s why some providers don’t like it. That’s also why private payers don’t like it; they would be at a cost disadvantage to the public plan. (They can live with Medicare because Medicare leaves them the entire under-65 market.) Maybe that’s unfair. But the current situation isn’t working.

By James Kwak

The Institute for Health Metrics and Evaluation (IHME)’s upcoming report, "Financing Global Health 2009"

But 12 of the 30 countries with the highest disease burden aren’t receiving as much aid as healthier, and, in some cases, wealthier countries

–Well-heeled donors, private corporations and average citizens sending money to their favorite charities are changing the landscape of global health funding, according to a new study by the Institute for Health Metrics and Evaluation (IHME) at the University of Washington.

Press release: http://healthmetricsandevaluation.org/resources/news/2009/Jun_18_2009.html

The Lancet, Volume 373, Issue 9681, Pages 2113 - 2124, 20 June 2009 Financing of global health: tracking development assistance for health from 1990 to 2007 at: http://www.thelancet.com/journals/lancet/article/PIIS0140-6736(09)60881-3/fulltext

“…..The research shows that funding for health in developing countries has quadrupled over the past two decades – from $5.6 billion in 1990 to $21.8 billion in 2007. Private citizens, private foundations and non-governmental organizations are shifting the paradigm for global health aid away from governments and agencies like the World Bank and the United Nations and making up an increasingly large piece of the health assistance pie – 30% in 2007. However, health aid does not always reach either the poorest or unhealthiest countries.

The study, Financing of global health: tracking development assistance for health from 1990 to 2007, appears in the June 20th issue of The Lancet and provides the first ever comprehensive picture of the total amount of funding going to global health projects. It takes into account funding from aid agencies in 22 developed countries, multilateral institutions like the World Health Organization and hundreds of nonprofit groups and charities. Prior to this report, nearly all private philanthropic giving for health was unaccounted for, meaning that nearly a third of all health aid was not tracked.

Overall, poor countries receive more money than countries with more resources, but there are strong anomalies. Sub-Saharan Africa receives the highest concentration of funding, but some African countries receive less aid than South American countries with lower disease burdens – like Peru and Argentina. Of the 30 low- and middle-income countries with the most illness and premature death, 12 are missing from the list of countries that receive the most health aid, including Angola, Ukraine and Thailand.

"With no one tracking this massive growth in spending, it’s no wonder that some countries receive far more than their neighbors for no immediately apparent reason,” said Dr. Christopher Murray, professor of global health and director of IHME at the University of Washington, and co-author of the study. "We’re hoping that this attempt to count money that has never been counted before in a careful and consistent way will lead to greater transparency and better use of health resources.”Some small island nations with relatively healthy populations like Micronesia and the Solomon Islands receive more health aid per capita than disease-stricken countries like Niger and Burkina Faso. Mali and Colombia have about the same level of sickness, but Colombia receives three times as much health funding. The study also found that two of the world’s emerging economic super powers, China and India, receive huge amounts of health aid. “We don’t know exactly why some countries seem to be far outpacing other countries, but historical, economic and political ties appear to be a factor,” said Nirmala Ravishankar, an IHME research scientist and the study’s lead author. “Some of these small islands are former colonies of the countries now giving them aid, and, in other cases, health aid seems to coincide with defense spending or drug interdiction efforts. This is an area that begs for more research.”

Where the money is being targeted within those countries also merits more scrutiny. Based on the research for 2007, HIV/AIDS receives at least 23 cents out of every dollar going into development assistance for health. Tuberculosis and malaria received less than a third of that, even though the combined burden for those diseases is greater than that from HIV/AIDS in developing countries and despite promises by G8 countries that those diseases would receive more funding. At the same time, about a nickel out of every dollar channeled to health assistance goes to system-wide health support – like funding for new clinics, doctor training and prevention programs – which is an area that global health experts have clearly identified as a priority. The study also reveals other key findings:

• The scale-up of global health funding doubled from 1990 to 2001 and then doubled again by 2007.
• The growth has been driven largely by donations from the U.S. government and U.S.-based private charitable organizations. In sheer volume, the U.S. accounted for over 50% of total development assistance for health in 2007. But, in terms of the fraction of national income that becomes health aid, the U.S. trails Sweden, Luxembourg, Norway, and Ireland.
• The Bill & Melinda Gates Foundation tops the list of private foundations providing global health aid, making up nearly 4% of all health assistance in 2007.
• Food For The Poor, Population Services International and MAP International lead all non-governmental organizations (NGOs) in spending on health aid, each contributing more than $1 billion in health assistance from 2002 to 2006. Six of the top 10 NGOs are religious organizations.
• In-kind contributions, such as donated drugs, made up more than 90% of the revenues of some of these NGOs, and they made up more than 50% of their total overseas health expenditure for most years during the study period. Because donations of drugs from pharmaceutical companies are sometimes valued at current market prices, this has potentially resulted in an exaggeration of the magnitude of resources flowing via US NGOs.

More details will be published in The Institute for Health Metrics and Evaluation (IHME)’s upcoming report, Financing Global Health 2009, University of Washington, Seattle, WA, USA.

(N Ravishankar PhD, P Gubbins BA, R J Cooley MED, K Leach-Kemon MPH, Prof D T Jamison PhD, Prof C J L Murray MD); and Harvard Initiative for Global Health, Harvard University, Cambridge, MA, USA (C M Michaud MD)

Related Content:

• See the figures
• Download the slides (2.66MB ppt)
• Map the data on IHME's GIS tool

The Lancet, Volume 373, Issue 9681 - 20 June 2009 An assessment of interactions between global health initiatives and country health systems
Health Organization Maximizing Positive Synergies Collaborative Group
http://www.thelancet.com/journals/lancet/article/PIIS0140-6736(09)60919-3/fulltext

Editorial: Who runs global health? http://www.thelancet.com/journals/lancet/article/PIIS0140-6736(09)61128-4/fulltext

What can be learned from data for financing of global health?
Peter S Heller, Paul H Nitze School of Advanced International Studies, The Johns Hopkins University, Washington
http://www.thelancet.com/journals/lancet/article/PIIS0140-6736(09)61132-6/fulltext

Address at the high-level dialogue on maximizing positive synergies between health systems and global health initiativesVenice, Italy 22 June 2009 Why the world needs global health initiatives. Dr Margaret Chan, Director-General of the World Health Organization
http://www.who.int/dg/speeches/2009/global_health_initiatives_20090622/en/index.html

Malpractice Reform to Reduce Healthcare Costs

Michelle Mello and Troyen Brennan have an article in this week's New England Journal of Medicine outlining ways to enact health care tort reform. The premise, they argue, is that doctors too frequently practice defensive medicine because of fears of getting sued, resulting in excessive tests that they know are unlikely to be revealing and may even lead to harm. By changing the way courts punish liable doctors, the argument goes, substantial savings will accrue. Their rough calculation is that if even 1% of costs are reduced by changing physician practice, $22 billion will be trimmed from the health budget - not a trivial amount. From my personal experience, up to 5% of what doctors do is driven by fears of litigation. I can't tell you how many head CTs for chronic headaches I've ordered even though not a single one has ever been positive, nor is there any evidence to order such a test. It's the very small chance of a negative outcome weighted against the very large payouts that patients receive that drives decision making, pushing doctors to deviate from evidence-based decision making.

The obvious choice, to cap non-economic ("pain and suffering") damage awards, would apparently be very difficult to pass with a Democrat dominated legislature. Instead, the authors propose three more palatable compromise solutions:

• "Pre-emptive strike" - A.k.a disclosure-and-offer allows medical liability insurers to disclose mistakes and offer an up-front payment without taking the case to trial. This method does not prevent the patient from going to court, but preliminary data suggests that the vast majority accept the mediation and do not pursue the lengthy and costly court proceeding. Whether this approach actually reduces costs is still being researched.
• "Neutral panel" - One of the major drivers of high payouts is when a particularly gruesome or egregious violation generates huge damages from a sympathetic group of jurors. Another option is to create a special court with neutral doctors and medically trained judges who have a better sense of what was done right and wrong without the visceral driving force that some of these trials have.
• "Safe Harbor" - Doctors are often sued for following evidence-based practices but the patient had a bad outcome anyway. If a panel of neutral experts decides that the treatment was within an acceptable standard of care, the physician becomes immune from personal litigation.

Of these, I personally favor numbers two and three, and I can actually see both of them working together to reduce defensive medicine. In any case, I agree with the authors that some form of tort reform should be bundled with general health care reform as a means to reduce costs and promote value-based treatment.

Senate Passes Landmark Bill to Regulate Tobacco - NYTimes.com

Great news -
Senate Passes Landmark Bill to Regulate Tobacco - NYTimes.com: However this doesn't make sense "The Congressional Budget Office had estimated that the F.D.A. legislation would reduce youth smoking by 11 percent and adult smoking by 2 percent over the next decade beyond the declines that had already resulted from public education, higher taxes and smoke-free indoor space laws." How can a 11 percent reduction in children only result in a 2 percent decline in adults? Lag time doesn't seem to make sense. Great new regardless.

The AMA does not speak for all doctors.

A.M.A. Opposes Government-Sponsored Health Plan - NYTimes.com

This is infuriating. As the NYT correctly points out (unfortunately near the end of the article) - the AMA does not represent all physicians. Actually, there are 250k members, and last I checked I think there were approximately 730k physicians. Most physicians have more of an affinity to either their professional medical society (e.g. internal medicine is with American College of Physicians) or with their regional society (Massachusetts docs with Mass Med Society). The AMA does have the most members, but is by no means the voice of the majority of physicians.

Some thoughts from Bill on HC Reform

Bill Clinton Sees Hope for Health Care Changes, This Time - NYTimes.com

"To achieve universal coverage, instead of Mr. Clinton’s plan to require employers to provide it, Mr. Obama envisions creating a government-run health plan that would compete with private insurers.

Mr. Clinton said that as he looked at the matter in 1993 he believed that he had two options for providing universal coverage: either a tax increase or an employer mandate. Since he had already expended a lot of political capital on a deficit-reduction plan that included tax increases as well as spending cuts, he said he had to rely on the employer mandate.

“If you had an employer mandate, then you could leave the small businesses out or come up with enough revenues to subsidize the smaller employers — and since we couldn’t raise taxes, having an employer mandate guaranteed that the National Federation of Independent Businesses would join with the insurance companies,” he said. “Now they don’t have to have an employer mandate, because they can offer buy-ins. I hope they won’t give up on this public option.”

From the ATS's The Washington Letter

Senate HELP Committee Releases Health Reform Overview

This week, the Senate Health, Education, Labor and Pensions Committee (HELP), chaired by Sen. Kennedy (D-MA), released a policy summary of the committee's health reform proposal.

http://finance.senate.gov/sitepages/leg/LEG%202009/042809%20Health%20Care%20Description%20of%20Policy%20Option.pdf

The summary outlines the main priorities for the committee's legislation, which is expected to be formally introduced in the Senate within the next week or so. Among the main priorities outlined are providing:

• Quality, affordable health coverage for all Americans
• Higher quality, more efficient delivery system
• New framework for enhancing prevention and wellness
• New structure of long-term supports and services for the disabled and seniors with chronic illness
• New mechanisms to prevent fraud and abuse
• Shared responsibility for healthcare reform

The plan outlines a number of proposals, all of which would lead to eventual universal coverage. The plan's goals include creating a public insurance option, as well as a federal Health Insurance Exchange that would provide quality and affordable options for consumers and assist those who wish to purchase private insurance. Under this plan, states would be permitted to set up their own insurance exchanges in collaboration with the federal government. Finally, the insurance industry would be governed by stricter regulation that would prohibit insurance plans from basing policies on an applicant's medical history or health status or denying coverage due to a pre-existing condition.

The HELP Committee's plan seeks to improve quality and efficiency in the healthcare delivery system through a number of mechanisms, including the development of standardized health information technology systems that are designed to conduct comparative effectiveness research, prevent medical errors, promote chronic disease management and strengthen the health workforce.

The plan would also create a Patient Safety and Clinical Delivery Institute within the Agency for Healthcare Research and Quality to coordinate best practices for health research and dissemination. The HELP Committee plans to address health workforce shortages through a new federal Workforce Commission, expanded primary care and nurse development programs and the creation of a new grant program to train professionals in geriatric care.

The new framework for prevention and public health proposes to improve chronic disease management in a number of ways, first by utilizing the "medical homes" model to provide patient-centered comprehensive health services coordinated by a case manager and by reforming the payment system to ensure reimbursement for preventative services such as screenings and affordability of these services for patients. Finally, the plan proposes strengthening community prevention programs--including those that focus on tobacco cessation--as well as promoting an increased focus on prevention and public health in medical school and residency curriculums.

--
The Washington Letter is written by the American Thoracic Society government relations office and emailed to all ATS members living in the United States. The letter keeps clinicians, scientists, and patients abreast of legislative, judicial, and regulatory issues in pulmonary, critical care, and sleep medicine. Each week's edition is archived on the ATS Web site, www.thoracic.org. If you have any questions or one more information about becoming involved in advocacy, please contact the ATS Washington office at 202-296-9770.

Porter article in NEJM on health care reform principles

There's an article by Michael Porter in NEJM early release this week. For those of you who don't know Porter, he is a Harvard Business School professor and founded The Montior Group (consulting).

NEJM -- A Strategy for Health Care Reform -- Toward a Value-Based System.

He has a few major points -

1) health insurers should compete on value instead of cost - they should be required to measure and report their subscribers' health outcomes, thus driving consumer-driven value purchasing of insurance

2) Employers should be kept an integral part of health insurance in America - they have a vested interest in keeping the health of their employees

3) Eliminate the burden on people who have no access to employer based health coverage - reduce tax deductibility of insurance purchased be individuals and through employers

4) Make individual insurance affordable through large regional (not national) high-risk pools that can spread risk

5) Provide income based subsidies to lower income people to buy insurance

6) Everyone must be required to purchase insurance

---

I am pretty much on board with most of these proposals (especially six - was one that made me more of a Clinton fan during the primaries, and I'm glad Obama is now considering it) . But number two is a bit funny - since most people switch their jobs and careers numerous times in their life, I'm not convinced employees have that much stake in improving quality of their employees. The value of any interventions they undertake are likely to be accrued by Medicare in the end. So seems to me that if the average employee is only around for two to five years, that employers have little incentive to improve their employees health care.

Now, there may be other reasons to keep employers in the health care insurance game, but I'd like to hear them, because I haven't been convinced yet.

Dr. Helene Gayle at CARE

from: Darke, Shannon <sdarke@care.org>
date: Tue, Jun 2, 2009 at 4:43 PM
subject: The first three years

On behalf of Dr. Helene Gayle, I would like to share with you the some of her reflections on her first three years as CARE’s President and CEO. The strategic focus that Helene’s leadership has brought to CARE was spotlighted in an interview published in the Harvard Business Review (link below). In compelling terms, Dr. Gayle explains how she applies her skills to “make the whole greater than the sum of its parts” at CARE, which she found to be “an astonishingly complex organization” when she took the helm in April 2006.

http://hbr.harvardbusiness.org/2009/04/care-ceo-helene-gayle-on-shaking-up-a-venerable-organization/ar/1