Road To Hellth

Mar
31

Medical Care? Sorry, Too Busy With Software QA…

by Dr. Doug Perednia

Ever get the impression that your doctor is paying way more attention to that computer than he is to you? Well get used to it.

It seems that there is no end to the stream of administrative and legal overhead that our Leaders in Washington are prepared to inflict upon patients and providers. The latest in this iron maiden of unfunded mandates is a recommendation of the Adoption / Certification Workgroup of the HHS Health Information Technology Policy Committee, that doctors and patients become the responsible parties when it comes to finding and reporting on computer bugs and other potential safety issues with electronic medical records (EMRs), computerized physician order entry (CPOE) and other healthcare information technologies (HIT).

First a little background. As we’ve discussed previously here and here, the Obama Administration and Democrats in Congress included language in the January 2009 stimulus bill that is intended to force providers into buying EMRs that most of them don’t like, don’t want and can’t afford. In a trend that has come to characterize Democratic healthcare policy, the initiative takes a “you buy it or we’ll tax you” approach. Physicians who spend their own money to purchase EMRs prior to 2014 will receive a partial subsidy from the Federal government. The subsidy decreases with time, so that the longer doctors wait to fork over their cash, the less money they receive. Then after 2014, any providers who persist in not purchasing “certified” EMRs from their friendly corporate HIT vendor will financially punished by Medicare. For each year of non-compliance, CMS will withhold an additional 1% of each provider’s gross Medicare payments for all of the healthcare services that they thoughtlessly provided in good faith. A doctor who resists the Will of Medicare for ten years will receive only 90% of the compensation of compliant doctors who provide exactly the same services. (Note 1)

Despite being mandated by our government Leaders, there is one small non-financial hitch for the doctors and patients who are being forced to use these products: faulty medical software may be killing people. As described here by a fellow physician and expert in medical informatics systems, the FDA has recently been looking into reports of patient injuries and deaths as a result of defective EMR and CPOE software products. There is little if any information broadly available regarding the unintended consequences of the health information technologies that our political Leaders and their corporate HIT contributors are so vigorously promoting.

What better way to solve this problem than to enlist the unpaid services of patients and the physicians who care for them?

Enter the Adoption/Certification Workgroup of the HHS Health Information Technology Policy Committee. You see, it’s not enough to simply purchase one of the expensive “certified” EMRs that the government mandates. Doctors must also show that they are “meaningfully using” the things. What constitutes “meaningful use”? Well, no one yet knows. It’s currently being debated by the regulators at CMS and even members of Congress. What is certain is that the tasks and requirements related to “meaningful use” are going to creep steadily in scope over time. In its initial 169-page draft document outlining meaningful use requirements and definitions. CMS has specified that there will be at least three separate stages of “meaningful use” requirements that are phased in over time. (Although the Stage 3 requirements are still completely undefined, they’ll come into effect in 2015. Of course by then it will be too late for doctors to decide whether – having already bought the software – they are willing to comply with the usage requirements.)

As a new and previously unanticipated part of the meaningful use requirements, the Adoption/Certification Workgroup is now proposing that:

“Stage 2 of Meaningful Use should include a requirement that [“eligible professionals” (EPs)] and Hospitals report HIT-related patient safety issues (“HIT safety organization”) to an organization authorized by ONC to receive HIT-related safety reports. Copies of those reports should be sent to any vendors that might be involved.”

That’s right. CMS is actually proposing that it becomes the responsibility of providers to report bugs and other problems associated with the medical software they’ve been forced to buy and use. Failure to do so would result in reduced payments by Medicare and presumably opens the door to legal liability on the part of the physician.

“Isn’t it true, Dr. Chump, that you had seen this type of error occur previously in the software that you use? Did you report this error promptly as required by Medicare, Dr. Chump? No? Are you always so cavalier about your choice of software and the safety of your patients, doctor?”

Patients aren’t off the hook either. The workgroup is recommending that they take every opportunity to review and report technical problems with their own computerized data. (This is excellent advice, considering that the patient now has yet another part of the healthcare system to distrust as a result of all this great technology.)

Let’s reflect upon some of the implications of these policies and the technologies that they seek to promote, shall we?

First, it is nothing short of remarkable that the government should require healthcare providers to buy and use expensive and potentially dangerous computer technologies with little or no clear economic or medical benefit. Not only do our Leaders wish to mandate the purchase of these technologies, but they’re willing to pony up nearly $20 billion of taxpayer money to subsidize it. This speaks volumes for the relative lobbying power of ordinary healthcare providers and patients, as compared with the industry trade group Health Information Management Society (HIMSS), and the giant HIT corporations involved.

Second, it is apparent that these same Leaders and regulators believe that the importance of HIT technology actually exceeds the value and importance of the medical services that doctors were trained to deliver in the first place. The evidence? Generally speaking, it takes far longer for providers to document a patient encounter while using a computer – time that could have been better spent seeing other patients. (As we’ve discussed previously, this is one reason that many providers are reverting to the 4,000 year-old practice of using scribes to document visits.) Yet doctors are now expected to add hours to their work day with computer busywork in order to qualify for full Medicare payment. Government would rather have fewer medical services – provided that they get delivered with an electronic record – than more medical services delivered without an EMR. The real impact of this preference will become evident as the new healthcare reform law adds millions of Americans to medical waiting lists nationwide.

Under the circumstances it’s hardly surprising that that doctors should now be asked to perform quality assurance services for software vendors as well.

So the next time you see that your doctor is running behind, remember that he’s probably doing lots of more important things than taking care of you. Like typing his progress notes, fiddling with drop-down lists, and accounting for “meaningful use” of his EMR. Oh yes, and reporting on that buggy EMR software.

Note 1: Ironically, while receiving this “extra” Medicare money may seem like a good thing, it’s not at all clear that it’s a winning financial proposition for the providers involved. While the government subsidies may help with purchasing the hardware and software initially, providers are left on the hook for the far larger long-term expense of upgrades, maintenance and service. A typical maintenance agreement for EMR software provides for ongoing “maintenance fees” consisting of around 17%-20% of the original purchase price of the software. For a typical EMR package costing $40,000 per providers, this is about $8,000 per year. Actual version upgrades to the software are, of course, extra. Depending upon the fraction of Medicare patients in a provider’s practice, these costs can easily wipe out all of the financial benefit received by qualifying for full, but already inadequate, Medicare payments.

Categories : Electronic Medical Records

Mar
23

And Now For Something Completely Different

by Dr. Doug Perednia

While we in the U.S. are understandably transfixed by the political process and fallout surrounding the healthcare “reform” bill in Washington, D.C., it is worth taking five minutes to think about something completely different. Let us turn our gaze “over there”, towards Great Britain.

Since 2005, the trials and tribulations of practicing medicine within the confines of the British National Health Service have been eloquently described and documented by The NHS Blog Doc blog. This literary wonder is the handiwork of “Dr. Crippen”, the pen name used by a general practitioner serving in the NHS.(Note 1) Over the years Dr. Crippen has written about his observations, opinions and experiences as working at the medical “coal face” – the surgeries, clinics and hospital wards where healthcare services are actually delivered. Many of his posts dealt with real patients and the difficulties imposed by the ever-growing administrative bureaucracy at NHS.

Several elements have served to keep readership of Dr. Crippen’s healthcare blog one of the highest on the Internet, with over 2 million visits since its creation. An excellent writer, Dr. Crippen somehow managed to show the funny side of the bureaucratic idiocy facing NHS physicians and surgeons. Some notable examples included “Defining the Euro-turd”, in which the European Union sought to rigorously classify various stool configurations, and The Stalin Awards for excellence in soviet-style healthcare management techniques. At the same time many of his posts were also quite touching. He often showed the physician-patient relationship at its besieged best – where doctors often have to swim against the bureaucratic current like salmon to get anything useful done on behalf of their true clients: patients.

All was well with the blog (if not with the NHS), until just this month, when Dr. Crippen abruptly announced his retirement. Overnight, his blog was gone and with it five precious years of NHS history as seen by patients and providers. Although it is just and right that Dr. Crippen should retire and enjoy life, it is both sad for his readers and a terrible loss for the healthcare community, especially since he has taken down his blog entirely. The loss of the NHS Blog Doc archives is especially tragic for those of us still in the fight to secure a just, rational and sustainable healthcare system for people everywhere. Here’s why.

Despite decades of trying, none of the world’s developed countries has yet come up with the perfect healthcare system. Certainly no one system appears to be a perfect fit for every economic and political system. With all of the variation between countries and philosophies, the world’s approach to healthcare has closer to a random walk than a steady march toward fair, pleasant, medically efficient and sustainable systems. In fact, many times a good deal of backtracking seems to be involved. All in all, it adds up to a great an uncoordinated experiment involving the lives of billions of people and trillions of dollars – and we still don’t know exactly what to do.

The NHS is decades ahead of the United States in terms of implementing a centralized national healthcare structure. Meanwhile, the passage of President Obama’s health reform legislation will inevitably move the U.S. health system toward greater centralization and federal control over the majority of all healthcare services. We have much to learn from the NHS experience, but much of the important stuff won’t be in white papers and official reports written by academics and bureaucrats. What really counts – after plowing through all of the easily manipulated statistics – is how the system works for patient and providers. The problem is that people don’t generally write books about these things. They don’t write about these sorts of results in white papers, and they certainly don’t write about them in government reports. They write diaries, they write letters and e-mails, and they write blogs. That’s the sort of thing that we can only find in blogs such as Dr. Crippen’s.

The advent of the Internet is both blessing and a curse for history. It has made it far easier for busy individuals to share their thoughts and observations, but also much harder to secure a permanent record. When books, magazines and newspapers were made with real paper, particular articles might be hard to find and publish, but they never vanished without a trace. Someone always had a copy somewhere that they might fax or copy and mail. Libraries would always save the day if worst came to worst. But there’s no defense against an “Error 404 – Page Not Found”, or the complete absence of a website. Experiences and wisdom gleaned from hundreds of hours of hard work and thousands of patients can be lost to future generations in the blink of an eye.

In his closing post, Dr. Crippen mentions that, “when [The NHS Blog Doc] appeared there were few medical bloggers in the UK. Now the medical blogosphere is well-populated…” This is true, and yet it makes it all the more important that his body of work remains on-line and available. Dr. Crippen’s observations came at a critical time for the NHS – one when it was transitioning from decently-funded and operated healthcare system for all, to a shoestring operation dominated by shady politicians, bureaucrats, box-tickers and hangers-on. The NHS experience holds important lessons for the U.S. as it moves closer to the British model of care. There are going to be ever-greater numbers of bureaucrats, practice guidelines, wait lists and “patient experience administrators” in our future. We in the United States need to learn as much as we can about where they come from and the potential ill effects now, before it’s too late.

I have written to Dr. Crippen to ask that he please consider restoring the contents of The NHS Blog Doc blog as an archive that can be referenced by the international healthcare community. I feel so strongly about its importance that I am willing to host it myself, and at my own expense if necessary. I hope that you will considering as well to make a similar appeal. It may not be too late to bring this important medical and literary resource back to the web.

The likeness of Dr. Hawley Crippen in Madame Tussauds Wax Museum

Note 1: I have no idea why the NHS Blog Doc decided to choose this particular moniker, but most of us in the U.S. won’t fully appreciate its connotations. It seems that Dr. Hawley Crippen is notorious as a celebrated criminal who was convicted of poisoning and dismembering his beloved wife. (Unfortunately, recent forensic evidence suggests that he may have been hanged unjustifiably in 1910. The jury took just 27 minutes to convict him.) His notoriety is such that his likeness still greets visitors to the Chamber of Horrors at Madame Tussauds Wax Museum. We can only imagine that “Dr. Crippen” the author relates to Dr. Crippen, the bespectacled, mild-mannered, 48 year-old suburban primary care provider, who just happened to be executed for a heinous crime? (Return to post)

Categories : Hellth Across The Pond

Mar
23

Clueless or Crazy: Which Is It?

by Dr. Doug Perednia

I’ve spent the past few days reviewing the provisions the new healthcare “reform” bill recently passed by Congress and signed into law by President Obama. It is gratifying to see that our elected Leaders are occasionally capable of something other than legislative gridlock. One also has to sympathize with the goal of providing more and better health insurance coverage to as many Americans as possible. It is clear that many of our elected representatives passed this law with good intentions. If good intentions were the sole criteria by which laws were judged, this would be a good one.

Sad to say, things are never that easy. As the saying goes, “the road to hell is paved with good intentions”, and so is the road to Hellth. It is not enough to have good intentions – good laws should also be wise, fair, simple, economically sustainable and easy to implement. This attempt at healthcare reform seems to have very few of these elements. Indeed, in some respects it appears to be built to fail. Which makes one wonder – was this an accident, or was this intentional? Which of these two is the most likely scenario? Were they drafted this healthcare reform legislation, were our political Leaders…

Clueless	…or	Crazy Like a Fox?
“Father, forgive them, for they do not know what they do.” Luke 23:34		"Heh, heh, heh."

Let’s look at just one of the major problems with the new law, and weigh these two competing possibilities, shall we?

Reality Bites

The basic problem that I’d like to focus in this post is the notion that, no matter how much one would like to provide health insurance, both money and healthcare resources are finite. We’re already spending about $2.5 trillion on healthcare each year with just our current population of insured individuals. The healthcare reform law just passed is supposed to provide health insurance coverage for nearly 32 million additional Americans. How will that be done, and what steps does the law take to ensure that we don’t run out of resources?

Virtually all of the new individuals added to the system will be insured in one of two ways: through private insurance plans (about 17 million people), or via the existing Medicaid system of health insurance for the poor (about 15 million people). As we’ve discussed previously, the Medicaid program has long been an underfunded basket case. The vast majority of physicians and other healthcare providers lose money on virtually every single Medicaid patient they see. One result is that very few physicians can afford to accept Medicaid patients any longer, and those that do have long waiting lists of Medicaid patients waiting to be seen. Adding 15 million more patients to these waiting lists is doesn’t exactly seem like a cunning plan. In an attempt to address the absurdly low rates of Medicaid reimbursement, the new law does increase Medicaid reimbursement rates to the level of Medicare payments (which themselves cause many doctors to lose money), but only for primary care physicians (internists, family doctors and pediatricians), and only for 2013 and 2014. Any of these patients who might need to see a specialist (or, coversely, the specialists who might agree to see them) are out of luck. Expanding the Medicaid population might seem easy on the surface, but it’s hardly a wise or sustainable solution to the problem.

Well, how about the rest of the newly insured who will all be covered by private insurance? Traditionally, private insurance is the bread-and-butter business that keeps the lights on for most hospitals and doctors. It pays enough to allow these providers to stay in business, even as they lose money on their Medicare and Medicaid patients. What is the situation here?

There is good and bad news for private insurance in this brave new world.

The first piece of good news (for the insurers, anyway), is that there will still be private insurance at all. Insurance industry lobbyists in Congress managed to stave off “the public option”, leaving the government to exercise its expansion of coverage largely through them. Although this makes them a highly regulated arm of federal policy makers, it at least ensures them a continued stream of revenue. At least for now.

The second bit of good news is that they’ll be getting lots of potential new customers whose ability to buy insurance is being subsidized by the taxpayers and anyone brave enough to buy U.S. Treasury Bonds. Other things equal, this will increase their gross revenue.

The bad news? Insurers shouldn’t expect to hang on to that money for long. Their medical and overhead expenditures are about to go through the roof. Let us count the ways:

Insurers as an industry get to pay an annual fee of $8 billion in 2014. This will increase annually, rising to $14.3 billion in 2018.

The law removes any lifetime limits on coverage. Theoretically this means that an insurer’s downside exposure on any given patient is limitless. And they can’t drop patients when they start to become expensive.

They now have to insure folks with expensive pre-existing conditions and terrible health, while they are allowed to charge customers higher premiums based only upon age (up to a 3:1 ratio), geographic area, family composition and tobacco use. This will raise medical payout costs a great deal. The only way to recoup these higher costs will be by raising insurance premiums for all customers across the board. It’s a safe bet that everyone will see their premiums continue to rise every year.

Patient deductibles will henceforth be limited to $2,000 for individuals and $4,000 for families, “unless contributions are offered that offset deductible amounts above these limits” (whatever that means…)

The penalties for not signing up for health insurance are relatively low. This means that there’s an excellent chance that the “Massachusetts affect” will pervade the market, i.e., relatively healthy people will simply pay the minimal tax penalty until they get sick, and then sign up with no fear of being rejected for a pre-existing condition. (Let’s say that you’re a relatively healthy single person earning $100,000 annually. Which would you rather do if you knew that you could buy insurance anytime – pay $5,000 per year for a health insurance policy, or the maximum penalty of $2,500 per year?)

Insurers will be subjected to additional government scrutiny through the American Health Benefit Exchange, Small Business Options Programs (at the state level), and Health Insurance Reform Implementation Fund at the federal level. Desirable or not, this is guaranteed to increase their overhead expense.

Still worse, there are no specific, meaningful or timely mechanisms for improving the efficiency of the healthcare system anywhere in the law. The deranged RBRVS payment system will remain in place, along with enormous (and increasing) amounts of regulatory and administrative overhead.

But what about all of those “savings” we were promised? While politicians and regulators are fond of claiming that substantial medical cost reductions will be achieved through preventive care and the increased use of electronic medical records, don’t expect to see them in your lifetime. Those assertions are simply not supported by clinical and economic research.

So when all is said and done, what will happen? The very best predictor that we have is the case of Massachusetts – a state that passed its own version of the current Federal reform law on its own in 2006.

As shown in this figure from the New York Times, medical spending skyrocketed after Massachusetts implemented its healthcare insurance reform program. Per capita healthcare spending in Massachusetts is now one-third higher than the national average. The Massachusetts plan was originally projected to cost taxpayers $88 million per year. The actual costs to the state since 2006 have now exceeded $4 billion – that’s eleven times more than expected.

As a point of comparison, the Obama healthcare reform law is supposed to cost the Federal government an $940 billion over ten years. (I.e., that’s $940 billion more than we would have spent without it.) If the Massachusetts experience is any guide, the actual cost is likely to be closer to $11 trillion, or $1.1 trillion per year above and beyond what we’re already paying for healthcare.

But of course that’s just the Federal government’s share of the costs. Businesses and individuals will be paying their own trillions of dollars into the system as well. Trillions more, as it turns out, than they would have been paying otherwise.

Let’s not mince words. From a strictly financial perspective, this is looking like a complete disaster.

“But that’s ridiculous!”, you say. “Of course, we won’t really be paying out all of that money for healthcare goods and services. We can’t afford to; nor can any nation.”

And you are absolutely right. Long before our healthcare expenditures exceed the gross domestic product, something has got to give; whether it’s repealing all of those health insurance benefits, massive healthcare rationing (overtly or covertly, it hardly matters), or simply turning doctors and nurses into slave labor. Which brings us back to our original question. Are our political leaders crazy-like-foxes, or just plain crazy?

Possibility #1: They Know Not What They Do

Of course, this could all be just a stupid mistake. Nobody bothered to ask real healthcare providers, real health economists or real business experts how one might design a medical and economically efficient healthcare system. Probably no one in Washington cared enough to find a plan that would eschew complex, bureaucratic, centralized regulation, and yet still provide good care and contain costs. (Not that it would have been that hard. These options certainly exist, and we’ll discuss them in upcoming posts.) But that’s not what they did. Instead, Americans got a new entitlement program that insures more people, but also created a humongous financial can – one that that got kicked down the road to some future Administration. Perhaps our country’s Leaders simply didn’t know any better.

Or did they?

Possibility #2: Crazy Like a Fox?.

The second possibility is, of course, that this was all intentional. Our political leaders have deliberately set out to systematically bankrupt the American healthcare system. But why would anyone do such a thing?

This theory (if you believe in theories like this), holds that the liberal wing of the Democratic Party will never be satisfied until all of healthcare is owned and operated by the Federal government. Since most Americans currently object to the idea of “socialist” or “government run” healthcare, the best way to accomplish this is to make privately administered healthcare so bad, that voters themselves beg for the government to step in and take over. “When people see the resulting mess”, this thinking goes, “they’ll be screaming for government-run medicine.” This will pave the way for replacing the existing system with one that will look like the British National Health Service (NHS). To put it another way, political leaders with this perspective believe that we have to first destroy the U.S. healthcare system in order to save it.

Given the likely economic consequences of the current law, one has to wonder if this notion is not as far-fetched as it once might have seemed. IIf nothing is done to correct it, the healthcare reform law will almost certainly destroy the private insurance market, healthcare providers, the economy, or all three. If one were looking for a way to make the NHS approach seem appealing, this just might do it.

So which theory is right? I have no idea. (If you happen to know, by all means please tell us.) In the long run it really doesn’t matter. Either way, we’re about to have a Hellth of a mess on our hands. And we’d better start talking about how to fix it.

Categories : PPACA

Mar
16

A Healthcare Rorschach Test

by Dr. Doug Perednia

I recently received an e-mail asking me to comment on a letter to the editor written by Dr. Roger Starner Jones. Dr. Jones’ letter was published in the August 29^th edition of Jackson, Mississippi’s newspaper, the Clarion Ledger. I have reprinted it below. I had not seen this letter before, but Dr. Jones does exist and his piece has received a considerable amount of comment in various places on the Internet.

Dr. Roger Starner Jones

Dear Sirs:

During my last night’s shift in the ER, I had the pleasure of evaluating a patient with a shiny new gold tooth, multiple elaborate tattoos, a very expensive brand of tennis shoes and a new cellular telephone equipped with her favorite R&B; tune for a ring tone.

Glancing over the chart, one could not help noticing her payer status: Medicaid.

She smokes more than one costly pack of cigarettes every day and, somehow, still has money to buy beer. And our President expects me to pay for this woman’s health care?

Our nation’s health care crisis is not a shortage of quality hospitals, doctors or nurses. It is a crisis of culture – a culture in which it is perfectly acceptable to spend money on vices while refusing to take care of one’s self or, heaven forbid, purchase health insurance.

A culture that thinks I can do whatever I want to because someone else will always take care of me.

Life is really not that hard. Most of us reap what we sow.

Starner Jones, MD
Jackson, MS

One of the most intriguing aspects of this letter is that it appears to function as a Rorshach test for those reading and commenting upon it. Conservatives believe that it is a clear and moving indictment of a welfare state mentality. Liberals interpret it as a racist and mean-spirited story that is probably made up, and unfairly attacks the poor. When it comes to what this story says about healthcare, opinions are just as varied. Some are offended by the sense of entitlement attributed to the patient, while others see a callous fat-cat doctor working in a healthcare system that is both unaffordable and mistreats its patient participants. It’s amazing that all of those commenting were reading the same story. How can one reconcile all of these perspectives?

To begin with, some of them don’t need to be reconciled. If his story is true as told (or even if it’s not), there is no reason to believe that Dr. Jones is a racist. The type of person he describes exists in all races, creeds and colors. I have seen them as patients many times, and so has every other doctor. There is no need to invent them. If you do not believe this, then you really do need to spend some time as an observer in a busy emergency room or clinic.

With that objection addressed, it’s easy to understand Dr. Jones’ frustration. People make poor, irresponsible and self-centered decisions all of the time. Many of these involve how they spend their money. They buy things they don’t need and can’t afford – often maxing out their credit cards and paying ridiculous rates of interest in the process. They prefer (and even insist upon) instant gratification. Saving for the future or for a rainy day is a foreign concept. And many Americans clearly make consumption decisions based upon advertising and social pressure. Indeed, the real question is why Dr. Jones – or anyone – should expect this large segment of the population to be any more rational and forward thinking about their healthcare decisions than about anything else? Planning for illness is the ultimate in foresight. Almost no one thinks about their health until they’re sick – especially when they’re young.

Let’s not kid ourselves. To the extent that both our healthcare system and our society as a whole promotes these behaviors, they are both broken.

It just so happened that Dr. Jones wrote about a healthcare-related example, but you can recognize the same basic problem anywhere you’d care to look. Because Americans don’t save, we are no longer in a position to supply our own business capital. If we need money, it must be borrowed from overseas. Because we do a poor job of educating ourselves, many of our product development and software engineers, scientists, (and even doctors) are recruited from India, China and elsewhere. Because we’re unwilling to hold banks and individuals accountable for the quality of mortgages they jointly create, our society has been willing to see wealth destroyed on a scale so large that the average person cannot possibly comprehend it.

Perhaps most disturbing is that our political system – the system that we rely upon for economic, social and military leadership – is emblematic of the problem as a whole. Short-term thinking. Buying votes with the taxpayers’ own money. Deficit spending during an economic expansion. Raising taxes on business in the middle of a severe recession. Creating (and passing!) a massive healthcare “reform” bill that is based upon faulty assumptions, political pork, poor economic choices and a complete absence of medical perspective; these are but different manifestations of the same attitude that walked into Dr. Jones’ emergency room that day. Unfortunately, what might be merely offensive in an individual is potentially catastrophic when backed by the sovereign power of a nation.

Which brings us back to the Rorschach test.

It should not matter whether you are liberal, conservative, or somewhere in-between. If we cannot look at Dr. Jones’ patient in a larger context and see that our country is very much in a crisis of culture, then we are either blind or unwilling to accept reality. Either possibility is a terrible danger to any country, especially a democracy.

From the perspective of many patients and providers, many aspects of our healthcare system really are in shambles. We are truly on The Road to Hellth. And there is no question that our healthcare system can be redesigned to minimize many of its present defects. This includes providing better incentives for people to think about their own health and financial choices proactively and responsibly. But we simply cannot stop there. It will hardly matter if we design and implement the perfect healthcare system, only to have it undermined by personal and political cultural values that corrupt everything they touch.

Categories : Personal Responsibility

Mar
11

Patient, Brace Thyself

by Dr. Doug Perednia

A diagram illustrating the structure and use of a standing brace.

It would surprise many people to learn that insurance companies make as much or more of their profit from their hoards of cash (called “loss reserves”) than they do from the premiums they charge. In this respect they’re much like banks. People give them money to hold onto until its needed. Instead of letting that money sit around doing nothing, insurance companies naturally invest it and earn a great deal of interest in the bargain. If you have enough money in your reserves it really adds up. For example, Wellpoint, Inc. owns Blue Cross of California, which just raised its health insurance premiums by 39% on many individuals. For the 4^th quarter of 2009, Wellpoint reported that it had $5.5 billion more in its subsidiary’s insurance loss reserves than was required by law, and over $700 million in unrealized capital gains. If you can earn 5% per year on that amount of money, it adds up to over a quarter-billion dollars each year.

Given these numbers it should be no surprise that insurers will do almost anything to avoid paying claims and reducing their reserves. Which brings us to the story of a patient whom we’ll call Paul. Paul and his doctor will have to remain anonymous because, in the words of his physician:

“You are welcome to use the story, but it must remain anonymous because I can’t take the risk of pissing off the insurer. If they drop me, I am out of business. You can quote me on this.”

I believe him.

Paul was unfortunately rendered paraplegic from farm accident. He wanted to work, and his employer wanted him to work. In fact, his employer went to all the expense and trouble of building special disabled access to the workplace to help him.

While at work, Paul sat at a computer terminal and his doctor wanted to get him a standing brace to use so that Paul wouldn’t get decubitus ulcers (plural: “decubiti”) on his skin. Decubiti are pressure sores that occur if the skin has to bear lots of concentrated weight for a prolonged period of time. The skin at the pressure point dies as a result of continuous and unremitting compression . Normally we avoid decubiti because discomfort makes us move around. Constant position changes avoid putting too much pressure on one piece of skin. Unfortunately this doesn’t happen to patients (such as paraplegics or diabetics) who cannot feel pain in their extremities, or in people who may not be able to move on their own.

Click here to see some examples of decubitus ulcers.

Paul’s insurer (one of the Blue Cross Blue Shield companies) denied the request for the brace. This is standard operating procedure for most health insurance companies, and it has a certain logic. If you deny a request for payment, one of two things can happen: (A) the doctor and patient take “no” for an answer, and they give up; or (B) they appeal the denial, and you can decide later. Either way payment is delayed and you earn extra investment income on your reserves.

Paul clearly needed the brace and his doctor immediately appealed. He talked to multiple people at the insurer over a period of weeks – all without compensation. (In contrast to other professionals such as lawyers and accountants, doctors in he U.S. get paid absolutely nothing for this type of advocacy.) Finally he located a doctor within the insurance company who agreed that approving the brace should be no problem, but that the approval needed to be made by others within the company. Paul and his doctor had to start the appeals process all over again by filing a whole new form that no one had told them about.

Of course by the time the brace was finally approved, Paul has already developed decubiti.

Compared to preventing them in the first place, treating decubitus ulcers that have already developed is hard. If they’re small, shallow, uninfected and you can keep pressure off of them, they’ll sometimes heal by themselves. But if they’re large, deep and/or infected, they often have to be treated with elaborate medications and surgical repair. Paul’s case was far from simple and he required several surgeries. He ended up spending five months in the hospital. Blue Cross had to pay for that, and it cost far more than the standing brace would have He also lost his job, and with it his Blue Cross Blue Shield health insurance. Ironically, this took Blue Cross off the hook when it came to paying for his long-term medical care. Completely disabled, he is now on Medicare and has had multiple complications from his ulcers and their treatment.

Now let’s get back to those reserves. Didn’t Blue Cross suffer terribly by having to pay for Paul’s hospitalization rather than a simple standing brace? Shouldn’t this teach them a lesson? Surely this won’t happen again?

You’d be excused for thinking so, but the insurance business doesn’t quite work that way.

First, the fact that an insurance company suffers losses in any given year is unfortunate, but it has bizarre silver lining as well. Losses this year can be used to justify higher premiums and higher reserves next year. The higher one’s reserves, the more investment income will be earned in future years. Let’s assume for the sake of discussion that a given health insurer wants to maintain reserves that are one half of its annual payments for medical care:

Year #1
Total healthcare payments	=	$100,000,000
Total reserves	=	$ 50,000,000
Reserve income (@ 5%/yr.)	=	$ 2,500,000

Year #2
Total healthcare payments	=	$200,000,000
Total reserves	=	$100,000,000
Reserve income (@ 5%/yr.)	=	$ 5,000,000

As you can see, medical cost inflation is a long-term money-maker for health insurance companies as long as they are able to increase premiums enough to cover their costs and boost those reserves. It’s just the nature of the business. By the same token if we really did reduce medical risk and costs substantially, it would be a mixed blessing or insurers. On one hand they might be able to lower premiums, which would allow more people to buy their insurance. On the other hand, there would be less justification for maintaining such high levels of cash reserves. If they let their reserves fall, investment income would suffer. Those lost interest and dividend payments would directly hurt the insurers bottom line, and you can bet your boots that executive bonuses would decline right along with them.

Paul’s is a sad, terrible and infuriating story, but it carries some very important practical lessons about the roads that leads to health, and those leading to Hellth.

First, incentives matter. Private insurance companies in the United States are businesses, and these businesses exist to make money, not promote health. No one should be surprised when they resort to tactics that ordinary people might find offensive in the process. Like the scorpion in the tale of the scorpion and the turtle, they don’t mean to harm anyone. It just turns out that way when management success is measured by revenue and reserves. If we want insurers to behave differently, the health insurance business has to be structured and regulated differently. If this can’t be done through the free market, it will have to be done through more and better government regulation – as distasteful as that might be to many. (see Note 1)

Second, regulation matters. If Blue Cross Blue Shield’s behavior in this case is unacceptable, it is because our government permits it. The health insurance markets in the United States are well and truly broken, for our governments have made them that way. They have set aside anti-trust laws, restricted interstate commerce, and tied the hands of physicians and patients when dealing with health insurers. Our political Leaders and regulators are as responsible for this case as the insurance company bureaucrats who pulled the denial trigger. Paul’s story is a perfect example of covert rationing at work. If healthcare resources are not rationed overtly and plainly, they will be rationed arbitrarily through bureaucracy, delay, finger-pointing and obfuscation.

Third, it really, really matters whether patients and clinicians run the healthcare system, or bureaucrats and administrators do. In the long run, the only way the system can work is if patients and providers are the ones responsible for managing and allocating the medical resources needed on a case-by-case basis.

Note 1: Would a government-run or single-payer insurance plan do a better job? Maybe, but not necessarily. It all depends on how it’s administered and run. The devil is in the details. If the folks administering that plan are ordered by Congress and the President to “save money”, their incentives and behaviors will be no different from that of their private sector counterparts. If their mandate is to ensure that the system runs with optimal medical and economic efficiency, the results might be quite helpful. More on this in a future post. (Note 1 Return to Post)

Categories : Bureaucracy Run Amok

Archive for March 2010

Medical Care? Sorry, Too Busy With Software QA…

And Now For Something Completely Different

Clueless or Crazy: Which Is It?

A Healthcare Rorschach Test

Patient, Brace Thyself

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