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Money, Medicine and Ethics

By John Goodman

The American College of Physicians has published their updated manual on ethics for physicians and the following passage is causing quite a stir:

Physicians have a responsibility to practice effective and efficient health care and to use health care resources responsibly. Parsimonious care that utilizes the most efficient means to effectively diagnose a condition and treat a patient respects the need to use resources wisely and to help ensure that resources are equitably available.

On the right, American Enterprise Institute scholar Scott Gottlieb writes “Parsimonious, to me, implies an element of stinginess, and stinginess implies an element of subterfuge.” (Quote of the Day in American Health Line.)

On the left, Aaron Carroll writes:

I would fight tooth and nail to get anything — and I mean anything — to save [his own child]. I’d do it even if it cost a fortune and might not work. That’s why I don’t think you should leave these kinds of decisions up to the individual. Every single person feels the way I do about every single person they love, and no one will ever be able to say no. That’s human.

Similarly, I don’t think that it’s necessarily fair to make it a physician’s responsibility. I also want my child’s doctor to fight tooth and nail to get anything that might save my child. Many times, physicians have long-standing relationships with patients. Asking them to divorce themselves from the very human feelings that compel them to do anything that might help their patients is not something that I think will necessarily improve the practice of medicine. They also should be human.

So whose job is it? Well, mine for instance. That’s what I do as a health services researcher. That’s what policy makers should also do….

That’s a roundabout way of saying that only the government can ration care the right way. Here is Don Taylor’s (Incidental Economist) take on the subject.

My view: people in health care have become so completely immersed in the idea of third-party payment that they have completely lost sight of the whole idea of agency.

[youtube]http://www.youtube.com/watch?v=BQMI7TksYo0&feature=player_embedded[/youtube]

This game of life I play
Living and dying with the choices I made

Can you imagine a lawyer discussing the prospects of launching a lawsuit without bringing up the matter of cost? What about an architect submitting plans for a building but completely ignoring what it would cost to build it?  Outside of medicine, can you imagine any professional anywhere discussing any project with a client and pretending that money doesn’t matter? Of course not.

Then what is so special about medicine? Answer: the field has been completely corrupted by the idea that (a) patients should never be in a position to choose between health benefits and monetary cost, (b) doctors shouldn’t have to think about such tradeoffs either, (c) in order to insulate the patient from having to choose between health care and other uses of money, third-party payers should pay all the medical bills and (d) since no one else is going to think about what anything costs, the third-party payer is the only entity left to decide which services are worthwhile and which ones aren’t.

To appreciate how doctors could do the same thing other professionals do in advising patients on how to spend their own money, take a look at the graphic below. These numbers are several years old and there may be more recent studies, but the graphic will serve our heuristic purpose. Armed with this information, what would a responsible doctor tell her patient about Pap smears and how often the patient should get them?

Source: Tammy O. Tengs et al., “Five Hundred Lifesaving Interventions and Their Cost-Effectiveness,” Risk Analysis, June 1995.

 

Note that getting a Pap smear every four years (versus never getting one) costs $12,000 per year of life saved, when averaged over the whole population. What the responsible doctor should say is, “In the risk avoidance business, this is a really good buy. Based on choices people like you make in other walks of life, this is a good decision. This type of risk reduction is well worth what it costs.”

What about getting the test every three years (versus every four) or every two years (versus every three)? Here the doctor should say, “Now we are moving toward the upper boundary of what most other people are willing to spend to avoid various kinds of risks. So at this point, serious thought needs to be given to whether the test is really worth what it cost.”

How about getting the test done every year (versus every two years)? Here the responsible doctor will say, “This is definitely a bad buy (unless there is some specific indication). The cost of an annual Pap smear in relation to the amount of risk reduction achieved is way outside the range of choices most people make with respect to other risks.”

Notice what is going on here. The responsible doctor, functioning as an agent of a patient who is not familiar with the medical literature and who is not skilled at evaluating risks or trading off risk reduction for other uses of money, advises her patient in these matters. She helps her patient manage both her health and her money — because both are important.

When Dr. Carroll says “I’d do it even if it cost a fortune and might not work,” I am sure he is being sincere. But I am equally sure that is not how he normally makes decisions. It is in fact easy to spend a fortune to avoid small-probability events. The EPA makes the private sector do it every day. But if an ordinary family tried that, they would end up spending their entire income avoiding trivial risks. And that is not what normal people do.

Here is another example of a money-is-no-object-no-matter-how-improbable-the-prospects-if-life-and-death-are-at-sake choice. This is Zeke Emanuel, writing in The New York Times the other day:

Proton beam therapy is a kind of radiation used to treat cancers. The particles are made of atomic nuclei rather than the usual X-rays, and theoretically can be focused more precisely on cancerous tissue, minimizing the danger to healthy tissue surrounding it. But the machines are tremendously expensive, requiring a particle accelerator encased in a football-field-size building with concrete walls. As a result, Medicare will pay around $50,000 for proton beam therapy for a patient with prostate cancer, roughly twice as much as it would if the patient received another type of radiation.

Emanuel claims there is no evidence the treatment works for prostate cancer — so the therapy is a waste of $25,000. Is he right? I don’t know. If you’re paying the extra $25,000 out of your own pocket, listen to what the doctors at Mayo have to say (in favor of its use) and then listen to what Emanuel has to say and make up your own mind.

Bottom line: helping patients manage their health dollars as well as their health care should be what doctoring is all about.

John C. Goodman, PhD, is president and CEO of the National Center for Policy Analysis. He is also the Kellye Wright Fellow in health care. His Health Policy Blog is considered among the top conservative health care blogs where health care problems are discussed by top health policy experts from all sides of the political spectrum.

Why Health Care Is Reshaping Itself

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By Joe Flower

Costs and revenue: This is the oxygen of any business, any organization. What are your revenue streams? How much does it cost you to produce them? Life is not just about breathing, but, if you don’t get that in-out equation right, there is nothing else life can be about.

Right now this enormous sector is turning itself inside out. It has turned the “transmogrification” setting to “warp.” Why? It’s all about the in-out. It’s all about increasingly desperate attempts to get that right — and the clear fact that we cannot know if we are getting it right.

Let’s do some school on the two sides of this equation. Let’s just go over the new weirdness, and the implications for you and your organization. Revenue first.

Hunting for True Revenue

In traditional health care (the way we did business until about five minutes ago) the revenue side was complicated in detail, but simple in concept: You do various procedures and tests and services, and you bill for them. You bill each item according to a code. You bill different payers; each has its own schedule of payments that you negotiate (or just get handed) every year. There are complications, such as people on Medicare with supplemental insurance, dual eligibles on Medicare and Medicaid, and self-pay patients who may or may not pay.

That’s the basic job: aggregating enough services that reimburse more than their real cost so that you can cover the costs of services that don’t reimburse well. This is cost-shifted, fee-for-service management. Cut back on those low-reimbursement services; pump up the high-reimbursement ones. Corral the docs you need to provide the services, provide the infrastructure and allocate costs across the system.

The incentives all point in the same direction. The revenue streams are all additive. The more you do of the moneymaking items on the list, the more money you make.

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Paying an Arm and a Leg for a Month of Life?

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By Peter Ubel

Imagine for a moment that you are an oncologist caring for a 53-year-old man with metastatic cancer, a person whose tumor has spread to lung and liver.

With standard chemotherapy, this man can expect to live around 12 months.  That standard treatment isn’t all that expensive in today’s terms, only $25,000 and his insurance company will pick up the entire tab since he is already maxed out on his yearly deductible and co-pays.

But wait!  Before prescribing the standard treatment, you find out there is a new chemotherapy on the market, one that costs $75,000 (in other words, fifty thousand dollars more than usual care) and has no more side effects than that standard treatment.

How much longer would patients like this have to live, on average, for you to feel that this new chemotherapy is warranted?

That’s not an easy question to answer.  But it’s not an impossible one either.  Clearly if the treatment would provide only, say, 1 day of additional survival on average, that would not amount to $50,000 well spent.  Just as clearly, if this man could expect 10 years of additional life, no one would deny him this new treatment.

So when, between 1 day and 10 years, does it become a tough call whether to prescribe this new treatment?

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Better Health Care at Half the Cost

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By Joe Flower

Why “half the cost?” How? Most important, what does it mean for hospitals and health systems? Here’s the argument, and some of the implications.

In 1980, health care in the United States took no more of a bite out of the economy than it did in any other developed country. Then we instituted cost controls. By 2000, U.S. health care cost twice as much as everyone else’s. By 2020 or 2025, we may be back to costing the same as any other country — half the current cost in GDP.

Historical charts of the comparative cost of health care in different countries show a startling and obvious pattern. The trend lines of the leading economies form a fairly tight pack, drifting slowly upward from around 5 percent of GDP in 1960 to 8 percent to 10 percent in recent years — except for one. Around 1980, the U.S. trend line sharply breaks from the pack, and quickly establishes itself at half again as much as most other leading economies, then twice as much.

This happened over the very period that Medicare, followed by private health plans, instituted increasingly stringent and widespread unit cost controls.

I draw two conclusions from this: The notion that U.S. health care must cost twice as much as everyone else’s is not exactly the law of gravity. And there is no evidence that unit cost controls actually control system costs. In fact, through a series of complex feedback mechanisms, it may well be that controlling unit costs pushes up system costs, as members of the system find ways to increase their prices and the numbers and acuity of their utilization patterns despite the caps on reimbursements for individual items.

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What Is the Cause of Excess Costs in US Health Care? Take Two

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By Mark Hoofnagle, MD


We’ve discussed it before. Why are costs so much higher in US healthcare compared to other countries? The Washington Post has a pointless article which seems to answer with the tautology costs are high because healthcare in America costs more. How much more? Well, we spend nearly twice as much per capita as the next nearest country while failing to provide universal coverage.

In the WaPo article they make a big deal of the costs of individual procedures like MRI being over a thousand in the US compared to $280 in France, but this is a simplistic analysis, and I think it misses the point as most authors do when discussing this issue. The reason things costs more is because in order to subsidize the hidden costs of medical care, providers charge more for imaging and procedures. For instance, Atul Gawande, in his New Yorker piece “The Cost Conundrum” wonders why it is that costs are higher to treat the same conditions in rural areas and in a major academic centers like UCLA than at a highly specialized private hospitals like the Mayo Clinic? I think the reason is it’s not nearly as expensive to administer and provide care for a select group of insured midwesterners at the Mayo than it is to provide care to the underserved in the poor areas of inner-cities and in poor rural locations.

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The Bottom Line

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By Kelly Wright, MD

It’s cool. So cool, that President Obama used one. So cool, it’s been on the cover of Newsweek. It’s been in multiple television commercials, radio advertisements, highway billboards, and was even coined one of the top 14 medical breakthroughs of 2011 by Boston Magazine, a city teeming with medical innovation. Yet surgeons and health economists are unable to explain the fascinating rise of robotic-assisted surgery.

Currently, a single company manufactures and distributes the robot, a line of surgical equipment used to conduct robotic-assisted surgery. The robotic system consists of a surgeon’s console with 3-dimensional high definition vision and a patient-side cart featuring robotic arms with proprietary wristed instruments. The system translates the surgeon’s natural hand movements on instrument controls into corresponding movements of instruments inside the patient, giving the surgeon control, range of motion, and depth of vision similar to open surgery.

The sole manufacturer hopes to establish the robot as the standard for surgical procedures by encouraging surgeons and hospitals to adapt the technique while marketing aggressively to patients about the benefits of robotic surgery. As of June 2011, the manufacturer had installed 1,933 robotic systems. They estimate that 278,000 robotic-assisted surgical procedures were performed in 2010, up 35% from 2009, and aims to achieve one million annual procedures in the United States over the next few years (Invester Report 2011). To achieve this goal, the manufacturer strategically markets to smaller hospitals and surgeons who may not be skilled at conventional laparoscopy to give them an edge for attracting patients.

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What Good are Health Insurers?

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By BILL KRAMER

Bill KramerAs the health reform effort moves into the final stages, everyone seems to be taking a whack at health insurers. Some of the insurers’ wounds are self-inflicted, such as WellPoint’s announcement of 39% premium increase for individual policies in California. Some of the attacks are calculated to build public support for health reform, since every good crusade needs a good enemy. Some of the criticism has even suggested that we don’t need private health insurers. Michael Hiltzik asked the question in a recent column “What do we need health insurers for anyway?” James Surowiecki – usually a careful and thoughtful observer of business and economic issues – said the following in a recent article in the New Yorker:

Congress [in its health reform bills] is effectively making private insurers unnecessary, yet continuing to insist that we can’t do without them. The truth is that we could do just fine without them: an insurance system with community rating and universal access has no need of private insurers.

Surowiecki goes on to comment on what the world would look like without private health insurers:

In fact, the U.S. already has such a system: it’s known as Medicare. In most areas, it’s true, private companies do a better job of managing costs and providing services than the government does. But not when it comes to health care: over the past decade, Medicare’s spending has risen more slowly than that of private insurers. A single-payer system also has the advantage of spreading risk across the biggest patient pool possible. So if you want to make health insurance available to everyone, regardless of risk, the most sensible solution would be to expand Medicare to everyone.

Not so fast. I would feel more optimistic that this would work if we had a different political system. One of the limitations of this approach is that Medicare’s spending is ultimately determined through the political process. The U.S. political system – for better or worse — allows the health care industry (or any other well-funded interest group) to use its financial resources and lobbying power to increase the flow of government funds into the health sector. The idea that Medicare has a “hammer” to force providers to accept lower payment rates is largely an illusion. In the current system, Medicare can do this only because there is a safety valve, i.e., a large private insurance segment that pays much higher rates to providers. If Medicare gets larger or replaces private insurance altogether, there will be less opportunity to use the safety valve, so providers will step up their efforts to use political pressure to increase payment rates in Medicare. I simply don’t see a strong countervailing political force that would exert sufficient political pressure to hold down costs.Continue reading…

Really Managing Care and Costs

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By BRIAN KLEPPER

One of my favorite health care stories is about Jerry Reeves MD, who in 2004 took the helm of a 300,000 life health plan in Las Vegas, including about 110,000 union members, and drove so much waste out of that system – without reducing benefits and while improving quality – that the union gave its members a 60 cent/hour raise. There was no magic here. It was a straightforward and rigorously managed combination of proven approaches.

Dr. Reeves’ work betrayed the lie that tremendous health care costs are inevitable. To a large degree, the nation’s major health plans abetted this perception when they effectively stopped doing medical management in 1999. (Most have recently begun managing again in earnest.) The result was an explosion in cost – 4 times general inflation and 3.5 times workers earnings between 1999 and 2009 – that has priced a growing percentage of individual and corporate purchasers out of the health coverage market, dangerously destabilizing the health care marketplace and the larger US economy. In 2008, PriceWaterhouse Coopers published a scathing analysis suggesting that $1.2 trillion (55%) of the $2.2 trillion health care spend at that time was waste.Continue reading…

Health Reform: A Class Act

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By THOMAS GREANEY, St. Louis University School of Law

Tim-greaney A few headlines from coverage of the passage of the health reform bill:

Winners, Losers in the House Healthcare Bill (Reuters)

Health Reform: What’s in it for you? (US News) 

Already Insured? Get Ready to Pay More (CBS)

Almost immediately after the House vote on Sunday, the media switched its “horse race” coverage from analyzing the politics of the affair to what it characterized as a clash of economic classes. Analysts were often quick to suggest that the average American might find himself in the loser column.  Others offered the conventional  ”on the one hand, on the other hand” pseudo-journalism, probably leaving most to assume (not unreasonably, based on their experience under trickle-down economics) that they have little to gain.  And inevitably, confusion spawns cynicism: The first question on Monday from my 91 year old uncle  was:  ”Do I still have Medicare?”Continue reading…

Stressed Out System

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By ROB LAMBERTS

I saw a patient today and looked back at a previous note, which said the following: “stressed out due to insurance.” It didn’t surprise me, and I didn’t find it funny; I see a lot of this. Too much. This kind of thing could be written on a lot of patients’ charts. I suspect the percentage of patients who are “stressed out due to insurance” is fairly high.

My very next patient started was a gentleman who has fairly good insurance who I had not seen for a long time. He was not taking his medications as directed, and when asked why he had not come in recently he replied, “I can’t afford to see you, doc. You’re expensive.”

Expensive? A $20 copay is expensive? Yes, to people who are on multiple medications, seeing multiple doctors, struggling with work, and perhaps not managing their money well, $20 can be a barrier to care. I may complain that the patients have cable TV, smoke, or eat at Taco Bell, but adding a regular $20 charge to an already large medical bill of $100, $200/month, or more is more than some people can stomach. I see a lot of this too.Continue reading…