Make the shell smaller, please!

So, Obamacare has passed, been legally upheld by the Supreme Court and appears to have met its enrollment goals.  So how far have we really come?  Not that far.  Let’s look at the statements and actions of some of those who actually run a portion of the system:

We need look no farther than The New York Times, May 26, 2014 for two separate indicators:

First, in an article titled “Hospitals Look to Health Law, Cutting Charity”, the author describes how some large hospital systems are reducing the level of charity care they provide, encouraging patients to sign up for Obamacare instead.  Or perhaps Medicaid.  Or if the patient doesn’t qualify for coverage, bill them directly.  One big shell game, as long as the hospital doesn’t have to eat the costs.  (The author didn’t say all of this- the author just stated the facts behind the cost shifting).

Then, in the editorial section, same date, we see responses to an earlier article that blamed the pay of insurance executives for the high costs of care, and attempted to shift the spotlight away from physicians.  It was the responses (letters to the editor) that interested me.

No less than three physicians wanted us to know it wasn’t the doctor’s fault.  Not to be outdone, a hospital association executive pointed out that it wasn’t the hospital’s fault.  Finally a nurse wrote in saying guess what?  If we only paid them more… (actually I do think nurses are the “good guys”).

So it’s one big shell game, and it’s not the doctors, hospitals or nurses at fault.

Here’s the news, all of you experts- we know it’s one big shell game.  Just make the shell (costs) smaller!  So the part that falls on us is tolerable.

With all of your expertise and training, you must be able to conceive of a solution to the problems of the health system that is more sophisticated than simple cost shifting!  Two children can do that (“make him pay…no, no, make him pay!).

So now that Obamacare has passed, been upheld and met the enrollment goals, do we all now get to sit back?

No.  It’s time to focus on costs.  Aggressively.  Now.

#Obamacare- The focus needs to be on Costs.

Now that an estimated 6 million + people have signed up for Obamacare, how have we done?  Is 6 million enough? Is the mix of young and old the right mix? Did enough previously uninsured people sign up?

Long term success will hinge not on any of the above questions, but on what we do about costs.

I am not talking about the cost of the insurance premium.  After all, if you insure something expensive, the insurance policy will be expensive.  Rather, I am talking about the costs of the underlying products and services- physicians, hospitals, pharmaceuticals, devices and supplies.

Here are several steps we can take that will decrease the costs of care:

-Allow Medicare to use its purchasing power to negotiate with pharmaceutical companies

-Implement tort reform

-Expand the scope of practice of physician extenders

-Open more retail clinics

-Allow, and reimburse more at-home care

-Encourage, and reimburse, more remote home monitoring

-Allow the sale of insurance policies across state lines

-Encourage more price transparency.  Increase the publication of prices.

Every one of these suggestions is either not done today or is limited in order to protect the finances of a particular interest group, be it physicians, hospitals, pharmaceutical companies, insurers or attorneys.  And in all cases, it is the consumer who suffers, either through lack of access, higher prices or higher taxes.

Don’t misunderstand me- I support Obamacare.  I am glad to see it happening.  But we need to focus on costs. Aggressively.  Now.

The only reasonable end-game is full transparency and significant downward pressure on prices.

As more and more people sign up for Obamacare, early indications are that there will be some adverse selection- more middle aged and older people, fewer young and healthy people.  This creates the “downward spiral” as those healthy people who signed up eventually drop out because prices are too high.  This worsens the risk pool and increases prices for those who remain.  Then more drop out.

This will accelerate as states and corporations discontinue coverage for some because they can now purchase coverage through Obamacare.  The people affected by this will mostly be retirees who are older and less healthy- more costs will be run through the exchanges.

If we don’t do something about the core issue of prices, this is not sustainable.

Whether the issue is people who only want catastrophic coverage but can no longer find it, or people who are forced to by coverage that cannot possibly apply to them (think 60 year olds purchasing maternity coverage), or part time workers whose hours are cut even further, there are many people who the market is presently ignoring, at great cost to the system as a whole and to those of us who participate in it.  And I am not talking about the price of insurance.  I am talking about the costs covered by the insurance- hospitals, physicians, drugs and devices.

We need to:

-force the publication of prices.  There have been several articles over the past year detailing how hospital and physician prices vary widely.  They seem unable to estimate prices until after you have received the service, then they are suddenly quite certain what you owe- and it’s a lot.

-broaden the scope of services for “physician extenders”, such as PAs and Nurse Practitioners.  If there is a “physician shortage”, the simple rule of supply and demand will ensure that they are in the “power position” in each and every discussion.  Allow more extenders, fix the shortage, reduce physician bargaining power and change the entire dynamic of the discussion with physicians.

-levy punishing fines, not token fines, when organizations are shown to have schemed the system, as one Florida hospital organization was recently shown to have done (driving up admissions and penalizing doctors who resisted).

-and yes- allow the market to provide products that are aligned with people’s needs.  If some want a catastrophic policy, they should be able to find one.  If a 60 year old couple does not want to buy maternity coverage, they should not have to.

I am not in favor of unfettered market freedom- after all, it is the market that gave us slavery and sexual trafficking.  I do believe, however, that a proper mix of regulation and market freedoms will provide the best answer.  Right now, we have swung too far in the direction of regulation, where attractive market options are forbidden by law.  We need to move back to a place where the market and regulations are in proper balance.  And if we provide transparency and allow the market to work, with some regulatory oversight, then prices will surely decline.

It is time to break the provider “monopoly” in health care.

Many of us believe the health care discussion is actually about money, masquerading as “quality”.  We see a number of versions of this:

1) The wave of hospital mergers.  They are presented to the public as “improving quality”, but a recent article (AARP bulletin, June 2013) cites cost increases of up to 40% following a merger.

2) Network restrictions imposed by insurers.  Large health systems whose prices are rejected during contract negotiations generally claim that to eliminate them from a network will “compromise quality”.  Pressure is then put on the insurer to include the prestigious hospital system in the network at a typically higher cost.

We also see some promising developments:

1) A recent New York Times article (“Lessons in Maryland for costs at Hospitals”, August 28, 2013) describes some results of using hospital price controls and encouraging patients to receive care outside of the traditional hospital (lower costs, better quality statistics, more satisfied patients, and yes, more profitable institutions).

2)     An increase in the number of retail clinics, and an increase in the range of services they are able to provide.

There are some commonalities here:  when we, the patients, are no longer considered “captive” by the local providers, and instead have alternatives where we can go to receive our care, interesting things happen- costs tend to go down.  Quality tends to go up.

So what then, are the benefits of granting local monopolies to select groups of health care providers?  There is an interesting lesson now playing out in New York City:

A hospital in lower Manhattan, St. Vincent’s recently closed.  Prior to the closure, providers predicted a drop in “the quality of care provided to local residents”.  Politicians predicted a disaster.  And what happened?  Nothing!  Death rates have not soared, the community has not suffered- in fact, many urgent care centers opened up to fill the void.

Some may argue that access in the neighborhood has improved- minor conditions can now be seen efficiently and at low cost, as opposed to lengthy waits in an emergency room that is also serving those with contagious conditions.

I hope this trend not only continues, but accelerates.  A provider “monopoly” tends to benefit only the providers.  It is time for the consumer to be at the center of this system!

A Comment on the “Time” Article

A recent article in Time Magazine (“Bitter Pill-Why Medical Bills Are Killing Us”, by Steven Brill), did a fine job of thrusting into the spotlight the profiteering behavior of some providers in our health care system.  While the article covered a lot of ground, his discussion of the behavior exhibited by hospitals and hospital systems was particularly interesting.  That is where I will focus.

To summarize, hospitals are wildly inconsistent in what they charge for specific services and service packages.  By packages, I mean the room, the procedure(s), the doctors, and the drugs required to treat you.  The costs are frequently hidden, and if pressed, hospitals will quote from a greatly inflated “charge master”.  One result is “non-profit” institutions that are incredibly profitable, while their patients experience financial devastation.

It almost seems as if the behavior is somewhat predatory (my words).  So what should we do?

Let’s start here- hospitals should be required to post conspicuously a price list for the 100 most common services or service packages.

If you are considering a hospital for an uncomplicated childbirth or a knee arthroscopy or a hernia repair, you should be able to look at a list and see what it costs.  The price should include all services, tests, supplies, labs and doctors expected to be involved. If the hospital chooses to post it’s charge master, fine (as opposed to an insurance rate, which may be prohibited by their contract).  Posting the charge master will allow consumers to compare prices.  Even if you wind up in the hospital because of an emergency, you can transfer to a more reasonably priced facility once the immediate crisis has passed.

Just this would prevent, or at least lessen, some of the financial horror stories described in the article.

So what do you think?

Should hospitals be required to post a price list for the most common service packages?

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We (the consumer) are about to get trashed!

I saw three articles that disturbed me last week.  Taken together, they are no less than frightening.  All were printed in the New York Times.

First came an article titled “Insurers alter cost formula- patients pay” (New York Times, April 24).  The main point is that insurers have changed the way in which they reimburse doctors and hospitals.  The reimbursement has gone down, so the patient’s portion has gone up.

The second article, also printed in the New York Times on April 24, is called “Pricing confusion adds to pain at hospitals”.  The main point here is that hospital bills appear to have no rhyme or reason, with the price for the same procedure in the same geographic area varying wildly, sometimes by a factor of ten or more.

Finally, in the New York Times on April 25, “Debt collectors pursue patients in hospitals” describes how employees of a collection firm, “Accretive Health” are actually allowed front line positions in their client hospitals where they can, and do, get right in patient’s faces demanding payment for expected or past services, sometimes before emergency services are provided.

Now put all of this together-

  1. We don’t know what something will cost and may be off by a factor of 10
  2. Whatever it does cost falls more and more on our shoulders to pay
  3. We will subjected to very extreme collection practices, including denial of services, until we pay what we owe.

Now compare this to the experience of citizens of every other advanced country in the world- costs are simply not allowed to come between a person and their need for health care.

We, the consumer, are about to get trashed, and it is time to do something about it! (Stay tuned for future posts).

Which of the key health industry players is to blame for the current problems?

Who is to blame?  All major participants have good and bad aspects:

Insurers:

  • The Good:  They bargain provider prices down.  They pay our bills when we get sick .
  • The Bad:  They deny coverage inappropriately.

Pharmaceutical companies:

  • The Good:  They provide medications that heal.  I’d rather take medicine than receive surgery.
  • The Bad:  They overcharge and put drugs on the market that are far more expensive and no more effective than what they replace.

Physicians:

  • The Good:  They provide good, compassionate care.  They save our lives!
  • The Bad:  They put us on a financial treadmill and churn patients to increase their incomes.

Hospitals:

  • The Good:  They provide the infrastructure within which healing and recovery take place.
  • The Bad:  They build empires and overbuild in general, driving up costs.  A cath lab in every town?

Device and supply manufacturers:

  • The Good:  They invent and produce live improving and life extending devices, e.g. pacemakers, MRIs.
  • The Bad:  They inappropriately work the system to sell more of their products.

So what does all this mean?  There is no universal “good guy” or universal “bad guy”.  In improving our system, all parties must be looked at carefully, and all parties must accept change!

Would you sacrifice choice this time around?

In the ’80’s and 90’s, when HMOs first became widespread, we all experienced lower costs but less choice- we had to choose from a list of doctors and hospitals, i.e. “in-network providers”.  But costs did stop rising, and in some cases actually fell.

Then came the managed care backlash and insurers allowed a much broader choice of doctors and hospitals.

Health care costs have nearly tripled since 1990 and now, the federal budget and nearly every state budget is threatened by extremely high health care costs.  Of the many methods being used to try to contain costs, limiting consumer choice of providers is once again a common approach.

The way this works in practice is that health plans offer one set of prices for using “in-network providers”.  If we use “out-of-network” providers, the amount we have to pay out of our own pockets is higher.  Sometimes much higher.

Here is the question: How do you feel about having a limited choice of doctors and hospitals in return for lower costs?

Is limiting our choice of doctors and hospitals fair, if costs are significantly lower?

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