Problems and Stakeholders

August 2nd, 2007

According to Dr. Koop, the ideal healthcare plan should have the following characteristics:

universal access; affordable for national and state governments and the recipient; cover all diseases and conditions; reduce costs or hold them to the current level of the consumer price index; provide for a drastic reduction in paperwork; develop methods of checking the quaity of care through development of minimal standards; support research and medical education; improve the morale of the health care profession by reducing regulation, and reform the tort system.
While some form of rationing has been viewed globally as a method to contain costs, there are mixed reports on its success. At a conference on healthcare delivery held at the Royal College of Physicians in. London, the consensus was that rationing is inevitable, but there is no consensus on how to accomplish it.  Cost-utility data for individual conditions was refuted because it was threatened by ritual, ignorance and haste. Public expenditure decisions were deemed to have failed because they were based on inadequate knowledge of demographic shifts and influence of new technology. Treatment efficiency measures were determined unacceptable because there were inadequate data and practice variance from doctor to doctor. Another group felt rationing was a political decision and that it should be a matter of public debate – not left to the professionals, administrators or economists. Society needs to decide where it wants to limit treatment and at what cost.
It is estimated that the 85+ age population group may be 10 million people within the next 15 years. There have been big gains in longevity, from increasing survival rate at birth through the vigorous attack on infectious diseases earlier this century. He then points out that even if healthcare costs are cut, demand will increase from the growing elderly population. Rationing will fail because of the large number of people involved. Basic care can be made more affordable, cost effective delivery more efficient, but total costs of medical care will not shrink due to the amount of care that will be needed by the ever-aging population.
In a recent Gallop Poll survey, 52% of the respondents said they would rather pay more out-of-pocket expenses to private physicians and hospitals for care than to pay higher taxes for a government-based system. About 75% would rather pay more and have the option to use a particular hospital or doctor tai) pay less and give up these options. Eighty percent said they would pay out-of-pocket expenses for routine care, if insurance covered more expensive, longterm and emergency care. Of those surveyed, 12% were uninsured. Of the 88% insured patients, 73% were covered through employer-sponsored benefit plans and 25% were insured by Medicare or Medicaid.
The physician is the traditional initiator of healthcare services, but with the development of managed care, there are increasing restrictions, economic as well as paperwork. Paperwork is the fastest rising category of federal regulation, which now takes up an estimated six billion hours of private sector work time. In addition, approximately $20 billion of the total $542 billion spent on medical care in 1992 was related to health safety.

In general, physicians realize that many tests and procedures are not absolutely necessary for diagnosis and treatment. But the-public infatuation with new technology and the tort system forces the prudent physician to use them. Not surprisingly, this proliferation of new technology, diagnostic tests, procedures and services is a major contributor to skyrocketing costs.
Society must decide, by its laws, that clinical decisions do not have to be made on the best possible information at all times. While tort reform is needed, it will not bring about enough savings in healthcare as a stand-alone effort. There must be antitrust reform, product liability reforms, termination of care and coverage litigation reform.
With national attention on outcomes research, there appears to be a consensus that savings will be one of the end-products. If outcome research is initiated, a very positive result could be the elimination of the current necessity for economic’ credentialing.
Good cost-effective care is best defined as the care provided by a competent and compassionate physician who has no incentive to do more or less than is judged appropriate in each case). It is most likely to be achieved when properly motivated: physicians – working with patients – are given the authority to manage medical care without the intrusion of third parties, but within clearly defined cost limits. To be cost-effective, care must certainly be managed, but the responsibility for management is best placed directly in the hands of the physicians and their patients. Who will define the cost limits and how will they be defined is a big issue. Until the public is ready to address these questions, physicians can take steps to extricate themselves from self-referral for laboratory, MRI and CT studies.
Hospitals are experiencing significant decreases in admissions. Since the free-standing surgery centers are moving procedures out of the hospital, those hospitals with outpatient centers do better than those without them. However, hospital charges are frequently higher than those of a free-standing center.
This shift of services is impacting hospital reimbursement for physician training. The training programs are having problems because much of hospital’s care is limited to severe illnesses. As a result, the trainees do not obtain a complete picture of what practice is like on the “outside”. To respond. to this situation, the boards in internal medicine are requiring a significant increase in house staff training in clinics and private physician offices. If reimbursement for-teaching services decreases, hospitals will experience serious financial problems. To this end, hospitals are developing relationships with primary care physicians to protect and increase their referral base. In some areas, billing for major procedures is being bundeled to include both the technical and professional components.
Medical Schools
It has been predicted that an oversupply of physicians is developing . Part of this may be due to our service driven system of medical education in which the number of residencies has increased tofill service needs of hospitals.

Medicare has facilitated this by paying the direct and indirect costs of medical education. This, in turn, has caused a growth in specilization.
While, some medical schools are oriented to training primary care physicians, still others are oriented to research and training academic physicians. Both types of medical schools are needed. However, the size, location and focus of each school requires examination.
With NIH funding, becoming increasingly difficult to obtain, schools need to decide how much-larger their staffs should be and how fast they should grow. How will research be funded if grants, cannot be obtained? How much clinical practice should the faculty be required to perform and still have time for clinical research?
Schools are increasingly developing relationships with hospitals other than the large central teaching. institution as a base for primary, care referral to feed the tertiary care system. And, schools are engaged in the development of healthcare systems to bid for managed care contracts and retain the current market share.
Insurance Companies
The insurance industry has produced problems in the health care delivery system by establishing rating systems attributing most of the increased cost of health care to physicians by proliferating the amount of paperwork or telephone time and by severely limiting coverage outside the, provider network.
Dr. Uwe Reinhardt, a Princeton health economist, emphasized that our health insurance system needs to be reformed by stating “Countries whose citizens give their health care system a high rating provide those citizens with secure health insurance coverage that is portable between jobs and localities and whose premium is divorced from the individuals health status”. By comparison, most current benefit plans are confusing, not portable and are priced to reflect the health status of the individual.
In response to the current turmoil, the Health Insurance Association of American (HIAA) has decided that there should be universal health insurance and community ratings. No limitations on their profit margins are offered; however, they are quick to call for standardization of medical fees. An interesting comment in Lancet stated: “The belated conversion (of HIAA) however, can more likely be attributed to a blend of basic survival instincts and the realization that the addition of 35 million cash customers would be no disaster for the health insurance industry – on the assumption, of course, that the industry, survives.” (1)

The Suffering

For the consumer, the suffering will more than likely be cloaked in terms of access and choice. Limitations may be placed on the choice of providers. Medical treatments might be restricted. New treatments will be restricted until proven effective and cost benefit is satisfactory. Elective procedures will be delayed (2).

Many physicians will be paid at a significantly lower rate than they presently receive. The first step has already occurred and deals with lower payment per unit of service., This is attributed to the introduction of RBRVS by Medicare to redistribute the current medical dollars from specialists to the primary care physicians. The second step in generally reducing cost will focus on decreasing the units of service through more procedures being performed in the office of the primary care offices thus reducing the number of referrals to specialists. Accompanying this process will be-the expansion of capitation to include the services provided by specialists as well as primary care physicians, and even hospitals, in a “global” capitation arrangement,

Primary care physicians will need to work harder at managing their patient panel mix and size to maintain current revenues. Good office data will be essential.
Hospitals will find it more difficult to shift costs to the private patient. By the same token, all charity care as we know it, will disappear. The educational programs will probably not be reimbursed as well as they have been in the past necessitating a cut in house staffs.

For teaching hospitals-and medical schools, there may be a significant decrease in research funds. Access to new technology may well be restricted to certain hospitals or medical schools until proven effective. Funding will decrease for specialty training, but will increase for training general practitioners and internists. There will probably be a need for more faculty to do the functions that specialty trainees do now at a time when the primary care physician will not be available for inpatient and outpatient teaching, unless he/she is being reimbursed for the service.

Assuming the insurance companies survive in a multi-payor system, their profit margins may be limited by law. But if everyone is insured, they still will do well. If a single payer system evolves, unemployment could rise but another bureacracy may very well develop around any new replacement system. Medical costs are still going to increase, but at a lower rate. Whether all are willing to suffer remains to be seen.

(1) Nursing, December 1992.
(2) JAMA, Feb 10, 1993, Volume 269 #6.
(3) Health Service, 1992: 26; p.725-742.
(4) Parade Magazine, Jan 3, 1993, p.17.
(5) Lancet, Vol.340: 11/28/92, p.1343-1344.
(6) St. Louis Post-Dispatch, Nov 30, 1992, Growth of Elderly Will Limit Health Care Program.
(7) Forbes, Feb 15, 1993.
(8) New England Journal of Medicine, Vol 328: p.133-135.
(9) Association of Internal Medicine, Vol. 117: p.839-844.
(10) JAMA News, April 20 1992, p.41.
(11) Lancet, Vol. 340: 12/12/92, p.1458.
(12) Congressional Budget Office – Universal Health Insurance Coverage, December 1991.

Some preliminary thoughts

August 1st, 2007

All Must Suffer
by Morris Alex, M.D.

Over the past several years, there has been increasing pressure for changes in the healthcare system. The press and the politicians use one-sided information to promote their own purposes. An ideal concept is presented to the public without advising them that developing an ideal system will require everyone— consumers, providers, insurance companies, hospitals, medical schools, politicians and researchers — to suffer. Let us examine how each group will need to give up some cherished positions for the betterment of all.

The Situation

What does the average American want from the healthcare system? They expect immediate accessibility, affordability, technology and quality care, but no increase in taxes. However, when a poll was taken by the Employee Benefit Research and the Gallup organizations (1), some interesting and conflicting attitudes became apparent.

* Only 14% of respondents agreed that reducing the amount of healthcare available to the elderly would be acceptable.
* 34% agreed that public funding for services to low-income individuals should be limited.
* 39% agreed that the scope of services covered by health insurance plans should be limited.
* 43% were not willing to limit the introduction of expensive high technology equipment that saves lives, but increases costs.
When specifically asked to name what they would limit if needed, the respondents noted the following healthcare services.
* 72% agreed that expensive treatment not likely to be successful should be limited.
* 64% agreed that expensive treatment that extends peoples lives but does not improve the quality of life should be limited.

The majority of the respondents did not believe that expensive treatments for patients over 75 years of age should be given solely because they would enable the patient to live in comfort, but not live longer. In addition, 77% of respondents felt the cure for rising healthcare costs is to cut the waste, the high profits and the fraud in medicine.

Forty-six percent of Medicare dollars have historically been expended in the last 60-90 days of life and 75% of those charges have been generated by hospitals (1)). Therefore, it appears that the public, while wanting the ideal, is willing to compromise. Whether they are willing to pay more taxes or participate in managed care that steers choice of physician toward a network is still open to question. The fact that PPOs are increasing more rapidly than other managed care concepts would seem to indicate that the American public still highly values being able to choose their own physicians.

The rationale for All Must Suffer

August 1st, 2007

This site will focus on the problems in reforming health care in the US, from the perspective of Morris Alex MD.