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Walking Away from the Ledge: A Different Perspective on Healthcare Reform

On Monday I wrote about the abyss that is the current state of healthcare reform in Washington – the enormous black hole that the U.S. will certainly fall in if we as a nation, progress along the path chosen by Mr. Obama and his party.  Succinctly put, the expense of Federalizing healthcare in the U.S. combined with  the certain politicization that will occur within the revised industry is a non-starter or should be.  For the reasons I discussed on Monday, we as a nation need to walk away from the current “reform” ledge that we are teetering on and take a fresh look at where healthcare is in the U.S. and what can be done to begin to “fix” it; sanely, rationally, economically and within the social landscape that is the U.S.

In order to begin to dissect and apply some realistic solutions to the current U.S. health system, we need to look fundamentally at what is wrong and why.  Principally flawed is the economic alignment of the present system. The system today rewards in increasing dollars, greater utilization and higher technology, often when the utilization and technology has questionable efficacy for the patient.  Using a rather simple economic axiom, “what get’s rewarded get’s done”.  In other words, the present system rewards most generously, the practice of acute, episodic medicine and the technology that rides alongside.  Many will argue that such technology is part and parcel to saving lives and I concur.  The issue however is not that the technology is merit-less it is rather, the use of such technology for usage sake and for payment primarily.  Arguably, if there is no disincentive to using advanced diagnostics, tests and procedures and the same are rewarded via payments that increase, a whole series of arguments will be advanced in support of technology as justification for its use (e.g., it saves lives).  In reality, the overuse of medical care has been institutionalized in the U.S. to the point that we are socially drugged by it, intoxicated into believing that such use means better care, even in spite of limited to no evidence to support such a conclusion.  Imagine if we roll this same system into a fully Federalized payer system.  The costs would be astronomic and literally unsustainable.

In an article published in the June 1 edition of the New Yorker, Dr. Atul Gawande dissects the problem of overuse and cost in the U.S. health system exceedingly well.  The unfortunate truth about this article is that precious little that he writes about is new.  The researchers at Dartmouth that publish the Dartmouth Atlas have provided us with similar information for many years albeit, in a far more academic and less interesting fashion.  Perhaps more concerning is that clearly, the politicians and other special interests that are on the current path of federalized healthcare reform in the U.S. likely have not read the article by Gawande or the information that comes from Dartmouth.

To be certain, there are many issues and problems intertwined within the over-use, over-prescribe, over-practice and over-charge current system.  Some will argue and perhaps rightly so, that these secondary issues are more primary than I credit them to be and in fact, bring weight to bear on why providers do what they do and charge how and what they charge.  The issues that I am referring to are a tortious legal environment, a system with enormous and mounting bureaucratic inefficiencies, an inane regulatory environment and of course, inadequate payment or reimbursement from Medicare and Medicaid.  It is the last issue that I take the least serious as a problem for the reason that both of these programs are prime examples of payers that reward substantially more dollars for higher acuity care.  Similarly, most private and other governmental/public health benefit programs use Medicare as the benchmark for payment, either providing discounts in their payment from the Medicare rate or modest increases thereto.  Arguably, if Medicare paid so inadequately, it would only stand to reason that all other payers that model their payments based on Medicare would pay equally as poorly if not even to a greater extent.  Remember, the Federal government is already the “elephant” in the healthcare shopping center, dictating the flow of all things around it.

To begin to simplify the core issues at hand and to drill down to a rational approach to reforming a system desperately in need of some level of reform, we need to start with the core problems and realign the incentives that have created these issues in the first place.  While not an exhaustive list ( I did say “core”), the following make the most logical sense to address initially.  I’ll explain in greater detail how and why a bit later.

  • Reimbursement – we need to modify the outdated system that is regionalized, lacks any real reimbursement for adequate primary care, and is not evidence based at all.
  • Tort Reform – we need to rationalize liability and medical care in the U.S. once and for all.
  •  Billing Simplicity – one standardized claim form, electronic of course, and one standardized methodology for adjudicating claims.
  • Regulatory Reform – next to the nuclear power and waste disposal industry, healthcare in the U.S. is the most regulated industry in the country.  Simplifying and discontinuing the politicized, bureaucracy that generates reams of useless regulations will unquestionably save billions of dollars and improve patient care.  Trust me, if you ever worked in healthcare for any length of time, you know how much energy, creativity and resources are devoted to compliance activities that don’t contribute one ounce of value to the care outcomes of patients.
  • Medical Education – current reformers talk about the need of the U.S. to cover 41 million uninsured and under-insured  yet, where will the primary physicians come from to care for this population?  The U.S. should develop an aggressive and permanent plan to assist with costs of medical education, principally focused on creating more primary care physicians, inclusive of Geriatricians and Pediatricians.  This specialty (primary care) within the physician community must become economically viable and sustainable in order for any reform to occur.

The focus of reform needs to be on a rational basis, devoid as much as possible of special interests and unrealistic economic projections.  Frankly, the U.S. spends amply on healthcare as discussed in my prior post – more than any other nation in the world.  In spite of this spending, the U.S. does not provide adequate primary care access or services to all  of its citizens and clearly, does a marginal job when ranked against other nations that spend far less in gross dollars and on a per capita basis.  Without question, there are cultural and social issues that impact the nation’s overall health status but for a nation that spends disproportionately more than the rest of the world, these cultural and social differences can’t possibly account for all of the variances in overall health rankings.  Presumably, the most rational basis for reform would then be to develop a system within the boundaries of current spending focused on creating a more universalized approach to care, based on attainable and sustainable health outcomes, and focused singularly on correlating quality with cost.  For those that argue that quality is impractical to measure in healthcare, one need only look at the reams of spending and outcome data produced repeatedly via multiple private and governmental sources such as the Centers for Medicare and Medicaid and Dartmouth University.  To the extent that more work is always needed in this area, I concur however, sufficient data is available to begin and to develop, significant and valid benchmarks on how care should be delivered and at what price.  One needs only to look at the Mayo Clinics to see how impressive patient outcomes can be delivered at a cost level that is significantly below virtually half of the nation.

The role government needs to play in this process is principally a role unfamiliar to the current politicized process.  The very nature of reform suggests however, that something new and radical must take place; spending a massive amount of dollars is not new and radical for Washington.  The role necessary is in direct contradiction to the role presently being played.  Congressional leaders and others within the rankings of government must demand and hold themselves and all other stakeholders accountable to, a process that is non-political and non-bureaucratic.  They must insulate themselves from the irrational noise that will come from various stakeholders regarding tort reform (it is necessary), billing simplicity, and regulatory reform.  Without such advances, the system cannot possibly be truly reformed.

The frank economic reality is that conservatively, fully one-fourth to one-third of present spending in the U.S. is wholly unrelated to the delivery of healthcare and the outcomes patients receive.  At a spending level of nearly three trillion dollars, that amounts to nearly $1 trillion that is of questionable value and likely, not related to patient care at all.  By any reasonable measure and approach, reforms such as those I have outlined would save hundreds of billions of dollars if not a trillion; resources sufficient to overhaul logically the current system, improve access, reduce the current spending trajectory, and improve overall outcomes.  Moreover, the reformed system would continue to remain a private economy not a federalized bureaucracy; critical if we wish innovation and increasing levels of research to continue. 

I will fully admit, the task of moving in the direction that I outlined is difficult – far more arduous than layering on more dollars and more inefficiencies in the typical Washington fashion.  The political will and capital necessary to truly reform the system cannot be gained solely within the corridors of Washington congressional offices – the industry and the populus must demand it, vocally.  It is imperative, if we are to create a sustainable, private system that we take the bold steps to reform and rationalize the medical liability limits in healthcare, to weed out inefficiencies and useless regulations and to revamp a reimbursement system that rewards over-utilization and over-spending.  Models of great efficiency and low cost do exist and are readily transferable nationally.  The data to make such transformations does exist and clearly, at a current  price tag of nearly 17% of GDP, the resources have already been more than allocated.

Tinkering around the edges is the likely game that will be played.  Unfortunately, Republicans have proved to be equally inept at creating and proposing real solutions as opposed to hybrid private plans and group purchasing options; none of which address the core problems.  The core structural flaws unaddressed leaves the foundation of the system cracked, distressed and unmanageable, regardless of whatever renovated floors one places over the top of the foundation.  In a phrase often used, “placing lipstick on a pig does not change the underlying animal – it remains a pig”.  Proposals which only window-dress the current system are simply new curtains placed around a cracked window however in this case, the crack does not let cold air in it lets billions of dollars out.  Without substantive and permanent change, emanating from outside of Congressional caucuses and special interests, the system and all of its present inadequacies and structural flaws will grind expensively, along the same ruinous path it is presently on.  There is no time better than the present, given the overall economic realities that haunt the U.S. daily, to begin to bring sanity and true reform to healthcare; rationally, structurally and permanently.

June 10, 2009 - Posted by | Policy and Politics - Federal

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