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Networking to Restore Accountability in HealthCare & Medical Practice
Tuesday, December 10, 2002
Vernon L Smith, PhD, Nobel Laureate
Our Mercatus Center announcement a month ago drew an unusually large email response from MedicalTuesday members who were interested in Dr Smith’s economic experiments. Having obtained a master’s degree in economics at the University of Kansas in 1952 and a PhD at Harvard in 1955, Dr Smith started out as an avowed socialist who believed that the good society was one in which a few wise men made most social, economic, and political decisions. (Weren’t we all socialists when in college? Somehow, as we matured, we realized that the best benevolence didn’t always rise to the top. And the creative energy of the masses was more beneficial and dependable than that of the few.) Reason magazine’s contributing editor Mike Lynch, and Editor-in-Chief, Nick Gillespie, interviewed Dr Smith in the current issue. Over the years, Smith gravitated toward a libertarian position where individuals are as free as possible to make their own tradeoffs. “Whether we’re talking about politics or economics, or even social interaction,” says Smith, “the best systems maximize the freedom of the individual, subject to the constraint of others in the system.” As an example, he cited farmers from Shasta County in California who shared fences. If one farmer is careless and his cattle get out, the others exert pressure on him to pay the damages, which are frequently more severe than might be obtained in a court judgment. He quotes economist F A Hayek, who pointed out that early lawgivers were not people who made laws. They simply wrote down the existing practices. This is called “discovered law.” “Made laws” come later. The old saying, “Everything for a friend, nothing for an enemy, and the law for strangers,” came about when transactions were no longer local or face-to-face. Property rights and markets help to extend the gains from trade to strangers by ensuring payment or ensuring delivery.
Medical Practice Is a Local or Face-to-face
To apply this to the practice of medicine, which is primarily a face-to-face transaction, the highest benefit to patients
, both in
terms of their health care and economically, results when there are fewer laws
that interfere with the doctor/patient interface. “Made laws” in
medicine are often developed by people with the least understanding of the
practice of medicine and health care. The lack of understanding, however, does
not deter “their” involvement. In the recent Redding, California, expose
about a “cardiologist” doing medical catheterizations and a cardiac surgeon
doing coronary bypasses, the SF Chronicle never once, in dozens of articles,
distinguished the difference between the medical and surgical field. However,
their lack of understanding about what diagnostic physicians do, as opposed to surgeons,
did not deter them from making single-payer health care
proposals to their readers. For the uninformed to revamp medical practice would result in an even greater catastrophe than the planners of bureaucratic
managed care accomplished two decades ago which did not improve either access or
availability to health care.
Martin Feldstein Estimates Third-Party Payment
Increases Costs by 250 Percent
Proponents of single payer or other forms of government medicine claim that the government is more efficient with less overhead or administrative expenses. S Blevins, in her book, Medicare’s Midlife Crises, points out that statistician Barkev Sanders warned that the Social Security Administration was concealing the truth in actuary estimates in order to sell national health insurance. T Schatz estimates that $463 billion was looted from trust funds in 2000 and 2001, representing worse mismanagement than Enron. Rep Ron Paul, MD, states, “No corporation on earth comes close to the accounting fraud practiced year after year by the federal government.” Martin Feldstein estimated that moving from a total out-of-pocket payment to a total third-party payment might increase [health care] expenditures by as much as 250 percent.
Well, It’s Free, So Why Can’t I Have It?
A 40-year-old asthmatic asked for an air purifier. When she was reminded that she was still smoking cigarettes, she said, "That's true. But by cleaning up the air around me, surely the cigarettes wouldn't harm me as much. I know Medicaid [taxpayers] pays for the purifier."
In this section we give examples of patients utilizing at least twice the necessary health care costs and frequently 10 to 100 times what is reasonable; today’s example, 100,000 times greater. Martin Feldstein estimates that the average gluttony
, (the cost of free care over that for which
patient’s pay) is 250 percent. This is an important number to remember as a likely
average. This is probably not that different from eating at a smorgasbord; often
we will eat twice as much or more as when we’re paying per dish. And get twice
as big and unhealthy. Recent data suggests that obesity or food gluttony
increases health care costs by 160 percent. This should be reflected in the health
insurance premium. Someone who eats healthily should not have to pay for the
excess health care costs of someone who eats unhealthily. I
had a patient who ate something that made her bowels very active. I suggested
she take diphenoxylate, a readily available synthetic opioid. Instead, she
called 911, the emergency system in the US, and was taken to the hospital. After
a number of tests, it was determined that she was not dehydrated or chemically
imbalanced, and was advised to take the same synthetic opioid. The next day she
had another loose stool and immediately called the emergency system, was taken
to the hospital emergency room, the same findings and the same treatment were
recommended. She did this five times before the hospital finally decided to
admit and treat her under observation. Upon admission she was given one
“diphenoxylate” tablet and had no diarrhea during the 24 hours and was
discharged. She then admitted that she had not taken any diphenoxylate during
the entire week. “Why should I keep all those poisons in me with drugs?”
Being on Medicaid, she incurred no expenses. The five ambulance (Limousine) rides
which cost taxpayers about $500 per ride, or $2500; the five ER visits which
cost taxpayers about $600 per visit or $3,000; and the 24-hour hospitalization which
costs taxpayers an estimated $1500 could all have been avoided with a seven cent
diphenoxylate pill. There was no discussion of costs with this patient. She
believed that society owed her this. She felt that it was society’s problem if
they had to spend $7,000 to take care of her before she was given the seven cent
pill after admission. But an increase in cost from $0.07 to $7,000.00 is a
100,000 fold or ten million percent (10,000,000%) increase in costs. No
bureaucracy would dare touch emergencies. Our HealthPlanUSA (as well as
HealthPlanUK, HealthPlanEURO, HealthPlanAussie,
etc.) will solve this problem.
Stay tuned to the next fifth Tuesday quarterly overview.
National HealthCare Systems in the English-speaking
World (No 8)
In his recent update of the “Twenty Myths about National Health Insurance,” John C Goodman, PhD, president of the National Center for Policy Analysis (www.ncpa.org), states that ordinary citizens lack an understanding of the defects of national health insurance and all too often have an idealized view of socialized medicine. For that reason, Goodman and his associates have chosen to present their information in the form of rebuttal to commonly held myths.
Myth Eight: Countries with Single-payer Systems of
National Health Insurance Hold Down Costs by Operating More Efficient Health
Advocates of single-payer health insurance often point to the low level of health care spending in countries with national health insurance as “proof” of efficient management. But cheap is not the same as efficient. By and large, Goodman contends, countries that have slowed the growth of health care spending have done so by denying services, not by using resources more efficiently. In Britain, it is not unusual to find a modern laboratory and an antiquated radiology department in the same hospital. Nor is it unusual to find one hospital with a bed shortage near another with a bed surplus. Where excellence exists, it usually is distributed randomly–often the result of the energy and enthusiasm of a few isolated individuals rather than decisions by hospital management.
How Much Does an Operation Cost in Single-payer
How much does it cost a hospital to perform an appendectomy? Outside the United States, it is doubtful that any public hospital could provide the answer. Nor do government-run hospitals typically keep records that would allow anyone else to find out. In organizational skills and managerial efficiency, the public hospitals of other countries lag far behind hospitals in the US. It is not easy for other countries to change course. One reason there is so much inefficiency abroad is precisely because health care is political. Health economist Alain Einthoven observes that because health care in Britain is so politicized, “it is more difficult to close an unneeded [British] hospital than an unneeded American military base.”
Hospital Bed Management in Britain
Britain has about 20 percent fewer inpatient hospital beds per capita than the US and about 44 percent fewer than the Organization for Economic Cooperation and Development (OECD) median of 4.3 per 1000 population. The statistics are quite telling:
An estimated 500,000 surgeries were canceled in the past five years due to a shortage of NHS hospital beds.
While more than one million people wait for medical treatment in Britain, close to 30,000 beds are empty on any given day.
By some estimates, an additional 15-16 percent of British hospital beds are filled with patients who do not belong in a hospital at all. A survey of a hospital in Coventry found that three-fourths of patients occupying a bed no longer needed acute care but had nowhere suitable to go.
Efficiency Measure: Hospital Length of Stay
One widely used measure of hospital efficiency is average length of stay (LOS). Hospital-related services are the largest component of health care costs in most countries. Consequently, using an acute care hospital bed for a patient awaiting tests or non-emergency care, or for a geriatric patient awaiting transfer to long-term or home care, especially in an environment of lengthy waiting lists for admissions, is not an efficient use of resources. In general, the more efficient the hospital, the more quickly it will admit and discharge patients. By this standard, US hospitals are far in front of their international counterparts. The average length of stay (LOS) in the US is 8 days compared to 14 days in Germany, 15 days in Australia, 32 days in the Netherlands and 44 days in Japan.
Britain’s NHS vs United States Staff Model HMO
Although the per capita cost of the two systems is similar, Kaiser provides its members with more comprehensive and convenient primary care services and much more rapid access to specialists and hospital admissions. Kaiser achieves better performance at roughly the same costs as the NHS because of integration throughout the system, efficient management of hospital use as well as the benefits of competition and greater investment in information technology.
Administrative Inefficiency in Canada
In Canada, a large percentage of acute care hospital beds are being used for patients who do not need acute care. Research shows that from 27 to 59 percent of hospital days do not require acute care. The Manitoba Centre for Health Policy found 23 percent of bed days spent by short-stay patients did not require a hospital setting. Studies of Winnipeg hospital found that 40 percent of the acute care beds were used by only a few patients, each staying more than 30 days. Global budgets create incentives to keep patients in the hospital. Doctors can find CT scan reports easier on inpatients rather than navigating the confusing outpatient network. Hospital managers assigned “global budgets” find it is less expensive when a bed is occupied by a long-term patient needing mostly “hotel” services than when it is occupied by a patient who is there for what may be high-cost treatment. This is very relevant inasmuch as Oregon and now California plan to implement a Canadian Style Health Care System. This should increase the sales of antacids or nitroglycerin for responsible or sick citizens.
Speaking of global budgets reminds me of my rotation through a federal government VA hospital. There, the average hospital stay was on the order of 30 days. It was so inefficient, even the medical students just chalked it up to congress’ attempt to practice medicine. In an address after a visit to a VA hospital, Joel D Wallach, DVM, MD, nominee for the Nobel Prize in Medicine in 1991, mentioned, “We have two ‘opportunities’ to give our lives for our country--once on the battlefield and once in a [government] VA hospital.” He wasn’t kidding. A VA doctor tells the true story: One day during rounds, the nursing assistant complained that a patient was not swallowing. The food just kept running down his mouth onto his shirt. The doctor looked closely at the patient and noted that he was dead. Not only can you give your life in the VA hospital, but even after you’ve done so, the staff doesn’t know you’re dead. As is well known, the government itself is a welfare system. It is the only employer that can employ the totally incompetent.
Vern Cherewatenko, MD, reports that yesterday and today, December 9 & 10, 2002, he and Lori Swanz are giving a seminar on SimpleCare at an international conference in the Dominican Republic. They anticipate about 500 attendees from the US, Canada, New Zealand and several other countries. “There is growing interest in Canada and we are giving seminars both regionally and nationally here in the US. We have ventured to Las Vegas twice in the last three months. It is nice to see that more people are interested in SimpleCare as the ranks of the uninsured grow daily. We are also going to be featured in this week's issue of the Puget Sound Business Journal.” He also announced that he and Dr David MacDonald are now 100 percent SimpleCare and are totally free of any contracts and billing. They also report that patients get paid 60 percent of charges when they bill their insurance, whereas Drs MacDonald and Cherewatenko typically got only 45 to 50 percent. Congratulations to David and Vern for blazing the way for personal private medicine and demonstrating that the Free Medical MarketPlace is more efficient and cost effective.
MedicalTuesday Recommends the Following Efforts in
The Greg Scandlen Health Policy Comments as an important source of market-based medicine, as well as the weekly Health Policy Digest which is a health summary of the full NCPA daily report. You may log onto NCPA (www.ncpa.org) and register to received these reports. The Mercatus Center at George Mason University is a strong advocate for accountability in government. You may register your email address or read their government accountability reports at www.mercatus.org. Martin Masse, director of the Montreal Economic Institute, is the publisher of the webzine: Le Québécois Libre. His enlightening articles can be found at www.quebecoislibre.org/apmasse.htm. We also recommend the market-based reports of Lew Rockwell, president of the Ludwig von Mises institute. Please log on at www.mises.org to obtain the foundation’s reports or log onto Lew’s premier free market site at www.lewrockwell.com.
MedicalTuesday Recognizes the Following Efforts in Restoring the Doctor & Patient Interface: PATMOS EmergiClinic - www.emergiclinic.com where Dr Robert Berry, MD, an emergency physician and internist, provides prompt care for many of the injuries and illnesses treated in Emergency Rooms at a fraction of their cost as well as an internal medicine practice; Dennis Gabos, MD, President of the Society for the Education of Physicians and Patients (SEPP) www.sepp.net for his efforts in Protecting, Preserving, and Promoting, the Rights, Freedoms, and Responsibilities of Patients and Health Care Professionals, with a special page for our colleagues in nursing; SimpleCare for their success in restoring private practice, www.simplecare.com; HealIndiana as a supporter of market-based medicine, www.HealIndiana.org; and the AAPS representing physicians in their struggles against bureaucratic medicine www.AAPSOnline.org.
Stay Tuned to the MedicalTuesday.Network
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Del Meyer, MD, CEO & Founder