WELCOME TO THE MEDICAL TUESDAY NETWORK
Physicians, Business, Professional and Information Technology Communities
Networking to Restore Accountability in HealthCare & Medical Practice
Tuesday, January 14, 2003
Welcome to Winning in the “Health Care” Business
on Behalf of our Patients.
In last month’s issue of Fast Company,
Gary Hamel's article, “Innovation Now! It’s the
Only Way to Win Today,” states: “Conventional wisdom says to get back to
basics . . . cut costs. [But] conventional wisdom is doomed. The winners
are the innovators who are making bold thinking an everyday part of doing
business.” The prevailing world sentiment is that governments must control
health care. But that control has
produced most of the problems we face today, such as rationing, years of
waiting, loss of quality of care, with resultant third world health care in
developed countries. Many nations are making attempts to privatize–to get the
government out of health care. But humans, despite our rational capabilities,
continue irrationally. Thus, there is growing sentiment to follow this
apocalyptic course. We have witnessed the State of Oregon’s attempt to
implement a single-payer
initiative with a 4:1 loss in the voting booth. There is a move in the State of
California to implement a single-payer
socialistic initiative despite the fact that the State’s finances are in the
toilet. There is an undercurrent to retry the disastrous HMO system of the past
two decades with even stricter regulations. Last week, an editorial in The
Wall Street Journal warned that if we add pharmaceutical coverage to
Medicare without a major overhaul to introduce market incentives during this
Republican controlled Congress, we will miss an opportunity to make it workable
during our lifetime. The WSJ states that by 2030, the present Medicare will
consume one-fourth of our entire tax revenue, double the present ratio, and a
drug benefit will add an additional $500 billion every decade. If reform fails,
the single-payer
government medicine may succeed in controlling the entire health care industry
by some irrational fluke; but it will fail to
improve the health of humankind in this country, repeating the disasters the
rest of the world has experienced.
The Case for Innovation and Radical Thinking
Paraphrasing Hamel, “If there is one thing we need to
understand about our bruised [health care] environment, it’s this:
Yesterday’s [failure] has never mattered less. Today’s success has never
been more fragile. Tomorrow has never been more uncertain. And the courage to
lead the kind of change that it takes to survive–or, even more important to
win–in this world has never been in such short supply.” For instance, when I
interviewed prospective business partners for MedicalTuesday about what
they surmised the health care environment needed, those who insisted that we
needed more laws and regulations were easy to dismiss. What we need is
innovation and radical thinking. As Hamel states, most executives choke on the
word radical as being high-risk, ill-conceived and speculative. But he defined
it as meeting three standards. 1) A radical idea has the power to change
customer expectations. Doctors and patients should be empowered to be
innovative, not compressed into bureaucratic molds. 2) A radical idea
changes the basis for competition. Doctors, the business, professional,
and information technology communities should be allowed to invest in new
technology without bureaucratic restrictions. 3) A radical idea is one
that has the power to change industry economics. If once again
doctors competed with their colleagues for patients
and hospitals competed with other hospitals for the best medical staff,
the quality of the health care industry would rise to even greater heights than
we already experience,
at prices that would be affordable. This would change the entire HealthCare
economics equation,
bringing health care to everyone since the social net of welfare and Medicaid
already gives the less fortunate an outstanding level of service,
except perhaps in California, exceeding that of most other countries.
The Gap: California’s $35 Billion Hole
In recent weeks nearly every major paper in the US and UK
featured articles about California’s Budget Mess. I believe the Wall
Street Journal had the clearest thinking on
the matter. As I recall, our governor inherited a $57 Billion
budget with a $58 Billion revenue stream. With the wealthy 0.3 percent
paying one-fourth of the tax revenues, the state income mushroomed to about $75
Billion. Meanwhile, by the time our governor bought all the votes possible by
various new entitlements
(which is not only unethical, but fraudulent if perpetrated by the business and
professional community),
the expenses soared to $78 Billion.
However, when 44,000 millionaires lost much of their income because of the
economic downturn, this revenue source dropped by three-fourths leaving an
adjusted $35 Billion deficit. In this country Independence Day has achieved a
double meaning. July 4 is not only the day we achieved our national
independence, it is approximately the day that many American workers begin
working for themselves and their families–having completed their annual
servitude to the government on behalf of national, state
and local taxes. However, these exorbitant taxes did not dissuade our governor
from adding even more taxes to cover his mismanagement of tax funds, thereby
jeopardizing the health safety net while he reduces health care funding to
welfare and eliminates Medicaid
to the near poor; and reduces
funding for education and increases tuition at the state colleges and
universities and more than doubles
tuition at our community colleges.
The Biggest Frauds Continue to Be Government Frauds
Rep Ron Paul has stated that the biggest frauds continue
to be government frauds, not those produced by Enron, World Com, and others. Why
aren’t the CEO, COO
and CFO of the government prosecuted and risk jail
terms like the CEO, COO
and CFO
of corporations? The moneys of all taxpayers entrusted to the state are
certainly of equal (or more) relevance than that entrusted by a group of
shareholders to their Board of Directors. One OpEd piece in The Sacramento
Bee observed that while there is an increasing push to further tax the
wealthy, California needs about 50,000 additional wealthy citizens to pay taxes.
Or, according to the National Taxpayer’s Union, what we really need is a flat
tax like the state of Massachusetts which started with a 5 percent
flat income tax on everyone. People began working together to control the costs
of government, gradually reducing the tax to 4.2 percent.
With a progressive income tax, citizens are pitted against each other which
produces a caste discrimination system. When it’s obvious that a government
cannot manage health care for the poor and can’t teach our children basic
reading and writing skills, we must continue our efforts to prevent government,
which now has the assistance of many of our professional organizations, from
destroying our entire health care industry by an impersonal, single-payer
socialistic system.
Medical Gluttony (Excessive HealthCare Costs)
This week, an 88-year-old patient, whom I’d seen several
months earlier, developed some chest discomfort that lasted for
several days. She chose to go to an urgent care clinic instead of coming to my
office as required by her insurance protocol. She
elected to see another unfamiliar physician even though I was available. This is
a common misconception by patients: that any doctor should be able to treat a
patient without the knowledge of the medical history. The repeat
electrocardiogram at the urgent care center revealed no acute changes to suggest
a myocardial infarction. However, she had some premature beats and was advised
to have a cardiology consultation. She mentioned her hemorrhoidal bleeding and a
gastroenterology consultation was also recommended. She mentioned her aching
shoulders and multiple x-rays were obtained, which revealed some arthritis.
Several days later, she came to the office requesting that these consultations
recommended by the urgent care center be implemented. During the course of my
initial 1½-hour
consultation, I had developed a significant medical record on her in which all
the above had been discussed. Had she come to me, none of the tests would have
been required based on these records. On my reexamination, her chest pain was
localized to the left fifth costochondral junction (where the rib meets the
sternum). She verified that this pain duplicated the pain she complained about at the urgent care center. Hence, a few minutes of
interview and examination confirmed this as musculo-skeletal rather than cardiac
in origin, and no
repeat ECG or cardiology consultation was warranted. When reviewing her record,
we noted that we had discussed further evaluation of her hemorrhoidal (possibly
rectal) problem which she had declined
since she did not want to subject herself to a colonoscopy. I felt this was a reasonable decision on her part considering her
age. Her insurance carrier called inquiring why the urgent care visit was
necessary since it was duplicative and even more expensive than my initial 1½-hour
evaluation. When they where informed of my findings, they refused to pay the
bill. She would have to pay over $600 for the unnecessary urgent care visit. And
had we subjected her to the diagnostic studies recommended by an otherwise
uninformed physician, who failed to do even a perfunctory medical history and
minimal chest examination, we would have increased her health care costs by five
or even ten fold. They were not medically indicated and would not have resulted
in an improvement in quality of life or life expectancy. The patient’s husband
commented that consumers are not informed about the
cost of their health care and felt
such information would modify behavior. What a rational and obvious observation.
Excessive Costs May Not Always be the Patient’s
Fault
This excessive cost was the
result of a combination of errors made by the patient and her husband, the urgent care
physician, and the insurance carrier. There is not a rule or regulation (even
with penalties) that would have changed this sequence except a competitive
Medical MarketPlace in which full disclosure occurs prior to care being
rendered–just as in any other purchase that we make. Because
the Medical MarketPlace places the patient in control, this patient would most likely have opted for a $60
office call instead of a $600 urgent care call, avoiding a 1000 percent
increase in costs. Furthermore, she would not have considered multiple
consultations and procedures associated with those consultations that would
easily have added another $6,000, a 10,000 percent
increase in costs. A Medicare bureaucrat sitting in
the middle of the urgent care center observing this entire sequence would not
have understood the problem or known how to reduce costs in a health-sensitive
manner. The Medicare or national health plan
bureaucrat sitting in Washington, D.C. or Ottawa or London or Stockholm would
have even less of a clue.
National HealthCare Systems in the English-speaking
World (No 10)
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. See previous
issues or the archives at www.MedicalTuesday.net
for the summary of the first nine myths,
or go to www.ncpa.org
for the original 21 chapters of the book.
Myth Ten: Single-payer Health Insurance Would
Reduce the Administrative Costs of the US Health Care Systems.
A frequent claim by advocates of single-payer health insurance, according to
Goodman, et al, is that private health insurance is inefficient because of the
administrative cost associated with multiple insurance firms. By one estimate,
health care costs with the same level of care
could be reduced by close to one-third by introducing a Canadian-style
single-payer insurance system. Marcia Angell, Spokesperson for The Physicians’
Working Group on Single-payer
National Health Insurance, and former Editor of the New
England Journal of Medicine, has touted
estimates of cost savings from a single-payer health care system of $150 billion
a year. This reduction in costs supposedly could be obtained “by eliminating
the high overhead and profits of the private, investor-owned insurance industry
and reducing spending for marketing and other satellite services.” This
argument, Goodman continues, is based on three mistaken assumptions: a) that low
administration costs and efficiency are synonymous, b) that the higher
administrative costs of private programs result in worse outcomes, and c) that
the relatively low administrative costs of public programs result
in better outcomes. He then illustrates how the administrative costs of pubic
programs are two-thirds higher than private programs.
Administrative Costs and Efficiency
According to Goodman, conventional wisdom holds that the
less a health care system spends on administration as a proportion of total
costs, the more efficient it must be. By this measure, the US health care
system, which spends 16 percent
of its total budget on administration, would appear to be less efficient than
the Canadian system, which allegedly spends about 5 percent.
However, when analyzing competing health care models, no one knows how to
measure administrative costs in ways that allow fair comparisons. The real goal
is not to get administrative costs as low as possible but to make the overall
system perform as efficiently as possible. To measure the net cost or gain to
society from administrative procedures, one has to compare them with the
benefits they produce. For example, the East German car, Trabant, had lower
administrative costs than the Honda or Ford. This did not make the East German
Trabant superior. Indeed, the opposite is the case. While
competition promotes the production of excellence, government decreases
efficiency and provides less consumer satisfaction, which are characteristic of
the socialist systems. If socialism had worked, the
economies of communist countries would not have collapsed.
Goodman agrees that the administrative costs and
paperwork burdens of the US health care system are much too high.
However, these
are not consequences
of
private health care but of federal policy which
include the excessive
burdens of Medicare and Medicaid that distort the
health care market, shifting procedures to high cost centers such as hospitals,
including their outpatient departments, and shifting paper and clerical costs to
physicians' offices.
Also, the cost of
levying and collecting taxes and lobbying for
additional funding would not be considered an expense of a public program,
whereas collecting premiums and marketing would count toward the cost of a
private insurer. Goodman contends that a public insurer must perform essentially
most of the same functions found in private insurance. They must reimburse
providers for services rendered, collect “premiums” in the form of taxes,
control utilization. These costs are often
difficult to analyze using traditional cost-accounting
methods. However, a study funded by private insurance companies that attempted
to estimate these hidden costs inclusive of taxes found:
1. Medicare and Medicaid spend 27 cents for every
dollar of benefits.
2. Thus government spends 66% more than the private
sector per dollar of benefits paid.
MedicalTuesday Recommends the Following in Restoring
Accountability:
• The weekly Health Policy Digest 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
with Nobel Laureate Vernon L Smith, PhD, on its faculty. You may log onto www.mercatus.org
and register your email address or read their government accountability reports
as well as information on Dr Smith’s economic experiments which helps us
understand health care issues.
• Martin Masse, Director of the Montreal Economic Institute, is the publisher of the webzine:
Le Québécois Libre. His
enlightening free market-based articles can be found at www.quebecoislibre.org/apmasse.htm.
This week he is joined by Professor Jean-Luc Migue on the financial problems of
socialized health care. Be sure to read his article on the Webzine this
Saturday.
• 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 These Efforts in Restoring
the Doctor & Patient Interface:
• PATMOS
EmergiClinic - www.emergiclinic.com,
where 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;
• Drs David MacDonald and Vern Cherewatenko
for their success in restoring private based medical practice which has grown
internationally through their SimpleCare model network, www.simplecare.com;
•
HealIndiana as a supporter of market-based medicine, www.HealIndiana.org;
• Association of American Physicians & Surgeons representing
physicians in their struggles against bureaucratic medicine and loss of medical
privacy. The AAPS midyear one day conference concerning these critical issues
will be held in San Antonio on Saturday, February 1, 2003. You may register
online at www.AAPSonline.org.
Del Meyer
Del Meyer, MD, CEO & Founder
DelMeyer@MedicalTuesday.net
www.MedicalTuesday.net