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Sunday, August 28, 2016

EpiPen craziness

My attention has been drawn to the Mylan labs controversy regarding its EpiPen product. This story epitomizes what is wrong with the pricing mechanism which permeates much of health care delivery.

The obvious front page story goes something like this:  "Greedy pharmaceutical companies lead by greedy CEO's take advantage of the public to reap out-sized profits."  This in turn leads to a cry for Federal intervention to fix this problem.

Is this really the problem and is the proposed fix going to be effective in solving the problem. I often hearken back to the words attributed to Albert Einstein who has been quoted " If I had only one hour to save the world, I would spend fifty-five minutes defining the problem, and only five minutes finding the solution." (Whether he actually said this is another story but beside the point). If we don't have the problem adequately defined or even worse, incorrectly defined, it is not likely that that the problem can be solved except by the injection of dumb luck.

It should come as no surprise that a profit seeking entity will be motivated by generating a profit and it will do whatever that is legally within its power to maximize its earnings.   Companies that sell any product or service will try to optimize the price structure. Companies that do a bad job at this tend to disappear. There are pressures to keep prices high enough to cover costs, the reasons being obvious. There are also pressures to pressures to keep prices low enough to compete with other parties who seek to take market share by offering the same or similar product or service at a more competitive price.

The case of the EpiPen is one of a failed market, one that has failed because a third party has intervened. That third party is the Federal government in the form of the FDA. The FDA has a mandate to protect the public from unsafe and/or ineffective medications and devices. Who can argue with that mandate? As usual, the devil is in the details and with any intervention targeted to add value to the public, there is always the possibility that the unintended consequences of the best intended actions end up creating new problems.

Epinephrine, the drug platform behind the EpiPen has been around for more than 100 years. It is inexpensive to produce. The delivery device has been around for decades and vastly cheaper earlier versions are sold outside of the US for pennies on the dollar. Multiple Mylan competitors have attempted to bring alternatives to market in the US for years. Mylan, in some sense partnering with the FDA, has done the most reasonable thing to maximize their shareholder value. In the absence of competitive pressure to keep prices low it would be irresponsible not push the envelope on price and fulfill their fiduciary duties to their shareholders.

The FDA combines the worst of the precautionary principle with a blindness to cost. I do not have inside information on the specifics of decisions to impede the deployment of competitive products and I do believe there is a specific conspiracy. It is likely simply to convergence of perverse incentives within the agency which which prompt employees to avoid risks associated with approval of competing products. The net result is the cost of the injector rising from around $50 for a single unit to over $600 for the obligatory two pack.

A second but related element is the role of health insurance in the evolution of this problem. While the EpiPen is in the news, the peculiarities regarding its pricing is fare from unique in health care. Perverse pricing of health care related goods and services are more the rule rather than the exception. The perverse pricing structures are a consequence of the use of third party payment mechanisms which result is large segments (but not all) of the public being insulated from the cost of given goods and services. Her lies the source of so many issues we face in health care. Even in the absence of any competitor, there are limits in terms of how much Mylan could charge for the EpiPen and the presence of a large insured population allowed them to push the price hikes much harder than if the public had to pay out of pocket for the EpiPen.

When going back to define which problems we are facing, I believe the crux boils down to the role of insurance and its effect of shielding the paying public from awareness of the cost of delivery of goods and services. The question should be, should we insulate people from the costs of health care delivery and if so, which ones and when? One reason that the EpiPen cost could rise so steeply is that during the time where the cost increases were going into effect, much of the buying public was insulated from the cost. As Holman Jenkins wrote in his WSJ article (Jenkins):
Well, in the rest of the economy, when a consumer is spending out of his pocket, he has incentive to judge whether the service he’s buying is worth the price he’s being asked to pay.
Now you know why we offer coupons and rebates to individual consumers. This is our way of trying to re-desensitize customers to the price of EpiPen in order to counter the efforts of insurers to re-sensitize them by hitting them with copays and deductibles.
Then why does getting our coupons and rebates involve rigmarole? Because certain consumers won’t make the effort, and then we get to keep the money that would otherwise go to defray their out-of-pocket costs.


Extrapolate the EpiPen phenomena to the entirety of the health care economy. Jenkins goes on to do this...
It’s a great game and we have fun playing it. On average, however, it probably does not increase the health-care industry’s profit margins or the public’s health—but only the share of national income diverted to health care from everything else: beer nuts, wedding presents, automobiles. Our industry’s share of GDP is 17%, up from 13% two decades ago. Hooray, that’s $700 billion a year.
  Obviously, there are catastrophic events where insurance has a vital role. Heck, that is the purpose of insurance.  However, when the desire to insulate the public from the cost of mundane and predictable services they can and should plan for, and to use insurance to meet those ends leads to outcomes which become catastrophic when considered in aggregate. Where well functioning markets are relentless in driving down costs, regulated health care markets drive up costs, even of old products with little or no commensurate value added to the public. Despite the best of intentions, the results are not what virtually anyone desires, unless you are Mylan Pharmaceuticals benefiting from a governmental facilitated monopoly.




Tuesday, July 26, 2016

Health care costs, mandates, and the changing health care workforce

Health care delivery is both already expensive and also saddled with unsustainable cost increases. The reasons for this are multiple. Just to name a select few, health care historically has operated under the assumption that improvement (or perceived improvement) is worth it, no matter what the cost. In addition, health care is very labor intensive and the labor is very expensive. In addition, it is about to get even more expensive.


I have little doubt that Hillary Clinton will be elected the next president of the US. I also have no regret that the next president will not be Donald Trump. I will derive some degree of satisfaction when the first person looks at him after the election and addresses him as a "loser" and I hope the habit continues for a long time. However, I have some great reservations regarding some of the planks of the Democratic Party Platform, relating to generous paid leave provisions.


For those us who need to balance budgets, legally mandating that employees can take generous time off with paid leave means figuring out how to pay them. For expensive people, this can get very expensive and we have lots of expensive labor in health care delivery. Increasing labor costs will not decrease the cost of delivery services. In fact, the effect is quite the opposite! How will I figure out how to pay the salaries of $100K+ professionals who are not at work? How many people on paid leave can we afford at any given time?


I have little doubt that these mandates will be established but I have to ask, how is this going to work? How are we going to find a way to delivery health care services at steeply lower costs when mandates drive up the cost of the biggest part of our overhead (labor)? I see there are only five options.


Option 1 is to pay everyone less money.
Option 2 is to hire less expensive labor, that is substitute nurses for doctors, health techs for nurses, etc.
Option 3 is to stop hiring people and automate
Option 4 is to stop offering services which are too expensive to deliver
Option 5 is really a hybrid of all the above which is to increase efficiencies and generate more value per unit of labor paid for.  However, there is no way that one can garner efficiency gains from people who are on paid leave.


I believe the pressures to cull the workforce and eliminate workers, especially expensive workers will be huge. Couple this with changing payment patterns and I believe physicians will be in the cross hairs. Physicians bring lots of unmeasured value into care delivery now but the thing that is measured is money. We measure little else. Up to the current time, fee for service has been mostly dependent upon MD's to drop bills. For health systems, doctors are needed for cash flow because doctors can submit bills and allow facilities to operate. When bundled payments go directly to health systems (as proposed under MACRA) and doctors are primarily salaried and are no longer required for billing, health systems will view MD's primarily as the most expensive part of their workforce. Where can costs be cut? Why are we paying these guys so much?

Tuesday, July 12, 2016

Movement from informal to formal processes in medicine

I have had a robust exchange with colleagues regarding how one should acknowledge another physician's opinion in the medical record. I am of the mind that the only opinion that one should write in the record is your own. I have no desire for any of my colleagues to record my opinion in their notes, unless they forward those for me to sign or write an addendum.
However, my opinion on this activity is not held universally, not by a long shot. Within other fields, especially radiology and pathology, there is a long tradition of bedside clinicians visiting and consulting these specialists, in their "houses". Rounds used to start in radiology and there would be extensive discussions with care teams, resulting in radiologist opinions being paraphrased in the medical record. Whether what the radiologist intended to communicate routinely ended up in the notes on the floor is not so clear.Similarly, glass slides routinely circulate in Pathology departments and colleagues are called upon to render inter-departmental consults, ranging from formal to very informal. The language incorporated into various reports may include a host of concurrences from physicians whose signature never appears on the final report.
Historically, critical decisions in medicine, especially in the most challenging of cases, were often made after generating a form of consensus, whether that consensus was derived from Grand Rounds, tumor board, or informal solicitation of opinions. The transcripts from these conferences and informal activities were generally non-existent and the consensus recorded tended to be ephemeral and biased through the lens of whomever wrote something in the chart. It may have been heavily influenced by one or a few strong and charismatic clinicians who would sway the audience based upon their confidence and experience. 
All of these activities were highly informal processes. Individual attendees tended to take away what they wanted to take away and the patients cared for had little or now idea what actual conclusions were drawn and how they were arrived at. They were simply informed that we had a conference and the agreement of the group was, whatever. Individual accountability and hard evidence was not something on the radar. 
Looking back nostalgically, we believe that these activities enhanced patient care, irrespective of the actual outcomes. They certainly made the care teams feel better and there was a certain simplicity and finality which appeared to be achievable which does not appear to be achievable now.  While the human contact did unquestionably facilitate communication, the model was not scalable. It depended on small groups who were familiar with everyone involved. The decision trees were not so arborized. The information to be managed was on a much more limited scale.
It is a different world now. We aspire to do more, much more which requires much more complex systems to manage. The teams are larger and the workloads more specialized. Communication becomes even more essential under these conditions and when communication fails, we ascribe those failures to leaving the informal systems behind. However, when systems become more complex, informal communications will not suffice. Each decision branch point, which may be dependent upon particular fidelity on terms of information transition, becomes a possible pitfall. A process with three steps has a much lower failure rate than one with five, or ten, or fifteen. Informal verbal communications are fraught with error and should not serve as the foundation for critical information flow.



Sunday, July 10, 2016

People can be strange and unpredictable

I am reading a book titled "Heaven's Ditch: God, gold, and murder on the Erie Canal". It is quite an interesting story, about the best of humanity, the worst of humanity, and the weirdness of humanity, all wrapped up in one nice package. The best is the fact that in the early part of the 19th century, the Erie canal was built. It took vision, chutzpah, drive, and incredible people. It was an engineering marvel which fundamentally changed the course of history in the US. The worst is that many of those involed were simply awful people who did awful things to other people.

However, it is the weirdness background which simply blows me away. The canal was built in western New York during a time of great religious revival. It was not just religious revival but all forms of spiritual, mystic, and magical thinking. It was where Joseph Smith's family ended up before the trek west. People became wrapped up in all manner of superstition. Joseph Smith, before he found the gold tablets and launched the Mormon sect, was one of may people who used special stones he placed in his hat to see the future. People, including Smith, were using divining rods to find casks of money buried in the ground.

While among my peer group currently, the acceptable facade to display is one of rationality and linear thought (sort of Mr. Spock like), I think this is not how many (most?) people really operate. Beneath the facade there are a jumble of emotions which can drive some peculiar behavior. Most of the peculiar behavior likely can be characterized as quirky and some of it as annoying. It then can go on to move into the territory of very odd, strange, really strange, and then downright disturbing. With enough concentration of people, likes can link up and amplify the quirkiness and strangeness. The internet has been very conducive to this. The fun end of this spectrum is where things like DragonCon reside. At the less benevolent end you might find congregations of people with more sinister motives.

I don;t think there has been any real fundamental change in the underlying DNA. There have always been people who have been at the fringes, did not play well with others, and/or simply had evil motives. If they were charismatic and could convince others to team up and do nasty acts, they could cause great destruction. However, individual actors were very limited in their reach. With great effort they could harm to a few others. Weirdness did not translate to far reaching effects.

Technology has greatly leveraged human capabilities. However, it has also leveraged the ability of individuals to cause great harm to many people. Anarchists more than 100 years ago began this using bombs to target populations. We were distracted for a while from this by wholesale slaughter by state actors and then the cold war and worry about state mediated thermonuclear annihilation. Now, this same phenomena is back.

It is hard to believe that single person human capability in terms of destruction can be scaled back. States may do their best to control armaments in the hands of their populace (with or without the second amendment), but progress in terms of miniaturization and energy concentration is not likely to stop. Research efforts to place more powerful and easily used tools in the hands of soldiers will invariably mean that the fruits of these endeavors ends up in the hands of ordinary people. It has happened with granola bars and it will happen with weapons.

I think this has happened to some degree in the past.  Throughout history, various parties have held monopolies on violence and those monopolies were disrupted by transitions of power and weapons into other hands. No state power means anarchy and chaos, while nothing but state power means totalitarianism. We do not want the constant war of every person against every other person but we do not want to cede total control to a unilaterally armed state because a few bad actors don't realize they are better off by giving up the right to annihilate those around them.

And what we are back to is the realization that people can be strange and unpredictable and we have to live with that.


Saturday, May 21, 2016

I am incedulous that this activity has not received more attention!

From the Washington Post today(Link). This is an op-ed piece from Nicholas Quinn Rosencranz regarding the Justice Department's settlement with various large banks which included the requirement for donations to various community development groups.
What is less well known is that some of this money — amounting to hundreds of millions of dollars — is designated for “donation” to various “community development” organizations that were neither parties to the case nor victims of the alleged wrongdoing. Investor’s Business Daily has characterized these payments as “political payoffs to Obama constituency groups,” and Congress is now considering banning this practice with the Stop Settlement Slush Funds Act of 2016.
How bizarre!  The constitutional issue is obvious. The settlement represents money paid to the Federal government which is then appropriated to pay another party, without any Congressional approval. What we are seeing as the discretionary portion of the Federal budget essentially disappears is the use of DOJ shakedowns of private entities for cash then used to repay politically connected.

How can we better the world?

Deirdre N. McCloskey published what I consider a spot-on piece today in the WSJ. (Link) It is titled "How the West (and the rest) got rich". It is well worth reading in its entirety and I will almost certainly pick up a copy of her new book, “Bourgeois Equality: How Ideas, Not Capital or Institutions, Enriched the World,” .


I am fascinated by why certain systems work well while other systems do not and I have come to believe that functional complex systems develop not because of intelligent design, but because of innumerable trials resulting in many failures and few successes. Thus the great enrichment is described by Dr. McCloskey. The essay is eloquently written and I thought it useful to highlight some of the most pithy parts.
Nothing like the Great Enrichment of the past two centuries had ever happened before. Doublings of income—mere 100% betterments in the human condition—had happened often, during the glory of Greece and the grandeur of Rome, in Song China and Mughal India. But people soon fell back to the miserable routine of Afghanistan’s income nowadays, $3 or worse. A revolutionary betterment of 10,000%, taking into account everything from canned goods to antidepressants, was out of the question. Until it happened.
Why did it happen? McCloskey goes on to write:
But none of the explanations gets it quite right.
What enriched the modern world wasn’t capital stolen from workers or capital virtuously saved, nor was it institutions for routinely accumulating it. Capital and the rule of law were necessary, of course, but so was a labor force and liquid water and the arrow of time.
What appears to have catalyzed this were ideas and liberty:
The capital became productive because of ideas for betterment—ideas enacted by a country carpenter or a boy telegrapher or a teenage Seattle computer whiz. As Matt Ridley put it in his book “The Rational Optimist” (2010), what happened over the past two centuries is that “ideas started having sex.” The idea of a railroad was a coupling of high-pressure steam engines with cars running on coal-mining rails. The idea for a lawn mower coupled a miniature gasoline engine with a miniature mechanical reaper. And so on, through every imaginable sort of invention. The coupling of ideas in the heads of the common people yielded an explosion of betterments. 
Power hungry statists and control freaks on both the left and right have been suspect of both liberty and change and have repeatedly attempted to vilify commercial interests which have been the drivers of growth and change:
Not everyone was happy with such developments and the ideas behind them. In the 18th century, liberal thinkers such as Voltaire and Benjamin Franklin courageously advocated liberty in trade. By the 1830s and 1840s, a much enlarged intelligentsia, mostly the sons of bourgeois fathers, commenced sneering loftily at the liberties that had enriched their elders and made possible their own leisure. The sons advocated the vigorous use of the state’s monopoly of violence to achieve one or another utopia, soon.
Intellectuals on the political right, for instance, looked back with nostalgia to an imagined Middle Ages, free from the vulgarity of trade, a nonmarket golden age in which rents and hierarchy ruled. Such a conservative and Romantic vision of olden times fit well with the right’s perch in the ruling class. Later in the 19th century, under the influence of a version of science, the right seized upon social Darwinism and eugenics to devalue the liberty and dignity of ordinary people and to elevate the nation’s mission above the mere individual person, recommending colonialism and compulsory sterilization and the cleansing power of war.
On the left, meanwhile, a different cadre of intellectuals developed the illiberal idea that ideas don’t matter. What matters to progress, the left declared, was the unstoppable tide of history, aided by protest or strike or revolution directed at the evil bourgeoisie—such thrilling actions to be led, naturally, by themselves. Later, in European socialism and American Progressivism, the left proposed to defeat bourgeois monopolies in meat and sugar and steel by gathering under regulation or syndicalism or central planning or collectivization all the monopolies into one supreme monopoly called the state.
McCloskey summarizes:
Rep. Thomas Massie, a Republican from Kentucky, had the right idea in what he said to Reason magazine last year: “When people ask, ‘Will our children be better off than we are?’ I reply, ‘Yes, but it’s not going to be due to the politicians, but the engineers.’ ”
I would supplement his remark. It will also come from the businessperson who buys low to sell high, the hairdresser who spots an opportunity for a new shop, the oil roughneck who moves to and from North Dakota with alacrity and all the other commoners who agree to the basic bourgeois deal: Let me seize an opportunity for economic betterment, tested in trade, and I’ll make us all rich.
I agree with McCloskey that political entities may create the necessary framework for betterment but there are limits as to what politics can accomplish. You cannot fix a fine watch movement with a ball peen hammer. Some might argue that enrichment is not a desirable end. I would suspect most of those making those claims do not live in abject poverty.  
 

Sunday, May 15, 2016

How do we know who is a good doctor?

I am a following "the Incidental Economist" (Link) and Healthcare Triage News. Aaron Carroll blogged on pay for performance programs and wrote a commentary late last year on measuring quality (Link).  There was also an article in today's NYT examining narrow networks and limited access for patients to providers outside of their designated networks (Sorry, we don't take Obamacare - link). What do these items have in common? What they have in common is the need to be able to measure quality. Who care if you are locked into a narrow network if it delivers what you need well? We all sort of lock ourselves into narrow networks when we end up selecting specific physicians to deal with our health care problems.


As I see it, we have a very basic problem in that more often then not, those needing services are really not in a position to discern whether a given physician (or other health care provider) is really good at what we need them to be good at. (When I use the term physician, please view it as a short hand for health care professional delivering a service). Obviously for those physicians who do very specific life saving or function saving targeted interventions, we may be able to sort through who is at the top of the heap v. those at the bottom. Even that can be tricky. A good set of outcomes for an orthopedic surgeon who replaces hips may be due to the fact they are in a position to cherry pick or a less than optimal set may be due to them being the go-to person for difficult cases.


Even more challenging may be within the larger universe of providers who do deliver services where it is difficult to impossible to define what quality is? One can march through the different specialties in medicine and it is the exception rather than the rule that clear criteria can be defined which allows any given person to identify who delivers high quality care.  How does one determine whether a gastroenterologist is good at colonoscopy? Yes, one can look at complication rates but the primary purpose of the exam is not simply to avoid trouble. You can always avoid the complication of the procedure by not doing it. How can one determine if a thorough exam was actually done? Are more biopsies better than fewer? What are the actual deliverables? A similar situation may be relevant for dermatologists? What represents a good skin exam? How can this be measured?  For primary care physicians, what constitutes a good or excellent annual check up? Who is doing the best pelvic exams? Who is the best pathologist? Is it the ones who diagnose the most or the least cancers? How can one discern who are the best pediatricians?
Those with great technical skills may have less than optimal judgement, work ethic, or interpersonal skills. What problems do given physicians within specific specialties actually solve and just how good a job do they do in solving these problems? What information do we have at our disposal to address these issues? We do have the annual best doctors issues for local publications for most major cities. However, the selection process for these is a popularity contest which reminds me of elections for class president when I was in high school. It takes into account essentially no quality data. Furthermore, does any actual quality data linked to a given doctor or other provider reflect the physician competence or other aspects of the team over which they have little control?


It is not an unusual circumstance where I am asked by a friend to make a recommendation for care within my system. I know a number of my colleagues on a personal level but truth be told, I really have very limited insight into what type of physician they actually are. I have basically little or no access to hard numbers in terms of whether they solve the problems of patients who they see. There are exceptions (primarily those who I work with every day)  but for the most part I have not directly and consistently witnessed the bedside manner of most of my colleagues or have clinically significant knowledge regarding the quality of their problem solving skills.


Then move into a domain where people have marginal medical knowledge, experience, and insight and imagine how they make these determinations. They simply are flying blind. Patients and their families can determine if someone spends time with them, listens, and makes an attempt to communicate. These observations are important but may not track with the ability to fix whatever problem that needs to be fixed. The may be especially true when the services delivered are done so for goals which may be realized well in the future. Patients can be very impressed with the quality of a service delivered that they did not actually need. One can generate impressive numbers if one is in the business of delivering preventative care for diseases that never or only rarely happen.


This brings us back to the original question; what can we measure to determine who is the best? Perhaps even more important is what can we measure to determine who is simply good enough? Not everyone can access the best and always spending money to get the best may be a bad investment of someone's scare resources, especially if the stakes are not so high.  How can patients tell if the providers available within their networks will likely be able to meet their basic needs and goals?  I believe the path to being able to address this problem will require inputs from both those delivering care and those receiving care. It will mean looking at both high stakes environments and lower stakes environments. It will unquestionably require that we better define what the specific goals of care are. Service delivery without goals can never fail. As the saying goes if you have no destination anywhere you end up should be fine. Similarly service delivery without measurable goals can also never fail and service delivery where the measurements are not aligned with the patient goals will almost always fail.


The fact that measuring what is expedient has ended up not getting us to where we want to be should not come as a surprise and should not prompt us reject striving for measuring outcomes. For us to sink more and more money into an industry which has dismal quality control is simply not an option.