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Sunday, November 13, 2016

Picking fights v. solving problems

I have been listening to much of the banter on XM radio since the surprising election results. I toggle between the POTUS channel, MSNBC, CNN, and Fox, trying to take a broad measure of what the Trump election means and how it will translate into specific decisions and course of action.

I did not see this coming, but I was not alone. In fact, the night of the election, I had turned off the TV early in he evening, believing things were essentially baked already and that Hillary would win with a comfortable margin in the Electoral College, that the House would remain under Republican control, and that the Senate was a toss up. As it turned out, we had a family medical emergency which prompted me to go to the Emergency Room around 11 pm and while I was in registration, I overheard the ED staff talking about a NYT prediction that Trump was going to win. I couldn't believe what I was hearing!

I find his words deplorable. He comes across as egocentric, hypercompetitive, and the opposite of reflective. No one has every accused Donald Trump of overthinking, anything.

He is now our president. Will he become any better or more likable as a person? I seriously doubt it but perhaps that is not as important as what his election will translate to in terms of positions, policies, and outcomes regarding the Federal government?  It is anyone's guess at this point. It is hard to hope he will be a disaster, although I have serious concerns. 

I believe we can get some insight into his priorities based upon his 100 day plan, summarized below (taken from  NPR website).   Already there are calls for resistance to anything and everything Trump. I am not into picking fights. Fighting rarely solves any problems. However, current politics is nothing but fighting and confrontation. I propose we attempt to make this into everything but Trump the person.  I suggest we all approach each of these initiatives using the following framework of questions:

1. What problem does this initiative address?
2. Is this a significant problem which warrants an intervention?
3. Do I believe the proposed solution will move toward a solution?
4. What are the likely unintended consequences? Is this approach dangerous and if you believe so, is it much more likely to create problems than to solve problems?
5. Is there a better approach? 

The first 100 days proposed (NPR)

* FIRST, propose a Constitutional Amendment to impose term limits on all members of Congress;

* SECOND, a hiring freeze on all federal employees to reduce federal workforce through attrition (exempting military, public safety, and public health);

* THIRD, a requirement that for every new federal regulation, two existing regulations must be eliminated;

* FOURTH, a 5 year-ban on White House and Congressional officials becoming lobbyists after they leave government service;

* FIFTH, a lifetime ban on White House officials lobbying on behalf of a foreign government;

* SIXTH, a complete ban on foreign lobbyists raising money for American elections.

On the same day, I will begin taking the following 7 actions to protect American workers:

* FIRST, I will announce my intention to renegotiate NAFTA or withdraw from the deal under Article 2205

* SECOND, I will announce our withdrawal from the Trans-Pacific Partnership

* THIRD, I will direct my Secretary of the Treasury to label China a currency manipulator

* FOURTH, I will direct the Secretary of Commerce and U.S. Trade Representative to identify all foreign trading abuses that unfairly impact American workers and direct them to use every tool under American and international law to end those abuses immediately

* FIFTH, I will lift the restrictions on the production of $50 trillion dollars' worth of job-producing American energy reserves, including shale, oil, natural gas and clean coal.

* SIXTH, lift the Obama-Clinton roadblocks and allow vital energy infrastructure projects, like the Keystone Pipeline, to move forward

* SEVENTH, cancel billions in payments to U.N. climate change programs and use the money to fix America's water and environmental infrastructure

Additionally, on the first day, I will take the following five actions to restore security and the constitutional rule of law:

* FIRST, cancel every unconstitutional executive action, memorandum and order issued by President Obama

* SECOND, begin the process of selecting a replacement for Justice Scalia from one of the 20 judges on my list, who will uphold and defend the Constitution of the United States

* THIRD, cancel all federal funding to Sanctuary Cities

* FOURTH, begin removing the more than 2 million criminal illegal immigrants from the country and cancel visas to foreign countries that won't take them back

* FIFTH, suspend immigration from terror-prone regions where vetting cannot safely occur. All vetting of people coming into our country will be considered extreme vetting.

Next, I will work with Congress to introduce the following broader legislative measures and fight for their passage within the first 100 days of my Administration:

Middle Class Tax Relief And Simplification Act. An economic plan designed to grow the economy 4% per year and create at least 25 million new jobs through massive tax reduction and simplification, in combination with trade reform, regulatory relief, and lifting the restrictions on American energy. The largest tax reductions are for the middle class. A middle-class family with 2 children will get a 35% tax cut. The current number of brackets will be reduced from 7 to 3, and tax forms will likewise be greatly simplified. The business rate will be lowered from 35 to 15 percent, and the trillions of dollars of American corporate money overseas can now be brought back at a 10 percent rate.
End The Offshoring Act. Establishes tariffs to discourage companies from laying off their workers in order to relocate in other countries and ship their products back to the U.S. tax-free.
American Energy & Infrastructure Act. Leverages public-private partnerships, and private investments through tax incentives, to spur $1 trillion in infrastructure investment over 10 years. It is revenue neutral.
School Choice And Education Opportunity Act. Redirects education dollars to give parents the right to send their kid to the public, private, charter, magnet, religious or home school of their choice. Ends common core, brings education supervision to local communities. It expands vocational and technical education, and make 2 and 4-year college more affordable.
Repeal and Replace Obamacare Act. Fully repeals Obamacare and replaces it with Health Savings Accounts, the ability to purchase health insurance across state lines, and lets states manage Medicaid funds. Reforms will also include cutting the red tape at the FDA: there are over 4,000 drugs awaiting approval, and we especially want to speed the approval of life-saving medications.
Affordable Childcare and Eldercare Act. Allows Americans to deduct childcare and elder care from their taxes, incentivizes employers to provide on-side childcare services, and creates tax-free Dependent Care Savings Accounts for both young and elderly dependents, with matching contributions for low-income families.
End Illegal Immigration Act Fully-funds the construction of a wall on our southern border with the full understanding that the country Mexico will be reimbursing the United States for the full cost of such wall; establishes a 2-year mandatory minimum federal prison sentence for illegally re-entering the U.S. after a previous deportation, and a 5-year mandatory minimum for illegally re-entering for those with felony convictions, multiple misdemeanor convictions or two or more prior deportations; also reforms visa rules to enhance penalties for overstaying and to ensure open jobs are offered to American workers first.
Restoring Community Safety Act. Reduces surging crime, drugs and violence by creating a Task Force On Violent Crime and increasing funding for programs that train and assist local police; increases resources for federal law enforcement agencies and federal prosecutors to dismantle criminal gangs and put violent offenders behind bars.
Restoring National Security Act. Rebuilds our military by eliminating the defense sequester and expanding military investment; provides Veterans with the ability to receive public VA treatment or attend the private doctor of their choice; protects our vital infrastructure from cyber-attack; establishes new screening procedures for immigration to ensure those who are admitted to our country support our people and our values

Clean up Corruption in Washington Act. Enacts new ethics reforms to Drain the Swamp and reduce the corrupting influence of special interests on our politics.

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.