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Saturday, February 6, 2010

Gaming and blaming

We saw a poor unfortunate baby last month who ended up dying from a huge hemangioma which was localized to its head and neck. The interventional radiologists tried to embolize the main vessels in the hope that depriving the hemangioma of its blood supply would halt its growth. While the conduits which the radiologists attended to were interrupted, the tumor quickly commandeered alternative vascular elements which ultimately were sufficient to sustain the tumor and destabilize the host. I could not help but think of how this situation shared certain characteristics with human social pathologies. This tumor was not to be denied and attempts to occlude its main feeder vessels was responded to by the development of innumerable small feeders which could not be stopped.

The economy is still in the tank with a few exceptions. Health care costs continue to grow, despite every effort to  control costs. The agents which try to scale back the costs are in some sense like the interventional radiologists, trying to occlude the major payment conduits where money flows to the healthcare tumor. However, individual physicians, groups, or hospitals are remarkably attentive to their cash flow. It is like the blood flow to the tumor and any effort to scale back major conduits results in innumerable "gaming' responses. Vulnerabilities are constantly probed and opportunities for better payment are exploited in real time, the information regarding venues for exploitation spreading at the speed of light.

The continued increasing money supply to the health care tumor shows that under the present rules, it will not be denied, much like the tumor which consumed that unfortunate baby. None of the single agents involved in this drama are inherently evil. Practicing doctors are simply trying to make payroll and cover their overhead. Opportunities to collect for services rendered are simply chances to get what is due to them. Except in the cases where actual fraud is undertaken, the intense probing and assessment constitutes typical gaming behavior. It is what we do because to be human is to be a gamer. The overall effects are very disturbing.

There is a point in the future when the blame game moves to new targets. Already, fingers are beginning to be pointed at the medical industry. This morning there was an op-ed piece in the WSJ, an interview with Angela Braly, the CEO of Wellpoint. She notes in this interview:
""Hospitals come in and ask for major increases," she says. "They come in and say, you know, we need a 40% increase. It would blow your mind, the difference we start with in some of these negotiations. . . . Why does that procedure cost $10,000 in this place and down the street it costs $1,000—and when the hospital that's getting paid $10,000 is asking for a 40% rate increase, you have to say, why?..............The reason costs are rising so fast, Mrs. Braly says, is because the way the health-care market is structured doesn't give providers reason to control costs. The solution is to "reintroduce the consumer to the health-care equation," and on that front, she believes, insurers "are actually the part of the health-care delivery system that is there to create the value."
She more than implies that the source of the runaway costs is not the insurers but the providers.

The insurance industry has taken much of the flak for rising health care costs based primarily upon obscene bonus packages for senior leadership. The health insurance industry is simply not that profitable with returns on equity being rather ordinary or even below average. Assuming that the insurance industry becomes more like a regulated utility and those seeking obscene bonus package migrate to some other realm. Our runaway growth problems with healthcare do not go away. Most physicians have been relatively spared the effects of the economic downturn which can be good news and bad news. The good news is obvious. We have been spared the effects. The bad news is that our efforts to ensure our continued revenues might be viewed in a most unfavorable light, particularly if the perception is that the healthcare tumor is devouring our economy.

Food for thought.

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