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Friday, April 30, 2010

Unintended Consequences

There is a robust literature calling into question the payment system’s effects on the delivery of health care. Much of the emphasis of the criticism has been on the present payment system’s incentives to provide more as opposed to better care. There is no question that this is a problem. However, this alone does not begin to capture the how the present system perverts the delivery of healthcare services to patients. In order to really begin to understand how the present insurance based, fee for service program negatively affects the delivery of health care services to patients, we need to look at how and where such a system influences what services are offered, how much they cost, and what incentives exists to move providers to provide a wide range of services at increasing quality and convenience and at lower costs.

What dictates which services are actually available to patients? The present system operates with what amounts to be a set menu of possible services. At the simplest level, there are items which are on the menu and items which are not. In order for items to be on the menu, they need to be included in the list of services which have been assigned a particular CPT code. These codes historically have been controlled by the RUC of the AMA. In order to have a new code created, one needed to undertake a not so trivial process whereby the RUC was formally petitioned, a time consuming and effort intensive process, and one by no means guaranteed of success.  Thus, in a changing health care environment, financial return for innovation is held hostage by limiting what gets on the menu. 

The second level of perverse incentives comes into play with setting of prices for services assigned CPT codes. The fact that some distinct service may exist on the menu does not mean that it is readily available to patients desiring such services. Coverage for a service does not necessarily mean that there will be a provider willing to deliver such services at whatever price is assigned. The major factor which influences availability is how much a physician can actually collect after they render such a service.  This is dictated by an administratively set pricing structure which takes its major cues from the RUC and Medicare which basically accepts the RUC recommendations. This may all change with the proposed implementation of the IPAB. It is not likely to get better. Such schemes using administrative entities to set prices have an extraordinarily consistently bad track record dating back literally thousands of years.

The insurance based fee for service system has had perhaps its most profound effects by creating patient and provider cultures where singular pursuit of self interest is diametrically at odds with common good. From the perspective of the providers, access to large pools of money which can be accessed with minimal concerns about patient sticker shock has created inexorable movement toward high margin practice domains.  Why risk being a trail blazer when you can simply pick something lucrative from a pre-existing menu.

The basically crazy payment structure is almost universally recognized as such within the medical field.  However, to take on the system as a whole ultimately places in jeopardy individual lucrative books of business. No one is sufficiently incentivized to commit economic suicide. It simply makes more sense to keep one’s head down and continue to pursue specific and lucrative rent seeking activities. 

Wednesday, April 21, 2010

Valuing patient time

I found an interesting article written by Alan B. Krueger last year in the NYT, entitled:

A Hidden Cost of Health Care: Patient Time

The basic premise of the commentary was that there is a time cost associated with the delivery of health care which is under recognized and this time cost is not only large, it is MASSIVE.

There are so many aspects of this observation that warrant comment and reflection. It is hard to know where to begin. Perhaps it is best to view this in terms of blind spots and there are many of them. From the perspective of the medical community, there multiple blind spots. My specialty deals with high volumes of patients and treatment regiments which require substantial investment of patient time to comply with our direction. We also deal with uncommon conditions which require substantial patient travel. In some cases, in office treatments occurring up to three times weekly may require an investment of up to 10 hours weekly to make this work. This is a time investment which begins to rival that seen with dialysis. Yet nowhere in our professional literature is any sort of recognition to this substantial time cost.  Dollars may be counted but time does not appear to be important.

The letters which were written in response to this piece were of two basic bents. One thread was one of complete resonance. The other thread was highly defensive. Both actually miss the point. Both patient and provider are victims of a system which is designed to produce exactly what we get. Calendars filled with agenda less meetings brokered by poorly trained clerks ill-equipped to actually fulfill the triage task of directing patients to the correct provider allocated the right amount of time. Furthermore, the actual purpose of these encounters is often a surprise to the physician,  and often the need simultaneous face to face interaction of is simply a function of this requirement to drop a bill.

The best way to value patient time is to turn our focus to why we do things which waste patient time. What I think we will find is all roads lead to the payment scheme. Themes which are consistent in the letters describing their time consuming interactions with their physicians described an odd mix of waiting for something to happen followed by an extraordinarily brief encounter with the physician. To value patient time, it would make sense to invest in all types of infrastructure which might be used to collect important information while the patient was waiting to see the physician, or to create interactive learning tools which could excel at informing and teaching patients.

The administrative payment system with it defined set of "valued" services all set at artificial, non-market based prices places a value on innovative tools which can save patients time at zero. Thus they do not exist. Ultimately, administratively set prices and services compensated fail to consider patient time in any of their various equations. This is simply the case of the objective school of value run amok and is living testimony that inputs do not define value.

Tuesday, April 20, 2010

IPAB - Goskomtsen redux

One of the provisions of the new health care law is the Independent Payment Advisory Board. If there was ever was a better example of history repeating itself, I cannot imagine a better example than the newly minted IPAB and the former Soviet Bureau of pricing, Goskomtsen.

Gomkomtsen was charged with setting all prices within the former Soviet Union. Incorrect pricing resulted in massive and chronic mis-allocation of resources of the in communist state. Arguably, incorrect pricing may have been the single most important factor in creating such a dysfunctional economic state.

The approach to setting prices was based upon examining inputs and cost of production. The information used for these calculations was almost always either incorrect at the time of collection or became incorrect shortly thereafter.  This approach to pricing shares remarkable similarities with the calculations underlying the RBRVS (from Wikipedia).
RBRVS determines prices based on three separate factors: physician work (52%), practice expense (44%), and malpractice expense (4%).[1][2] It does not include as factors outcomes, quality of service, severity, or demand: it is determined by producer factors, not consumer factors.[3]
It is not particularly clear how prices will be set by the IPAB. My guess is they will use an approach which will be similar to the approach taken historically by the RUC, with modifications driven my political expediency. This does not inspire confidence. There is little doubt that they will get the prices wrong and the erroneous signals from the incorrect pricing will continue to provide perverse incentives.

Tuesday, April 13, 2010

Covered vs non-covered services

In a world where the value of any given service to patients is determined by parties outside of the actual medical transaction, all sorts of strange things can happen when the gamers enter the equation. In the world of markets, we simply do not need to define what is a covered vs. uncovered service. Some parties are willing to offer goods and services. Other parties want to purchase goods or services. When the striking price is right, a transaction takes place. Everyone comes out ahead since the transaction would not happen is there were not two willing parties.

The the bizarre world of medicine where we have constructed universes of parties engaged in what can best be called parallel play, the clarity of the market disappears. While it may appear we have we defined services, some of which may be covered by insurance payments and others which are not, it is actually much more complicated. We have constructed a system of intertwined parties, tied together by ill defined contractual arrangements. Up until now it has held together because there have been domains sufficiently lucrative to entice physicians to remain part of the game, putting up with the ambiguity because there was sufficient profit  margins to be garnered.

However, this enticement to remain part in the insurance game is disappearing. Some physicians are simply leaving and moving to a cash economy. However, others have cleverly asked a simple question. What can I charge for that is not a covered service? Historically, certain domains have been universally recognized as non-covered, particularly cosmetic services. No one has questioned the ability of physicians to bill for such services independent of insurance. However, what allows physicians to bill an otherwise insured patient for these services?

The obvious answer is they are not covered but what exactly does that mean? Does it just mean that when you provide these services to patients their insurer will not pay for this? Does this mean that any service that you bill for which is not covered is by definition a non-covered service? Does that mean such services, like cosmetic services, can be charged directly to patients? This is basically the underlying rationale for the so-called concierge practices. Patients may not need such access but if they desire access, they can pay for this non-covered and non-essential service. If this is fair game, I would venture to guess that the opportunities for novel business models where any number of activities could be viewed as non-essential and non-covered services. This element of gaming has been limited until now because it was simply not worth it to push the envelope. There was plenty of money to be made by steering clear of such activities. However, times are changing.

This all might sound unprofessional, more like the scheming of money grubbing whores. However, if we remain compliant with a payment system which fails to provide remunerative recognition for legitimate professional activities which provide real value to patients, we become accessories to denying patients the very medical services they want and need. What is priced at nothing means it is not valued and ceases to be available.

 I recently read an exchange discussing internet derived health care information and whether it would render physicians irrelevant. The consensus was that physicians will always be needed to help patients understand whatever information they find. All I kept thinking as I read this was, what CPT code pays for that? In order for physicians to be paid to provide this consultative service to patients, are we required to bring them to the office and perform the useless ritual of  the physical exam (feeling a normal abdomen, looking in the ears...) before we actually get to what they really want and need. Or perhaps should we just viewreflective discussion with patients as a non covered service and charge them like we would if injected them with Botox?

Saturday, April 10, 2010

A contrarian view of medical "paperwork"

Being true to my contrarian roots, I am going to take a contrary view related to medical paperwork. The term paperwork is really not entirely apropos since much of this documentation happens in the digital world. However, we still speak of dialing phones which have not had dials for decades. In a recent blog from the Medical Skeptic (, the author highlights recent studies which underscore the fact that doctors are spending more time with paperwork than in the past, resulting in less time with patients.

It prompts me to ask what has changed to prompt such a change in behavior? The stock answer is physicians are saddled with more bureaucratic mandates to comply with regulations and justify their billings. I suspect that this is true to substantial extent, but I would argue that independent of all the mandates and billing documentation our writing and documentation  requirements would have and will continue to increase in the future.

The reason is simple. Medicine has moved from a solo, lone wolf activity to a team activity. As well specialize more and more and participate more as a cog in a larger team, our need to communicate with other team members will increase. The safety of patients absolutely requires better communication between health care team members. That communication can only occur by taking time, generally not in the presence of patients, to reflect and document what you are thinking in a format that can be seen and digested by other health care professionals participating and making decisions relevant to a given patient.

 It is unfortunate that the present circumstances have conspired to prompt physicians to use the medical record more to comply with useless mandates and avoid billing fraud accusations while distracting physicians from the actual communication with other essential team members. This is simply a distraction created by narrow minded control freaks who have high jacked the entire process. That we engage in this essentially useless activity should not make us believe that all the time that we devote to working that is not face to face encounters with patients is wasteful.

Ours is a profession which requires both action and reflection. Our time with patients provides them with value only if we are not always shooting from the hip and our plans are the product of thought and exchange, neither one of which is valuable unless we accept that documentation is required for creating value from the thought by enhancing communication.

The wow factor and tachyphylaxis

I have come to realize that my medical education  has more relevance to non-medical contexts  than I could ever have imagined. In today's NYT, Gail Collins published a piece entitled "The curse of the wow factor". In it she laments that -
The problem is that they’re all wow and no substance....... There’s a feeling abroad that politicians can only get attention by sounding a little nutty. 
In order for any given politician to generate support, they need to attract attention in a world where they are competing for attention. That is an increasingly challenging task to accomplish in a world with some many inputs and increasing volume of each of these inputs. This is classic pharmacology.  Place a cell is a quiescent state and it becomes primed to respond to a very nominal stimulus. You don't need much ligand to get a response. Keep a cell in an environment where it is bathed in stimuli and it adjusts by downregulating receptors and becoming responsive only to the most robust of stimuli.

The public has become less responsive to what might be considered "normal" political stimulation because we have downregulated our political receptors. As it stands now, those politicians who can get through the first wave of selection for major candidacy MUST significantly activate a portion of the party faithful to generate specific responses;

1) showing up for public appearances and generating motivated crowds
2) Check writing behaviors
3) Foregoing other activities to be involved in campaign activities.  

 The question is what stimulus in needed to get this response in sufficient numbers of people over time to keep a campaign energized? It ultimately depends upon how much other stimulus people are getting and how much their receptors for political stimuli have been downregulated.

I am reminded of the similarity of this scenario to entertainment and prime time TV. When the TV series ER first aired, it was novel and widely acclaimed. Over time, the writers needed to find novel scenarios (stimuli) which they had not yet exposed their audience to since prior exposure meant that the appropriate TV receptors had already been downregulated or otherwise rendered non-responsive. They ended up requiring increasingly outrageous circumstances to happen each week in order to hold the audiences attention. Like the politicians described by Gail Collins, the characters had to become nuttier and nuttier in order to hold the audiences attention.

How do you restore the appropriate responsiveness to stimuli once tachyphylaxis has happened? In the world of pharmacology, you need to withdraw the drug. When the writers of ER could no longer dream up story lines which could titillate the public sufficiently, audiences melted away seeking their fixes by watching Nip Tuck or House, thus finding alternative sources of stimulation. They simply found a different stimulant whose receptors were still active, at least for a while.

At least part of the reason we have gotten to this point is that we have no consensus on what job politicians are actually vying to do. Is their primary role to serve the county, to serve their constituency, to protect the constitution, to be fiscally responsible, the protect the weak, to be leaders or follows. Ask five people and you will get five different answers. We could try to have a discussion about what their job should be but that would simply not be stimulating. Politicians could try to take on a leadership role and tell voters what they thought their job should.  I strongly suspect that would be an extremely ineffective vote garnering exercise. Absent a defined job for them to accomplish, there is no other approach to garnering votes than to "wow" the voters with ploys ever more out there.

Given the ground rules and the new avenues for pursuing the wow factor, there is no reason not to assume that politicians will get progressively nuttier and nuttier and the impassioned faithful will become even more emotionally and less cerebrally motivated. Politics may very well become the province of the drug crazed until there is sufficient sentiment to follow the old Nancy Regan principle of "Just say no".

Even more on gaming

From Peggy Noonan's column in today's WSJ:
That's why this week's Financial Industry Inquiry Commission hearings were so exciting, such a public service. The testimony of Charles Prince, former CEO of Citigroup, a too-big-to-fail bank that received $45 billion in bailouts and $300 billion in taxpayer guarantees, was riveting. You've seen it on the news, but if you were watching it live on C-Span, the stark power of his brutal candor was breathtaking. This, as you know, is what he said:
"Let's be real. This is what happened the past 10 years. You, for political reasons, both Republicans and Democrats, finagled the mortgage system so that people who make, like, zero dollars a year were given mortgages for $600,000 houses. You got to run around and crow about how under your watch everyone became a homeowner. You shook down the taxpayer and hoped for the best.
"Democrats did it because they thought it would make everyone Democrats: 'Look what I give you!' Republicans did it because they thought it would make everyone Republicans: 'I'm a homeowner, I've got a stake, don't raise my property taxes, get off my lawn!' And Wall Street? We went to town, baby. We bundled the mortgages and sold them to fools, or we held them, called them assets, and made believe everyone would pay their mortgage. As if we cared. We invented financial instruments so complicated no one, even the people who sold them, understood what they were.
"You're finaglers and we're finaglers. I play for dollars, you play for votes. In our own ways we're all thieves. We would be called desperadoes if we weren't so boring, so utterly banal in our soft-jawed, full-jowled selfishness. If there were any justice, we'd be forced to duel, with the peasants of America holding our cloaks. Only we'd both make sure we missed, wouldn't we?"
OK, Charles Prince didn't say that. Just wanted to get your blood going. Mr. Prince would never say something so dramatic and intemperate. I made it up. It wasn't on the news because it didn't happen.
It would be kind of a breath of fresh air though, wouldn't it? 

Why do we expect people to behave otherwise? We are all in some sort of service industry and more often than not, the client we serve primarily is ourselves.  

Wednesday, April 7, 2010

The power of saying No

David Leonhardt asks a very simple question in his column entitled "In Medicine, the power of No"  in the NYT today;
How can we learn to say no?
This seems like such a simple question but its complex answer underlies the apparently unsolvable quandary we find  ourselves in relating to allocation of resources to pay for health care. At the simplest level the question is ambiguous since it is not clear who we is. Each of us individually have no problem whatsoever saying no within a host of contexts. We say it every day, frequently more than once. We say no to our children, to our spouses, to our colleagues at work, to our friends at churches, synagogues, and mosques, and to ourselves. We recognize that our personal resources are not without limits, particularly time and we disappoint those around us by declining that dinner invitation, that opportunity to serve on the PTA board, the request to make an additional contribution to the police benevolence society. While some create problems in their personal domains by their inability to say no, for the most part people are individually pretty good at this. Ask any telemarketer and see what their hit rate is.

Something happens when we move from individuals making decisions about the allocation of their personal resources to groups of people allocating resources other than their own. Individuals have no trouble saying no because they are acutely aware of their many wants which virtually always outstrip the capacity of their personal resources to deliver. If individuals cannot husband their own resources, they quickly run out of resources. The bank takes their house. Their credit cards are no longer accepted at the local Target.

Once we move to groups and group resources, we run into the tragedy of the commons. What is owned by all is often protected and valued by none. What is the upside of saying no? Saying no in these circumstances cannot be leveraged to delay gratification for a payoff later. When it comes to common resources the use it or lose principle is basically always in play. Once potential future resources can be tapped via borrowing, the incentive to delay gratification becomes unthinkable. Where is the wisdom of saying no to anyone or anything?

Leonhardt's piece goes into great depth discussing various scenarios in the medical world where no one appears to have any incentive to say no to anyone else. From 20,000 feet, each of his arguments makes sense. Our inability or lack of incentives to say  no is part of the engine which drives crazy spending on activities from which patient likely derive little value, at least from the standpoint of examining what we believe they need.

However, the perspective taken is remarkably myopic. While undefined, much of the activity which falls under the definition of health care are services which are desired by but not necessarily needed by patients. While this distinction may be easy to sort out retrospectively in a non-pressured and contemplative environment, it is basically impossible where providers and patients meet.  In a world where both people's needs and wants will be paid for by common resources, who will be in the position to say no without appearing to be arbitrary and capricious? In fact, how can these decisions be anything but arbitrary and capricious when needs and wants morph so quickly as to be undefinable.

It is easy to see how it will play out. Common resources will be created through taxation and controlled by the state. State officials will be selected through the process used to select state officials, that is a political process. While state agencies may be guided by expert panels, the selection of the experts will be through a political process. Decisions of need and allocation of scarce resources will be done through politics. When do politicians say no? They say no when they can garner no additional resources. They say no when we are broke and their usual sources of credit are no longer available. They say no when they can no longer say yes. Saying no is not learned behavior, it is forced behavior.


Friday, April 2, 2010

Unanticipated spending acceleration events

I can see the financial post mortum in 75 years. The question will be "How could this have happened?" The sentiment will be that somehow someone should have been aware of the crazy out of control spending of borrowed money. There will be all sorts of analysis looking into contributing and modifying events, defining whether specific regulations, control systems, or safety measures might have been effective in preventing the run up of debt and resultant bubble bursting.

I see this to be like the investigations of the unexplained acceleration events associated with automobiles. When the various black boxes are interrogated and all the systems analyzed, the cause eventually appears to be the driver continued to press the accelerator. Similarly, when we are driving our economy at 80 mph toward a cliff, we need to take our foot off the gas and press the brake.  

Whose costs are we talking about?

It is said that economics is the study of the allocation of scarce resources. Scarcity touches basically everything in the human realm since there are never sufficient resources to fulfill all legitimate wants, even in the realm of health care. The question becomes, how do we deal with scarcity in any human realm and in particular health care?

Dr. Molly Cooke has authored a commentary in a recent NEJM entitled, "Cost Consciousness in Patient Care — What Is Medical Education’s Responsibility?

On the whole I agree with Dr. Cooke that cost considerations need to considered at multiple levels of decision making and awareness of true costs by all parties is the first step in avoiding waste of scarce resources. However, beyond that realm of agreement  our perspective diverge. One reason for the divergence is based upon the lack of precision in terms of what Dr. Cooke means by cost. When addressing cost the term has no meaning unless one defines cost to who or what. Using cost without a definition of who the actual bearer of the cost will be is meaningless, much like saying 50% larger or 30% better without giving some reference for comparison. 

The whole concept of cost makes sense when specific entities are weighing investment of resources and balancing investment in one domain vs. another. Investments may be expensive but deemed worth the cost given the benefits conferred. Thus, there lies the rub. In the present system of resources made common in order to confer benefits upon specific individuals, Dr. Cooke is asking physicians to alter their historical role as patient advocates and jettison this in order to become an advocate of some other entity championing the common good. 
Second, we must abandon the myth of the physician as single-minded advocate for any amount of benefit for every patient. We make all kinds of choices in caring for patients; some involve denying care that patients perceive as — and that might actually be — beneficial.

Furthermore, in order to train the next generation of physicians to become the instruments to impose her vision of cost control, we need to incorporate the concept of divided allegiance into our medical school curriculum. 
I have no doubt that Dr. Cooke is motivated by the highest ethical standards and she has devoted her life to a very noble calling of medical education. However, I am not sure she understands the slippery slope that she has ventured on to. Is she willing to make such a divided allegiance completely transparent to her patients, placing it upon flyers, stating clearly that "I am not your single minded advocate". 

As I see it, we have a simple choice. When we commonize more and more resources, those who make decisions regarding their allocation become less and less beholden to patients and more and more beholden to those who control those resources. We as physicians will respond more and more to external metrics conceived by those arms length (or farther) from patient wants, driven by the desire to prevent the tragedy of the commons. This will follow as a consequence of commonizing the resources used to provide health care and is completely and utterly unavoidable. When we chose this pathway, the end result is virtually certain that the doctor patient relationship is forever changed. Lessons from history also suggest that commonized resources are often squandered as well.

The alternative choice is to avoid commonizing resources whenever possible, leaving resources in the hands of potential patients who will be more attuned to consumption of their private resources. This pathway decentralizes the responsibility for cost control, placing it at grass roots level. When patients pay for care, they constantly serve as teachers for their caring providers, letting them know when the cost appears to be out of line. Markets work like that.