The untenable position of physicians as cost control agents

In October in JAMA, Tilburt, et al published the results from a survey of physicians regarding their perceptions of their role(s) in the control of costs in health care (JAMA. link). Nearly everyone surveyed recognized that out of control costs were a big problem and needed to be addressed. What was reported from this study was what was viewed as surprising results showing that most physicians did not view themselves as having the primary role as controller of costs, and that other parties should take on larger roles.

Physicians also hold nuanced views about their perceived responsibility for health care costs. Most (78%) agree that they “should be solely devoted to [their] individual patients’ best interests, even if that is expensive,” whereas 85% disagree that they “should sometimes deny beneficial but  costly services to certain patients because resources should go to other patients that need them more..........Yet 85%also agree that “trying to contain costs is the responsibility of every physician,” and 89%agree that “doctors need to take a more prominent role in limiting use of unnecessary tests.” This apparent inconsistency may reflect inherent tensions in professional roles to serve patients individually and society as a whole. Previous smaller studies have suggested that US physicians endorse the ideal of prudent stewardship but are reluctant to withhold available but costly services that could benefit individual patients.....Physicians clearly struggle with these tensions and how they can act individually and collectively to provide optimal, sustainable quality care. They also recognize themselves as just one component of a multifaceted system of stakeholders responsible for addressing increasing costs. Indeed, they ascribe a higher degree of responsibility for controlling costs to external forces such as health systems, insurance companies, and even patients and trial lawyers than they do to themselves.

Then who should be primarily responsible?

Maybe this is the wrong question. Perhaps the better question is that how are other industries grappling with this? Is the automotive industry going through a crisis because we are spending too much on cars and dealers are being singled out because they are not concerned sufficiently with cost control? Is the mobile phone industry concerned about the explosion of users of mobile phones and cellular service? Do we try to hold accountants or lawyers accountable for the overall cost of financial or legal services?  I don't think so.

There are major differences with these other industries since for the most part the costs of these services are falling in real dollar terms and the quality of the goods involved are improving, even without requiring the parties involved in the manufacturing and distribution to agonize over driving costs and prices down. Why is this not happening with health care? This very important difference revolves around what I refer to as health care exceptionalism.

We have been indoctrinated in the tenants of health care exceptionalism, in that health care is different. This is based upon delusional thinking centered around the idea that decisions regarding health care should not be influenced by scarcity. Within the broader economy, markets control the allocation of scarce resources and scarce resources (which are all resources to some degree or another) tend to end up in the hands of those who make best use of them.

The beauty of market based allocations is that no single party must be charged with management of scarce resources, setting prices for all, or driving affordability. It is a shared responsibility and although Adam Smith's invisible hand has been repeatedly trashed as an allocation tool, no better alternative has been shown to actually work as well. Within health care, market mechanisms have gone AWOL. Prices are artificial. Actual costs are opaque. Supply has been regulated to death and regulatory agents initially deployed to protect the public now protect the guilds which choke supply.  The cost of losing the market mechanisms and succumbing to regulatory chokeholds is that prices lose their ability to send scarcity signals and efficient allocation of scarce resources does not happen.

These articles in JAMA highlight what happens when these market mechanisms are lost. Because we view health care a somehow fundamentally (and inherently indefinably) different from other human wants and needs, so distinct that we could not possibly entrust allocation of resources to something as vague as the 'market". we declare that we must use some other mechanism. Who or what is supposed to step up to fill these holes is left undefined? There is no way that physicians can do this job and it places them in a position which is thoroughly untenable, creating financial and ethical quandaries which we are not at all prepared to deal with. The grand experiment of planned economies of the 20th century demonstrated unambiguously that experts cannot replace markets as allocators of scarce resources.  To place physicians front an center is the role of resource allocators in health care will undoubtedly fail. The results of this survey do not demonstrate lack of leadership but in fact demonstrates real wisdom in that physicians recognize that they are no experts in resource allocation. What we do as physicians really provides us with none of the tools or expertise to control costs. It is not our job.

Health Care Exchange Hidden Surprises

Leigh Page published an article on the American Health Care Exchanges in the British Medical Journal this week. It is behind the pay wall but for those who have access to read the full content, it is well worth doing. The stories described are startling. For example:

Physicians who don’t want to participate, however, are finding it’s not so easy to do. Last year, David Aizuss, an ophthalmologist in Encino, California, was sent an exchange contract from Blue Shield of California, with the payment rates left blank, to be filled in by the plan later. “They were basically asking me to sign a blank check,” Aizuss recalls, and he refused to do so. But later he found his name on the plan’s provider list, contacted Blue Shield and had it removed. He found out the insurer planned to pay him 70% of his usual rate.

 Ok, the idea that insurers try to extract lower payment rates from practices is not new news. But there is more...

In many cases, the physician’s affirmative assent is not required. Under the contract, the plan only needs to send physicians a notice, and they will be included in the new network unless they opt out in writing within a certain period, typically 30 to 60 days. Practices may never see these notices. Depending on the terms of the contract, they may be faxed, e-mailed or simply posted on the plan’s website. A notice may be just one of countless communications from dozens of different plans, covering a variety of issues. “Half of the time they are not even read,” said Sam Unterricht, president of the Medical Society of the State of New York. “Who has the time to read all this stuff?” He added that practices should make a special effort to keep track of these communications. In other cases, through an “all products” clause in the contract, plans do not even have to inform physicians that they are putting them into a new network, said Sidney Welch, an attorney specializing in physician contracts at Kilpatrick Townsend and Stockton in Atlanta. All product clauses are banned in states like Texas and Connecticut but not in New York, where a survey of physicians by the Medical Society of State of New York (MSSNY)
found that 16.5% of them had been forced to join exchange plans through such clauses.2

OK, now this is getting serious. You cannot even discern whether you are part of the network or specific plans. What other surprises are lurking? More...much, much more.
 

Curran added he was concerned about some aspects of the new arrangement. For example, if enrollees stop paying their premium, federal regulations require a “grace period” in which they can still get care. The insurer has to continue paying claims for the first 30 days, but the physician must continue providing care for 60 days after that, with no assurance of being paid. In the MGMA survey, 59% of practices cited the grace period as a reason for not joining exchange plans.

I guess there is always the option to opt out and not participate in the Exchanges. Maybe, maybe not...

Unterricht thinks that once physicians know they are in exchange networks and have to grapple with the problems, there will be a mass exodus from them. “The network that existed last April [when New York plans vouched for network adequacy] will not

 

be in place come January or next April,” he said. Opting out, however, could be challenging, according to Welch, the contract attorney. The contract may stipulate that the physician must stay in the network for a certain period of time. Physicians who can’t get out might refuse to see exchange patients, but under the terms of many contracts, the physician would be barred from seeing new patients in all the other networks the insurer operates, Welch said.

What I find most interesting is that this is published in the British Medical Journal, not JAMA or the NEJM.  

 

 

 

Healthcare.gov on Dec 2, 2013

The claims today are that the website is vastly improved. It is hard to take issue with this claim since it is not to hard to improve upon the October 1 baseline.

When I treat patients I will ask them if they have had a response to treatment. If they say yes, I ask them to use one of a set of global response descriptors ranging from minimal, partial, near complete, or complete to describe their response.  If I were to use the patient global assessment tools for characterizing the "response" to website "treatment", I would have admit, yes there was some improvement but I could not begin to claim that the response was complete or near complete. It perhaps would be a stretch to call the response partial and given all the caveats regarding continued bugs and glitches, I would have to settle upon a minimal response. Any way you look at this the efforts are not nearly adequate to meet the public needs.

No one has made any claims whatsoever about the back end of this. However, that part which involves insurers and doctors getting paid is not so important. As long as they can get this to be operational by 2025, we should be just fine.

Putting things in perspective

One of the challenges we face a physicians is to both understand risk ourselves, and communicate risk to our patients. We are hamstrung by basic human foibles, most notable being our inability to grasp the difference between how different a risk of one in one thousand might be from a risk of one in one billion. Our ancestors developed in a world where understanding such differences in size were simply not relevant. Unless particularity trained, our brains do not ascribed significant differences to these differences.

The Teaching Company course on Big History taught by Dr. David Christian is a great resource for beginning to grasp how significant these differences and scales are. The scope of this course is to cover the history of the universe, startling with the big bang and moving to contemporary history; 13 billion years in 48 lectures. The entire first lecture is a discussion of nothing more than understanding the size of the universe and the time scale to be addressed, looking at orders of magnitude (powers of ten). He gives a quick Ted Talk summarizing this in 18 minutes.

I recently saw a piece posted on the Big Picture blog by Barry Ritholz which provided a good visual representation of this (Big Picture link). I also tracked this back to another nice blog  (www.waitbutwhy.com)(www.waitbutwhy.com2). I really like authors who dwell upon these concepts since I see this as a major shortcoming of human cognition and decision making. Our fascination with critiquing and judging events in a moment to moment fashion, is destructive. This when combined with our other tendencies to create stories out of random chatter prompts us to act hastily and value action over reflection.

While we physicians (and other health care professionals) do not work on universe life-time scales of time, we still are called upon to understand phenomena occurring within huge a spectrum of probability, needing us to understand quantitative concepts which we are ill suited to grasp. This may all seem to be an pointless intellectual distraction except for the fact that it is not. As our scope of work in health care has moved to assessors of risk and providing advice to patients regarding events that might affect them in the future, it is absolutely essential that we are able to understand orders of magnitude and furthermore, be able to communicate this understanding to patients.

My training failed to prepare for this task. Given what I read of the medical literature, the preparation of my colleagues was equivalently inadequate. Our rights of passage required us to do and survive all sorts of things in our training. It did not require us to understand risk and probability in any sort of real quantitative fashion. Whatever appreciation I have developed regarding perspective, size, risk, and orders of magnitude has for the most part developed as a consequence of reading and listening out side of the medical field.

I hope this is changing.

Let the games begin!

OMG... What an angle. I am always amazed at the resourcefulness of humans....
Hatton

Nudges or shoves? Voluntary or guns to your head?

What is voluntary and what is coercion?  Interesting video....

Michael Munger at MTSU

Hooray for Tyler Cowen

Tyler Cowen wrote a great piece in the NYT:
More Freedom?

It reminds me of Richard Epstein's seminal work Simple Rules for a Complex World.

The limits of the reach of the law

Let us go back to the Spring of 2010 after the ACA had passed Congress and had become the law of the land the previous fall. As referenced in a previous blog linking to a particular David Cutler letter (Cutler letter), David Cutler wrote to Larry Summers and expressed the following concerns:

I am writing to relay my concern about the way the Administration is implementing the new health reform legislation. I am concerned that the personnel and processes you have in  place are not up to the task, and that health reform will be unsuccessful as a result...........My general view is that the early implementation efforts are far short of what it will take to implement reform successfully. For health reform to be successful, the relevant people need a vision about health system transformation and the managerial ability to carry out that vision. The President has sketched out such a vision. However,I do not believe the relevant members of the Administration understand the President’s vision or have the capability to carry it out.

The events since October 1 of this year provide evidence that David Cutler was spot on in his assessment. Furthermore, the most recent responses of the Obama administration underscore a crucial point. It appears to me that there is a mindset which views the public deliverables as the law, and that the product of political process, that being new law conceived, is sufficient to improve the lives of citizens. The events of the recent past should serve to dissuade anyone of that notion.

Even the most recent response to the Healthcare.gov website meltdown is illustrative of the almost delusional faith in the power of the state. Delivery of health care services involves a complex web of people, products, and services. The availability of insurance products is only one element of this matrix. Having a well functioning insurance market is an necessary but not sufficient element for health care delivery to thrive. In this limited but essential domain, there is remarkable complexity and the systems which have developed over many years are the product of evolving and adapting complex systems. For these entities to survive and thrive, they require robust IT systems, actuarial data, rules required to adjudicate claims, people management systems, marketing systems, and management know how that allow them to plan, budget, and respond to a changing and challenging business environment.

In any event, either no one understands or wants to understand that when  passing a law does not equate with making things happen. Congress can pass a law mandating that everyone should be happy but even the most delusional Pol understands that this is simply not possible. However, many legitimate desires to improve the lot of people are pushed into the political arena with the hope that near Utopian aspirations can be realized by passing a law. It is a simple and seductive concept which has ended up transferring money and power to various state capitals and most importantly Washington, DC, the latter now being the richest city in the country.

The business of Washington is government and the product for the most part is regulation and law. From the Washington insider and activist perspective, the deliverable is the law itself, not the implementation. Which again brings us back to David Cutler's prescient letter where he goes on to warn specifically:

Above the operational level, the process is also broken. The overall head of implementation inside HHS, Jeanne Lambrew, is known for her knowledge of Congress, her commitment to the poor, and her mistrust of insurance companies. She is not known for operational ability, knowledge of delivery systems, or facilitating widespread change. Thus, it is not surprising that delivery system reform, provider outreach, and exchange administration are receiving little attention. 

Not that no one else saw this happening. Scott Gottlieb wrote in Forbes in March of this year in his article titles "Who's in charge of implementing  Obamacare and why it matters (Forbes link):

I wrote more almost three years ago, in the New York Post, that many of the Obama Administration’s economic centrists were leaving the White House. Left behind were some of the most progressive staffers. They would be the ones implementing the law.
That transition now seems to be complete. The few remaining centrists thinkers inside the White House, mostly scattered across the National Economic Council and Treasury, are gone – or largely marginalized when it comes to issues around implementation. The people drafting and reviewing the regulations are mostly centered in the White House and its Domestic Policy Council — and they mostly work for Jeanne Lambrew.

It seems that many people recognized that placing someone with operational savvy in charge of ACA deployment was not a priority. Not surprising for a President who had almost no operational experience prior to ascending to the Presidency.  He then appeared to condone the purging of HHS of those with operational expertise, perhaps to maintain philosophical purity and Federal control of the products to be marketed on the exchanges.

Now that it is becoming increasingly clear that the foundation upon which the health insurance exchanges were built cannot be supported given the probable number of enrollees, the response of both Congress and the Obama administration is to rule by decree. In both case each entity is looking to change the rules precipitously without regard to the actual timetables which fall under the category of "the possible". In the case of the White house, they also appear to ignore whether their actions fall under the category of "the legal". That has not stopped them in the past, however. Why bother changing the law when one can rule by Executive decree.

I am reminded of recent events happening in Venezuela where President Maduro has decided that prices for consumer goods are too high. His response has been to decree that he will set profit limits in all sectors of the economy. Toilet paper is in short supply. They have had to deploy troops to control crowds at consumer electronics retailer Daka. Sounds like a great idea to make greed disappear by decree. Why bother with markets or rule of law or needing to cooperate with messy institutions such as elected governing bodies. They are just obstructive when good leaders are trying to get something done to help the people like getting them free stuff.

In the same sense, why bother with trying to understand how insurance markets actually work when you think you can manipulate them like a puppeteer controlling a marionette. Push for a law which is fatally flawed? No problem! Mandate others fix it by decree and them blame them for any ensuing disaster. Just ignore the inconvenient reality of state insurance commissioners, actuaries, and the planning required to make sure entities charged with paying health care bills are fiscally solvent. Such petty and boring operational details are not the stuff of genius. That should be someone else's job and it is not material which gets anyone elected for higher office.

However, it just the heart of what makes the world work. We should not take this for granted.

The origins of irrational exuberance for cancer screening

Every day I wake and I am here, wherever I might be. I operate using a set of assumptions, most of which I do not think to question. While we constantly exclaim that the pace of change is scary, on a day to day basis we perceive very little change. Given that background, I read articles like the one that appeared in the Health section of the New York Times on October 17th which remind me that the world that we presently experience is not the world that has existed for time in memorial (NYT- Bowery study).

The article is by Gina Kolata, one of my favorite writers for the Times and her piece was about a study done more than 50 years ago by Dr. Perry Hudson, a urologist who was a researcher working out of Columbia University.  For those of you who follow my blog, you realize I have more than a little skepticism when it comes to cancer screening programs. In the present time, I am the outlier, expressing essentially little or no faith in the ability of our tools to accurately predict who will die from malignancies. I was intrigued to read in Dr. Arnowitz's piece (Aronowitz)  that early in Dr. Hudson's career, the position that I currently hold was more the norm for the medical profession.

At mid-century, there was also a backlash to the optimism-promoting “do not delay” public health campaign in other cancers. Physicians were increasingly skeptical that existing means of prevention and treatment were effective because the mortality from most site-specific cancers had not improved. This skepticism led to a group of self-identified physician “predeterminists” who argued that at the time of a cancer diagnosis the fate of most individuals was outside of medical care, determined by the poorly understood tumor characteristics and the individual patient’s immune status.

Enter Dr. Hudson. He was motivated to dispel the cancer fatalism which permeated the medical community and it only made sense to him that early detection and treatment was a promising approach.  He begins to test his ideas on homeless men living in flop houses in the Bowery of New York City. He provided inducements to coax them into participation in gruesome diagnostic and "therapeutic" interventions, inflicting untold harm upon ill informed subjects. His work was accepted by the medical powers that were at the time, passing peer review and receiving funding from NIH.

The damage is not limited to the poor souls from the Bowery, but extends to to current times. As Dr. Aronowitz  states in words that I cannot improve upon:

There has been a disturbing continuity between the Bowery series and our current paradigm. The Bowery studies were prematurely deployed, crude technopractices that anticipated and followed a similar logic undergirding many subsequent incremental developments in prostate cancer. These studies, forgotten perhaps because they reminded later practitioners of the violence and dubious ethics of subjecting men to invasive procedures without good evidence of benefit, are a window into the long halting history of how we have come to accept as efficacious a set of very invasive prostate cancer practices, developments that are themselves part of an ever larger quest to control cancer and our fears of cancer and that have brought millions of American men into state of prostate cancer risk.

The message is clear. We tend to be blind to the very things that the future will be appalled by. The medical profession has a long history of caring for the sick and relieving suffering. However, it also has a long history of doing terrible things to other people with inadequate disclosure and without their consent, often justified by lofty goals for humanity in general. We cannot forget specific humans in particular.

A prescient letter and a touchdown dance on the 50 yard line

David Cutler's warning in 2010 (Cutler's 2010 warning)

The Atlantic Monthly's touchdown dance on the 50 yard line (Atlantic Monthly early touchdown dance)

Day 27 of the Exchanges

It is Day 23 of the exchanges. The blather erupting from the political class and their minions on Fox News and MSNBC is just amazing. I just can't help being a voyeur, toggling between the polar ends of the partisan spectrum and marvel at the their blindness to their own biases. I have tried to sort through the chatter and I am at a loss to predict how all this will play out in the next six months. However, I have come to these conclusions:


1. The Federal exchanges are a mess. The state exchanges appear to function better but it is not clear whether they are functioning well enough.
2. It is not clear whether the situation is improving quickly enough.
3. It is not clear whether the situation is any worse than what was previously experienced with the roll out of Medicare part D in 2006
4. It is not clear who is able to sign up and whether sufficient young healthy people will sign on to make this work. Most of those signing up are signing up for Medicaid.
5. In time we might be able to figure out what all this means.
6. There is much finger pointing to come.Much causality will be claimed and belief will be much more important than actual proof.

Measuring success with sustainability in mind

What constitutes success? It seems like a relatively simple question but it is actually very hard to define success because what appears like a success at one moment in time can end up as an abject failure at a later point in time. The converse is also true. This represents a truism in basically all realms of human endeavors.

Take for example the world of financial investment management. Bernie Madoff was one of the most
successful money managers of the late 20th century. Even before he was infamous he was famous for his remarkable returns on investments and by all measures was a remarkable success attracting celebrity clients, assuming leadership positions in his industry, and being a darling of the philanthropy community. He was almost universally viewed as a success until he was not. He turned out to be a fraud and a failure because his formula for success was not sustainable. World history has been littered with similar individuals. Just today the WSJ reported on Eike Batista, a Brazilian tycoon whose empire is not collapsing. He was on the Forbes list of most wealthy people in the world as recently as last year. Now he is the center of perhaps the largest bankruptcy ever to occur in Brazil with the prospects of sending destabilizing financial ripples throughout the country and world.  The same principle can be applied to institutions, states, and programs.

When I am driving in my care, I make it a point to take the opportunity to listen to the spectrum of political chatter, listening to both MSNBC and Fox  News (as well as NPR). I would argue that MSNBC and Fox news have more in common that they might think and they should each thank their lucky stars that both exist. Each serves to create content for the other. I am struck by the differences in what different ends of the political spectrum view as successes, acceptable failures, and looming catastrophe. Perhaps I am naive (I know that to be the case) but I wish to believe that each side is motivated by the desire to create a better world, but they have very different views on how to go about doing this. Furthermore, each side uses a different set of what amount to be surrogate measures to identify success or failure in a time frame where they can actually measure things. In each case the time frames used by these hedgehogs (always certain and frequently wrong) are likely not entirely useful for avoiding what I refer to as the Bernie Madoff problem;
embracing early what end up being transient and non-sustainable approaches to solve real problems.

The theme is recurrent; create some program replete with subsidies or tax breaks, spur the development of rapid investment in some particular target area or create or support politically connected entities which are uniquely enriched by politically derived resource flows. The picture may look great, particularly for the select few who derive direct benefits, but what about the broader public? The picture tends to be even more muddled that a simple model of short term success vs. long term failure might imply. What we face is more like a muddled picture in all time frames with bad outcomes always mixed with some good outcomes which are not uniformly distributed. The politically connected will always fight much harder to protect their specific subsidies and rents because they directly benefit. This always happens when the benefits are concentrated and the costs are socialized and not easily measured.

Each side of the political spectrum cherry picks the respective outcomes to justify whatever they are advocating at the moment, creating implausible causality linkages which conveniently justify their talking points. The latest case is using the government shutdown and making the claim that this resulted in the poor job numbers just released. This is despite the fact the numbers were actually collected before the shutdown. While this particular case highlights a dubious claim of the political left, they have no monopoly on such claims.  Reading David Stockman's books made me understand that success in politics going back to at least Nixon has required that one sell such dubious linkages to the public and deploy short term approaches to create transient success at the risk of creating long term failures. It likely goes back much farther (perhaps to the dawn of human civilization). I cannot help but think about Louis XV and his famous utterance about "After me the deluge". Success for him only mattered up until when he was dead.

Sustainability is one of those things which has been seized upon by various parties across the political spectrum. Here again the focus of sustainability anxiety differs across the various political parties. The right worries most about financial sustainability, focusing on deficit spending and the effects upon future financial growth and stability. The left focuses more on environmental issues and sustainability. In each case there are concerns that current practices are not sustainable and if continued they will lead to catastrophes. Who is right? How likely are these various scenarios to come about and in what time frames?

I must admit I worry more about financial calamities. They have happened with consistent regularity with spectacular financial and social breakdowns punctuating human history. Poverty and social chaos appear to be the default mode for the world. There are many more paths leading there than there are leading to wealth and order. In my limited experience the worst environmental degradation seems to happen where people are the poorest and the path to better environments seems to be through improved generation of wealth. The counter arguments focus on the possibility of existential environmental calamity driven by human action. If this is a "likely" possibility, it should change human behavior. However, we cannot come to an agreement as to what likely means and what threshold should inspire action. Good luck in driving a consensus. The problem is those most passionate about particular concerns function as advocates who have huge blindsides. There appears to be no ability to question their own beliefs and not vilify those with contrary opinions.

It leads us back to asking what is the success that we should aspire to and what cautions should be deploy on our way to those successes? It seems that all of us carry our own unique fears regarding what terrible events might unfold in our futures and we come to these conclusions using primarily emotional decision making tools. Based upon the work of Jonathan Haidt, it seems that these belief systems may be hard wired to some degree. The ends of the political spectrum hold certain things in common, most notably their certainty of being right and having short memories of when they were wrong.

Day 13 of the Exchanges

The enrollments apparently are now a trickle. The launch of the exchanges is now recognized as a "soft" launch. As expected, the state managed exchanges are performing marginally better than the federally run exchange Exchange data. None of this is really surprising with the exception of  the California data. They spent about $1 billion of Federal grant money to set up their exchange and they have enrolled no one? The Feds did not get their specs to the programmers until late this spring and there was no way this was going to get launched without serious bugs by the October 1 deadline. Given the other delays, the politics of this program where going to drive a launch by the October 1 deadline, come hell or high water.

My state elected to allow the Feds to run their exchange. Now that people have been able to get access to the sites and see t he offerings, we are now getting a feel for what the insurance offerings and  the networks look like. Similar to what has been observed in other states, the exchange here has offerings from a variety of insurers offering what appears to be much thinner networks than their usual products. For example, a number of the major health systems are not part of the Blue Cross and Blue Shield exchange offering. One thing I also did not realize is that those purchasing insurance through the exchange will get a tax break while those buying products outside of the exchange will not.

While the initial numbers insured through the exchanges may be small, over time they will grow for a number of reasons. First, the tax breaks available. This amounts to a subsidy independent of the direct subsidy. Second, there is going to be a transfer of those covered by employer based insurance to the exchanges. Employers will be able to better define and control their costs. They will simply say here is your money for insurance. Buy what suits your needs. While  their will be push back to start, employees will adjust quickly. I can't say that I view this as a bad thing. Employer based health insurance created more problems than it solved.

There are going to be a lot of people who will be insured but because of the narrow networks the meaning of being insured will be very different. What happens when those who are insured have some sort of condition where the expertise to treat falls outside of the narrow network? What sort of language is within the contracts to address this situation? What will be the responsibilities of the physicians within the network? What will happen when patients are told that no one in your network knows how to help you?

I am sure that this will evolve over time and hopefully the most robust delivery systems will be able to put in place systems which can identify where expertise and capacity are needed. However, perhaps not. One business model may highlight strategic incompetence with very low rates to attract the well and frugal. I could imagine being able to deploy a network at very low cost if a system did not have to deal with any actual illness.

I look at our own practice which is the destination for a number of patients within a six state region. What happens when these patients start to come to us out of network and are expected to pay the entire cost of their care? While ostensibly insured, they are basically uninsured to us. What will be our ethical obligation to them? The simplest answers to this question will be either, we are physicians are we should care for them without concern for cost or we should treat only who can pay. Take the former tack and we will go broke an be of no use to anyone. Take the latter tack and we will have lost our way in terms of our mission. In addition, if patients have to pay full freight, our referral pipeline will likely dry up.

Sick patients will need to end up somewhere and if networks become increasingly closed and their ability to shunt patients elsewhere for specialist care is impaired, how will this play out? Remember this is all going to happen in a world where patients have increasing access to information. Patients will be able to change networks but movement of patients with serious illness from systems unable to care for them to networks able to take on challenges will need to be associated with the right actuarial data which will allow networks attracting the sick to remain financially viable. Being a magnet for patients expensive to care for is not a strategy for financial success if one cannot collect the premiums to cover your costs plus a reason rate of return.

There are going to be some gaping holes and some scary patient stories. However, there are gaping holes and scary patient stories now. It will be difficult to see if the holes will be bigger and the stories worse for a while. As they say, this is the fog of war....

Knights, Knaves, and Pawns

I recently became aware of a series of articles published first in the social science literature (Knights,knaves or Pawns) and then adapted to the health care delivery realm (Are docs KKP?) which come under the rubric of people being noble (knights), essentially not to be trusted (knaves), or simply a function of their environments (pawns). There is both simplicity and power with this particular worldview because these labels line up with our personal perceptions relating to those around us. In our personal dealings, we quickly become aware that there are those who we can trust (knights), those who we will never trust (knaves) and those who we might trust in a certain contexts (pawns). In realms where know those who we deal with, we can use our judgement as to who we assign to specific categories. Unfortunately, many of our dealings are with individuals who we do not have sufficient information to judge. When this happens in the private realm, individuals have the latitude to make a broad range of  decisions, some of them good, many of them bad.

In his 1995 article in the Journal of Social Policy,  LeGrand addressed addressed issues that are important broadly for understanding the implications of social policy, especially the modern welfare state.

"To what extent are they a response to the perceived failures in the old systems? If they are a response to these failures, are they a good response? .....More specifically, I argue that both the quasi-market and legal changes in welfare systems are based on a particular view of human motivation and behaviour, and that this view is rather different from the assumptions concerning motivation that underlay older models of welfare systems. However, neither this ‘new’ view nor the ‘older’ assumptions are likely to provide an adequate account of the way in which people actually behave in welfare-relevant situations; hence welfare systems based solely on one or the other are likely to fail. What is needed are ‘robust’ welfare policies: ones that allow for the possibility of different kinds of human motivation and hence have the potential for more successful outcomes. This is a broad canvas. Inevitably in places the argument is speculative; equally inevitably it will involve both the caricaturing of distinguished thinkers’ arguments and the over-simplification of a complex reality."

This is politics in a nutshell. In order to gain political power to accomplish any goal, successful players must simplify, simplify, and simplify further. The cost of simplification is the loss of reflection, polarization, and a winner take all environment. This is unfortunate since understanding human nature is essential when defining social policy and there is nothing simple about human nature. Whether a particular social program meets its goals is completely dependent upon how people respond to the changing incentive structures and whether they act like knaves or knights will evolve over time as the norms of the population are changed by the changing social programs.

In the private realm, individuals and groups that make bad assessments regarding whether they are dealing with knights or knaves tend to do poorly over the long term. The rest of us can perhaps learn from their mistakes. In the public realm, politics pushes us toward "all in", one size fits all policies, driven often by slim political majorities. The time frames to assess success or failure often is beyond the ability of players to make key linkages. Success in the political realm may be defined by growth of programs and concentration of money and power. It rapidly gets very hard to figure out who are the knights and knaves.

LeGrand's work was applied to the medical realm, describing the evolving perspective of physicians (Are docs KKP).

"Le Grand’s work on post–World War II British social policy found that perceptions of human motivations gradually transformed, with the prevailing view of the typical British citizen morphing from knight into knave as the costs of maintaining an expensive welfare state increased. US perspectives on physicians have undergone a similar transformation with the increasing cost (both to taxpayers and to individual patients) of health care delivery. As physician behavior has been tied to these rising costs and increasing scrutiny has been applied to the quality of care delivered, policy discourse often reflects the perspective that physicians are an obstacle not an enabler to a functioning health care system. Rather than being counted on to exercise their professional ethic to address problems in health care delivery, physicians should be guided to do what is right with an increasing menu of incentive payments (ie, pay for performance or value-based purchasing) or strict regulations. Rather than being counted on to maintain their knowledge and expertise on their own accord, they are subject to periodic examinations to demonstrate continued proficiency. "

 We now appear to be in a world where physicians are no longer perceived to behave like knights. Some of this altered perception may be justified by less than honorable behavior of of knave like elements within the physician population. I would also venture that certain social programs implemented over the past 60 years have served to undermine physician professionalism, spawning gaming behavior in initially the few and more broadly over time.

We are not alone in being in a position of lost trust. What I find odd is when specific professionals lose the public trust, the response tends to be to recreate powerful regulatory structures within the realm of politics. What makes us believe that those who gravitate toward political  institutions are any more knightly or accountable? Can the problems associated with the complexities of human behavior by fixed best with political tools? I doubt it.

Day 2 of the Exchanges

It is end of Day two of the exchange roll out. By all accounts, it has been somewhat chaotic and by some accounts there is the suggestion that not a single person has succeeded in completing an enrollment. This is where no one should want to be an early adopter. I logged on to the Healthcare.gov site and was able to peruse the offerings. They were not cheap even though I put in demographics which were not indicative of high risk (young and no pre-existing conditions).

In the long run I suspect the computer glitches will be worked through and the enrollment process will be passable before the January start dates. Then the real fun begins. My guess (and it is a guess) is that for those who enroll, they will choose the least expensive programs while not understanding the financial implications at the outset. Those implications will be they will be insured....sort of. Patients will soon learn that costs will be shifted on to them and they better become savvy medical shoppers and fast. Simultaneously physicians and health care organizations will take a haircut. The cost cutting  pressures will be exerted from two sets of payers; both legacy payers (insurers) and end users (patients).

In as far as the ACA has served to drive changes in the insurance market it has been a key driver in the upcoming changes. Ironically, I do not believe the changes which will result were the ones intended by the authors of the legislation, that is the driving of out of pocket costs on to consumers but unless there is some dramatic change in how this is to be rolled out, it is what we are going to get. Yes, the Feds will provide some degree of subsidy to some on the lower half of the income scale but the math does not work. From an actuarial perspective, the only way to pay for this will be to deploy something which wakes end users up to the costs associated with both the volume and intensity of care. Make patients responsible for some of the costs and they will become less willing to consume health care.

As costs become transferred to the public, I see decreased demand and steady downward pricing pressure. Like all predictions, I could be wrong. Only time will tell.

You can't afford your doctor - transparent accounting

The math is unambiguous. You cannot afford your doctor. However, the injection of third party payment into health care delivery has obscured this reality. Let's take a simple drill down into basic health care finance in terms of ambulatory care. Let us assume that your very average primary care physician makes roughly $200,000/yr. That works our approximately to about $4000/wk, assuming working around 50 weeks a year (which is a generous assumption). Assuming that the average physician works 8 clinical sessions per week which allows for time to do other essential functions (calls, note completion, test follow up), this means that the average physician needs to net $500 per session after all overhead costs.

To make the math simple, let us assume a 66% overhead which would require about $1500 in revenue per clinical session. Let us assume that each of the sessions is scheduled for 6 hours which translates to 8 hours of clinical work. If one is living off the E&M codes, the most common code used in the 99213 code with the 99214 code catching up. One can assume that the average payment will be between the two. I think we can liberally assume a revenue of about $100/patient. That means you need to schedule 15 patients per half day session to make the $1500 to pay yourself and cover your overhead. That means  you need to see about 4 patients per hour. That translates to a total of 15 minutes per patient and perhaps if you are lucky you can spend half of that time in actual face to face time with your patient. This boils down to 7.5 minutes face time.

How many doctor's offices are up front with you when you make the appointment. "You have 7.5 minutes to complete all business. Please be prepared with an appropriate agenda which can fit into 7.5 minutes." Do you want to spend more time and are you willing to pay more for your time? Sorry, not allowed according to the contractual arrangements in place. You don't pay the bills so you don't make the rules.

So you say that your insurance pays for your visits. No they don't. They just take your money and pass it on taking a generous cut. The math of reality is shown above. Through your insurer this is what you purchase. It may be said that cross subsidies should offset such a payment plan. Talk about lack of transparency. Why should we advocate for overpaying for something in order to offset for stinting on another. Furthermore, those closest to the game and having the most at stake quickly figure out how to game the system, providing only over compensated services.

The public needs to understand what they have bought into. When you get sick hope that the 7.5 minutes is enough.

Carrots and sticks

Penn State employees are up in arms, at least some of them (NYT Story). It seems that their employer and financier of certain employee benefits, most notably health insurance benefits, wants to provide incentives to "nudge" them toward certain behaviors which MAY be linked to lower health care costs. My employer has tried similar approaches in the past, offering cash bonuses or credits if employees undertook certain healthy lifestyle activities. In my case, there was an extra bonus of some sort at stake. In the case of Penn State, there was a penalty is one did not participate. There is always a fine line between carrots and sticks. It only takes a modest degree of creative framing and one can always toggle between selling particular actions with carrots or use a carrot as a bludgeon to shove them in the desired direction.

I think this story needs to be viewed from a much broader perspective to understand its deeper meaning. Underlying this story is one set of parties who are in the business of providing a service to  Penn State employees. Their ability to provide this service and remain financially solvent is increasingly contingent on accurate and detailed information. However there is resistance from the counter party to providing the information. When we enter into contractual agreements with various private entities, we voluntarily share all sorts of information. In return, we get specific services and/or goods which we value more than what we give up. Vendors, who may be taking on some degree of risk in servicing our needs and wants, are able to discount the cost based upon the information we reveal. Transparency facilitates the trade which ideally leaves each party better off than when they started.

Big data is the buzz word of the early 21st century. Data drives all sorts of decisions and this is not limited to health care. What big data is all about is transparency. For example, the Progressive Insurance company markets a small device (Snapshot) which you can plug into your care which allows your driving habits to become transparent to them, thus allowing them to potentially provide you with good driver rates. If you are willing to be transparent about your driving habits, they are willing to cut you a deal. This arrangement is totally voluntary. You can still buy insurance from Progressive without revealing your driving habits in detail. You just don't get the best rates. So what do you value more; your privacy or your money?

The real time monitoring is only just beginning. I wear a small step counting device which gives me feedback on how active I am. This and related devices will be able to collect all sorts of data in real time. The possible benefits for medical practice are staggering. However, the potential for privacy intrusions are also significant. If my insurer will give me a serious discount for behaviors their actuaries tell them will save them money, that can and should be an option which two private parties can come to agreements over. If they are able to measure particular behaviors in real time that creates more confidence that they can offer me lower rates. Would I be willing to wear my activity device and automatically relay information to Aetna or Blue Cross for financial reward? Whether any financial delta to me is framed as a bonus or a penalty is totally arbitrary. It depends upon how much money and how onerous the activities required to gain might be. Between private parties, the basic principles underlying freedom of contract allow anyone of us to simply decide that we do or do not want to participate. No one can hold a gun to our heads.

This all works fine as long as the agreements are voluntary and between two private parties who have the ability to say no and walk away.  However, it gets very messy when one of the parties is a governmental entity that has the ability to compel parties to participate using the force of law. What happens when larger and larger segments of the public are insured by state controlled entities and in order for them to provide efficient and cost effective services, they are required to collect huge amounts of information from the very people they are legally obligated to protect. Individual citizens may find they are not able to simply say no to the state. What happens if we move to a single, state payer and that payer compels us to reveal things we care not to reveal?

Interesting link

Researchspeak

Never say die

The Saturday WSJ published a piece "The ultimate end-of-life plan" by Katie Butler. She has authored a book "Knocking on Heaven's Door" (which I have not read). The Journal piece outlined her mother's story (Valerie Bulter) and her refusal to embark on "heroic" measures to prolong her life.(End of Life) The story is not new or unique. Her mother decided against invasive measures to improve cardiac function based upon her previous experience caring for her husband whose life was extended but only at the cost of severe debilitation and dementia.

There is a bigger story here which is much more generalizable beyond end of life decisions. As I have previously written about there is a bias for action which has developed within American health care . Its sources are multiple. There are financial incentives, no doubt but it goes way beyond finances. They reinforce tendencies which are preexisting and those biases are two fold. First, we worship the persistent and those who say never say die. Second, we tend to overestimate the likelihood that action will provide benefit and underestimate the tendency for interventions to cause mischief. Daniel Kahneman refers to these biases where we irrationally underestimate the risks of what is familiar and overestimate the risks of what is outside our common experience. In this case intervention is familiar and deferral of intervention is uncommon.

Ultimately the payment system has has evolved to reinforce these biases, providing handsome rewards for those whose default mode is to act much and think little. Communications to patients billed as educational outreach blend seamlessly into marketing efforts, exaggerating potential benefits and discounting harms. When faced with someone like Valerie Butler, who failed to be sucked into the action first mantra, there is disbelief followed by repeated efforts to sway her decision. Virtually everyone has come to hold the same belief system.

Take a look at almost any medical practice and where action is taken, it may bring little value to those they serve. Yet most actions have CPT codes which pay substantially more than E&M codes associated with cognitive work. Deep thinking will more often result in finding reasons not to act which pays less that thinking and acting fast.  The payment system reinforces biases which then go on to reinforce the payment system. The public wants everything done. They are part of the problem. Physicians are biased toward action and payment for action. They are part of the problem. Health systems are paid for volume. They are part of the problem. Insurers have made money by being middle men. They are part of the problem. We have met the enemy and he is us.

The financial incentives of thinking fast

Medical care delivery is under tremendous pressure to to improve productivity. This is not surprising since health care delivery has taken an almost century long hiatus from productivity growth. However, the pressures and incentives now being applied may have unintended and not productivity- enhancing consequences. They may drive volume growth but not necessarily value growth.

I am reading the iBook version of "Tracking Medicine" by John Wennberg. This work describes the work which served as the basis for the Dartmouth Atlas. His description of the variation of tonsillectomy rates in adjacent communities is really priceless. He focuses on the heuristics utilized by three different surgeons to justify the use of tonsillectomy. One stresses anterior tonsillar pillar injection while a second dismisses this finding and instead focuses on adenopathy. A third dismisses both of these. As one other, perhaps more reflective surgeon noted, the only reason to look at the throat is to make sure that someone had not gotten there first and there are still tonsils to remove.

The point is there is much belief and little actual data and that each physician had developed a quick approach with a bias toward action. Those surgeons whose approach required them to be more thoughtful and reflective ended up being less productive in the sense they took longer to decide to do nothing, or at least what appeared to be nothing.

I could go on and on with examples where the medical profession has evolved toward the use of heuristics which are unsupported by outcomes data where their use is driven by the ability to deploy them quickly and link them to the use of some revenue generating activity. Rapidly these activities become embedded within practice, becoming both lucrative and defining standard of care. Under these circumstances who in their right mind is going to go out on a limb and refuse to do something which both pays their bills and is expected by patients and colleagues alike, even if it adds nothing of value to patients?

The way out of these quandries is actual outcomes data and changes in payments which reward real gains in productivity which includes value measures, not just volume measures. How this will end up looking is anyone's guess.

Medical "paper work" and transparency

I read a very intriguing piece I found cited on Arts and Letters Daily called "The write stuff: how paperwork validates power and obscures meaning". It was written by Peter Lopatin and published in The Weekly Standard. It is a review of a book (link) titled " The Demon of Writing: Powers and Failures of Paperwork
" (Demon). The basic tenant of the book is that paperwork (which now may not require paper)  is an essential tool of the modern state because it is required for transparency and accountability. Lopitan writes:

The French Revolution did not merely bring about the end of the monarchy; it purported, as well, to institute a form of government whose legitimacy was founded on its claim to be, at all times, the representative of every one of its citizens. Necessarily, such a government would have to be accountable for its every action and transparent in its functioning. This notion was embodied in Article 15 of the Declaration of the Rights of Man and Citizen of 1789, which asserted: “Society has the right to ask all public agents to give an accounting of their administration.”

In earlier and simpler times, trust could be generated via personal relationships. Our need to have ongoing exchanges with others rarely extended beyond a small group, often kin. However, as our activities began to require larger networks, involving individuals and groups where we could no longer rely on relationships build upon trust, new tools to create trust we're needed. Thus written agreements and written documentation which allowed all parties to see that agreements were honored became essential. With the loss of personal relationship there was a huge need to create transparency. This the explosion of "paperwork" to facilitate transparency. 

I immediately saw parallels to what has happened in medicine and the changing role of the medical record. Until recent decades, health care delivery was primarily  an exercise in trust. Services were delivered locally by a small group of well known (and trusted) professionals. They were trusted to place their patients interests above their own. Tools to facilitate transparency and accountability were not particularly essential or valued. 

Fast forward and the world is different. For the most part health care is a business delivered by anonymous and perhaps interchangeable people with tenuous personal relationships (if they exist at all). To replace the trust that was lost from the  loss of personal relationships, tools to enhance accountability need to be found somewhere. Thus the rise of medical paperwork. The nature of interactions changed dramatically, as did the cadre of people delivering them. Financial stakes became huge. The opportunities for gaming and placing ones personal agenda ahead of the patient's exploded. We had no real options for creating transparency and accountability other than paperwork.

There is an opportunity here for replacing paperwork with big data. Data on interventions and outcomes is all about accountability and transparency. The issue becomes how to do this in the current payment environment. We collect data but it is not the type which allows for measuring what we want to hold people accountable for. RVU's measure how much individual providers do without accounting for how much value it adds to patients. Until we develop meaningful metrics, we will be left with paperwork.