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.

Improving adherence but who will benefit? Selling insurance that most will not benefit from

Taking Our Medicine — Improving Adherence in the Accountability Era,  by Lisa Rosenbaum, M.D., and William H. Shrank, M.D.(NEJM Link)

Accountability tends to be a good thing. Those not held accountable for their actions lack an important feedback loop, and we all need feedback.  Feedback in the healthcare business has moved more and more to financial rewards. That can be OK assuming the financial rewards to those delivering care to patients is aligned with what patients actually desire. Under ideal circumstances those delivering care will be rewarded when they add value to patients, not just extract value. However, there is a problem as summarized by the authors:

Our willingness to care for patients has never depended on their  willingness to do what we say. But an estimated one third to one half of U.S. patients do not adhere to prescribed medication regimens.

The problem is simple. We view that these patients have a problem that requires action, the action being pharmacological intervention. They do not agree as evidenced by their actions in that they fail to take their prescribed medications. They are non-compliant with our desires. As Clayton Christensen noted in the Innovators Prescription, we are trying to sell a product to patients that patients don't want. In the new era of accountability, physicians will be punished for patient non-adherence to treatment regiments.

As I see it, we have two choices. We either convince patients that they should want we are selling or we should move on toward offering them something they will value.  It is a simple marketing problem which salesman have been dealing with for millennium. While those of us within the health care profession may be put off by this perspective, it is exactly what we are doing: we are engaged in selling products to the public. Like any product sold by a merchant, health care products may add value to patients lives or not not add value.

Step outside of the usual health care we know what is best for the public frame of mind and listen to the message and the tone of this NEJM piece. It is more that a bit off putting. Can you imagine reading a similar piece in a  trade journal in the insurance industry. I can picture this now as an indignant insurance salesman writes a piece lambasting the non-compliant public for failing to purchase whole life policies.  But wait a second! Is this really an relevant comparison? More than one author has weighed in on this argument and has claimed that most people fail to benefit from purchasing whole life insurance products.

Lets think about this from the perspective of NNB (number needed to buy). From a perspective of personal probability of benefit, most people may not benefit from purchase of whole life insurance, but are the numbers any worse than the number needed to treat when it comes to statins. Treating asymptomatic conditions with medical treatments (such as statins)  to avoid future bad outcomes is very much like buying insurance. Pushing such interventions is very much like pushing whole life insurance.

I am sure that we could frame (market) the data in such a way to enhance adoption (purchase) of the product(s) we are selling. Any approach which perhaps exaggerated the benefits of the product we are selling to the public would likely increase their adoption. If we were selling products other than those in the health care realm that would likely be viewed as being unscrupulous and conflicted. For any specific person taking a lipid lowering agent is not likely to result in any person benefit. However, if reward metrics for individual providers use compliance metrics to allocate financial bonuses to physicians there is an obvious conflict. What is a reasonable estimate of adoption of any recommended intervention assuming the options were presented in a truly non-biased fashion and most of those deciding will derive NO benefit?

We need to understand that not everyone will or should want to buy what we are marketing. The rest of the commercial world has come to grips with long ago. They do not criticize their customers when the customers don't see value in their products. They simply work harder to find what their customers need and want.

What does Universal Health Care Mean? Let's create UWBI

In the Annals of Internal Medicine a commentary was published titled as above(Pubmed link). It was written by  representatives of  the Health Section of UNICEF. It's focus hinges upon a basic question which the development community wrestles with; investment in health care vs. development. I call into question making this distinction whatsoever.

Perhaps we need to reframe the issue and make a new designation. Let's call it UWBI standing for Universal well-being insurance. I can justify this on the basis of health being linked to resources, environment, and culture. We will never get to the point where there is equity in health care until EVERYONE has control over sufficient resources to control their own destinies. Scarcity always matters to some degree and what better vehicle can we envision to address the scarcity issue than to insure everyone on the planet against scarcity using some sort of government issued insurance policy. While we are at it why don't we simply pass laws to guarantee than everyone will live to 1000 years of age without pain or deprivation. I don't want to hear from those nay-Sayers now. Let's keep the discussion positive.  Problem solved. The only thing left is to convince a do nothing Congress and Tea Party to get off their butts and pass the laws. 

I cannot help but harken back to the von Mises quote regarding common goals but different means which separate even most disparate political foes.

But each party is intent upon proving by ratiocination and by referring to historical experience that only the system it recommends will make the citizens prosperous and satisfied. They tell the people that realization of their program will raise the standard of living to a higher level than realization of any other party’s program. They insist upon the expediency of their plans and upon their utility. It is obvious that they do not differ from one another with regard to ends but only as to means. They all pretend to aim at the highest material welfare for the majority of citizens.

The question becomes how do we move toward a world where more human needs and wants are met?

The temptation is to make a distinction between health care goods and services and all other goods and services which enhance human lives. I am not entirely sure where this comes from. The article by the UNICEF group underscores the futility of this exercise. Individual and population health outcomes are perhaps more related to delivery of goods and services viewed outside of the health care arena. Do populations have ready  access to clean water, electricity, transportation, high quality and inexpensive food, shelter from the elements, safe work places, and modern waste disposal systems? All of those things require coordinated human action and resources. 

In a world where there are lots of possibilities of outcomes, without the right rules and incentives, there are more likely bad outcomes than good outcomes. For most of human history humans lived brutish and  short lives because everything needed to make human lives longer and better were either non-existent or in short supply. Even now people in much of the world live such lives.Looking back and using metrics we seem to value presently, there might be aspects of earlier times which we seem to want to replicate in the present. When everything was scarce there was less inequity among humans. Everyone was essentially dirt poor but there was little disparity.

Only when specific people and groups began to make significant inroads into mass production did humans first observe resource inequities. How one views such snapshot inequities, as being the product of desirable innovation or unfair fates of one group vs. another, should hinge on taking a long term perspective. Should we view equity as being so important as to advocate against disruptive innovation which might ultimately make some better off than others although in the longer term everyone will be better off than they started?

The concept of Universal Health Care is essentially meaningless. None entity can define the goods or services which would fall under this designation at any given point in time or place and there is no mechanisms for defining this in any sort of dynamic way which would be required to make it a useful within any legal entitlement framework. The words sound good and have the potential to make us feel good. Beyond that, they are at best neutral in their impact and more likely terribly destructive. We ultimately move toward the concept of UWBI and in doing so unleash the moral hazards associated with the use of insurance.

People have needs and wants and through time these are constantly changing. These needs and wants exist in a world where the the resources to meet the needs and wants are not unlimited and expansion of the pools of goods and services to meet human needs are accomplished by human action. Set the incentives correctly and one inspires people to act to create more resources and interact in win-win transactions. Set the incentives wrong and you increasingly engage people in win-lose or lose-lose, resources consuming actions. This results in a race to the bottom.   These basic rules work in all human endeavors. To suggest they do not operate in health care requires that one then be able to define how health care activities are different from other human endeavors. That cannot be done.