Oh no...Not again!

As the financial calamity is unfolding in Europe, I see remarkable parallels similarities between every budget crisis which has unfolded in the past 20 years. The present crisis involving Greece and the EU, has been punctuated by specific episodes where Greece faces a liquidity crisis prompting it to make an urgent request to the EU (primarily Germany) to provide access to emergency loans. The loans are made technically made contingent upon financial reform in Greece. However, once the loans are made, the leverage to hold the Greeks to their promises evaporates. With each additional cycle, those loaning the money become more and more vested in avoiding a Greek default, thus perpetuating the cycle of profligate spending, emergency bailout, followed by additional spending which outstrips economic productivity. 

  

The problem is the asymmetry of power based on the chronology of required action. Those providing the funds for bailout are required to take action up front while those who as ostensibly bound to to respond afterwards with financial reform and spending cuts are able to renege on whatever agreement that was hammered out initially. The may be because the agreement was made in bad faith but even more likely because whomever made the agreement in the first place is no longer in power when austerity actions are required to be put in place.

The same dynamic is operational in budget negotiations  in the US. Almost invariably, tax hikes are implemented immediately, sometimes retroactively. Business planning for 2011 is based upon a tax environment which may be in place as much as 12-24 months prior to 2011. However, tax rates for 2011 can be hiked basically anytime prior to when 2011 taxes are due. This can be as late as April 2012. On the other hand, spending cuts tend to be most heavily focused on out years, particularly years well after upcoming elections, after which elected officials may have little or no incentive to be held to promises which they did not make.

 This dynamic is acutely relevant to our present state in the finance of health care. I found a very interesting in Greg Mankiw's blog where he calls attention to a 1967 quote from Paul Samuelson from Newsweek magazine.

The beauty of social insurance is that it is actuarially unsound. Everyone who reaches retirement age is given benefit privileges that far exceed anything he has paid in -- exceed his payments by more than ten times (or five times counting employer payments)!

How is it possible? It stems from the fact that the national product is growing at a compound interest rate and can be expected to do so for as far ahead as the eye cannot see. Always there are more youths than old folks in a growing population.

More important, with real income going up at 3% per year, the taxable base on which benefits rest is always much greater than the taxes paid historically by the generation now retired.

Social Security is squarely based on what has been called the eighth wonder of the world -- compound interest. A growing nation is the greatest Ponzi game ever contrived.

While we were at the helm of a growing wealth generating engine which used to the the US economy, making such promises as Social Security, Medicare, and Medicaid could be done without fear that the chickens would come home to roost in any near term time frame. The asymmetry of time frame allowed for implementation (the glory) without immediate impact the wealth engine making things possible (the pain). Those Jeremiahs who could see the crisis coming and made attempts to inject fiscal discipline may have temporarily appeared to be successful. Agreements generally involved immediate revenue enhancements coupled with spending cuts in the longer term, agreements which fail to materialize well after tax increases were set in stone. They have been much like Charlie Brown, forever the optimist, committing to kick that ball,  firmly believing that Lucy will not snatch the football away.  


It is unfortunate but it appears that the process continues until one or more of the parties is incapable of continuing because they broke and flat out of money.  Ponzi schemes always end and generally not well. In the case of the US economy, when the growth rates drop and the demographics of the US population turn less than favorable, the game is over unless we learn from the events unfolding in Europe.

The Price, Cost, Reimbursement, and Value quandary

Michael Porter and Robert Kaplan have written a piece on the Harvard Business Review entitled "How to solve the cost crisis in health care". http://hbr.org/2011/09/how-to-solve-the-cost-crisis-in-health-care/ar/1 The concepts cut to the basics of economics; scarce resources, optimal allocation, and incentives. One of the most basic tenants of business management is knowing what it costs to deliver a product or service. The health care is not equipped with the tools needed to really understand the costs of health care delivery.

Porter and Kaplan outline multiple reasons why this is the case, the major one being that health care accounting confounds charges with actual costs. While this approach worked OK when margins were huge and there was enough money in the system to allow for massive cross subsidies, we are no longer in a position to run such an increasingly expensive endeavor without  knowing what it costs to deliver any given service. Furthermore, any real attempts to actually measure value must take into consider actual costs of service delivery. It is easier for low cost interventions to meet the value bar than high cost ones. When you don't know the cost figures, any attempt to assess value is doomed from the start.

It seems remarkable that such an industry consuming more than 15% of GDP of the US can operate with such a rudimentary understanding of cost. From my perspective, this is a product of a mindset which permeates medicine which I can best term Medical or Health Care Exceptionalism. What I mean by this exceptionalism in health care is that it has been viewed as an industry that can and should operate outside of basic economic principles.  This perspective is deeply flawed. While the great wealth generating engine could spin off so much wealth in the US in the second half of the 20th century, we could live under this delusion. We now are faced with reality. Scarcity matters in all human endeavors, including health care. The health care industry, like all industries, requires resources, including people, who have choices and need to be given appropriate incentives to utilize scarce resources prudently. 

Porter and Kaplan's analysis also reminded me of the analysis of another Harvard Professor, Dr. Hsaio, developer of the resource based relative value scale (RBRVS). Both use a system of measuring inputs in order to accomplish some end in health care delivery. However, there is a huge difference in how they seek to deploy their information.  Hsaio developed the RBRVS as a tool to set payments to physicians. He conflated costs of inputs with actual value to patients. Porter and Kaplan promote cost analysis as an essential tool to define resources used, not value delivered. They look to use cost information to better utilize scarce resources, not administratively set prices.

Whether cost analysis is an essential step in defining value depends upon who pays for the services and what they are trying to achieve. In my opinion, value always needs to be defined by those purchasing the services. In the health care three way transactions, it will always be fuzzy as to who is the customer and who will be most pressed to measure value and deliver value. However, we should be in agreement that actual cost to deliver a service does not equal price of that service which does not equal the value delivered to the patient. If we can get past this confusion, we can  get our bearings and start to move in a direction away from the financial abyss.

Decision making and the upside to junk food

A colleague of mine sent me a link to an article in the NYT Sunday magazine from last week http://mobile.nytimes.com/2011/08/21/magazine/do-you-suffer-from-decision-fatigue.xml.  It is based upon a soon to be release book entitled:  Willpower: Rediscovering the Greatest Human Strength by Roy F. Baumeister and John Tierney. I have not had a chance to read the book but I will order it as soon as it is release. However, the summary from the article resonated with my own experiences, particularly in my practice. 

The basic premise of the article is that decisions we make are highly influenced by the environment the decision maker is placed in and the volume of decisions they are called upon to make. People called upon to make many decisions suffer from what the authors refer to as decision fatigue. Those who suffer from decision fatigue generally end up making sub-optimal decisions where only the most basic data is considered.


Surprisingly, decision fatigue can be obviated to a great extent by the simplest of interventions; feeding the decision maker. Glucose appears to have a huge impact. Intuitively, I understand this. Some of the worst decisions I make are immediately before lunch when I am hungry. Additionally, the most intensive cognitive work decision making activities make me ravenously hungry and from personal experience, I find that sweets fuel my own productivity. 


In my own patient care work environment, one thing which is almost universally frowned upon is any sort of food or drink. There were likely good reasons for such rules based upon hygiene and a clean work environment. However, these, like all rules, are likely to have unexpected and negative impacts. In a fast paced ambulatory patient care environment, caretakers are at high risk for decision fatigue and prohibitions against food and drink apparently removes the most important possible intervention to alleviate decision fatigue.

This underscores two likely problems with how we structure our work environments .First, those who make the rules are almost always unaware of the impact of rules on how people do their jobs because those who make the rules rarely have even the slightest appreciation for how those at point of service do their jobs. Electronic medical records are pushed out without analysis of their effects on workflow. Mandates are created about communication with patients without understanding what tools are required to meet the mandates. Outcomes are mandated with the tools to collect, validate, or analyze the data required. 


Furthermore, those who do the actual work at point of service are likely not so reflective as to how they do their work. After reading this article, I realized that many of the actions of my colleagues in how they structure their offices and practices may be driven in part by their desire to avoid making decisions. Movement to specialist and procedure driven healthcare limits the range of decisions required. In particular, procedure focused medicine removes the requirements to make decision based upon incomplete information. Movement to checklists may be used to remove even more decisions from the workday and although I do not know whether anyone has compared fatigue from decision making to manual tasks, my own experience suggests that doing work with one's hands is more of an escape than a drain. I recall my experience in the Emergency department as an intern where we all craved the opportunity to sew up lacerations and escape the frantic bubble of ER demands. 


The observations regarding the impact of decision fatigue on various decisions was made possible by the ability to measure outcomes. These studies were done under controlled and artificial conditions and it will be a challenge to deploy these types of studies in a healthcare delivery environment. The effects of poor decisions will rarely result in such easy things to measure as life or death. We can be aware of studies of human decision making which yield data likely relevant to decision making in health care environments and make reasonable modifications to how we do our work. Maybe the first thing to do is to allow snacks as an antidote to decision fatigue. However, Diet Cokes will simply not do.   

  

Data collection vs. relation building activities

Yet again dealing with my mother has provided me with insights into my interactions with patients and how we attempt to deal with patient needs in general. The particular scenario has little to do with medicine at first blush. My sister and I bought my mother a Kindle. She loves to read but was beginning to have problems with chronic eye strain after limited times reading.  We thought the Kindle format, the non-back lit format, and the ability scale font size would be helpful, which it was. However, she ran into a problem with the billing to her credit card which she needed to address. When she went to the Amazon Website, there was no number to call. As it turned out, you could go to the Amazon site and follow a detailed series of screens to take you to a final screen where you enter your number and they will call you. This was simply not acceptable to my mother. She wanted a number to call so she could talk to a person.

I found this very enlightening for a number of reasons, many of which are quite relevant to the practice of medicine. The scenario above is similar to a patient who has a medical problem and wants to call a telephone number, based upon the assumption that if they talk to a person, they will improve the likelihood that they will solve their problem. From my perspective as a physician who runs a large clinical operation, I see phone calls as a challenge. The universe of possible problems which can be fielded by our phone banks is unimaginably large and it has always made sense to me that any ability to collect some data before a human is assigned to solve a problem makes tremendous sense. Amazon understands this issue and they applied a new approach to dealing with their calls. Collect the data first and assign the task of solving the problem to someone who is equipped with the tools and information required. However, from a patient perspective, they frequently see their situation like my mother and her Kindle. The most efficient way to get their problem fixed is if they coudl talk to a person.

I am a problem solver. It is my world view and the perspective as a problem solver creates a lens which focuses (or perhaps distorts) how I see the world in general and what others want from both me and the world in general. As a physician, I see my encounters with patient first as an opportunity to solve problems and only secondary as an opportunity to build relationships. For others, problem solving and relationship building are inextricably linked. Where I see the face to face doctor patient encounter and the phone as a terrible tools to collect data, people like my mother see asynchronous communication tools as missing elements of human interaction which are essential to solve their particular problems. Their problems, no matter what their nature, cannot be solved without the element of human contact. I think at least part of this perspective may be tied to the idea that having a specific point of contact up front creates a personal contact and from that a personal obligation. Someone you have spoken to can he held personally accountable. In a simple world where the potential number of possible responsible parties was orders of magnitude less, that may have held true.

I suspect that letters and telephones were viewed in a similar light when they were deployed. Over time, appropriate spheres of use for communication were accepted. Certain things are best left for face to face communication; other things were recognized as being suitable circumstances for alternative communication approaches, be that letters or telephone calls. The electronic communication realm has thrown this world into chaos and the rules for appropriate use of emails, texting, instant messaging, Facebook and whatever are incompletely defined.  Where these tools are deployed in social circumstances where they are not suited to supplant the nuanced communication of actual direct human contact is a problem.

I am a social animal and enjoy personal interactions. However, in my professional sphere I focus very much on what data I need in order to make recommendations directed toward solving specific problems. I see the great potential of separating the data collection functions from the social elements of medical practice. The new communication tools are likely superior to older tools in terms of data collection, particularly if we can move essential data collection outside of the valuable face to face time of the office visit. If deployed correctly,  non-traditional communication tools hold the potential for actually freeing time to cultivate relationships between patients and physicians.

Short order medical care

I have been away on vacation this week, spending time in the cool mountains. It has been a pleasure to hike through the woods taking in beautiful vistas and listening to the music of mountain streams.
We have a cabin the woods equipped with all the comforts of home including a kitchen where we prepare some of our meals. However, vacation is not vacation if it did not include dining out as well. We are isolated but are within a 30 minute drive of multiple small quaint towns, each of which has multiple dining options.

Last night we exercised the option to indulge at a local Italian restaurant. It was really hopping with a full parking lot, a full bar of waiting patrons, and people spilling out into the parking lot. The wait staff was really hustling, clearing tables and seating customers as fast as possible. In watching this complex ballet of activity, it occurred to me what this reminded me of; my office. The parallels were striking. Most people had called ahead and had reservations (an appointment). The restaurant had a basic idea of the nature of their problem (they were hungry). In contrast to my office, the restaurant has an explicit and  defined menu of options and it is pretty much agreed upon that the customer selects from those menu options. We have a list of options which are opaque to my customers which I select to bill for after the fact. The more the patient has ordered, the more the items are discounted. This has all sorts of implications in terms of incentives to consume.

In each case there is a frantic pace to get people in an out. In both cases, the rooms (in MD offices) and tables (in restaurants) are where revenue is generated.  As long as we are financially locked into the short order model of ambulatory care, we will be stuck with the short order health care delivery system. The restaurant industry has certain advantages. The restaurant model has take out, a concept that perhaps the health care industry can create.  The restaurant industry has long recognized that they deliver both what clients need and what they want. People need food but they can want much more. Their needs can be satisfied by the most basic foods but their wants can be virtually infinite and the restaurant industry responds to this by offering a mix of offerings, ranging from the most basic fast food to the most indulgent (and pricey) experiences.

Retail medicine is responding, albeit slowly. Regulatory barriers and legacy payment arrangements have served as brakes on real innovation. Acute ambulatory clinics have moved to a menu driven service model. Patients seem to accept that if it is not on the menu, they will not ask for it. There will always be a few people, like those who want to order a hamburger at Taco Bell, who will be indignant. Concierge practices try to make explicit the difference between what patients need and what they want. These efforts are in their infancy. There is much more to come and the pressures to develop models which create clear distinctions between needs and wants will become acute as the payment from insurance (both public and private) will become more and more focused on paying only for needs, not wants.

We should be view this as both as threat and an opportunity to escape the medical short order delivery model.

The upside of being unsatisfied

Earlier this year I went to a patient safety conference sponsored by the IHI conference. It was a very interesting conference. In contrast to the usual medical conferences I attend, the population of attendees was very heterogeneous, made up of a small fraction of physicians and an admixture of nurses, PAs, NPs, PhDs., administrators, counselors, health techs, and a host of others involved in some form in the delivery of health care services. The focus was mostly on primary care s opposed to specialty care, although it was interesting that it appeared to require many different specialists to delivery primary care (although not MD specialists). Common to all of these participants in the delivery of primary care was the recognition that their future was completely linked to the need to change. No one I met was at all married to keeping the present delivery system.

Here I was in what could be best described as a supercharged atmosphere literally where it was a given that everything would change and everyone thought... "Bring it on!". Ditch the fee for service payment system... what are you waiting for? So what if we have been operating using a particular set of models before. They don't work for us or our patients.

It was such a stark contrast to the crowds that I generally run with who are as a rule vested in as little change as possible. Why such a contrast? The major reason is that primary care providers are not at all happy with their current lot. What they generally do to bring value to patients is arbitrarily not valued as much financially as what many other medical specialty activities. In contrast, those involved in specialty care, particularly those who are proceduralists who are highly paid, like their practices just the way they have been.

Outside of the internal struggles within medicine as to who is valued or not, there is a larger process which will likely satisfy those who want change for the simple reason that change is inevitable. When the super committee appointed by Congress gets back to work, they will look at the task ahead of them. Whatever their partisan bent, champions of expensive health care will not likely find many allies. They will be charged with one major task... cut spending. On the Democrat side of the aisle, there will be huge pressures to "save" Medicare and Medicaid as we know it. On the Republican side of the aisle, the goal might be different in that there will be huge pressures to re-conceive how Medicare and Medicaid are structured, moving perhaps to more market based principles. However, both parties will measure a key element of success with one common metric; spending less money and curbing the rate of growth of health care spending.

When the revenue streams are cut with the prospects of further cuts into the indefinite future, this will turn everything upside down.  Expensive hospital based medicine will be a business no one will want to be in. Present profit centers will become cost centers and top billers in the present  will be viewed as consumers of expensive resources. Everything will be turned on its ear, if you remain in the world where your income sources are strictly linked to third party payers, particularly ones whose mandates will be to spend less because they are broke. Fee for service might not be dead, but lucrative fee for service paid for by government entitlement programs will be a thing of the past. The drive to cut costs will overwhelm all other priorities. 

Remember that happiness = results - expectations. Those who expectations are the continuation of an unsustainable payment system which rewards them arbitrarily but handsomely will be disappointed. Those who expectations have already been dashed,  this sea of change and disruption of the present system is viewed with great glee. It is the upside of not being happy with their present circumstances. Whether they will fare any better in the future is an open question. We can hope that we will be left with a health care delivery system that serves patients better for less money. That is the real measure of success.

Ruminations on the dying Canada Hemlocks

We are spending the week beating the heat in the Appalachian Mountains. We own some property high up in the mountains where we maintain our own little preserve. We also venture out to the national forest, looking for modest circle hikes offering inviting vistas and cool breezes. We have access to old growth forests, although the term old is relative. Along the steep mountainsides where logging is difficult grow the majestic Canada Hemlocks and Tulip Poplars. While not quite to the scale of the Coastal Redwoods, these are huge old trees.

However, the Hemlocks are in trouble, being attacked by a ravenous beetle imported inadvertently from Asia. The US Forest Service is trying to treat some of these beautiful trees, marking the ones treated with small tags. I am not too optimistic given previous experience. I grew up in a once stately city which had beautiful boulevards lined with majestic elms forming graceful canopies. However, the elms were decimated by Dutch Elm disease, decimating these stately trees at about the same time changes in economic fundamentals created blighted communities. Later in my life, I became an avid outdoors man  hiking much of the Appalachian Trail in Virginia and North Carolina.  My guides often pointed out the rotting hulks of the American Chestnut. While there were estimated to be approximately three billion American Chestnut trees in the US, they now number in the hundreds.

The story was remarkable. A beautiful tree, appearing to be almost perfectly suited for a particular environment, competes for a particular niche, thrives, and becomes a dominant force in a time frame which we humans view as an eternity. As it turns out the equilibrium is really fleeting when viewed through the prism of time. Even what appears to be the strongest of entities has weaknesses which can be exploited by the most modest of creatures..a beetle or a fungus.

Charles Mann's new book "1493" was reviewed today in the WSJ. While I started this blog piece before I read this review, the concepts he describes in his book fit in well with my most recent forest contemplation. It is inherently human to want to hold on to what we have and resist change. Our perspective on time limits our abilities to see the nature of the world in its dynamism. We tend to overestimate some of our impact as drivers of change while completely missing others. According to Mann, just by the nature of our ability to travel we have impact. When Europeans brought the earthworm to North America, the impact was viewed as positive. When the elm bark beetle was transported, it was viewed as a disaster. In both cases, the new entry reshaped the North American ecosystem in fundamental and unpredictable ways.

Lessons of nature seem always to have implications for human institutions. What brings down dominant players in any complex system is generally not foreseeable. What is enduring and what is transient is for the most part beyond human comprehension. What we see as the giant Canada Hemlock like institutions of American Medicine are really not any older than the old growth trees I view on my walks. Like the Hemlocks, the Elms, and the American Chestnuts, they grew to enormous size in an environment which was remarkably conducive to such growth. In such forests, there was no reason to believe these spectacular creatures could not dominate forever.

That is for one thing... nothing dominates forever. The rules change, the environments change, sometimes dramatically and sometimes subtly, and the world changes. Those entities which appear to be the biggest and most dominant always go away and are replaced by something else. In the same sense, the dominant institutions of American Medicine in the last century are not likely to survive the current century. What institutions will become dominant and which roles will compete with the historically dominant physician role is an open question. It will be decided by the combined influence of economics, politics, and animal spirits.