Extracting value versus creating value in health care

One of the pitfalls we fall into when we discuss health care and health care financing is the implicit assumption that health care activities can be distinguished from non-health care activities. This is simply wrong. However, this assumption is almost universally accepted (passively but not actively) and allows for further acceptance of such nonsensical statements as "Health care is different" or "Markets don't work in health care". These statements are nonsense because the critical term health care remains undefined.

Labor specialization and exchange are essential elements of human societies. As societies become wealthier, they become more complex and ever more dependent upon specialization and exchange. Unless we desire to move back to eking out a subsistence existence (along with hunger, disease, and a vastly shortened life expectancy), there is no turning back the clock. Within the web of exchange, there are goods and services which are all linked to some degree to human health. Everything is part of the health care industry. To state that free markets don't work in health care is a non sequitur; it implies that free markets do not work to fulfill human needs.

Markets work for the simple reason they are the best vehicle to create value. Free, non-coerced exchange of goods and services results in goods and services ending up in the hands of those who value them the most. Free exchange creates value and wealth.

In my 30 years as a physician, I have witnessed an increasing divergence between what brings value to patients and what brings value to the health care system that purportedly cares for patients. The increasingly command and control health care system combined with a payment system that divorces the cost of care from recipients has served to drive practitioners and health systems toward simply extracting value from patients and payers, often without actually delivering value to patients. Payments for many services were determined before value to patients was known and questionable interventions were deployed on large scales. We saw this in the past with cardiac bypass surgery, hysterectomies, carotid endarterectomies, and bone marrrow transplants for breast cancer. One not need to look for dramatic and expensive interventions to find resources wasted on activities which create little or no patient value. Find a well person going to the doctor and you are likely to find someone who is receiving little value unless they are getting their vaccinations.

A price coordinated economy rapidly sends signals to producers or goods and services, letting them know whether their products are valued by those who exchange their personal resources for what is being marketed. In domains embedded in free markets, falling out of touch with what is valued by consumers is a quick ticket to extinction.

However, segments of the economy serviced by entities locked into price controls lose the most valuable feedback tool which allows producers to know whether they are bringing value to customers.

That is where much of medicine resides now. We do lots of things to patients, some of which may fulfill patient needs and are worth whatever investment is made for them. I suspect that many simply create very little value for their recipients and much more value for the people and systems that deliver them. We within the field are terribly fearful to allow patients to absorb anywhere near the entire cost to deploy these services as now delivered because we know that patients would not value them sufficiently to pay for them using their own resources. Hello! There is a message there.

Perhaps the contrast between extracting value and creating value is not so black and white. In free markets, for an entity to be enduring and successful it must create value before it can extract value required to maintain itself. The problem with the portion of our economy designated as health care is that creation of value is random and to a great degree irrelevant to the ability of those particular portions of the delivery system to extract value from patients and payers.

As the realm of health care expands capturing ever larger portions of the overall economy in the command and control, administrative pricing trap, the waste and extraction without clear value creation will only aggravate our current economic situation. Economics is all about the allocation of scarce resources and no method has proved superior to free markets in directing resources into the hands of those who value them most and can create the most value.

This is not a trivial intellectual spat. We either fix the problem associated with health care payments or we go broke. We will not fix this problem until we understand the difference between creating value and extracting value, and come to realize that markets are the best tool we have at our disposal to work best to foster free exchange, allocate scarce resources, and create value in all realms of human activity.

Why we should be optimistic

I am a great fan of Matt Ridley. His recent book "Declaration of Independents" is well worth reading. I particularly like his chapter on deregulation in the beer brewing industry. This video from the Zeitgeist is simply stunning!

http://www.youtube.com/watch?v=0g8U0rzhzLc&feature=player_embedded

Gun control and other distractions

Now that we have avoided the immediate impact of the fiscal cliff, our political class has taken refuge in heated debates regarding gun control. I wish I could say there was some degree of wisdom and reflection associated with these discussions. No such luck.

I am no gun enthusiast. I have not fired a weapon in probably over 30 years. I can honestly say I do not harbor strong feelings regarding this debate. I do believe that the second amendment was originally written to protect the rights of individuals to bear arms. Note that the term gun is not included in the second amendment.

A well regulated militia being necessary to the security of a free state, the right of the people to keep and bear arms shall not be infringed.

Few would argue that this amendment should guarantee an individual right to arm oneself with Sarin gas or thermonuclear weapons. It is a given that the Second Amendment to the Constitution is not a carte blanche for individuals to acquire tools of mass destruction. However, the debate is not couched in these terms. One has to draw a line somewhere. Where do you draw such a line and which criteria can should we use to determine where it might be?

For all the bluster regarding gun control legislation, it is essentially impossible to determine what the specific likely accomplishable goals of legislation might be.
It is implied that implementation of additional restrictions of some sort will result in fewer gun related deaths and injuries. This is predicated on two basic assumptions. The first assumption is that such regulations are enforceable in any meaningful way. The second assumption is that even if the laws are enacted and enforced, they will have a meaningful effect. Ironically, places like Washington DC with some of the most restrictive gun control laws have the highest gun related homicide rates .Granted it is difficult to impossible to prevent diffusion of weapons from neighboring localities but this issue is not likely to go away.

The recent series of mass murders has also highlighted a facilitation role for violent media, particularly first person shooter video games. I find the discussions very odd, saddled with huge blind spots. There is no question that it is only the very rare individual who plays these games who then acts out by recapitulating their actions in real life. It is perhaps analogous to the rare complication of drug treatment where one is million of individuals given a particular has a catastrophic and idiosyncratic event. If this happens frequently we do take the drug off the market but if it happens only rarely and the agent provides value, we tolerate the rare undesirable outcome.

What I find odd what we define as acceptable to pay out in a virtual video world. I have not actually played any of these games so my knowledge of what specific characteristics these games have may be flawed. From what I can discern, we deem it commercially acceptable to create video games where players can live out a crime, even the crime of murder and even the crime of mass murder to boot. I understand that no one is really dying and it is just a game.

Let's take this one step farther and ask whether in the virtual and victim-less world we would find other scenarios acceptable:

1. Virtual pedophilia
2. Virtual ethnic cleaning
3. Virtual mass murder of children
4. Virtual animal cruelty

I am presently reading Jonathan Haidt's book on "The Righteous Mind" which touches upon some of these issues. He makes the point that we define certain private behaviors as unacceptable even if there appears to be no immediately victim. What I find so odd about the first person shooter videos is not that we have not legally banned them. It is the fact that they have received so little social push back. They allow people to live out gruesome and horrible fantasies, doing deeds in a virtual world which are so reprehensible that anyone who actually pulls this off in the real world initiates national outrage.

Whether playing such games facilitate mass murders will be debated forever. The sample size required to "prove" such a causal linkage is beyond what we can collect, or at least I hope that this is the case. Thankfully these events are rare events. That said, it does appear that the profile of these young shooters tends to include heavy use of first person shooter video games. That may mean nothing since the use of these games is fairly widespread among young men. However, I cannot imagine such virtual renditions of reprehensible actions would be accepted if it touched upon violence against women, rape, child sex acts, or killing infants. Remember, what is acceptable in the video game world vs not acceptable is not defined by what is legal in the real world. Many of the actions done in these video games are crimes and crimes of the worst sort.

Which brings me back to earth. The discussion is useful but the likelihood that anything useful results in the legal realm is almost zero. Humans have a tendency to violence and this tendency needs to be tempered by social and legal controls. The political class will jump all over this because they want to create the impression they are doing something. Legislation will pass and it will accomplish nothing. This is not a problem which has its roots in legal failure. Making more things criminal is not likely to solve the underlying problems.

Fundamentally, the gun control debate pulls attention from pressuring the political class from having to actually deal with more important and pressing matters where their actions can actually make a real difference. I suspect that the distractions will continue while Rome burns.

I hardly knew him

I mopped up my aging messages in my message box yesterday with the hope that I could take care of everything that was pressing before the holidays. I called one particular patient whose message intimated that he had suffered a complication from a recent treatment. This was a patient who I have followed for years from a variety of chronic conditions. I had seen him in the office more than a dozen times.

My impression of him from these generally brief encounters was that he was a pleasant man, rarely appearing in any distress. I knew he traveled from a modest distance and most recently, we had elected to have his care transferred to a facility closer to his home. He was approaching his 9th decade of life and suffering from a number of slowly debilitating conditions which made travel increasingly difficult, particularly a chronic neuro-degenerative disease. Still, from all outward signs, he appeared to be quite intact and robust.

I called him at home to inquire as to the nature of extent of his difficulties. As it turned out, he was feeling fine and the issues that initially prompted his call were sell on the way to resolution. However, the opportunity to speak to me in the relatively unhurried context of my call created an opportunity for him to share a whole host of questions and long standing issues. I listened intently.

As it turned out that despite seeing this gentleman repeatedly over many years, I hardly knew him at all. He was retired from the aerospace industry, something I had no inkling of. He was a keen observer of detail, recalling specific details of past encounters, particularly actions we did which were inconsistent over time. He noted variation in our staff activities, instructions they gave, and issues that appeared to develop as a consequence. He was a wealth of information which we might have benefited from if we had only listened to him.

As the conversation went on, he also went on to share some of the challenges he faced now with an ailing spouse and growing costs of her care. The time and financial burdens were actually rather staggering. I hadn't a clue as to what he faced. I began to wonder whether the incremental benefits he might derive from our frequent interventions might be viewed as not worth his investment of time and money compared to the benefits he might have received from investing his time and money elsewhere. Those considerations were never on my radar. I had what amounted to be an incomplete context to place my recommendations into.

As individual physicians what are our obligations to know these types of details regarding our patients? In the current model, it is simply not practical to delve into this type of detail and there are no incentives to do so. In reality, there are huge financial incentives to remain as ignorant as possible. Injection of personal complexities into the production model of medicine slows decision making, taking decisions which might be viewed in black and white terms to shades of gray. Shades of gray may not be compatible with efficiency, a euphemism for speed and throughput.

Can we actually do our jobs well if no one in the medical community deals with this? Is this a personal responsibility of patients to make their preferences known or at least delegate a family member or friend to advocate? I can't say for certain who should do this but it is reasonable to assume there are multiple possible approaches, most of which will not be deployed in our current system because they cannot be readily monetized. We can hope that such time consuming and complex activities will be available broadly based upon the spirit of volunteerism, but this represents a best can be described as an aspiration for the triumph of hope over experience.

Improvement in the delivery of health care ultimately requires better decision making and those decisions require a better understanding of the unique goals of individuals. If we representing those who assist in making those decisions are near complete strangers to those they are assisting, we will not be in a position to provide optimal guidance and perhaps will provide more bad advice than good.

The fallacies of intelligent Design - Unintended consequences and health insurance exchanges

In a previous blog, I noted that a fundamental difference between conservatives and liberals is that the later tend to focus on what should be while the former tend to focus on what can be. Perhaps no where is this now more evident than in the developing story on the deployment of health insurance exchanges. The ACA timetable for deployment of the exchanges calls for them to deployed and operational by October of 2013. it is now appearing increasingly unlikely that this has any real hope of actually happening.

The NYT reported yesterday that it is likely that only 17 states will operate their own exchanges. As noted in the article by Robert Fear:

The federal government and states face a series of deadlines in the new year. On Jan. 1, Secretary Sebelius must determine whether each state will be able to operate its own exchange in compliance with federal standards. By Feb. 15, states must notify the federal government if they want to help with selected tasks, like consumer assistance and the supervision of health plans, in partnership with the federal government.

On Oct. 1, consumers can begin to enroll in health plans, for coverage starting on Jan. 1, 2014, when most Americans will be required to have insurance.

The remainder have chosen to forego this opportunity. The reasons are multiple but a common theme appears to be the lack of guidance which was forthcoming from the Washington DC bureaucracy. As noted the the NYT piece:

In Tennessee, state officials did a huge amount of planning for a state-run exchange. But Gov. Bill Haslam announced this week that he had decided against the idea because the Obama administration had failed to answer numerous operational questions.

Gov. Chris Christie of New Jersey cited similar concerns in vetoing legislation to establish a state-based exchange last week.

“New guidance continues to trickle out of Washington at an erratic pace,” Mr. Christie said.

I have no particular desire to gloat. Innumerable patients I care for have taken this timetable to heart and are betting on the timely access to insurance which will provide them with affordable coverage independent of pre-existing conditions. I am concerned they have placed their hopes on something many would consider desirable but is not not feasible. Both are required.

When Nancy Pelosi proclaimed that the bill needed to be passed in order to see what what in it, it turns out she was not kidding. At the time the thought was that she was referring to the extensive document already written. However, this aspirational document represented only a shell of what will ultimately be needed. What appeared to be a good and grand idea gets a bit more complicated when the idea is to reconstitute perhaps 20% of the economy and make it micromanaged by federal bureaucrats.

This episode adds new meaning to the term "Intelligent Design". When political officials express skepticism regarding biological evolution and embrace concepts that the universe can and was designed by some intelligent being, they are ridiculed a being ignorant. I agree that those views are ridiculous and should be challenged. Complexity and durable complex systems do not develop as a consequence of top down architects.

Similarly, when human beings try to assume they can take on god like powers they are behaving in an ignorant fashion. I am sure that when HHS took on the task of simply providing guidance to states trying to build exchanges, they quickly found themselves in over their heads. No gods or intelligent design capacity there. I hate to imagine what they have ahead of them when they attempt to build exchanges for the remaining 33 states. These are entities which can evolve over time if the appropriate rules and selection pressures are applied. I have my doubts they can be the product of creation by people and institutions which are made of ordinary people.

The Pain of the Hedgehog

In today's Wall Street Journal, there was a very interesting article focusing on Dr. Russel Portenoy. (Portenoy)  Dr. Portenoy was a instrumental driver of a movement in medicine to address the under treatment of pain. I remember this movement at or near its inception and have to admit it made sense to me at the time and for the most part, it still resonates, although mostly as it relates to acute pain.

Early in his career Dr. Portenoy had a big idea. He noted that opiates were extremely effective in the management of pain in patients affected with cancer. He envisioned that these drugs could be used in a much broader clinical context to treat chronic pain in patients who did not have cancer. He was very smart, and very articulate and these elements mixed with his passion for for what her believed in catapulted his agenda to the front and center of medicine and the public. He changed how medicine was practiced.

He was a hedgehog. Isaiah Berlin in his essay the "Hedgehog and the Fox" borrowed from the Greek Archilocus, to divide thinkers into two categories, hedgehogs and foxes. Hedgehogs believe single defining ideas while foxes draw on a much larger set of experiences and hold more skepticism that we can place as much stock in any single idea. Hedgehogs are much better positioned to move the needle on any given issue. They are better advocates because they tend not to be distracted by anything, including evidence which fails to support their big idea.

Dr. Pourtnoy overcame resistance to wider use of opiates using his powers of persuasion to convince skeptics that the dangers of opiate use were overstated. He believed at the time that the evidence did not support the concerns which had long limited their use. While he may have correct that the evidence did not support the dangers, his hedgehog biases also blinded him to the lack of evidence supporting their safe long term use. He confused strong belief with strong evidence. To his credit, he now appears to have recognized that his efforts have resulted in substantial unintended consequences and he would not have pursued the same agenda if he knew at the movement's inception what he now know now.

The world needs both hedgehogs and foxes. Too many foxes and no one will pursue big and bold ideas. However, too many hedgehogs results in too many big gambles. Furthermore, it also makes a difference where the hedgehogs and foxes reside.

Within our world, we have people who are early adopters and others who are late adopters. That mix is great for creating "unfragile" entities. Early adopter can hit it big or can go down in flames. Late adopters can be so conservative that they relegate themselves to oblivion or they can serve as a reservoir to repopulate after the early adopters have done something crazy. It works because you have diverse groups hedging their bets in lots of different ways.

However, put a hedgehog in a position of authority and in charge of some entity which can compel others to uniformly embrace big ideas and you remove that diversity of response. In the world of pain management, the hedgehogs captured the power of medical licensing boards and used coercive tools to push their big idea.

I have to admit I have my hedgehog tendencies, particularly relating to the deployment of data and data tools in medicine. It is my big idea (although do not take that to mean I conceived this). I think big ideas are fine as long as they are pursued within a particular framework. First, if at all possible, big ideas need to be pushed out within an environment where people have the right to decline them. No matter how good the idea sounds, it is desirable to have cadres of people who are free to reject them and exercise that freedom, even if they appear to be stupid at the time. Second, big ideas should be deployed in an environment which has feedback loops already in place. The concepts of improvement and  progress are meaningless if there are no mechanisms in place to define where you started from and where you ended up. Finally, understanding success or failure, improvement, and unintended consequences often requires a time frame which is beyond the attention span of individuals or individual human lifetimes. What appears to be success after a few months or years, can translate into disaster after a few decades.

Diagnostic Error

I attended the meeting of the Society for Improved Diagnosis in Medicine this past week in Baltimore. This is a new society, being formally constituted within the past year, although this was the fifth meeting. Previously it had met with other groups, most recently the Society of Medical Decision making.

The major focus was one developing tools and approaches to define the scope of the problem which likely huge but difficult to define and quantify. It was a fascinating group of people which included physicians from a host of specialties. However, it was not limited to physicians and I would venture to guess that nearly half (and perhaps more than half) of the attendees were non-physicians, including many patients.

Even that characterization is not entirely accurate since every one of the attendees are currently recipients of some form of medical care, some more intensively than others. This is of note in that all inquiries into the sources diagnostic error and approaches to addressing diagnostic error interested with the patient communities. Their stories of harm were compelling and at times overwhelming. Their stories were not an add-on to the meeting but in fact central to it.

I was struck by the gulf that still separates patients from physicians and the health care delivery system, a gulf that is maintained by perceptions, processes, and desires to maintain power. However, as I heard the stories of patients, many of whom were very smart and sophisticated, I realized that the elements which maintain the separateness are the same elements which are a source of diagnostic error in the first place.

My perspective as a physician is shaped by the perceptions of those I trained with and those I work with. We view patient histories with great skepticism. What we hear from patients may not be accurate, relevant, or complete. That may be because they do not give us complete stories, not surprising since we demand they provide them under the most time constrained conditions where they suffer from significant performance anxiety. It may also because we fail to hear what they are trying to say and fail to give them sufficient time to reflect upon what the feedback we give them.

My residents often complain that I am able to elicit a history different from what they obtain. I found this very curious until I had a realization as to why this happens. Resident interviews act as a facilitator for patients to reflect upon what we as physicians want to know. Patients come into visits as poorly prepared as we do an questions offered by the residents surprise them. Answers obtained under those circumstances are often incomplete or wrong. However, in the time supplied after the resident leaves and I arrive, patients reflect and rethink their answers, having time to get their stories straight. No guile involved; just the opportunity for reflection improves the quality of the information delivered.

There were lots of interesting aspects of the conference and many interesting speakers. However, one specific session made a particular impression. It was very focused on the role of patients in addressing diagnostic error. The roles proposed proposed for patients raised in my mind the thought that addressing the problem of diagnostic error will require a fundamental change in how we view the role of patients in the diagnostic process. In each of the patient stories of missed diagnosis the opportunities for improvement and avoidance of similar events appeared to require an engaged and activated patient providing a feedback loop to the health care provider to avoid diagnostic pitfalls.

Once the patient is viewed as part of the diagnostic team, it creates the need to define boundaries and ownership. It was absolutely fascinating to hear the divergence of opinions between the physician and patient communities on where these boundaries should be and there was great concern that the unintended consequences of unfiltered information sharing could be dire. However, it was also pointed out that we survived having family access to delivery rooms and ICUs and that patient and family involvement has turned out to be an enhancement, not a detriment to healthcare delivery.

There is no question in my mind that the old model of care delivery has a short half-life. Patients want and deserve better .However, one particular attendee who was a primary care MD spoke up. He was a bit annoyed the primary care physicians were often pilloried as central characters in stories of harm. He urged patients to ask why their primary care physicians cut them short, ignored their complaints, and appeared to be unsympathetic. Providing thoughtful and reflective care using shared decision making takes time and effort. That fall squarely in the uncompensated or poorly compensated quadrant of physician efforts.

Most of the stories of harm and missed diagnosis could be linked back to insufficient time to hear or assimilate information from patients and to integrate all of the pieces. Circumstances and models where this does not happen now generally involve heroic efforts of extraordinary people and non-scalable or sustainable models of care. Patients may want and deserve better, but patient leaders need to understand they are dealing with an economic problem. The current administrative pricing structure in health care values physician activities required for reflective and shared care at essentially nothing. The price signals linked to these activities are telling doctors that there is no value in these activities and against this relentless tide of pressure, no one but the most heroic of physicians continues to resist.

Economic laws are almost as immutable as the law of gravity. It takes much energy to keep things from falling. Items valued as nothing tend to disappear over time. It is not surprising we have found ourselves with a scarcity of reflection and time spent with those who patients believe should be their advocates and counselors. Our own moral compasses as physicians tell us when we have time to reflect that we should provide this time to patients, whether we are paid to do so or not. However, that is simply unrealistic. As things stand now, we are the engines that support not only ourselves but entire teams of people who are almost completely dependent upon the revenue generating capacity of physicians. Thus, we make compromises and rationalize these decisions on the basis that overall we do overwhelmingly more good than harm and it is important to keep the lights on and the doors open. We do our own little bits of God's work and recognize that we cannot fix all of the world's ills.

The payment system that fails to incentivize physicians to deliver what is needed to address diagnostic error continues and, for the most part, few recognize that the scarcity has been created by the dysfunctional administrative pricing system. While patient engagement is an essential piece to address diagnostic error, it is necessary but not sufficient. Patient engagement creates activated patients. However, this is of limited utility without activated clinicians. Some clinicians will become activated because of their moral compass but for the broader provider audience, activation will require financial rewards or at least the lack of financial deterrents. The sooner the activated patients realize this, the better off they will be.