Tag Archives: health care

It’s a Start

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In the past I've written extensively about how frustrating our health care and health insurance systems are in the good ol' US of A.  As I see it one of the biggest obstacles to true health care reform in this country is the lack of transparency in the system, or in laymen's terms, the fact that you generally have no idea how bad you're screwed until well after you've received whatever treatment or service for which you visited the doctor.

That's why I was very interested in this piece at the Triad Business Journal's blog:

Passed last week in the waning days of this year's legislative session, the "Health Care Cost Reduction and Transparency Act of 2013" (House Bill 834) will create an online database of what hospitals are paid, on average, for the 100 treatments they perform most frequently. They'll also be reporting their costs for the 20 most common surgical procedures and 20 most common imaging procedures.

Take a case of pneumonia. N.C. consumers will now be able to go online and compare a variety of prices for that treatment. The database will tell them what Medicare pays for the treatment of pneumonia, what Medicaid pays and the average of what the five largest insurers in the state would pay the hospital.

Additionally, the database will offer up what the charge will be for a person with no insurance, and what the average price that the uninsured are able to negotiate with the hospital to pay.

That's a lot more info than is now available to N.C. consumers, though a clearer picture of what health care costs are in the state is still emerging.

This is what NC's attorney general had to say:

N.C. Attorney General Roy Cooper, who had advocated for several of the provisions included in the final transparency law,praised its passage.

“We recommend that consumers shop around for a good deal, but our health care system doesn’t make that easy to do,” Cooper said. “Giving consumers straightforward information on what medical services cost and what they owe will help them make better decisions about their health care.”

He's got that right, especially when you're talking about preventive or non-urgent care. Obviously if you're in an emergency situation the last thing you're going to think about is whether or not the hospital nearest to you is the cheapest, but when a consumer has time to think having accurate information is the most valuable tool at his disposal. 

What I hope we see in the very near future is an app on our phones that will be linked to a database of ALL medical procedures from all health systems. And while I'm dreaming I'd love to see our state have more viable health insurance options than the duopoly we currently "enjoy" in North Carolina.

Hidden Costs

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One of the interesting changes we're seeing in the US is the different behavior of health care consumers when they are actually allowed to act like consumers. From the Wall Street Journal:

Last fall, two big employers embarked on a radical new approach to employee health benefits, offering workers a sum of money and allowing them to choose their health plans on an online marketplace. Now, the first results are in: Many workers were willing to choose lower-priced plans that required them to pay more out of their pockets for health care.

The new online marketplace, operated by consulting firm Aon AON -0.29% Hewitt, a unit of Aon PLC, was used by more than 100,000 employees of  SearsHoldings Corp.  SHLD -0.86%  and Darden Restaurants Inc.,  DRI +0.43% as well as Aon itself, to pick plans for 2013. The employers gave workers a set contribution to use toward health benefits, and they could opt to pay more each month to get richer plans, or choose cheaper ones that might have bigger out-of-pocket fees, such as higher deductibles.

"When people are spending their own money, they tend to be more consumeristic," said Ken Sperling, Aon Hewitt's national health exchange strategy leader.

Go figure. When people are given pricing options and asked to consciously weigh costs/benefits and risks/rewards they make "consumeristic" decisions. Forget for a moment all the details about "Obamacare" and your feelings towards it, and instead ask yourself these questions: Can any health care reform program succeed if it doesn't allow people to behave like a logical consumer? How can a logical consumer exist in a market where pricing is obscured? To that end, the next time you go to the doctor's office try this exercise: ask them what your appointment is going to cost before they do anything. They likely won't be able to tell you because they simply don't know – the cost depends on what kind of insurance you have and the rates your insurer has negotiated with the doctor's network. Craziness, huh?

Changing gears, but sticking to the hidden costs theme, have you ever wondered why we it's been so difficult for people to grasp the true costs of the wars in Afghanistan and Iraq? It's because the bill has shown up in the form of an exploding deficit and not a "War Tax." Deficits are like credit card debt: you know they're bad and that they can be a drag on your financial well being, they are hard to get overly excited about because your daily life doesn't change much until you run out of credit and the bills come due. On the other hand if you're paying cash – or a War Tax – the cost of your action is immediately clear and you're far less likely to be so sanguine about whatever you're doing. 

So here's a rule of thumb we need to teach our children: if the cost of something is hidden, or if you aren't asked to pay for it up front, it is likely much higher than you think so you should really think hard before making that purchase decision. There should also be a corollary: if it's a politician doing the selling then you should probably just walk away or be ready to spend 100x whatever you think the cost is (see War, Iraq).

Health Care Frustration

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The video below was emailed to me by my mother. It offers up a vision of the health care industry being revolutionized by information technology. Hopefully that vision will be realized, but pardon me if I'm skeptical. As I told my mom in reply to her email, I can remember being a member of the Kaiser Permanente HMO in the DC area twenty years ago. They had an integrated computer network that allowed me or any member of my family to walk into any one of their centers and have our records accessed immediately by a doctor or nurse. No carting charts from one doctor to another! This, I thought, was the very near future of medicine. Twenty years later it still hasn't happened for the most part and I remain skeptical that the vested interests in health care will allow the changes needed to improve health care delivery in this country.

After watching this piece I truly hope I'm being overly pessimistic:

The Miracles and Limitations of Modern Health Care

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My wife and I spent yesterday at Brenner Children's Hospital in Winston-Salem with our youngest son. Our son has been dealing with a condition called supraventricular tachycardia (SVT), which in layman's terms means his heart will sometimes beat really fast – like 200 beats-per-minute fast – for extended periods of time even if he's sitting still. He was in the hospital for a procedure called a cardiac ablation which, if successful, would prevent these episodes from happening in the future.

The way the ablation was explained to us is that the doctor would send catheters through major veins in the legs to our son's heart and, depending on where in the heart the problem was, either burn or freeze the part of the heart that was causing it to go into this abnormal rhythm. Our son would be put under general anesthesia for the procedure and it would likely take about four hours. They would provoke his heart into going "wonky" (that's our technical term for it), identify the problem area, treat it and then observe it for a period of time to make sure they got all of it. If they needed to they'd freeze or burn more spots until they had the problem area taken care of.

Here's the really amazing part: if all went as planned we'd have our son back home the same day and he'd be under orders to take it easy for four days, not lift anything heavy for about a week, and then he'd be back to normal. To us this was truly a miracle of modern medicine – our son would have a heart procedure as outpatient surgery!

Thankfully all went as planned and we had our son home last night. Truly amazing.

Unfortunately modern medicine also has its limitations. While we were in the waiting room during our son's surgery a doctor came out and met with a mother and grandmother waiting near us. It was very early in the morning and most of the folks in the waiting area were asleep, thus it was pretty quiet. We tried our best not to eavesdrop, but it was impossible not to hear pieces of what the doctor was telling the mother – that her child did indeed have some rare, malignant cancer. It was also impossible not to hear the mother's crying and her mother trying to console her. And quite frankly it was impossible not to break down ourselves once they left – I haven't cried in public since I was a child, and I'm not ashamed to say that I just couldn't hold it together. I can't imagine going through what that family is going through right now.

Right now our country is dealing with a lot of change in our health care system thanks in large part to the Affordable Care Act, aka Obamacare. There's (rightfully) a lot of discussion about how our health care system and the related health insurance industry work. The debate often focuses on cost and on whether or not we're moving towards a system of "socialized" medicine similar to Canada's or the UK's, and if we are, whether that will lead to a stall in medical advances that have led to every day "miracles" like what our family experienced.

Those are all worthy discussion points, but after yesterday all I could think was this: when it's your child in the operating room you really don't care how expensive the procedure is, you just want him to have whatever it takes to make him well. I would gladly live in a cardboard box in order not to have to hear what that poor mother next to us heard. Whatever we do I hope we continue to work towards making sure that fewer and fewer parents have to hear that their child doesn't have a miracle available to them at any price.

Who Pays for Health Care?

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An interesting piece at the Atlantic Wire shows the change in who pays for health care services (hospital care, physician and clinical services, prescription drugs, etc.) from 1960 to 2010. In 1960 a far higher percentage of the payments were out-of-pocket and a lower percentage came from private insurance, Medicare and Medicaid. In 2010 a much smaller percentage was paid out-of-pocket and, with the exception of dental services and "other medical products", the vast majority was paid by private insurance, Medicare and Medicaid. 

That's interesting in and of itself, but what's downright unbelievable is the change in the amount spent on health care each year that's shown in the article. In 1960 the total amount spent was $23.4 billion and in 2010 it was $2,186 billion or a 93.4-fold increase. Of course there are more people in America in 2010 so a good question would be, "What's the per-capita increase in health care spending?"

The answer is that in 1960 the per capita spending was $147 and in 2010 it was $8,402 – a 57-fold increase. To give you an idea of how big a jump that is you need only note that the buying power of $1 in 1960 was the same as $7.35 in 2010. In other words health care spending literally exploded; if it had been even roughly analogous to inflation the per capita spending would be more like $1,080 than $8,402.

Some thoughts to ponder as you digest this information:

  • Would spending be lower if end consumers had to pay more out of pocket?
  • Would pricing transparency be greater without insurers playing middle man?
  • How much of the cost is due to the inefficiencies of the health care system? 
  • How much less would the spending be if doctors didn't have to employ multiple people simply to handle billing insurers?
  • If you added in the cost of health insurance that doesn't get directly applied to paying for health care services – many years we pay more in premiums than get spent on health care services – what would the annual spending be? 
  • It's interesting to note that where the money was spent – the percentage spent on hospital care, physician and clinical service, prescription drugs – is almost exactly identical in 2010 to where it was in 1960. Doesn't that seem to indicate that the entire system is screwed up, not just hospitals or pharmaceuticals?

The health care industry is facing some signicant changes thanks to "Obamacare," but it remains to be seen whether or not those changes will rein in costs. It's hard to imagine the health care system getting any less efficient, but then again in 1960 it was hard to imagine a man walking on the moon within a decade. 

Perfect Timing in the News

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Today the Winston-Salem Journal published the last article in a three-part series on the two major nonprofit health care systems in the Winston-Salem area, Novant and Wake Forest Baptist Medical Center, and this particular installment focused on executive compensation. Here's an excerpt from the article:

Dr. Roy Poses, a clinical associate professor of medicine at Brown University and former physician at three academic medical centers, writes a blog called "Health Care Renewal" in which he frequently tackles the issue of executive compensation…

"The same rationales are cited to justify their treatment — executives are said to have very difficult jobs, and competitive pay is necessary to hire the brilliant people required.

"Left unsaid, however, is how difficult these managerial positions are in comparison to the demanding work and sometimes life-or-death responsibilities of health professionals, how brilliant executives are in comparison to such well-trained professionals, and why the executives deserve competitive pay when other employees may be laid off." (Emphasis mine).

Later in the morning Novant made the following announcement:

Carl Armato, president and chief executive of Novant, said in a memo to employees that the system is eliminating 82 management positions and 207 staff positions, effective immediately. The majority of the eliminated positions are in Novant's Winston-Salem and Charlotte markets…

Armato said there are four main reasons behind the decision.

"We all know there's a national mandate to lower what our nation spends on health care and to make care more affordable," Armato said…

"The poor economy has clearly changed people's behaviors and they are using fewer health-care services, including elective surgeries and outpatient testing, such as diagnostic imaging."

Armato said Medicaid and Medicare reimbursement for services "is dramatically declining. Put simply, we are being paid less for our services and this trend will unfortunately not improve.

"The amount of charity care we provide has increased 200 percent over the past five years.

Pretty nice juxtaposition huh?

Question: If you had to guess, what would you say the odds are that Mr. Amato showed some leadership by taking a voluntary reduction in pay, or even a pay freeze, before deciding to seriously screw with 289 people's lives by laying them off? 

Dunning the Sick

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Whenever I hear people debating health care reform or talk about "Obamacare" I almost invariably hear the statement, "Well, even with the system today everyone is able to get medical care – hospitals aren't allowed to deny anyone care." I've always thought that to be a dumb argument because it seems like it's an incredibly inefficient and expensive way to provide health care to those who can't afford it, and reading this article on collection agencies working in hospitals seems to support the argument that it is indeed supremely stupid and expensive:

Still, hospitals are in a bind. The more than 5,000 community hospitals in the United States provided $39.3 billion in uncompensated care — predominately unpaid patient debts or charity care — in 2010, up 16 percent from 2007, the hospital association estimated.

So it's no surprise that hospitals would try to recoup some of their money through collection agencies. Unfortunately, the tactics at least one of these agencies is using seem to be encroaching on the health care delivered by the hospitals:

Collection activities extended from obstetrics to the emergency room. In July 2010, an Accretive manager told staff members at Fairview that they should “get cracking on labor and delivery,” since there is a “good chunk to be collected there,” according to company e-mails.

Employees were told to stall patients entering the emergency room until they had agreed to pay a previous balance, according to the documents. Employees in the emergency room, for example, were told to ask incoming patients first for a credit card payment. If that failed, employees were told to say, “If you have your checkbook in your car I will be happy to wait for you,” internal documents show…

Patients with outstanding balances were closely tracked by Accretive staff members, who listed them on “stop lists,” internal documents show. In March 2011, doctors at Fairview complained that such strong-arm tactics were discouraging patients from seeking lifesaving treatments, but Accretive officials dismissed the complaints as “country club talk,” the documents show.

Nah, we don't need no stinking health care reform.

Make Sure to Tell Your Ambulance Driver to Head to the High Rent Hospital

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From the Freakonomics blog:

Both strategies show that higher-cost hospitals have significantly lower one-year mortality rates compared to lower-cost hospitals. We find that common indicators of hospital quality, such as indicators for “appropriate care” for heart attacks, are generally not associated with better patient outcomes. On the other hand, we find that measures of “leading edge” hospitals, such as teaching hospitals and hospitals that quickly adopt the latest technologies, are associated with better outcomes, but have little impact on the estimated mortality-hospital cost relationship. We also find that hospital procedure intensity is a key determinant of the mortality-cost relationship, suggesting that treatment intensity, and not differences in quality reflected in prices, drives much of our findings. The evidence also suggests that there are diminishing returns to hospital spending and treatment intensity.

Basically what they're saying is that if you go to the budget hospital you're likely screwed.

More Employers Questioning Need to Offer Health Insurance

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Some of the insights shared at a recent Winston-Salem Chamber of Commerce meeting about the state of the health care industry won't shock anyone who’s been paying attention the last few years:

Keith Kiser, a senior vice president for BB&T Insurance Services, said his group is fielding more questions from employers about the justification for providing health insurance to employees, besides as a carrot to hire and retain quality workers.

“Chief executives and chief financial officers are fully engaged in these conversations these days,” Kiser said, considering the cost of providing health insurance typically ranging from $8,000 to $10,000 for each employee.

The 2011 Kaiser Family Foundation study on employer health benefits, out in September, found 99 percent of large companies — 200 or more workers — offer health benefits, but only 48 percent of those with three to nine employees do and 59 percent of those with 3 to 199 workers do.

Three-quarters of small firms (3-199 employees) not offering health benefits believed their employees would prefer a $2 an hour increase in wages rather than health insurance, Kaiser said.

Kiser said the reality that 1 in 5 consumer dollars goes to health-care costs “does keep you awake a night.”

This trend will likely get more prominent as the new federal health regulations, aka Obamacare, go into effect:

The federal health-care overhaul will allow employers to stop providing health insurance — beginning in 2014 — with their employees going into a government-controlled exchange.

However, employers with 50 or more workers that don’t offer coverage will be required to pay $2,000 for each full-time employee in its full-time work force. The fee begins if at least one employee enrolls in a plan through a health-insurance exchange and receives a federal subsidy. Two part-time workers are considered as one full-time employee.

The top executives at Blue Cross Blue Shield N.C., Novant Health Inc. and Wake Forest Baptist Medical Center said they empathize with businesses’ concerns about health-care costs since they are large employers as well as providers.

So, should you spend $8-10,000 insuring your employees or pay the government $2,000 for not insuring them?  An interesting question, especially when you consider that companies only started offering health insurance in general during World War II as a way to entice workers in a highly competitive hiring market.  It’s a relatively recent phenomenon in American history for companies to provide health insurance to their employees and over the years it became a kind of “least common denominator” in terms of employee benefits packages.  That began to change when health care costs started to explode, and now it looks like health insurance is returning to it’s original role – a very nice perk that can act as a set of “golden handcuffs” for valued employees.

Quality of Death Index

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After my post last week re. dying with dignity you might think I'm on a death kick here, but really it's just coincidence.  Just read this post at BookofJoe about an article in The Economist about an attempt to assess the dying process throughout the world:

Britain tops the table. For all the health-care system’s faults, British doctors tend to be honest about prognoses. The mortally ill get plentiful pain killers. A well-established hospice movement cares for people near death, although only 4% of deaths occur in them. For similar reasons, Australia and New Zealand rank highly too.

Some countries, such as Denmark and Finland, that normally score higher than Britain on human-development indices rank lower on the quality-of-death index. They concentrate more on preventing death (which they see as a medical failure) rather than on helping people die without suffering pain, discomfort and distress. America scores poorly because of the health insurers’ rule that they pay for palliative care only if a patient relinquishes curative treatments.