Reduce, Destroy, Demoralize, or Why a Single-Party Payer is the Only Sensible Option

The following paper was published two weeks ago in the healthcare policy journal Health Affairs (abstract and author affiliations provided):

Should Health Care Come With A Warranty?

Many goods and services come with warranties; should health care? Analysis of one payment model shows promise and challenges.

by Francois de Brantes, Guy D’Andrea, and Meredith B. Rosenthal

ABSTRACT: How health care providers get paid has implications for the delivery of care and cost control; the topic is especially important during an economic downturn with persistent growth in health spending. Adding “warranties” to care is an innovation that transfers risk to providers, because payment includes allowances for defects. How do such warranties affect patient care and bottom lines? We examine a proposed payment model to illustrate the role of warranties in health care and their potential impact on providers’ behavior and profitability. We conclude that warranties could motivate providers to improve quality and could increase their profit margins. [Health Affairs 28, no. 4 (2009): w678–w687 (published online 16 June 2009; 10.1377/hlthaff.28.4.w678)]

Francois de Brantes (francois.debrantes@bridgestoexcellence.org) is chief executive officer (CEO) of Bridges to Excellence, a not-for-profit organization developed by employers, physicians, health care services researchers, and other industry experts to recognize and reward providers who demonstrate quality improvement, in Newtown, Connecticut. Guy D’Andrea is CEO of Discern Consulting, a health care policy consulting organization, in Baltimore, Maryland. Meredith Rosenthal is an associate professor of health economics and policy in the Department of Health Policy and Management, Harvard School of Public Health, in Boston, Massachusetts.

(Here is the link to the actual paper on the Health Affairs web site, though you may need a subscription to access)

This paper, as you can imagine, has garnered some attention. The New York Times columnist Pauline Chen, MD, interviewed the lead author of the paper for an article in the June 25 issue of the NYT, and Tara Parker-Pope opened it up for an online discussion on her blog.

This discussion has been quite contentious, as Tara gets read by a lot of physicians and other healthcare providers. Of the 40 or so posts, not surprisingly, not one welcomed the idea. There were many emotional and sometimes bilious comments mostly around how patients’ non-compliance might influence individual practitioners’ reimbursements under this system. Many of the comments reflected the sense of disempowerment so prevalent among physicians today.

But the devil is usually in the details. So, I read with great interest the actual paper by de Brantes and colleagues. After all, the authors themselves are no slouches, and between them have decades of academic and real-world experience in healthcare policy. The authors propose separating what they refer to as “probability risks”, or those risks inherent in the patient and his/her circumstances, from “technical risks”, or those risks related to what they call “care production”. While the former are to be carried by the insurer, the latter, they suggest, are to be borne by the provider. To be fair, they do not call for zero compensation for the preventable acquired conditions (PACs, or those conditions acquired as the result of inappropriate process of care, such as preventable hospitalizations for a chronic condition). In fact, they propose mining the vast repositories of data that are already in existence to arrive at the middle-of-the-road estimates for their associated costs of care, allowing for a 50% frequency of the current rate of PACs. As an example, if the national rate of PACs is 12%, this payment system will cover a 6% frequency of PACs. This way, the authors argue, the providers are still covered for some baseline occurrence of PACs, and at the same time are rewarded for driving them down as much as possible. The result of this is that those providers who have very low PAC rates can make a substantial profit even under this system. Elegant, no?

Unfortunately, as someone who deals with data day in and day out, I am only too aware that reality is much messier than theory. The authors’ intentions are certainly good, and the road to Hades is paved with good intentions. This is a great system for physicians who take care of patients who are not too sick and who have the financial and cognitive means and the will to follow their recommendations. On the other hand, what happens to a provider who takes care of an inner city working poor population, who in the best of economic times end up splitting their blood pressure pills and cannot afford to keep to a heart healthy life style, and thus put themselves at risk for preventable hospitalizations? And what is the effect of the current profound economic crisis on these already marginally “compliant” patients? And realize that, since all healthcare is local, these patients are not conveniently and evenly distributed across all providers in the US. So, the very phenomenon that everyone is trying to avoid, patient profiling (cherry-picking only the healthiest and most compliant patients), is one of the very real potential unintended consequences of this proposed payment reform.

This proposed system takes away from both physicians and patients in other ways too. It takes all choice away from the patient and assumes that we, lemming-like, will follow all recommendations of our physicians. I may have already convinced you that one person’s evidence of benefit is another person’s evidence of uselessness. Since the authors suggest basing judgment of procedural correctness on either best evidence where available or expert opinion (and don’t even get me started on “expert opinion”!), there will not likely be much room for individual judgment, either for a physician or a patient.

But I want to bring up another, much more insidious consequence of this (and other) pay-for-performance scheme. Psychologist Barry Schwartz maintains that reducing all motivation to external rewards demoralizes people in two ways: in the conventional sense of taking away hope and enthusiasm, and also by eliminating morals as the driver of our actions. Let’s face it, it is downright absurd to suggest that we spend 4 years in medical school and put ourselves through additional 3-10 years of grueling training on top of that (while making less money than a receptionist) in order to get rich. The pursuit of reimbursement is for most MDs the direct result of this demoralization.

And this brings me to my conclusion: the only sensible response to this crisis is to create a single-party payer system and to salary all healthcare providers. With a salary, provided that it adequately reflects one’s investment of time and energy, there is no incentive to provide unnecessary and costly care, and physicians can concentrate on providing good care instead of drowning in bureaucratic process. Some surveys suggest that nearly ¾ of all MDs are for single-party payer. What are the rest of us missing? Tell Congress to stop throwing your tax dollars away on stupid experiments that simply rearrange the deck chairs on the Titanic: the market model of healthcare has already failed us.

Patients' rights

I went for my routine physical last week, not that I believe in routine physicals. But I bit the bullet and went, largely to appease those around me who believe in their usefulness, and to make sure that my doctor still remembers me. After a thorough clinical examination and a lovely chat, my doctor asked me what labs I might be interested in checking. Knowing the US Preventive Services Task Force's recommendations for screening a patient like me, I opted to get no lab studies. I further informed my physician that my reading of the literature has convinced me that, given my risk factor profile, I do not wish to have any more screening mammograms until the age of 50. I also had to apologize to her, knowing that the pay-for-performance rules of my insurer will withhold a certain amount of her quality care bonus payment for not obtaining annual screening mammography.

I tell this story because it illustrates a couple of important points. First, since I am an uber-informed consumer, I have the wherewithal to make educated decisions at every step of my encounter with the healthcare system. An additional societal benefit is that, as a responsible consumer, I can help drive down costs by personally promoting efficiency. Of course, it took not only 10 years of post-graduate schooling and training, but also an additional decade of researching to develop the skill to navigate this complex and convoluted environment. What follows is a realization that the politicians' call for healthcare consumer empowerment is more political posturing than a credible policy directive. As a very competent physician friend of mine pointed out to me, you cannot become a medical expert on Google -- the information and decisions are esoteric and specialized to the point where even physicians are not always aware of their intricacies. Not too comforting, hey?

So, what are the choices? A peer review system is something to advocate for, but more on this later. I guess the inevitable conclusion is that, at least to a degree, patients have to allow for substituted judgment by their healthcare providers. And this brings me to my second point. The practice of medicine has become defensive. What I mean by this is that every patient to a certain extent represents a potential law suit. And this is certainly a direct result of egregious misuse of our tort system, intended to be an equalizing instrument within our society. I know this is a worn justification for runaway healthcare costs and dysfunctional physician behavior, but it is not entirely imagined. Our culture deplores risk, and we as consumers have been conditioned by clever marketing that to protect ourselves from such risks, real or imagined, as burglaries and kidnappings, all it takes is more spending on the latest gadgets. We have also adopted this attitude in the way we think about healthcare: if a mammogram is good at detecting an early cancer, an MRI or anything digital must be even better, right? We worship at the shrine of technology and use our children's future as the sacrificial lamb to bargain for a disease-free passage into old age. And so, if a physician uses her judgment to recommend against a mammogram, and, against all known odds, a cancer is subsequently discovered, a law suit usually results, even if the decision was not due to negligence, but rather because of understanding the patient in the context of what is known about her risk.

People who know me well, including my students, know that I love to think in threes. So, in that spirit I am going to make a third point. This is something that eludes not only the lay public, but also government agencies, insurers and practitioners alike. I am of course talking of the risks and consequences of a false positive result. As an example, I am talking about getting a "routine" urinalysis in a healthy woman, discovering what we call an asymptomatic bacteruria (bacteria in the urine not causing an infection), treating her with an antibiotic, which in turn results in a serious intestinal infection with the bacterium Clostridium difficile requiring a surgery to remove her colon in order to save her life. This is but a small illustration of how doing more, although well-intentioned, can derail not just a sensible way of practicing medicine, but indeed a person's entire life. A similar scenario can be imagined with, yes, you guessed it, mammography: a lesion detected, resulting in an invasive procedure, resulting in an infection followed by multiple complications and further interventions, while the lesion proves to be entirely benign. And then, of course, the same insurance company that may be dictating a screening mammogram as a quality measure to determine the physician's reimbursement, subjects the said patient to a rescission (withdrawal of insurance coverage due to a pre-existing condition).

So, as with everything else in life, the adage "everything in moderation" applies to your dose of healthcare. It is your right as a patient!

Physicians, healthcare costs and getting beyond the blame game

Well, unpopular opinions are just that -- unpopular. But you have to start somewhere.

I wrote the paper posted below over the last couple of weeks knowing full well that is would get rejected by medical journals out of hand, and it has. So, I feel fortunate to live in this technologically advanced age that allows me the opportunity to publish it anyway! Here goes:

An article by Atul Gawande, MD, in a recent issue of The New Yorker magazine caught my eye. In it he was describing his journey through several Texas towns in search of an explanation for the long-appreciated regional variations in Medicare expenditures¹. He was specifically interested in why it was that annual per capita Medicare costs in the town of McAllen in Hidalgo County were over $15,000, while those in El Paso county, just 800 miles away, were $7,504. His quest compelled him to speak to many physicians and administrators, as well as to understand regional health statistics. Going through many potential explanations for this disparity, and rejecting each in turn after subjecting it to an intellectually rigorous evaluation, he concluded that in large part these disparities are driven by local healthcare providers’ attitudes towards the practice of medicine. That is, he discovered an inverse relationship between costs and whether the culture in the medical community was more concerned with the patients’ needs rather than with maximizing revenue. With this stroke of his pen, Dr. Gawande opened wide a window on a dirty little secret: the responsibility of individual practitioners in the escalating costs of healthcare in America.

It may be easy to dismiss this idea as an aberration, a few bad apples spoiling everyone’s reputation. It is more difficult to do this in light of the findings by the Dartmouth group, who for years have been reporting vast differences in per capita Medicare spending in different parts of the US, spending that is not commensurate either with worse underlying population health or with better health outcomes. To be sure, Gawande’s theory is not a surprise to anyone who has experienced private practice and has come in contact with the full spectrum of physicians – from those committed to doing what is in the best interest of the patient to ones committed to maximizing their profit. It is neither cynical nor far-fetched to posit that the increasing demands and diminishing returns, both financial and in professional satisfaction, in the race to commodify medicine may drive doctors to prioritize their bottom line above patient care, either implicitly or explicitly. Why not, in a system that financially rewards doing more rather than doing better?

It also becomes more difficult to write off this behavior as an exception when viewing it in the context of the social and political history of our profession. American medicine developed through a series of power struggles and coups worthy of a pulp novel. Early physicians had little political muscle and even less education to distinguish themselves from traditional healers and outright quacks. Yet through formal organizing into exclusive medical societies and by eventually establishing strict licensing rules, they were able to seize enough power to increase their market share of healthcare delivery. During the Industrial Revolution, a heightened emphasis on medical education, better hygiene in hospitals, development of transportation and the change from home- to factory-based business model resulted in moving most of healthcare provision from the home into the office and the hospital. In this way doctors were able to increase their incomes by increasing their daily throughput dramatically: instead of traveling far and wide to visit the ailing, they could see them in the office, an indisputable improvement in efficiency. Over the next century many battles over healthcare financing and access would ensue and persist until today, in which, to use the words of Princeton University Professor Paul Starr from his Pulitzer Prize-winning book The Social Transformation of American Medicine, the “search for efficiency conflicted with the doctors’ defense of their income and autonomy”².

The conclusion is inevitable: physicians too have had a part in driving up costs of care in the US. While we are willing to admit to our charming penchant for ignoring evidence, and to some misguided inclination among few in our ranks to lie by omission about their support dollars, we rarely see this admission of fiscal guilt in our scholarly journals. What we do see is a massive effort to deflect attention away from our bad behavior to the ills perpetrated by others. The inevitable villains in this formula are the manufacturers of drugs and devices, as well as insurance companies and lawyers. Since I have done a lot of work over the years in partnership with manufacturers, I am well aware of the diverse motivations among their employees. Much like the attitudes of physicians, the ethos within pharmaceutical and device companies ranges from dogged dedication to the well being of the patient to unbridled profit motive. As for the insurance industry, I have traditionally been eager to expose their dirty underbelly. It is in this spirit that I read the recent report from the WellPoint Institute indicating that only 3 cents of every health insurance dollar represents profit³. It is of interest that an average net profit margin for consumer goods (that is all the stuff we as consumers purchase) is 6.57%⁴, putting the insurance company profits well below this number. At first, I was tempted to discard these data as industry propaganda. But upon dutifully reading the report and then reflecting on it in light of Dr. Gawande’s article, I began to overcome my anti-insurer bias in favor of starting the difficult task of recognition through self-reflection.

What is the over-arching point here? Physicians are human. To admit this does not in any way take away from the selfless dedication of large numbers of doctors to their patients, even, as we were grimly reminded recently by the cold-blooded murder of Dr. Tiller, at the expense of their lives. No one group is innocent; all parties in our healthcare quagmire have been responsible in some way for getting us here. To blame only someone other than self is counterproductive and disingenuous, as is focusing singularly and selfishly on interests of one’s own stakeholder group. We owe it to our patients and the society to come together, all of us, armed with the emotional maturity and political will to listen to each other’s concerns and to promote a culture of cooperation. The conversation, likely to take place in shades of gray, reflecting the topic’s complexity, has to start today and continue until solutions are found whose goal is not merely to appease every participant, but to provide a comprehensive roadmap to developing what may deserve to be called the greatest healthcare system in the world.

References

1. Atul Gawande. The Cost Conundrum. The New Yorker, June 1, 2009. Available at http://www.newyorker.com/reporting/2009/06/01/090601fa_fact_gawande?currentPage=all, accessed June 4, 2009

2. Paul Starr. The Social Transformation of American Medicine. Basic Books, A Member of The Perseus Books Group; 1982:247

3. WellPoint Institute of Healthcare Knowledge. What’s really driving the increase in health care premiums? Available at http://www.wellpoint.com/pdf/Premium%20Cost%20Drivers.pdf, accessed June 4, 2009

4. Yahoo finance. Available at http://biz.yahoo.com/p/3qpmd.html, accessed June 4, 2009

Less is more

So, you noticed that on several occasions I said that health does not generate revenue, disease does. Let us examine this statement a little more closely and see if it is true.

There are two traditional ways to structure a proof:

1). By citing examples, and 

2). By disproving the opposite

While in statistics and epidemiology we favor the second, I will step away from this in favor of the first method and will explore a relevant example. Since I am still reading Devra Davis's book (see my recent post), the example will come from the world of cancer.

Let's take breast cancer, for example. Your counter-argument to my statement is probably that mammography is the perfect example of how health promotion can turn into a viable business model. OK, let's examine our assumptions. The central assumption here is that mammography is indeed a health promoting technology. What we hear is that early detection saves lives, so we encourage all women at around age 40 years to begin with annual screenings. And look, the proof is in the pudding: survival with breast cancer has improved dramatically over the last 2 decades. But is this really cause and effect? Most data do not support the idea that mammography decreases cancer mortality. Indeed, among younger pre-menopausal women the usefulness of mammography has been questioned by several reputable groups. Younger women's breasts are dense and are prone to high false positive rates of mammographic findings. These then have to be followed up with additional tests, such as an ultrasound or even an MRI with contrast (costly interventions beget further even costlier ones). On occasion, the only way to rule out a malignancy is through surgical excision -- you have to agree this is a very high price to pay for a diagnosis of a benign breast lesion! Sometimes, however, a very early cancer will be diagnosed and excised,which is potentially life-saving, right? Well, this is not so clear either, as scientists are beginning to conclude that many of the very early ductal carcinomas in situ, or DCIS, are probably subject to the woman's own immune extermination and do not develop into life-threatening aggressive disease. So, at least there is no lasting harm from screening mammography beyond the short-term physical and emotional ordeal, so the benefit still outweighs the risk, right? Not so fast. Since mammography exposes a woman to a dose of radiation, albeit small, there is reason to question whether mammography itself may be cancer-causing in some individuals.

I do not want to sound cavalier and suggest that we all quit getting our annual mammograms. What I am suggesting is that each of us take the time to learn about the data and discuss them cogently with our healthcare providers in order to make the most sensible individual decisions. At the same time, we need to acknowledge that there is no free lunch. What I mean by that is that early identification (typically through the utilization of costly technological interventions) does not equal prevention (typically through identification and systematic avoidance of potentially causative exposures). Even the language implies the economic consequences of each -- revenue generation through utilization and revenue loss through avoidance. 

Many of the same concepts can be applied to structuring arguments in other areas of healthcare interventions, but I will not belabor this point now. The bottom line is that the less we think we need, and this includes cars, television sets, soda, the less potentially detrimental disease-causing environmental exposures we may subject ourselves to. But, of course, at the same time, the worse our 401Ks will perform. So, once again, the choice is ours -- health or wealth? 

Is obesity the next cancer?

I am reading a very thought-provoking book right now: The Secret History of the War on Cancer by Devra Davis. In this book Dr. Davis lays out a very detailed story of how much of the knowledge on cancer risks related to environmental factors, gathered as long ago as the 1930s, was suppressed in the US mostly due to diligent efforts of chemical and tobacco companies. In fact, today, the National Institutes of Health spends roughly $170 million on lung cancer research alone. Of incidental interest is the fact that despite being the most common cause of cancer deaths in the US, lung cancer's allocation was less than 1/4 of the revenue going to breast cancer in the same year ($726 million). The proportion of these numbers that goes to prevention research is very difficult to find. However, when one is familiar with the scientific literature in this field, it becomes self-evident that the vast majority of the developing interventions is in the treatment arena. And why is this? Well the answers are both complex and obvious -- I go back to my recent statement that health does not generate dollars, disease does, and for so many stakeholders in this instance.

But I did not really want to focus on cancer -- I do, however, recommend that you read Davis's book to learn more, if interested. I wanted to talk about obesity instead. I recently came upon this statement from the very reputable Cochrane Collaboration, an academic group that synthesizes the vast expanses of medical literature into manageable reports: "The current evidence suggests that many diet and exercise interventions to prevent obesity in children are not effective in preventing weight gain, but can be effective in promoting a healthy diet and increased physical activity levels." (http://www.cochrane.org/reviews/en/ab001871.html) Really? Has human physiology changed that much over the last few decades that we are now refractory to the weight control effects of eating well and having sensible levels of activity? On the other hand, the same group tells us that bariatric surgery "results in greater weight loss than conventional treatment in moderate (body mass index greater than 30) as well as severe obesity. Reductions in comorbidities, such as diabetes and hypertension, also occur. Improvements in health-related quality of life occurred after two years, but effects at ten years are less clear. (http://www.mrw.interscience.wiley.com/cochrane/clsysrev/articles/CD003641/). Hmm... interesting. So, diet and exercise do not work, while bariatric surgery does well at controlling obesity and its consequences. Sound familiar? 

Interestingly, research suggests that high fructose corn syrup, the generic sweetener du jour that children and adults guzzle by the pound daily in their sodas, juices, candy and cookies, is sweeter than regular sugar and thus more palatable to the human animal, resulting in higher amounts consumed. Could this be one of the causes of our obesity epidemic? Is bariatric surgery with its expense and risks really the most obvious (not to mention cost-effective) answer? Well, how about studies that link television watching among our children to unhealthy eating habits and lack of exercise, thus resulting in a climb of the BMI among the youngest members of our society? Bariatric surgery again?

So why, you ask, was the evidence for cancer-causing chemicals kept secret for decades, and how is it relevant to the obesity problem? As you can imagine, many chemical manufacturers would have had substantial economic losses had this evidence come to light sooner. Even today, because studies linking exposure to certain substances with development of cancer are epidemiologic in nature, and thus cannot prove causality beyond the shadow of a doubt, evidence is conveniently twisted and discarded by the clever legal structure created around this type of litigation: a strong suggestion of causality is not enough to inject caution into the use of these compounds. In a similar vein, we do not want to hear that it is the way we eat and live that has created the obscenely pervasive obesity epidemic. Why should we, when we have pills and surgery to combat it? After all, this approach does not take the profit away from the manufacturers of high fructose corn syrup (also benefitting from our tax dollars dumped as subsidies into growing corn monocultures), and in fact it creates a market for new instrumentation and procedures for the vast healthcare industry. Prevention? "That is not economically feasible." Let's cut the crap! Prevention takes political will, which we do not seem to have at the moment, as we are all too busy having our cake and eating it too, particularly since life is sweeter with high fructose corn syrup.