This is probably one of the most heated, complicated, frustrating situations. It encompasses many different intertwined issues. It cannot be summed up quickly, and there is no perfect solution. Understanding what is wrong with the system requires some history and explanation. Obamacare was a well-intentioned piece of legislature, and it’s not fair to simply say it was crap. It did make some assumptions that were flawed, and that led to significant failures, some of which were predictable, some not. But most importantly, it attempted to fix a variety of symptoms without addressing the root problem.
Like any other complex issue, it is imperative that you look at how we got to where we are now, paying attention to previous attempts at correcting evolving issues, and recognizing the reactions that occurred so as to better predict what might happen as you try to shape the new model. The practice of medicine has changed dramatically in the last 40 years. Some of these changes were unexpected, many not. Hindsight can be a ready guide.
The one fact that needs to be nailed to the wall is this: the healthcare system in the United States is the best in the world. Period. I didn’t say it was the cheapest, I said it was the best, and it is, have no doubt. Consider this: where do people come from around the world when money is no object? The United States. Other countries are cheaper. Other countries have better overall public health (which includes culture, and I will come back to that). But there is no place on the planet that has a superior medical system. And when you read stats to the contrary, be very careful about those numbers, because most are not telling you the whole truth. Look at neonatal care statistics: you may have heard that survival rates for neonates in the US are lower than other countries. That’s poppycock. In the US, when a baby is born, we say that a baby was born, because, what else would you say? Well, some countries don’t consider it a baby if it is below a certain age, like 28 weeks. Or my favorite: it’s not a live birth until the baby goes home from the hospital. You have to read the fine print. The reality is that we often look bad because we try to save infants that others would not, and we hold ourselves to a higher standard.
And it is imperative to keep this quality in mind, because when you get to the top of anything, the price goes up exponentially. So before we even start reducing the cost of health care in the US – which needs to be done – remember that we want to do so without sacrificing that quality. That’s not easy, but it is possible.
When I was interviewing for residency positions, I sat in on a lecture given by a training pathologist in Birmingham, Alabama. He was presenting data on a new laboratory test that could detect heart attacks earlier and better than anything available at the time. He showed statistics about how this would decrease time to treatment, minimize heart muscle damage, reduce hospital stay, and all of this would save money. One of the attendings in the audience made a point about the economics of health care that is both disturbing and true: the most cost effective heart attack is the one that kills the patient immediately at home, so the system never spends any money on them at all. It is a frustrating reality of medicine that when you include money, our successes only complicate the issue.
The trick is to reduce costs while improving quality. Wait… if we are saying we are already the best, how can that be? Because though we are the best, we are certainly not perfect. It starts by recognizing that quality of a system is more than just your ability to throw expensive tests and medicines at a disease. It continues as you realize that avoiding bad complications in a patient with diabetes is just as much of a success – though not as sexy – as saving a person with aggressive cancer with a new targeted therapy. What we really need to do is look back and see what went wrong.
In the old days, physicians were married to their jobs. The term resident came from the fact that doctors in training resided at the hospital. My partner’s father had delivered most everyone in town when we moved here, and the lifestyle he led as the only obstetrician was very different than that experienced by the doctors of today. Essentially on-call 24/7, it was not a schedule that was conducive to making it to ball games. But it was the ultimate in continuity of care, as he saw his patients for year after year. And he was beloved by everyone. A pillar of the community, the level of respect given to him by those around him inspired a devotion to give back in any way possible. It is always amazing to hear the list of accomplishments that physicians of his generation seemingly invariably have achieved.
These doctors were not working in the dark ages, but the panel of medical tests available was extremely limited by today’s standards, and physicians relied much more heavily on the history and physical exam. There were no automated blood analyzers or CT scanners or MRIs. Joint replacement surgery wasn’t an option. Intensive care units didn’t have ventilators. Records were hand written.
But the same doctor was seeing the patient regularly over years and even decades, at home or in the office, in or out of the hospital. And those doctors utilized another precious commodity: time. They understood the complex family and lifestyle issues, work issues and environmental issues, and integrated these far better than the physicians of today can hope to do. The picture painted of the small town doctor in the 1991 film Doc Hollywood is more accurate than it might seem. That depth and continuity of knowledge cannot be replaced by any laboratory test, nor can the fulfilment from helping a patient or the deep sense of gratification from community appreciation be replaced by money.
The changes were slow. The use of medical tests began to increase. Specialized blood tests, radiology, molecular tests, these progressively allowed better diagnostic accuracy, continuously improving care. But it also meant slowly increasing costs, and once a test or procedure becomes the standard of care, failure to utilize them appropriately opened the door for repercussions in the case of a mistake. This led to tests being used more and more in a “CYA” manner, a practice that is now almost ubiquitous. Once the stuff of science fiction, procedures like open heart surgery and joint replacement have become commonplace. Knee replacement surgery now represents one of the most common procedures in operating rooms, and bypass surgery for heart disease has been nearly replaced by the use of intravenous catheterization to place stents in coronary arteries. Laproscopic surgery, robotic surgery, we continue to revolutionize what we are capable of doing, but as each technique demonstrates it’s worth, slowly and inexorably these become the manner in which we maintain health. And the pharmacology industry has moved in parallel, with similar breakthroughs and improvements, but steadily rising financial burden.
All of this new stuff meant increased cost, and this led to changes in billing and insurance practices. Doctors and hospitals made money on the tests and procedures, so utilization was completely uninhibited. Think about it: if you miss something, it’s inexcusable, and you make money doing tests, so throwing the kitchen sink at the patient becomes your modus operandi. CMS and insurance companies began requiring specific indications before authorizing payments, a logical step to try to get doctors to think about things before doing things. But this increased the complexity of the practice of medicine, with doctors needing to learn more and more about non-medical details like billing codes and procedure codes, topics neither taught in medical school nor of any interest to physicians. These were people who simply wanted to take care of their patients. New medications emerged, along with advertisements. The old days of the family doctor making house calls and rounding on patients in the hospital was giving way to the business of medicine. The subtleties and complexities of a careful history and physical were difficult to justify on a balance sheet, and that skill – which remains the most powerful tool in the physician’s arsenal – became a temporal liability. Today, doctors do not have the luxury of time. The findings on an exam have been trumped by lab tests, the integration of all of those family and environmental factors is lost.
In the earlier days, many physicians began assisting their patients financially where they felt they could. Patients were allowed to forgo insurance copays. Those without insurance might be billed at a lower rate, and insurance companies – who had seemingly unlimited coffers – were charged the absolute maximum. The reaction from the payers was not unreasonable, as the government and insurance companies attempted to eliminate these cost shifting strategies, trying to prevent unfair gouging. Practices were required to set fee levels for each procedure code, and to bill everyone the same, whether they had insurance or were paying out of pocket. So medical offices set those fees as high as possible, to be certain to capture the maximum allowable and not leave any money on the table. CMS and insurance companies continued to cut back on the payment schedules, which is the amount they agree to reimburse for various tests and procedures. In response, some doctors quit taking various insurances, including Medicare or Medicaid, angered at the lower and lower payments for the same work. In some cases, particularly Medicaid but sometimes Medicare as well, those reimbursements would not actually cover the costs of expensive procedures, and the losses needed to be offset by higher payments from other payers. We now have a situation in which many hospital or office fees remain set very high, and when a patient lacks insurance, the very same regulations that sought to curb the gouging requires the charges be for the full amount, leading to bigger bills for the uninsured. This helps explain the difficulties faced by both uninsured patients and the system delivering care.
The evolving public image and lifestyle changes are intertwined, but often overlooked. The increasing financial pressures and complexity of the business of medicine led to growing frustrations. Doctors were spending more and more time trying to figure out how to navigate the system than taking care of the community. One should not underestimate the deep level of fulfilment that physicians receive when allowed to successfully treat patients. This was the motivation for becoming physicians in the first place – not money. And this unrecognized form of reimbursement, was, and still is, being systematically whittled away. So, doctors who went in to medicine primarily motivated by a desire to care for people were instead becoming businessmen. They were unable to spend the necessary time with patients, those patients were increasingly burdened by the financial impacts of care, and there was greater influence by outside information including the media. Complex tests and procedures were not just available, they were expected to be used, and advertising meant patients would ask for them specifically. This changed the doctor-patient relationship forever.
And doctors responded in kind. Medical societies helped them learn to work angles with insurance companies. Businessmen helped physicians arrange their practices using accounting as a guide. Physician treatment plans that had been guided by the question “what is the best thing for the patient?” were instead crafted along the lines of, “what can I bill for?” Family doctors, no longer being paid for utilizing the most powerful tool in medicine (actually seeing a patient) began adding tests and procedures to their practice to increase reimbursement. Competition developed between different physicians and physician groups for patients that they could do stuff to, because that is what makes money. It is a pervasive mindset throughout medicine now, in offices, in hospitals, in the meeting rooms where policy is shaped.
Being a doctor is no longer a life-style, it is a job. And so it should be no surprise that the latest generation of physicians treats it exactly as such. They negotiate for pay, for benefits, hours, and time on-call. Shift work is becoming the norm. Physicians are disinterested in dealing with the business aspects of medicine, so they are leaving that to administrators, who are in turn treating them more and more as commodities. Individual practices are no longer run as partnerships, they are small businesses. Involvement in hospital governance is all but lost, as most primary care physicians don’t even see patients in the hospital anymore. Hospital based doctors have an employer-employee relationship with administration.
Probably the biggest loss has been to the staple of community health: the family doctor. It is no wonder that despite all of the increased knowledge and treatment options and technology, the general health of the average American is slipping backwards. Because we have devalued and lost the most powerful tools for maintaining health: a careful history and physical, the understanding of the complete patient environment, and true continuity of care. These things cannot be replaced with tests or technology, and there is no billing code for them.
The insurance industry has tried to curb the rising costs by requiring certain indications for services and medicines. But this only adds to the complexity of the process, and the businessmen figure out loopholes; there is always a way to justify a treatment.
Obamacare tried to answer some of the issues, but the problems it went after were symptoms of the disease, not the underlying cause. It tried to fight rising costs of health care by expanding the number of people paying into the system and reforming the insurance business. Neither of those things are reasons for increasing costs, they are methods of covering those costs.
Look at the fundamental driving forces:
- The newest and best becomes the standard of care.
- No one is denied the standard of care.
- Providers get paid for doing things.
No one wants to mess with the first two principles. I am suggesting the following change:
- The newest and best becomes the standard of care.
- No one is denied the standard of care.
- Providers get paid for RESULTS.
This is what a system of capitated reimbursement would do. The system is paid to take care of patients while being required to meet a list of quality metrics. The impact of this subtle shift is profound.
First, picture the current primary care office: rushed physicians struggle with a cumbersome electronic medical record, and are bogged down by ICD-10 and CPT codes. A myriad of blood tests are ordered prior to the patient being seen, to be run at an inefficient in-office lab. EKGs, X-rays, even limited procedures such as endoscopy or minor surgery can be done in the office. What keeps the office open is doing things to patients, justifying those things with whoever is paying, and getting reimbursed.
Now imagine the same office in the new world: Your family physician sees you and does a careful history and physical. He asks about your lifestyle, whether you smoke, or exercise, and if you need help in these areas, he can point you in the right direction. He asks about your mood, are you depressed? (The costs to our nation relating to unrecognized or poorly treated psychological conditions such as depression is immense). There is time for all of this, for discussion of your diet and work, and for a careful physical exam. Because these are the things that are critical to keeping you healthy, and that is what he gets paid for. There is no in-office lab, no X-ray machine, no procedure rooms. There are no CPT codes or ICD-10 codes, because he doesn’t have to justify any tests or procedures. Because he is simply paid per capita, he is back to thinking the way the physicians used to think: what is the best for the patient? Of course all of the same technology is available, from every imaginable automated blood test, to CT scans, to MRIs, advanced surgical procedures. But these are done by specialists, and the name of the game is efficiency.
So what about those specialists? A large, hospital-based laboratory can capitalize on volume and perform higher quality testing with more speed at a tenth of the cost. Capitated reimbursement solves the issues of duplication of services, and ends the discussion of certificates of need. The impetus is on efficiency while maintaining that standard of care, and meeting those quality metrics.
Surgery centers currently advertise their advanced techniques on bill-boards, competing for patients like used car salesmen. Are that outcomes from robotic surgery really worth the extra cost? Sure, you will be held to some quality standard. But the decision to do the procedure is financial. In a capitated world, that decision is based on actual utility, not whether or not the business manager has found a way to get insurance to pay. Right now, virtually all medical practices have shifted their work towards doing tests and procedures, because that is what we are paying for. We need to stop paying for stuff, and start paying for results.
The Medicare Payment reform, Macra, was a huge step in this right direction, and it needs to be monitored and rolled out carefully. The biggest issue with capitated reimbursement is the transition. How do you move from a fee-for-service world to a results-based world without everyone going bankrupt in the interim? And I can tell you this with 100% certainty: it will NOT happen unless it is mandated.
One hurdle will be all of the medical care centers that have been built to capitalize on the current system. Because they won’t be cash cows anymore, and they aren’t going to go away quietly. Politicians are going to have to look past the money and look deeper if they are going to see the real heart of the matter.
Doctors are already frustrated with regulation and bureaucracy and all of the complexity that has nothing to do with why they went to medical school or what their training entailed. They are relatively oblivious to the coming changes. Older physicians are simply retiring. Younger physicians are acting as employees. There is relatively small number of doctors who recognize that this is a time of remodeling, and that the work we do now completely redesigning the way we deliver care will pay huge dividends in the future. We have the opportunity to improve patient outcomes and physician fulfillment, and reduce expenditures.
As a capitalistic society, we have sought to rely on competition to fix our medical system. First, competition has no place in medicine. And second, competition in a fee-for-service world neither reduces costs nor improves care. In a world of capitated reimbursement, competition is replaced by cooperation.
Think of a city in our current system with multiple hospitals competing against each other. The market will decide their fate, right? The one with the best outcomes will draw the best doctors and staff and patients, and it those that can’t complete will close their doors. Ideologically, this requires that you ignore the crappy care being delivered to those unfortunate enough to choose poorly. But more importantly, the success of a hospital is not based on quality, it is based on money. Advertising, public perception, and sound business decisions are much more important. What brings in money is having people in the hospital, doing tests and procedures and surgeries, and administering medications. Cooperation with other entities in the health care system – unless they are under the same corporate roof – is detrimental to the bottom line. Refer a patient across town because they have better care in this area? I think not. Yes, we are trying to add value-based incentives to various types of reimbursement, but at the end of the day, you are still trying to manipulate a competitive fee-for-service environment. It’s polishing a turd, and we just keep rubbing and rubbing.
With capitated reimbursement, cooperation becomes a key component. Because patients are going to migrate from one provider system to another, the demand for quality metrics means there is incentive to keep everyone healthy regardless of whose patient they are, and who is actually delivering the care. It means that an orthopedist is actually responsible for the high blood pressure he records in his office for an ankle sprain, where today he shrugs it off as not his problem. It means that a patient entering a hospital should arrive with appropriate information from their primary care doctor regardless of the relationship between the doctor and facility, because how they do in the hospital will reflect back on the primary care doctor. And similarly, a patient being discharged should arrive back at that office with all of the information essential to recovery, because the success of that process is again going to reflect on both the hospital and doctor.
Duplication of services goes well beyond physicians or tests, and is a huge drain not just on the health care system, but on the community, particularly in poverty-stricken areas. A competitive, fee-for-service environment exacerbates the issues. For example, our emergency room evaluated high-cost patients and looked for solutions. Like many other areas, the root cause in many heavy utilizers is based on social issues like transportation, communication, and education. So a system was built with navigators and cooperation between various entities and clinics in the area to better address the needs of these patients. The program remains a huge success. But our current environment means those resources are only available to the ER, even though many other areas both in our hospital and in surrounding offices face the same challenges. The power of addressing social issues is being widely recognized, so each individual silo is building its own version of this process. With competitive offices and hospitals, no one will even consider sharing resources. In the capitated world, it is an advantage to leverage all of the resources of the healthcare system and the community it serves collectively. We are hoping to build a system that serves all areas, from the ER to offices, to city works and the school system. It will only work if we move away from fee-for-service and enter a capitated world.
The primary failures of Obamacare relates to its impact on the insurance industry. As I already stated, you can’t affect the costs of running the system by adjusting the insurance industry. That being said, insurance is obviously essential to a health care system, whether it is private or public. But you have to recognize that the insurance industry is a business, so you can’t expect to put restrictions on the industry that are not economically sound and expect those companies to survive. If the goal is to put private insurance companies out of business and force the move to a single payer system, then you are on the right track. But if you really look deeply at what is going on as I have tried to show here, it’s not going to fix the problem. Yes, you can control costs (because you just won’t pay out the money). But it will be at the expense of quality.
One big issue is the preexisting condition. Ideologically it is wrong for insurance companies to want to deny you coverage because you have a disease. Economically, an insurance company cannot be financially sound if they enroll people they know will cost them more money than they collect in premiums. But the underlying issue has nothing to do with preexisting conditions, it is related to the fact that insurance is tied to employment. People used to stay at single employers for a career. Now, the average person stays at any one job some 4-5 years. But we continue to tie insurance to work, when they have nothing to do with each other. Having insurance as a benefit gives large companies a competitive advantage over small businesses, and makes self-employment extremely difficult. It reduces continuity of care, often by forcing changes in treating physicians or even health care systems when changing jobs. It makes no sense, must change, can be changed easily, will have economic benefits at almost all companies, and will have little drawbacks.
If health insurance were simply continued from a young age throughout life, the impact of preexisting conditions would be dramatically reduced. And then the only regulation that need be applied is not allowing insurance companies to drop someone if they get sick.
Affecting the change is easy: eliminate insurance as a business expense, and instead make insurance premiums a tax deduction on individual returns.
Without the expense of paying for healthcare, businesses will have more money to pay employees. Employees get a bigger paycheck, which they can put towards insurance premiums. And those premiums can be deducted, meaning the increased pay is offset in terms of tax liability. A progressive tax incentive program could be temporarily utilized to insure that people move to private insurance. Similarly, penalties could be levied on businesses that failed to pass the savings on to employees. Instead of subsidizing health insurance products through the exchange, the government can use individual tax deductions and rebates to assist lower income households directly, eliminating the middle man. And temporary assistance for those pesky pre-existing conditions could be investigated to get over the “hump” of moving to the new plan.
The result is a health insurance industry that is modelled after the auto insurance industry. There is no place for competition in the delivery of healthcare, but there is every reason to leverage its effectiveness in the insurance business. The current system doesn’t allow competition, as the individual is simply reliant on the employer. And that employer is motivated by the bottom line, not the health of the employee. Now individuals can pick the insurance product that is right for them, shopping based on their own needs and the services provided. Insurance companies can align with healthcare communities to offer capitated, community-wide, quality-based plans that would encourage cooperation and efficiency. The cost savings comes from the reduction of utilization and duplication of services.
One final idea that needs investigation is continued involvement of the patient in their own care. It is unreasonable to place all of the onus of health on the doctor without individual accountability. For example, if quality metrics require regular monitoring of blood glucose or high blood pressure in patients with diabetes or hypertension, the patient bears some responsibility to actually go to see the doctor. Obamacare did that by saying well visits had to be free, but that only reduces the hurdle (and only then for those with insurance). If there are other costs involved in going to the doctor – missed work, transportation, child care – or if it is just an onerous task, patients won’t come. We are looking at insurance incentives such as premium rebates for patient involvement.
- Understand the system we have to work with
- Demand quality, but simplify the process
- Pay for results, not stuff
- Separate work and insurance