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Barriers to an Improved and more Cost-Effective Medical System

Posted Aug 13 2009 8:02pm
Health care per capita in the United States costs at least double nearly every other country on earth. Yet our longevity, infant mortality, and other health indices lag behind the rest of the industrial world. What's not to change about such a system? Think of it: we do the same tests and radiology studies as other countries, use the same drugs, and I get paid about the same (as a primary care doctor) as if I lived in western Europe, Canada or Australia. But healthcare costs twice as much over here, because we do more or different things than we need to do for patients, our drugs cost more, our equipment costs more, and there is an enormous amount of "fat" everywhere you squeeze the system.

Egregious financial conflicts of interest can be found under every stone you care to turn up in the healthcare garden.

Profit margins have been reliably above 10% per year for most healthcare companies. No wonder members of Congress and the administration have invested in them. However, those investments are anchors, preventing the US from turning around the ship of state when it comes to healthcare. Shouldn't our legislators recuse themselves from a role in healthcare policy reform while hamstrung by personal investments?

We administer more in the US. A lot of the administration is not designed to reduce procedures or cut costs. Instead, it redirects resources. For example, insurer A contracts with Pharmacy Benefits Manager (PBM) B to supply medications to its customers. Drug manufacturers or wholesalers make deals with the PBM to sell only certain drugs, and to shift prescribed drugs to others in the same class. This is done through the mechanism of the Formulary, a fancy name for limiting the selection of available drugs. But every year the formulary (or pricing pattern of available drugs) changes, so patients (and hospitals) have to frequently change the drugs they have available, or pay through the nose. This is one of many wasteful situations in healthcare, in which the beneficiary of the change (the PBM) shifts the costs of the change onto consumers, hospitals and pharmacies. It is a shell game.

Here is another example of crazy healthcare economics. I see a patient on referral. Another doctor thought I had some expertise to offer this patient. I do a complete evaluation, and give the patient and referring doctor my advice. I bill the patient's insurance company, which decides how much it wants to pay me for the service. I never know what I will receive, how long it will take to arrive, and I frequently receive nothing. I can write letters, make phone calls, and sometimes some money will arrive late, but it is entirely unpredictable. Can you name any other industry in which the price that will be paid for a service (if any) is kept a secret by the payer until after the service is rendered, and often bears little relationship to the time spent or complexity of the service?

Since billing rules are constantly changing (another version of the shell game) billing cannot be done cost-effectively in a small office, for you cannot keep up with the changing regulations and software needed.

The unpredictable payment system led many doctors to sell their practices and take a salary, swapping autonomy for income stability. (I gave away my practice in 2002, and was mighty glad to relinquish captivity to an incomprehensible system of reimbursement.)

There has been a revolving door at FDA for employees or consultants to drug and device manufacturers, who become regulators for awhile. Maybe that is why the rules for scrutinizing new medical devices have been so weak. Attorney Daniel Troy was the top attorney and enfant terrible at FDA, appointed by Bush to gut public health protections. He is infamous for creating the legal doctrine of "preemption": if FDA approved it, no state courts can hear challenges to the safety or efficacy of the product. Now he has returned to the pharma industry as senior VP at Glaxo.

Let's talk pricing. Competition controls prices, right? But FDA approval gives manufacturers a license to steal, since no one else can sell your drug while it is on patent, and no one can tell the manufacturer how to price it. Is the drug used for cancer, a heart attack or stroke? Then it is worth thousands of dollars a dose. (You heard me right. Thousands. No wonder the drug companies focus on drugs for the final year of life.) Because most patients are shielded from the full cost by insurers, there is no outcry. Those not shielded may go bankrupt trying to pay.

Need I go on? An army of hardworking, well-intentioned health professionals puts a good face on a heathcare industry replete with dirt. And given the nutty payment system, healthcare institutions are practically forced to steal from Peter (i.e., overcharge) to pay Paul, a very unsatisfactory situation that currently is a requirement for hospitals (and healthcare professionals like me) to stay in business.

Our nation is desperate for an accounting of where the healthcare dollars are going; for accountability for quality outcomes; and to develop a system in which excellent health indices, broad preventive services, and enhanced provider communications occur -- one for which we can all be proud, and healthier!
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