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Inefficiency Pays While Efficiency Kills.

Posted Jan 26 2009 4:37pm

Healthcare is truly perverse. Inefficiency pays. Efficiency kills.

Inefficiency Pays
Last week we were having a discussion about how to improve our billing process. A deafening silence greeted a call for suggestions. After the pregnant pause, someone blurted out: “If we (hospitals) don’t benefit from this system; if the doctors and nurses hate it; and if it drives the patients crazy, then who likes it?!

There are two answers. 1) In the short run, the “payers” like it. 2) In the long term, no one likes it, but no one is taking a long-term view.

The financial structure of healthcare is complex, cumbersome, contradictory, and inefficient – intentionally so. As you know, 30% of all healthcare dollars disappear into “the middle.” They are the costs of bureaucracy and of regulatory compliance. However, I am talking about the other 70% or so, a mere trillion dollars.

People, sick or healthy, provide healthcare dollars either as premiums to insurance companies and/or as taxes to the government. Those who have the money want to hold it as long as possible because holding it MAKES money for them. When you talk about billions, even a little delay in payment generates huge sums of unearned [ no value-added ] profit.

The delays, denials, and exemptions that frustrate both patients and providers are the tactics of a system where delayed payment (inefficiency) pays – it generates profit for those who hold onto the money. We need a system where people make money by keeping people healthy rather than keeping the dollars.

You can try to adjust the details but it will not help, just make good sound bytes. Until you change the system to reward efficient payment, patients and providers will continue to be the losers.

Efficiency Kills
In keeping with how perverse healthcare is, while inefficiency pays, “efficiency” kills.

What is an “efficient” provider (nurse or doctor)? Hospitals and medical groups measure efficiency just the way Henry Ford did building cars: number of – products produced; services rendered; patients processed – per hour. The efficient health care provider sees the most patients per hour and therefore, spends the least time with any one patient.

This definition of efficiency is a holdover from the assembly lines of 19th and early 20th centuries as shown in the Boeing bomber manufacturing plant in 1943 above. That definition of efficiency is obsolete and actually produces the opposite of what we want.

Efficiency should relate to some outcome we want and not some intermediate process measurement such as patients per hour. A definition like the “most patients recovered in the shortest time” would reward and therefore promote good health. As currently measured, efficiency encourages oversight or outright error. As currently defined and measured, efficiency in healthcare kills.

If we want healthcare to work for the patients,
we need to redefine the word Efficiency.

System MD

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