Comments on: When Market Incentives Lead to Bad Outcomes, Continued

By: tyson vandament

tyson vandament — Thu, 25 Jun 2009 22:19:53 +0000

I continue to read that the system/gov’t/ect has failed to provide proper incentives to the healthcare business in order to control cost/raise quality. This is true, the healthcare industry does respond to incentives, and up until this point the incentives were, like there are in all capitalist enterprises, to make as much money as possible. The have responded swiftly to these incentives, which is illustrated by a earlier post detailing their profits. The gov’t public option will help to provide new incentives; ie, cut costs or go out of business (this may not acutally happen, but the insurance industry may lose a large segment of the market, and the government will be able to set new price floor/ceilings due to economies of scale). This is a good thing, as even those who choose to stay in private plans will benefit from increased efficiency. Also, the insurance lobby has argued to meet new cost standards they would have to pressure suppliers to cut costs and so on. This is a bad thing because? This is the precise business model Walmart uses and many have argued will unfair, is incredibly efficient and passes low prices onto consumers. Many of the same conservative economists who decry a public option have defended Walmart’s practices, arguing they almost alone keep the inflation rate down due to their rabid cost cutting. Finally, while Mr. Obama has said he will engage all stakeholders, the primary goal of this policy should be to both 1)provide quality healthcare at a reasonable cost; and second 2)avert financial catastrophe. I hope that compromise will not trump competence in this bill, as compromise for its own sake is nothing to smile about. Results matter, not the path that lead you there.

By: The Baseline Scenario | EthicalMarkets.com

The Baseline Scenario | EthicalMarkets.com — Tue, 23 Jun 2009 13:59:14 +0000

[...] A couple of weeks ago, I wrote a post about Atul Gawande’s New Yorker article about health care spending and outcomes. I didn’t claim to have any particular insight about health care economics; I just thought that people should read his article – which, to summarize greatly, argues that there is no correlation between high spending and good outcomes, because the current system does not motivate doctors to seek good outcomes. (Apparently Barack Obama agreed, since the Times reported that “the article became required reading in the White House.”) Read more… [...]

By: Jim Gagne MD

Jim Gagne MD — Tue, 23 Jun 2009 00:12:45 +0000

Dr. Gawande’s New Yorker article starkly depicts the problem with healthcare in the United States. It eloquently demonstrates that just changing how you pay doctors won’t help. “CBS from the West” is right: a market-based system will also fail. But neither Dr. Gawande nor previous commentators have diagnosed the problem. We need to pay doctors to practice medicine: do proper histories and physicals, not just order tests. And patients should see specialists only when needed. Otherwise tunnel vision prevents accurate diagnosis and treatment.

A recent blog post (can’t find the link) describes a classical story. An executive developed chest pain, so he saw a cardiologist. $200,000 and several complications later, his heart was pronounced normal. The executive next saw a gastroenterologist, thinking the pain came from heartburn. Another big workup yielded no diagnosis and no relief. Finally he saw his primary physician, who found the pain came from muscle spasm.

Dr. Gawande praises the low-cost, high-quality care at the Mayo Clinic, which he attributes to how Mayo doctors are paid: salary, not fee for service. But Mayo’s quality comes from doing meticulous histories and physicals. They **listen to the patient**. Growing scientific evidence shows that areas of the country with predominantly primary care physicians have much better health outcomes and 30% less cost (see the American College of Physicians position paper, http://www.txpeds.org/u/documents/statehc06_1.pdf)

By: PghMike

PghMike — Mon, 22 Jun 2009 13:57:45 +0000

I’ve started a few companies in my time, and this is always a concern of mine — if you’re part of too small a pool, if someone becomes ill, you’re screwed, especially here in Pennsylvania, where there are very few limits on how high premiums can go if you get sick.

By: Health Care: The McAllen Problem

Health Care: The McAllen Problem — Sun, 21 Jun 2009 19:52:14 +0000

[...] the lesson of McAllen, Texas, the focus of Atul Gawande’s celebrated article (discussed here and here)? This is my attempt at an [...]

By: Anonymous

Anonymous — Sun, 21 Jun 2009 18:15:46 +0000

Wow! That is so true

By: The McAllen Problem « The Baseline Scenario

The McAllen Problem « The Baseline Scenario — Sun, 21 Jun 2009 12:01:34 +0000

[...] lesson of McAllen, Texas, the focus of Atul Gawande’s celebrated article (discussed here and here)? This is my attempt at an [...]

By: some guy in a cube

some guy in a cube — Sat, 20 Jun 2009 03:33:25 +0000

You can expect that health care “reform” American-style will go the identical route as all of the financial responses we’ve seen over the last year.

Namely, all will be done to protect a small cadre of powerful, connected, entrenched interests at the expense of the greater public good.

You can count on it. These people have not let me down before, and they won’t let me down this time (with health care), either.

As I have said on this board many times before, this generation of American elites is not capable of doing the right thing. It is simply not in their bones. Even if they wanted to do the right thing, they would not have the slightest clue how.

True reform will have to wait for a generational (i.e baby-boomer) die-off.

By: ella

ella — Fri, 19 Jun 2009 15:15:36 +0000

Look at the profits that the current Health care industry has created. http://blogs.webmd.com/mad-about-medicine/2007/08/ceo-compensation-who-said-healthcare-is.html

Here is a sample; # United Health Group
CEO: William W McGuire
2005: 124.8 mil
5-year: 342 mil

# Forest Labs
CEO: Howard Solomon
2005: 92.1 mil
5-year: 295 mil

# Caremark Rx
CEO: Edwin M Crawford
2005: 77.9 mil
5-year: 93.6 mil

# Abbott Lab
CEO: Miles White
2005: 26.2 mil
5-year: 25.8 mil

# Aetna
CEO: John Rowe
2005: 22.1 mil
5-year:57.8 mil

# Amgen
CEO: Kevin Sharer
2005:5.7 mil
5-year:59.5 mil

By: StatsGuy

StatsGuy — Fri, 19 Jun 2009 13:58:47 +0000

Nice article. Thank you for the link. Hits all many major points…

– Best hospitals treat the least; worst treat the most

– Overtreatment isn’t due to lawsuits (Texas laws now more rigid)

– It isn’t “moral hazard” of insurance – patients can’t possibly negotiate with doctors; higher copays don’t really help

– The reason is profit-seeking; best hospitals are non-profits

– The current system is making it hard for good systems to survive; bad systems are killing them off.

I do think there is one point that is missed… The EASY part of the answer is to say that we should drop treatment that is causing more harm than good. But there are circumstances where very expensive procedures/drugs have marginal improvements (according to measures that are often flawed). This piece becomes a classic rationing issue – someone or some thing (like personal wealth) has to say the benefits to the individual aren’t worth the costs to society. This will prove politically painful, especially if people _perceive_ this is happening (even if the treatment has no gain).

In addition, the article does not discuss the large share of resources in the system that are being dedicated to accounting and compensation/payment management.

But one very practical piece of advice stands out: If you ever call/email a doctor and they tell you they can’t discuss something over the phone (and therefore you need to make an appointment), get a new doctor.

By: CBS from the West

CBS from the West — Fri, 19 Jun 2009 03:51:40 +0000

Certainly our diet and exercise habits aggravate the situation. But, on the other hand, we have a much lower smoking prevalence than other industrialized countries. In some ways, we Americans are more irresponsible about our health than others, but in other ways we are less so. And, empirically, our health care costs were already outliers back in 1980 before the obesity epidemic took hold.

As for the 300 pounder with knee pain who asks for a prescription, why don’t we give him or her simple aspirin or generic ibuprofen instead of some outlandishly expensive selective cox-2-inhibitor, and, while we’re at it, skip the knee MRI?

Indeed, to close the loop with the more general themes of this blog, I think that we can identify innovation as one of the drivers of the health care cost explosion. New health care technologies are commercially promoted and uncritically adopted on a massive scale long before we have time to find out through valid research what, if anything, they are really good for. While we can point to innovations that have saved lives, reduced morbidity, and even saved money, we can also point to many others that are wasteful and more than a few that were ultimately seen to do more harm than good. That, it seems to me, is inherent in innovation when there is nothing to restrain its premature dissemination for profit.

By: Tippy Golden

Tippy Golden — Fri, 19 Jun 2009 02:40:00 +0000

Eugene, I look forward to your opinion on Dr Kessler’s work. Please post.

By: Ted K

Ted K — Fri, 19 Jun 2009 02:36:09 +0000

Go to this link. Scroll down with your mouse just a little. You’ll see Republicans’ latest Health Care Plan.
http://www.timesfreepress.com/news/2009/may/14/plan/?editorialcartoons

By: Tippy Golden

Tippy Golden — Fri, 19 Jun 2009 02:34:22 +0000

Eugene, you might find this interesting.

A former FDA commissioner and Harvard-trained doctor completed a seven year study on why there is an obesity epidemic in the United States. He has written a book and he is angry. His conclusion is the fast food industry has created products that alter body metabolism and brain chemistry to create food addiction.

His conclusion is the not-so-secret ingredients to creating food addiction are: fat, sugar, salt. His observation is much of American food is layer upon layer of fat, sugar, salt; which alters body metabolism, brain chemistry and created food addiction. This on top of a culture where eating 24 hours a day, any time of the day, is acceptable.

The American food industry could be playing a major role in this obesity epidemic. IMO, this former FDA commissioner’s observation is correct. Junk food, fast food, restaurant food is mainly layers and layers of fat, sugar, salt. There is a biological reason why humans prefer food with high fat and sugar content. The food industry is a sophisticated multi-billion dollar enterprise. It knows what it is doing. I find your judgement on obese Americans somewhat harsh. I think you may be blaming the victims.

His name is Dr. David Kessler. Check this out.

By: Dick Kunc

Dick Kunc — Fri, 19 Jun 2009 02:07:09 +0000

If this is the case then more health care advice is necessary, not the rationed by wealth and career choice option. The sooner you can tell a patient to change his/her lifestyle, the sooner they can consider themselves educated and start to take control of their lives as best they can.
I didn’t see a doctor or dentist for 15 years, until I started to have symptoms of hypertension, because it cost too much and I felt okay and I had to pay for graduate school. Had it been affordable, it would have been caught before then.