Archive for category Control of Health Care

A Design For American Health Care

ahc_logo2What an opportunity!  A design for American Health Care that is badly needed, a blank slate, an open door, a blank check.  So what blogger could resist the obvious invitation.  First is the logo — I hope you like it.  No more Medicare, Medicaid, Indian Health Service, Veterans Administration, Blue Cross or United Health.

Who gets AHC?  Well, every US citizen.

How much does it cost?   The annual out of pocket cost is limited to just $1000.

Is there any paper work?  NO.  No paperwork, no bills, no EOB, and no insurance claims.

What do you need for healthcare?  Just your AHC card.

What is the price list?

  • Office visits:  $25
  • ER visits $50
  • Thirty day prescription $10
  • Surgery  $100
  • Hospitalization $200
  • Medical equipment $75
  • Medical devices $75
  • Ambulance $100

What is the national healthcare budget?  It’s set by congress.  Initially budget neutral at three trillion dollars (or whatever budget neutral at this time).

Where does the money come from?  Taxes.  Instead of insurance premiums it’s included in your taxes.

Do insurance companies go out of business?  No.  They process claims from healthcare providers, pharmacies, hospitals etc.  The person getting healthcare does not need to be involved with all the paperwork.

What government agency runs the program?  Medicare, under the AHC name.  Providers bill the claims processor and AHC pays the processor.

Is great American health research affected?  No.  This is a health care system.  Research is not health care and is outside the system.

Can people obtain health services, like for cosmetic surgery?  Sure.  Any services you want to purchase yourself outside AHC is fine.  But, you still pay the same taxes.  AHC does not pay for private care.

Are the States excluded?  No.  The States are responsible for managing AHC in their States.  The Federal Government sets the standards for the country.  The States make it happen.

Why would national costs be lower?  Because America as a country negotiates prices and because cost would be capped by the congressional budget for care.  The cost would be the same the first year.  Waste is a major problem — with better management of a system waste can be addressed.  Since about one half of US healthcare cost is consumed by waste there is lots of room for improvement.

What about poor people?  The deductible would be lower than $1000 — but because the deductible is low to begin with not many would need this help.

Now would be a good time for the applause.  Your humble blogger thanks you.

 

 

 

 

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US Healthcare Diagram — results are what count

us-healthcareThe U.S. healthcare system is going to change or at least be updated in the coming years.  So, when congress tinkers with the system what might be good changes and what might be bad changes?  That is the $3 trillion dollar question!  It would be fair to say most people and most congressmen do not understand U.S. healthcare — the prevailing notion is overwhelming complexity and way too much cost.  However, this blog is going to make the case the key to understanding and the key to making changes is to keep your eyes on the results.

What results?  It’s not complicated, it has to do with measurements.  Consumer Reports and J.D.Power know we want to buy value.  And, value in this case is the reasonable cost for wellness, longevity and successful treatment of disease.  That’s it, three things.  Whatever changes or tinkering are contemplated we just need to know those three things will be getting better and simultaneously costing less.  Politicians have a really bad habit of saying the changes they propose will do the job.  Nobody can predict what will work — there are always unintended consequences — so, any proposal must include a dedication to measuring the outcomes we want — if the change does not work it needs to be discarded as soon as possible.  And, discarding what does not work can’t wait for the next election and should not wait until tomorrow.  Simply, we want results, and we want the data as proof.  On a hopeful note, if something works, keep doing it.

The above diagram describes U.S. healthcare.  It is more simple than the systems in other countries.  The system is linear — people, illness and unlimited money on the left side pass to the results on the right side.  This is a flow diagram of the system.  The complexity can be hidden by thinking in terms of the five boxes.  Later, some of the complexity will be discussed.  First, consider the boxes:

  1. Money to pay for the system.   The money people earn is paid to the health care system.  Money is money — it does not matter if the money comes by way of taxes, insurance or cash.  Funds that do not come from insurance come from the other sources.  This is the cost of U.S. healthcare which is about $3 trillion.  Don’t pay the money, you don’t get healthcare.
  2. The healthcare providers.  Traditionally we only think of doctors, hospitals and drugs.  We often overlook the other things in the box.  Things we don’t like, things healthcare providers would like to see in another box.  These other things are hugely expensive and fully under the control of the healthcare providers.  Unnecessary treatment is perhaps one of the worst — treatment or tests that are not needed.  For example, an EKG done as part of a yearly exam on a healthy person.  Profit is in this category.  Clearly, no profit, no healthcare system.  But, profit beyond what is needed is just waste for the system — it is money that leaves the system and does not come back.   Inefficiency comes in many forms.  Failing to prevent diseases early, only to spend more money later is supremely inefficient.  Corruption is a problem in every human endeavor.  Errors turn huge amounts of money into waste.  The money spent on medical liability suits is just the tip of the iceberg.  Money spent to prevent errors is minuscule compared to the money spent on drug marketing.
  3. Who gets healthcare?  Everybody.  The aggregate need for healthcare is fairly stable for the system.  But, for an individual the need is hugely variable — an auto accident is not predictable.  And, when disease strikes most of us can not afford the cost without insurance.  Statistics show 50% of Americans do not have access to $4oo for an emergency.  The very people who don’t have emergency funds are the very people who do not want to purchase health insurance.  Sadly, those people end up in bankruptcy while the system grudgingly provides the care.  Now that more people have insurance those without may find less compassion from the providers.  Many feel there are freeloaders in the system — people who do not contribute.  Does a birth defect, mental illness or low IQ make people freeloaders — that’s an ethical question which is beyond the scope of this discussion.
  4. Waste.  In monetary terms this about $1.5 trillion dollars per year with a huge death toll in the US.  A hospital acquired infection is very expensive and kills many of those affected.  The high profile infections from spinal injections are just the tip of the iceberg, again.  Re-hospitalization for an unresolved health problem is another example.  Paying $800 for a $10 epinephrine injector is another example.
  5. The results.  We want those good results.  Not just for cancer patients, not just for heart attack victims, not just for you, but for me too.   We don’t want promises, we want results.  In this age of smart phones and millions of apps there is no excuse for failing to have the data to prove the system is working in our hands every day.  We want the results today, not after several years of scrubbing the data in some moldy university.  We all must keep our eyes on the results and hold our elected officials accountable.

Complexity.   Medicine is a science and by its nature is very complex.  Open heart surgery is a good example — there are few people who understand the issues involved.  But, the system, from the patient’s view does not need to be complex.  In one country the cost of hospitalization is $400/day — the people there know exactly how much the illness will cost.  In another country, the prices of office visits are posted in the waiting room — it does not matter what insurance company you might have.   In another country all the providers use the same medical record system — not a big deal to move or see a consultant.  We seem to tolerate the complexity of our system and think it should be as difficult to understand as heart surgery.

The US pays about twice what other countries do for similar or better care.  There is enough money in our system now.   Our problem seems to be in the area of wasted money and effort.  It seems unlikely that just reducing payments to providers will reduce errors and wasted money — this supply-side economics does not get to the real problem.  More than likely, lower payment to providers will only result in lower income for them and perhaps more errors and unnecessary services.  But, if it works, do it.

Back to the initial warning.  Keep you eyes on the results of the system and the cost.  Whether any economic hypothesis proves correct is irrelevant.  What matters is the system must move in the right direction, always.

There is a lot to recommend the quality improvement method called “Plan – Do – Study -Act” or PDSA.  The idea is to plan a change to a system of care,  do the plan, make measurements to study the results then act to change the system to get better results.  This is an ongoing process.  Congress seems to be mired in a system of management which is one hundred years out of date — if anything, that’s what needs to change first.

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Why the US Pays More for Drugs

MoneyThe people in the United States pay more for drugs than any other country.  And, they pay more to universities to do drug research than other countries.  In a nutshell, it is due to a lack of regulation in the U.S.

Two very insightful articles appeared in the past week addressing the inequity of global drug prices — The New York Times and the Wall Street Journal.

Drug companies constantly complain regulations are hurting profits.  Now it appears without enough regulation drug companies are hurting sick patients.  As big pharma points out, it’s all legal.  Basically, big pharma points a finger at the US Congress for not imposing restrictions common in the rest of the world.  Sounds like a circular argument!

Between the two articles linked above and this author’s experience here are the reasons:

  1. Abuse of patent laws
  2. Driving small drug  companies and generic companies out of business with frivolous but highly expensive suits.
  3. Release of a similar drug before a patent expires and manipulating doctors and patients to change to the new drug suggesting the similar drug is “MUCH” better (evergreening).
  4. Paying new drug makers to delay marketing their competitive drug (pay-to-delay).  While at the same time asking for a fast track through the FDA approval process.
  5. Claiming a new drug is novel when by any reasonable standard it is not (asthma inhalers are a good example).
  6. Coupling devices to drugs to double the difficulty for competition (like insulin pumps).
  7. Failing to pay their fair share of basic drug research, funded by the US government instead.
  8. Happily doing “inversion” deals to move headquarters to other countries to evade US taxes — into the very countries that strongly regulate drug company profits.
  9. Voluntarily limiting profits in many countries due to the threat of regulation, but failing to offer the same deal to the US.
  10. Lobbying successfully to prevent Medicare (a larger health program than the NHS in the UK) from negotiating prices as the UK has done for many years.
  11. Blackmailing patients to pay for old drugs at exorbitant prices because generic companies are afraid to compete (pricing because-they-can, oral beclomethasone is one example).
  12. Preventing drugs from other countries to be sold across borders because of unfounded safety concerns (crocodile tears).
  13. Actively avoiding drug comparison research — forcing others to do that type of research after the drug is already marketed.
  14. Doing cancer drug research with endpoints (such as tumor size) rather than life expectancy.  85% of cancer drugs now have no connection to the most basic expectation of patients, to live longer.
  15. The WSJ review of 40 drugs administered in physicians offices:  39 cost less in the UK, 37 cost less in Norway and 28 cost less in Ontario Canada.  The price gouging in the US certainly suggests racketeering.
  16. Drug company profits are 17% in the US and 7% elsewhere.
  17.  Actively avoid cost-effectiveness research — prescribers don’t know whether a new drug is better or worse than old drugs except by what is told to them by marketing.  (Unlike the UK drug system which is strongly linked to cost-effectiveness)
  18. Drug companies hide special deals with large customers so other customers have no idea of the low end of the price spectrum.  The companies are so large that a lone US State can not leverage deals needed to lower prices like countries can.

Perhaps I have missed some other corrupt practice or unethical behavior, there are just so many.  This mess needs to be cleaned up!  At very least the US Congress needs to institute controls similar to other countries.  Feel free to send this blog to your congressional representative — with a copy of your drug bills!

 

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Health Care Lobbying — it’s not for quality

lobbyst

Health care lobbyists are not your friends.  They do not promote quality health care, instead they promote health care business profits.  If only hundreds of millions of dollars could be spent on lobbying for health care quality, on health care access, and on lowering health care cost then the US might not be last in the quality ranking for industrialized countries.  The data below are from the Center for Responsive Politics.  The table shows the amount of money spent for lobbying in 2015 for various industries.   Any wonder why we don’t see much change?

Industry Total (millions) X = 10 million $
Pharmaceuticals &
Health Products
$178 XXXXXXXXXXXXXXXXX
Insurance $118 XXXXXXXXXXX
Oil & Gas $97 XXXXXXXXX
Business Associations $96 XXXXXXXXX
Electronics Mfg &
Equip
$91 XXXXXXXXX
Electric Utilities $88 XXXXXXXX
Misc Manufacturing &
Distributing
$80 XXXXXXXX
Health Professionals $73 XXXXXXX
Securities &
Investment
$70 XXXXXXX
Hospitals &
Nursing Homes
$67 XXXXXX
Telecom Services $64 XXXXXX
Air Transport $60 XXXXXX
Education $56 XXXXX
Defense Aerospace $56 XXXXX
Health Services &
HMOs
$52 XXXXX
Real Estate $52 XXXXX
Civil Servants &
Public Officials
$51 XXXXX
Commercial Banks $46 XXXX
TV/Movies/Music $45 XXXX
Automotive $43 XXXX

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Medical Care and Control Theory

sweatshopPiecework maximizes human productivity.  Make more things, get more money.  Garment workers and physicians both have been paid under this system — it’s great if the payment per piece is high but miserable if the price is low.  Because piecework itself is no guarantee of quality inspectors were invented to reject low quality products.  Thus, the little piece of paper in your new shirt pocket “Inspector 23”.

What if you went to a doctor’s office and had to be inspected before the doctor was paid?  You had to have that little piece of paper “Inspector 23” to submit an insurance claim. That’s never going to happen but you get the idea.   The doctor is paid by the number of services but the service should meet a quality standard.

This example is just the tip of the iceberg.  Medicine is discovering process control without much input from the well established engineering field of process control.  It’s sad, and perhaps a little arrogant on the part of medical administrators and law makers, to ignore the extensive work on process control.  People do not like to be considered as little boxes in a system diagram — understandable — but a failure to think in this way is wasting trillions of dollars.  The time for change has arrived.

PieceworkThe black box of medical care is what happens with the doctor-patient interaction.  1) A patient enters the office, operating room or x-ray office then health care happens then 2) the patient leaves.  As it stands now the physician is paid by the number of services performed so the possible process control at points 1 and 2 are wide open.  Nothing is measured, nothing is controlled, and quality is not guaranteed.

Control Theory

Now, consider modern process control with 5 control points, a measurement point and feedback to control the input to the black box of health care.  What is in the black box?  Perhaps just one health care provider.  Or perhaps many health care providers. Instead of a black box it might be a grey box with lots of individual elements.

Parallel SystemPerhaps the box contains whole specialties or perhaps many hospitals within an accountable care organization across many states.

At the highest level of abstraction the feedback loop is intended to minimize cost but at the lowest level the feedback loop is intended to maximize quality.  To make sure throughput is maintained the providers need to be paid by the number of services performed but the flow of patients is choked off if quality is not adequate.

This is rocket science.  But, as Einstein says, a system “should only be as complex as needed”.  Health care is very complicated and at the present the garment industry is not the model the world should be using.  Simplistic ideas of supply and demand are not adequate to make a rocket fly nor to control cost in a health care system.

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