Posts Tagged cost of low quality

Lack of Consistency — medical care variability

Combined target graph

An Interim Report from the Institute of Medicine (IOM) about geographic variations in care was just released.   This is a very scholarly report with massive statistical analysis.   The basic idea was to review what Medicare paid for various types of medical care, devices and drugs across the US to see if some pattern could be identified.  The hope was to find some way to alter the payment scheme to improve the value of health care.  Alas, they could not find a pattern, only wild variation.  An individual doctor might be cost-effective for one disease and a money-waster in another, doctors within a group would range from  judicious to wildly profit-motivated and the variations between hospital referral areas show the same scatter.

The graph.

The holes in the target above are an example of wide variation.  The archers did not hit the bulls-eye  very often — there is a lot of variation.  A particularly interesting graph from the report is redrawn above on the right.  This is about how often gastroenterologists in an unnamed state perform a stomach scope (EGD) with the billing diagnosis of heartburn  (i.e. gastroesophageal re-flux) .

The vertical axis is the number of EGD procedures per 100 diagnoses of heartburn (the procedure rate).  The horizontal axis is the ordered list of 403 gastroenterologists in the state.  The list is in order of the lowest to highest rate of performing EGD.  The ovals placed on the s-shaped curve represent 17 different doctors all in the same group.  The remainder of the 403 gastroenterologists are plotted as dots on the curve.  If all the gastroenterologists approached heartburn in a consistent and reliable manner the graph would just be a horizontal line somewhere in the lower part of the graph.  Instead we see some gastroenterologists performing a scope on 100% of people they see who have heartburn — to be clear, this is the picture of unnecessary procedures or “padding” the bill.

What does it mean? 

Gastroenterologists are poor marksmen.  No, no, no.  It means they are shooting at different targets.  Some aim to maximize revenue,  some aim to follow evidence based (lower cost) guidelines and some aim in-between.   Keep in mind that a gastroenterologist is paid about $200/hour for clinic visits and about $1000/hour when doing procedures.   The doctors on the right side of the graph clearly have targeted the high paying procedures “scope first and ask questions later!”

The IOM claims no insight into the mysterious variation.  It is not necessary to study this more!  Look at other countries, they don’t have this problem because other countries don’t pay doctors by the number of procedures performed.   Simply pay the gastorenterologist the same hourly wage for seeing patients in the clinic as doing a procedure.  In the big picture, the variation can be markedly reduced by having doctors employed by an accountable care organization (ACO).  The ACO sets the salary, pays the malpractice insurance and provides the office to practice — a doctor in an ACO just has to focus on doing what is right for the patient, not what is most profitable for the gastroenterologist.

What should be done?

Although the graph puts gastroenterologists in the spot light the data show the same scatter across the spectrum of doctors.  US health care is sliding more and more into the swamp of poor quality and high cost.  The US needs doctors to aim for the right target and to aim for reliability, which means to consistently hit the bulls-eye.   Hopefully the IOM will have the strength to recommend strong action to change the whole system of  payment for US doctors, hospitals, drug companies and equipment manufacturers.  Instead of trying to make a perfect system we need a good system that can be adjusted as needed to achieve both high quality AND low cost care.

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Low Value Health Care — The Equation

The “Sick in America Poll” shows 33% of people who were sick in the past year believe they don’t get a good value for health care.  One way to look at “value” is the following equation:

V = B / P

Value = Benefit divided by Price

If a person wishes to cross a river there might be 2 ways to get across.  $5 to go across a bridge or $2 to go across a tightrope.  If the benefit (getting across the river) is the same then the best value would be to use the tightrope.  But, low risk,  no need for training and convenience are actually part of the benefit for the bridge — which is indeed the best value.

In health care the “value equation” runs into problems.  What if a person only has $2 (the unemployed).   What if a person does not know about the bridge (poor health literacy).  What if a person does not need to cross the river but pays a fee just in case (insurance).  What if a person pays tax for the bridge (taxation).  What if the bridge is in disrepair so a person falls (cost of poor quality).  What if a person will not live long enough to get across the river (quality adjusted life years).  Health care economics is indeed complicated.

There is also a “funnel theory” of health care which says that despite theoretical complexity there are only a few solutions to come out.

  1. Deliver evidence based healthcare
  2. Stay within a budget
  3. Eliminate waste
  4. Maximize quality
  5. Minimize cost
  6. Be fair
  7. Know the value of life


Finally, the “Marcus Welby” theory of health care is dead.  That is to say, the doctor who knows everything, treats a few patients (with lots of drama) and bills enough to have a great lifestyle is now off the air.  Cost is now the king, and Americans must work within a system to meet budget requirements.  Corporations live under the same constraints, so must health care.

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