November 1, 2012
Confusion
"There’s too much confusion,
I can’t get no relief."
These lyrics, sung by Jimmy Hendrix in his famous song All Along the Watchtower, can be used to describe the present state of organized Medicine concerning quality indicators. For almost two decades, there has been a movement toward a uniform set of practice guidelines which would elevate the quality of care delivered to the American public. Practice Guidelines, Evidence-Based Medicine and Comparative Effectiveness are just three of the buzzwords used by the groups promulgating these movements.
Medicare has set a number of quality indicators, which they measure accurately, as indicators of how well a practice or an institution is performing in delivering quality healthcare. The problem has become that many of these quality indicators are falling by the wayside. The latest to go is the quality indicator which measures how often Beta Blockers are prescribed after myocardial infarction (heart attack). Beta Blockers were believed to significantly reduce the incidence of second heart attack over the long run. A recent long-term study, published in the Journal of the American Medical Association, seems to have disproved the value of Beta Blockers in this setting.
This is not the first, nor will it be the last, quality indicator to have….well….quality issues. Inhaled steroids for asthma have been questioned. Hormone replacement for women has certainly fallen aside; in fact, the incidence of Breast Cancer in the USA has fallen by 15% since hormone replacement therapy, once a leading quality indicator, was exposed as harmful 10 years ago. Yearly mammography, once a solid quality indicator, has been under fire recently, both scientifically as well as politically. Yearly PSA, another quality indicator, has been shown to be more harmful than helpful. Colonoscopy every five years as opposed to every ten years is another.
As we look to get more bang for our buck from our healthcare dollars, it appears that what we consider to be quality is somewhat elusive. One can make the argument that Medicine is an evolving science and as such will have forward movement as well as setbacks. The bigger question is why is so much of Medical Research so wrong? Conflict of interest, career advancement, income, regression to the mean and bad public policy are a few of the short answers.
The present crisis in Medicine revolves around how little real good we get from all the money that we throw at it. Until we reform how medical research and progress are actually carried out, the course to bad outcomes and bankruptcy will continue to be paved with the best of intentions.
April 16, 2012
Back Door Single Payer
The Supreme Court will be deciding on the Constitutionality of Obamacare in June. Pundits are already proclaiming victory for the right who has fought this legislation tooth and nail. While most agree that the individual mandate will be struck down, few agree that the entire bill will be swept aside. For one thing, the justices did not want to do the work of reading the entire document; who can blame them since few in the House or the Senate read the entire bill either. The Court is also concerned about its legacy (as too activist) if they send the entire bill into the dumpster.
If they strike down the individual mandate only, this will eventually end up as a victory for the far left. Yes...you heard me.... a victory for the far left. The far left wants a single payer system as the ultimate goal; think of it as Medicare for all from birth to death. They may have to wait a while and they may have to deal with a few speed bumps, but the elimination of the individual mandate is the first step toward that ultimate goal. If the remainder of the bill is preserved, the insurance companies will be left saddled with all sorts of expensive new regulations which will eventually destroy their current business model. Chief among those is the elimination of the pre-existing condition problem. Under the new paradigm, people with no insurance (or lousy insurance) can buy gold-plated insurance AFTER they are diagnosed with a serious medical condition. This is akin to buying collision insurance after you have had your auto accident. Under the original bill, the individual mandate would have covered the cost of eliminating the pre-existing condition dilemma. With the individual mandate toast, the economics of eliminating the pre-existing condition problem do not work.
The new bill also calls for a massive expansion of Medicaid by about 40%. Medicaid (Medicare's ugly sister) is a shared federal/state program which provides medical care for the poor. Under the new bill, it will also serve much of the middle class. Medicaid is a low cost, low quality, least common denominator form of health care; it contributes mightily to America's low quality world ranking of medical care delivered. Much of Medicaid's budget goes to ancillary health care matters (Nursing homes, transportation etc.) as opposed to direct medical care.
Stuck with all these new unfunded liabilities, the big insurance companies will put a bigger squeeze on hospital and other providers and further ratchet down their medical payments. This will force many hospitals and providers into bankruptcy (or at least, have a very significant impact on the quality of the care that can be delivered.) Many insurance companies will quickly pivot into models that cherry pick only the profitable segments of the entire apple or abandon medical insurance models altogether.
As this evolves over the next 3-10 years, the government will incrementally continue to expand Medicaid deeper and deeper into the middle class until almost all Americans have either Medicaid or Medicare as their only available coverage. Of course, the top 5% will continue to have private insurance because they will be the only one's who can afford it. Medicare and Medicaid will, at some point, merge and become one entity.... probably Medicare. The end result will be that we will have a single payer for 95% of the population. Isn't this the system Great Britain has right now? The National Health Service covers about 95% of the population with the other 5% covered privately. As George Orwell famously said in Animal Farm: "All animals are equal but some animals are more equal than others."
So, as the right savors its victory upon the striking down of the individual mandate, the left will be sitting pretty with its ultimate dream of a single payer. It makes you wonder if the Obama administration threw the case.
December 18, 2011
Confusion is King
In philosophy, Dualism is the concept where opposing forces battle each other for supremacy: yin vs. yang; liberal vs. conservative; state's rights vs. federal rights; good vs. evil. Hegal, my favorite philosopher, carried this concept a bit further with his political/philosophical idea of dialectics; the central concept is the thesis which is balanced by the opposing view, the antithesis. These opposing views are resolved by the synthesis whereby the two opposing views reach a settlement and move on to the next level.
The upcoming presidential election is about the economy; as Bill Clinton famously remarked on his way to the White House: "It's the economy, stupid." For at least 75 years, the dualism of the two major political parties has orbited the political-economic philosophies of two major competing economists: John Maynard Keynes and Friedrich von Hayek. Keynes, the brilliant Englishman, is the grandfather of Keynesian Economics and the first economist to describe macroeconomics (the overall picture vs. microeconomics, the building blocks of any economy). Keynesianism proposes some degree of government central planning, a large degree of government intervention during recessions (as a bridge to returning prosperity), and strong manipulations of both monetary (interest rates and money supply) and fiscal (government spending and taxation) policies to guide the economy to ever more sustainable levels of progress. Hegal would call this the thesis.
The antithesis of this school of thought is the political-economic philosophy of Hayek, the best known member of the Austrian School of Economics. In his most famous work--The Road to Serfdom-- Hayek condemns central planning, big government, deficit spending, excessive regulation and the nanny state.
It would be a simplification to state that the Republicans embrace Hayek, while the democrats embrace Keynes as their respective mentors. If it were that simple, the thesis and the antithesis would reach Hegelian synthesis (dialectics); some compromise of the two schools would prevail and the country could move onto a higher plain of function until the next crisis appears. Why is this not possible (and certainly not happening)?
It is not happening because although one party or the other may talk the talk, they are most definitely not walking the walk. Ronald Reagean, who one would on first glance identify with Hayek, raised the deficit to record levels and although best remembered for his tax cuts, also raised taxes significantly at the end of his second term. George H. W. Bush, who famously said: "Read my lips, no new taxes", went on to raise the deficits even further and reversed course to increase taxes as well. Bill Clinton, who was pegged as a tax and spend Democrat surprised many when he cut entitlements, balanced the budget and reduced regulation. George W. Bush, who ran, like Reagan, on reducing the role of Government in our lives, played a major role in one of the biggest increases in entitlements in modern history--Medicare Part D--and increased the deficits to record levels each of his 8 years in office. He also turned positively Keynesian when he helped shepherd an $800 billion dollar stimulus package into law during the recent economic meltdown. He claimed to have Hayek as one of his favorite mentors, but turned positively Keynesian when things got crunchy. Obama so far has been truly Keynesian since he took office but it is early to see how he will finish up.
Voters are confused. The candidates claim to identify with one school or the other as their respective parties do....but then they do just the opposite. Reagan and both Bushes were hardly fiscally responsible. Clinton was hardly Keynesian.
What is really going on here is that the political establishment has become increasingly a textbook example of crony capitalism. Each party has its respective special interests to pay back for helping to get them elected. As they say in Texas..."You dance with the them that brung ya". As a voter, you can no longer vote for a republican because you want fiscal responsibility, lower taxes and less regulation. As a democrat, you can no longer vote for your candidate because you want secure entitlements, more regulation of Wall Street and a wider social net. As a voter, you need to look at what special interests are pulling the strings on the candidates and by extension, what agendas those special interest are trying to promote.
The political identities of Keynes and Hayek (thesis and antithesis) will not be reaching any synthesis in the near future. This is why we have political gridlock and why such a large proportion of the electorate is dispirited and depressed. This morass will continue until we discover a way to reduce the influence of special interests on our present day political sphere. As my father used to say: "We have the best Congress money can buy."
The upcoming presidential election is about the economy; as Bill Clinton famously remarked on his way to the White House: "It's the economy, stupid." For at least 75 years, the dualism of the two major political parties has orbited the political-economic philosophies of two major competing economists: John Maynard Keynes and Friedrich von Hayek. Keynes, the brilliant Englishman, is the grandfather of Keynesian Economics and the first economist to describe macroeconomics (the overall picture vs. microeconomics, the building blocks of any economy). Keynesianism proposes some degree of government central planning, a large degree of government intervention during recessions (as a bridge to returning prosperity), and strong manipulations of both monetary (interest rates and money supply) and fiscal (government spending and taxation) policies to guide the economy to ever more sustainable levels of progress. Hegal would call this the thesis.
The antithesis of this school of thought is the political-economic philosophy of Hayek, the best known member of the Austrian School of Economics. In his most famous work--The Road to Serfdom-- Hayek condemns central planning, big government, deficit spending, excessive regulation and the nanny state.
It would be a simplification to state that the Republicans embrace Hayek, while the democrats embrace Keynes as their respective mentors. If it were that simple, the thesis and the antithesis would reach Hegelian synthesis (dialectics); some compromise of the two schools would prevail and the country could move onto a higher plain of function until the next crisis appears. Why is this not possible (and certainly not happening)?
It is not happening because although one party or the other may talk the talk, they are most definitely not walking the walk. Ronald Reagean, who one would on first glance identify with Hayek, raised the deficit to record levels and although best remembered for his tax cuts, also raised taxes significantly at the end of his second term. George H. W. Bush, who famously said: "Read my lips, no new taxes", went on to raise the deficits even further and reversed course to increase taxes as well. Bill Clinton, who was pegged as a tax and spend Democrat surprised many when he cut entitlements, balanced the budget and reduced regulation. George W. Bush, who ran, like Reagan, on reducing the role of Government in our lives, played a major role in one of the biggest increases in entitlements in modern history--Medicare Part D--and increased the deficits to record levels each of his 8 years in office. He also turned positively Keynesian when he helped shepherd an $800 billion dollar stimulus package into law during the recent economic meltdown. He claimed to have Hayek as one of his favorite mentors, but turned positively Keynesian when things got crunchy. Obama so far has been truly Keynesian since he took office but it is early to see how he will finish up.
Voters are confused. The candidates claim to identify with one school or the other as their respective parties do....but then they do just the opposite. Reagan and both Bushes were hardly fiscally responsible. Clinton was hardly Keynesian.
What is really going on here is that the political establishment has become increasingly a textbook example of crony capitalism. Each party has its respective special interests to pay back for helping to get them elected. As they say in Texas..."You dance with the them that brung ya". As a voter, you can no longer vote for a republican because you want fiscal responsibility, lower taxes and less regulation. As a democrat, you can no longer vote for your candidate because you want secure entitlements, more regulation of Wall Street and a wider social net. As a voter, you need to look at what special interests are pulling the strings on the candidates and by extension, what agendas those special interest are trying to promote.
The political identities of Keynes and Hayek (thesis and antithesis) will not be reaching any synthesis in the near future. This is why we have political gridlock and why such a large proportion of the electorate is dispirited and depressed. This morass will continue until we discover a way to reduce the influence of special interests on our present day political sphere. As my father used to say: "We have the best Congress money can buy."
March 24, 2011
Contradictions
Obamacare appears to be heading to the Supreme Court for a showdown. Multiple federal judges in multiple districts have either ruled that parts of the legislation are unconstitutional or have ruled that they are constitutional. Many are calling for an expedited course--skipping the Appeals Court level--and going straight to the Supremes. Their arguments are persuasive.
The short version is the question: does the Congress have the right, under the commerce clause of the constitution, to force citizens to buy health insurance. This is called the individual mandate. The secondary question is: if the individual mandate is unconstitutional, is the whole bill unconstitutional?
I am no legal scholar and will make no predictions about how this will turn out...however, I recall the philosopher, social scientist, political scientist and trouble maker Hegal, who famously suggested that the argument that has the fewest internal contradictions should prevail. Following that logic, I would like to know that if the Supreme Court finds that Congress cannot compel citizens to buy health insurance, can hospitals and physicians and other providers begin to refuse to treat people who have no insurance and who refuse (or are unable) to pay? Decades ago, it became illegal for any health care facility to refuse treatment based on his or her ability to pay. Then the infamous HIPPA legislation made it illegal to even ASK patients in the emergency room if they had insurance before they underwent at least an initial medical evaluation. Health Care facilities have been giving out free care quietly and graciously for a long time. Now that Medicaid and Medicare and, increasingly, private insurance continue to reduce payments to providers, free care is becoming problematic.
So, if people refuse to buy insurance, would it not be consistent to say that providers should be able to refuse them free service? OK...I know what you are going to say. Car insurance covers people to drive and driving a car is a privilege not a right. No insurance, no license. Living is not a privilege, it is a right--one does not require a state license to keep breathing. There is also that pesky little document that says something like "life, liberty and the pursuit of happiness....".
Life is a right and the state would never take that right away. But wait....it does. The death penalty is still legal. So, the State does on occasion take a life away--so should one conclude that living is a privilege and not a right?
The reimbursement problem in healthcare is a huge problem which significantly adds to the cost of healthcare for all. If the Supreme Court is going to weigh in on this, perhaps they should write an opinion which clarifies in which direction this should head. I am certain that they have all read Hegal and are familiar with his argument. The real question becomes if they or any other of our leaders have the political will to gravitate toward a reasonable, consistent, non-contradictory policy. I am not holding my breath.
The short version is the question: does the Congress have the right, under the commerce clause of the constitution, to force citizens to buy health insurance. This is called the individual mandate. The secondary question is: if the individual mandate is unconstitutional, is the whole bill unconstitutional?
I am no legal scholar and will make no predictions about how this will turn out...however, I recall the philosopher, social scientist, political scientist and trouble maker Hegal, who famously suggested that the argument that has the fewest internal contradictions should prevail. Following that logic, I would like to know that if the Supreme Court finds that Congress cannot compel citizens to buy health insurance, can hospitals and physicians and other providers begin to refuse to treat people who have no insurance and who refuse (or are unable) to pay? Decades ago, it became illegal for any health care facility to refuse treatment based on his or her ability to pay. Then the infamous HIPPA legislation made it illegal to even ASK patients in the emergency room if they had insurance before they underwent at least an initial medical evaluation. Health Care facilities have been giving out free care quietly and graciously for a long time. Now that Medicaid and Medicare and, increasingly, private insurance continue to reduce payments to providers, free care is becoming problematic.
So, if people refuse to buy insurance, would it not be consistent to say that providers should be able to refuse them free service? OK...I know what you are going to say. Car insurance covers people to drive and driving a car is a privilege not a right. No insurance, no license. Living is not a privilege, it is a right--one does not require a state license to keep breathing. There is also that pesky little document that says something like "life, liberty and the pursuit of happiness....".
Life is a right and the state would never take that right away. But wait....it does. The death penalty is still legal. So, the State does on occasion take a life away--so should one conclude that living is a privilege and not a right?
The reimbursement problem in healthcare is a huge problem which significantly adds to the cost of healthcare for all. If the Supreme Court is going to weigh in on this, perhaps they should write an opinion which clarifies in which direction this should head. I am certain that they have all read Hegal and are familiar with his argument. The real question becomes if they or any other of our leaders have the political will to gravitate toward a reasonable, consistent, non-contradictory policy. I am not holding my breath.
November 26, 2010
Adventures in the Urologist's Office
Being a strict adherent to Murphy's laws, I peed blood the day before traveling overseas. Knowing full well that this was cancer until proven otherwise, I made an appointment for the day after my return--there was no way I was surrendering my trip.
Seated nervously in the waiting room, I found that the only available reading material was the current issue of Cosmopolitan. What strange reading material for a Urology office. The lead article was "50 Ways To Keep Your Man Happy in Bed." I began to imagine that I had entered a Fellini movie. At 61, I was, by far, the youngest patient there; I doubt if any of these men wanted to be reminded of their diminished or totally absent sex lives. Hello... this is a Urology office.
An attractive, young, blond nurse escorted me into an exam room. Even by Doctor's Office standards, this room was stark. No art, no pictures...nothing. Having a high familiarity with exam rooms, I decided to poke around to pass the time; I had left my issue of Cosmo in the waiting room. The first drawer that I opened had a stack of paper gowns with an old, beat up pair of Channel lock pliers sitting on top. What the hell do they use those for??? Well--obviously--for adjustments to your genitals. I decided to quit poking around.
The doctor came in and took a short history. He suggested an IVP and a cystoscopy for a workup. I agreed to the cysto and, if that were negative, to negotiate the need for the IVP xray exam. I readily agreed to do the cysto right away since I did NOT want to come back again.
The nice, young, blond nurse took me into the procedure room where she told me, unceremoniously, to drop my pants and lie down on the table. She stood with her back to me while I complied; the formality of undressing and putting on a gown was skipped. Just drop trou...at least, I wasn't asked to bend over. (I will cover colonoscopy in another blog.)
I almost fell asleep waiting for the procedure to begin. In came the Urologist and explained the procedure. It was to be a Fellini movie after all....I got to watch the whole thing on the tv monitor. He held my manhood in his left hand and injected some lubricant into my urethra with his right hand. Oh boy. This was quickly followed by the cystocope, a flexible tube with a lens on the end as well as ports to add water or suction water or take biopsies as necessary. I could not decide which was worse: following the scope up my urethra on the monitor or watching him push the scope up my penis. My bottom was quickly soaked with the overflow of water used to improve visability. Aha...there's the problem: he found a stricture in the urethra where I had had Radiation for my Prostate Cancer four years earlier. He said it was tight and he might not be able to break through and finish the examination.
He said it might hurt a bit and I encouraged him to go for it. I went, back and forth, from watching the monitor to watching him, manhood in left hand and scope in right hand, pushing back and forth to try to break open the obstruction. I could not help but envision a pile driver; but without the noise. The pain was as much psychic as physical. After a minute or so (which seemed like an hour), he popped through into the bladder and finished the exam. No cancer. No need for further workup.
In a flash, he was gone. Having had my cherry popped, I turned to the nurse, who probably assists on a half-dozen of these a day, and said: "Do you think I put out too much for a first date?" She cracked up.
I bled for a couple of days but was relieved to know I was free of serious pathology and, more importantly, was relieved to have this whole episode in my rear-view mirror. Many would complain that this episode reflects the new health care system; personally,I was quite pleased to have a serious problem dealt with quickly and efficiently. I would send my patients to this office with no reservations. It could have been worse; he might have pulled out the channel lock pliers.....
Seated nervously in the waiting room, I found that the only available reading material was the current issue of Cosmopolitan. What strange reading material for a Urology office. The lead article was "50 Ways To Keep Your Man Happy in Bed." I began to imagine that I had entered a Fellini movie. At 61, I was, by far, the youngest patient there; I doubt if any of these men wanted to be reminded of their diminished or totally absent sex lives. Hello... this is a Urology office.
An attractive, young, blond nurse escorted me into an exam room. Even by Doctor's Office standards, this room was stark. No art, no pictures...nothing. Having a high familiarity with exam rooms, I decided to poke around to pass the time; I had left my issue of Cosmo in the waiting room. The first drawer that I opened had a stack of paper gowns with an old, beat up pair of Channel lock pliers sitting on top. What the hell do they use those for??? Well--obviously--for adjustments to your genitals. I decided to quit poking around.
The doctor came in and took a short history. He suggested an IVP and a cystoscopy for a workup. I agreed to the cysto and, if that were negative, to negotiate the need for the IVP xray exam. I readily agreed to do the cysto right away since I did NOT want to come back again.
The nice, young, blond nurse took me into the procedure room where she told me, unceremoniously, to drop my pants and lie down on the table. She stood with her back to me while I complied; the formality of undressing and putting on a gown was skipped. Just drop trou...at least, I wasn't asked to bend over. (I will cover colonoscopy in another blog.)
I almost fell asleep waiting for the procedure to begin. In came the Urologist and explained the procedure. It was to be a Fellini movie after all....I got to watch the whole thing on the tv monitor. He held my manhood in his left hand and injected some lubricant into my urethra with his right hand. Oh boy. This was quickly followed by the cystocope, a flexible tube with a lens on the end as well as ports to add water or suction water or take biopsies as necessary. I could not decide which was worse: following the scope up my urethra on the monitor or watching him push the scope up my penis. My bottom was quickly soaked with the overflow of water used to improve visability. Aha...there's the problem: he found a stricture in the urethra where I had had Radiation for my Prostate Cancer four years earlier. He said it was tight and he might not be able to break through and finish the examination.
He said it might hurt a bit and I encouraged him to go for it. I went, back and forth, from watching the monitor to watching him, manhood in left hand and scope in right hand, pushing back and forth to try to break open the obstruction. I could not help but envision a pile driver; but without the noise. The pain was as much psychic as physical. After a minute or so (which seemed like an hour), he popped through into the bladder and finished the exam. No cancer. No need for further workup.
In a flash, he was gone. Having had my cherry popped, I turned to the nurse, who probably assists on a half-dozen of these a day, and said: "Do you think I put out too much for a first date?" She cracked up.
I bled for a couple of days but was relieved to know I was free of serious pathology and, more importantly, was relieved to have this whole episode in my rear-view mirror. Many would complain that this episode reflects the new health care system; personally,I was quite pleased to have a serious problem dealt with quickly and efficiently. I would send my patients to this office with no reservations. It could have been worse; he might have pulled out the channel lock pliers.....
October 28, 2010
Arrogance
The Juan Williams' firing underscores everything that is wrong with traditional main stream media. Eight million Americans have lost their jobs over the past 2 years--the vast majority lost their jobs through no fault of their own. Juan Williams was fired for cause--I think that the cause was pretty weak but the only opinion that matters is his boss's opinion.
As an independent, I watch PBS, FOX, CNN as well as other news sources. I liked that Juan Williams appeared on many venues--he had a nice, moderate, sensible take on current events. He balanced the extreme views of the right and the left quite nicely....until he played the race card and claimed that he was fired because he didn't play the role of the lackey black man (that was expected of him). What a waste. Why do the talking heads think that they do not play by the same rules as the rest of Americans....that they can be fired, demoted or used as needed by their employers?
At 61 years old, I have joined the young and look to Jon Stewart (The Daily Show) for more meaningful news than the traditional sources. NO ONE gets a free pass on his show. He exposes the hypocritical attitudes of not only the politicians but also (and most vehemently) the pundits who cover them. The public has become less and less tolerant of the slow intimate dirty dance going on between politics and media.President Obama, an astute politician, decided to appear on The Daily Show for good reasons.
Mr. Williams was awarded a $2 million dollar contract from FOX within 48 hours of his firing--way more money than a brain surgeon makes...and political commentary is not brain surgery. Perhaps big money is as big a problem in the media as it is in politics.
Several commentators have complained that Obama's appearance on the Daily Show, for a 30 minute interview, demeaned the office of the Presidency. This is sour grapes...they wish that they had scored the interview. Maybe if they were a little more relevant and a little less arrogant, shrewd politicians (as Obama certainly is) would sit with them for thirty minutes. It is simultaneously ironic and sad that we have to turn to the Comedy Channel for serious dialog.
October 6, 2010
Look forward...plan back
Recent data shows that the United States now spends 17% of GDP on health care. This is just over one dollar out of six. Other advanced countries, with similar or better quality indicators, spend 8-12%. Some experts suggest that this expense could reach 25%--one dollar out of four--by the end of the new decade. Ouch....
A number of factors are contributing to this spiraling cost. The baby-boomer generation is approaching age 65--this tsunami of demographic statistical significance will flood the available resources. New procedures, drugs and treatments march ever forward. The Dartmouth Atlas reveals wide variation in the appropriate use of common medical procedures. Medical practice is increasingly fragmented into smaller and smaller quanta; today, it takes a village of practitioners to take care of patients. Surgeons sub-specialize not only into fields (say Orthopedics) but also into one specialty procedure (such as arthroscopic surgery on the shoulder). An endocrinologist will manage your diabetes but wants nothing to do with your blood pressure or cholesterol. This fragmentation improves the treatment of individual problems while ignoring the patient's overall well-being; your care is being deconstructed. It also maximizes total revenue.
American Corporations face increasing headwinds in global competition. Two striking ones are corporate taxes (nearly the highest in the world) and the highest health care costs in the world. Not only do companies in other developed countries pay lower corporate income taxes, most pay NO health care costs as they are underwritten by the state. If health care costs spike to 25% by 2020, how will American companies be able to compete with foreign companies who do not face these costs? Would it surprise you if they invested their profits overseas?
Health care experts agree that the trifecta of health care reform would address three issues: access, quality and cost. Obamacare seriously addressed only one..access. Access to our existing dysfunctional system has been expanded; quality will probably stagnate and costs will continue their upward spiral.
Game Theory tells us to look forward and plan back. What will be the public policy response when health care costs hit 25%? No doubt, the system will be capped and any new additional medical expense will have to be balanced by a reduction in some other medical area. Politicians call this pay-as-you-go. Economists call it a closed system.
Well then, if we know that we are hurtling toward a cap, why don't we start initiating a cap now with a pay-as-we-go program? If we eased into a flexible cap now, we would have time to work out the kinks before we hit that brick wall down the road.
Some sort of cap would FORCE us to develop programs with more bang for the buck than what we are getting now. Health care cannot be an open ended commitment to everything...we simply cannot afford it. Unfortunately, the politicians would pick winners and losers...those who are politically astute would be favored; the dis-enfranchised would suffer. These groups already know who they are. It will take time to develop a more equitable balance; that time is only available if we start seeking out ways to get more value for our health care dollars now--not when we hit that brick wall of 25%(which is not far off). Starting a flexible cap now would give us time to work out the political problems: the recent furor over mammograms is an excellent example of the resistance that will accompany any radical change to the status quo.
We spend 2.5 trillion dollars a year on health care; we deserve to get more for that expense than we are currently receiving. We need to cull unnecessary treatments and use the savings to develop newer treatments that are even more effective. It is not rocket science figuring out what works...it just takes political will. I am not optimistic.
A number of factors are contributing to this spiraling cost. The baby-boomer generation is approaching age 65--this tsunami of demographic statistical significance will flood the available resources. New procedures, drugs and treatments march ever forward. The Dartmouth Atlas reveals wide variation in the appropriate use of common medical procedures. Medical practice is increasingly fragmented into smaller and smaller quanta; today, it takes a village of practitioners to take care of patients. Surgeons sub-specialize not only into fields (say Orthopedics) but also into one specialty procedure (such as arthroscopic surgery on the shoulder). An endocrinologist will manage your diabetes but wants nothing to do with your blood pressure or cholesterol. This fragmentation improves the treatment of individual problems while ignoring the patient's overall well-being; your care is being deconstructed. It also maximizes total revenue.
American Corporations face increasing headwinds in global competition. Two striking ones are corporate taxes (nearly the highest in the world) and the highest health care costs in the world. Not only do companies in other developed countries pay lower corporate income taxes, most pay NO health care costs as they are underwritten by the state. If health care costs spike to 25% by 2020, how will American companies be able to compete with foreign companies who do not face these costs? Would it surprise you if they invested their profits overseas?
Health care experts agree that the trifecta of health care reform would address three issues: access, quality and cost. Obamacare seriously addressed only one..access. Access to our existing dysfunctional system has been expanded; quality will probably stagnate and costs will continue their upward spiral.
Game Theory tells us to look forward and plan back. What will be the public policy response when health care costs hit 25%? No doubt, the system will be capped and any new additional medical expense will have to be balanced by a reduction in some other medical area. Politicians call this pay-as-you-go. Economists call it a closed system.
Well then, if we know that we are hurtling toward a cap, why don't we start initiating a cap now with a pay-as-we-go program? If we eased into a flexible cap now, we would have time to work out the kinks before we hit that brick wall down the road.
Some sort of cap would FORCE us to develop programs with more bang for the buck than what we are getting now. Health care cannot be an open ended commitment to everything...we simply cannot afford it. Unfortunately, the politicians would pick winners and losers...those who are politically astute would be favored; the dis-enfranchised would suffer. These groups already know who they are. It will take time to develop a more equitable balance; that time is only available if we start seeking out ways to get more value for our health care dollars now--not when we hit that brick wall of 25%(which is not far off). Starting a flexible cap now would give us time to work out the political problems: the recent furor over mammograms is an excellent example of the resistance that will accompany any radical change to the status quo.
We spend 2.5 trillion dollars a year on health care; we deserve to get more for that expense than we are currently receiving. We need to cull unnecessary treatments and use the savings to develop newer treatments that are even more effective. It is not rocket science figuring out what works...it just takes political will. I am not optimistic.
August 30, 2010
Claw Back
http://online.wsj.com/article/SB10001424052748703447004575449813071709510.html?mod=WSJ_hp_mostpop_emailed
The above link will take you to an opinion piece by Arnold Schwarzenegger in the WSJ; in this illuminating piece, the governor outlines the horrible state of California finances...especially when it comes to state sponsored pensions. Unfortunately, this same scenario is playing out in municipal and state governments across the land.
It is quite clear that local and state governments are running Ponzi schemes when it comes to their pensions. It is simply a mathematical improbability that they will be able to pay off these pensions which were obviously irresponsibly promised. What to do?
Hagel, the philosopher, famously stated that the argument that most often wins out in the end is the argument with the fewest internal contradictions. The corollary of this is that the facets of any argument must be consistent.
Let us turn to how the government is handling the most famous of Ponzi schemes--the Madoff affair. In that scheme, Bernie Madoff reported consistent 18% returns to his clients year after year--whether the economy was growing or receding. People should have known that it was a scam. The Justice Department, using that logic is going back a number of years and repossessing the assets of those who cashed in their chips before Madoff was finally exposed. Most will get to keep their initial investment but must return their fraudulent 18% returns so that those who did not get out in time will get at least a part of their investment back. This is called a claw back; it is based on a sense of fairness; the out-in-time investors should not profit from a fraudulent scheme while others lose everything; perhaps the investors should have known that these types of returns were other worldly. This process is ongoing at the present.
The existing California pension plan is a Ponzi scheme (as probably are NY's, NJ's, Illinois' and several others). The number of public employees retiring in their 50's with 6 figure pensions (and health care) for life is staggering. Many got a quick raise just before retirement to bolster their loot. You can bet that there are politics involved as well. No matter....the uncontroverted facts are that the pension system is unsustainable; it is underfunded; it lies on its reporting by quoting totally unrealistic investment return projections; and it is probably corrupt.
I see parallels with the Bernie Madoff case. Where is the government claw back? Are they looking at those last minute raises? Are they looking at those ridiculously high pensions? Are they looking at those unrealistic investment return projections?
Are they looking at the true state of underfunding?
This appears to be a case of do as I say not do as I do. A large chunk of the 800 billion dollar stimulus package went to prop up local and state governments. The money that was supposed to go to shovel-ready infrastructure projects has ended up kicking the pension-bomb can down the street. No wonder, the stimulus package delivered so little bang for the buck.
To recover its credibility, the government must act consistently in how it handles various ponzi schemes which have been unmasked by the economic melt-down....whether they are private or public schemes. I am not holding my breath.
The above link will take you to an opinion piece by Arnold Schwarzenegger in the WSJ; in this illuminating piece, the governor outlines the horrible state of California finances...especially when it comes to state sponsored pensions. Unfortunately, this same scenario is playing out in municipal and state governments across the land.
It is quite clear that local and state governments are running Ponzi schemes when it comes to their pensions. It is simply a mathematical improbability that they will be able to pay off these pensions which were obviously irresponsibly promised. What to do?
Hagel, the philosopher, famously stated that the argument that most often wins out in the end is the argument with the fewest internal contradictions. The corollary of this is that the facets of any argument must be consistent.
Let us turn to how the government is handling the most famous of Ponzi schemes--the Madoff affair. In that scheme, Bernie Madoff reported consistent 18% returns to his clients year after year--whether the economy was growing or receding. People should have known that it was a scam. The Justice Department, using that logic is going back a number of years and repossessing the assets of those who cashed in their chips before Madoff was finally exposed. Most will get to keep their initial investment but must return their fraudulent 18% returns so that those who did not get out in time will get at least a part of their investment back. This is called a claw back; it is based on a sense of fairness; the out-in-time investors should not profit from a fraudulent scheme while others lose everything; perhaps the investors should have known that these types of returns were other worldly. This process is ongoing at the present.
The existing California pension plan is a Ponzi scheme (as probably are NY's, NJ's, Illinois' and several others). The number of public employees retiring in their 50's with 6 figure pensions (and health care) for life is staggering. Many got a quick raise just before retirement to bolster their loot. You can bet that there are politics involved as well. No matter....the uncontroverted facts are that the pension system is unsustainable; it is underfunded; it lies on its reporting by quoting totally unrealistic investment return projections; and it is probably corrupt.
I see parallels with the Bernie Madoff case. Where is the government claw back? Are they looking at those last minute raises? Are they looking at those ridiculously high pensions? Are they looking at those unrealistic investment return projections?
Are they looking at the true state of underfunding?
This appears to be a case of do as I say not do as I do. A large chunk of the 800 billion dollar stimulus package went to prop up local and state governments. The money that was supposed to go to shovel-ready infrastructure projects has ended up kicking the pension-bomb can down the street. No wonder, the stimulus package delivered so little bang for the buck.
To recover its credibility, the government must act consistently in how it handles various ponzi schemes which have been unmasked by the economic melt-down....whether they are private or public schemes. I am not holding my breath.
August 29, 2010
Animal Spirits and Policy
The Bush and Obama Administrations have spent over a trillion dollars on various bailouts over the past 2 years. Arguably, that spending has kept us from falling into the abyss of another depression. Even though we are on the cusp of a double dip recession, it is clear that we are on firmer ground than we were 18 months ago.
Going forward, how do we establish a terra firma from which to proceed? It is clear that we must GROW our way out of this mess. Unemployment continues at unacceptably high rates; the consumer continues to keep a firm grasp on his wallet; the banks are reluctant to lend; surviving industries are unwilling to invest in new employees or capital infrastructure;the whole economy has a bad case of paralysis.
The FED recently announced its intention of enacting a new round of quantitative easing (QE); this means they will buy up securities which will have the intended effect of increasing the money supply. The danger of this is that an increased money supply will lead to inflation--a result that is bad for everyone and everything.
What is needed is growth. In this environment, growth comes from two sources: animal spirits and public policy. Animal spirits is the term used for entrepreneurship...the effort made by business to create or expand operations; to make investments with the hope of a decent return on investment. Such entrepreneurship necessarily entails risk. While risk is acceptable to entrepreneurs because it can be quantified and allowed for, uncertainty cannot be quantified and allowed for.
This is where public policy comes in. Public policy must be clear and allow risk to be evaluated clearly. Any public policy which fosters uncertainty will quash animal spirits dead in its tracks. Nouriel Roubini describes risk as being handed a revolver with one bullet in the cylinder and being asked to play Russian Roulette; uncertainty is being handed a revolver with NO information as to whether there are 2, 6 or no bullets loaded in the chamber. Which game would you play?
Unfortunately, the public policy of the last 2 years has increased uncertainty and absolutely stalled any animal spirits which may have existed. Hence, the present paralysis. Huge quantities of political capital have been spent on Healthcare Reform; in short, access to a dysfunctional system has been expanded with no attention to the bigger problems of cost and quality. This reform increases uncertainty about how much greater will be the inflation of medical costs which have risen at a steeper rate than other costs for business. Financial reform, a 2500 page document full of uncertainty, has left most practical decisions about important issues such as capital requirements, to new political committees yet to be formed. In other words, these reforms have increased uncertainty rather than decreased it. Risk is manageable.... uncertainty is not.
Both parties need to put their child-like ideologies behind them and work toward a goal of developing public policy that will encourage and nurture animal spirits. Public policy needs to become more business friendly. This is not a matter of ideology, this is a matter of pragmatism.....a matter of survival. If the existing anti-business policy trend continues, animal spirits will continue to be suppressed, growth will remain elusive and ideology (any ideology--whether left or right) will become academic. In order to foster growth, everything needs to be on the table: Medicare, Social Security, Pensions, taxes, Defense spending, War(s),--nothing gets a free pass.
If we cannot foster growth, then crushing unemployment will lead to civil unrest. At that point, we will regret that we did not seize the opportunity to create a reasonable public policy to foster growth. Ideology needs to be put aside; the cold clear logic of pragmatism needs to be the order of the day. My confidence that our present political system can adapt to this necessity in constrained.
Going forward, how do we establish a terra firma from which to proceed? It is clear that we must GROW our way out of this mess. Unemployment continues at unacceptably high rates; the consumer continues to keep a firm grasp on his wallet; the banks are reluctant to lend; surviving industries are unwilling to invest in new employees or capital infrastructure;the whole economy has a bad case of paralysis.
The FED recently announced its intention of enacting a new round of quantitative easing (QE); this means they will buy up securities which will have the intended effect of increasing the money supply. The danger of this is that an increased money supply will lead to inflation--a result that is bad for everyone and everything.
What is needed is growth. In this environment, growth comes from two sources: animal spirits and public policy. Animal spirits is the term used for entrepreneurship...the effort made by business to create or expand operations; to make investments with the hope of a decent return on investment. Such entrepreneurship necessarily entails risk. While risk is acceptable to entrepreneurs because it can be quantified and allowed for, uncertainty cannot be quantified and allowed for.
This is where public policy comes in. Public policy must be clear and allow risk to be evaluated clearly. Any public policy which fosters uncertainty will quash animal spirits dead in its tracks. Nouriel Roubini describes risk as being handed a revolver with one bullet in the cylinder and being asked to play Russian Roulette; uncertainty is being handed a revolver with NO information as to whether there are 2, 6 or no bullets loaded in the chamber. Which game would you play?
Unfortunately, the public policy of the last 2 years has increased uncertainty and absolutely stalled any animal spirits which may have existed. Hence, the present paralysis. Huge quantities of political capital have been spent on Healthcare Reform; in short, access to a dysfunctional system has been expanded with no attention to the bigger problems of cost and quality. This reform increases uncertainty about how much greater will be the inflation of medical costs which have risen at a steeper rate than other costs for business. Financial reform, a 2500 page document full of uncertainty, has left most practical decisions about important issues such as capital requirements, to new political committees yet to be formed. In other words, these reforms have increased uncertainty rather than decreased it. Risk is manageable.... uncertainty is not.
Both parties need to put their child-like ideologies behind them and work toward a goal of developing public policy that will encourage and nurture animal spirits. Public policy needs to become more business friendly. This is not a matter of ideology, this is a matter of pragmatism.....a matter of survival. If the existing anti-business policy trend continues, animal spirits will continue to be suppressed, growth will remain elusive and ideology (any ideology--whether left or right) will become academic. In order to foster growth, everything needs to be on the table: Medicare, Social Security, Pensions, taxes, Defense spending, War(s),--nothing gets a free pass.
If we cannot foster growth, then crushing unemployment will lead to civil unrest. At that point, we will regret that we did not seize the opportunity to create a reasonable public policy to foster growth. Ideology needs to be put aside; the cold clear logic of pragmatism needs to be the order of the day. My confidence that our present political system can adapt to this necessity in constrained.
July 22, 2010
Theory of Everything
There are two very large camps in the wonderful world of Physics. One group studies Quantum Mechanics which is basically the study of the behavior of subatomic particles; what are they made of and how do they work? The other camp is the more macro camp which studies the universe: Relativity, Inflation, Dark Matter, Expansion, Space Time...the big picture. For more than half a century, their respective findings and equations have been contradictory. Einstein, after winning his Nobel prize at a relatively young age, spent most of the rest of his life trying to resolve these contradictions into a generalized Theory of Everything. He did not get very far and neither have any of his successors.
In response to this, each camp has retired to its respective field and done ongoing research to further its own specialty while ignoring the fact that the two fields were incompatible. Science moves on; careers are made; papers are published and any theory which would reconcile this fundamental discrepancy has simply not appeared.
Physics is a "hard science". It uses the scientific method which we all learned (or should have learned) in elementary school. You observe something; you formulate an hypothesis; you design an experiment to test that hypothesis; your experiment proves or disproves the hypothesis. Wash, rinse repeat.
Economics is soft science. Yet, it finds itself in the same pickle when it comes to forecasting a solution to the instant political-economic mess. We recently dodged a depression but still find ourselves very slow to surface from a very long and difficult recession. The Fed spent and guaranteed trillions of dollars to avoid that depression. Interest rates are just barely above zero. As we peer over the edge of an abyss which is the dreaded double dip, the economists and political scientists find themselves in two camps--just like the physicists. One camp, the Keynesians, believe that more stimulus is needed. Print some more money and bail out the municipalities, the States, the corporations and whoever else is needed to get the economy growing again. They believe that the government is the spender-of-last-resort and the only group that can save the economy. We can deal with the deficits later. They claim that the first stimulus definitely worked (despite the 9.5% unemployment figure). Paul Krugman is their champion.
The second camp calls for a period of austerity; it is time to address the deficit before we find the national debt at 100% of GDP. When debt reaches 100% of GDP, almost all growth (say a nominal 4%) will go to debt service; hence, we have to grow at a nominal rate to tread water. We now have the highest corporate taxes in the world and all those corporate taxes barely cover the debt service right now. (Greece presently has debt equal to 150% of its GDP; even if it were to perform the herculean task of reducing its debt by 50%, all its growth would still go to paying the interest on that debt!)
This camp wants to cut spending, cut spending, cut spending. Of course, to cut spending in this fragile recovery state could lead to a new round of recession with even higher unemployment.
Both camps have good arguments for their points of view....just like the physicists. Unlike the physicists (who do hard science), the economists cannot design experiments to see which camp is right. The two camps cannot even agree on whether the first stimulus plan did any good. How can you know for sure? Each economic camp has its own set of equations, rationals and presidents to support its point of view.
Here is where it gets dicey. We have two distinct groups facing off in a polar standoff with no OBJECTIVE way to determine which school of thought is correct and no way to measure after the fact whether the success or failure was due to the intervention. Like the physicists, each camp will retreat to its respective arena and continue to push its respective agenda. For the physicists, it is hard science; for the political economists, it is ideology. The republicans will push to lower taxes, cut entitlements, reduce government; the democrats will push for more stimulus (especially for their specific special interests), increase the size and scope of government, and increase taxes (redistribute income) as a means to an end.
Hence, the recovery from this economic melt-down has simply hardened pre-established positions rather than brought the two sides together to work for the common good. Rham Emanuel said it best when he said: "A crisis is a terrible thing to waste."
More than a clash of ideologies, this is quickly becoming a clash of classes. A new culture war is brewing; if unemployment continues high and the bankers continue to draw obscene bonuses for almost destroying the economy, the existing polarization will look like grade school stuff.
Let's all hope that Washington develops some adult supervision and that we start to work together to sort out this mess. Everything depends on it. The clock is ticking.
In response to this, each camp has retired to its respective field and done ongoing research to further its own specialty while ignoring the fact that the two fields were incompatible. Science moves on; careers are made; papers are published and any theory which would reconcile this fundamental discrepancy has simply not appeared.
Physics is a "hard science". It uses the scientific method which we all learned (or should have learned) in elementary school. You observe something; you formulate an hypothesis; you design an experiment to test that hypothesis; your experiment proves or disproves the hypothesis. Wash, rinse repeat.
Economics is soft science. Yet, it finds itself in the same pickle when it comes to forecasting a solution to the instant political-economic mess. We recently dodged a depression but still find ourselves very slow to surface from a very long and difficult recession. The Fed spent and guaranteed trillions of dollars to avoid that depression. Interest rates are just barely above zero. As we peer over the edge of an abyss which is the dreaded double dip, the economists and political scientists find themselves in two camps--just like the physicists. One camp, the Keynesians, believe that more stimulus is needed. Print some more money and bail out the municipalities, the States, the corporations and whoever else is needed to get the economy growing again. They believe that the government is the spender-of-last-resort and the only group that can save the economy. We can deal with the deficits later. They claim that the first stimulus definitely worked (despite the 9.5% unemployment figure). Paul Krugman is their champion.
The second camp calls for a period of austerity; it is time to address the deficit before we find the national debt at 100% of GDP. When debt reaches 100% of GDP, almost all growth (say a nominal 4%) will go to debt service; hence, we have to grow at a nominal rate to tread water. We now have the highest corporate taxes in the world and all those corporate taxes barely cover the debt service right now. (Greece presently has debt equal to 150% of its GDP; even if it were to perform the herculean task of reducing its debt by 50%, all its growth would still go to paying the interest on that debt!)
This camp wants to cut spending, cut spending, cut spending. Of course, to cut spending in this fragile recovery state could lead to a new round of recession with even higher unemployment.
Both camps have good arguments for their points of view....just like the physicists. Unlike the physicists (who do hard science), the economists cannot design experiments to see which camp is right. The two camps cannot even agree on whether the first stimulus plan did any good. How can you know for sure? Each economic camp has its own set of equations, rationals and presidents to support its point of view.
Here is where it gets dicey. We have two distinct groups facing off in a polar standoff with no OBJECTIVE way to determine which school of thought is correct and no way to measure after the fact whether the success or failure was due to the intervention. Like the physicists, each camp will retreat to its respective arena and continue to push its respective agenda. For the physicists, it is hard science; for the political economists, it is ideology. The republicans will push to lower taxes, cut entitlements, reduce government; the democrats will push for more stimulus (especially for their specific special interests), increase the size and scope of government, and increase taxes (redistribute income) as a means to an end.
Hence, the recovery from this economic melt-down has simply hardened pre-established positions rather than brought the two sides together to work for the common good. Rham Emanuel said it best when he said: "A crisis is a terrible thing to waste."
More than a clash of ideologies, this is quickly becoming a clash of classes. A new culture war is brewing; if unemployment continues high and the bankers continue to draw obscene bonuses for almost destroying the economy, the existing polarization will look like grade school stuff.
Let's all hope that Washington develops some adult supervision and that we start to work together to sort out this mess. Everything depends on it. The clock is ticking.
June 25, 2010
Job One
Congress has a lot on its plate at this particular point in history. Unemployment is at record levels. Financial Reform is pressing to prevent another melt-down due to socialized risk and privatized profit. The "stans" in central Asia are melting down into civil war. Israel is getting ready to attack Iran. Iran is building a nuclear bomb. The economy is trending toward a double dip. Deficits are soaring. The wars are degenerating into quagmires. Turkey is turning away from a secular pro-western democracy into an Islamic anti-western government.
Congress has picked this time to solidify job one--which is to get re-elected for another term. To get reelected, they need money and to get money, they need special deals for themselves.
McCain/Finegold was an ambitious bill to curb campaign contributions from special interests. The Robert's Supreme Court has gutted the bill as unconstitutional. In the recent Citizens United case, it basically announced that Corporations (as well as other special interest groups) have the same rights as citizens to free speech and that money (contributions) are a form of free speech. To counter this court decision, Congress (led in the Senate by the crafty Chuck Schumer) is about to pass a transparency law--basically, if you are going to fund an attack ad during a campaign, you have to identify who paid for the ad. This allows individuals or groups (with their new citizen-like status) to maintain their court-appointed free speech....they just cannot do it anonymously. Sounds good, does it not?
Well, they carved out exceptions for the National Rifle Association, AARP, the Sierra Club and some other very large politically-active special interests. These groups just coincidentally spend a bloody fortune on campaign ads. So, the small voices have to identify themselves while the heavy hitters can remain anonymous. With all the problems facing this country, this is where Congress is putting its legislative effort this week.
Half a century ago, George Orwell wrote a very satirical fantasy novel called Animal Farm which lampooned what occurs under communism (the bogeyman of the cold war era). In this satire, the farm animals (the proletariat) boot the farmers (the bourgeoisie) off the farm and take over. The pigs appoint themselves as leaders and quickly develop an autocratic iron-fisted rule. They boast: "All animals are equal but some animals are more equal than others."
It seems that the autocratic "pigs" in the Congress have adopted this quote as their own mantra. "All special interest groups are equal but some special interest groups are more equal than others." The irony is that this is happening in what is supposed to be a democratic form of government.
Congress sure is looking out for itself. When will they start looking out for the millions of their constituents who just want a job and a fighting chance at the American way of life? I am not holding my breath.
Congress has picked this time to solidify job one--which is to get re-elected for another term. To get reelected, they need money and to get money, they need special deals for themselves.
McCain/Finegold was an ambitious bill to curb campaign contributions from special interests. The Robert's Supreme Court has gutted the bill as unconstitutional. In the recent Citizens United case, it basically announced that Corporations (as well as other special interest groups) have the same rights as citizens to free speech and that money (contributions) are a form of free speech. To counter this court decision, Congress (led in the Senate by the crafty Chuck Schumer) is about to pass a transparency law--basically, if you are going to fund an attack ad during a campaign, you have to identify who paid for the ad. This allows individuals or groups (with their new citizen-like status) to maintain their court-appointed free speech....they just cannot do it anonymously. Sounds good, does it not?
Well, they carved out exceptions for the National Rifle Association, AARP, the Sierra Club and some other very large politically-active special interests. These groups just coincidentally spend a bloody fortune on campaign ads. So, the small voices have to identify themselves while the heavy hitters can remain anonymous. With all the problems facing this country, this is where Congress is putting its legislative effort this week.
Half a century ago, George Orwell wrote a very satirical fantasy novel called Animal Farm which lampooned what occurs under communism (the bogeyman of the cold war era). In this satire, the farm animals (the proletariat) boot the farmers (the bourgeoisie) off the farm and take over. The pigs appoint themselves as leaders and quickly develop an autocratic iron-fisted rule. They boast: "All animals are equal but some animals are more equal than others."
It seems that the autocratic "pigs" in the Congress have adopted this quote as their own mantra. "All special interest groups are equal but some special interest groups are more equal than others." The irony is that this is happening in what is supposed to be a democratic form of government.
Congress sure is looking out for itself. When will they start looking out for the millions of their constituents who just want a job and a fighting chance at the American way of life? I am not holding my breath.
June 5, 2010
Spinning your wheels...
http://online.wsj.com/article/SB10001424052748703961204575280903681581516.html
The above link will take you to a Wall Street Journal article which reports an article that will come out next week in the Journal of the American Medical Association (JAMA).In short, it has been ascertained that although the length of stay (inpatient) has been reduced by about 25%, the cost of caring for Congestive Heart Failure CHF) has risen because of increasing rates of readmission to the hospital within 30 days of discharge. This is an extremely important article which will probably fly well below the radar.
It is important because the chief cause of medical cost inflation has been, is, and will continue to be driven chiefly by the management of chronic diseases. The king of chronic diseases is CHF; as goes CHF, so goes the Medical Economy. A list of the top ten chronic disease states consumes a disproportionate share of medical dollars. To reel in run-away inflation in health care, the efficient management of chronic diseases must be conquered. Unfortunately, we appear to be heading in the opposite direction. The failure of shorter hospital stays to reel in costs must serve as a barometer signalling a larger approaching storm.
Here is my take on the problem. There has been a new paradigm at work for some time now; there has been an increasing fragmentation of care into ever smaller discreet units--a deconstruction of care if you will. The old paradigm was fairly simple. When a patient showed up in the ER with decompensated CHF, the attending physician would go to the ER, admit the patient, care for the patient in-house and then discharge the patient back to his/her office for follow up. Under the new paradigm, the patient is evaluated by an ER physician (and more often by a PA or Nurse Practitioner). The ER mostly has to make the binary decision to admit or not admit. If admitted, the CHF is then monitored in-house by a team of hospitalists who bring the CHF back under control. The patient is then discharged back to the primary care physician who may not even know that his patient was in the hospital.
In each case let us assume that the transfer of information is 90%. Under the old system, the efficiency is 90% because the physician is involved (and running) the entire process. Under the new sysytem, there are at least three transfers which leads to an efficiency of transfer of information of (.90 x .90 x ,90) or about 72%.
Assigning an arbirary rate of 90% is pretty generous; if we assume 60%, the new overall rate becomes (.60 x .60 x .60) or roughly 21% overall. Recall the game that you played as a child where you sat in a ring with 6 or so friends and whispered a sentence from one to the next until back at its origin. Hence, "The blue horse stood next to the red fence." becomes "The red horse is glued to the red barn." You get the idea.
Many providers actually embrace this new paradigm of fragmentation. Once the case is passed on to the next provider, there is no responsibility for, nor vested interest in, the future of the case. In addition, billing is maximized. Just as procedures are much more lucrative than cognitive services, providers have found that LIMITED discreet interactions with patients are more lucrative than long term relationships. Congress manufactured this system with their stupid reimbursement schemes and price controls which foster the fragmentation of care into ever smaller parcels--each with its own discreet billing codes.
The fragmentation noted above is external as it occurs between distinct groups. There also exists internal fragmentation where the care is divided up within a group. Is the hospitalist who admits you the same hospitalist who discharges you and passes on the history of the stay? Increasingly, large medical groups are employing PA's and Nurse Practitioners who "share" the management of cases with ever increasingly distant physician supervision. Of course, as an internist who managed my own patients with CHF, I have some bias against the new system...however, this landmark article seems to show that this new fragmented system is not working so well. There is a lot to be said for knowing your patients inside out. Protocols and check lists, although useful, are no substitute for knowing the patient--nuance is important.
In some respects, this fragmentation resembles the securitization of mortgages which almost brought down the country 18 months ago. That process was fragmented as well with no one taking overall responsibility. The originator passed off to the broker who passed off to the banker who passed off to the securitizor who passed off to the investor. At each step, some value was stripped out and all responsibility was passed on down the line. Keep the assembly line going. Look how that ended.
The mantra of the 1990's was "faster, better, cheaper". In physics, Heisenberg's Uncertainty Principle suggested that we can know the position and the momentum of a particle but we cannot know both at the same time. It appears that we can have faster, better and cheaper but we cannot have all 3 at the same time.
James Carville, running Bill Clinton's Presidential campaign famously said "It's the economy, stupid." In the instant case, we should be saying: "It's the continuity, stupid." This JAMA article is very important in terms of hinting where the management of chronic diseases needs to head. Whether or not we have the political will to make the necessary course correction is not at all clear.
The above link will take you to a Wall Street Journal article which reports an article that will come out next week in the Journal of the American Medical Association (JAMA).In short, it has been ascertained that although the length of stay (inpatient) has been reduced by about 25%, the cost of caring for Congestive Heart Failure CHF) has risen because of increasing rates of readmission to the hospital within 30 days of discharge. This is an extremely important article which will probably fly well below the radar.
It is important because the chief cause of medical cost inflation has been, is, and will continue to be driven chiefly by the management of chronic diseases. The king of chronic diseases is CHF; as goes CHF, so goes the Medical Economy. A list of the top ten chronic disease states consumes a disproportionate share of medical dollars. To reel in run-away inflation in health care, the efficient management of chronic diseases must be conquered. Unfortunately, we appear to be heading in the opposite direction. The failure of shorter hospital stays to reel in costs must serve as a barometer signalling a larger approaching storm.
Here is my take on the problem. There has been a new paradigm at work for some time now; there has been an increasing fragmentation of care into ever smaller discreet units--a deconstruction of care if you will. The old paradigm was fairly simple. When a patient showed up in the ER with decompensated CHF, the attending physician would go to the ER, admit the patient, care for the patient in-house and then discharge the patient back to his/her office for follow up. Under the new paradigm, the patient is evaluated by an ER physician (and more often by a PA or Nurse Practitioner). The ER mostly has to make the binary decision to admit or not admit. If admitted, the CHF is then monitored in-house by a team of hospitalists who bring the CHF back under control. The patient is then discharged back to the primary care physician who may not even know that his patient was in the hospital.
In each case let us assume that the transfer of information is 90%. Under the old system, the efficiency is 90% because the physician is involved (and running) the entire process. Under the new sysytem, there are at least three transfers which leads to an efficiency of transfer of information of (.90 x .90 x ,90) or about 72%.
Assigning an arbirary rate of 90% is pretty generous; if we assume 60%, the new overall rate becomes (.60 x .60 x .60) or roughly 21% overall. Recall the game that you played as a child where you sat in a ring with 6 or so friends and whispered a sentence from one to the next until back at its origin. Hence, "The blue horse stood next to the red fence." becomes "The red horse is glued to the red barn." You get the idea.
Many providers actually embrace this new paradigm of fragmentation. Once the case is passed on to the next provider, there is no responsibility for, nor vested interest in, the future of the case. In addition, billing is maximized. Just as procedures are much more lucrative than cognitive services, providers have found that LIMITED discreet interactions with patients are more lucrative than long term relationships. Congress manufactured this system with their stupid reimbursement schemes and price controls which foster the fragmentation of care into ever smaller parcels--each with its own discreet billing codes.
The fragmentation noted above is external as it occurs between distinct groups. There also exists internal fragmentation where the care is divided up within a group. Is the hospitalist who admits you the same hospitalist who discharges you and passes on the history of the stay? Increasingly, large medical groups are employing PA's and Nurse Practitioners who "share" the management of cases with ever increasingly distant physician supervision. Of course, as an internist who managed my own patients with CHF, I have some bias against the new system...however, this landmark article seems to show that this new fragmented system is not working so well. There is a lot to be said for knowing your patients inside out. Protocols and check lists, although useful, are no substitute for knowing the patient--nuance is important.
In some respects, this fragmentation resembles the securitization of mortgages which almost brought down the country 18 months ago. That process was fragmented as well with no one taking overall responsibility. The originator passed off to the broker who passed off to the banker who passed off to the securitizor who passed off to the investor. At each step, some value was stripped out and all responsibility was passed on down the line. Keep the assembly line going. Look how that ended.
The mantra of the 1990's was "faster, better, cheaper". In physics, Heisenberg's Uncertainty Principle suggested that we can know the position and the momentum of a particle but we cannot know both at the same time. It appears that we can have faster, better and cheaper but we cannot have all 3 at the same time.
James Carville, running Bill Clinton's Presidential campaign famously said "It's the economy, stupid." In the instant case, we should be saying: "It's the continuity, stupid." This JAMA article is very important in terms of hinting where the management of chronic diseases needs to head. Whether or not we have the political will to make the necessary course correction is not at all clear.
April 25, 2010
The Lousy House
On a crisp April day, I returned to my home town for the first time in 38 years. Riverside Connecticut, a subsection of Greenwich, sits on the intersection of the Mianus River with Long Island Sound. It was a wonderful place to grow up; it was solidly middle class with teachers, plumbers and commuters all living side by side. Today, houses which sold slowly for 40 grand in 1970 easily top seven figures now. It has evolved into an exclusive retreat for the wealthy commuters to NYC. The old Colonial and Victorian houses, which were usually in intermediate degrees of decrepitude with peeling white paint as their common feature, sport 4 color fresh paint schemes, shake roofs, spectacular landscapes and real ambiance.
I was lucky in my timing as the daffodils. tulips, dogwoods, cherry trees and crab-apples were all in riotous display. One could not have asked for a more opportune return to one's childhood.
Sitting among this splendor was the biggest shock of all--the survival of the "lousy house". The lousy house was (and is) a small variety store that sits about a hundred yards from the railroad station. It sold (and still sells) penny candy, cigarettes, newspapers and simple groceries like bread and Twinkies. It never had a sign out front; it never advertised; and it never even had a real name. Kids would flock there after school on their bikes; they would buy penny candy from a large oak display case, sodas from a water filled cooler in the back for seven cents or snow cups for a dime. Your mother might send you there for a 25 cent pack of Pall-Malls or a 27 cent loaf of Daffodil bread. It has a front porch where kids would sit and eat their loot or blush at the arrival of the opposite sex. I have no idea why it was called the lousy house because there was nothing wrong with it.
So, with no "branding", no advertising, and no marketing, there stood the lousy house in all of its former glory just as I had last seen it almost 4 decades ago. I had to go in. The place was pristine in its originality. The oak display case was still there...still full of penny candy (which now costs a dime). The water cooler for the sodas was gone but the grabber, the mechanical device used to grab items from the top shelves was still there on its hook in the corner. The newspaper tray was still there as I had remembered it.
Most conspicuously absent was Ada, the lady who ran the joint. She knew every kid in the neighborhood (and wouldn't think twice about calling your parents if you tried to buy some cigarettes). She also knew every piece of gossip in town. Her nephew, who now tends the shop, explained that she had died two years ago at age 87. She had worked the place well into her seventies. He told me that old "clients" had dropped by fairly often; that she had remembered most of them; and, that all of them, like me, were shocked that the old place still existed. I was sorry to have missed her.
Also conspicuously absent were the kids. While my generation rode bikes everywhere and generally ran wild, the new generation is home watching tv, playing on the internet or texting their smart phones. Despite the resilience of the lousy house, the old neighborhood had a distinctly different feel to it.
It is remarkable to consider what survives and what does not as progress marches inexorably forward. Without Ada, it is hard to believe that the lousy house will last much longer. I know that it was the high point of my return to my home town--kind of a Rosebud moment. Such moments do not come often and need to be cherished.
April 8, 2010
Skin in the Game
Back in the early 1970's, I did research on neurotransmitters at Massachusetts General Hospital in Boston. Our group collarorated with the Department of Psychiatry. One day while shooting the bull with some post-doc Psychiatry fellows, I asked them what their favorite Psych study was. Several of them mentioned a study which demonstarted that patients get a lot more from their cognitive therapy (counseling) if they actually pay something, even a small fraction, for it. If it were completely free, they did not value it. This little conversation stuck with me.
There is much talk today about moral hazard; the idea that if a third party pays for a service, it is misused or abused. Investment Bankers take excessive risk if they know the public will bail them out. Patients want more health care, even unnecessary health care so long as an insurance company pays for it. The list is endless.
People have been able to buy half million dollar homes with no money down; those with any equity have sucked it out. Having no equity in a house sure makes it easier to mail in the keys and walk away.
My 16 year old daughter had a summer job punching a cash register at the local grocery store. She came home with stories of the fine meats, expensive cheeses and name brand products that people were buying with food stamps--better stuff than most upper-middle class families could afford.
I recall, as a practicing physician, having difficult end-of-life discussions with family members about how aggressive to be with terminal aged loved ones. Many responded that I should do everything possible so long as the insurance paid for it. I love the ads on TV that promise that they can get you a power chair (to get your lazy butt out of the chair) or a scooter (to get your lazy butt around the house) without costing you a cent. While there are legitimate uses for these things, for most patients, the increased inactivity, enabled by these expensive devices, actually reduces health. The power of free is incredible.
The popular book—Predictably Irrational documents the Hershey kiss experiment. The experimenters offered students a Lindt Truffle (very high end chocolate) for 26 cents or a Hershey Kiss for 1 cent. 40% chose the Lindt Truffle while 40% chose the Hershey Kiss. The price of each was dropped one cent and the choices were repeated. In that instance, the subjects chose the kiss 90% of the time. Despite the fact that the price was dropped equally, the “freeness” of the kiss seemed irresistible. Impressively the experimenters tried various other combinations but were unable to avoid the power of “freeness”.
Goldman Sachs was a privately run firm until the 1990's; when it invested in something, it was using the partners' capital--capital that could only be taken out slowly, even after retirement. They were all on the hook personally. Once they went public, they were betting the shareholders capital. Do you think management's tolerance for risk increased?
All of these examples underscore the incredible changes in behavior that are explainable by moral hazard. Perhaps the answer to many of the ills presently effecting society is to substantially reduce moral hazard at all levels. Let's go back to requiring a 10-20% down payment on mortgages (and all loans). Let us require people with food stamps to pay 20% of the cost. Let us require credit default swaps to be limited to insuring a maximum of 80% of the value of the bond in question. Let's require insurance (in total) to cover only a maximum of 80% of the cost of a medical procedure. This simple concept is known as having "skin in the game"; it forces people to actually seriously consider how they use resources--something sorely lacking in today's society. Just as the Hersey kiss experiment showed us, even a small cost makes people more rational and more responsible in their choices.
There is much talk today about moral hazard; the idea that if a third party pays for a service, it is misused or abused. Investment Bankers take excessive risk if they know the public will bail them out. Patients want more health care, even unnecessary health care so long as an insurance company pays for it. The list is endless.
People have been able to buy half million dollar homes with no money down; those with any equity have sucked it out. Having no equity in a house sure makes it easier to mail in the keys and walk away.
My 16 year old daughter had a summer job punching a cash register at the local grocery store. She came home with stories of the fine meats, expensive cheeses and name brand products that people were buying with food stamps--better stuff than most upper-middle class families could afford.
I recall, as a practicing physician, having difficult end-of-life discussions with family members about how aggressive to be with terminal aged loved ones. Many responded that I should do everything possible so long as the insurance paid for it. I love the ads on TV that promise that they can get you a power chair (to get your lazy butt out of the chair) or a scooter (to get your lazy butt around the house) without costing you a cent. While there are legitimate uses for these things, for most patients, the increased inactivity, enabled by these expensive devices, actually reduces health. The power of free is incredible.
The popular book—Predictably Irrational documents the Hershey kiss experiment. The experimenters offered students a Lindt Truffle (very high end chocolate) for 26 cents or a Hershey Kiss for 1 cent. 40% chose the Lindt Truffle while 40% chose the Hershey Kiss. The price of each was dropped one cent and the choices were repeated. In that instance, the subjects chose the kiss 90% of the time. Despite the fact that the price was dropped equally, the “freeness” of the kiss seemed irresistible. Impressively the experimenters tried various other combinations but were unable to avoid the power of “freeness”.
Goldman Sachs was a privately run firm until the 1990's; when it invested in something, it was using the partners' capital--capital that could only be taken out slowly, even after retirement. They were all on the hook personally. Once they went public, they were betting the shareholders capital. Do you think management's tolerance for risk increased?
All of these examples underscore the incredible changes in behavior that are explainable by moral hazard. Perhaps the answer to many of the ills presently effecting society is to substantially reduce moral hazard at all levels. Let's go back to requiring a 10-20% down payment on mortgages (and all loans). Let us require people with food stamps to pay 20% of the cost. Let us require credit default swaps to be limited to insuring a maximum of 80% of the value of the bond in question. Let's require insurance (in total) to cover only a maximum of 80% of the cost of a medical procedure. This simple concept is known as having "skin in the game"; it forces people to actually seriously consider how they use resources--something sorely lacking in today's society. Just as the Hersey kiss experiment showed us, even a small cost makes people more rational and more responsible in their choices.
March 30, 2010
Complex Adaptive Systems
It will be extremely interesting to watch the new health care system roll out. It will phase in over many years; so, do not expect any quick, meaningful evaluations. Traditional organizational theory (the kind Congress uses) views the health care system as a machine; it has easily interchangeable parts as well as sets of behavior which are predictable and controllable based on prior histories. All the players will line up like good little soldiers; those who resist falling in step can be replaced. Hence, doctors will just accept a 21% Medicare haircut; patients will simply accept the mandate to buy insurance; insurance companies will simply ignore pre-existing conditions; brokers will run efficient exchanges. In your dreams.
Health care does not act like a predictable machine. Complexity theory would describe it as a Complex Adaptive System (CAS). A CAS is an open, dynamic network with incredible plasticity. It is made up of multiple semi-autonomous units which simultaneously compete and cooperate with each other. The social-networking types would call them "frenemies"--friends and enemies at the same time. The plasticity of these systems allows them to adapt to change and to shift allegiances based on ever-evolving behaviors. A CAS adapts to a changing environment incrementally and does NOT respond monolithically to predetermined orders proclaimed from hierarchical or centralized controlling bodies.
Imagine a school board negotiating for a new health care contract. Here are the players: 1) the teachers (the patients), 2) the union reps, 3) the brokers, 4) the school board, 5) the insurance companies, 6) the hospitals, 7) the primary-care physicians, 8) the specialists, 9) the hospital-based physicians, 10) the free-standing centers. I can go on but these are the major forces; their stated ultimate goal may be to provide high quality health care to the patients, but, trust me that their incentives are NOT aligned. Each semi-autonomous group can collaborate with or fight against any other group...but not consistently, depending on what aspect of the contract is being discussed. Actually, within each group, subgroups can align with or fight among themselves simultaneously. Male teachers may want different benefits than female teachers. Primary Care doctors may want different things depending on their comfort with hospitalized patients. Specialists may vary because of the nature of their invasive procedures. Everyone is looking to cherry-pick the low hanging fruit.
Congress, assuming the traditional organizational model, has been clueless in its deliberations. It has assumed that the system is basically stable; that its functions and roles can be carried out by replaceable individuals and that financial incentives, rigid regulations, inflexible protocols and "best practice" initiatives will carry the day. Recall some of the more recent failures spawned by such an autocratic approach: HMO's, gatekeepers, practice guidelines, DRG's, formularies and preferred providers... to name a few.
By recognizing the true nature of Complex Adaptive Systems, it becomes clear why many prior attempts at building sustainable processes (and even consensus) within the health care system have failed and why scientific evidence alone is insufficient to drive the proper adoption of new innovation. In fact, scientific evidence is even slower at weeding out ineffective treatments. Many new innovations (effective or not) spawn cottage industries which are incredibly difficult to eradicate once established.
What to do? The National Institute of Health (NIH) has been studying this problem; they have proposed a counter strategy--the Reflective Adaptive Process. They suggest five main guiding principles:
1) Sharing the same Mission, Vision and Values are fundamental to guiding any changes
to a complex adaptive system.
2) Time and space must be created for learning and reflecting on the process.
3) Tension and Discomfort must be viewed as NORMAL and encouraged as part of the evolutionary process.
4) Improvement teams must include a wide-spectrum of the agents involved--not just the anointed winners and yes- men so common in the hierarchy.
5) Change requires leadership which allows for reflection and for participation by all semi-autonomous groups.
In my view, the first guiding principle is 90% of the battle. Without a shared mission, vision and set of values, the other four will become just wasted effort. So, how do you go about setting up an organization with shared mission, vision and values? Well, you find an organization which has succeeded at just that--then, you buy, copy or steal their model.
The Dartmouth Atlas, which I feel is the road-map to improving cost and quality to our health care system, has identified areas of the country where invasive procedures are not overused and where health care costs and quality seem to be relatively controlled. It appears that horizontally and vertically integrated health care systems (like Kaiser, Mayo and Cleveland Clinics) seem to offer the right model for shared vision, mission and values. It is no coincidence that the doctors are all salaried employees and are somewhat less entrepreneurial. (See Blog Off the Tracks below.)
Ironically, this is just what many young doctors want; they think the long hours, little vacation time and dedication of the previous generation are a fool's game. Why not have a successful career AND a life? If Congress had a clue, they would be creating policy which would shepherd all the players into large groups which, by the nature of their organization (horizontal and vertical integration), would foster a shared vision, mission and set of values. As Yogi Berra would say: Half of the battle would be three -quarters over.
Despite being a dinosaur, I would gladly sign up.
Health care does not act like a predictable machine. Complexity theory would describe it as a Complex Adaptive System (CAS). A CAS is an open, dynamic network with incredible plasticity. It is made up of multiple semi-autonomous units which simultaneously compete and cooperate with each other. The social-networking types would call them "frenemies"--friends and enemies at the same time. The plasticity of these systems allows them to adapt to change and to shift allegiances based on ever-evolving behaviors. A CAS adapts to a changing environment incrementally and does NOT respond monolithically to predetermined orders proclaimed from hierarchical or centralized controlling bodies.
Imagine a school board negotiating for a new health care contract. Here are the players: 1) the teachers (the patients), 2) the union reps, 3) the brokers, 4) the school board, 5) the insurance companies, 6) the hospitals, 7) the primary-care physicians, 8) the specialists, 9) the hospital-based physicians, 10) the free-standing centers. I can go on but these are the major forces; their stated ultimate goal may be to provide high quality health care to the patients, but, trust me that their incentives are NOT aligned. Each semi-autonomous group can collaborate with or fight against any other group...but not consistently, depending on what aspect of the contract is being discussed. Actually, within each group, subgroups can align with or fight among themselves simultaneously. Male teachers may want different benefits than female teachers. Primary Care doctors may want different things depending on their comfort with hospitalized patients. Specialists may vary because of the nature of their invasive procedures. Everyone is looking to cherry-pick the low hanging fruit.
Congress, assuming the traditional organizational model, has been clueless in its deliberations. It has assumed that the system is basically stable; that its functions and roles can be carried out by replaceable individuals and that financial incentives, rigid regulations, inflexible protocols and "best practice" initiatives will carry the day. Recall some of the more recent failures spawned by such an autocratic approach: HMO's, gatekeepers, practice guidelines, DRG's, formularies and preferred providers... to name a few.
By recognizing the true nature of Complex Adaptive Systems, it becomes clear why many prior attempts at building sustainable processes (and even consensus) within the health care system have failed and why scientific evidence alone is insufficient to drive the proper adoption of new innovation. In fact, scientific evidence is even slower at weeding out ineffective treatments. Many new innovations (effective or not) spawn cottage industries which are incredibly difficult to eradicate once established.
What to do? The National Institute of Health (NIH) has been studying this problem; they have proposed a counter strategy--the Reflective Adaptive Process. They suggest five main guiding principles:
1) Sharing the same Mission, Vision and Values are fundamental to guiding any changes
to a complex adaptive system.
2) Time and space must be created for learning and reflecting on the process.
3) Tension and Discomfort must be viewed as NORMAL and encouraged as part of the evolutionary process.
4) Improvement teams must include a wide-spectrum of the agents involved--not just the anointed winners and yes- men so common in the hierarchy.
5) Change requires leadership which allows for reflection and for participation by all semi-autonomous groups.
In my view, the first guiding principle is 90% of the battle. Without a shared mission, vision and set of values, the other four will become just wasted effort. So, how do you go about setting up an organization with shared mission, vision and values? Well, you find an organization which has succeeded at just that--then, you buy, copy or steal their model.
The Dartmouth Atlas, which I feel is the road-map to improving cost and quality to our health care system, has identified areas of the country where invasive procedures are not overused and where health care costs and quality seem to be relatively controlled. It appears that horizontally and vertically integrated health care systems (like Kaiser, Mayo and Cleveland Clinics) seem to offer the right model for shared vision, mission and values. It is no coincidence that the doctors are all salaried employees and are somewhat less entrepreneurial. (See Blog Off the Tracks below.)
Ironically, this is just what many young doctors want; they think the long hours, little vacation time and dedication of the previous generation are a fool's game. Why not have a successful career AND a life? If Congress had a clue, they would be creating policy which would shepherd all the players into large groups which, by the nature of their organization (horizontal and vertical integration), would foster a shared vision, mission and set of values. As Yogi Berra would say: Half of the battle would be three -quarters over.
Despite being a dinosaur, I would gladly sign up.
March 28, 2010
And the beat goes on......
There is an old joke about the husband who scolds his wife for buying expensive clothes. Confident that she can defuse this claim, she drags him to the closet and challenges him to pick out the most expensive dress. He picks out a plain, unassuming dress with the tags still attached. "Aha!", she exclaims as she relishes explaining to him that that dress is well below average in cost. He retorts that it is the most expensive because it has hung there, unworn, for six months; the most expensive things we buy are the things that we do not use.
America has the most expensive health care in the world. There are many reasons for this but the most pressing is the fact that so many of our advanced treatments do no good--in fact, many of them do harm. The Dartmouth Atlas, published annually, tracks the variation in use of invasive, high tech therapies across the country. It demonstrates an unbelievably high variation in use; paradoxically, it further demonstrates that the higher the use of these procedures, the worse are the outcomes. In short, excessive use of some procedures can be toxic to your well-being. What happened to the dictum: "First, do no harm."?
The most expensive health care that we provide is the care that does not work...and even more expensive is the care that does harm. We are way too slow in learning this lesson. Why did it take over 30 years to figure out that routine Hormone Replacement Therapy was killing women? How quickly we have forgotten the politically charged issue of bone marrow transplants for metastatic breast cancer from a decade ago. The issue quietly went away when it was conclusively shown that these transplants actually shortened survival.
Coronary Artery Stents are one contemporary example. They are incredibly effective in certain circumstances. However, the indications for their placement have grown so wide as to undercut their rationale. We place about 3 times as many as other developed countries; yet, the long term goals of avoiding heart attack and or death are no different. This is clearly overuse....and,boy, are they expensive. Many other examples abound.
The British have an institute called the National Institute of Clinical Excellence (NICE) which objectively evaluates the utility of procedures, medications and treatments. Based on their findings, they may limit or deny the use of modalities which are not effective. Can you imagine an institute like that here? Not likely as the special interests would have a stroke. Meanwhile, the overuse of dubious treatments threatens to bankrupt our health care system....and the beat goes on. When will we become smarter about the allocation of our resources? Probably, when they are gone. Contrary to what you hear, eliminating treatments which do not work is not rationing. It is time to clean out the closet.
America has the most expensive health care in the world. There are many reasons for this but the most pressing is the fact that so many of our advanced treatments do no good--in fact, many of them do harm. The Dartmouth Atlas, published annually, tracks the variation in use of invasive, high tech therapies across the country. It demonstrates an unbelievably high variation in use; paradoxically, it further demonstrates that the higher the use of these procedures, the worse are the outcomes. In short, excessive use of some procedures can be toxic to your well-being. What happened to the dictum: "First, do no harm."?
The most expensive health care that we provide is the care that does not work...and even more expensive is the care that does harm. We are way too slow in learning this lesson. Why did it take over 30 years to figure out that routine Hormone Replacement Therapy was killing women? How quickly we have forgotten the politically charged issue of bone marrow transplants for metastatic breast cancer from a decade ago. The issue quietly went away when it was conclusively shown that these transplants actually shortened survival.
Coronary Artery Stents are one contemporary example. They are incredibly effective in certain circumstances. However, the indications for their placement have grown so wide as to undercut their rationale. We place about 3 times as many as other developed countries; yet, the long term goals of avoiding heart attack and or death are no different. This is clearly overuse....and,boy, are they expensive. Many other examples abound.
The British have an institute called the National Institute of Clinical Excellence (NICE) which objectively evaluates the utility of procedures, medications and treatments. Based on their findings, they may limit or deny the use of modalities which are not effective. Can you imagine an institute like that here? Not likely as the special interests would have a stroke. Meanwhile, the overuse of dubious treatments threatens to bankrupt our health care system....and the beat goes on. When will we become smarter about the allocation of our resources? Probably, when they are gone. Contrary to what you hear, eliminating treatments which do not work is not rationing. It is time to clean out the closet.
March 26, 2010
Heavy Lifting
Having passed a health care bill, Congress should be allowed a suitable time for gloating before the real heavy lifting begins. It has been common knowledge that the health care crisis has three main facets: access, quality and cost. The bill just passed addresses access to the system for most Americans; however it simply takes our broken existing system and applies it more widely. The CBO has been able to squeeze out some cost savings in this new plan by cutting reimbursement to Medicare providers by 21%. Office based physicians with a high overhead will find their actual pay reduced by about 50% by these cuts. They will begin opting out of Medicare--hence, making access a problem all over again.
The heavy liftings that I allude to are the quality and cost issues which this bill fails to address. Despite all the claims that we have the best health care system in the world, we do not. Numerous studies demonstrate that we lag significantly behind other developed countries in important quality indicators--yet we spend almost twice what they pay. Fixing the quality/cost (value) problem will look like the Aegean Stables after the relatively simple process (just completed) of securing greater access--a process that is actually in Act I.
The road-map to the solution of the quality/cost conundrum exists and has existed for some time--but, it has been ignored. The Dartmouth Atlas publishes a yearly study of the variation in use of various medical procedures across the geographical USA. It not only demonstrates a wide variation in the use of invasive procedure to treat common conditions but surprisingly shows that the MORE health care you receive, the WORSE becomes your outcome. In short, the overuse of aggressive high tech medical care can be toxic to your health. Florida, New York, New Jersey and Los Angeles top the list (surprise, surprise).
Correcting this overuse of marginally beneficial medical procedures will take a seismic shift in medical policy. Special interest groups are already digging in their heels. However, we may be approaching a tipping point. Fortune magazine, usually considered a conservative source, published an article last November that outlined the overuse of five common procedures. It recommended that if your doctor has ordered up one of them, to either get a second opinion or run for the hills. Reports concerning excessive radiation exposure from the overuse of CT scans are reaching the lay press. In short, the overuse of medical procedures, medications and therapies are becoming part of the public's consciousness. New diseases (mostly mental) are cropping up faster than we can categorize them. How many of them are real as opposed to just personality quirks?
Correcting this medicalization of everything will be difficult. Key to any frontal assault on the quality/cost issue will be a fundamental overhaul in how statistics are used (misused) to justify the care that we receive. This misuse and misunderstanding of statistical methods has been a dirty little secret of organized science for some time. Yet, the misuse of statistics has made many a career, propelled many a promotion, generated a lot of sales and made a lot of people rich. Forcing a proper use of statistics will be a sea-change that will be difficult to construct.
Let's give our hard working leaders a month to gloat over their shallow victory. Then, we must demand that they attack the other 2/3's of the problem--cost and quality. That is the Heavy Lifting. As health care costs approach 20% of GDP, we had better get it under control before it tanks the entire economy.
March 4, 2010
Cytokine Storm
The human immune system is one of the seven wonders of nature. It is an incredibly complicated system; when it works well, we are generally unaware that it is even functioning. When it is not working properly, disaster is not far off. It has three major ways of not working: it can be lazy and allow infections (or tumors) to proceed unchecked; it can be wiped out altogether by HIV and leave the victim open to all predators; finally, it can be hyper-vigilant.
When it is hyper-vigilant, its response to some triggering invader goes way beyond what is necessary. One hundred and fifty (or more) chemical agents can be released. Chemicals which increase inflammation compete with chemicals which decrease inflammation. The resulting battle is called a cytokine storm and can be more lethal to its victim that the inciting infection. This exaggerated immune response is caused by the rapid proliferation of highly activated t-cells or natural killer cells.
Bird Flu (the H5N1 influenza), is a classic example. If the patient develops a cytokine storm in reaction to the infection, he develops acute respiratory distress syndrome (ARDS), which is often lethal. Otherwise, Bird Flu is just another self-limited routine respiratory illness.
American Security has parallels to the human immune system. It could be lax and allow unwanted penetration-- such as 9/11. It could be wiped out completely by a nuclear war. Or, it could over-react to penetration by forming a political cytokine storm; such a storm could be more lethal to our well being than the original threat had posed.
In fact, this was exactly what has happened. Our guard was down and twenty determined, well trained terrorists changed our world on 9/11. The situation demanded a measured, well targeted response; what we got was a cytokine storm. The government orchestrated an attack (and war) on one country marginally involved with 9/11 (Afghanistan) and another attack (and war) on a country not involved at all (Iraq). They trampled on Constitutional rights, broke international law by encouraging torture and directed the expansion of aggression via the new "Homeland Security" department. For me, the very name--Homeland Security-- conjures up fascist vapors.
Our security system needs to dial it back and prevent this cytokine storm from destroying who we are. We can enjoy high levels of security with a much smaller bootprint on the throat of the world. Our resources would be more effective and last longer if we showed some moderation. Would not a greater use of drones and special forces accomplish more with less risk than our current role of nation building? Obama promised us a more measured approach during the campaign; let's hold him to his promise. It is not weak to be smart.
When it is hyper-vigilant, its response to some triggering invader goes way beyond what is necessary. One hundred and fifty (or more) chemical agents can be released. Chemicals which increase inflammation compete with chemicals which decrease inflammation. The resulting battle is called a cytokine storm and can be more lethal to its victim that the inciting infection. This exaggerated immune response is caused by the rapid proliferation of highly activated t-cells or natural killer cells.
Bird Flu (the H5N1 influenza), is a classic example. If the patient develops a cytokine storm in reaction to the infection, he develops acute respiratory distress syndrome (ARDS), which is often lethal. Otherwise, Bird Flu is just another self-limited routine respiratory illness.
American Security has parallels to the human immune system. It could be lax and allow unwanted penetration-- such as 9/11. It could be wiped out completely by a nuclear war. Or, it could over-react to penetration by forming a political cytokine storm; such a storm could be more lethal to our well being than the original threat had posed.
In fact, this was exactly what has happened. Our guard was down and twenty determined, well trained terrorists changed our world on 9/11. The situation demanded a measured, well targeted response; what we got was a cytokine storm. The government orchestrated an attack (and war) on one country marginally involved with 9/11 (Afghanistan) and another attack (and war) on a country not involved at all (Iraq). They trampled on Constitutional rights, broke international law by encouraging torture and directed the expansion of aggression via the new "Homeland Security" department. For me, the very name--Homeland Security-- conjures up fascist vapors.
Our security system needs to dial it back and prevent this cytokine storm from destroying who we are. We can enjoy high levels of security with a much smaller bootprint on the throat of the world. Our resources would be more effective and last longer if we showed some moderation. Would not a greater use of drones and special forces accomplish more with less risk than our current role of nation building? Obama promised us a more measured approach during the campaign; let's hold him to his promise. It is not weak to be smart.
February 27, 2010
Socialism, oh Socialism......
One rallying cry for those opposed to healthcare reform has been that we are moving incrementally toward the socialistic decadence of western Europe. While these countries provide high quality health care to all of its citizens at half the cost, the very idea of a government run system is anathema to the free marketers here in the good old U.S. of A.
This argument has been very successful in rallying support against a greater role for government in healthcare but is ultimately specious. While it is true that the public plan (proposed as a hybrid of Medicare to compete with private corporate insurance plans) is a definite move toward socialism, the unvarnished truth is that we are NOT moving away from a free-market system.
Medicare has set reimbursements for medical services for years; physician fees are set and DRG's (Diagnosis Related Groups) have set hospital reimbursements for decades. To a large degree, private insurance has followed suit by paying some percentage premium or discount to these set payments. Yet...Medicare (the government) has set the basic price; Medicaid, Medicare's ugly sister, pays at a steep discount to Medicare....often at a level below the providers' actual costs incurred in providing those services.
In our existing system, an entrepreneur is NOT free to make a capital investment which might make him a nice profit....the very bedrock of the free enterprise capitalistic system. He or she must obtain a "Certificate of Need" to build or upgrade a facility. If an entrepreneur wants to build an MRI center to compete with a local hospital, he must obtain a certificate of need from the government--a lengthy and possibly politically charged event.
The Stark Amendment prohibits doctors from referring patients to a facility which they may have built as a way of providing better or more-timely care. Stark reasoned that (oh my god), they might have a conflict of interest and make a few bucks from the investment of time, energy and capital. Stark thus prevents the very entrepreneurial role of return- on- investment embraced by free market capitalism.
Many other examples abound, but only serve to provide further examples of the point that we do NOT have a free market form of capitalism at work in our health care system. Rather, we have a system of authoritative capitalism--the nucleus of the form of capitalism that we have seen at work in China over the past two decades. This system, also based on return-on-investment, picks winners and losers at the discretion of the regulators. This form can and does squash entrepreneurial activity which does not enjoy strict government approval. Unfortunately, the winners so anointed are often chosen on the basis of political influence rather than on total utility to the system. Corruption is always lingering in the background.
Free market capitalism may not work for the healthcare system. Maybe the health care system (like the military) is too important to the public to allow it to function under free market rules. Health care is really not optional. However, the next time that you hear the fear-mongering cry of "Socialism is taking over health care", think about where we really are now and whether an incremental move toward a more socialistic system (government run), is an improvement or a deterioration to the system that we now "enjoy".
This argument has been very successful in rallying support against a greater role for government in healthcare but is ultimately specious. While it is true that the public plan (proposed as a hybrid of Medicare to compete with private corporate insurance plans) is a definite move toward socialism, the unvarnished truth is that we are NOT moving away from a free-market system.
Medicare has set reimbursements for medical services for years; physician fees are set and DRG's (Diagnosis Related Groups) have set hospital reimbursements for decades. To a large degree, private insurance has followed suit by paying some percentage premium or discount to these set payments. Yet...Medicare (the government) has set the basic price; Medicaid, Medicare's ugly sister, pays at a steep discount to Medicare....often at a level below the providers' actual costs incurred in providing those services.
In our existing system, an entrepreneur is NOT free to make a capital investment which might make him a nice profit....the very bedrock of the free enterprise capitalistic system. He or she must obtain a "Certificate of Need" to build or upgrade a facility. If an entrepreneur wants to build an MRI center to compete with a local hospital, he must obtain a certificate of need from the government--a lengthy and possibly politically charged event.
The Stark Amendment prohibits doctors from referring patients to a facility which they may have built as a way of providing better or more-timely care. Stark reasoned that (oh my god), they might have a conflict of interest and make a few bucks from the investment of time, energy and capital. Stark thus prevents the very entrepreneurial role of return- on- investment embraced by free market capitalism.
Many other examples abound, but only serve to provide further examples of the point that we do NOT have a free market form of capitalism at work in our health care system. Rather, we have a system of authoritative capitalism--the nucleus of the form of capitalism that we have seen at work in China over the past two decades. This system, also based on return-on-investment, picks winners and losers at the discretion of the regulators. This form can and does squash entrepreneurial activity which does not enjoy strict government approval. Unfortunately, the winners so anointed are often chosen on the basis of political influence rather than on total utility to the system. Corruption is always lingering in the background.
Free market capitalism may not work for the healthcare system. Maybe the health care system (like the military) is too important to the public to allow it to function under free market rules. Health care is really not optional. However, the next time that you hear the fear-mongering cry of "Socialism is taking over health care", think about where we really are now and whether an incremental move toward a more socialistic system (government run), is an improvement or a deterioration to the system that we now "enjoy".
February 20, 2010
Dump and Run
I cut my AARP membership card in half and mailed it to headquarters; I have been questioning their values for some time but an article in this month's magazine finished me off. I'm done with them
The article covers the story of a couple reaching retirement age (both working professionals with good jobs); they plan to travel. Unfortunately, the husband develops dementia at age 64 and begins to become a burden. After conferring with an attorney who specializes in geriatric issues, the wife divorces the man, keeping all the remaining assets and the house for herself. The husband is put in a nursing home on the taxpayers' dime (Medicaid). I do not really blame this woman for her actions; her husband was gone....only a shell remained. She made a tough, cold, pragmatic decision to save herself and her independence. Unfortunately, the article couches this whole sordid situation in terms of how loving and caring the wife was as she carried out her plan. She had no choice.
She had no choice???? She could have taken care of him. She could have purchased long-term care insurance. She could have divorced him and given him half of the assets (but why waste assets on a demented nursing home patient)? The article goes on to describe other legal maneuvers to disengage from situations like this.
I do not blame this woman for her action but let's speak plainly and call a spade a spade. She kept the assets and put the "love of her life" on the public dole. In these cases, the State will appoint a guardian to make critical decisions for the patient. As a rule, to avoid litigation, guardians insist that all medical interventions be taken until the end. Instead of allowing nature to take its course, this patient will be subjected to feeding tubes, trips to the ER, medical procedures and even possibly life supporting measures such as ventilators--all on the taxpayers' dime. By the way, if he is demented, who represented him in the divorce where he got no assets? These maneuvers may be legal but are they moral?
AARP comes off as advocating this kind of arrangement. Seek out an attorney who specializes in geriatric law; protect yourself--yourself being the key word. The sanctity of marriage is frequently discussed in the political discourse these days. No wonder the young think marriage is a joke and are trending toward cohabitation (with children) as an alternative.
The author of this diatribe concludes by chastising Medicare for not doing more to help with home nursing and nursing home care. Hello!....Medicare has a 36 trillion dollar UNFUNDED obligation. Adding to this burden would be insane during this economic melt-down. I realize that AARP is a lobbying organization for the elderly, but this is an embarrassment. The new culture wars will not be the old ones (black vs. white or rich vs. poor); they will be the old vs. the young. The old are embarking on a trip to suck the economic life out of the young. Medicare and Social Security are called the third rail of politics. The tsunami of baby boomers about to hit age 65 will crush the young who simply do not have the demographic strength to support all that the elderly are demanding. I want no part of it.
I hope that loving spouse enjoys her travelling.
The article covers the story of a couple reaching retirement age (both working professionals with good jobs); they plan to travel. Unfortunately, the husband develops dementia at age 64 and begins to become a burden. After conferring with an attorney who specializes in geriatric issues, the wife divorces the man, keeping all the remaining assets and the house for herself. The husband is put in a nursing home on the taxpayers' dime (Medicaid). I do not really blame this woman for her actions; her husband was gone....only a shell remained. She made a tough, cold, pragmatic decision to save herself and her independence. Unfortunately, the article couches this whole sordid situation in terms of how loving and caring the wife was as she carried out her plan. She had no choice.
She had no choice???? She could have taken care of him. She could have purchased long-term care insurance. She could have divorced him and given him half of the assets (but why waste assets on a demented nursing home patient)? The article goes on to describe other legal maneuvers to disengage from situations like this.
I do not blame this woman for her action but let's speak plainly and call a spade a spade. She kept the assets and put the "love of her life" on the public dole. In these cases, the State will appoint a guardian to make critical decisions for the patient. As a rule, to avoid litigation, guardians insist that all medical interventions be taken until the end. Instead of allowing nature to take its course, this patient will be subjected to feeding tubes, trips to the ER, medical procedures and even possibly life supporting measures such as ventilators--all on the taxpayers' dime. By the way, if he is demented, who represented him in the divorce where he got no assets? These maneuvers may be legal but are they moral?
AARP comes off as advocating this kind of arrangement. Seek out an attorney who specializes in geriatric law; protect yourself--yourself being the key word. The sanctity of marriage is frequently discussed in the political discourse these days. No wonder the young think marriage is a joke and are trending toward cohabitation (with children) as an alternative.
The author of this diatribe concludes by chastising Medicare for not doing more to help with home nursing and nursing home care. Hello!....Medicare has a 36 trillion dollar UNFUNDED obligation. Adding to this burden would be insane during this economic melt-down. I realize that AARP is a lobbying organization for the elderly, but this is an embarrassment. The new culture wars will not be the old ones (black vs. white or rich vs. poor); they will be the old vs. the young. The old are embarking on a trip to suck the economic life out of the young. Medicare and Social Security are called the third rail of politics. The tsunami of baby boomers about to hit age 65 will crush the young who simply do not have the demographic strength to support all that the elderly are demanding. I want no part of it.
I hope that loving spouse enjoys her travelling.
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