Category Archives: Healthcare Reform

In your ideal world, would you prefer your physician’s income reflect:

• number of patients seen and procedures performed, or
• high quality of care, reflected in ready accessibility, lowering cost without compromising care, compliance with science-based guidelines, and patient satisfaction/experience, or
• combination of the above

In other words, do you want your physician incentivized by volume or value?

It doesn’t matter what you want anyway, peon.

A recent study looked at salary arrangements for doctors in system-affiliated physician organizations in four states. The main conclusion:

The study results suggest that despite growth in value-based payment arrangements from payers, health systems currently incentivize physicians to maximize volume, thereby maximizing health system revenues.

This in-depth multimodal cross-sectional assessment of compensation and incentives among health system–affiliated POs [physician organizations] for which there is greater exposure to VBP [value-based payment] and APM [alternative payment model] arrangements compared with independent practices found that volume was the most common form of base compensation by a wide margin, being included by more than 80% and 90% of POs for PCPs [primary care physicians] and specialists, respectively, and representing more than two-thirds of compensation when included. Similarly, actions to increase volume were the most commonly cited means for physicians to increase their compensation. Base compensation incentives for physicians were not dominated by population or value-oriented payments, with only a third of POs reporting inclusion of capitation with PCPs and averaging only about a third of total compensation when included. Performance-based financial incentives for value-oriented goals, such as clinical quality, cost, patient experience, and access, were commonly included in compensation but represented a small fraction of total compensation for PCPs and specialists in health systems, operating at the margins to affect physician behavior. Taken together, these findings suggest that despite growth in APMs and VBP arrangements, these value-based incentives were not commonly translated into health system physician compensation, which was dominated by volume-oriented incentives.

The problem is that it’s a lot easier to measure volume than value. Easy wins.

Steve Parker, M.D.

Ref: Physician Compensation Arrangements and Financial Performance Incentives in US Health Systems in JAMA Network

PS: Avoid the medical-industrial complex as much as is safely possible. Let me help.

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Hospital care accounts for 33% of money spent on healthcare

From UPI Jan. 31, 2020:

Despite spending far more on health care than other wealthy nations, the United States has the lowest life expectancy and the highest suicide rate, new research shows.

For the study, researchers at The Commonwealth Fund compared the United States with 10 other high-income nations in the Organization for Economic Cooperation and Development (OECD)—Australia, Canada, France, Germany, the Netherlands, New Zealand, Norway, Sweden, Switzerland and the United Kingdom—and with the average for all 36 OECD nations.

In 2018, the United States spent almost 17 percent of its gross domestic product (GDP) on healthcare. That’s more than any other high-income country and twice the overall OECD average. For example, New Zealand and Australia spent 9 percent of GDP on healthcare.

U.S. healthcare spending now tops $10,000 per person, and much of it is driven by private insurance costs such as premiums, according to The Commonwealth Fund report published online Jan. 30.

Source: U.S. health stats remain low despite trillions in healthcare spending – UPI.com

The numbers above are outdated. U.S. health care spending grew 4.6 percent in 2018, reaching $3.6 trillion or $11,172 per person.  As a share of the nation’s Gross Domestic Product, health spending accounted for 17.7 percent.

Click to learn what that money is spent on.

Click to learn why U.S. healthcare is so expensive.

Steve Parker, M.D.

PS: Why not try to avoid healthcare spending by getting and staying as healthy as possible? Let me help now. And for less than $20.

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Don’t blame him

The American Prospect has an eye-opening article from 2017 that sheds light on pharmacy benefits managers (PBMs). Ever heard of them?

Author David Dayen starts with comments from pharmacy owner Frankil talking about how he determines how much money he makes on retail sale of a drug:

Like any retail outlet, Frankil purchases inventory from a wholesale distributor and sells it to customers at a small markup. But unlike butchers or hardware store owners, pharmacists have no idea how much money they’ll make on a sale until the moment they sell it. That’s because the customer’s co-pay doesn’t cover the cost of the drug. Instead, a byzantine reimbursement process determines Frankil’s fee.

“I get a prescription, type in the data, click send, and I’m told I’m getting a dollar or two,” Frankil says. The system resembles the pull of a slot machine: Sometimes you win and sometimes you lose. “Pharmacies sell prescriptions at significant losses,” he adds. “So what do I do? Fill the prescription and lose money, or don’t fill it and lose customers? These decisions happen every single day.”

Frankil’s troubles cannot be traced back to insurers or drug companies, the usual suspects that most people deem responsible for raising costs in the health-care system. He blames a collection of powerful corporations known as pharmacy benefit managers, or PBMs. If you have drug coverage as part of your health plan, you are likely to carry a card with the name of a PBM on it. These middlemen manage prescription drug benefits for health plans, contracting with drug manufacturers and pharmacies in a multi-sided market. Over the past 30 years, PBMs have evolved from paper-pushers to significant controllers of the drug pricing system, a black box understood by almost no one. Lack of transparency, unjustifiable fees, and massive market consolidations have made PBMs among the most profitable corporations you’ve never heard about.

***

In the case of PBMs, their desire for larger patient networks created incentives for their own consolidation, promoting their market dominance as a means to attract customers. Today’s “big three” PBMs—Express Scripts, CVS Caremark, and OptumRx, a division of large insurer UnitedHealth Group—control between 75 percent and 80 percent of the market, which translates into 180 million prescription drug customers. All three companies are listed in the top 22 of the Fortune 500, and as of 2013, a JPMorgan analyst estimated total PBM revenues at more than $250 billion.

***

PMBs initially came about as a means of saving costs. Why hasn’t that panned out?

The biggest reason experts cite is an information advantage in the complex pharmaceutical supply chain.

***

This lack of transparency enables PBMs to enjoy multiple hidden revenue streams from every other player. “It’s OK to have intermediaries, we have Visa,” says David Balto, an antitrust litigator and former top official with the Federal Trade Commission. “But these companies make a fabulous amount of money, even though they’re not buying the drug, not producing the drug, not putting themselves at risk.”

The PBM industry is rife with conflicts of interest and kickbacks. For example, PBMs secure rebates from drug companies as a condition of putting their products on the formulary, the list of reimbursable drugs for their network. However, they are under no obligation to disclose those rebates to health plans, or pass them along. Sometimes PBMs call them something other than rebates, using semantics to hold onto the cash. Health plans have no way to obtain drug-by-drug cost information to know if they’re getting the full discount.

***

It’s a long article and I confess I haven’t read the whole thing yet. I’ve read enough to rile up my sense of indignation! Pharmaceutical companies and health insurers don’t seem too upset. Because costs associated with these third-party shenanigans is simply passed on to the consumer—that’s you—in higher insurance premiums, deductibles, and co-pays. PBMs are a target for future healthcare reform.

Steve Parker, M.D.

PS: Reduce your needs for drugs with a healthy diet and lifestyle. I can help.

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Are ALL the clerks and administrators in hospitals necessary?

25% according to an article at JAMA Network.

Let’s face it, there’s always going to be some waste. The authors of the study at hand figure that, whatever the dollar amount of waste is, we can reduce it by 1/4. Which could be $250 billion.

A prior study indicated that 30% of healthcare spending may be considered waste. Is that still valid?

Researchers reviewed the pertinent literature from January 2012 to May 2019 focused on the 6 previously identified “waste domains”:

1. failure of care delivery
2. failure of care coordination
3. overt-reatment or low-value care
4. pricing failure
5. fraud and abuse
6. administrative complexity

Waste-related costs were converted to 2019 dollars.

From the abstract:

Findings

The review yielded 71 estimates from 54 unique peer-reviewed publications, government-based reports, and reports from the gray literature. Computations yielded the following estimated ranges of total annual cost of waste: failure of care delivery, $102.4 billion to $165.7 billion; failure of care coordination, $27.2 billion to $78.2 billion; overtreatment or low-value care, $75.7 billion to $101.2 billion; pricing failure, $230.7 billion to $240.5 billion; fraud and abuse, $58.5 billion to $83.9 billion; and administrative complexity, $265.6 billion. The estimated annual savings from measures to eliminate waste were as follows: failure of care delivery, $44.4 billion to $93.3 billion; failure of care coordination, $29.6 billion to $38.2 billion; overtreatment or low-value care, $12.8 billion to $28.6 billion; pricing failure, $81.4 billion to $91.2 billion; and fraud and abuse, $22.8 billion to $30.8 billion. No studies were identified that focused on interventions targeting administrative complexity. The estimated total annual costs of waste were $760 billion to $935 billion and savings from interventions that address waste were $191 billion to $282 billion.

Conclusions and Relevance 

In this review based on 6 previously identified domains of health care waste, the estimated cost of waste in the US health care system ranged from $760 billion to $935 billion, accounting for approximately 25% of total health care spending, and the projected potential savings from interventions that reduce waste, excluding savings from administrative complexity, ranged from $191 billion to $282 billion, representing a potential 25% reduction in the total cost of waste. Implementation of effective measures to eliminate waste represents an opportunity reduce the continued increases in US health care expenditures.

Source: Waste in the US Health Care System: Estimated Costs and Potential for Savings | Health Care Policy | JAMA | JAMA Network

Here’a radical idea. Why not stay out of the healthcare system as much as possible by getting and staying as healthy as possible? I have few ideas how…

Steve Parker, M.D.

PS: Getting and staying healthy will help you avoid wasteful healthcare spending. Let me help.

Click pic to purchase book at Amazon.com. E-book versions available at Smashwords.com.

This treadmill stress test is looking for atherosclerotic heart disease, aka coronary artery disease and coronary heart disease

From Sean Masaki Flynn at Market Watch:

As the Democratic presidential candidates argue about “Medicare for All” versus a “public option,” two simple policy changes could slash U.S. health-care costs by 75% while increasing access and improving the quality of care.

These policies have been proven to work by ingenious companies like Whole Foods and innovative governments like the state of Indiana and Singapore. If they were rolled out nationally, the United States would save $2.4 trillion per year across individuals, businesses, and the government.

The first policy—price tags—is a necessary prerequisite for competition and efficiency. Under our current system, it’s nearly impossible for people with health insurance to find out in advance what anything covered by their insurance will end up costing. Patients have no way to comparison shop for procedures covered by insurance, and providers are under little pressure to lower costs.

The second money-saving policy links health insurance (with an annual  deductible) to a health saving account (HSA).

Look, people. We gotta do something. There’s no way that healthcare in the U.S. should devour almost 20% of Gross Domestic Product. We can get it down to 5%. I know how.

Source: The U.S. can slash health-care costs 75% with 2 fundamental changes — and without ‘Medicare for All’ – MarketWatch

Steve Parker, M.D.

PS: Reduce your need for healthcare via diet and exercise!

Click pic to purchase book at Amazon.com. E-book versions available at Smashwords.com.

…according to Daily Mail:

Lawyers, medical professionals and tech experts have reacted with a mixture of horror and fury after it emerged that Google has been secretly acquiring sensitive medical data on millions of people without their knowledge or consent.

Questions were immediately raised around the ethics of the data-gathering operation – code-named Project Nightingale – as well as the security of patient data after the program was first reported on Monday.

Others called for an immediate change to privacy laws after Google and Ascension, the healthcare organization it has partnered with, boasted that the scheme is completely legal.

Dr. Robert Epstein, an author, medical researcher and former editor-in-chief at Psychology Today, summed up the mood when he tweeted: ‘You can’t make this s*** up. #BeAfraid.’

Source: Furious backlash after it emerges Google has secretly amassed healthcare data on millions of people | Daily Mail Online

The “confidential” data reportedly included names, dates of birth, lab results, diagnoses, and hospitalization records.

Thanks, Ascension. How much did you make off the deal?

Google HQ in 20 years?

I’ve increasingly noticed that I have to depend on Daily Mail or other non-U.S. sources for news that “the powers that be” apparently don’t want me to hear about.

Steve Parker, M.D.

PS: Keep your sensitive healthcare data out of Google’s  and Ascension’s clutches by getting healthier. Let me help.

PPS: If I ever have have an office-based medical practice again, I may market it as totally private. No insurance interference. No digital communication with third parties.

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A fictional cityscape abandoned and over grown with vegetation.

If Karl’s right, you’ll find good deals in real estate in a few years. If you have any money left.

You must expect that no medical care will be available for anything currently paid for by “insurance” or the government.  This is likely too pessimistic but if you count on it and are wrong you die, so being pessimistic by a bit over what’s likely is good rather than bad.  If you can change a chronic disease outcome with lifestyle you better do it now.  If you can’t then get your affairs in order, make peace with God if you believe in him, and then figure out whether you want to settle some scores when the bad stuff starts, because it’s going to and you’re going to have a very bad time of it.D

You must also expect that state, local and federal governments will all get very aggressive in trying to increase tax revenue.  If you live in a large metro area where embedded costs are high you need to get out now.  There is a very high probability that either through internal rot and collapse (e.g. they can’t pay for infrastructure repairs and they fail) or due to either an external actor or an uncoordinated and thus impossible to interdict group of Americans who decide they’ve had enough of the Blue “steal it all” crap infrastructure collapse is initiated and the large Blue Enclaves go feral within days.

If you lose this bet you will die fast and nasty.  If you stay and “win” you still lose; you’ve already seen property tax ramps in most of these places of 100% or more.  If you look at the discounted inflation-adjusted value of your house you’ve lost half of its value over the last 20 years not including the taxes already paid and thus forever gone!  That is, even if you “win” and there is no mass collapse due to either disgruntled Americans or some external actor you will still lose in that the value of your holdings will be destroyed over the next ten years.  It will be gone.  For most people not in the 1% who “own” houses their real estate holdings are more than half of their net worth and for many people it’s essentially all of it.  Get the **** out now or you will lose all of that value.  That much is assured and that’s if you win the bet; lose it and it’s not just money you lose, it’s your life as well.

RTWT.

Steve Parker, M.D.

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