The Business of Medicine

Attached a link http://www.miamiherald.com/2012/01/22/2601913_p3/hospitals-hiring-doctors-to-get.html to an interesting article written by John Dorschner titled "Hospitals hiring doctors to get ready for reform" highlighting the growing trend of hospitals purchasing physicians practices. Its of interest to note that executives at Baptist and Holy Cross say " the physicians’ practices on their own do not break even after being purchased, but ancillary income from such measures as diagnostic tests boost the bottom line." But more diagnostic tests and procedures also means more health care expenditures! At Jackson Health System, Miami-Dade’s public hospitals, the unaudited financial statements for fiscal 2011 show that the doctors’ practices lost $4.4 million! One employed physician argues that he likes this arrangement because he doesn’t have to spend time dealing with all the business aspects of a private practice. But understanding the business of medicine is exactly what we need to prevail in the rapidly changing health care environment. We cannot pretend that we can practice medicine in splendid isolation and to leave the "dirty" business to others. That's a prescription for certain marginalization and disempowerment. We must acquire knowledge and skills to master the business of medicine in order to practice medicine more efficiently. What do you think? Yours Bernd

Why We Need The Individual Mandate

Attached a link http://www.rwjf.org/files/research/20120112qs70onepager.pdf to an interesting study by the Urban Institute of the Robert Wood Johnson Foundation titled "Eliminating the Individual Mandate: Effects on Premiums, Coverage, and Uncompensated Care," analyzing the different scenarios resulting from the elimination of the individual mandate. Under the Patient Protection and Affordable Care Act (ACA) passed by Congress, most Americans will be required to be covered by health insurance or pay a penalty—the so-called individual mandate. The legality of this feature is being debated in the courts. These Urban Institute authors estimate the effects of the ACA and the individual mandate, as well as various levels of exchange participation, using a model that simulates decisions of individuals and businesses in response to policy changes. Exchange enrollment is viewed as necessary to reduce adverse selection, or the likelihood of only the sickest choosing to be insured. The researchers found that without the individual mandate: Between 40 and 42 million would remain uninsured as opposed to 26 million with the mandate; Private coverage would fall 11 million, covering 4 million fewer people than it would have without reform; Uncompensated care spending would be much higher due to the increased number of uninsured; Individual premiums in the health benefit exchanges would increase by 10 percent in a scenario assuming high exchange participation and by 25 percent with a low participation scenario. Removing the mandate from the ACA while expanding Medicaid eligibility would decrease the number of people with private coverage by 3.6 million. Uncompensated care would increase by $20 billion. I strongly recommend reading this study which provides clear and convincing arguments in favor of the individual mandate. Yours Bernd

Health Insurance

Attached a link http://meps.ahrq.gov/mepsweb/data_files/publications/st354/stat354.pdf to a very interesting federal study titled "The Concentration and Persistence in the Level of Health Expenditures over Time: Estimates for the U.S. Population, 2008-2009" published by the Center for Financing, Access, and Cost Trends of the Agency for Healthcare Research and Quality. Using information from the Household Component of the Medical Expenditure Panel Survey (MEPS-HC) for 2008 and 2009, this report provides detailed estimates of the persistence in the level of health care expenditures over time. Studies that examine the persistence of high levels of expenditures over time are essential to help discern the factors most likely to drive health care spending and the characteristics of the individuals who incur them. According to the study in 2008, 1 percent of the population accounted for 20.2 percent of total health care expenditures, and in 2009, the top 1 percent accounted for 21.8 percent of the total expenditures with an annual mean expenditure of $90,061. The lower 50 percent of the population ranked by their expenditures accounted for only 3.1 percent and 2.9 percent of the total for 2008 and 2009 respectively. Of those individuals ranked at the top 1 percent of the health care expenditure distribution in 2008, 20 percent maintained this ranking with respect to their 2009 health care expenditures In both 2008 and 2009, the top 5 percent of the population accounted for nearly 50 percent of health care expenditures. Individuals who were between the ages of 45 and 64 and the elderly (65 and older) were disproportionately represented among the population that remained in the top decile of spenders for both 2008 and 2009. While the elderly represented 13.2 percent of the overall population, they represented 42.9 percent of those individuals who remained in the top decile of spenders. Focusing on the under age 65 population, health insurance coverage status also distinguished individuals who remained in the top decile of spenders from their counterparts in the lower half of the distribution. Individuals who were uninsured for all of calendar year 2009 were disproportionately represented among the population that remained in the lower half of the distribution based on health care spending. While 15.5 percent of the overall population under age 65 was uninsured for all of 2009, the full-year uninsured comprised 25.9 percent of all individuals remaining in the bottom half of spenders (figure 6). Alternatively, only 3.6 percent of those under age 65 who remained in the top decile of spenders were uninsured. What can we learn from the data and how should the data influence public policy? We are spending a disproportionally high percentage of precious healthcare dollars on a very small percentage of sick people.Most of them suffer from preventable chronic diseases which we still cannot manage properly within our existing healthcare system. The overwhelming majority of those "high" spenders were insured and there annual mean expenditure of $90,061 are not covered by the healthcare premiums they pay. The overwhelming majority of healthy "low" spender are uninsured and therefore do not contribute with their health insurance premium payment to cover for their eventuality of their own care needs. Taking all of these facts into consideration we should support an individual mandate that requires health insurance coverage for each and every American to spread the insurance risk. Spreading the risk assures that as the number of people in a given group gets larger, a company or governmental agency can more easily spread the risk (that would be the risk of a payout) among the pool of participants. They can therefore better estimate the average cost (or payout) per person in the event that one or even several of the group are victims of a catastrophic event. In the absence of such a mandate insurance companies can simply not afford to continue paying 50% of health care expenditures on 5% of the population!!! Alternative proposals to create high-risk pools are doomed to fail because the risk to cover "sick" participants is so high that it results in unaffordable health insurance premiums by private insurance companies. If those companies choose to opt out of providing insurances for such a high-risk pool then the government remains the insurer of the last resort, i.e the tax payer. Yours Bernd

US Healthcare Costs

According to the latest edition of "Health at a Glance" http://www.oecd-ilibrary.org/social-issues-migration-health/health-at-a-glance-2011_health_glance-2011-en published by the Organization for Economic Co-operation and Development (OECD) The United States stands out as performing very well in the area of cancer care, achieving higher rates of screening and survival from different types of cancer than most other developed countries. The United States does not do well in preventing costly hospital admissions for chronic conditions, such as asthma or chronic obstructive pulmonary disease, which should normally be managed through proper primary care. Avoidable hospital admissions for asthma complications and chronic obstructive pulmonary disease (COPD) are much greater in the United States than the OECD average. For asthma admissions, the rate in the United States was 121 per 100 000 adults in 2009, more than two times greater than the OECD average of 52. For COPD, hospital admission in the United States was 230 per 100 000 adults, compared with an OECD average of 198. Regarding healthcare expenditures the United States spent 17.4% of GDP on health in 2009, much more than the OECD average of 9.6%. Spending per person is two-and-a-half times higher than the OECD average. Following the United States were the Netherlands, France and Germany, which allocated respectively 12.0%, 11.8% and 11.6% of their GDP to health. Is US health spending higher due to higher prices or higher service provision? (or both?) Facts: 1) US prices for a set of hospital services is over 60% higher than the average of 12 OECD countries, 2) US prices for certain procedures (including appendectomy,coronary angioplasty, coronary artery bypass graft, hip & knee replacement) are much higher than in other OECD countries, 3) Almost DOUBLE the spending on Insurance administration expressed in terms of purchasing power parity. Its also of interest to note that in most countries, health spending is largely financed out of taxes or social security contributions, with private insurance or ‘out-of-pocket’ payments playing a significant but secondary role. This is not the case in the United States which, together with Mexico and Chile, is the only OECD country where the government plays the smallest role in financing health spending. The public share of health expenditure in the United States was 47.7% in 2009, much lower than the OECD average of 71.7%. However, the level of health spending in the United States is so high that public (i.e. government) spending on health per capita is greater than in all other OECD countries, except Norway and the Netherlands. For this amount of public expenditure in the United States, government provided in 2009 insurance coverage only for the elderly and disabled people (through Medicare) and some of the poor (through Medicaid and the State Children’s Health Insurance Program, SCHIP), whereas in most other OECD countries this was enough for government to provide universal health insurance. Public spending on health in the United States has been growing more rapidly than private spending since 1990, largely due to expansions in coverage. Private insurance accounted for 33% of total health spending in the United States in 2009, by far the largest share among OECD countries. Beside the United States, Canada and France are the only two other OECD countries where private insurance represents more than 10% of total health spending. Conclusions: we are spending more for healthcare per person than in any other country in the world utilizing an inefficient private insurance model. But also public (i.e. government) spending on health per capita is greater than in all other OECD countries but fails to provide universal coverage. We must achieve a broad based consensus on how to efficiently allocate our healthcare resource to achieve high quality healthcare for all Americans. Tinkering on the edge will not provide us with a meaningful and sustainable solution. If we do not engage in such a dialogue now we will face rationing and further economic slowdown. Yours Bernd

Medical Errors Awaiting Prevention

Attached a link http://www.nytimes.com/2012/01/06/health/study-of-medicare-patients-finds-most-hospital-errors-unreported.html to an interesting article titled "Report Finds Most Errors at Hospitals Go Unreported" pointing out that according to recent federal study hospital employees recognize and report only one out of seven errors, accidents and other events that harm Medicare patients while they are hospitalized. According to the study, from Daniel R. Levinson, inspector general of the Department of Health and Human Services, some of the most serious problems, including some that caused patients to die, were not reported.The inspector general estimated that more than 130,000 Medicare beneficiaries experienced one or more adverse events in hospitals in a single month. Many hospital administrators acknowledged that their employees were underreporting injuries and infections that occurred in the hospital, he said. More often, Mr. Levinson said, the problem is that hospital employees do not recognize “what constitutes patient harm” or do not realize that particular events harmed patients and should be reported. In some cases, he said, employees assumed someone else would report the episode, or they thought it was so common that it did not need to be reported, or “suspected that the events were isolated incidents unlikely to recur.”The inspector general found that “hospitals made few changes to policies or practices” after employees reported harm to patients. In many cases, hospital executives told federal investigators that the events did not reveal any “systemic quality problems.”Organizations that inspect and accredit hospitals generally “do not scrutinize” how hospitals keep track of medical errors and other adverse events, the study said. The federal investigators did an in-depth review of 293 cases in which patients had been harmed. Forty of those cases were reported to hospital managers, and 28 were investigated by the hospitals, but only five led to changes in policies or practices, the study said. What are possible solutions? 1) Train staff to report medical errors and to automatically flag those patients within an electronic health record for IMMEDIATE quality assurance review 2) Utilize software which automatically triggers alerts for diagnoses and conditions including medication errors, severe bedsores, infections that patients acquire in hospitals, delirium resulting from overuse of painkillers and excessive bleeding linked to improper use of blood thinners. 3) Deploy medical error prevention teams within hospitals to educate staff and to assist in the implementation of lessons learned from a root-cause analysis into the clinical practice. I am confident that we can achieve our goals to reduce medical errors and to save lives. Yours Bernd

Medicaid Pilot Program in Florida

Letter to the Editor published in Miami Herald, December 23rd, 2011 Patients protected The Dec. 16 article State can expand Medicaid pilot program incorrectly stated that the federal government approved the expansion of the Medicaid pilot project. Actually, the extension of the five-county Medicaid pilot project was approved until 2014, but with significant improvements to the program. They include the denial of the medical-loss-ratio waiver requiring the participating private health plans to spend 85 percent of the funds on patient care and the denial of capping benefit levels for Medicaid beneficiaries, which prevents the termination of Medicaid services because recipients have already met their maximum. These requirements will protect patients from arbitrary insurance denials and will force private health insurance plans to manage the taxpayers’ dollars more efficiently and responsibly. We should continue to oppose any expansion of the pilot project unless the state of Florida can provide solid data that it improves access and enhances the quality of healthcare for all Medicaid enrollees. Bernd Wollschlaeger, MD,