Dear Friends and Colleagues:
Attached an interesting article from todays Wall Street Journal reviewing the obstacles regarding the implementation of Health Savings Accounts.
These are the facts:
* Only about 8-10 Million Americans are enrolled in Health Savings Accounts and that number increased among US workers only slightly, to 2.7 million in 2006 from 2.4 million in 2005.
* Few employers are focusing on the costly measures -- such as offering better coverage or more consumer education, and instead shifting healthcare costs to the employees.
* Where employees do have a choice, only 19% choose the newfangled plans, the Kaiser study estimates. In the Federal Employees Health Benefits Program, which has offered the plans for several years, only about 50,000 of its eight million members were enrolled in them in 2006. Guess, our elected officials prefer to use traditional plans ,whereas us common folk should swallow the bait.
* Employers are often HSAs as the cheapest and only insurance alternative forcing employees to use them, even though those plans are not suitable for them.40% of employees in a consumer-directed plan say it was the only choice available from their employer!!!
HSAs may be ONE solution among the many insurance options available for US consumers, but should not marketed as THE solution.
Personally, I would like our government to spend as much energy and money promoting existing and traditional solutions as they do with HSAs.
If cost shifting is the goal, then the common folk will loose.
Yours
Bernd
Health Savings Plans Start to Falter
Despite Employer Enthusiasm for Consumer-Directed Approach, Patients Express Dissatisfaction With How the Accounts Work
By VANESSA FUHRMANS
Wall Street Journal June 12, 2007; Page D1
President Bush and many big employers have hailed "consumer-directed" health plans and savings accounts as an effective weapon in the battle against runaway medical costs. But several years after the plans got off to a fast start, the approach appears to be stumbling -- largely because of consumers' unease in using them.
Eight million to 10 million Americans are enrolled in consumer-directed plans, which involve a high-deductible insurance policy that can be combined with a savings account to help pay for out-of-pocket health costs. The plans, which have lower premiums but shift more of the responsibility for health-care spending onto consumers, got a big boost in late 2003 after Congress created portable health-savings accounts that participants can use to sock away pretax dollars and let them grow tax-free. Employers often put money in the accounts to subsidize the higher deductibles.
SPEED BUMP
[Speed Bump]
Enrollment in consumer-driven health plans
• Number of U.S. workers (excluding dependents) enrolled in such plans through work was 2.7 million in 2006, vs. 2.4 million in 2005.
• 40% of employees in a consumer-directed plan say it was the only choice available from their employer.
• Where employees have a choice of health-plan options, only 19% choose consumer-driven plans.
Source: The Kaiser Family Foundation
The plans are accomplishing some of what they intended: A raft of data show that people enrolled in the plans do tend to spend less on care than others. That is encouraging more employers to introduce such plans to their workers over the next two years.
But low enrollment and low satisfaction among workers who are offered them raise the question of whether consumer-directed plans will stall before they ever hit the mainstream. Few employers are focusing on the costly measures -- such as offering better coverage or more consumer education -- that may be needed to accelerate these plans.
The numbers of U.S. workers enrolled in such plans through their jobs (excluding dependents and those in firms with fewer than three workers) grew only slightly, to 2.7 million in 2006 from 2.4 million in 2005, according to the Kaiser Family Foundation. Most do it because either their companies give them no choice or the premiums are the cheapest. Enrollment is growing faster on the individual market and among sole proprietors, but that may be because the plans are often the only affordable option.
Where employees do have a choice, only 19% choose the newfangled plans, the Kaiser study estimates. In the Federal Employees Health Benefits Program, which has offered the plans for several years, only about 50,000 of its eight million members were enrolled in them in 2006, according to industry estimates. At lightbulb-maker Osram Sylvania, just 5% of employees enrolled in the plans in 2006, their first year.
In addition, those who are in consumer-directed health plans often report lower satisfaction and confusion about how the plans are supposed to work. The general idea is for patients to conserve money in their savings accounts, which are meant to pay for care until they reach their high insurance deductible. In theory, patients who shop carefully could have money left over, which they can keep and let build into savings for bigger health-care costs down the line.
[Consumer-Directed Plans]
In a survey published last month by Towers Perrin, an employee-benefits firm, employees enrolled in them said they felt less capable of finding a quality doctor or hospital, though they often were in the same network as colleagues in other plans. Only 29% said they tried to save money in their accounts for future medical expenses.
Though the consulting firm says consumer-directed plans have much potential, its executives were surprised consumer responses were so negative.
"If I were a product manager in any other industry and saw scores this low in customer satisfaction and understanding, I'd be thinking of pulling that product from the shelves or retooling it," says David Guilmette, managing director of Towers Perrin's health-care consulting practice.
One reason for the frustration is the uphill battle many consumers describe in trying to shop for their health care. Six years ago, Howard Katz, an industrial-design research consultant in rural eastern Pennsylvania, bought a family health plan with a savings account and a deductible that is now $5,650. But getting specific price information on which to base purchase decisions for MRIs, doctor visits and blood work has been difficult, he says.
And the money in the health savings account gets spent; only once has enough remained to roll over to the next year.
Now, he says, he has rejoined a company as an employee after working on his own, and one of the perks is regaining traditional health coverage. "Now I don't have to act like a medical examiner anymore," he says.
Proponents of consumer-directed plans point out that their overall enrollment continues to grow at a faster clip than enrollment in HMOs did when they were introduced in the 1970s. Among those who enroll, the vast majority stay in and don't switch back to another type of plan.
In cases where employers spend months informing workers about how the plans work and offer them more financial incentives than just cheaper premiums, workers report higher satisfaction and often get more preventive care than people in other plans. "But the vast majority of companies still do not have the time, effort or resources to prime the pump," says Larry Boress, president of the Midwest Business Group on Health, a coalition of large employers.
A growing number of industry experts believe that for consumer-directed plans to succeed, they have to offer coverage that is at least as rich as traditional plans. That means providing upfront coverage of most preventive services and treatments and a generous contribution to employees' accounts.
"If you're just trying to cost shift, and you only get 10% of your employees in, they are the youngest and healthiest, and you haven't accomplished anything in terms of health-care costs," says Bill Sharon, a senior vice president at Aon Consulting, the human-resources consulting arm of insurance broker Aon Corp.
Osram Sylvania introduced a consumer-directed health plan with a health savings account with premiums 15% to 20% cheaper than its traditional plans, but employees were responsible for the entire deductible. Just 5% of employees enrolled. In preparation for 2007, it introduced another similar plan alongside it, but with 100% preventive-care coverage and a $600 contribution into the health reimbursement account, and older generation of the health savings account.
"We'd heard concerns from employees that they weren't going to get the right care," says Julie Thibodeau, co-director of human resources at Osram Sylvania. This year enrollment between the two consumer-directed plans rose to 15%.
Aon has offered its own employees two consumer-directed options since 2002, with deductibles between $2,500 and $6,250. Nearly 20% of employees are enrolled in one, and the majority of them have money left to roll over from the $500 to $2,500 that Aon contributes to their account each year. Employee premiums are about 30% lower than in the more-traditional plans Aon offers, says John Reschke, Aon Corp.'s vice president of benefits. Considering that the coverage is at least as rich for most employees as in the traditional plans, "we should have a lot more people enrolled," he says. "But this is a different kind of insurance, and it can be scary at first until people understand."
Write to Vanessa Fuhrmans at vanessa.fuhrmans@wsj.com1
Wednesday, June 13, 2007
Wednesday, May 30, 2007
Doctors Go Online !
Dear Friends and Colleagues:
Attached an interesting article from todays New York Times.
The author makes a good point:
"Health care providers have been dreaming about electronic records for so long that the idea has begun to seem like vaporware, a never-to-be-realized fantasy similar to flying cars and jetpacks."
The question remains if his preference for WorldVista is really the solution for the problem. A one-size-fit-all product may not be the solution. But a cost-effective, customizable and scaleable solution could lower the threshold for those doctors who are still looking for a suitable product.
Look forward to your comments.
Yours
Bernd
New York Times
May 30, 2007
Op-Ed Contributor
Physician, Upgrade Thyself
By THOMAS GOETZ
SAN FRANCISCO
GO into almost any medical office, hospital or clinic in the United States and your records will still be handled the old-fashioned way — on paper. You can use a computer to pay your taxes, to program your TiVo or to read a message from your great-aunt, but your doctor has to practically level a forest just to examine your medical files. The cost, however, isn’t calculated in trees but in human lives: Electronic medical records would reduce the risk of medical errors and spare hospitals the expense of missing records and unnecessary treatment.
Health care providers have been dreaming about electronic records for so long that the idea has begun to seem like vaporware, a never-to-be-realized fantasy similar to flying cars and jetpacks. But there is already a clear software standard, an open-source system that’s low-cost, easy to use and readily available. It could be the key to the health care system we ought to have already.
The program, WorldVistA, is based on the Veterans Affairs Department’s electronic-records system, called VistA (short for Veterans Health Information Systems and Technology Architecture — and yes, they beat Bill Gates to the name). VistA stands as perhaps the greatest success story for government-developed information technology since the Internet itself.
Using the VistA record system, the veterans department has managed to improve nearly every benchmark of quality in health care. In a decade, the department increased its pneumonia vaccination rate among at-risk patients to 94 percent from only 29 percent. That translates into 6,000 saved lives and $40 million saved each year from fewer pneumonia hospitalizations. On a host of other benchmarks — beta blocker use, cancer screening, cholesterol screening and so on — the department outperforms the nation’s best care.
Thanks to VistA, costs per patient at the Veterans Health Administration system are 32 percent lower, using inflation-adjusted dollars, than they were a decade ago. Over the same period, the medical consumer price index has increased 50 percent for the country as a whole.
The patients are happy, too. For the past eight years, the Veterans Health Administration has outscored private-sector health care in the independent American Customer Satisfaction Index. And because VistA is government-developed software, we all own it — it’s in the public domain. But while the government will mail you a copy, it won’t help install it or maintain it. The Department of Veterans Affairs is, in fact, prohibited by law to stray from its mission to serve veterans.
So in 2002, a group of former Veterans Affairs programmers and open-source advocates formed WorldVistA. They set about making a version of VistA that was simple for health care providers to use, and the fruit of their effort is now ready for market. Like VistA, WorldVistA is robust and fast. In April, the software was approved by the Certification Commission for Healthcare Information Technology. The certification means that WorldVistA is ready for broad adoption.
The effort to promote WorldVistA is supported by a grant from the Centers for Medicare and Medicaid Services, the agency that sets the prices for Medicare and Medicaid payments. The agency wants to provide clinics and public hospitals, especially those that serve uninsured and underserved patients, with an inexpensive system for electronic medical records. The agency was also just getting tired of seeing another year go by without a significant increase in the adoption of digital records. Right now, only a quarter of office-based doctors use them.
The problem isn’t a lack of software. There are hundreds of companies hawking electronic-records systems. But they don’t come cheap. The average cost is about $33,000 per doctor, plus another $1,500 a month per doctor for maintenance, according to a study published in the policy journal Health Affairs. For a small clinic with one or two doctors, that price is usually out of reach. For major hospitals, installing a new system can quickly become a multimillion-dollar experiment.
WorldVistA, thanks to its public-domain origins, costs about one-tenth of what a proprietary system does for a license fee and a support contract. And like any good open-source project, it’s constantly improving. A community of programmers fixes glitches and adds features, just as is done for the open-source Firefox browser and the Linux operating system.
And WorldVistA can be scaled up or down. It can work for neighborhood clinics, small-town hospitals, hospital systems, or, well, the Department of Veterans Affairs. WorldVistA’s big promise is that it can become the nationwide standard for electronic medical records, the backbone of a national network of health care. Your medical records could be read instantly and understood (perhaps less instantly) by any provider, anywhere.
Want to see the best knee surgeon in the country? If he’s using WorldVistA, he can check out your online records at his house or office. If you switch jobs and move to a new insurance plan, you won’t need to build a new medical history and FedEx old records around. With your permission, your files will be accessible to your new providers instantly. In this way, electronic medical records generate better care and lower costs.
WorldVistA isn’t perfect. It isn’t as customizable as some proprietary systems, and its graphical interface isn’t as intuitive or as polished. Worse, its back-office functions — staffing and billing — aren’t all that strong. Major hospitals and health maintenance organizations in search of a Cadillac are free to spend the dollars to buy one.
But for the vast majority of health care providers, WorldVistA is what they’ve been waiting for: a low-cost, simple-to-use system that makes it easier to provide quality health care. If only it could upgrade the waiting-room magazines, too.
Thomas Goetz is the deputy editor of Wired magazine and author of the blog Epidemix.
Attached an interesting article from todays New York Times.
The author makes a good point:
"Health care providers have been dreaming about electronic records for so long that the idea has begun to seem like vaporware, a never-to-be-realized fantasy similar to flying cars and jetpacks."
The question remains if his preference for WorldVista is really the solution for the problem. A one-size-fit-all product may not be the solution. But a cost-effective, customizable and scaleable solution could lower the threshold for those doctors who are still looking for a suitable product.
Look forward to your comments.
Yours
Bernd
New York Times
May 30, 2007
Op-Ed Contributor
Physician, Upgrade Thyself
By THOMAS GOETZ
SAN FRANCISCO
GO into almost any medical office, hospital or clinic in the United States and your records will still be handled the old-fashioned way — on paper. You can use a computer to pay your taxes, to program your TiVo or to read a message from your great-aunt, but your doctor has to practically level a forest just to examine your medical files. The cost, however, isn’t calculated in trees but in human lives: Electronic medical records would reduce the risk of medical errors and spare hospitals the expense of missing records and unnecessary treatment.
Health care providers have been dreaming about electronic records for so long that the idea has begun to seem like vaporware, a never-to-be-realized fantasy similar to flying cars and jetpacks. But there is already a clear software standard, an open-source system that’s low-cost, easy to use and readily available. It could be the key to the health care system we ought to have already.
The program, WorldVistA, is based on the Veterans Affairs Department’s electronic-records system, called VistA (short for Veterans Health Information Systems and Technology Architecture — and yes, they beat Bill Gates to the name). VistA stands as perhaps the greatest success story for government-developed information technology since the Internet itself.
Using the VistA record system, the veterans department has managed to improve nearly every benchmark of quality in health care. In a decade, the department increased its pneumonia vaccination rate among at-risk patients to 94 percent from only 29 percent. That translates into 6,000 saved lives and $40 million saved each year from fewer pneumonia hospitalizations. On a host of other benchmarks — beta blocker use, cancer screening, cholesterol screening and so on — the department outperforms the nation’s best care.
Thanks to VistA, costs per patient at the Veterans Health Administration system are 32 percent lower, using inflation-adjusted dollars, than they were a decade ago. Over the same period, the medical consumer price index has increased 50 percent for the country as a whole.
The patients are happy, too. For the past eight years, the Veterans Health Administration has outscored private-sector health care in the independent American Customer Satisfaction Index. And because VistA is government-developed software, we all own it — it’s in the public domain. But while the government will mail you a copy, it won’t help install it or maintain it. The Department of Veterans Affairs is, in fact, prohibited by law to stray from its mission to serve veterans.
So in 2002, a group of former Veterans Affairs programmers and open-source advocates formed WorldVistA. They set about making a version of VistA that was simple for health care providers to use, and the fruit of their effort is now ready for market. Like VistA, WorldVistA is robust and fast. In April, the software was approved by the Certification Commission for Healthcare Information Technology. The certification means that WorldVistA is ready for broad adoption.
The effort to promote WorldVistA is supported by a grant from the Centers for Medicare and Medicaid Services, the agency that sets the prices for Medicare and Medicaid payments. The agency wants to provide clinics and public hospitals, especially those that serve uninsured and underserved patients, with an inexpensive system for electronic medical records. The agency was also just getting tired of seeing another year go by without a significant increase in the adoption of digital records. Right now, only a quarter of office-based doctors use them.
The problem isn’t a lack of software. There are hundreds of companies hawking electronic-records systems. But they don’t come cheap. The average cost is about $33,000 per doctor, plus another $1,500 a month per doctor for maintenance, according to a study published in the policy journal Health Affairs. For a small clinic with one or two doctors, that price is usually out of reach. For major hospitals, installing a new system can quickly become a multimillion-dollar experiment.
WorldVistA, thanks to its public-domain origins, costs about one-tenth of what a proprietary system does for a license fee and a support contract. And like any good open-source project, it’s constantly improving. A community of programmers fixes glitches and adds features, just as is done for the open-source Firefox browser and the Linux operating system.
And WorldVistA can be scaled up or down. It can work for neighborhood clinics, small-town hospitals, hospital systems, or, well, the Department of Veterans Affairs. WorldVistA’s big promise is that it can become the nationwide standard for electronic medical records, the backbone of a national network of health care. Your medical records could be read instantly and understood (perhaps less instantly) by any provider, anywhere.
Want to see the best knee surgeon in the country? If he’s using WorldVistA, he can check out your online records at his house or office. If you switch jobs and move to a new insurance plan, you won’t need to build a new medical history and FedEx old records around. With your permission, your files will be accessible to your new providers instantly. In this way, electronic medical records generate better care and lower costs.
WorldVistA isn’t perfect. It isn’t as customizable as some proprietary systems, and its graphical interface isn’t as intuitive or as polished. Worse, its back-office functions — staffing and billing — aren’t all that strong. Major hospitals and health maintenance organizations in search of a Cadillac are free to spend the dollars to buy one.
But for the vast majority of health care providers, WorldVistA is what they’ve been waiting for: a low-cost, simple-to-use system that makes it easier to provide quality health care. If only it could upgrade the waiting-room magazines, too.
Thomas Goetz is the deputy editor of Wired magazine and author of the blog Epidemix.
Saturday, May 05, 2007
Abortion Measure Fails
Attached an article from the Miami Herald reporting that the abortion measure introduced by Rep. Trey Traviesa, a Tampa Republican, died in the Senate.
The proposed measure would have made it more diffcult for women tto access family planning services.
Obviously, in the Senate cooler heads prevailed recognzing that women's right to choose should not be curtailed.
Bernd Wollschlaeger,MD
Posted on Sat, May. 05, 2007
Lawmakers can't reach a consensus on abortion bill
BY BREANNE GILPATRICK
No 24-hour wait periods. No preabortion sonograms. No court-appointed guardians for underaged girls trying to bypass the state's parental notification laws.
In fact, Florida won't see any abortion-law changes at all this year, after a controversial bill bounced back and forth between the state House and Senate in the final hours of session, dooming the proposal.
The legislative tennis match started when senators stripped the controversial proposal by Rep. Trey Traviesa, a Tampa Republican, of its controversial provisions.
Among them: a mandated 24-hour wait period and a sonogram before all abortions, with the requirement that doctors give women a chance to see the ultrasound scan.
But when the bill left the Senate and headed back to the House, it contained a list of criteria judges must consider when granting pregnant girls a waiver to Florida's parental-notification requirement.
In the House, Traviesa rejected the bare bones bill and sent it back to the Senate.
That's where the proposal died. The Senate ended the session without taking the bill up again.
The Senate compromise just wasn't acceptable for House supporters, Traviesa said.
''Do we take something small and call it something good?'' Traviesa asked. ``No, we don't.''
The proposed measure would have made it more diffcult for women tto access family planning services.
Obviously, in the Senate cooler heads prevailed recognzing that women's right to choose should not be curtailed.
Bernd Wollschlaeger,MD
Posted on Sat, May. 05, 2007
Lawmakers can't reach a consensus on abortion bill
BY BREANNE GILPATRICK
No 24-hour wait periods. No preabortion sonograms. No court-appointed guardians for underaged girls trying to bypass the state's parental notification laws.
In fact, Florida won't see any abortion-law changes at all this year, after a controversial bill bounced back and forth between the state House and Senate in the final hours of session, dooming the proposal.
The legislative tennis match started when senators stripped the controversial proposal by Rep. Trey Traviesa, a Tampa Republican, of its controversial provisions.
Among them: a mandated 24-hour wait period and a sonogram before all abortions, with the requirement that doctors give women a chance to see the ultrasound scan.
But when the bill left the Senate and headed back to the House, it contained a list of criteria judges must consider when granting pregnant girls a waiver to Florida's parental-notification requirement.
In the House, Traviesa rejected the bare bones bill and sent it back to the Senate.
That's where the proposal died. The Senate ended the session without taking the bill up again.
The Senate compromise just wasn't acceptable for House supporters, Traviesa said.
''Do we take something small and call it something good?'' Traviesa asked. ``No, we don't.''
Wednesday, May 02, 2007
Politicians At The Bedside
Dear Friends and Colleagues:
Attached a troubling news item reporting how politicians are interfering in the physician-patient relationship. I know that within our organization and our society at large , women’s right to choose their reproductive life is being hotly debated.
Unfortunately, the US Supreme Court not only decided to uphold the “Partial Birth Abortion” ban, but also adopted the terminology of the Pro-Life movement calling doctors providing such services “abortion doctors” and described the procedure known as intact dilation and evacuation or dilation and extraction as "partial-birth abortion".
In a further blow to the physician-patient relationship the Florida House voted last week
to impose a 24-hour wait period and a sonogram before almost all abortions.
This decision not only encroaches on women’s reproductive rights, but also inserts the politician into the physician-patient relationship.
Most women I have provided pregnancy termination advice and counsel come to my office after days or deliberation and do not need rules and regulation imposed by paternalistic politicians.
As a physician and my patients advocate I protest such government intrusion into the practice of medicine and call upon organized medicine to speak up in defense of women’s reproductive rights.
Yours truly,
Bernd
===============================================================
Posted on Sat, Apr. 28, 2007
Abortion bill heads to Senate
BY BREANNE GILPATRICK
A controversial proposal requiring a 24-hour wait period and a sonogram before almost all abortions passed the state House of Representatives on Friday and is on its way to the Florida Senate.
The House voted 71-42 in favor of the provisions, after roughly two hours of contentious debate. Both proposals were added to a bill by Rep. Trey Traviesa, a Tampa Republican, that would require judges to appoint a guardian for underage girls who want an abortion and seek to get around the state's parental-notification law.
''On every other medical procedure there is time, time for those important two words: informed consent,'' Traviesa said. ``And anyone who seeks to deny a woman the ability to achieve informed consent is not advocating for the rights of women. They're advocating for an idea.''
Women who are victims of rape, incest, domestic violence or human trafficking would be exempt from the sonogram requirement.
SUPREME COURT BAN
The House vote comes nine days after the U.S. Supreme Court upheld a federal government ban on a particular kind of late-term abortion, a decision pro-choice activists have said would encourage some states to attempt to chip away at abortion rights.
Legislatures in Georgia and South Carolina are considering similar ultrasound requirements. One South Carolina proposal also would require women to view the scans.
The proposal faces rough going in the Senate, where the version by Sen. Ronda Storms, a Valrico Republican, addresses only the parental-notification changes. And senators from both parties have said they are opposed to expanding Storms' bill to encompass the new House provisions.
Gov. Charlie Crist said he is unsure what he thinks about the 24-hour wait period.
''That might concern me,'' Crist said Friday. ``I better look at it, though.''
Supporters say the ultrasound and 24-hour waiting period help women make better medical decisions. The state already requires sonograms before abortions in the second and third trimesters. The proposal would add that requirement for the first three months of pregnancy, when most abortions take place.
The bill also gives women the option not to view the scan.
''If you read this bill, it doesn't do anything to take a way a woman's right to choose,'' said Rep. Kevin Ambler, a Lutz Republican. ``What it does is put a thoughtful deliberative process in place.''
`WHAT AN OUTRAGE'
But opponents say anti-abortion advocates have hijacked the parental notification bill to add provisions designed to create more abortion hurdles that trivialize a woman's decision to have an abortion.
''This bill demeans me in a way I have never felt demeaned before,'' said Rep. Kelly Skidmore, a Boca Raton Democrat. ``It suggests that I would be so cavalier about the decision to terminate a pregnancy that I should go back home and think it over as if I was out shopping and passed by a clinic and decided to pop in for an abortion. What an outrage.''
Miami Herald staff writer Marc Caputo contributed to this report.
Attached a troubling news item reporting how politicians are interfering in the physician-patient relationship. I know that within our organization and our society at large , women’s right to choose their reproductive life is being hotly debated.
Unfortunately, the US Supreme Court not only decided to uphold the “Partial Birth Abortion” ban, but also adopted the terminology of the Pro-Life movement calling doctors providing such services “abortion doctors” and described the procedure known as intact dilation and evacuation or dilation and extraction as "partial-birth abortion".
In a further blow to the physician-patient relationship the Florida House voted last week
to impose a 24-hour wait period and a sonogram before almost all abortions.
This decision not only encroaches on women’s reproductive rights, but also inserts the politician into the physician-patient relationship.
Most women I have provided pregnancy termination advice and counsel come to my office after days or deliberation and do not need rules and regulation imposed by paternalistic politicians.
As a physician and my patients advocate I protest such government intrusion into the practice of medicine and call upon organized medicine to speak up in defense of women’s reproductive rights.
Yours truly,
Bernd
===============================================================
Posted on Sat, Apr. 28, 2007
Abortion bill heads to Senate
BY BREANNE GILPATRICK
A controversial proposal requiring a 24-hour wait period and a sonogram before almost all abortions passed the state House of Representatives on Friday and is on its way to the Florida Senate.
The House voted 71-42 in favor of the provisions, after roughly two hours of contentious debate. Both proposals were added to a bill by Rep. Trey Traviesa, a Tampa Republican, that would require judges to appoint a guardian for underage girls who want an abortion and seek to get around the state's parental-notification law.
''On every other medical procedure there is time, time for those important two words: informed consent,'' Traviesa said. ``And anyone who seeks to deny a woman the ability to achieve informed consent is not advocating for the rights of women. They're advocating for an idea.''
Women who are victims of rape, incest, domestic violence or human trafficking would be exempt from the sonogram requirement.
SUPREME COURT BAN
The House vote comes nine days after the U.S. Supreme Court upheld a federal government ban on a particular kind of late-term abortion, a decision pro-choice activists have said would encourage some states to attempt to chip away at abortion rights.
Legislatures in Georgia and South Carolina are considering similar ultrasound requirements. One South Carolina proposal also would require women to view the scans.
The proposal faces rough going in the Senate, where the version by Sen. Ronda Storms, a Valrico Republican, addresses only the parental-notification changes. And senators from both parties have said they are opposed to expanding Storms' bill to encompass the new House provisions.
Gov. Charlie Crist said he is unsure what he thinks about the 24-hour wait period.
''That might concern me,'' Crist said Friday. ``I better look at it, though.''
Supporters say the ultrasound and 24-hour waiting period help women make better medical decisions. The state already requires sonograms before abortions in the second and third trimesters. The proposal would add that requirement for the first three months of pregnancy, when most abortions take place.
The bill also gives women the option not to view the scan.
''If you read this bill, it doesn't do anything to take a way a woman's right to choose,'' said Rep. Kevin Ambler, a Lutz Republican. ``What it does is put a thoughtful deliberative process in place.''
`WHAT AN OUTRAGE'
But opponents say anti-abortion advocates have hijacked the parental notification bill to add provisions designed to create more abortion hurdles that trivialize a woman's decision to have an abortion.
''This bill demeans me in a way I have never felt demeaned before,'' said Rep. Kelly Skidmore, a Boca Raton Democrat. ``It suggests that I would be so cavalier about the decision to terminate a pregnancy that I should go back home and think it over as if I was out shopping and passed by a clinic and decided to pop in for an abortion. What an outrage.''
Miami Herald staff writer Marc Caputo contributed to this report.
Sunday, April 22, 2007
Stop Corporate Welfare Programs
Dear Friends and Colleagues:
Attached an interesting editorial from yesterdays New York Times focusing on the issue of government subsidies for health insurance companies offering Medicare Advantage plans.
What is the problem?
About a fifth of elderly Americans now belong to private Medicare Advantage plans, which — thanks to government subsidies — often charge less or offer more than traditional Medicare. The government pays private plans 12 percent more, on average, than the same services would cost in the traditional Medicare fee-for-service program. The private plans use some of this money to make themselves more attractive to beneficiaries — by reducing premiums or adding benefits not covered by basic Medicare — and siphon off the rest to add to profits and help cover the plans’ high administrative costs ( and boost their CEO salaries)
What are the results?
The biggest subsidies — averaging 19 percent above cost — go to private fee-for-service plans, which are the fastest-growing part of the Medicare Advantage program. Those companies receive $54 Billion over five years resulting in an average premium increase of $2 to pay for those subsidies.
"If private health plans are supposedly so great at delivering high-quality care while holding down costs, why does the government have to keep subsidizing them so lavishly to participate in the Medicare program?"
What Should Be Done?
* Eliminate the subsidies
* Offer traditional Medicare plans with lower premiums and less adminstrtaive overhead
* Force private companies to compete with traditional Medicare plans
The proponents of market based health care services often forget that more then 50% of each dollar spent spent for health care services is provided by the government NOT INCLUDED the tax subsidies for employer-based health insurance.
Instead of calling for market based health care (which even conservatives do not support) , we should hold our government accountable on how it spends our health care dollars and eliminate corporate welfare programs (i.e subsidies).
Yours
Bernd
====================================================================================
April 21, 2007
Editorial
The Medicare Privatization Scam
If private health plans are supposedly so great at delivering high-quality care while holding down costs, why does the government have to keep subsidizing them so lavishly to participate in the Medicare program?
About a fifth of elderly Americans now belong to private Medicare Advantage plans, which — thanks to government subsidies — often charge less or offer more than traditional Medicare. As Congress struggles to find savings that could offset the costs of other important health programs, it should take a long and hard look at those subsidies.
The authoritative Medicare Payment Advisory Commission estimates that the government pays private plans 12 percent more, on average, than the same services would cost in the traditional Medicare fee-for-service program. The private plans use some of this money to make themselves more attractive to beneficiaries — by reducing premiums or adding benefits not covered by basic Medicare — and siphon off the rest to add to profits and help cover the plans’ high administrative costs.
Although the insurance industry insists that the subsidies are much lower and are warranted by the benefits provided, Thomas Scully, who headed the Medicare program for the Bush administration until 2003, told reporters recently that the subsidies were too large and ought to be reduced by Congress.
The largest private enrollment is in health maintenance organizations, which typically deliver care a bit more cheaply than standard Medicare and should not need their 10 percent subsidies, on average, to compete. The biggest subsidies — averaging 19 percent above cost — go to private fee-for-service plans, which are the fastest-growing part of the Medicare Advantage program. Unlike the H.M.O.’s, which at least manage a patient’s care and bargain hard with doctors and hospitals, these plans ride on the coattails of standard Medicare, typically providing access to the same doctors and paying them at the same rates. Thanks to the big subsidies they get, such plans are often a good deal for beneficiaries, charging less for the same benefits or adding benefits without raising prices.
The main losers are the beneficiaries in the standard Medicare program, whose monthly premiums are roughly $2 higher to help pay for the subsidies, and the taxpayers who pick up part of the tab. The subsidies also erode the long-term solvency of Medicare, which needs to rein in costs, not increase them with handouts to insurance companies.
When the Democrats first won control of Congress, it seemed possible that they might eliminate the subsidies — saving some $54 billion over five years — to finance a $50 billion expansion of a health insurance program for low-income children. But the insurance industry has mounted a furious lobbying campaign to head off any cuts.
Congress ought to eliminate the subsidies completely unless it is willing to subsidize the same benefits — at enormous cost — for the far greater number of people enrolled in standard Medicare. It is time to level the playing field and force private plans to really compete with traditional Medicare.
Attached an interesting editorial from yesterdays New York Times focusing on the issue of government subsidies for health insurance companies offering Medicare Advantage plans.
What is the problem?
About a fifth of elderly Americans now belong to private Medicare Advantage plans, which — thanks to government subsidies — often charge less or offer more than traditional Medicare. The government pays private plans 12 percent more, on average, than the same services would cost in the traditional Medicare fee-for-service program. The private plans use some of this money to make themselves more attractive to beneficiaries — by reducing premiums or adding benefits not covered by basic Medicare — and siphon off the rest to add to profits and help cover the plans’ high administrative costs ( and boost their CEO salaries)
What are the results?
The biggest subsidies — averaging 19 percent above cost — go to private fee-for-service plans, which are the fastest-growing part of the Medicare Advantage program. Those companies receive $54 Billion over five years resulting in an average premium increase of $2 to pay for those subsidies.
"If private health plans are supposedly so great at delivering high-quality care while holding down costs, why does the government have to keep subsidizing them so lavishly to participate in the Medicare program?"
What Should Be Done?
* Eliminate the subsidies
* Offer traditional Medicare plans with lower premiums and less adminstrtaive overhead
* Force private companies to compete with traditional Medicare plans
The proponents of market based health care services often forget that more then 50% of each dollar spent spent for health care services is provided by the government NOT INCLUDED the tax subsidies for employer-based health insurance.
Instead of calling for market based health care (which even conservatives do not support) , we should hold our government accountable on how it spends our health care dollars and eliminate corporate welfare programs (i.e subsidies).
Yours
Bernd
====================================================================================
April 21, 2007
Editorial
The Medicare Privatization Scam
If private health plans are supposedly so great at delivering high-quality care while holding down costs, why does the government have to keep subsidizing them so lavishly to participate in the Medicare program?
About a fifth of elderly Americans now belong to private Medicare Advantage plans, which — thanks to government subsidies — often charge less or offer more than traditional Medicare. As Congress struggles to find savings that could offset the costs of other important health programs, it should take a long and hard look at those subsidies.
The authoritative Medicare Payment Advisory Commission estimates that the government pays private plans 12 percent more, on average, than the same services would cost in the traditional Medicare fee-for-service program. The private plans use some of this money to make themselves more attractive to beneficiaries — by reducing premiums or adding benefits not covered by basic Medicare — and siphon off the rest to add to profits and help cover the plans’ high administrative costs.
Although the insurance industry insists that the subsidies are much lower and are warranted by the benefits provided, Thomas Scully, who headed the Medicare program for the Bush administration until 2003, told reporters recently that the subsidies were too large and ought to be reduced by Congress.
The largest private enrollment is in health maintenance organizations, which typically deliver care a bit more cheaply than standard Medicare and should not need their 10 percent subsidies, on average, to compete. The biggest subsidies — averaging 19 percent above cost — go to private fee-for-service plans, which are the fastest-growing part of the Medicare Advantage program. Unlike the H.M.O.’s, which at least manage a patient’s care and bargain hard with doctors and hospitals, these plans ride on the coattails of standard Medicare, typically providing access to the same doctors and paying them at the same rates. Thanks to the big subsidies they get, such plans are often a good deal for beneficiaries, charging less for the same benefits or adding benefits without raising prices.
The main losers are the beneficiaries in the standard Medicare program, whose monthly premiums are roughly $2 higher to help pay for the subsidies, and the taxpayers who pick up part of the tab. The subsidies also erode the long-term solvency of Medicare, which needs to rein in costs, not increase them with handouts to insurance companies.
When the Democrats first won control of Congress, it seemed possible that they might eliminate the subsidies — saving some $54 billion over five years — to finance a $50 billion expansion of a health insurance program for low-income children. But the insurance industry has mounted a furious lobbying campaign to head off any cuts.
Congress ought to eliminate the subsidies completely unless it is willing to subsidize the same benefits — at enormous cost — for the far greater number of people enrolled in standard Medicare. It is time to level the playing field and force private plans to really compete with traditional Medicare.
Saturday, April 21, 2007
Different Opinions On Medicare
Dear Friends and Colleagues:
Attached you find two articles highlighting two different opinions regarding the function, role and success of the Medicare program.
The first article by Paul Krugman is entitled "The Plot Against Medicare. In it he author correctly states that:
"The 2003 Medicare legislation created Part D, the drug benefit for seniors — but unlike the rest of Medicare, Part D isn’t provided directly by the government. Instead, you can get it only through a private drug plan, provided by an insurance company. At the same time, the bill sharply increased payments to Medicare Advantage plans, which also funnel Medicare funds through insurance companies. As a result, Medicare — originally a system in which the government paid people’s medical bills — is becoming, instead, a system in which the government pays the insurance industry to provide coverage. And a lot of the money never makes it to the people Medicare is supposed to help.....Meanwhile, those Medicare Advantage plans cost taxpayers 12 percent more per recipient than standard Medicare. In the next five years that subsidy will cost more than $50 billion — about what it would cost to provide all children in America with health insurance. Some of that $50 billion will be passed on to seniors in extra benefits, but a lot of it will go to overhead, marketing expenses and profits."
He concludes stating that
" Public opinion is strongly in favor of universal health care, and for good reason: fear of losing health insurance has become a constant anxiety of the middle class. Yet even as we talk about guaranteeing insurance to all, privatization is undermining Medicare — and people who should know better are aiding and abetting the process."
In the second article from the Wall Street Journal "The Competence Man" the author touts the leadership of the Dr. McClellan, the former CMS head, who was implementing the Medicare Part D program.
"His success, in particular with the drug benefit, rests in two broad ideas. The first was to design a program that immediately attracted a critical mass of private players to provide price and choice competition.
Dr. McClellan's other strategy -- and the flip side of the coin -- was to get seniors enrolled quickly. His team designed an Internet program that allowed seniors to punch in their information and examine the best plans. His agency reached out to local organizations -- church groups, community centers -- and enlisted their aid in explaining details."
According to the author private companies have flocked to offer a drug benefit, giving most seniors a choice of 50 innovative plans. The competitive jockeying has slashed prices from an expected $37-a-month premium to an average $22. The cost of Medicare Part D for taxpayers was 30% below expectations its first year -- unheard of in government. And Medicare Advantage, which allows seniors to choose between private insurers, has grown to encompass nearly one in five beneficiaries.
Even though I respect Dr.McClellan's efforts I consider Medicare Part D as the biggest mistake of the Bush administration.
Medicare is an example of a single-payer system serving the senior segment of our population. Its its not a "decrepit program" and outsourcing its services to private companies provides drug companies with mega-profits on the expense of US tax payers.
Who is going to pay the estimated $ 8 Trillion price tag for the Medicare Part D program? Our children and grand children!
By then Bush and Co. won't be around, our government will have to use its entire federal budget for the payment of a gigantic debt load created by inflated entitlement programs and we may have to ask ourselves: what did we do to stop it?
Yours
Bernd
=======================================================================================
New York Times, April 20, 2007 Op-Ed Columnist
The Plot Against Medicare
By PAUL KRUGMAN
The plot against Social Security failed: President Bush’s attempt to privatize the system crashed and burned when the public realized what he was up to. But the plot against Medicare is faring better: the stealth privatization embedded in the Medicare Modernization Act, which Congress literally passed in the dead of night back in 2003, is proceeding apace.
Worse yet, the forces behind privatization not only continue to have the G.O.P. in their pocket, but they have also been finding useful idiots within the newly powerful Democratic coalition. And it’s not just politicians with an eye on campaign contributions. There’s no nice way to say it: the N.A.A.C.P. and the League of United Latin American Citizens have become patsies for the insurance industry.
To appreciate what’s going on, you need to know what has been happening to Medicare in the last few years.
The 2003 Medicare legislation created Part D, the drug benefit for seniors — but unlike the rest of Medicare, Part D isn’t provided directly by the government. Instead, you can get it only through a private drug plan, provided by an insurance company. At the same time, the bill sharply increased payments to Medicare Advantage plans, which also funnel Medicare funds through insurance companies.
As a result, Medicare — originally a system in which the government paid people’s medical bills — is becoming, instead, a system in which the government pays the insurance industry to provide coverage. And a lot of the money never makes it to the people Medicare is supposed to help.
In the case of the drug benefit, the private drug plans add an extra, costly layer of bureaucracy. Worse yet, they have much less ability to bargain for lower drug prices than government programs like Medicaid and the Veterans Health Administration. Reasonable estimates suggest that if Congress had eliminated the middlemen, it could have created a much better drug plan — one without the notorious “doughnut hole,” the gap in coverage once your annual expenses exceed $2,400 per year — at no higher cost.
Meanwhile, those Medicare Advantage plans cost taxpayers 12 percent more per recipient than standard Medicare. In the next five years that subsidy will cost more than $50 billion — about what it would cost to provide all children in America with health insurance. Some of that $50 billion will be passed on to seniors in extra benefits, but a lot of it will go to overhead, marketing expenses and profits.
With the Democratic victory last fall, you might have expected these things to change. But the political news over the last few days has been grim.
First, the Senate failed to end debate on a bill — in effect, killing it — that would have allowed Medicare to negotiate over drug prices. The bill was too weak to have allowed Medicare to get large discounts. Still, it would at least have established the principle of using government bargaining power to get a better deal. But in spite of overwhelming public support for price negotiation, 42 senators, all Republicans, voted no on allowing the bill to go forward.
If we can’t even establish the principle of negotiation, a true repair of the damage done in 2003 — which would require having Medicare offer seniors the option of getting their drug coverage directly, without involving the insurance companies — seems politically far out of reach.
At the same time, attempts to rein in those Medicare Advantage payments seem to be running aground. Everyone knew that reducing payments would be politically tough. What comes as a bitter surprise is the fact that minority advocacy groups are now part of the problem, with both the N.A.A.C.P. and the League of United Latin American Citizens sending letters to Congressional leaders opposing plans to scale back the subsidy.
What seems to have happened is that both groups have been taken in by insurance industry disinformation, which falsely claims that minorities benefit disproportionately from this subsidy. It’s a claim that has been thoroughly debunked in a study by the Center on Budget and Policy Priorities — but apparently the truth isn’t getting through.
Public opinion is strongly in favor of universal health care, and for good reason: fear of losing health insurance has become a constant anxiety of the middle class. Yet even as we talk about guaranteeing insurance to all, privatization is undermining Medicare — and people who should know better are aiding and abetting the process.
=======================================================================================
Competence Man, April 20th, 2007 Wall Street Journal
Republicans won a big victory this week, shooting down a Democratic plan for more government-run health care. The GOP victors, and free-marketeers, might send their thank-you notes to Dr. Mark McClellan.
Dr. McClellan is the 43-year-old internist who, until recently, held the thankless job of running Medicare. He was handed the further thankless task of designing and implementing Congress's tepid 2003 Medicare reform. And he's the big brain who then wrung every last ounce out of that authority to create a striking new model for Medicare competition that is today not only performing beyond expectations, but is changing the political health-care debate.
High praise, yes, but borne out by this week's GOP defeat of a bill to allow the government to fix Medicare drug prices. That was a top Democratic promise this last election, as the party sought to play off public anger over health-care costs. Liberals saw it as an important step toward their all-government, health-care nirvana. Nancy Pelosi and Harry Reid also felt this was an issue on which they could once again roll Republicans, by flashing the impoverished-senior-citizens card.
Instead, Dr. McClellan's new model came online and wowed the older class. Private companies have flocked to offer a drug benefit, giving most seniors a choice of 50 innovative plans. The competitive jockeying has slashed prices from an expected $37-a-month premium to an average $22. The cost of Medicare Part D for taxpayers was 30% below expectations its first year -- unheard of in government. And Medicare Advantage, which allows seniors to choose between private insurers, has grown to encompass nearly one in five beneficiaries.
This success has rebutted Democratic criticisms of the drug benefit and shown up those who tar the Bush administration as incompetent. The program's success emboldened Republicans to vote for free-market health care this week. Democrats have seen flagging public support for their program of more government and fewer drugs. While Mr. Reid held his caucus together this week, some are worried about bashing a drug benefit that has an 80% senior approval rating. "Congress only wishes it had an 80% approval rating," chuckles former Democratic Sen. John Breaux, an author of the 2003 reform. "A lot of folks campaigned last year on 'We're going to fix this program,' only to be told by seniors, 'Wait a minute, it ain't broke.'"
None of this was inevitable, but goes back to the competent Dr. McClellan. President Bush came to town pushing Medicare reform, and had a shot at an historic overhaul. The GOP could offer the carrot of a new drug benefit, in return for opening the entire decrepit program to private competition. Instead, Bush and Co. became more interested in claiming credit for an $8 trillion entitlement, and settled for meager reform.
Dr. McClellan nonetheless took this pared-down opportunity and used it to show private competition can work. His success, in particular with the drug benefit, rests in two broad ideas. The first was to design a program that immediately attracted a critical mass of private players to provide price and choice competition. At the time, nobody thought that possible. Mr. Breaux remembers Congress worrying that so few private players would participate that whole areas of the country would lack private drug plans.
Dr. McClellan's solution was a program that gave companies maximum freedom to design plans, bundle drugs and turn a profit. He was a salesman, talking up the opportunities and even traveling to New York to reassure Wall Street. It worked, and by the first days of business most seniors were being courted by anywhere from 11 to 23 plan sponsors. Those numbers have only grown, creating so much competition that sponsors are eliminating deductibles, lowering premiums, offering more drugs. It's also led to smart cost-cutting and efficiencies; an estimated 60% of Medicare prescriptions are now for generics.
Dr. McClellan's other strategy -- and the flip side of the coin -- was to get seniors enrolled quickly. His team designed an Internet program that allowed seniors to punch in their information and examine the best plans. His agency reached out to local organizations -- church groups, community centers -- and enlisted their aid in explaining details. A call center at one point handled 400,000 plan questions a day. Today, some 90% of Medicare recipients are enrolled in the benefit, numbers that have further attracted private players, further spurred competition, further lowered prices. "This is how you come in under budget, increase satisfaction," says the man himself, Dr. McClellan. He adds, humbly, "Nobody should think this is perfect yet, but it's clearly accomplishing some good things."
Good things or no, the reforms are still at risk. There was a time when Democrats believed in Medicare reform, but now most prefer it as a political stick to beat President Bush. There are also liberals -- Henry Waxman, Pete Stark -- who understand this is a crucial moment in the national debate over government-versus-private health care, and will do what they can to sabotage the reforms.
Expect, therefore, more votes over Medicare's right to price-fix. If a broad bill can't pass, liberal politicians will instead target individual, high-cost drugs, arguing that since Medicare foots most of the bill for these products, it should have the right to "negotiate." The real goal will be to get any foot in the price-setting door, making it harder for private companies to craft flexible drug packages, and laying the groundwork for more price-setting down the road.
Expect, too, a push to starve the competitive programs of cash. Critics know how effective this is, having siphoned dollars out of the old Medicare Advantage program in the 1990s, causing private plans to drop out, and giving the program a bad name. Dr. McClellan's reforms, and a Republican Congress, have re-energized the program, but the key to future success is in the budget. Republicans would do well to spend more time touting the competition successes of the reform, rather than the drug giveaway.
In a perfect world, the Bush administration would never have swallowed that entitlement in the first place. In our imperfect world, it at least had the wisdom to hand the reform challenge to a guy who was able to demonstrate the merits of health-care competition, and optimistically, pave the way for broader reform down the road.
Write to kim@wsj.com1.
Attached you find two articles highlighting two different opinions regarding the function, role and success of the Medicare program.
The first article by Paul Krugman is entitled "The Plot Against Medicare. In it he author correctly states that:
"The 2003 Medicare legislation created Part D, the drug benefit for seniors — but unlike the rest of Medicare, Part D isn’t provided directly by the government. Instead, you can get it only through a private drug plan, provided by an insurance company. At the same time, the bill sharply increased payments to Medicare Advantage plans, which also funnel Medicare funds through insurance companies. As a result, Medicare — originally a system in which the government paid people’s medical bills — is becoming, instead, a system in which the government pays the insurance industry to provide coverage. And a lot of the money never makes it to the people Medicare is supposed to help.....Meanwhile, those Medicare Advantage plans cost taxpayers 12 percent more per recipient than standard Medicare. In the next five years that subsidy will cost more than $50 billion — about what it would cost to provide all children in America with health insurance. Some of that $50 billion will be passed on to seniors in extra benefits, but a lot of it will go to overhead, marketing expenses and profits."
He concludes stating that
" Public opinion is strongly in favor of universal health care, and for good reason: fear of losing health insurance has become a constant anxiety of the middle class. Yet even as we talk about guaranteeing insurance to all, privatization is undermining Medicare — and people who should know better are aiding and abetting the process."
In the second article from the Wall Street Journal "The Competence Man" the author touts the leadership of the Dr. McClellan, the former CMS head, who was implementing the Medicare Part D program.
"His success, in particular with the drug benefit, rests in two broad ideas. The first was to design a program that immediately attracted a critical mass of private players to provide price and choice competition.
Dr. McClellan's other strategy -- and the flip side of the coin -- was to get seniors enrolled quickly. His team designed an Internet program that allowed seniors to punch in their information and examine the best plans. His agency reached out to local organizations -- church groups, community centers -- and enlisted their aid in explaining details."
According to the author private companies have flocked to offer a drug benefit, giving most seniors a choice of 50 innovative plans. The competitive jockeying has slashed prices from an expected $37-a-month premium to an average $22. The cost of Medicare Part D for taxpayers was 30% below expectations its first year -- unheard of in government. And Medicare Advantage, which allows seniors to choose between private insurers, has grown to encompass nearly one in five beneficiaries.
Even though I respect Dr.McClellan's efforts I consider Medicare Part D as the biggest mistake of the Bush administration.
Medicare is an example of a single-payer system serving the senior segment of our population. Its its not a "decrepit program" and outsourcing its services to private companies provides drug companies with mega-profits on the expense of US tax payers.
Who is going to pay the estimated $ 8 Trillion price tag for the Medicare Part D program? Our children and grand children!
By then Bush and Co. won't be around, our government will have to use its entire federal budget for the payment of a gigantic debt load created by inflated entitlement programs and we may have to ask ourselves: what did we do to stop it?
Yours
Bernd
=======================================================================================
New York Times, April 20, 2007 Op-Ed Columnist
The Plot Against Medicare
By PAUL KRUGMAN
The plot against Social Security failed: President Bush’s attempt to privatize the system crashed and burned when the public realized what he was up to. But the plot against Medicare is faring better: the stealth privatization embedded in the Medicare Modernization Act, which Congress literally passed in the dead of night back in 2003, is proceeding apace.
Worse yet, the forces behind privatization not only continue to have the G.O.P. in their pocket, but they have also been finding useful idiots within the newly powerful Democratic coalition. And it’s not just politicians with an eye on campaign contributions. There’s no nice way to say it: the N.A.A.C.P. and the League of United Latin American Citizens have become patsies for the insurance industry.
To appreciate what’s going on, you need to know what has been happening to Medicare in the last few years.
The 2003 Medicare legislation created Part D, the drug benefit for seniors — but unlike the rest of Medicare, Part D isn’t provided directly by the government. Instead, you can get it only through a private drug plan, provided by an insurance company. At the same time, the bill sharply increased payments to Medicare Advantage plans, which also funnel Medicare funds through insurance companies.
As a result, Medicare — originally a system in which the government paid people’s medical bills — is becoming, instead, a system in which the government pays the insurance industry to provide coverage. And a lot of the money never makes it to the people Medicare is supposed to help.
In the case of the drug benefit, the private drug plans add an extra, costly layer of bureaucracy. Worse yet, they have much less ability to bargain for lower drug prices than government programs like Medicaid and the Veterans Health Administration. Reasonable estimates suggest that if Congress had eliminated the middlemen, it could have created a much better drug plan — one without the notorious “doughnut hole,” the gap in coverage once your annual expenses exceed $2,400 per year — at no higher cost.
Meanwhile, those Medicare Advantage plans cost taxpayers 12 percent more per recipient than standard Medicare. In the next five years that subsidy will cost more than $50 billion — about what it would cost to provide all children in America with health insurance. Some of that $50 billion will be passed on to seniors in extra benefits, but a lot of it will go to overhead, marketing expenses and profits.
With the Democratic victory last fall, you might have expected these things to change. But the political news over the last few days has been grim.
First, the Senate failed to end debate on a bill — in effect, killing it — that would have allowed Medicare to negotiate over drug prices. The bill was too weak to have allowed Medicare to get large discounts. Still, it would at least have established the principle of using government bargaining power to get a better deal. But in spite of overwhelming public support for price negotiation, 42 senators, all Republicans, voted no on allowing the bill to go forward.
If we can’t even establish the principle of negotiation, a true repair of the damage done in 2003 — which would require having Medicare offer seniors the option of getting their drug coverage directly, without involving the insurance companies — seems politically far out of reach.
At the same time, attempts to rein in those Medicare Advantage payments seem to be running aground. Everyone knew that reducing payments would be politically tough. What comes as a bitter surprise is the fact that minority advocacy groups are now part of the problem, with both the N.A.A.C.P. and the League of United Latin American Citizens sending letters to Congressional leaders opposing plans to scale back the subsidy.
What seems to have happened is that both groups have been taken in by insurance industry disinformation, which falsely claims that minorities benefit disproportionately from this subsidy. It’s a claim that has been thoroughly debunked in a study by the Center on Budget and Policy Priorities — but apparently the truth isn’t getting through.
Public opinion is strongly in favor of universal health care, and for good reason: fear of losing health insurance has become a constant anxiety of the middle class. Yet even as we talk about guaranteeing insurance to all, privatization is undermining Medicare — and people who should know better are aiding and abetting the process.
=======================================================================================
Competence Man, April 20th, 2007 Wall Street Journal
Republicans won a big victory this week, shooting down a Democratic plan for more government-run health care. The GOP victors, and free-marketeers, might send their thank-you notes to Dr. Mark McClellan.
Dr. McClellan is the 43-year-old internist who, until recently, held the thankless job of running Medicare. He was handed the further thankless task of designing and implementing Congress's tepid 2003 Medicare reform. And he's the big brain who then wrung every last ounce out of that authority to create a striking new model for Medicare competition that is today not only performing beyond expectations, but is changing the political health-care debate.
High praise, yes, but borne out by this week's GOP defeat of a bill to allow the government to fix Medicare drug prices. That was a top Democratic promise this last election, as the party sought to play off public anger over health-care costs. Liberals saw it as an important step toward their all-government, health-care nirvana. Nancy Pelosi and Harry Reid also felt this was an issue on which they could once again roll Republicans, by flashing the impoverished-senior-citizens card.
Instead, Dr. McClellan's new model came online and wowed the older class. Private companies have flocked to offer a drug benefit, giving most seniors a choice of 50 innovative plans. The competitive jockeying has slashed prices from an expected $37-a-month premium to an average $22. The cost of Medicare Part D for taxpayers was 30% below expectations its first year -- unheard of in government. And Medicare Advantage, which allows seniors to choose between private insurers, has grown to encompass nearly one in five beneficiaries.
This success has rebutted Democratic criticisms of the drug benefit and shown up those who tar the Bush administration as incompetent. The program's success emboldened Republicans to vote for free-market health care this week. Democrats have seen flagging public support for their program of more government and fewer drugs. While Mr. Reid held his caucus together this week, some are worried about bashing a drug benefit that has an 80% senior approval rating. "Congress only wishes it had an 80% approval rating," chuckles former Democratic Sen. John Breaux, an author of the 2003 reform. "A lot of folks campaigned last year on 'We're going to fix this program,' only to be told by seniors, 'Wait a minute, it ain't broke.'"
None of this was inevitable, but goes back to the competent Dr. McClellan. President Bush came to town pushing Medicare reform, and had a shot at an historic overhaul. The GOP could offer the carrot of a new drug benefit, in return for opening the entire decrepit program to private competition. Instead, Bush and Co. became more interested in claiming credit for an $8 trillion entitlement, and settled for meager reform.
Dr. McClellan nonetheless took this pared-down opportunity and used it to show private competition can work. His success, in particular with the drug benefit, rests in two broad ideas. The first was to design a program that immediately attracted a critical mass of private players to provide price and choice competition. At the time, nobody thought that possible. Mr. Breaux remembers Congress worrying that so few private players would participate that whole areas of the country would lack private drug plans.
Dr. McClellan's solution was a program that gave companies maximum freedom to design plans, bundle drugs and turn a profit. He was a salesman, talking up the opportunities and even traveling to New York to reassure Wall Street. It worked, and by the first days of business most seniors were being courted by anywhere from 11 to 23 plan sponsors. Those numbers have only grown, creating so much competition that sponsors are eliminating deductibles, lowering premiums, offering more drugs. It's also led to smart cost-cutting and efficiencies; an estimated 60% of Medicare prescriptions are now for generics.
Dr. McClellan's other strategy -- and the flip side of the coin -- was to get seniors enrolled quickly. His team designed an Internet program that allowed seniors to punch in their information and examine the best plans. His agency reached out to local organizations -- church groups, community centers -- and enlisted their aid in explaining details. A call center at one point handled 400,000 plan questions a day. Today, some 90% of Medicare recipients are enrolled in the benefit, numbers that have further attracted private players, further spurred competition, further lowered prices. "This is how you come in under budget, increase satisfaction," says the man himself, Dr. McClellan. He adds, humbly, "Nobody should think this is perfect yet, but it's clearly accomplishing some good things."
Good things or no, the reforms are still at risk. There was a time when Democrats believed in Medicare reform, but now most prefer it as a political stick to beat President Bush. There are also liberals -- Henry Waxman, Pete Stark -- who understand this is a crucial moment in the national debate over government-versus-private health care, and will do what they can to sabotage the reforms.
Expect, therefore, more votes over Medicare's right to price-fix. If a broad bill can't pass, liberal politicians will instead target individual, high-cost drugs, arguing that since Medicare foots most of the bill for these products, it should have the right to "negotiate." The real goal will be to get any foot in the price-setting door, making it harder for private companies to craft flexible drug packages, and laying the groundwork for more price-setting down the road.
Expect, too, a push to starve the competitive programs of cash. Critics know how effective this is, having siphoned dollars out of the old Medicare Advantage program in the 1990s, causing private plans to drop out, and giving the program a bad name. Dr. McClellan's reforms, and a Republican Congress, have re-energized the program, but the key to future success is in the budget. Republicans would do well to spend more time touting the competition successes of the reform, rather than the drug giveaway.
In a perfect world, the Bush administration would never have swallowed that entitlement in the first place. In our imperfect world, it at least had the wisdom to hand the reform challenge to a guy who was able to demonstrate the merits of health-care competition, and optimistically, pave the way for broader reform down the road.
Write to kim@wsj.com1.
Sunday, April 15, 2007
Florida Health Information Network
Dear Friends and Colleagues:
Just returned from Israel where I gave a presentation at an international conference in Jerusalem (Israel Medicine Association-World Fellowship Conference) about the implementation of electronic health records in medical practice. The paper was well received and doctors present were especially interested in the SFHII (South Florida health Information Initiative) project. As a result I was invited to give the same presentation in Germany in November.
Reviewing the stack of Miami Herald editions I found an interesting article (April 13, 2007) highlighting the issue of a statewide health information network.
Of course, financing and privacy issues remain major obstacles that need to be addressed
Organized medicine should head the struggle for the widespread adoption of electronic health records and the connectivity of such systems for the benefit of our patients, to improve the efficacy and safety of medical care.
Yours
Bernd
;-)
Posted on Fri, Apr. 13, 2007
Lawmakers consider statewide medical database
BY MONICA HATCHER
The healthcare industry is usually among the first to adopt cutting-edge technology to improve the practice of medicine. But when it comes to keeping and sharing patient information, it's often accused of being stuck in the age when leeches were considered state of the art.
More than 80 percent of doctors still rely on handwritten records and manila folders to organize and track patient histories, according to National Center for Health Statistics.
Florida lawmakers are now considering several bills that would create a healthcare information network, where physicians could access a statewide Internet database of medical records. Despite concerns over expense and privacy, advocates -- including the Florida Medical Association -- say electronic records promise greater patient safety, more efficiency and reduced healthcare costs for consumers.
''Banking is moving forward, business is moving forward, government is moving into the information age, but the medical care is staying stagnant,'' said Rep. Denise Grimsley, R Lake Placid, who is co-sponsoring HB 1121, which will likely come up for a final vote in the full house next week.
Similar Senate measures are pending scheduling. Grimsley's bill builds on a two-year initiative to create regional online medical record databases around the state, including one in Miami-Dade County.
PILOT PROGRAM
The South Florida Health Information Initiative launched a pilot system in October linking Mercy Hospital with nine clinics affiliated with the Health Choice Network. Through a Web-based portal, physicians can access and update an individual's health information at ''the point of care,'' or when they are face to face with a patient.
Several hospitals in South Florida already use electronic record systems internally, but other doctors and hospitals can't get to them.
Carladenise Edwards, executive director for SFHII, said her program is designed to eventually become the main regional gateway that allows local systems to talk to each other.
''Our ultimate goal is to improve the quality of healthcare by maximizing the use of technology,'' Edwards said.
COST THEORIES
Advocates believe the lack of access to information is one reason for duplicate and unnecessary treatments that drive up costs. Mailing or faxing paper records wastes time and opens the door to errors because of illegible handwriting.
In addition, an electronic system would take the guesswork out of treating patients who end up incoherent in an emergency room.
The Helen Bentley Health Center in Coconut Grove is one participant in the pilot program. Medical director Anthony Stanley said he's glad he no longer needs to call nurses and technicians in his office for help deciphering patient records penned by other doctors.
''This is going to expedite better patient care, minimize patient care,'' Stanley said.
Not all in the medical field are on board, however.
Edwards said recruiting participants to the pilot program is an ongoing struggle. Many are reluctant to adopt the technology largely because of the cost of buying software and hardware, she said. Others have cited concerns for patient privacy.
``It's a very political process. Some of them are anxious to be involved. Others are sitting back and waiting for it to be mandated.''
In the last two years, the Agency for Health Care Administration has given $3.5 million in grants to regional health organizations for network development and training. Grimsley's bill would provide for about $25 million to build the state network over the next three years.
PAST LEGISLATION
Financial restraints led to the rejection of similar measures last year. Debate over whether it was the government's role and not the private sector's to build the statewide system also stymied legislation.
The bills have moved farther and swifter this session, but in a tight economic environment, getting funding could again prove a significant hurdle.
''Electronic records -- electronic anything, is very expensive,'' said Linda Renn, a lobbyist with the Florida Health Information Management Association. ``I wouldn't say it's pie in the sky, but [bill supporters] are going to have to explain why this is important.''
Just returned from Israel where I gave a presentation at an international conference in Jerusalem (Israel Medicine Association-World Fellowship Conference) about the implementation of electronic health records in medical practice. The paper was well received and doctors present were especially interested in the SFHII (South Florida health Information Initiative) project. As a result I was invited to give the same presentation in Germany in November.
Reviewing the stack of Miami Herald editions I found an interesting article (April 13, 2007) highlighting the issue of a statewide health information network.
Of course, financing and privacy issues remain major obstacles that need to be addressed
Organized medicine should head the struggle for the widespread adoption of electronic health records and the connectivity of such systems for the benefit of our patients, to improve the efficacy and safety of medical care.
Yours
Bernd
;-)
Posted on Fri, Apr. 13, 2007
Lawmakers consider statewide medical database
BY MONICA HATCHER
The healthcare industry is usually among the first to adopt cutting-edge technology to improve the practice of medicine. But when it comes to keeping and sharing patient information, it's often accused of being stuck in the age when leeches were considered state of the art.
More than 80 percent of doctors still rely on handwritten records and manila folders to organize and track patient histories, according to National Center for Health Statistics.
Florida lawmakers are now considering several bills that would create a healthcare information network, where physicians could access a statewide Internet database of medical records. Despite concerns over expense and privacy, advocates -- including the Florida Medical Association -- say electronic records promise greater patient safety, more efficiency and reduced healthcare costs for consumers.
''Banking is moving forward, business is moving forward, government is moving into the information age, but the medical care is staying stagnant,'' said Rep. Denise Grimsley, R Lake Placid, who is co-sponsoring HB 1121, which will likely come up for a final vote in the full house next week.
Similar Senate measures are pending scheduling. Grimsley's bill builds on a two-year initiative to create regional online medical record databases around the state, including one in Miami-Dade County.
PILOT PROGRAM
The South Florida Health Information Initiative launched a pilot system in October linking Mercy Hospital with nine clinics affiliated with the Health Choice Network. Through a Web-based portal, physicians can access and update an individual's health information at ''the point of care,'' or when they are face to face with a patient.
Several hospitals in South Florida already use electronic record systems internally, but other doctors and hospitals can't get to them.
Carladenise Edwards, executive director for SFHII, said her program is designed to eventually become the main regional gateway that allows local systems to talk to each other.
''Our ultimate goal is to improve the quality of healthcare by maximizing the use of technology,'' Edwards said.
COST THEORIES
Advocates believe the lack of access to information is one reason for duplicate and unnecessary treatments that drive up costs. Mailing or faxing paper records wastes time and opens the door to errors because of illegible handwriting.
In addition, an electronic system would take the guesswork out of treating patients who end up incoherent in an emergency room.
The Helen Bentley Health Center in Coconut Grove is one participant in the pilot program. Medical director Anthony Stanley said he's glad he no longer needs to call nurses and technicians in his office for help deciphering patient records penned by other doctors.
''This is going to expedite better patient care, minimize patient care,'' Stanley said.
Not all in the medical field are on board, however.
Edwards said recruiting participants to the pilot program is an ongoing struggle. Many are reluctant to adopt the technology largely because of the cost of buying software and hardware, she said. Others have cited concerns for patient privacy.
``It's a very political process. Some of them are anxious to be involved. Others are sitting back and waiting for it to be mandated.''
In the last two years, the Agency for Health Care Administration has given $3.5 million in grants to regional health organizations for network development and training. Grimsley's bill would provide for about $25 million to build the state network over the next three years.
PAST LEGISLATION
Financial restraints led to the rejection of similar measures last year. Debate over whether it was the government's role and not the private sector's to build the statewide system also stymied legislation.
The bills have moved farther and swifter this session, but in a tight economic environment, getting funding could again prove a significant hurdle.
''Electronic records -- electronic anything, is very expensive,'' said Linda Renn, a lobbyist with the Florida Health Information Management Association. ``I wouldn't say it's pie in the sky, but [bill supporters] are going to have to explain why this is important.''
Sunday, April 08, 2007
Health Care Reform Now
Dear Friends and Colleagues:
I hope that you have spent a relaxing Eastern and Passover Holiday.
Attached you find an interesting article from the Wall Street Journal entitled “Perverse Incentives in Health Care.”
The author claims that in health care delivery mediocrity is the rule and excellence, where it exists, is distributed randomly. There is no systematic reward for excellence and no penalty for mediocrity. As a result, excellence tends to be the result of the energy and enthusiasm of a few individuals, who usually receive no financial reward for their efforts.
Due to the fixed price-system (i.e. third-party payors) high-quality, low-cost care is not financially rewarding. Hospitals and doctors can make more money providing inefficient, mediocre care(i.,e, volume based care)
The author correctly states that in health care, contracts and prices are imposed by large impersonal bureaucracies. The individual physician has virtually no opportunity to offer a different bundle of services for a different price. As a result, very little entrepreneurship is possible.
Bottom line: When doctors and hospitals do not compete on the basis of price, they do not compete at all.
Where third-party payment is the norm, markets tend to be bureaucratic and stifling. But in those health-care sectors where third-party payment is rare or nonexistent, the market is vibrant, entrepreneurial and competitive.
I agree with the authors observation that many believe (including our AMA) that health savings accounts (HSAs) will radically reform the health-care system. Yet this is also a reform that focuses on demand, not supply. Even with an HSA plan in hand as you approach the doctor's office, you should know that your insurer has already spelled out what services will be paid for, which ones will not and how much will be paid. HSAs, therefore, will not free doctors to take advantage of telephone, email, computerized records or any other truly innovative service. Like school vouchers, HSAs create new freedom on the buyer side without loosening the shackles on those who produce. The reform is commendable. But real innovation must come from the supply side of the market.
Why are our patients flogging to in-store clinics, traveling to Thailand for surgery or are buying prescriptions from Canada? Because they seek the best price for the care they need. Our health care system is not market based, but controlled by bureaucrats and legislators
Meanwhile, organized medicine is still battling every year to avoid further Medicare cuts instead focusing on comprehensive health care reform.
Our health care system is on life-support and we are still afraid to pull the plug. If we don’t do it someone will do it for us.
Lets jump-start the market-oriented process, promote entrepreneurship, instead of stifling it.
Change has to happen NOW!!!
============================================================================
Perverse Incentives in Health Care
By JOHN C. GOODMAN
Wall Street Journal April 5, 2007; Page A13
Our public-school system and our health-care system may seem as different as night and day. Yet both systems share something in common: Mediocrity is the rule and excellence, where it exists, is distributed randomly.
In both cases the reason is the same. There is no systematic reward for excellence and no penalty for mediocrity. As a result, excellence tends to be the result of the energy and enthusiasm of a few individuals, who usually receive no financial reward for their efforts.
Research by John Wennberg and his colleagues at Dartmouth Medical School suggest that if everyone in America went to the Mayo Clinic, our annual health-care bill would be 25% lower (more than $500 billion!), and the average quality of care would improve. If everyone got care at Intermountain Healthcare in Salt Lake City, our health-care costs would be lowered by one-third.
Of course, not everyone can get treatment at Mayo or Intermountain. But why are these examples of efficient, high-quality care not being replicated all across the country? The answer is that high-quality, low-cost care is not financially rewarding. Indeed, the opposite is true. Hospitals and doctors can make more money providing inefficient, mediocre care.
In a normal market, entrepreneurs in search of profit would solve this problem by repackaging and repricing their services in order to make customer-pleasing adjustments. Yet in health care, contracts and prices are imposed by large impersonal bureaucracies. The individual physician has virtually no opportunity to offer a different bundle of services for a different price. As a result, very little entrepreneurship is possible.
Sometime in the early 20th century, lawyers, accountants and most other professionals discovered that the telephone was a useful instrument for communicating with clients. Yet even today, consultations with doctors by telephone are quite rare. Sometime in the late 20th century most other professionals discovered email. Yet only 21% of patients exchange email with their physicians; of these, slightly more than 2% do so on a frequent basis.
One would be hard-pressed to find a lawyer in the U.S. today who does not keep client records electronically. Ditto for accountants, architects, engineers and virtually every other profession. Yet although the computer is ubiquitous and studies show that electronic medical record systems have the capacity to improve quality and greatly reduce medical errors, no more than one in five physicians or one in four hospitals have such systems.
Why has the practice of medicine (as opposed to the science of medicine) changed so little in the modern era? The reason is because of the way we pay for medical care, particularly the way we pay doctors. At last count, there were about 7,500 specific tasks Medicare pays for. Telephone consultations are not among them. Nor are email consultations or electronic record keeping. What is true of Medicare is also true of Blue Cross and most employer plans.
Things are made worse by the fact that patients do not usually pay for health care with money; they typically pay with their time instead. As in Canada and most other developed countries, health care in the U.S. is mainly rationed by waiting, not by price.
When the doctor's time is rationed by waiting, the primary care physician's practice is usually fully booked, unless the practice is new or located in a rural area. As a result, there is very little incentive to compete for patients the way other professionals compete for clients. Because time -- not money -- is the currency we use to pay for care, the physician does not benefit very much from patient-pleasing improvements and is not harmed very much by an increase in patient irritations. Bottom line: When doctors and hospitals do not compete on the basis of price, they do not compete at all.
Where third-party payment is the norm, markets tend to be bureaucratic and stifling. But in those health-care sectors where third-party payment is rare or nonexistent, the market is vibrant, entrepreneurial and competitive.
Take cosmetic and Lasik surgery, for example. In both markets, patients pay with their own money. They also have no trouble finding what is virtually impossible to find for other types of surgery -- a package price covering all aspects of the procedure. People can compare prices, and in some cases quality. Providers are competing on price and quality and competition pays off. Over the past decade and a half, the number of cosmetic procedures grew sixfold along with numerous technological innovations of the type that are blamed for rising costs everywhere else in health care. Yet despite tremendous growth and technological change, the real price of cosmetic surgery declined. Over the past decade the real price of Lasik surgery fell by 30%.
The market for prescription drugs is another area where a great many people are paying out of pocket. In response, Rx.com was the first online outlet that began competing based on price and quality (they make fewer mistakes than local pharmacies). Wal-Mart's new policy of offering a month's supply of generic drugs is yet another example. Can anybody imagine Wal-Mart offering the same deal to Blue Cross?
Perhaps the most spectacular instance of a health-care product developing outside the third-party payment system is the walk-in clinic. These can be found in shopping malls and drug stores in the upper Midwest and they are spreading like wildfire around the country. They post prices. There is very little waiting. They maintain records electronically. The quality of service is comparable to traditional primary care at half the cost.
I know what you're probably thinking. Markets may work for certain specialized services; but can they work for run-of-the-mill hospital surgery? Medical tourism is proving that the answer is yes. If you're willing to leave the country you too can have access to efficient, high-quality health care. In India, Thailand and elsewhere around the world, facilities are offering U.S. citizens virtually every kind of procedure for package prices, covering all the costs of treatment, and sometimes airfare and lodging as well. These prices are often one-fifth to one-third the cost in the U.S. and care is often delivered in high-quality facilities that have electronic medical records and meet American accreditation standards.
One part of our health-care system (the part where third parties are absent) is teeming and bristling with entrepreneurship and innovation. In the other part (where third parties pay the bills), entrepreneurship has been all but extinguished. How can we make the latter more like the former?
Public and private efforts to reform the health-care system have been actively underway for the past two decades. The results have been disappointing, to say the least, and they all have one thing in common: They focus on the demand side of the medical marketplace.
Managed care, practice guidelines, pay-for-performance -- each of these short-lived fads involves buyers of care telling the providers how to practice medicine. Does no one notice how strange this is? In normal markets, buyers do not instruct sellers on how to efficiently produce their products. Even the HMO movement is a demand-side reform in this context. The HMO doctor is just as trapped as the fee-for-service physician and just as unable to rebundle and reprice his services in innovative ways.
Some believe that health savings accounts (HSAs) will radically reform the health-care system. Yet this is also a reform that focuses on demand, not supply. Even with an HSA plan in hand as you approach the doctor's office, you should know that your insurer has already spelled out what services will be paid for, which ones will not and how much will be paid. HSAs, therefore, will not free doctors to take advantage of telephone, email, computerized records or any other truly innovative service. Like school vouchers, HSAs create new freedom on the buyer side without loosening the shackles on those who produce. The reform is commendable. But real innovation must come from the supply side of the market.
One would think that health insurers and employers would find it in their self interest to break the mold. To the extent that entrepreneurs raise quality and lower price, the insurance product itself should become more attractive to potential customers. The trouble is that the entire third-party payment system is completely dominated by government (principally through Medicare and Medicaid). Private insurers tend to pay the way the government pays and providers who break Medicare rules in order to better serve the patient risk being barred from the entire Medicare program.
A possible way out of this morass is to start with government. Under the current system, Medicare and Medicaid stifle entrepreneurial activity and financially punish efforts to lower costs or improve quality. Why can't these agencies reward improvements instead? Suppose an entrepreneur offered to replicate the Mayo Clinic in other parts of the country -- potentially saving Medicare 25% of costs and improving quality of care along the way. Medicare should be willing to pay, say, 12.5% more than its standard rates in order to achieve twice that amount in lower total costs. That would leave the entrepreneur with a 12.5% profit -- an amount that one would hope would encourage other entrepreneurs to enter the market with even better ideas.
Once government agencies jump-start the entrepreneurial process in this way, private insurers are likely to follow suit. In this way, government could promote entrepreneurship, instead of stifling it.
Mr. Goodman is president of the National Center for Policy Analysis.
I hope that you have spent a relaxing Eastern and Passover Holiday.
Attached you find an interesting article from the Wall Street Journal entitled “Perverse Incentives in Health Care.”
The author claims that in health care delivery mediocrity is the rule and excellence, where it exists, is distributed randomly. There is no systematic reward for excellence and no penalty for mediocrity. As a result, excellence tends to be the result of the energy and enthusiasm of a few individuals, who usually receive no financial reward for their efforts.
Due to the fixed price-system (i.e. third-party payors) high-quality, low-cost care is not financially rewarding. Hospitals and doctors can make more money providing inefficient, mediocre care(i.,e, volume based care)
The author correctly states that in health care, contracts and prices are imposed by large impersonal bureaucracies. The individual physician has virtually no opportunity to offer a different bundle of services for a different price. As a result, very little entrepreneurship is possible.
Bottom line: When doctors and hospitals do not compete on the basis of price, they do not compete at all.
Where third-party payment is the norm, markets tend to be bureaucratic and stifling. But in those health-care sectors where third-party payment is rare or nonexistent, the market is vibrant, entrepreneurial and competitive.
I agree with the authors observation that many believe (including our AMA) that health savings accounts (HSAs) will radically reform the health-care system. Yet this is also a reform that focuses on demand, not supply. Even with an HSA plan in hand as you approach the doctor's office, you should know that your insurer has already spelled out what services will be paid for, which ones will not and how much will be paid. HSAs, therefore, will not free doctors to take advantage of telephone, email, computerized records or any other truly innovative service. Like school vouchers, HSAs create new freedom on the buyer side without loosening the shackles on those who produce. The reform is commendable. But real innovation must come from the supply side of the market.
Why are our patients flogging to in-store clinics, traveling to Thailand for surgery or are buying prescriptions from Canada? Because they seek the best price for the care they need. Our health care system is not market based, but controlled by bureaucrats and legislators
Meanwhile, organized medicine is still battling every year to avoid further Medicare cuts instead focusing on comprehensive health care reform.
Our health care system is on life-support and we are still afraid to pull the plug. If we don’t do it someone will do it for us.
Lets jump-start the market-oriented process, promote entrepreneurship, instead of stifling it.
Change has to happen NOW!!!
============================================================================
Perverse Incentives in Health Care
By JOHN C. GOODMAN
Wall Street Journal April 5, 2007; Page A13
Our public-school system and our health-care system may seem as different as night and day. Yet both systems share something in common: Mediocrity is the rule and excellence, where it exists, is distributed randomly.
In both cases the reason is the same. There is no systematic reward for excellence and no penalty for mediocrity. As a result, excellence tends to be the result of the energy and enthusiasm of a few individuals, who usually receive no financial reward for their efforts.
Research by John Wennberg and his colleagues at Dartmouth Medical School suggest that if everyone in America went to the Mayo Clinic, our annual health-care bill would be 25% lower (more than $500 billion!), and the average quality of care would improve. If everyone got care at Intermountain Healthcare in Salt Lake City, our health-care costs would be lowered by one-third.
Of course, not everyone can get treatment at Mayo or Intermountain. But why are these examples of efficient, high-quality care not being replicated all across the country? The answer is that high-quality, low-cost care is not financially rewarding. Indeed, the opposite is true. Hospitals and doctors can make more money providing inefficient, mediocre care.
In a normal market, entrepreneurs in search of profit would solve this problem by repackaging and repricing their services in order to make customer-pleasing adjustments. Yet in health care, contracts and prices are imposed by large impersonal bureaucracies. The individual physician has virtually no opportunity to offer a different bundle of services for a different price. As a result, very little entrepreneurship is possible.
Sometime in the early 20th century, lawyers, accountants and most other professionals discovered that the telephone was a useful instrument for communicating with clients. Yet even today, consultations with doctors by telephone are quite rare. Sometime in the late 20th century most other professionals discovered email. Yet only 21% of patients exchange email with their physicians; of these, slightly more than 2% do so on a frequent basis.
One would be hard-pressed to find a lawyer in the U.S. today who does not keep client records electronically. Ditto for accountants, architects, engineers and virtually every other profession. Yet although the computer is ubiquitous and studies show that electronic medical record systems have the capacity to improve quality and greatly reduce medical errors, no more than one in five physicians or one in four hospitals have such systems.
Why has the practice of medicine (as opposed to the science of medicine) changed so little in the modern era? The reason is because of the way we pay for medical care, particularly the way we pay doctors. At last count, there were about 7,500 specific tasks Medicare pays for. Telephone consultations are not among them. Nor are email consultations or electronic record keeping. What is true of Medicare is also true of Blue Cross and most employer plans.
Things are made worse by the fact that patients do not usually pay for health care with money; they typically pay with their time instead. As in Canada and most other developed countries, health care in the U.S. is mainly rationed by waiting, not by price.
When the doctor's time is rationed by waiting, the primary care physician's practice is usually fully booked, unless the practice is new or located in a rural area. As a result, there is very little incentive to compete for patients the way other professionals compete for clients. Because time -- not money -- is the currency we use to pay for care, the physician does not benefit very much from patient-pleasing improvements and is not harmed very much by an increase in patient irritations. Bottom line: When doctors and hospitals do not compete on the basis of price, they do not compete at all.
Where third-party payment is the norm, markets tend to be bureaucratic and stifling. But in those health-care sectors where third-party payment is rare or nonexistent, the market is vibrant, entrepreneurial and competitive.
Take cosmetic and Lasik surgery, for example. In both markets, patients pay with their own money. They also have no trouble finding what is virtually impossible to find for other types of surgery -- a package price covering all aspects of the procedure. People can compare prices, and in some cases quality. Providers are competing on price and quality and competition pays off. Over the past decade and a half, the number of cosmetic procedures grew sixfold along with numerous technological innovations of the type that are blamed for rising costs everywhere else in health care. Yet despite tremendous growth and technological change, the real price of cosmetic surgery declined. Over the past decade the real price of Lasik surgery fell by 30%.
The market for prescription drugs is another area where a great many people are paying out of pocket. In response, Rx.com was the first online outlet that began competing based on price and quality (they make fewer mistakes than local pharmacies). Wal-Mart's new policy of offering a month's supply of generic drugs is yet another example. Can anybody imagine Wal-Mart offering the same deal to Blue Cross?
Perhaps the most spectacular instance of a health-care product developing outside the third-party payment system is the walk-in clinic. These can be found in shopping malls and drug stores in the upper Midwest and they are spreading like wildfire around the country. They post prices. There is very little waiting. They maintain records electronically. The quality of service is comparable to traditional primary care at half the cost.
I know what you're probably thinking. Markets may work for certain specialized services; but can they work for run-of-the-mill hospital surgery? Medical tourism is proving that the answer is yes. If you're willing to leave the country you too can have access to efficient, high-quality health care. In India, Thailand and elsewhere around the world, facilities are offering U.S. citizens virtually every kind of procedure for package prices, covering all the costs of treatment, and sometimes airfare and lodging as well. These prices are often one-fifth to one-third the cost in the U.S. and care is often delivered in high-quality facilities that have electronic medical records and meet American accreditation standards.
One part of our health-care system (the part where third parties are absent) is teeming and bristling with entrepreneurship and innovation. In the other part (where third parties pay the bills), entrepreneurship has been all but extinguished. How can we make the latter more like the former?
Public and private efforts to reform the health-care system have been actively underway for the past two decades. The results have been disappointing, to say the least, and they all have one thing in common: They focus on the demand side of the medical marketplace.
Managed care, practice guidelines, pay-for-performance -- each of these short-lived fads involves buyers of care telling the providers how to practice medicine. Does no one notice how strange this is? In normal markets, buyers do not instruct sellers on how to efficiently produce their products. Even the HMO movement is a demand-side reform in this context. The HMO doctor is just as trapped as the fee-for-service physician and just as unable to rebundle and reprice his services in innovative ways.
Some believe that health savings accounts (HSAs) will radically reform the health-care system. Yet this is also a reform that focuses on demand, not supply. Even with an HSA plan in hand as you approach the doctor's office, you should know that your insurer has already spelled out what services will be paid for, which ones will not and how much will be paid. HSAs, therefore, will not free doctors to take advantage of telephone, email, computerized records or any other truly innovative service. Like school vouchers, HSAs create new freedom on the buyer side without loosening the shackles on those who produce. The reform is commendable. But real innovation must come from the supply side of the market.
One would think that health insurers and employers would find it in their self interest to break the mold. To the extent that entrepreneurs raise quality and lower price, the insurance product itself should become more attractive to potential customers. The trouble is that the entire third-party payment system is completely dominated by government (principally through Medicare and Medicaid). Private insurers tend to pay the way the government pays and providers who break Medicare rules in order to better serve the patient risk being barred from the entire Medicare program.
A possible way out of this morass is to start with government. Under the current system, Medicare and Medicaid stifle entrepreneurial activity and financially punish efforts to lower costs or improve quality. Why can't these agencies reward improvements instead? Suppose an entrepreneur offered to replicate the Mayo Clinic in other parts of the country -- potentially saving Medicare 25% of costs and improving quality of care along the way. Medicare should be willing to pay, say, 12.5% more than its standard rates in order to achieve twice that amount in lower total costs. That would leave the entrepreneur with a 12.5% profit -- an amount that one would hope would encourage other entrepreneurs to enter the market with even better ideas.
Once government agencies jump-start the entrepreneurial process in this way, private insurers are likely to follow suit. In this way, government could promote entrepreneurship, instead of stifling it.
Mr. Goodman is president of the National Center for Policy Analysis.
Wednesday, February 21, 2007
In-Store Clinics
" Given the stresses expected to bear upon delivery of services in the future, such models deserve consideration as
one potential mechanism for managing a particular class of medical problems, serving a particular patient need, and
maximizing patient benefit with limited resources."
Dear Friends and Colleagues:
Attached a very interesting article from todays NEJM reviewing the issue of in-store clinics.
The author emphasizes the following:
* Payers note that primary care is less expensive when delivered at in-store clinics than when provided in a doctor's office or emergency room,
* patients value the convenience and low price,
* entrepreneurs see a profitable business model
* proponents of consumer-driven health care see services that can be paid for out of health savings accounts.
* Physicians, however, express concern about the quality of care and the potential impact on their businesses.
How is the care in-store clinic health care delivery structured?
* Care is intended to be quick,inexpensive, and convenient: visits and waiting times are short,the charge is usually less than $50, and extended hours are offered along with ample parking.
* It's not surprising, then,that patients and investors have taken notice. Although only7% of respondents in a 2005 poll said they had ever used such a service, 41% said they would be likely to do so.
* Diagnoses are made by using a simple binary test(such as for a streptococcal throat infection) or by applying a rigid, protocol-based decision rule. In some cases, no diagnosis is required (such as for a hepatitis vaccination).
* In addition,the conditions treated and therapies offered require no or minimal follow-up (for instance, clinics offer diabetes screening but not treatment), and decisions can be guided by highly specified protocols.
* More important, the conditions can be diagnosed and treated quickly.
What are the concerns doctors have with the emergence of in-store clinics?
* The effect of this specialized care delivery model on traditional primary care practices may be to remove some patients and services from the doctor's office, leaving a sicker population behind.
The in-store clinics raise important issues regarding the future design of primary care delivery including:
1. In-store clinics reflect a well-designed operating system in which all the elements — location, physical structure, information systems, staffing, clinical and business processes, and range of services — are aligned to meet a particular population's needs efficiently and effectively.
2. In-store clinics place patients in a new role, as they become responsible for sorting their medical problems according to their complexity. Because some menu items are diagnoses, there is an implicit assumption that patients can make their own clinical judgments, relying on clinics only to confirm the diagnosis and deliver the treatment.
3. Prognosticators see an impending crisis caused by the convergence of a reduced supply of physicians and nurses and an increased demand for health care as baby boomers age and develop chronic conditions. Service models such as in-store clinics may efficiently provide services to a small slice of the population, freeing up primary care practitioners and emergency rooms to deal with more complex cases, for which they are more appropriately configured.
4. In-store clinics are certainly entering the market at the low end of medical complexity. However, they have, by design, limited ability to move "up" into coverage of more complex conditions or problems. The menu of services consistent with their operating model is short, and taking on others would undermine their operations and their customer value proposition. Consequently, it is unlikely that in their current form they will usurp the core business of primary care practitioners.
The author concludes stating that " Whether or not this model becomes a permanent feature of the health care landscape, the thinking behind it — in terms of operating-system alignment, alternative approaches to stratification and capacity creation, and the patient's role — may well influence the design of future delivery systems."
A VERY IMPORTANT ASPECT WE CAN FOCUS ON LIMITING THE SPREAD OF IN-STORE CLINICS IN OUR STATE
Clinics are located in states that allow prescribing by nurse practitioners, and physician involvement is limited.
WE CAN LIMIT THE IN-STORE CLINICS IN FLORIDA BY FOCUSING ON THE SCOPE OF PRACTICE ISSUE AND TIGHTEN THE SUPERVISION ASPECT!!!
THIS WILL GIVE US ENOUGH TIME TO EVALUATE THE PERFORMANCE OF IN-STORE CLINICS AS IT RELATES TO PATIENT SAFETY AND THE RELATIONSHIP BETWEEN NPs AND PAs WITH THE SUPERVISING PHYSICIANS.!!!!!!
Yours truly,
Bernd
NEJM 02-22-2007
The Rise of In-Store Clinics — Threat or Opportunity?
Richard Bohmer, M.B., Ch.B., M.P.H.
The recent acquisition by the pharmacy chain CVS of MinuteClinic, a chain of in-store clinics founded in Minnesota, has put this model of primary care delivery back in the spotlight. Although still not widespread, the model is increasing in prevalence (see table) and appeals to several stakeholders: payers note that primary care is less expensive when delivered at in-store clinics than when provided in a doctor's office or emergency room, patients value the convenience and low price, entrepreneurs see a profitable business model, and proponents of consumer-driven health care see services that can be paid for out of health savings accounts. Physicians, however, express concern about the quality of care and the potential impact on their businesses.
The typical in-store clinic is a kiosk — a small, thin-walled structure located inside a store — staffed by a nurse practitioner. The clinics differ from the old "doc-in-the-box" model in that they are neither routinely staffed by a physician nor intended to provide all primary care services. Indeed, the range of services — posted as a "menu" on the company's Web site or on the kiosk — is strikingly small, including common adult vaccinations, screening tests, and treatment for simple conditions.
But for these circumscribed services, the clinics provide a compelling value proposition. Care is intended to be quick, inexpensive, and convenient: visits and waiting times are short, the charge is usually less than $50, and extended hours are offered along with ample parking. It's not surprising, then, that patients and investors have taken notice. Although only 7% of respondents in a 2005 poll said they had ever used such a service, 41% said they would be likely to do so.2 And since 2000, when the concept was developed by QuickMedx (which later became MinuteClinic), at least 10 other companies have entered the market and several hundred clinics have been opened or are being planned. The California HealthCare Foundation expects thousands to open in the near future.1
At the heart of the appeal are well-thought-out business and operational models, both dependent on the limited services menu. Overhead is low because staffing, real estate, and financing costs are low, and some of these overhead costs are shared with the store. Clinics are located in states that allow prescribing by nurse practitioners, and physician involvement is limited. In addition, their focus on out-of-pocket payment limits accounts-receivable costs. Affiliations with drugstores benefit both partners: patients appreciate the convenience of being able to fill prescriptions on the spot, and the clinic draws customers to the store.
The operational model is equally well constructed. The originators based their design on the McDonald's hamburger chain, in which customers select items from a limited menu. The services listed are highly standardized interventions and require no physician evaluation. Diagnoses are made by using a simple binary test (such as for a streptococcal throat infection) or by applying a rigid, protocol-based decision rule. In some cases, no diagnosis is required (such as for a hepatitis vaccination). In addition, the conditions treated and therapies offered require no or minimal follow-up (for instance, clinics offer diabetes screening but not treatment), and decisions can be guided by highly specified protocols. More important, the conditions can be diagnosed and treated quickly.
Some concerns have been raised, however, about quality of care. Critics worry that important, albeit rare, diagnoses and opportunities to address other concomitant health issues may easily be missed by nurse practitioners following rigid protocols. Questions have also been raised about the potential lack of continuity of care: when care is fragmented, with different clinics or clinicians providing care at different times, trends suggestive of serious underlying conditions may be missed, and if clinics have no explicit after-hours arrangements, complications arising from daytime care may go unaddressed. In addition, past experience suggests that for-profit clinics might be motivated to overservice patients.
These drawbacks have thus far remained theoretical. Clinics have worked to maintain good relationships with local primary care practitioners,3 some have software that searches for patterns of repeated presentations, and the strict reliance on evidence-based protocols should prevent overservicing. Both the American Medical Association and the American Association of Family Practice support the concept of pluralism in primary care services.3 Moreover, these clinics raise important issues regarding the future design of primary care delivery.
First, in-store clinics reflect a well-designed operating system in which all the elements — location, physical structure, information systems, staffing, clinical and business processes, and range of services — are aligned to meet a particular population's needs efficiently and effectively. Health care services tend to be loosely stratified, typically by patient age, by body system, or by disease. Although these variables are often rough proxies for the complexity of medical problems, complexity itself is not usually an organizational rubric. In-store clinics, by contrast, stratify the primary care market into more and less complex care and are carefully configured to serve the needs of the less sick. Focus on a small segment of the market facilitates such operating system alignment.
The effect of this specialized care delivery model on traditional primary care practices may be to remove some patients and services from the doctor's office, leaving a sicker population behind. Some practitioners will see this as "cream skimming" and a threat to their revenue, particularly if they rely on income from short appointments for simple cases to subsidize the cost of more time-consuming appointments for more complex cases. But others may see in-store clinics as a way to improve their patients' access to care, decompress their busy waiting rooms, free them up to spend more time with patients, and serve the uninsured, a group of patients whom they may wish to avoid.
Second, in-store clinics place patients in a new role, as they become responsible for sorting their medical problems according to their complexity. Because some menu items are diagnoses, there is an implicit assumption that patients can make their own clinical judgments, relying on clinics only to confirm the diagnosis and deliver the treatment. The clinics' highly engineered business and operational models are very sensitive to misclassification. Attracting patients for whom the clinic is not configured — for instance, someone with an acute, life-threatening disease — would cause a serious delay for others in the queue and weaken the customer value proposition of speed and convenience. Clinics, however, say that such occurrences are less common than one might fear; Michael Howe, the chief executive officer of MinuteClinic, notes that less than 10% of patients are turned away at his company's clinics, which have never had a patient present with chest pain, for instance. With regard to the circumscribed set of conditions on the menu, patients have turned out to be capable diagnosticians. Moreover, some patients — and not just those in higher socioeconomic groups — seem to be happy with this role and comfortable arranging their own care.
Third, prognosticators see an impending crisis caused by the convergence of a reduced supply of physicians and nurses and an increased demand for health care as baby boomers age and develop chronic conditions.4 Service models such as in-store clinics may efficiently provide services to a small slice of the population, freeing up primary care practitioners and emergency rooms to deal with more complex cases, for which they are more appropriately configured. In fact, primary care practices and emergency departments could themselves use such a model, both to improve access to care and to create spare capacity. Indeed, several provider organizations have already opened their own in-store clinics, using their powerful local brand to attract consumers.
Finally, some wonder whether this model is a "disruptive innovation" — that is, a service or technology that enters a market at the low end, initially not performing as well as higher-end incumbents, then improves until it captures the whole market.5 In-store clinics are certainly entering the market at the low end of medical complexity. However, they have, by design, limited ability to move "up" into coverage of more complex conditions or problems. The menu of services consistent with their operating model is short, and taking on others would undermine their operations and their customer value proposition. Consequently, it is unlikely that in their current form they will usurp the core business of primary care practitioners.
Whether or not this model becomes a permanent feature of the health care landscape, the thinking behind it — in terms of operating-system alignment, alternative approaches to stratification and capacity creation, and the patient's role — may well influence the design of future delivery systems. If these clinics are to complement existing services, they will have to ensure continuity of care by building effective relationships with local primary care physicians and by developing systems to track patients who have multiple appointments in order to identify patterns suggestive of underlying illnesses. However, concern about the quality of care is not a reason to reject such models out of hand. Given the stresses expected to bear upon delivery of services in the future, such models deserve consideration as one potential mechanism for managing a particular class of medical problems, serving a particular patient need, and maximizing patient benefit with limited resources.
Source Information
Dr. Bohmer is a senior lecturer in business administration at Harvard Business School, Boston.
An interview with Dr. Bohmer can be heard at www.nejm.org.
References
1. Scott MK. Health care in the express lane: the emergence of retail clinics. Prepared for the California Healthcare Foundation. (Accessed January 30, 2007, at http://www.chcf.org/topics/view.cfm?itemID=123218.)
2. Many agree on potential benefits of onsite clinics in major retail stores that can provide basic medical services, yet large number are also skeptical. Wall Street Journal Online/Harris Interactive health-care poll. October 26, 2005. (Accessed January 30, 2007, at http://www.harrisinteractive.com/news/newsletters/wsjhealthnews/wsjonline_hi_health-carepoll2005vol4_iss21.pdf.)
3. Store-based health clinics. Report 7 of the Council on Medical Service (A-06). June 2006. (Accessed January 30, 2007, at http://www.ama-assn.org/ama1/pub/upload/mm/372/a-06cmsreport7.pdf.)
4. Bodenheimer T. Primary care -- will it survive? N Engl J Med 2006;355:861-864. [Free Full Text]
5. Christensen CM, Bohmer RMJ, Kenagy J. Will disruptive innovations cure health care? Harv Bus Rev 2000;78:102-112. [ISI][Medline]
one potential mechanism for managing a particular class of medical problems, serving a particular patient need, and
maximizing patient benefit with limited resources."
Dear Friends and Colleagues:
Attached a very interesting article from todays NEJM reviewing the issue of in-store clinics.
The author emphasizes the following:
* Payers note that primary care is less expensive when delivered at in-store clinics than when provided in a doctor's office or emergency room,
* patients value the convenience and low price,
* entrepreneurs see a profitable business model
* proponents of consumer-driven health care see services that can be paid for out of health savings accounts.
* Physicians, however, express concern about the quality of care and the potential impact on their businesses.
How is the care in-store clinic health care delivery structured?
* Care is intended to be quick,inexpensive, and convenient: visits and waiting times are short,the charge is usually less than $50, and extended hours are offered along with ample parking.
* It's not surprising, then,that patients and investors have taken notice. Although only7% of respondents in a 2005 poll said they had ever used such a service, 41% said they would be likely to do so.
* Diagnoses are made by using a simple binary test(such as for a streptococcal throat infection) or by applying a rigid, protocol-based decision rule. In some cases, no diagnosis is required (such as for a hepatitis vaccination).
* In addition,the conditions treated and therapies offered require no or minimal follow-up (for instance, clinics offer diabetes screening but not treatment), and decisions can be guided by highly specified protocols.
* More important, the conditions can be diagnosed and treated quickly.
What are the concerns doctors have with the emergence of in-store clinics?
* The effect of this specialized care delivery model on traditional primary care practices may be to remove some patients and services from the doctor's office, leaving a sicker population behind.
The in-store clinics raise important issues regarding the future design of primary care delivery including:
1. In-store clinics reflect a well-designed operating system in which all the elements — location, physical structure, information systems, staffing, clinical and business processes, and range of services — are aligned to meet a particular population's needs efficiently and effectively.
2. In-store clinics place patients in a new role, as they become responsible for sorting their medical problems according to their complexity. Because some menu items are diagnoses, there is an implicit assumption that patients can make their own clinical judgments, relying on clinics only to confirm the diagnosis and deliver the treatment.
3. Prognosticators see an impending crisis caused by the convergence of a reduced supply of physicians and nurses and an increased demand for health care as baby boomers age and develop chronic conditions. Service models such as in-store clinics may efficiently provide services to a small slice of the population, freeing up primary care practitioners and emergency rooms to deal with more complex cases, for which they are more appropriately configured.
4. In-store clinics are certainly entering the market at the low end of medical complexity. However, they have, by design, limited ability to move "up" into coverage of more complex conditions or problems. The menu of services consistent with their operating model is short, and taking on others would undermine their operations and their customer value proposition. Consequently, it is unlikely that in their current form they will usurp the core business of primary care practitioners.
The author concludes stating that " Whether or not this model becomes a permanent feature of the health care landscape, the thinking behind it — in terms of operating-system alignment, alternative approaches to stratification and capacity creation, and the patient's role — may well influence the design of future delivery systems."
A VERY IMPORTANT ASPECT WE CAN FOCUS ON LIMITING THE SPREAD OF IN-STORE CLINICS IN OUR STATE
Clinics are located in states that allow prescribing by nurse practitioners, and physician involvement is limited.
WE CAN LIMIT THE IN-STORE CLINICS IN FLORIDA BY FOCUSING ON THE SCOPE OF PRACTICE ISSUE AND TIGHTEN THE SUPERVISION ASPECT!!!
THIS WILL GIVE US ENOUGH TIME TO EVALUATE THE PERFORMANCE OF IN-STORE CLINICS AS IT RELATES TO PATIENT SAFETY AND THE RELATIONSHIP BETWEEN NPs AND PAs WITH THE SUPERVISING PHYSICIANS.!!!!!!
Yours truly,
Bernd
NEJM 02-22-2007
The Rise of In-Store Clinics — Threat or Opportunity?
Richard Bohmer, M.B., Ch.B., M.P.H.
The recent acquisition by the pharmacy chain CVS of MinuteClinic, a chain of in-store clinics founded in Minnesota, has put this model of primary care delivery back in the spotlight. Although still not widespread, the model is increasing in prevalence (see table) and appeals to several stakeholders: payers note that primary care is less expensive when delivered at in-store clinics than when provided in a doctor's office or emergency room, patients value the convenience and low price, entrepreneurs see a profitable business model, and proponents of consumer-driven health care see services that can be paid for out of health savings accounts. Physicians, however, express concern about the quality of care and the potential impact on their businesses.
The typical in-store clinic is a kiosk — a small, thin-walled structure located inside a store — staffed by a nurse practitioner. The clinics differ from the old "doc-in-the-box" model in that they are neither routinely staffed by a physician nor intended to provide all primary care services. Indeed, the range of services — posted as a "menu" on the company's Web site or on the kiosk — is strikingly small, including common adult vaccinations, screening tests, and treatment for simple conditions.
But for these circumscribed services, the clinics provide a compelling value proposition. Care is intended to be quick, inexpensive, and convenient: visits and waiting times are short, the charge is usually less than $50, and extended hours are offered along with ample parking. It's not surprising, then, that patients and investors have taken notice. Although only 7% of respondents in a 2005 poll said they had ever used such a service, 41% said they would be likely to do so.2 And since 2000, when the concept was developed by QuickMedx (which later became MinuteClinic), at least 10 other companies have entered the market and several hundred clinics have been opened or are being planned. The California HealthCare Foundation expects thousands to open in the near future.1
At the heart of the appeal are well-thought-out business and operational models, both dependent on the limited services menu. Overhead is low because staffing, real estate, and financing costs are low, and some of these overhead costs are shared with the store. Clinics are located in states that allow prescribing by nurse practitioners, and physician involvement is limited. In addition, their focus on out-of-pocket payment limits accounts-receivable costs. Affiliations with drugstores benefit both partners: patients appreciate the convenience of being able to fill prescriptions on the spot, and the clinic draws customers to the store.
The operational model is equally well constructed. The originators based their design on the McDonald's hamburger chain, in which customers select items from a limited menu. The services listed are highly standardized interventions and require no physician evaluation. Diagnoses are made by using a simple binary test (such as for a streptococcal throat infection) or by applying a rigid, protocol-based decision rule. In some cases, no diagnosis is required (such as for a hepatitis vaccination). In addition, the conditions treated and therapies offered require no or minimal follow-up (for instance, clinics offer diabetes screening but not treatment), and decisions can be guided by highly specified protocols. More important, the conditions can be diagnosed and treated quickly.
Some concerns have been raised, however, about quality of care. Critics worry that important, albeit rare, diagnoses and opportunities to address other concomitant health issues may easily be missed by nurse practitioners following rigid protocols. Questions have also been raised about the potential lack of continuity of care: when care is fragmented, with different clinics or clinicians providing care at different times, trends suggestive of serious underlying conditions may be missed, and if clinics have no explicit after-hours arrangements, complications arising from daytime care may go unaddressed. In addition, past experience suggests that for-profit clinics might be motivated to overservice patients.
These drawbacks have thus far remained theoretical. Clinics have worked to maintain good relationships with local primary care practitioners,3 some have software that searches for patterns of repeated presentations, and the strict reliance on evidence-based protocols should prevent overservicing. Both the American Medical Association and the American Association of Family Practice support the concept of pluralism in primary care services.3 Moreover, these clinics raise important issues regarding the future design of primary care delivery.
First, in-store clinics reflect a well-designed operating system in which all the elements — location, physical structure, information systems, staffing, clinical and business processes, and range of services — are aligned to meet a particular population's needs efficiently and effectively. Health care services tend to be loosely stratified, typically by patient age, by body system, or by disease. Although these variables are often rough proxies for the complexity of medical problems, complexity itself is not usually an organizational rubric. In-store clinics, by contrast, stratify the primary care market into more and less complex care and are carefully configured to serve the needs of the less sick. Focus on a small segment of the market facilitates such operating system alignment.
The effect of this specialized care delivery model on traditional primary care practices may be to remove some patients and services from the doctor's office, leaving a sicker population behind. Some practitioners will see this as "cream skimming" and a threat to their revenue, particularly if they rely on income from short appointments for simple cases to subsidize the cost of more time-consuming appointments for more complex cases. But others may see in-store clinics as a way to improve their patients' access to care, decompress their busy waiting rooms, free them up to spend more time with patients, and serve the uninsured, a group of patients whom they may wish to avoid.
Second, in-store clinics place patients in a new role, as they become responsible for sorting their medical problems according to their complexity. Because some menu items are diagnoses, there is an implicit assumption that patients can make their own clinical judgments, relying on clinics only to confirm the diagnosis and deliver the treatment. The clinics' highly engineered business and operational models are very sensitive to misclassification. Attracting patients for whom the clinic is not configured — for instance, someone with an acute, life-threatening disease — would cause a serious delay for others in the queue and weaken the customer value proposition of speed and convenience. Clinics, however, say that such occurrences are less common than one might fear; Michael Howe, the chief executive officer of MinuteClinic, notes that less than 10% of patients are turned away at his company's clinics, which have never had a patient present with chest pain, for instance. With regard to the circumscribed set of conditions on the menu, patients have turned out to be capable diagnosticians. Moreover, some patients — and not just those in higher socioeconomic groups — seem to be happy with this role and comfortable arranging their own care.
Third, prognosticators see an impending crisis caused by the convergence of a reduced supply of physicians and nurses and an increased demand for health care as baby boomers age and develop chronic conditions.4 Service models such as in-store clinics may efficiently provide services to a small slice of the population, freeing up primary care practitioners and emergency rooms to deal with more complex cases, for which they are more appropriately configured. In fact, primary care practices and emergency departments could themselves use such a model, both to improve access to care and to create spare capacity. Indeed, several provider organizations have already opened their own in-store clinics, using their powerful local brand to attract consumers.
Finally, some wonder whether this model is a "disruptive innovation" — that is, a service or technology that enters a market at the low end, initially not performing as well as higher-end incumbents, then improves until it captures the whole market.5 In-store clinics are certainly entering the market at the low end of medical complexity. However, they have, by design, limited ability to move "up" into coverage of more complex conditions or problems. The menu of services consistent with their operating model is short, and taking on others would undermine their operations and their customer value proposition. Consequently, it is unlikely that in their current form they will usurp the core business of primary care practitioners.
Whether or not this model becomes a permanent feature of the health care landscape, the thinking behind it — in terms of operating-system alignment, alternative approaches to stratification and capacity creation, and the patient's role — may well influence the design of future delivery systems. If these clinics are to complement existing services, they will have to ensure continuity of care by building effective relationships with local primary care physicians and by developing systems to track patients who have multiple appointments in order to identify patterns suggestive of underlying illnesses. However, concern about the quality of care is not a reason to reject such models out of hand. Given the stresses expected to bear upon delivery of services in the future, such models deserve consideration as one potential mechanism for managing a particular class of medical problems, serving a particular patient need, and maximizing patient benefit with limited resources.
Source Information
Dr. Bohmer is a senior lecturer in business administration at Harvard Business School, Boston.
An interview with Dr. Bohmer can be heard at www.nejm.org.
References
1. Scott MK. Health care in the express lane: the emergence of retail clinics. Prepared for the California Healthcare Foundation. (Accessed January 30, 2007, at http://www.chcf.org/topics/view.cfm?itemID=123218.)
2. Many agree on potential benefits of onsite clinics in major retail stores that can provide basic medical services, yet large number are also skeptical. Wall Street Journal Online/Harris Interactive health-care poll. October 26, 2005. (Accessed January 30, 2007, at http://www.harrisinteractive.com/news/newsletters/wsjhealthnews/wsjonline_hi_health-carepoll2005vol4_iss21.pdf.)
3. Store-based health clinics. Report 7 of the Council on Medical Service (A-06). June 2006. (Accessed January 30, 2007, at http://www.ama-assn.org/ama1/pub/upload/mm/372/a-06cmsreport7.pdf.)
4. Bodenheimer T. Primary care -- will it survive? N Engl J Med 2006;355:861-864. [Free Full Text]
5. Christensen CM, Bohmer RMJ, Kenagy J. Will disruptive innovations cure health care? Harv Bus Rev 2000;78:102-112. [ISI][Medline]
Sunday, February 18, 2007
Medicare Part D
"Most Americans are aware that our health-care system is in deep trouble, a dog's breakfast ofprivate providers and insurers that has weak and inconsistent incentives for quality control and cost containment."
Dear Friends and Colleagues;
Greetings from the cold, but sunny Jerusalem.
Attached a very interesting and informative article published in yesterdays Wall Street Journal reviewing the effect and performance of the Medicare Part D program.
Part D is a massive social experiment on the ability of a privatized market to deliver social services effectively.
The author and researcher claims that in terms of health delivered per dollar of cost, our health care system is grotesquely inefficient. We spend $6,102 per person on health care each year, nearly 17% of GDP. Our neighbor Canada's single-payer system costs $3,165 per person per year, about half our expenditure, or 10% of their GDP. The Canadian costs and health outcomes are typical of developed countries, where government managed and financed systems predominate. The extra cost of our system is not buying us better health. The probability of dying between ages 15 and 60, a good indicator of failure of a health-care system to prevent and treat disease, is 8.1% for females in the U.S.; in Canada, the same probability is 5.7%.
f current trends continue, health care in the U.S. as a proportion of GDP will rise to 40% by 2050, a level that will break the current system of financing health through employers, pension funds and Medicare/Medicaid.
The authors then continue analyzing the performance of the Medicare Part B program and gives it a mixed report card:
My overall conclusion is that, so far, the Part D program has succeeded in getting affordable prescription drugs to the senior population. Its privatized structure has not been a significant impediment to delivery of these services. Competition among insurers seems to have been effective in keeping a lid on costs, and assuring reasonable quality control. We do not have an experiment in which we can determine whether a single-product system could have done as well, or better, along these dimensions, but I think it is reasonable to say that the Part D market has performed as well as its partisans hoped, and far better than its detractors expected.
Does this mean that Part D proves that privatization will be effective in other segments of the health-care market?
The authors cautions and points out that:
* the success of Part D depends substantially on thoughtful and muscular management of the market.A health insurance market like Part D probably requires this level of active management to work well; after-the-fact oversight in the style of the SEC or FTC is inadequate. If privatization is going to work elsewhere in health care, active market management will be needed.
* consumer-directed health care works only if consumers can understand the consequences of their choices. In much of medicine, providers are the agents that guide consumers through these choices. If consumer-directed health care is to be effective, these providers must give sound advice on both the health and financial consequences of alternative choices. This is possible if the incentives to providers and consumers are right, but the design of such markets should not be left to chance.
Yours
Bernd Wollschlaeger,MD,FAAFP
A Dog's Breakfast
By DANIEL L. MCFADDEN
February 16, 2007; Page A15
Last year, Medicare underwent a major expansion with the addition of Part D prescription drug coverage. A controversial feature of this new program was its organization as a market in which consumers could choose among various plans offered competitively by different insurers and HMOs, rather than the single-payer, single-product model used elsewhere in the Medicare system. Proponents of this design touted the choices it would offer consumers, and the benefits of competition for product quality and cost; opponents objected that consumers would be overwhelmed by the complexity of the market, and that it was unnecessarily generous to pharmaceutical and insurance companies.
Part D is a massive social experiment on the ability of a privatized market to deliver social services effectively. With the support of the National Institute on Aging, my research group has monitored consumer choices and outcomes from the new Part D market. I will summarize our findings, but first I want to provide some perspective on the American health-care system and the questions that study of Part D may help answer.
Most Americans are aware that our health-care system is in deep trouble, a dog's breakfast of private providers and insurers that has weak and inconsistent incentives for quality control and cost containment. Many consumers cannot obtain health insurance at reasonable cost, and financing the system is stressing employers, pension funds, and the government's Medicare and Medicaid programs.
In terms of health delivered per dollar of cost, our system is grotesquely inefficient. We spend $6,102 per person on health care each year, nearly 17% of GDP. Our neighbor Canada's single-payer system costs $3,165 per person per year, about half our expenditure, or 10% of their GDP. The Canadian costs and health outcomes are typical of developed countries, where government managed and financed systems predominate. The extra cost of our system is not buying us better health. The probability of dying between ages 15 and 60, a good indicator of failure of a health-care system to prevent and treat disease, is 8.1% for females in the U.S.; in Canada, the same probability is 5.7%.
In the future, things are going to get much worse. If current trends continue, health care in the U.S. as a proportion of GDP will rise to 40% by 2050, a level that will break the current system of financing health through employers, pension funds and Medicare/Medicaid.
There are a number of reasons for this gathering storm. First, the U.S. population is getting older, and the old require more medical maintenance. Second, we are getting wealthier, and staying alive is the ultimate luxury good. Third, we demand expensive medical innovations, such as dialysis, MRIs, transplants, stents and biotech. About a third of all medical costs are incurred in the last year of life, and are at best marginally effective. The incentives in the system do not force hard choices.
To deal with this future, three substantial reforms are needed. First, we need to wring out some of the inefficiencies. Something like 30% of our health costs come from administrative overhead, legal costs and defensive medicine. These could be largely eliminated in a comprehensive reform; we just need to emulate best practice in other developed countries.
Second, we need universal health insurance coverage, with active emphasis on preventive medicine that is effective in reducing later medical events and costs. Perhaps this can be accomplished by cobbling together existing sources of finance, as in Gov. Arnold Schwarzenegger's current proposal for California. However, eventually we will have to go to a system that is not channeled through employers, something like a tax-financed medical voucher system.
Third, we need incentives that match choice of expensive treatments with consumers' willingness to pay for them, a benefit-cost analysis that places treatment choices and financial responsibility on the individual.
This brings us to Medicare Part D. This experiment in privatizing the prescription drug insurance market and the interface between insurers and consumers gives the individual the right, and responsibility, to make insurance plan choices that are in his or her self-interest. If consumers are up to this task, then their choices will ensure that the plans, and insurers, that succeed in the market are ones that meet their needs. However, if many are confused or confounded, the market will not get the signals it needs to work satisfactorily. The success or failure of the Part D market is a bellwether for proposals to spread consumer-directed health care across the system, putting health and financial choices in the hands of consumers, and utilizing the forces of market competition to rationalize the system.
So, how well has the Part D market worked? We now have one year of experience, including a second open enrollment period in which consumers could switch plans, or enroll if they had not done so earlier. We can ask whether consumers were satisfied with this market, whether their choices were consistent with their interests, and whether Part D insurance has had a positive effect on health outcomes. To do this, my group is tracking about 2,200 consumers age 65 and up from opening of the initial enrollment period in mid-November 2005. We interviewed them just before enrollment began, and again just after the initial enrollment period ended on May 15, 2006. Here are some of the things we have found:
Consumers were quite confused about the Part D program before enrollment began, with 40% knowing little or nothing about what the program offered, and 17% indicating that they were unlikely to enroll. Start-up problems, widely publicized, further clouded the program's future. However, when the initial enrollment period closed, only 7.4% of the age 65-plus eligible population of 35.8 million were not enrolled in Part D or comparable prescription drug coverage. It helped that monthly premiums, predicted to be about $37, were substantially lower, averaging around $24, with some plans available for premiums as low as $6 to $10. It helped that about 68% of the population was automatically enrolled, either through employer or union based plans or through Medicaid, VA or federal employee coverage. It also helped that Part D incorporates an annual subsidy of about $1,200 per enrollee, so that most potential enrollees benefit immediately.
Failure to enroll turned out to be a minor problem, but making Part D voluntary rather than mandatory did have some consequences. About 1.2 million seniors who use enough prescription drugs so that they would immediately benefit from enrolling failed to do so. Mostly, these were not the very poor, who were picked up by Medicaid and by outreach programs, but poorly educated people above the poverty line.
General opinions elicited after the close of the initial enrollment period give Part D a mixed report card. Seventy-seven percent liked having a choice of plans, but 58% thought the program was not well designed; 77% say they would have preferred to have prescription drugs provided automatically as part of Medicare Part A; 58% are less satisfied with Medicare as a result of Part D; and large majorities dislike formulary restrictions and the gap, a range of out-of-pocket costs where the Part D standard plan offers no benefits.
However, when one looks at plan choices made, one finds that consumers were relatively consistent in recognizing their self-interest. Most consumers selected among the lowest-cost plans available in their area. Consumers with significant drug needs enrolled early, while those with no immediate needs mostly enrolled later to preserve their option value of obtaining insurance at non-penalized rates. There is some evidence that consumers did not fully appreciate the consequences of the gap, and enhanced policies that covered the gap were not heavily demanded, even though the additional coverage they offered was close to actuarially fair.
The picture that emerges is that elderly consumers were mostly able to navigate the Part D market and reach reasonable choices, despite its novelty and complexity. Two concerns with insurance markets that also arise for the Part D market are adverse selection, in which only the sickest seek insurance, and insurers respond by cherry-picking, refusing coverage for individuals and conditions likely to increase claims; and moral hazard, in which insurance coverage encourages additional treatments by reducing the incremental costs of these treatments.
Adverse selection has so far been avoided in the Part D market because the voluntary enrollment rate is high, including a high proportion of healthy seniors who currently are net contributors to the system. Further, adverse selection is not a problem for plan switchers because participating insurers must take all comers, and are reimbursed by Medicare based on each individual's experience rating. There is moral hazard in the sense that prescription drug use is increasing for seniors newly insured under part D, to 4.4 from 3.3 prescriptions on average per month, according to our survey.
This increase must be assessed in terms of its health consequences. Dana Goldman at RAND Corporation has found that making at least some drugs available to seniors at lower cost more than pays for itself in decreased incidence and cost of health problems. For example, reducing the copay on statins to $10 from $45 for a 30-day supply increased plan prescription drug payments, but the increased adherence of patients to the therapy at the lower copayment reduced cardiovascular incidents and attendant hospitalization costs, so that total annual health costs per patient in his study fell to $5,180 from $5,470.
A recent study of the VA population indicates that statins increase adult life expectancy by nearly two years, apparently because they act as anti-inflamatories as well as reducing cholesterol. Anecdotal evidence indicates that Part D coverage will reduce medical problems and hospitalization costs enough to offset a significant portion of its cost. However, reduced adherence to therapies by consumers who hit the gap will probably have a significant adverse effect on health outcomes that we will begin to see in 2007. A humorous proposal is that employers could lower their total health-care bills by putting statins and anti-hypertensives in the water cooler. What is clear is that an integrated approach is needed to evaluating health-care costs, and programs like Part D that can deliver effective preventative drugs may pay for themselves.
My overall conclusion is that, so far, the Part D program has succeeded in getting affordable prescription drugs to the senior population. Its privatized structure has not been a significant impediment to delivery of these services. Competition among insurers seems to have been effective in keeping a lid on costs, and assuring reasonable quality control. We do not have an experiment in which we can determine whether a single-product system could have done as well, or better, along these dimensions, but I think it is reasonable to say that the Part D market has performed as well as its partisans hoped, and far better than its detractors expected.
Does this mean that Part D proves that privatization will be effective in other segments of the health-care market? Here, I think caution is advised. First, the success of Part D depends substantially on thoughtful and muscular management of the market. The former head of Medicare, Mark McClellan, and a dynamic, no-nonsense 75-year-old government bureaucrat, Abby Block, bullied insurers to make sure there were, in her words, "no bad choices." It is unclear whether their successors will be as successful in standing toe-to-toe with the industry and making sure consumers' interests are protected.
A health insurance market like Part D probably requires this level of active management to work well; after-the-fact oversight in the style of the SEC or FTC is inadequate. If privatization is going to work elsewhere in health care, active market management will be needed.
Finally, consumer-directed health care works only if consumers can understand the consequences of their choices. In much of medicine, providers are the agents that guide consumers through these choices. If consumer-directed health care is to be effective, these providers must give sound advice on both the health and financial consequences of alternative choices. This is possible if the incentives to providers and consumers are right, but the design of such markets should not be left to chance.
Mr. McFadden, the E. Morris Cox professor of economics and director of the Econometrics Laboratory at Berkeley, is a 2000 Nobel laureate in economics.
URL for this article:
http://online.wsj.com/article/SB117159975453110920.html
Dear Friends and Colleagues;
Greetings from the cold, but sunny Jerusalem.
Attached a very interesting and informative article published in yesterdays Wall Street Journal reviewing the effect and performance of the Medicare Part D program.
Part D is a massive social experiment on the ability of a privatized market to deliver social services effectively.
The author and researcher claims that in terms of health delivered per dollar of cost, our health care system is grotesquely inefficient. We spend $6,102 per person on health care each year, nearly 17% of GDP. Our neighbor Canada's single-payer system costs $3,165 per person per year, about half our expenditure, or 10% of their GDP. The Canadian costs and health outcomes are typical of developed countries, where government managed and financed systems predominate. The extra cost of our system is not buying us better health. The probability of dying between ages 15 and 60, a good indicator of failure of a health-care system to prevent and treat disease, is 8.1% for females in the U.S.; in Canada, the same probability is 5.7%.
f current trends continue, health care in the U.S. as a proportion of GDP will rise to 40% by 2050, a level that will break the current system of financing health through employers, pension funds and Medicare/Medicaid.
The authors then continue analyzing the performance of the Medicare Part B program and gives it a mixed report card:
My overall conclusion is that, so far, the Part D program has succeeded in getting affordable prescription drugs to the senior population. Its privatized structure has not been a significant impediment to delivery of these services. Competition among insurers seems to have been effective in keeping a lid on costs, and assuring reasonable quality control. We do not have an experiment in which we can determine whether a single-product system could have done as well, or better, along these dimensions, but I think it is reasonable to say that the Part D market has performed as well as its partisans hoped, and far better than its detractors expected.
Does this mean that Part D proves that privatization will be effective in other segments of the health-care market?
The authors cautions and points out that:
* the success of Part D depends substantially on thoughtful and muscular management of the market.A health insurance market like Part D probably requires this level of active management to work well; after-the-fact oversight in the style of the SEC or FTC is inadequate. If privatization is going to work elsewhere in health care, active market management will be needed.
* consumer-directed health care works only if consumers can understand the consequences of their choices. In much of medicine, providers are the agents that guide consumers through these choices. If consumer-directed health care is to be effective, these providers must give sound advice on both the health and financial consequences of alternative choices. This is possible if the incentives to providers and consumers are right, but the design of such markets should not be left to chance.
Yours
Bernd Wollschlaeger,MD,FAAFP
A Dog's Breakfast
By DANIEL L. MCFADDEN
February 16, 2007; Page A15
Last year, Medicare underwent a major expansion with the addition of Part D prescription drug coverage. A controversial feature of this new program was its organization as a market in which consumers could choose among various plans offered competitively by different insurers and HMOs, rather than the single-payer, single-product model used elsewhere in the Medicare system. Proponents of this design touted the choices it would offer consumers, and the benefits of competition for product quality and cost; opponents objected that consumers would be overwhelmed by the complexity of the market, and that it was unnecessarily generous to pharmaceutical and insurance companies.
Part D is a massive social experiment on the ability of a privatized market to deliver social services effectively. With the support of the National Institute on Aging, my research group has monitored consumer choices and outcomes from the new Part D market. I will summarize our findings, but first I want to provide some perspective on the American health-care system and the questions that study of Part D may help answer.
Most Americans are aware that our health-care system is in deep trouble, a dog's breakfast of private providers and insurers that has weak and inconsistent incentives for quality control and cost containment. Many consumers cannot obtain health insurance at reasonable cost, and financing the system is stressing employers, pension funds, and the government's Medicare and Medicaid programs.
In terms of health delivered per dollar of cost, our system is grotesquely inefficient. We spend $6,102 per person on health care each year, nearly 17% of GDP. Our neighbor Canada's single-payer system costs $3,165 per person per year, about half our expenditure, or 10% of their GDP. The Canadian costs and health outcomes are typical of developed countries, where government managed and financed systems predominate. The extra cost of our system is not buying us better health. The probability of dying between ages 15 and 60, a good indicator of failure of a health-care system to prevent and treat disease, is 8.1% for females in the U.S.; in Canada, the same probability is 5.7%.
In the future, things are going to get much worse. If current trends continue, health care in the U.S. as a proportion of GDP will rise to 40% by 2050, a level that will break the current system of financing health through employers, pension funds and Medicare/Medicaid.
There are a number of reasons for this gathering storm. First, the U.S. population is getting older, and the old require more medical maintenance. Second, we are getting wealthier, and staying alive is the ultimate luxury good. Third, we demand expensive medical innovations, such as dialysis, MRIs, transplants, stents and biotech. About a third of all medical costs are incurred in the last year of life, and are at best marginally effective. The incentives in the system do not force hard choices.
To deal with this future, three substantial reforms are needed. First, we need to wring out some of the inefficiencies. Something like 30% of our health costs come from administrative overhead, legal costs and defensive medicine. These could be largely eliminated in a comprehensive reform; we just need to emulate best practice in other developed countries.
Second, we need universal health insurance coverage, with active emphasis on preventive medicine that is effective in reducing later medical events and costs. Perhaps this can be accomplished by cobbling together existing sources of finance, as in Gov. Arnold Schwarzenegger's current proposal for California. However, eventually we will have to go to a system that is not channeled through employers, something like a tax-financed medical voucher system.
Third, we need incentives that match choice of expensive treatments with consumers' willingness to pay for them, a benefit-cost analysis that places treatment choices and financial responsibility on the individual.
This brings us to Medicare Part D. This experiment in privatizing the prescription drug insurance market and the interface between insurers and consumers gives the individual the right, and responsibility, to make insurance plan choices that are in his or her self-interest. If consumers are up to this task, then their choices will ensure that the plans, and insurers, that succeed in the market are ones that meet their needs. However, if many are confused or confounded, the market will not get the signals it needs to work satisfactorily. The success or failure of the Part D market is a bellwether for proposals to spread consumer-directed health care across the system, putting health and financial choices in the hands of consumers, and utilizing the forces of market competition to rationalize the system.
So, how well has the Part D market worked? We now have one year of experience, including a second open enrollment period in which consumers could switch plans, or enroll if they had not done so earlier. We can ask whether consumers were satisfied with this market, whether their choices were consistent with their interests, and whether Part D insurance has had a positive effect on health outcomes. To do this, my group is tracking about 2,200 consumers age 65 and up from opening of the initial enrollment period in mid-November 2005. We interviewed them just before enrollment began, and again just after the initial enrollment period ended on May 15, 2006. Here are some of the things we have found:
Consumers were quite confused about the Part D program before enrollment began, with 40% knowing little or nothing about what the program offered, and 17% indicating that they were unlikely to enroll. Start-up problems, widely publicized, further clouded the program's future. However, when the initial enrollment period closed, only 7.4% of the age 65-plus eligible population of 35.8 million were not enrolled in Part D or comparable prescription drug coverage. It helped that monthly premiums, predicted to be about $37, were substantially lower, averaging around $24, with some plans available for premiums as low as $6 to $10. It helped that about 68% of the population was automatically enrolled, either through employer or union based plans or through Medicaid, VA or federal employee coverage. It also helped that Part D incorporates an annual subsidy of about $1,200 per enrollee, so that most potential enrollees benefit immediately.
Failure to enroll turned out to be a minor problem, but making Part D voluntary rather than mandatory did have some consequences. About 1.2 million seniors who use enough prescription drugs so that they would immediately benefit from enrolling failed to do so. Mostly, these were not the very poor, who were picked up by Medicaid and by outreach programs, but poorly educated people above the poverty line.
General opinions elicited after the close of the initial enrollment period give Part D a mixed report card. Seventy-seven percent liked having a choice of plans, but 58% thought the program was not well designed; 77% say they would have preferred to have prescription drugs provided automatically as part of Medicare Part A; 58% are less satisfied with Medicare as a result of Part D; and large majorities dislike formulary restrictions and the gap, a range of out-of-pocket costs where the Part D standard plan offers no benefits.
However, when one looks at plan choices made, one finds that consumers were relatively consistent in recognizing their self-interest. Most consumers selected among the lowest-cost plans available in their area. Consumers with significant drug needs enrolled early, while those with no immediate needs mostly enrolled later to preserve their option value of obtaining insurance at non-penalized rates. There is some evidence that consumers did not fully appreciate the consequences of the gap, and enhanced policies that covered the gap were not heavily demanded, even though the additional coverage they offered was close to actuarially fair.
The picture that emerges is that elderly consumers were mostly able to navigate the Part D market and reach reasonable choices, despite its novelty and complexity. Two concerns with insurance markets that also arise for the Part D market are adverse selection, in which only the sickest seek insurance, and insurers respond by cherry-picking, refusing coverage for individuals and conditions likely to increase claims; and moral hazard, in which insurance coverage encourages additional treatments by reducing the incremental costs of these treatments.
Adverse selection has so far been avoided in the Part D market because the voluntary enrollment rate is high, including a high proportion of healthy seniors who currently are net contributors to the system. Further, adverse selection is not a problem for plan switchers because participating insurers must take all comers, and are reimbursed by Medicare based on each individual's experience rating. There is moral hazard in the sense that prescription drug use is increasing for seniors newly insured under part D, to 4.4 from 3.3 prescriptions on average per month, according to our survey.
This increase must be assessed in terms of its health consequences. Dana Goldman at RAND Corporation has found that making at least some drugs available to seniors at lower cost more than pays for itself in decreased incidence and cost of health problems. For example, reducing the copay on statins to $10 from $45 for a 30-day supply increased plan prescription drug payments, but the increased adherence of patients to the therapy at the lower copayment reduced cardiovascular incidents and attendant hospitalization costs, so that total annual health costs per patient in his study fell to $5,180 from $5,470.
A recent study of the VA population indicates that statins increase adult life expectancy by nearly two years, apparently because they act as anti-inflamatories as well as reducing cholesterol. Anecdotal evidence indicates that Part D coverage will reduce medical problems and hospitalization costs enough to offset a significant portion of its cost. However, reduced adherence to therapies by consumers who hit the gap will probably have a significant adverse effect on health outcomes that we will begin to see in 2007. A humorous proposal is that employers could lower their total health-care bills by putting statins and anti-hypertensives in the water cooler. What is clear is that an integrated approach is needed to evaluating health-care costs, and programs like Part D that can deliver effective preventative drugs may pay for themselves.
My overall conclusion is that, so far, the Part D program has succeeded in getting affordable prescription drugs to the senior population. Its privatized structure has not been a significant impediment to delivery of these services. Competition among insurers seems to have been effective in keeping a lid on costs, and assuring reasonable quality control. We do not have an experiment in which we can determine whether a single-product system could have done as well, or better, along these dimensions, but I think it is reasonable to say that the Part D market has performed as well as its partisans hoped, and far better than its detractors expected.
Does this mean that Part D proves that privatization will be effective in other segments of the health-care market? Here, I think caution is advised. First, the success of Part D depends substantially on thoughtful and muscular management of the market. The former head of Medicare, Mark McClellan, and a dynamic, no-nonsense 75-year-old government bureaucrat, Abby Block, bullied insurers to make sure there were, in her words, "no bad choices." It is unclear whether their successors will be as successful in standing toe-to-toe with the industry and making sure consumers' interests are protected.
A health insurance market like Part D probably requires this level of active management to work well; after-the-fact oversight in the style of the SEC or FTC is inadequate. If privatization is going to work elsewhere in health care, active market management will be needed.
Finally, consumer-directed health care works only if consumers can understand the consequences of their choices. In much of medicine, providers are the agents that guide consumers through these choices. If consumer-directed health care is to be effective, these providers must give sound advice on both the health and financial consequences of alternative choices. This is possible if the incentives to providers and consumers are right, but the design of such markets should not be left to chance.
Mr. McFadden, the E. Morris Cox professor of economics and director of the Econometrics Laboratory at Berkeley, is a 2000 Nobel laureate in economics.
URL for this article:
http://online.wsj.com/article/SB117159975453110920.html
Sunday, February 04, 2007
Health Information Technology
Attached you find a link to several interesting articles from the recent edition of Health Affairs about the medical information technology applications.
Data gathered in electronic health records on the experience of millions of patients have the potential to dramatically accelerate clinical research and provide the nation with timely, urgently needed knowledge about the value of new medical technologies, researchers report in a special edition of Health Affairs on "rapid learning" published January 26. Strategies for advancing rapid learning in health care was the topic of a Health Affairs-sponsored conference in Washington, D.C., today that included an appearance by AHRQ Director Carolyn Clancy, as well as several authors from the January 26 issue.
A webcast of the briefing is available at:
www.rwjf.org/newsroom/activitydetail.jsp?id=10195&type=3
The attached prologue accurately reflects on the content and purpose of the articles.
Yours
Bernd
http://content.healthaffairs.org/cgi/content/full/hlthaff.26.2.w107/DC2
26 January 2007
Rapid Learning:
Getting Technology Into Practice
PROLOGUE: Amid persistent concerns about performance and quality, the health sector remains ambivalent about electronic health records (EHRs). Champions of accelerated adoption of health information technology (IT) have been unable to generate a groundswell of demand, despite excellent arguments for health IT's potential to save money, improve quality, and transform care. It may be, though, that the strongest argument for speeding IT adoption is still largely below the radar.
The dramatic pace of biomedical innovation has dazzled America but created nagging tensions as well. Our insatiable demand for new drugs and technologies is driving unsustainable growth in health spending. An explosion of new knowledge has strained clinicians' learning capacity and fostered subspecialization and fragmentation of care. Clinical research and regulatory capabilities are swamped with urgent questions about the safety and effectiveness of new treatments.
But on scattered islands within the dominant system, promising approaches to managing innovation are beginning to surface, and their foundation is the EHR. In organizations such as the Veterans Health Administration (VHA), Kaiser Permanente, and the Geisinger Health System, the richness of data capture in fully deployed patient record systems is enabling clinicians and researchers to answer practical questions about safety, effectiveness, and cost more efficiently than the traditional process of randomized clinical trials (RCTs) possibly could.
The implications of these approaches for the future of "rapid learning" are spelled out in an overview paper by Lynn Etheredge. "An inadequate knowledge base limits initiatives to improve health system performance," Etheredge writes. "With large, computer-searchable databases, studies that would now take years will be doable, at low expense, in a matter of weeks, days, or hours." Case studies accompanied by commentaries explore how EHR database research is being used at the VHA (for diabetes research and care), Kaiser (for cancer research and care), and Geisinger (to close the "inferential gap" between RCTs and real-world clinical decisions). David Eddy offers his vision for a health system that will use predictive models from large, merged databases of EHRs to advance the biomedical sciences as well as clinical care. Sean Tunis and colleagues suggest strategies to use large new government clinical care databases to support Medicare coverage decisions, comparative effectiveness studies, and postmarket drug safety surveillance.
The rapid-learning efforts described here were originally presented at a March 2006 conference in Washington, D.C., organized by Etheredge and Health Affairs and sponsored by the Robert Wood Johnson Foundation. The publication of the papers is also supported by Kaiser Permanente and the federal Agency for Healthcare Research and Quality.
Data gathered in electronic health records on the experience of millions of patients have the potential to dramatically accelerate clinical research and provide the nation with timely, urgently needed knowledge about the value of new medical technologies, researchers report in a special edition of Health Affairs on "rapid learning" published January 26. Strategies for advancing rapid learning in health care was the topic of a Health Affairs-sponsored conference in Washington, D.C., today that included an appearance by AHRQ Director Carolyn Clancy, as well as several authors from the January 26 issue.
A webcast of the briefing is available at:
www.rwjf.org/newsroom/activitydetail.jsp?id=10195&type=3
The attached prologue accurately reflects on the content and purpose of the articles.
Yours
Bernd
http://content.healthaffairs.org/cgi/content/full/hlthaff.26.2.w107/DC2
26 January 2007
Rapid Learning:
Getting Technology Into Practice
PROLOGUE: Amid persistent concerns about performance and quality, the health sector remains ambivalent about electronic health records (EHRs). Champions of accelerated adoption of health information technology (IT) have been unable to generate a groundswell of demand, despite excellent arguments for health IT's potential to save money, improve quality, and transform care. It may be, though, that the strongest argument for speeding IT adoption is still largely below the radar.
The dramatic pace of biomedical innovation has dazzled America but created nagging tensions as well. Our insatiable demand for new drugs and technologies is driving unsustainable growth in health spending. An explosion of new knowledge has strained clinicians' learning capacity and fostered subspecialization and fragmentation of care. Clinical research and regulatory capabilities are swamped with urgent questions about the safety and effectiveness of new treatments.
But on scattered islands within the dominant system, promising approaches to managing innovation are beginning to surface, and their foundation is the EHR. In organizations such as the Veterans Health Administration (VHA), Kaiser Permanente, and the Geisinger Health System, the richness of data capture in fully deployed patient record systems is enabling clinicians and researchers to answer practical questions about safety, effectiveness, and cost more efficiently than the traditional process of randomized clinical trials (RCTs) possibly could.
The implications of these approaches for the future of "rapid learning" are spelled out in an overview paper by Lynn Etheredge. "An inadequate knowledge base limits initiatives to improve health system performance," Etheredge writes. "With large, computer-searchable databases, studies that would now take years will be doable, at low expense, in a matter of weeks, days, or hours." Case studies accompanied by commentaries explore how EHR database research is being used at the VHA (for diabetes research and care), Kaiser (for cancer research and care), and Geisinger (to close the "inferential gap" between RCTs and real-world clinical decisions). David Eddy offers his vision for a health system that will use predictive models from large, merged databases of EHRs to advance the biomedical sciences as well as clinical care. Sean Tunis and colleagues suggest strategies to use large new government clinical care databases to support Medicare coverage decisions, comparative effectiveness studies, and postmarket drug safety surveillance.
The rapid-learning efforts described here were originally presented at a March 2006 conference in Washington, D.C., organized by Etheredge and Health Affairs and sponsored by the Robert Wood Johnson Foundation. The publication of the papers is also supported by Kaiser Permanente and the federal Agency for Healthcare Research and Quality.
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